##### 



EXHIBIT 15.(b).2




---



##### 



HYDRO Annual Report and Form 20-F 2005




---



##### 



CONTENT
 04:
    
    
    Letter to Shareholders07:
    
    
    Business and Operating Information69:
    
    
    Investor Information83:
    
    
    Society, People, Environment91:
    
    
    Risk, Regulation and Other Information105:
    
    
    AppendixFinancial Statements and Other InformationOperating StatisticsTerms and DefinitionsCross Reference to Form 20-F
  Hydros 2005 reporting Annual Report and Form 20-F Annual Review www.hydro.com/reports




---



##### 



CONTENT
 08
    
    
    About Hydro12
    
    
    Business Description12
    
    
    Oil & Energy32
    
    
    Aluminium40
    
    
    Other Businesses42
    
    
    Financial Information42
    
    
    Selected Consolidated Financial Data43
    
    
    Financial Review58
    
    
    Liquidity and Capital Resources62
    
    
    Hydros Critical Accounting Policies65
    
    
    Other65
    
    
    Market Risk67
    
    
    Research and Development68
    
    
    Legal Proceedings




---



##### 



About Hydro
 
  Our businesses




---



##### 



Strategic direction
    The Hydro Way
   
    
    An ability to develop source businesses
    
    A drive to optimize
    
    An instinct to commercialize
    
    A passion for social commerce




---



##### 



THE ORMEN LANGE GAS FIELD DEVELOPMENT

THE QATALUM ALUMINIUM SMELTER PROJECT Hydros
Oil & Energy
 
    
    Exploration and Productionconsists of Hydros oil and gas exploration activities, field
development activities and the operation of production and oil transportation facilities.
    
    Energy and Oil Marketingconsists of Hydros commercial operations in the oil, natural gas and
power sectors, the operation of Hydros hydroelectric power stations, management of Hydros
interest in the gas transportation system on the Norwegian Continental Shelf (NCS) as well as
Hydros seaborne transportation of crude oil, natural gas liquids and other petroleum products and
the marketing and sales of refined petroleum products (e.g., gasoline, diesel and heating oil).
Energy and Oil Marketing also includes Hydros new energy business activities.
 Hydros Aluminium
 
    
    Primary Metals and Metal Productsconsists of Hydros upstream activities, principally the
production and sale of primary aluminium. Hydros metals activities also includes the processing of
scrap and ingot for the mid- and downstream markets, all aluminium and raw materials trading
activities and Hydros high purity aluminium business. As of 1 January 2005, Hydros magnesium
activities have been included as part of Hydros automotive operations.
    
    Rolled Productsconsists of Hydros cold rolling mills primarily located in Europe. Rolled
Products also includes Hydros 50 percent interest in the AluNorf hot rolling mill located in
Germany.
    
    Extrusion and Automotiveconsists of Hydros extruded products business focused mainly on the
building, construction and transportation industry sectors and its precision tubing, structures and
casting business operations primarily serving to the automotive industry. Hydros extrusion and
automotive sub-segment also includes its magnesium operations.




---



##### 



History and Development of the Company
        Other Information
  www.hydro.com




---



##### 



Exploration
and Production
 Introduction 1)
    
 1)
    
    See Terms and Definitions at the end of this report for a description of terms used throughout
the business description of the Oil & Energy segment. These terms have the meanings indicated
unless the context indicates otherwise.




---



##### 



HIGH OIL PRICE DRIVEN BY SUPPLY CONCERNS

WORLD OIL PRODUCTION BY SOURCE Industry overview
 High crude oil price levels
  Exploration becoming increasingly challenging
   The
NCS  a maturing oil province




---



##### 



PROFITABLE PRODUCTION GROWTH

MASTERING THE NCS CHALLENGE Strategy
  
    
    Delivering strong production growth based on Hydros existing portfolio in well-defined,
profitable projects.Hydros total equity production of oil and gas increased from 270,000 boe per
day in 1998 to 563,000 boe per day in 2005. The increase included the acquisition in 1999 of Saga
Petroleum, start-up production from Hydros international activities, increased ownership interests
on the NCS acquired from the Norwegian State in the Oseberg, Tune and Grane fields in 2002, as well
as organic growth on the NCS. Hydros international production will become increasingly important
for medium-term growth;
    
    Building the basis for future, long-term production through three avenues for growth:
 
    
    the optimal development and exploitation of existing assets to secure a solid foundation for new
opportunities;
    
    improved explorationwork processes as a source of longer-term growth. Hydro has increased its
exploration activity to take advantage of its attractive exploration portfolio with balanced risk
and geography profiles;
    
    acquiringproven resources where Hydros core competencies and expertise (including advanced
drilling techniques, flow-assurance, reservoir management and execution of complex and
technologically challenging projects) can add value to assets traded
in the market-place. In
addition, the acquisition of technical resources continues to provide attractive potential through
the application of Hydros distinct capabilities;
 
    
    Capturing the opportunities on the NCS.Hydro intends to capitalize on its extensive field
development portfolio through technological advances and innovative field development solutions.
Many of Hydros oil fields on the NCS contain large amounts of gas. As a result, Hydros current
portfolio on the NCS will become increasingly linked to gas. These gas resources are highly
profitable because most of the necessary infrastructure is in place and flexible export
opportunities exist. There is also a potential for further infrastructure-led exploration on the
NCS. Existing infrastructure with spare liquid capacity is a key driver for exploration in maturing
areas; and
    
    Continuing to pursue cost improvements in exploration and production activities.As fields on the
NCS mature and production declines, high priority will be given to reducing costs and implementing
measures to increase production on existing fields, including IOR measures and development of
satellite fields. Hydros objective is to maintain and improve its status as an efficient operator,
and Hydro will continue its efforts to drive down costs on operated facilities despite the
underlying maturing nature of the portfolio. Active infrastructure-led exploration is also a key
factor in maintaining production cost per barrel at a profitable level and extending the life of
the infrastructure in the tail-end production phase.




---



##### 



Operational information
 Exploration activity
 Norway.
  Angola.
  Canada.
 Russia.
 Libya.




---



##### 



Iran.
 US Gulf of Mexico.
  Nigeria.
 Denmark.
 Madagascar.
 Morocco.
 Mozambique.
 Cuba.




---



##### 



Drilling information
  DRILLING ACTIVITYNorway
    
    
    International
    
    
    Total2005
    
    
    2004
    
    
    2003
    
    
    2005
    
    
    2004
    
    
    2003
    
    
    2005
    
    
    2004
    
    
    2003Exploratory wellsProductive 1)
    
    Gross 3)
    
    
    4
    
    
    
    2
    
    
    
    2
    
    
    
    7
    
    
    
    9
    
    
    
    1
    
    
    
    11
    
    
    
    11
    
    
    
    3Net 4)
    
    
    1.32
    
    
    
    0.33
    
    
    
    0.4
    
    
    
    1.8
    
    
    
    1.8
    
    
    
    0.1
    
    
    
    3.12
    
    
    
    2.13
    
    
    
    0.5Dry 2)
    
    Gross 3)
    
    
    3
    
    
    
    4
    
    
    
    4
    
    
    
    2
    
    
    
    2
    
    
    
    6
    
    
    
    5
    
    
    
    6
    
    
    
    10Net 4)
    
    
    0.84
    
    
    
    1.05
    
    
    
    0.8
    
    
    
    0.4
    
    
    
    0.45
    
    
    
    1.64
    
    
    
    1.24
    
    
    
    1.5
    
    
    
    2.42Under evaluation
5)
    
    Gross 3)
    
    
    1
    
    
    
    
    
    
    
    
    
    
    
    1
    
    
    
    
    
    
    
    
    
    
    
    2
    
    
    
    
    
    
    
    Net 4)
    
    
    0.3
    
    
    
    
    
    
    
    
    
    
    
    0.2
    
    
    
    
    
    
    
    
    
    
    
    0.5
    
    
    
    
    
    
    
    Exploration extensions
of production wellsProductive 1)
    
    Gross 3)
    
    
    2
    
    
    
    3
    
    
    
    5
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2
    
    
    
    3
    
    
    
    5Net 4)
    
    
    0.44
    
    
    
    0.47
    
    
    
    0.83
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    0.44
    
    
    
    0.47
    
    
    
    0.83Dry 2)
    
    Gross 3)
    
    
    1
    
    
    
    
    
    
    
    
    
    
    
    1
    
    
    
    
    
    
    
    
    
    
    
    2
    
    
    
    
    
    
    
    Net 4)
    
    
    0.4
    
    
    
    
    
    
    
    
    
    
    
    0.3
    
    
    
    
    
    
    
    
    
    
    
    0.7
    
    
    
    
    
    
    
    Total exploration
targets drilledProductive 1)
    
    Gross 3)
    
    
    6
    
    
    
    5
    
    
    
    7
    
    
    
    7
    
    
    
    9
    
    
    
    1
    
    
    
    13
    
    
    
    14
    
    
    
    8Net 4)
    
    
    1.76
    
    
    
    0.8
    
    
    
    1.23
    
    
    
    1.8
    
    
    
    1.8
    
    
    
    0.1
    
    
    
    3.56
    
    
    
    2.6
    
    
    
    1.33Dry 2)
    
    Gross 3)
    
    
    4
    
    
    
    4
    
    
    
    4
    
    
    
    3
    
    
    
    2
    
    
    
    6
    
    
    
    7
    
    
    
    6
    
    
    
    10Net 4)
    
    
    1.24
    
    
    
    1.05
    
    
    
    0.8
    
    
    
    0.7
    
    
    
    0.45
    
    
    
    1.64
    
    
    
    1.94
    
    
    
    1.5
    
    
    
    2.42Under evaluation
5)
    
    Gross 3)
    
    
    1
    
    
    
    
    
    
    
    
    
    
    
    1
    
    
    
    
    
    
    
    
    
    
    
    2
    
    
    
    
    
    
    
    Net 4)
    
    
    0.3
    
    
    
    
    
    
    
    
    
    
    
    0.2
    
    
    
    
    
    
    
    
    
    
    
    0.5
    
    
    
    
    
    
    
    
 1)
    
    A productive well is an exploratory well deemed to be commercially viable.2)
    
    A dry well is an exploratory well found to be incapable of producing either oil or gas in
sufficient quantities to justify completion as an oil or gas well.3)
    
    A gross well is a well in which a whole or fractional working interest is owned.4)
    
    A net well is the sum of the whole fractional working interests in gross wells which equal one.5)
    
    A well under evaluation is a well that has not yet been determined to be either productive or
dry.
 IN PROCESS DRILLING ACTIVITIESAs of 31 December 2005
    
    
    Norway
    
    
    International
    
    
    TotalExploratory
    
    Gross
    
    
    1
    
    
    
    8
    
    
    
    9Net
    
    
    0.1
    
    
    
    3
    
    
    
    3.1




---



##### 



18
    
    (BLACK BOX)
    
    Business and Operating InformationBusiness Description
 Developed and undeveloped acreage
  
 As of 31 December 2005
    
    Developed acreage 1)
    
    
    in square kilometers
    
    
    Undeveloped acreage 2)
    
    
    in square kilometersGross 3)
    
    
    Net 3)
    
    
    Gross 3)
    
    
    Net 3)NCS 4)
    
    
    9,290
    
    
    
    1,757
    
    
    
    30,504
    
    
    
    12,445Angola
    
    
    176
    
    
    
    18
    
    
    
    12,637
    
    
    
    2,950Canada
    
    
    379
    
    
    
    36
    
    
    
    11,520
    
    
    
    4,848Gulf of Mexico
    
    
    895
    
    
    
    438
    
    
    
    8,085
    
    
    
    4,538Libya
    
    
    5,562
    
    
    
    660
    
    
    
    33,784
    
    
    
    2,678Iran
    
    
    
    
    
    
    
    
    
    
    3,200
    
    
    
    2,400Russia
    
    
    350
    
    
    
    140Morocco
    
    
    
    
    
    
    
    
    
    
    6,663
    
    
    
    3,248Nigeria
    
    
    
    
    
    
    
    
    
    
    4,887
    
    
    
    669Madagascar
    
    
    
    
    
    
    
    
    
    
    17,836
    
    
    
    5,351Total
    
    
    16,652
    
    
    
    3,049
    
    
    
    129,115
    
    
    
    39,127
 1)
    
    Developed acreage is acreage spaced or assignable to productive wells.2)
    
    Undeveloped acreage is the acreage on which wells have not been drilled or completed to a point
that would permit the production of commercial quantities
of oil or gas, regardless of whether or not such acreage contains proved reserves.3)
    
    Gross acreage includes the total number of square kilometers in which the company has an
interest. Net acreage is the sum of the companys fractional
interests in gross acreage.4)
    
    Hydro also has interests in four exploration areas with a total of 9 optional licenses on the
NCS, of which it is operator of one area. Each of the optional
licenses may turn into a license under normal conditions if the partners commit to an exploration
well following seismic evaluations. These four exploration
areas cover an additional gross area of more than 14,000 square km and a net area of about 4,480
square km.
  Reserve information
    
 Oil in millions of boe
    
    2005
    
    
    2004
    
    
    2003Gas in billions of cubic feet (bcf)
    
    Norway
    
    
    Intl 1)
    
    
    Total
    
    
    Norway
    
    
    Intl 1)
    
    
    Total
    
    
    Norway
    
    
    Intl 1)
    
    
    TotalProved oil reserves, developed and
undeveloped 2)
    
    
    693
    
    
    
    160
    
    
    
    853
    
    
    
    749
    
    
    
    156
    
    
    
    905
    
    
    
    839
    
    
    
    154
    
    
    
    993Of which developed
    
    
    576
    
    
    
    93
    
    
    
    669
    
    
    
    607
    
    
    
    97
    
    
    
    704
    
    
    
    690
    
    
    
    88
    
    
    
    778Proved gas reserves,
developed and undeveloped 2)
    
    
    6,571
    
    
    
    190
    
    
    
    6,761
    
    
    
    6,626
    
    
    
    
    
    
    
    6,626
    
    
    
    7,317
    
    
    
    
    
    
    
    7,317Of which developed
    
    
    4,551
    
    
    
    58
    
    
    
    4,609
    
    
    
    4,197
    
    
    
    
    
    
    
    4,197
    
    
    
    4,415
    
    
    
    
    
    
    
    4,415Proved oil and gas reserves,
developed and undeveloped 2)
    
    
    1,854
    
    
    
    192
    
    
    
    2,046
    
    
    
    1,920
    
    
    
    156
    
    
    
    2,076
    
    
    
    2,134
    
    
    
    154
    
    
    
    2,288Of which developed
    
    
    1,380
    
    
    
    103
    
    
    
    1,483
    
    
    
    1,350
    
    
    
    97
    
    
    
    1,447
    
    
    
    1,470
    
    
    
    88
    
    
    
    1,558
 1)
    
    Reserves reflected in the International columns are shown net of royalties in kind and the
governments share of profit oil.2)
    
    For the definition of proved reserves, proved developed reserves and proved undeveloped
reserves, and applicable conversion factors, see Terms and
Definitions at the end of this report.




---



##### 



Business and Operating Information
    
    (BLACK BOX)
    
    
    19Business Description
   
 Hydro's shareAs of 31 December 2005
    
    
    
    
    
    Hydro's
    
    
    Total
    
    
    Oil/NGL
    
    
    Gas
    
    
    Gas
    
    
    Prod.Field
    
    Block
    
    Operator
    
    %-interest
    
    
    mill. boe
    
    
    mill. boe
    
    
    bill. scf
    
    
    bill. Sm3
    
    
    start upTroll
    
    31/2, 31/3, 31/5, 31/6
    
    Hydro / Statoil
    
    
    9.78
    
    
    
    485
    
    
    
    45
    
    
    
    2,551
    
    
    
    72.1
    
    
    
    1995 1996Oseberg fields
    
    30/6, 30/9
    
    Hydro
    
    
    34.00
    
    
    
    308
    
    
    
    85
    
    
    
    1,240
    
    
    
    35.0
    
    
    
    1988Ormen Lange
    
    6304/9 6305/1,2,4,5,7,8
    
    Hydro / Shell 1)
    
    
    18.07
    
    
    
    235
    
    
    
    14
    
    
    
    1,245
    
    
    
    35.2
    
    
    
    2007Grane
    
    25/11
    
    Hydro
    
    
    38.00
    
    
    
    160
    
    
    
    160
    
    
    
    0
    
    
    
    
    
    
    
    2003Åsgard
    
    6407/2, 6506/11,12, 6507/11
    
    Statoil
    
    
    9.60
    
    
    
    130
    
    
    
    53
    
    
    
    434
    
    
    
    12.3
    
    
    
    1999Ekofisk fields
    
    2/4, 2/5, 2/7
    
    ConocoPhillips
    
    
    5.81 - 6.65
    
    
    
    100
    
    
    
    87
    
    
    
    70
    
    
    
    2.0
    
    
    
    1971Snorre fields
    
    34/4, 34/7, 33/9
    
    Statoil
    
    
    5.98 - 17.65
    
    
    
    88
    
    
    
    86
    
    
    
    9
    
    
    
    0.3
    
    
    
    1992Visund
    
    34/8, 34/7
    
    Statoil
    
    
    20.30
    
    
    
    69
    
    
    
    21
    
    
    
    269
    
    
    
    7.6
    
    
    
    1999Kristin
    
    6406/2, 6506/11
    
    Statoil
    
    
    14.00
    
    
    
    57
    
    
    
    34
    
    
    
    128
    
    
    
    3.6
    
    
    
    2005Gullfaks fields
    
    34/10, 33/12
    
    Statoil
    
    
    9.00
    
    
    
    43
    
    
    
    27
    
    
    
    85
    
    
    
    2.4
    
    
    
    1986Kvitebjørn
    
    34/11
    
    Statoil
    
    
    15.00
    
    
    
    38
    
    
    
    10
    
    
    
    149
    
    
    
    4.2
    
    
    
    2004Sleipner fields
    
    15/6, 15/9, 16/7
    
    Statoil
    
    
    8.85 - 10.00
    
    
    
    36
    
    
    
    10
    
    
    
    141
    
    
    
    4.0
    
    
    
    1993Fram
    
    35/11
    
    Hydro
    
    
    25.00
    
    
    
    20
    
    
    
    12
    
    
    
    41
    
    
    
    1.2
    
    
    
    2003Tyrihans
    
    6407/1
    
    Statoil
    
    
    12.00
    
    
    
    19
    
    
    
    13
    
    
    
    36
    
    
    
    1.0
    
    
    
    2009Mikkel
    
    6407/5,6
    
    Statoil
    
    
    10.00
    
    
    
    16
    
    
    
    6
    
    
    
    52
    
    
    
    1.5
    
    
    
    2003Njord
    
    6407/7,10
    
    Hydro
    
    
    20.00
    
    
    
    16
    
    
    
    7
    
    
    
    50
    
    
    
    1.4
    
    
    
    1997Norne/Urd
    
    6608/10, 6508/1
    
    Statoil
    
    
    8.10 - 13.5
    
    
    
    14
    
    
    
    11
    
    
    
    18
    
    
    
    0.5
    
    
    
    1997Heimdal fields
    
    25/4, 25/5
    
    Hydro / Total
    
    
    10.00 - 28.85
    
    
    
    6
    
    
    
    2
    
    
    
    21
    
    
    
    0.6
    
    
    
    1985Tune
    
    30/8, 30/5, 30/6
    
    Hydro
    
    
    40.00
    
    
    
    6
    
    
    
    1
    
    
    
    27
    
    
    
    0.8
    
    
    
    2002Volve
    
    15/9
    
    Statoil
    
    
    9.40
    
    
    
    5
    
    
    
    5
    
    
    
    3
    
    
    
    0.1
    
    
    
    2007Ringhorne
øst
    
    25/8
    
    Exxon Mobil
    
    
    11.70
    
    
    
    2
    
    
    
    2
    
    
    
    1
    
    
    
    
    
    
    
    2006Brage
    
    31/4, 30/6, 31/7
    
    Hydro
    
    
    20.00
    
    
    
    1
    
    
    
    1
    
    
    
    0
    
    
    
    
    
    
    
    1993Total Norway
    
    
    
    
    
    
    
    
    
    
    1,854
    
    
    
    693
    
    
    
    6,571
    
    
    
    185.7Terra Nova
    
    Grand Banks, Canada
    
    Petro-Canada
    
    
    15.00
    
    
    
    34
    
    
    
    34
    
    
    
    0
    
    
    
    
    
    
    
    2002Dalia 3)
    
    Block 17, Angola
    
    Total
    
    
    10.00
    
    
    
    27
    
    
    
    27
    
    
    
    0
    
    
    
    
    
    
    
    2006Hibernia
    
    Grand Banks, Canada
    
    HMDC 2)
    
    
    5.00
    
    
    
    22
    
    
    
    22
    
    
    
    0
    
    
    
    
    
    
    
    1997Kharyaga 3)
    
    Timan Pechora, Russia
    
    Total
    
    
    40.00
    
    
    
    17
    
    
    
    17
    
    
    
    0
    
    
    
    
    
    
    
    1999Girassol/Jasmim 3)
    
    Block 17, Angola
    
    Total
    
    
    10.00
    
    
    
    12
    
    
    
    12
    
    
    
    0
    
    
    
    
    
    
    
    2001Mabruk 3)
    
    Sirte Basin, Libya
    
    Total
    
    
    25.00
    
    
    
    9
    
    
    
    9
    
    
    
    0
    
    
    
    
    
    
    
    1995Rosa 3)
    
    Block 17, Angola
    
    Total
    
    
    10.00
    
    
    
    9
    
    
    
    9
    
    
    
    0
    
    
    
    
    
    
    
    2007Murzuq 3)
    
    Sirte Basin, Libya
    
    Repsol
    
    
    8.00
    
    
    
    
    
    
    
    7
    
    
    
    0
    
    
    
    
    
    
    
    2003Gulf of Mexico 4)
    
    
    
    
    
    
    
    
    
    
    755
    
    
    
    23
    
    
    
    190
    
    
    
    5.4
    
    
    
    Total International
    
    
    
    
    
    
    
    
    
    
    192
    
    
    
    160
    
    
    
    190
    
    
    
    5.4Total
    
    
    
    
    
    
    
    
    
    
    2,046
    
    
    
    853
    
    
    
    6,761
    
    
    
    191.1
 1)
    
    Hydro is operator for the field development. Shell is operator for the field operation.2)
    
    HMDC: Hibernia Management Development Company.3)
    
    Fields with production sharing agreements (PSA).4)
    
    Includes the Lorien field and the fields acquired through the Spinnaker acquisition.




---



##### 



20
    
    (BLACK BOX)
    
    Business and Operating InformationBusiness Description
 Development
   
 Total
    
    
    InvestmentProduction
    
    estimated
    
    
    incurred to
    
    
    Hydro'sApproved for
    
    scheduled to
    
    investment 1)
    
    
    date 1)
    
    
    equityField
    
    Type of field
    
    Operator
    
    development
    
    commence
    
    (in NOK billion)
    
    
    (in NOK billion)
    
    
    shareNorwayOrmen Lange 2)
    
    Gas/Condensate
    
    Hydro
    
    April 2004
    
    October 2007
    
    
    52.7
    
    
    
    15.9
    
    
    
    18.0728
    %Vilje
    
    Oil
    
    Hydro
    
    March 2005
    
    February 2007
    
    
    2.3
    
    
    
    0.5
    
    
    
    28.8
    %Gimle
    
    Oil
    
    Statoil
    
    Pending approval
    
    Test production from February 2005
    
    
    0.6
    
    
    
    0.2
    
    
    PendingRing home
øst
    
    Oil
    
    ExxonMobil
    
    November 2005
    
    April 2006
    
    
    1.2
    
    
    
    0.1
    
    
    
    11.7
    %Tyrihans
    
    Oil/Gas
    
    Statoil
    
    February 2006
    
    July 2009
    
    
    14.5
    
    
    
    0.2
    
    
    
    12
    %Volve
    
    Oil
    
    Statoil
    
    April 2005
    
    April 2007
    
    
    2
    
    
    
    0.2
    
    
    
    10
    %InternationalEastern Gulf 3)
    
    Gas
    
    Dominion/ Anadarko/ Hydro
    
    November 2004
    
    February - May 2007
    
    
    4.3
    
    
    
    1.8
    
    
    
    18.3-50
    % 3)Lorien
    
    Oil
    
    Noble Energy
    
    July 2005
    
    April 2006
    
    
    1.4
    
    
    
    1.3
    
    
    
    30
    %Dalia
    
    Oil
    
    Total
    
    April 2003
    
    September 2006
    
    
    29.2
    
    
    
    14.7
    
    
    
    10
    %Rosa
    
    Oil
    
    Total
    
    August 2004
    
    April 2007
    
    
    14.7
    
    
    
    5.7
    
    
    
    10
    %
 1)
    
    Total estimated investment and Investment incurred to date amounts are as of 31 December
2005. These amounts represent the total estimated investment
based on the PDO or current cost estimate and total incurred investment for the applicable field,
respectively. All amounts are in nominal values (i.e.,
not discounted to present value). The exchange rate used for the international fields was US
dollar/NOK 6.7687 as of 30 December 2005.2)
    
    The total estimated investment for Ormen Lange excludes the cost of the Langeled gas export
pipeline.3)
    
    Includes the San Jacinto (Hydros share 26.67 percent), Spiderman (Hydros share 18.33 percent),
and Q fields (Hydros share 50 percent).
  Production
  
 Type of well
    
    
    
    Norway
    
    
    International
    
    
    Total 1)Crude oil
    
    Gross
    
    
    512
    
    
    
    175
    
    
    
    687Net
    
    
    72
    
    
    
    33
    
    
    
    105Natural gas
    
    Gross
    
    
    120
    
    
    
    65
    
    
    
    185Net
    
    
    15
    
    
    
    31
    
    
    
    47
 1)
    
    Includes 85 wells with multiple completions (i.e., more than one formation producing into
the same well bore). If one of the multiple completions in a well
is an oil completion, the well is classified as an oil well.




---



##### 



Business and Operating Information
    
    (BLACK BOX)
    
    
    21Business Description
  1)
 Hydros share of average daily
    
    
    Hydros share of average dailyproduction in 2005
    
    
    production in 2004Total in
    
    
    Oil in
    
    
    Gas in
    
    
    Total in
    
    
    Oil in
    
    
    Gas inthousands
    
    
    thousands
    
    
    millions of
    
    
    thousands
    
    
    thousands
    
    
    millions ofField
    
    Location
    
    of boe
    
    
    of boe 1)
    
    
    cubic feet
    
    
    of boe
    
    
    of boe 1)
    
    
    cubic feetNorwayOseberg fields 2)
    
    North Sea
    
    
    102.4
    
    
    
    80.7
    
    
    
    117.6
    
    
    
    115.7
    
    
    
    95.3
    
    
    
    104.3Troll
    
    North Sea
    
    
    71.5
    
    
    
    25.6
    
    
    
    264.8
    
    
    
    74.9
    
    
    
    32.1
    
    
    
    247.6Grane
    
    North Sea
    
    
    67.5
    
    
    
    67.5
    
    
    
    
    
    
    
    46.3
    
    
    
    46.3
    
    
    
    Snorre fields 3)
    
    North Sea
    
    
    48.5
    
    
    
    46.2
    
    
    
    12.6
    
    
    
    58.1
    
    
    
    56.2
    
    
    
    10.7Asgard
    
    Norwegian Sea
    
    
    35.9
    
    
    
    19.0
    
    
    
    94.9
    
    
    
    37.7
    
    
    
    21.3
    
    
    
    92.4Sleipner fields 4)
    
    North Sea
    
    
    35.3
    
    
    
    10.3
    
    
    
    136.6
    
    
    
    32.8
    
    
    
    10.4
    
    
    
    122.9Ekofisk fields 5)
    
    North Sea
    
    
    27.8
    
    
    
    23.5
    
    
    
    22.8
    
    
    
    28.5
    
    
    
    24.0
    
    
    
    23.4Gullfaks fields 6)
    
    North Sea
    
    
    27.0
    
    
    
    20.5
    
    
    
    37.0
    
    
    
    28.6
    
    
    
    23.0
    
    
    
    32.0Tune
    
    North Sea
    
    
    25.0
    
    
    
    3.5
    
    
    
    114.2
    
    
    
    33.4
    
    
    
    6.1
    
    
    
    144.8Kvitebjørn
    
    North Sea
    
    
    18.2
    
    
    
    7.3
    
    
    
    61.3
    
    
    
    2.3
    
    
    
    0.8
    
    
    
    8.5Norne/Urd 7)
    
    Norwegian Sea
    
    
    9.4
    
    
    
    8.1
    
    
    
    7.3
    
    
    
    11.3
    
    
    
    10.1
    
    
    
    7.2Fram
    
    North Sea
    
    
    7.8
    
    
    
    7.8
    
    
    
    
    
    
    
    12.3
    
    
    
    12.3
    
    
    
    Njord
    
    Norwegian Sea
    
    
    6.3
    
    
    
    6.3
    
    
    
    
    
    
    
    5.8
    
    
    
    5.8
    
    
    
    Mikkel
    
    Norwegian Sea
    
    
    5.9
    
    
    
    2.8
    
    
    
    17.4
    
    
    
    5.5
    
    
    
    2.6
    
    
    
    15.5Brage
    
    North Sea
    
    
    5.8
    
    
    
    5.4
    
    
    
    2.4
    
    
    
    6.1
    
    
    
    5.7
    
    
    
    2.1Visund
    
    North Sea
    
    
    5.4
    
    
    
    4.2
    
    
    
    6.7
    
    
    
    6.2
    
    
    
    6.2
    
    
    
    Heimdal fields 8)
    
    North Sea
    
    
    4.1
    
    
    
    1.1
    
    
    
    16.5
    
    
    
    3.8
    
    
    
    1.3
    
    
    
    13.3Other fields 9)
    
    
    
    
    
    
    2.4
    
    
    
    1.7
    
    
    
    3.6
    
    
    
    
    
    
    
    
    
    
    
    Frigg
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    4.8
    
    
    
    
    
    
    
    27.7Total Norway
    
    
    
    
    
    
    506.2
    
    
    
    341.7
    
    
    
    915.8
    
    
    
    514.1
    
    
    
    359.5
    
    
    
    852.4InternationalGirassol/Jasmim
    
    Angola
    
    
    20.0
    
    
    
    20.0
    
    
    
    
    
    
    
    21.7
    
    
    
    21.7
    
    
    
    Terra Nova
    
    Canada
    
    
    14.9
    
    
    
    14.9
    
    
    
    
    
    
    
    16.5
    
    
    
    16.5
    
    
    
    Hibernia
    
    Canada
    
    
    9.9
    
    
    
    9.9
    
    
    
    
    
    
    
    10.2
    
    
    
    10.2
    
    
    
    Kharyaga
    
    Russia
    
    
    6.4
    
    
    
    6.4
    
    
    
    
    
    
    
    6.7
    
    
    
    6.7
    
    
    
    Murzuq
    
    Libya
    
    
    3.0
    
    
    
    3.0
    
    
    
    
    
    
    
    0.8
    
    
    
    0.8
    
    
    
    Mabruk
    
    Libya
    
    
    2.1
    
    
    
    2.1
    
    
    
    
    
    
    
    2.0
    
    
    
    2.0
    
    
    
    Gulf of Mexico 10)
    
    United States
    
    
    0.8
    
    
    
    0.2
    
    
    
    3.0
    
    
    
    
    
    
    
    
    
    
    
    Total International
    
    
    
    
    
    
    57.1
    
    
    
    56.6
    
    
    
    3.0
    
    
    
    57.9
    
    
    
    57.9
    
    
    
    Total
    
    
    
    
    
    
    563.3
    
    
    
    398.2
    
    
    
    918.8
    
    
    
    572.0
    
    
    
    417.4
    
    
    
    852.4
 1)
    
    Includes crude oil and NGL/condensate.2)
    
    Includes Oseberg, Oseberg Vest, Oseberg Sør and Oseberg Øst fields.3)
    
    Includes Snorre, Tordis, Vigdis, Statfjord Øst and Sygna fields.4)
    
    Includes Sleipner Vest, Sleipner Øst, Gungne and Sigyn fields.5)
    
    Includes Ekofisk, Eldfisk, Embla and Tor fields.6)
    
    Includes Gullfaks and Gullfaks Sør fields.7)
    
    Includes Urd from 2005.8)
    
    Includes Heimdal, Vale and Skirne fields.9)
    
    Includes Kristin and Gimle fields.10)
    
    Includes fields acquired through the Spinnaker acquisition beginning 14 December 2005.




---



##### 



22
    
    (BLACK BOX)
    
    Business and Operating InformationBusiness Description
  
 Hydros shareTotal
    
    
    Oil/NGL
    
    
    Gas
    
    
    GasHydros
    
    
    mill.
    
    
    mill.
    
    
    bill.
    
    
    bill.
    
    
    Remaining
    
    
    LicenceField
    
    Operator
    
    %-interest
    
    
    boe
    
    
    boe
    
    
    scf
    
    
    Sm3
    
    
    prod. period
    
    
    PeriodOseberg fields
    
    Hydro
    
    
    34.00
    
    
    
    37
    
    
    
    29
    
    
    
    43
    
    
    
    1.2
    
    
    
    2013  2024
    
    
    
    2031Troll
    
    Hydro / Statoil
    
    
    9.78
    
    
    
    26
    
    
    
    9
    
    
    
    97
    
    
    
    2.7
    
    
    
    2030
    
    
    
    2030Grane
    
    Hydro
    
    
    38.00
    
    
    
    25
    
    
    
    25
    
    
    
    
    
    
    
    
    
    
    
    2023
    
    
    
    2030Snorre fields
    
    Statoil
    
    
    5.98  17.65
    
    
    
    18
    
    
    
    17
    
    
    
    5
    
    
    
    0.1
    
    
    
    2015  2023
    
    
    
    2024Åsgard
    
    Statoil
    
    
    9.60
    
    
    
    13
    
    
    
    7
    
    
    
    35
    
    
    
    1.0
    
    
    
    2026
    
    
    
    2027Sleipner fields
    
    Statoil
    
    
    8.85  10.00
    
    
    
    13
    
    
    
    4
    
    
    
    50
    
    
    
    1.4
    
    
    
    2010  2014
    
    
    
    2014  2018Ekofisk fields
    
    ConocoPhillips
    
    
    5.81  6.65
    
    
    
    10
    
    
    
    9
    
    
    
    8
    
    
    
    0.2
    
    
    
    2015  2028
    
    
    
    2028Gullfaks fields
    
    Statoil
    
    
    9.00
    
    
    
    10
    
    
    
    8
    
    
    
    14
    
    
    
    0.4
    
    
    
    2016
    
    
    
    2016Tune
    
    Hydro
    
    
    40.00
    
    
    
    9
    
    
    
    1
    
    
    
    42
    
    
    
    1.2
    
    
    
    2008
    
    
    
    2032KvitebjØrn
    
    Statoil
    
    
    15.00
    
    
    
    7
    
    
    
    3
    
    
    
    22
    
    
    
    0.6
    
    
    
    2014
    
    
    
    2031Norne/Urd
    
    Statoil
    
    
    8.10  13.5
    
    
    
    3
    
    
    
    3
    
    
    
    3
    
    
    
    0.1
    
    
    
    2016
    
    
    
    2026Fram
    
    Hydro
    
    
    25.00
    
    
    
    3
    
    
    
    3
    
    
    
    
    
    
    
    
    
    
    
    2016
    
    
    
    2024Njord
    
    Hydro
    
    
    20.00
    
    
    
    2
    
    
    
    2
    
    
    
    
    
    
    
    
    
    
    
    2013
    
    
    
    2021  2023Mikkel
    
    Statoil
    
    
    10.00
    
    
    
    2
    
    
    
    1
    
    
    
    6
    
    
    
    0.2
    
    
    
    2021
    
    
    
    2020  2022Brage
    
    Hydro
    
    
    20.00
    
    
    
    2
    
    
    
    2
    
    
    
    1
    
    
    
    
    
    
    
    2008
    
    
    
    2015  2017Visund
    
    Statoil
    
    
    20.30
    
    
    
    2
    
    
    
    2
    
    
    
    2
    
    
    
    0.1
    
    
    
    2023
    
    
    
    2023Heimdal fields
    
    Hydro/Total
    
    
    10.00  28.85
    
    
    
    2
    
    
    
    
    
    
    
    6
    
    
    
    0.2
    
    
    
    2006  2011
    
    
    
    2021  2025Other fields(Kristin and Gimle)
    
    Statoil
    
    
    14.00  19.00
    
    
    
    1
    
    
    
    1
    
    
    
    1
    
    
    
    
    
    
    
    2024
    
    
    
    2027  2033Total Norway
    
    
    
    
    
    
    
    
    185
    
    
    
    125
    
    
    
    334
    
    
    
    9.4Girassol/Jasmim
    
    Total
    
    
    10.00
    
    
    
    7
    
    
    
    7
    
    
    
    
    
    
    
    
    
    
    
    2020  2022
    
    
    
    2022Terra Nova
    
    PetroCanada
    
    
    15.00
    
    
    
    5
    
    
    
    5
    
    
    
    
    
    
    
    
    
    
    
    2016
    
    
    
    2093Hibernia
    
    HMDC 1)
    
    
    5.00
    
    
    
    4
    
    
    
    4
    
    
    
    
    
    
    
    
    
    
    
    2030
    
    
    
    2085Kharyaga
    
    Total
    
    
    40.00
    
    
    
    2
    
    
    
    2
    
    
    
    
    
    
    
    
    
    
    
    2030
    
    
    
    2031Murzuq
    
    Repsol
    
    
    8.00
    
    
    
    1
    
    
    
    1
    
    
    
    
    
    
    
    
    
    
    
    2023
    
    
    
    2028Mabruk
    
    Total
    
    
    25.00
    
    
    
    1
    
    
    
    1
    
    
    
    
    
    
    
    
    
    
    
    2028
    
    
    
    2028Gulf of Mexico 2)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1
    
    
    
    Total International
    
    
    
    
    
    
    
    
    21
    
    
    
    21
    
    
    
    1
    
    
    
    Total
    
    
    
    
    
    
    
    
    206
    
    
    
    146
    
    
    
    335
    
    
    
    9.4
 1)
    
    
    HMDC: Hibernia Management Development Company.2)
    
    
    Includes fields acquired through the Spinnaker acquisition beginning 14 December 2005.




---



##### 



Business and Operating Information
    
    (BLACK BOX)
    
    
    23Business Description
 
 
 Field descriptions
 NCS  fields under development
 Ormen Lange
 Vilje
 Gimle
 Ringhorne Øst
 Tyrihans
 Volve
 NCS  operating fields
  Oseberg Area Unit
 Oseberg Vestflanken
 Oseberg Øst




---



##### 



24
    
    (BLACK BOX)
    
    Business and Operating InformationBusiness Description
  Oseberg
Delta
 Tune Field
 Troll Field
 Fram Field
 Grane Field
 Ekofisk Fields
 Gullfaks Fields
 Åsgard Field
 Sleipner Fields
 Kvitebjørn Field
 Snorre Fields
 Visund Field
 Njord Field
 Norne Field
 Kristin Field
 International  fields under development
 Dalia
 Rosa
 Lorien
 Eastern Gulf




---



##### 



Business and Operating Information
    
    (BLACK BOX)
    
    
    25Business Description
 
 
 International
 operating fields
 Angola
 Canada
 Libya
 Russia
 Gulf of Mexico




---



##### 



26
    
    (BLACK BOX)
    
    Business and Operating
InformationBusiness Description
 Transportation of oil and gas
 Norway
   
 Length
    
    
    Hydros percentageEnd Point
    
    (km)
    
    
    interestGassled (gas)
    
    From the NCS to Germany, Belgium, France and the UK
    
    
    > 6,600
    
    
    
    11.186 1

)Langeled 2)
    
    Nyhamna - Sleipner (Norway) - Easington (UK)
    
    
    1,170
    
    
    
    17.6102Tampen Link 3)
    
    Statfjord B - St. Fergus via FLAGS (UK)
    
    
    23
    
    
    
    10.5Norpipe Oil A/S (oil)
    
    Ekofisk - Teesside (UK)
    
    
    354
    
    
    
    3.50Oseberg Transport System (OTS) (oil)
    
    Oseberg - Sture (Norway)
    
    
    115
    
    
    
    22.23Frostpipe (oil)
    
    Frigg - Oseberg (Norway)
    
    
    82
    
    
    
    13.75Sleipner
Øst NGL pipeline (NGL)
    
    Sleipner - Kårstø (Norway)
    
    
    245
    
    
    
    10.00Troll Oil 1
& 2 (oil)
    
    Troll - Mongstad (Norway)
    
    
    165
    
    
    
    9.73Grane Oil Pipeline (oil)
    
    Grane - Sture (Norway)
    
    
    212
    
    
    
    24.40Grane Gas Pipeline (gas)
    
    Grane - Heimdal (Norway)
    
    
    50
    
    
    
    38.00Norne Gas Transport (gas)
    
    Norne - Asgard (Norway)
    
    
    130
    
    
    
    8.10Vestprosess (NGL)
    
    Kollsnes/Sture - Mongstad (Norway)
    
    
    56
    
    
    
    17.00
 1)
    
    For further information please see below.2)
    
    The first part of Langeled is expected to be operational in October 2006.3)
    
    Tampen Link is scheduled to be ready for operation in October 2007, and will be tied into
Gassled.
 Gassled,
 Langeled 3
 Sture terminal
 International




---



##### 



Business and Operating Information
    
    (BLACK BOX)
    
    
    27Business Description
 WELL POSITIONED IN GAS INFRASTRUCTURE

POWER PLANTS Energy and Oil Marketing
 Introduction




---



##### 



28
    
    (BLACK BOX)
    
    Business and Operating InformationBusiness Description
 EUROPEAN GAS SUPPLY AND DEMAND

WORLD OIL SUPPLY Industry overview
 Liberalization of European electricity and gas markets
   Growth in European natural gas demand
   Continued focus on renewable energy and hydrogen
 2




---



##### 



Business
and Operating Information
    
    (BLACK BOX)
    
    
    29Business Description
 INCREASE IN HYDRO GAS PRODUCTION

GAS  AN INCREASINGLY VALUABLE COMMODITY Strategy
  
    
    Enhancing the value of Hydros crude oil portfolio.Hydro aims at
maximising the prices for its crude oil portfolio by utilizing its marketing
competencies on core crude oil grades. Hydros marketing competency
will continue to be aligned with the upstream activites, particularly
through a further development of international crude oil marketing
as a result of Hydros growth in international oil production.
    
    Enhancing the value of Hydros natural gas portfolio.Location,
transportation infrastructure and substantial reserves make
Norwegian natural gas competitive in the European region. Hydro is
increasingly becoming a key gas supplier for Europe. Hydro has an
interest in all the major natural gas fields on the NCS and in Gassled.
Hydro also holds capacity rights in Gassled, enabling access to five
landing points for natural gas in Europe. This offers a flexible and
favorable position with respect to capturing value in the market.Hydros strategy is to combine its role as a natural gas producer with
that of a wholesaler and trader to increase its market share in the
developing liberalized European natural gas market. Hydro aims to
develop a strong and balanced customer portfolio, including a mix of
long-term contracts with wholesalers, end-user sales to the power
and industrial segments, and spot sales, in order to optimize its natural
gas portfolio.
    
    Optimizing Hydros power activities.Since the liberalization of the
Norwegian electricity market in 1991, Hydro has developed its commercial
power activities, along with analysis, portfolio and risk management
systems. Hydro will continue to focus on optimising its
Nordic electricity portfolio and sourcing of power to Hydros larger
consuming plants in the Nordic area and continental Europe.
    
    Pursuing hydrogen and renewable energy opportunities.Hydro
plans to continue its focus on new sources of energy, such as wind-power
and hydrogen. Hydro views wind power generation as one of
the most important parts of the new energy market. Potential
Norwegian and European wind power projects are continuously evaluated
in Norway pending the framework for production and sale of
renewable energy. Hydro is presently involved in several hydrogen
projects, including filling stations for hydrogen-fueled vehicles in
Iceland and Germany.
    
    Enhancing the value of Hydros oil marketing activities.Hydros
strategy is to maximize its return on investments already made in its
gasoline station chains by focusing on the most profitable stations
and closing smaller and unprofitable outlets, building strong brand
recognition and expanding on profitable segments of the market.




---



##### 



30
    
    (BLACK BOX)
    
    Business and Operating InformationBusiness Description
 Operational information
 Oil trading
   Sales (thousands of tonnes)
    
    2005
    
    
    2004
    
    
    2003Crude oil/NGL
    
    
    17,877
    
    
    
    20,096
    
    
    
    18,560Oil products
    
    
    
    
    
    
    
    
    
    
    2,808
 Gas activities
  (in bcm)
    
    2005
    
    
    2004
    
    
    2003Equity natural gas production
    
    
    9.4
    
    
    
    8.8
    
    
    
    7.8Sales of non-equity gas
    
    
    4.1
    
    
    
    3.9
    
    
    
    3.8
      Power activities
 1)
   (in TWh)
    
    2005
    
    
    2004
    
    
    2003Power production
    
    
    10.8
    
    
    
    8.1
    
    
    
    7.5Acquired under long-term contracts
for Hydros industrial use
    
    
    7.0
    
    
    
    7.0
    
    
    
    7.0
     Oil Marketing activities
  1)
    
    The legislation regarding reversion is under revision. The proposed change would have
moderately positive effects for Hydro.




---



##### 



Business and Operating Information
    
    (BLACK BOX)
    
    
    31Business Description
     Volumes (thousands of m3) 1)
    
    2005
    
    
    2004
    
    
    2003Gasoline
    
    
    1,471
    
    
    
    1,487
    
    
    
    1,435Gasoil
    
    
    2,541
    
    
    
    2,266
    
    
    
    2,109
 1)
    
    Volumes reflected in the table include 100 percent of Hydro Texacos
volumes.
  Market share (%) (2005) 1)
    
    Sweden 2)
    
    
    Norway 2)
    
    
    Denmark 2)Gasoline
    
    
    9.7
    
    
    
    21.3
    
    
    
    17.0Gasoil
    
    
    14.7
    
    
    
    16.8
    
    
    
    18.2
 1)
    
    Includes 100 percent of Hydro Texaco.2)
    
    As of December 2005.




---



##### 



32
    
    (BLACK BOX)
    
    Business and Operating InformationBusiness Description
 Aluminium
 
 
 Introduction




---



##### 



Business and Operating Information
    
    (BLACK BOX)
    
    
    33Business Description
 ALUMINIUM CONSUMPTION PER SEGMENT

ALUMINIUM CONSUMPTION PER REGION

INCREASED COST CHALLENGE Industry overview
    Industry structure
    Growth in aluminium consumption




---



##### 



34
    
    (BLACK BOX)
    
    Business and Operating InformationBusiness Description
 ALUMINIUM INVENTORIES AND PRICES

WORLD SMELTER AVERAGE POWER PRICES   Aluminium price developments
    Developments in aluminium inventories




---



##### 



Business and Operating Information
    
    (BLACK BOX)
    
    
    35Business Description
 SMELTER SIZE

SMELTER GEOGRAPHY

ALUMINA EQUITY COVERAGE Strategy
 Repositioning Hydros aluminium business
 
    
    Enhance upstream activities. Hydro is prioritizing future investments
within its aluminium business toward upstream activities to reposition
these activities, replace closed down capacity with competitive new
capacity and to meet the expected growth in demand for primary
metal. This will increase the share of Hydros production being produced
in larger and more efficient smelters. Hydro expects to increase
its share of production at smelters having a minimum capacity of
300,000 mt per year from none in 2000 to 29 percent in 2005 and to
43 percent in 2010. The expansions of Hydros fully owned Sunndal
metal plant and partly owned Alouette plant have contributed to an
improved relative cost position. The planned smelter project in Qatar
is expected to add substantial cost efficient production capacity. The
smelter has an initial design capacity of 585,000 mt per year.
Unprofitable high cost capacity in Stade in Germany and environmentally
challenging capacity based on the Søderberg technology in
Norway is being or will be closed down. The Hamburg smelter (33
percent Hydro owned) in Germany was closed by the end of 2005.
    
    Improve relative cost position of alumina. Through the second
expansion of the Alunorte alumina plant in Brazil, Hydro has improved
its relative cash-cost position of its equity alumina production. A third
planned expansion at Alunorte is expected to deliver lower average
costs and contribute strongly toward Hydros total alumina needs.
    
    Improve performance downstream. Hydro plans further measures
downstream to improve the financial performance and cash generation
of its rolled products, extrusion and automotive operations including
turnaround, divestment or closure of underperforming units. A
new business area Aluminium Products was created in January 2006
to focus on implementation of these measures.
    
    Strengthen mid-streams market positions.Various measures have
been taken to establish strong metal products positions with customers
downstream (mainly extrusions plants, foundries and rolling
mills), including recycling of customers scrap and commercial as well
as technical support. This strategy enables Hydro to better utilize its
casthouse capacity and create market opportunities for new smelter
capacities.




---



##### 



Business and Operating Information
  UNIQUE DIFFERENTIATED PORTFOLIO

GERMAN ELECTRICITY PRICES Operational information  Metals
 Primary Aluminium Production
  
  
 Aluminium production (mt)
    
    Country
    
    
    2005
    
    
    2004
    
    
    2003Primary AluminiumKarmøy
    
    Norway
    
    
    277,000
    
    
    
    278,000
    
    
    
    271,000Årdal
    
    Norway
    
    
    233,000
    
    
    
    222,000
    
    
    
    215,000Sunndal
    
    Norway
    
    
    362,000
    
    
    
    306,000
    
    
    
    210,000Høyanger
    
    Norway
    
    
    78,000
    
    
    
    76,000
    
    
    
    74,000Søral (Hydros 49.9% share)
    
    Norway
    
    
    81 ,000
    
    
    
    82,000
    
    
    
    79,000Slovalco 1)
    
    Slovakia
    
    
    159,000
    
    
    
    157,000
    
    
    
    27,000Neuss
    
    Germany
    
    
    225,000
    
    
    
    223,000
    
    
    
    221,000Stade
    
    Germany
    
    
    60,000
    
    
    
    69,000
    
    
    
    69,000HAW (33.3% share) 2)
    
    Germany
    
    
    40,000
    
    
    
    44,000
    
    
    
    43,000Kurri Kurri
    
    Australia
    
    
    152,000
    
    
    
    155,000
    
    
    
    156,000Tomago (12.4% share)
    
    Australia
    
    
    63,000
    
    
    
    60,000
    
    
    
    59,000Alouette (20% share)
    
    Canada
    
    
    96,000
    
    
    
    48,000
    
    
    
    49,000Total primary aluminium production
    
    
    
    
    
    
    1,826,000
    
    
    
    1,720,000
    
    
    
    1,473,000Average realized aluminium price 3)
    
    
    
    
    
    
    1,844
    
    
    
    1,649
    
    
    
    1,404Average market price primary aluminium
(U.S.$/tonne per LME 3-month price)
    
    
    
    
    
    
    1,900
    
    
    
    1,721
    
    
    
    1,428
 1)
    
    The annual production capacity of the Slovalco smelter has been expanded by approximately
34,000 mt from 2003. Hydros share of the smelter is 20
percent, however, as of 1 January 2004, Slovalco has been fully consolidated in Hydro both in
terms of financial results and volumes due to change in accounting standards.2)
    
    Shut down of production was completed by the end of 2005. Metal in pots after stopping the plant
is not included.3)
    
    On LME basis net of product premiums and excluding hedges.




---



##### 



Business and Operating Information
   Raw materials
 alumina
        Cast house products and remelt activities
    Sales and distribution; trading activities




---



##### 



Business and Operating Information
  High purity aluminium
  Operational information  Rolled products
        UNIT
    
    2005 EXTERNAL SALES VOLUMES (in mt)Lithography
    
    
    161.8Foil
    
    
    155.3Strip
    
    
    636.1Total
    
    
    953.2
     
  
 Ownership
    
    
    2005 Sales Volume 1)Site
    
    Percentage
    
    
    (in thousands of mt)Grevenbroich, Germany
    
    
    100
    
    
    
    539.5Hamburg, Germany
    
    
    100
    
    
    
    142.4Slim, Italy
    
    
    100
    
    
    
    77.9INASA Spain
    
    
    100
    
    
    
    24.6AISB, Malaysia
    
    
    81
    
    
    
    21.6Karmøy,Norway
    
    
    100
    
    
    
    63.0Holmestrand Norway
    
    
    100
    
    
    
    83.2Total, excluding internal sales
    
    
    
    
    
    
    953.2AluNorf, Germany 1)
    
    
    50
    
    
    
    642.8
 1)
    
    Volumes exclude inter-company shipments, except volume cited for AluNorf, which is 100 percent inter-company.




---



##### 



Business and Operating Information
   Operational information  Extrusion and Automotive
 Extrusion
    Automotive




---



##### 



Business and Operating Information
   Hydro Polymers
   Raw materials and production
      Sales and distribution
  
  
 Base Products
    
    2005
    
    
    2004
    
    
    2003
    
    
    2002VCM
    
    
    566,000
    
    
    
    541,000
    
    
    
    575,000
    
    
    
    540,000Caustic Soda
    
    
    306,000
    
    
    
    260,000
    
    
    
    281 ,000
    
    
    
    262,000PolymersS-PVC
    
    
    484,000
    
    
    
    496,000
    
    
    
    507,000
    
    
    
    458,000P-PVC
    
    
    85,000
    
    
    
    82,000
    
    
    
    81 ,000
    
    
    
    70,000Total Polymers
    
    
    569,000
    
    
    
    578,000
    
    
    
    588,000
    
    
    
    528,000PVC Compounds
    
    
    120,000
    
    
    
    132,000
    
    
    
    129,000
    
    
    
    128,000
 
  
 2005
    
    
    2004
    
    
    2003
    
    
    2002Ethylene  /tonne delivered
    
    
    732
    
    
    
    629
    
    
    
    522
    
    
    
    518VCM  Spot export fob US$/tonne
    
    
    748
    
    
    
    722
    
    
    
    452
    
    
    
    451S-PVC  /tonne delivered
    
    
    847
    
    
    
    853
    
    
    
    683
    
    
    
    714




---



##### 



Business and Operating Information
  Other activities
     Industriforsikring




---



##### 



Business and Operating
Information
   
  
 Year ended 31 DecemberAmounts in NOK million (except per share data)
    
    2005
    
    
    2004
    
    
    2003
    
    
    2002
    
    
    2001Operating revenues 1)2)
    
    
    174,201
    
    
    
    153,891
    
    
    
    131,778
    
    
    
    132,477
    
    
    
    116,147Operating costs and expenses 2)
    
    
    127,768
    
    
    
    122,044
    
    
    
    110,153
    
    
    
    114,810
    
    
    
    97,176Operating income
    
    
    46,432
    
    
    
    31,847
    
    
    
    21,625
    
    
    
    17,667
    
    
    
    18,971Equity in net income of non-consolidated investees
    
    
    619
    
    
    
    629
    
    
    
    620
    
    
    
    (24
    )
    
    
    236Financial income (expense), net
    
    
    (1,890
    )
    
    
    137
    
    
    
    155
    
    
    
    1,806
    
    
    
    (1,091
    )Other income (expense), net
    
    
    990
    
    
    
    169
    
    
    
    (1,253
    )
    
    
    77
    
    
    
    631Income from continuing operations before taxes and minority
interest
    
    
    46,152
    
    
    
    32,781
    
    
    
    21,146
    
    
    
    19,526
    
    
    
    18,747Income tax expense
    
    
    (30,317
    )
    
    
    (21,197
    )
    
    
    (12,923
    )
    
    
    (12,452
    )
    
    
    (12,945
    )Minority interest
    
    
    (118
    )
    
    
    (106
    )
    
    
    151
    
    
    
    26
    
    
    
    92Income from continuing operations
    
    
    15,716
    
    
    
    11,477
    
    
    
    8,375
    
    
    
    7,100
    
    
    
    5,894Income from discontinued operations 3)
    
    
    
    
    
    
    1,083
    
    
    
    2,312
    
    
    
    1,665
    
    
    
    1,998Income before cumulative effect of change in accounting principles
    
    
    15,716
    
    
    
    12,560
    
    
    
    10,687
    
    
    
    8,765
    
    
    
    7,892Cumulative effect of change in accounting principles
    
    
    (78
    )
    
    
    
    
    
    
    281
    
    
    
    
    
    
    
    Net income
    
    
    15,638
    
    
    
    12,560
    
    
    
    10,968
    
    
    
    8,765
    
    
    
    7,892Earnings (loss) per share:Basic and diluted earnings per share from continuing operations
    
    
    62.70
    
    
    
    45.10
    
    
    
    32.50
    
    
    
    27.50
    
    
    
    22.80Basic and diluted earnings per share
    
    
    62.40
    
    
    
    49.40
    
    
    
    42.60
    
    
    
    34.00
    
    
    
    30.50Average number of outstanding ordinary shares
    
    
    250,807,304
    
    
    
    254,411,433
    
    
    
    257,528,511
    
    
    
    257,799,411
    
    
    
    258,434,202Cash dividends paid per share during period:NOK per share 4)
    
    
    20.00
    
    
    
    11.00
    
    
    
    10.50
    
    
    
    10.00
    
    
    
    9.50Converted into USD per share 4)
    
    
    3.11
    
    
    
    1.64
    
    
    
    1.56
    
    
    
    1.24
    
    
    
    1.05
 1)
    
    Effective 1 January 2005, buy/sell arrangements have been presented net in the income
statement. These arrangements were previously presented on a
gross basis, and have been reclassified for comparison purposes.2)
    
    Prior years amounts have been reclassified to reflect the implementation of EITF 02-3 and
EITF 03-11, which require realized and unrealized gains and
losses on all derivative instruments be presented on a net basis in the income statement.
Previously, gains and losses on energy derivative contracts were
reported according to EITF 98  10 and were presented on a gross basis in the income statement.3)
    
    The Companys Agri business was transferred to Yara International ASA on 24 March 2004 in a
demerger transaction. Results of the transferred operations relating to periods prior to demerger are reported under Income from discontinued
operations.4)
    
    Cash dividends paid during the period represent payments of dividends with respect to the
previous year. Amounts paid in Norwegian kroner have been
converted at prevailing exchange rates on the date of such payments.




---



##### 



Business
and Operating Information
  OPERATING REVENUES

OPERATING INCOME

INCOME FROM CONTINUING OPERATIONS  Overview
   Oil & Energy




---



##### 



Business and Operating
Information
           Summary of operating results
  
  
 Amounts in NOK million
    
    2005
    
    
    2004
    
    
    2003Oil & Energy
    
    
    43,451
    
    
    
    31,144
    
    
    
    21,143Aluminium
    
    
    2,511
    
    
    
    1,805
    
    
    
    2,456Other activities
    
    
    (2
    )
    
    
    312
    
    
    
    (404
    )Corporate and eliminations
    
    
    472
    
    
    
    (1,414
    )
    
    
    (1,569
    )Total
    
    
    46,432
    
    
    
    31,847
    
    
    
    21,625
  Amounts in NOK millionOperating income 2005
    
    
    46,432Operating income 2004
    
    
    31,847Change
    
    
    14,585Prices and currency, E & P1)2)
    
    
    15,555Margin including currency effects
    
    
    250Volume
    
    
    85Fixed costs
    
    
    1,380Depreciation
    
    
    10Production and exploration costs,E & P 2)
    
    
    (1,430
    )Write-downs, other
    
    
    800Trading and unrealized LME effects, Aluminium
    
    
    (1,025
    )Other
    
    
    (1,040
    )Total change in operating income
    
    
    14,585
 1)
    
    Including positive variances for elimination of unrealized gain/loss on
electricity contracts (NOK 1,626 million for the year) and negative
variance for elimination of the gain/loss on gas contracts (NOK 833 million
for the year).2)
    
    Exploration and Production.




---



##### 



Business
and Operating Information
 Oil & Energy
  1)
     Aluminium
    Outlook
         1)
    
    Average oil price realized by Oil & Energys Exploration and Production sub-segment.




---



##### 



Business and Operating
Information
  2)
 Earnings from non-consolidated investees
  Financial income (expense) net
 Amounts in NOK million
    
    2005
    
    
    2004
    
    
    2003Interest income
    
    
    897
    
    
    
    973
    
    
    
    1,005Dividends received/net gain (loss)
on securities
    
    
    338
    
    
    
    190
    
    
    
    285Interest income and other financial
income
    
    
    1,235
    
    
    
    1,163
    
    
    
    1,290Interest expense
    
    
    (1,745
    )
    
    
    (2,077
    )
    
    
    (2,782
    )Capitalized interest
    
    
    867
    
    
    
    664
    
    
    
    715Net foreign exchange gain (loss)
    
    
    (2,159
    )
    
    
    1,350
    
    
    
    1,035Other
    
    
    (89
    )
    
    
    (964
    )
    
    
    (104
    )Interest expense and foreign
exchange gain/loss)
    
    
    (3,125
    )
    
    
    (1,027
    )
    
    
    (1,136
    )Net financial income (expense)
    
    
    (1,890
    )
    
    
    137
    
    
    
    154
   Other income and expense net
   Income tax expense
   2)
    
    Hydro is engaged in substantial trading and commercial activities in the physical
markets and also uses financial instruments such as forwards, futures and options both on and
off exchanges in order to manage and hedge unfavorable fluctuations in prices and production
volumes. Certain contracts are marked-to-market value in the balance sheet with unrealized
gains and losses reflected in operating results for the period or deferred if certain hedge
accounting criteria are met. Offsetting gains and losses on contracts within Hydros total
portfolio that are not marked-to-market value are recognized when realized (i.e., when the
contracts are closed). This can result in significant effects on reported results, in
particular, during periods of substantial volatility in the markets.




---



##### 



Business and Operating Information (BLACK BOX) 47
   Discontinued operations
  Return on average Capital Employed (RoaCE 3) )
 4)
  Adjusted EBITDA 5)
   
  
 SelectedAmounts in
    
    Operating
    
    
    Non-cons.
    
    
    Interest
    
    
    financial
    
    
    Other
    
    
    Adjusted
    
    
    Depr.
    
    
    AdjustedNOK million
    
    income (loss)
    
    
    Investees
    
    
    Income
    
    
    income
    
    
    income
    
    
    EBIT
    
    
    and amort.
    
    
    EBITDAExploration and Production
    
    
    40,594
    
    
    
    6
    
    
    
    13
    
    
    
    26
    
    
    
    
    
    
    
    40,640
    
    
    
    9,962
    
    
    
    50,601Energy and Oil Marketing
    
    
    3,575
    
    
    
    108
    
    
    
    36
    
    
    
    
    
    
    
    65
    
    
    
    3,783
    
    
    
    673
    
    
    
    4,456Eliminations
    
    
    (719
    )
    
    
    (2
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (720
    )
    
    
    2
    
    
    
    (719
    )Hydro Oil & Energy
    
    
    43,451
    
    
    
    112
    
    
    
    49
    
    
    
    26
    
    
    
    65
    
    
    
    43,703
    
    
    
    10,636
    
    
    
    54,339Metals
    
    
    3,898
    
    
    
    272
    
    
    
    6
    
    
    
    122
    
    
    
    
    
    
    
    4,298
    
    
    
    1,727
    
    
    
    6,025Rolled Products
    
    
    754
    
    
    
    (27
    )
    
    
    5
    
    
    
    4
    
    
    
    
    
    
    
    736
    
    
    
    829
    
    
    
    1,565Extrusion and Automotive
    
    
    (1,100
    )
    
    
    100
    
    
    
    18
    
    
    
    
    
    
    
    
    
    
    
    (982
    )
    
    
    2,477
    
    
    
    1,495Other and eliminations
    
    
    (1,041
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (1,041
    )
    
    
    
    
    
    
    (1,041
    )Hydro Aluminium
    
    
    2,511
    
    
    
    345
    
    
    
    29
    
    
    
    126
    
    
    
    
    
    
    
    3,011
    
    
    
    5,033
    
    
    
    8,044Other activities
    
    
    (2
    )
    
    
    164
    
    
    
    100
    
    
    
    167
    
    
    
    925
    
    
    
    1,355
    
    
    
    525
    
    
    
    1,880Corporate and eliminations
    
    
    472
    
    
    
    (1
    )
    
    
    719
    
    
    
    19
    
    
    
    
    
    
    
    1,209
    
    
    
    22
    
    
    
    1,231Total
    
    
    46,432
    
    
    
    619
    
    
    
    897
    
    
    
    338
    
    
    
    990
    
    
    
    49,277
    
    
    
    16,216
    
    
    
    65,493
 3)
    
    RoaCE is defined as Earnings after tax divided by average Capital Employed. See also
discussion pertaining to non-GAAP financial measures included
later in this report, including the long term price assumptions used to calculate normalized
RoaCE.4)
    
    2005: The acquisition of Spinnaker in December and the impairment loss within Hydros
aluminium business. 2004: Impairment losses within Hydros
aluminium business, together with the effect of a change in Norwegian tax legislation.5)
    
    See discussion pertaining to Segment Measures included in note 5  Operating and geographic
segment information  to Hydros consolidated financial
statements.




---



##### 



OIL AND GAS PRODUCTION

OIL PRICE

OPERATING INCOME OIL & ENERGY Oil & Energy
 Amounts in NOK million
    
    2005
    
    
    2004
    
    
    2003Operating Revenues
    
    
    91,490
    
    
    
    71,269
    
    
    
    58,805Operating Costs
    
    
    48,039
    
    
    
    40,125
    
    
    
    37,662Operating Income
    
    
    43,451
    
    
    
    31,144
    
    
    
    21,143Adjusted EBITDA
    
    
    54,339
    
    
    
    41,777
    
    
    
    31,826Capital Employed
    
    
    56,353
    
    
    
    36,511
    
    
    
    42,329Adjusted RoaCE 1)
    
    
    32.7
    %
    
    
    23.4
    %
    
    
    16.2
    %Number of employees
    
    
    3,715
    
    
    
    3,527
    
    
    
    3,465
 2005
    
    
    2004
    
    
    2003Oil and gas production (thousands boed)
    
    
    563
    
    
    
    572
    
    
    
    530Oil price (USD/bbl)
    
    
    53.10
    
    
    
    37.30
    
    
    
    28.70Oil price (NOK/bbl)
    
    
    342.20
    
    
    
    251.30
    
    
    
    202.90Average exchange rate USD/NOK
    
    
    6.44
    
    
    
    6.74
    
    
    
    7.07Gas price (NOK/Sm3)
    
    
    1.52
    
    
    
    1.09
    
    
    
    1.03Exploration expense (NOK million)
    
    
    1,839
    
    
    
    1,264
    
    
    
    1,577
 1)
    
    Actual 2005 RoaCE adjusted for the effects of the Spinnaker acquisition.
 Operating results
   Market conditions




---



##### 



Business
and Operating Information
  Production and reserves
   3 3
   6)
 Key development activities
      
  
 2005
    
    
    2004
    
    
    2003
    
    
    2002
    
    
    2001Proved reserves at beginning of year
    
    
    2,076
    
    
    
    2,288
    
    
    
    2,225
    
    
    
    2,073
    
    
    
    2,040New reserves
    
    
    59
    
    
    
    23
    
    
    
    265
    
    
    
    118
    
    
    
    89Revisions of reserves
    
    
    64
    
    
    
    39
    
    
    
    (6
    )
    
    
    23
    
    
    
    99Net purchase and sales
    
    
    52
    
    
    
    (65
    )
    
    
    (2
    )
    
    
    186
    
    
    
    (1
    )Production
    
    
    (206
    )
    
    
    (209
    )
    
    
    (194
    )
    
    
    (175
    )
    
    
    (154
    )Proved reserves at end of year
    
    
    2,046
    
    
    
    2,076
    
    
    
    2,288
    
    
    
    2,225
    
    
    
    2,073
 6)
    
    For the definition of proved reserves, proved developed reserves and proved undeveloped
reserves, see Terms and definitions at the end of this report.




---



##### 



Business and Operating
Information
   Exploration and Production
 Amounts in NOK million
    
    2005
    
    
    2004
    
    
    2003Operating Revenues
    
    
    64,201
    
    
    
    48,962
    
    
    
    37,904Operating Costs
    
    
    23,607
    
    
    
    20,599
    
    
    
    19,404Operating Income
    
    
    40,594
    
    
    
    28,363
    
    
    
    18,500Adjusted EBITDA
    
    
    50,601
    
    
    
    38,168
    
    
    
    27,624Number of employees
    
    
    3,067
    
    
    
    2,821
    
    
    
    2,800
 
  
 Amounts in NOK millionOperating income 2005
    
    
    40,594Operating income 2004
    
    
    28,363Change
    
    
    12,231Prices and currency
    
    
    15,555Volume
    
    
    (600
    )Depreciation
    
    
    (210
    )Production costs
    
    
    (855
    )Exploration costs
    
    
    (575
    )Other
    
    
    (1,085
    )Total change in Operating income
    
    
    12,231
 Operating revenues
  Operating costs
  7
  8
  Operating income
   
 7)
    
    Production cost is comprised of the cost of operating fields,
including CO2 emission tax,
insurance, gas purchased for injection, and lease costs for
production installations, but excluding transportation and processing tariffs, operation costs
for transportation systems and depreciation.8)
    
    See discussion included in note 2  Business combinations, dispositions and demeger  to
Hydros consolidated financial statements for further informa
tion. In accordance with Hydros accounting policy, all expenses related to exploration, with the
exception of the cost of drilling exploratory wells, are
expensed as incurred. As a result, any fair value allocated to such costs relating to acquired
assets must be written off.




---



##### 



Business
and Operating Information
    
    
    (BLACK BOX)
    
    
    
    51Financial Information
 9)
 Adjusted EBITDA
  Energy and Oil Marketing
 Amounts in NOK million
    
    2005
    
    
    2004
    
    
    2003Operating Revenues
    
    
    76,513
    
    
    
    59,339
    
    
    
    48,216Operating Costs
    
    
    72,938
    
    
    
    56,689
    
    
    
    45,548Operating Income
    
    
    3,575
    
    
    
    2,650
    
    
    
    2,668Adjusted EBITDA
    
    
    4,456
    
    
    
    3,478
    
    
    
    4,226Number of employees
    
    
    648
    
    
    
    706
    
    
    
    665
  
  
 Amounts in NOK millionOperating income 2005
    
    
    3,575Operating income 2004
    
    
    2,650Change
    
    
    925Margin
    
    
    130Volume
    
    
    925Fixed costs
    
    
    (105
    )Depreciation
    
    
    (10
    )Other
    
    
    (15
    )Total change in Operating income
    
    
    925
 Operating revenues
   Operating costs
  Operating income
   
  
 Amount in NOK million
    
    2005
    
    
    2004
    
    
    2003Power activities
    
    
    1,109
    
    
    
    732
    
    
    
    664Gas activities
    
    
    2,156
    
    
    
    1,833
    
    
    
    1,795Oil trading activities
    
    
    299
    
    
    
    188
    
    
    
    406Oil marketing
    
    
    91
    
    
    
    104
    
    
    
    (16
    )Other 1)
    
    
    (80
    )
    
    
    (208
    )
    
    
    (181
    )Total
    
    
    3,575
    
    
    
    2,650
    
    
    
    2,668
 1)
    
    Other mainly consists of new energy activities.
     9)
    
    See discussion in note 24  Derivative instruments and risk management  to Hydros
consolidated financial statements for further discussion on accounting for contract with embedded
derivatives.




---



##### 



52
    
    
    (BLACK BOX)
    
    
    Business and Operating
InformationFinancial Information
 Adjusted EBITDA
  Eliminations Oil & Energy




---



##### 



Business
and Operating Information
    
    
    (BLACK BOX)
    
    
    
    53Financial Information
 PRODUCTION OF PRIMARY ALUMINIUM

ALUMINIUM PRICE

OPERATING INCOME ALUMINIUM Aluminium
 Amounts in NOK million
    
    2005
    
    
    2004
    
    
    2003Operating Revenues
    
    
    80,836
    
    
    
    79,589
    
    
    
    68,323Operating Costs
    
    
    78,325
    
    
    
    77,784
    
    
    
    65,867Operating Income
    
    
    2,511
    
    
    
    1,805
    
    
    
    2,456Adjusted EBITDA
    
    
    8,044
    
    
    
    8,655
    
    
    
    6,498Capital Employed
    
    
    46,211
    
    
    
    43,542
    
    
    
    44,926Adjusted RoaCE 1)
    
    
    6.0
    %
    
    
    7.0
    %
    
    
    4.7
    %Number of employees
    
    
    24,555
    
    
    
    25,967
    
    
    
    26,728
 2005
    
    
    2004
    
    
    2003Aluminium price LME (USD/tonne)
    
    
    1,900
    
    
    
    1,721
    
    
    
    1,428Aluminium price realized
    
    
    1,812
    
    
    
    1,629
    
    
    
    1,440USD/NOK, realized 2)
    
    
    6.57
    
    
    
    6.98
    
    
    
    7.25Primary production (Kmt) 3)
    
    
    1,826
    
    
    
    1,720
    
    
    
    1,473Total volume delivered (Kmt)
    
    
    3,821
    
    
    
    3,638
    
    
    
    3,330
 1)
    
    Actual 2005 and 2004 RoaCE adjusted for the effects of impairment losses.2)
    
    Difference between realized exchange rate and spot rate at the date of transaction is
reported as currency gain/loss (excluding hedge contracts) and not included in adjusted
EBITDA.3)
    
    Volumes includes production in the Variable Interest Entity Slovalco from 2004.
 Operating results
   Market conditions




---



##### 



54
    
    
    (BLACK BOX)
    
    
    Business and Operating InformationFinancial Information
     Key development projects
    Plant closures
     Metals
 Amounts in NOK million
    
    2005
    
    
    2004
    
    
    2003Operating Revenues
    
    
    54,961
    
    
    
    51,910
    
    
    
    39,140Operating Costs
    
    
    51,063
    
    
    
    51,050
    
    
    
    37,060Operating Income
    
    
    3,898
    
    
    
    860
    
    
    
    2,080Adjusted EBITDA
    
    
    6,025
    
    
    
    5,372
    
    
    
    4,019Number of employees
    
    
    5,558
    
    
    
    6,161
    
    
    
    6,276
 
  
 Amounts in NOK millionOperating income 2005
    
    
    3,898Operating income 2004
    
    
    860Change
    
    
    3,038Margin
    
    
    (155
    )Volume
    
    
    600Fixed costs
    
    
    420Depreciation
    
    
    70Trading and hedging 1)
    
    
    170Write-downs, other
    
    
    2,040Other
    
    
    (105
    )Total change in Operating income
    
    
    3,038
 1)
    
    Includes realized effects from the Sunndal hedge program.
 Operating revenues
  10)
 10)
    
    See note 26  Related parties and variable interest entities  to Hydros consolidated
financial statements for further information pertaining to the consolidation of Slovalco.




---



##### 



Business and Operating Information
    
    
    (BLACK BOX)
    
    
    
    55Financial Information
   Operating costs
  Operating income
  11)
 Adjusted EBITDA
  Rolled Products
 Amounts in NOK million
    
    2005
    
    
    2004
    
    
    2003Operating Revenues
    
    
    19,490
    
    
    
    20,288
    
    
    
    18,377Operating Costs
    
    
    18,736
    
    
    
    19,662
    
    
    
    18,245Operating Income
    
    
    754
    
    
    
    626
    
    
    
    132Adjusted EBITDA
    
    
    1,565
    
    
    
    1,361
    
    
    
    835Number of employees
    
    
    3,981
    
    
    
    4,013
    
    
    
    4,259
 
  
 Amounts in NOK millionOperating income 2005
    
    
    754Operating income 2004
    
    
    626Change
    
    
    129Margin
    
    
    (235
    )Volume
    
    
    70Fixed costs
    
    
    380Depreciation
    
    
    65Write-downs, other
    
    
    (155
    )Total change in Operating income
    
    
    129
 Operating revenues
   Operating costs
  11)
    
    The Sunndal hedge program will continue to impact reported results during 2006. The
program is comprised of LME future contracts spread evenly over the year and US dollar forward
contracts maturing mainly in the first half of the year (approximately 80 percent of the currency
contracts will mature in the first half of 2006). The LME future contracts and USD forward
contracts underlying the hedge were priced at approximately US dollar 1,500 and
NOK/USD 9.4, respectively, for the remainder of the program.




---



##### 



56
    
    
    (BLACK BOX)
    
    
    Business and Operating InformationFinancial Information
 12)
  Operating income
  Adjusted EBITDA
  Extrusion and Automotive
 Amounts in NOK million
    
    2005
    
    
    2004
    
    
    2003Operating Revenues
    
    
    26,075
    
    
    
    27,137
    
    
    
    24,483Operating Costs
    
    
    27,175
    
    
    
    26,889
    
    
    
    24,173Operating Income
    
    
    (1,100
    )
    
    
    248
    
    
    
    310Adjusted EBITDA
    
    
    1,495
    
    
    
    1,850
    
    
    
    1,710Number of employees
    
    
    15,016
    
    
    
    15,793
    
    
    
    16,193
 
  
 Amounts in NOK millionOperating income 2005
    
    
    (1,100
    )Operating income 2004
    
    
    248Change
    
    
    (1,348
    )Margin
    
    
    (255
    )Volume
    
    
    (775
    )Fixed costs
    
    
    665Depreciation
    
    
    85Write-downs, other
    
    
    (1,070
    )Total change in Operating income
    
    
    (1,348
    )
 Operating revenues
  Operating costs
  Operating income
   Adjusted EBITDA
  Other and Eliminations
  12)
    
    Rolled Products sales prices are based on a margin over the metal price. The production
and logistic process of rolled products has a duration of two to three months. As a result, margins
are impacted by timing differences resulting from the FIFO (first in, first out) inventory
valuation method, due to changing aluminium prices during the production process. Decreasing
aluminium prices in Euro results in a negative metal effect, while increasing prices have the
opposite effect.




---



##### 



Business and Operating Information
    
    
    (BLACK BOX)
    
    
    
    57Financial Information
   Other Businesses
 
  
 Amounts in NOK million
    
    2005
    
    
    2004
    
    
    2003Polymers
    
    
    69
    
    
    
    254
    
    
    
    (8
    )Other
    
    
    (71
    )
    
    
    58
    
    
    
    (396
    )Total
    
    
    (2
    )
    
    
    312
    
    
    
    (404
    )
 
  
 Amounts in NOK million
    
    2005
    
    
    2004
    
    
    2003Polymers
    
    
    564
    
    
    
    774
    
    
    
    401Other
    
    
    1,316
    
    
    
    589
    
    
    
    712Total
    
    
    1,880
    
    
    
    1,363
    
    
    
    1,113
  Polymers
    Other activities
   Corporate activities and eliminations
     13)
 13)
    
    Hydros net pension cost for 2005 amounted to NOK 2,185 million. See note 5  Operating
and geographical segment information  to Hydros consolidated financial statements for information
on how pension costs are allocated between operating units and Corporate and eliminations.




---



##### 



58
    
    
    (BLACK BOX)
    
    
    Business and Operating InformationFinancial Information
  
  
 
 
  
 Amounts in NOK million
    
    2005
    
    
    2004
    
    
    2003Cash flow provided by (used for)Operations
    
    
    27,385
    
    
    
    27,724
    
    
    
    22,773Investments
    
    
    (24,318
    )
    
    
    (23,962
    )
    
    
    (7,054
    )Financing
    
    
    (6,797
    )
    
    
    (13,579
    )
    
    
    (8,092
    )Increase (decrease) in cash and
cash equivalents
    
    
    (3,903
    )
    
    
    (507
    )
    
    
    9,326Return on Shareholders equity
    
    
    17.2
    %
    
    
    14.4
    %
    
    
    13.4
    %RoaCE
    
    
    16.8
    %
    
    
    13.0
    %
    
    
    8.4
    %Adjusted net debt/equity ratio1)
    
    
    0.31
    
    
    
    0.11
    
    
    
    0.38
 1)
    
    Adjusted net interest-bearing debt divided by shareholders equity plus minority interest,
adjusted for unfunded pension obligation (after tax) and present value of future obligations on
operating leases.
 Cash flow
  Operating activities
  Investing activities
   Financing activities
  Liquidity




---



##### 



Business and Operating Information
    
    
    (BLACK BOX)
    
    
    
    59Financial Information
 
  
 As of 31 DecemberAmounts in NOK million
    
    2005
    
    
    2004
    
    
    2003
    
    
    2002
    
    
    2001Cash, cash equivalents and short-term investments
    
    
    14,328
    
    
    
    25,336
    
    
    
    16,426
    
    
    
    8,158
    
    
    
    28,683Total assets
    
    
    227,195
    
    
    
    200,243
    
    
    
    218,629
    
    
    
    207,211
    
    
    
    197,922Short-term debt
    
    
    5,037
    
    
    
    4,353
    
    
    
    6,485
    
    
    
    8,819
    
    
    
    9,685Long-term debt
    
    
    21,387
    
    
    
    19,487
    
    
    
    28,403
    
    
    
    30,728
    
    
    
    37,608Deferred tax liabilities
    
    
    34,693
    
    
    
    29,899
    
    
    
    33,323
    
    
    
    36,818
    
    
    
    30,648Ordinary shares and additional paid-in capital
    
    
    15,240
    
    
    
    15,207
    
    
    
    20,403
    
    
    
    20,420
    
    
    
    20,402Total shareholders equity
    
    
    95,495
    
    
    
    85,890
    
    
    
    88,080
    
    
    
    75,867
    
    
    
    74,793
 Short and long term borrowings




---



##### 



60
    
    
    (BLACK BOX)
    
    
    Business and Operating InformationFinancial Information
  Employee retirement plans
  Contractual obligations, commitments and off-balance sheet arrangements
   
  
 Payments due by PeriodAmounts in NOK million
    
    Total
    
    
    Less than 1 year
    
    
    1-3 years
    
    
    3-5 years
    
    
    ThereafterLong-term debt
    
    
    21,249
    
    
    
    358
    
    
    
    368
    
    
    
    4,668
    
    
    
    15,855Interest related to long-term debt
    
    
    21,709
    
    
    
    1,498
    
    
    
    2,984
    
    
    
    2,752
    
    
    
    14,473Finance lease obligations
    
    
    517
    
    
    
    21
    
    
    
    138
    
    
    
    93
    
    
    
    264Operating lease obligations
    
    
    7,529
    
    
    
    1,427
    
    
    
    4,101
    
    
    
    1,466
    
    
    
    535Unconditional purchase obligations
    
    
    65,867
    
    
    
    10,360
    
    
    
    19,520
    
    
    
    9,751
    
    
    
    26,235Contractual commitments for-PP&E
    
    
    20,140
    
    
    
    10,883
    
    
    
    4,560
    
    
    
    1,300
    
    
    
    3,398-Other future investments
    
    
    151
    
    
    
    34
    
    
    
    51
    
    
    
    45
    
    
    
    21Benefit payments unfunded defined
benefit plans
    
    
    
    
    
    
    327
    
    
    
    756
    
    
    
    896
    
    
    }    See 1)Termination
benefits
    
    
    
    
    
    
    267
    
    
    
    478
    
    
    
    372Other long-term liabilities
    
    
    3,257
    
    
    
    523
    
    
    
    982
    
    
    
    405
    
    
    
    1,347Total contractual cash obligations
    
    
    
    
    
    
    25,699
    
    
    
    33,939
    
    
    
    21,749
 1)
    
    Annual payments are expected to continue to increase gradually into the foreseeable future
starting in the range of NOK 700 to 800 million. The Company also has other obligations connected
with pension plans that are not contractually fixed to timing and amount.
 Minority interest and Shareholders equity




---



##### 



Business and Operating Information
    
    
    (BLACK BOX)
    
    
    
    61Financial Information
 Investments
     
 1)
 
 Amounts in NOK million
    
    2005
    
    
    %
    
    
    2004
    
    
    %
    
    
    2003 4)
    
    
    %Exploration and Production
    
    
    33,846
    
    
    
    82
    
    
    
    10,606
    
    
    
    54
    
    
    
    10,270
    
    
    
    58Energy and Oil Marketing
    
    
    2,333
    
    
    
    6
    
    
    
    1,460
    
    
    
    8
    
    
    
    989
    
    
    
    6Eliminations
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Hydro Oil & Energy
    
    
    36,179
    
    
    
    88
    
    
    
    12,067
    
    
    
    62
    
    
    
    11,259
    
    
    
    64Metals
    
    
    1,792
    3)
    
    
    4
    
    
    
    4,244
    2)
    
    
    22
    
    
    
    3,574
    
    
    
    20Rolled Products
    
    
    545
    3)
    
    
    1
    
    
    
    553
    
    
    
    3
    
    
    
    466
    
    
    
    3Extrusion and Automotive
    
    
    1,425
    
    
    
    3
    
    
    
    1,398
    
    
    
    7
    
    
    
    1,542
    
    
    
    9Other and eliminations
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Hydro Aluminium
    
    
    3,762
    
    
    
    9
    
    
    
    6,194
    
    
    
    32
    
    
    
    5,581
    
    
    
    32Other Activities
    
    
    1,097
    
    
    
    3
    
    
    
    1,058
    
    
    
    5
    
    
    
    791
    
    
    
    4Corporate and eliminations
    
    
    72
    
    
    
    0
    
    
    
    145
    
    
    
    1
    
    
    
    81
    
    
    
    0Total
    
    
    41,110
    
    
    
    100
    
    
    
    19,464
    
    
    
    100
    
    
    
    17,712
    
    
    
    100
 1)
    
    Additions to property, plant and equipment (capital expenditures) plus long-term
securities, intangible assets, long-term advances and investments in non-consolidated
investees.2)
    
    Includes effect of change in accounting principle (FIN 46R). Non-cash increase in investment
of NOK 1,275 million.3)
    
    Includes effect of change in accounting principle (FIN 47). Non-cash increase in investment
of NOK 186 million for Metals and NOK 9 million for Rolled Products.4)
    
    Includes effect of change in accounting principle (FIN 143). Non-cash increase in investment of
NOK 1,918 million.
 Investments in Hydros exploration and production operations in 2003 were NOK 10,270 million. The
largest investments related to development projects, of which Grane, Kristin and Sn¿hvit were the
most important. The major investments in Hydros aluminium business in 2003 included the expansion
activities pertaining to the smelters in Sunndal, Norway, where phase II was completed and phase
III is under construction, and in Alouette in Canada. An expansion of the alumina refinery
Alunorte, in Brazil, was also completed during the year. The investments for Hydros extrusion and
automotive operations related to the construction of a new casting line in Dillingen in Germany.
Investments for other activities relates primarily to the construction of a new chlorine plant at
Rafnes in Norway which was started in 2003. Material commitments for capital expenditures




---



##### 



62
    
    
    (BLACK BOX)
    
    
    Business and Operating InformationFinancial Information
   Oil and gas exploration costs
     Proved oil and gas reserves
    Commodity instruments and risk management activities
  Asset retirement obligations




---



##### 



Business and Operating Information
    
    
    (BALCK BOX)
    
    
    
    63Financial Information
    Impairment of long-lived assets
   Contingencies and environmental liabilities
  Business combinations and goodwill




---



##### 



64
    
    
    (BLACK BOX)
    
    
    Business and Operating InformationFinancial Information
     Income taxes
  Employee retirement plans




---



##### 



Business and Operating Information
    
    
    (BLACK BOX)
    
    
    
    65Financial Information
     
 1)
 
 Amounts in NOK million
    
    Pre tax
    
    
    After tax
    
    
    ChangeOil price per barrel
    
    
    1,100
    
    
    
    325
    
    
    1 USDAluminium price per tonne
    
    
    950
    
    
    
    665
    
    
    100 USDUS dollar Hydro Oil & Energy
    
    
    7,500
    
    
    
    2,250
    
    
    1 NOKUS dollar Hydro Aluminium
    
    
    2,800
    
    
    
    1,900
    
    
    1 NOKUS dollar before financial items
    
    
    10,300
    
    
    
    4,150
    
    
    1 NOKUS dollar financial items 2)
    
    
    (3,000
    )
    
    
    (1,950
    )
    
    1 NOKUS dollar net
    
    
    7,300
    
    
    
    2,200
    
    
    1 NOK
 1)
    
    Based on average 2005 prices and expected business volumes for
2006: Oil 50 US dollar/bbl, Aluminium 1,900 US dollar/tonne
and Norwegian krone/US dollar 6.5. USD sensitivities for Oil & Energy
and Aluminium includes both USD revenues and USD cost. Hydro has
established certain hedging programs as well as economic hedges to
reduce earnings volatility. This has an impact on the potential maximum
effect on earnings of actual price changes. See note 24  to the consolidated financial statements for further details.2)
    
    Total USD sensitivity of financial positions is NOK 4,000 million negative
and consists of assets and liabilities in various financial instruments.
Positive net working capital of USD 1,000 million reduces the total sensitivity to NOK 3,000 million.
  Financial and commercial risk management
    Sensitivity analysis




---



##### 



66
    
    
    (BLACK BOX)
    
    
    Business and Operating InformationFinancial Information
 
  
 Fair value asof 31 December,
    
    
    
    
    
    
    Foreign currency
    
    
    CommodityAmounts in NOK million
    
    2005 1)
    
    
    Interest rates
    
    
    exchange rates
    
    
    prices
    
    
    Volatility
    
    
    OtherDerivative financial instruments 2)
    
    
    727
    
    
    
    1
    
    
    
    1,597
    
    
    
    
    
    
    
    
    
    
    
    Other financial instruments 3)
    
    
    (10,799
    )
    
    
    1,153
    
    
    
    1,856
    
    
    
    
    
    
    
    
    
    
    
    202Derivative commodity instruments
    
    
    (489
    )
    
    
    
    
    
    
    54
    
    
    
    1,236
    
    
    
    144
    
    
    
    
 
  
 Fair value asof 31 December,
    
    
    
    
    
    
    Foreign currency
    
    
    CommodityAmounts in NOK million
    
    2004 1)
    
    
    Interest rates
    
    
    exchange rates
    
    
    prices
    
    
    Volatility
    
    
    OtherDerivative financial instruments 2)
    
    
    2,115
    
    
    
    8
    
    
    
    827
    
    
    
    
    
    
    
    
    
    
    
    Other financial instruments 3)
    
    
    1,825
    
    
    
    1,136
    
    
    
    1,442
    
    
    
    
    
    
    
    
    
    
    
    182Derivative commodity instruments
    
    
    (130
    )
    
    
    
    
    
    
    325
    
    
    
    695
    
    
    
    (29
    )
    
    
    
 1)
    
    The change in fair value due to price changes is calculated based on pricing formulas for
certain derivatives, the Black-Scholes model for options and the net present value of cash
flows for certain financial instruments or derivatives. Discount rates vary as appropriate for
the individual instruments.2)
    
    Include mainly forward currency contracts and currency swaps.3)
    
    Include cash and cash equivalents, investments in marketable securities, bank loans and other
interest-bearing short-term debt and long-term debt. A substantial portion of the hypothetical
loss in fair value for changes in interest rates relates to Hydros long-term fixed rate debt.
As Hydro expects to hold this debt until maturity, changes in the fair value of debt would
only impact earnings over time as interest payments fall due.
   
    
    The tables only include the effects of the derivative instruments discussed above and of
certain financial instruments (see note 3). The analysis does not include any related
physical positions, contracts, and anticipated transactions that many of the derivative
instruments are meant to secure. A rate or price change of 10 percent will often result in a
corresponding effect to the fair value of the physical or underlying position such that the
resulting gains and losses would offset.
    
    As allowed by the SEC regulations, Hydro has excluded accounts payable and accounts receivable
from the presentation, which may have had a significant effect on the foreign exchange risk figures
provided.
    
    The computations, which provide the most negative effect to Hydro of either a 10 percent
increase or decrease in each rate or price, do not take into account correlations, which would be
expected to occur between the risk exposure categories. For example, the effect that a change in a
foreign exchange rate may have on a commodity price is not reflected in the tables.
    
    It is not likely that all rates or prices would simultaneously move in directions that would
have negative effects on Hydros portfolio of instruments




---



##### 



Business and
Operating Information
    
    (BLACK BOX) 67Other
      
    
    Increased discovery rate through improved exploration technology,
    
    Increased oil recovery in order to prolong the production from mature fields,
    
    Economically viable development of smaller fields and,
    
    Further improvement of health, safety and environmental technology to ensure personnel and technical safety as well as
protecting the external environment.
 2




---



##### 



68
(BLACK BOX)Business and Operating InformationOther




---



##### 



(BLACK BOX) 69
  CONTENT
 70
    
    Shareholder Information74
    
    Corporate Governance
 74
    

    Overview77
    
    Directors and Officers Compensations,
Share Ownership and Loans78
    
    Governance Bodies80
    
    Board of Directors81
    
    Corporate Management Board




---



##### 



70
(BLACK BOX)
    
    Investor InformationShareholder Information
  SHARE PRICE IN NOK

SHARE PRICE IN USD

DIVIDEND PER SHARE    Dividend policy
    Buyback of shares




---



##### 



Investor
Information
    
    (BLACK BOX) 71Shareholder Information
 TOTAL SHARE HOLDER RETURN 2001  2005 IN USD

EARNINGS PER SHARE FROM CONTINUING OPERATIONS

GEOGRAPHICAL OWNERSHIP DISTRIBUTION OF SHARES    Funding and credit rating
  
 Total number of shares
    
    
    Maximum number ofpurchased as part of
    
    
    shares that may yetTotal number of
   
    
    Average price paid per
    
    
    publicly announced
    
    
    be purchased undershares purchased
    
    
    share in NOK
    
    
    program
    
    
    the programs9
February 2005  redemption of the Norwegian states
share of the buyback program in 2004
    
    
    2,191,190
    
    
    
    441.00
    
    
    
    2,191,190
    
    
    
    1 - 30 June
    
    
    96,600
    
    
    
    531.52
    
    
    
    96,600
    
    
    
    4,285,4001 - 31 August
    
    
    97,400
    
    
    
    661.85
    
    
    
    97,400
    
    
    
    4,188,0001 - 30 September
    
    
    116,400
    
    
    
    684.66
    
    
    
    116,400
    
    
    
    4,071,6001-31 October
    
    
    106,000
    
    
    
    633.45
    
    
    
    106,000
    
    
    
    3,965,6001 - 30 November
    
    
    413,000
    
    
    
    661.31
    
    
    
    413,000
    
    
    
    3,552,6001 - 31 December
    
    
    105,000
    
    
    
    691.31
    
    
    
    105,000
    
    
    
    3,447,600Total
    
    
    3,125,590
    
    
    
    503.80
    
    
    
    3,125,590




---



##### 



72
(BLACK BOX)
    
    Investor InformationShareholder Information
  Major shareholders and voting rights
 
 Shareholder
    
    Number of
    
    
    Ownershipshares
    
    
    interestNorwegian state
    
    
    113,483,658
    
    
    
    43.82
    %State Street
Bank (nominee)
    
    
    11,998,731
    
    
    
    4.63
    %Morgan
Guaranty Trust (ADR)
    
    
    10,023,942
    
    
    
    3.87
    %Folketrygdfondet
    
    
    9,355,327
    
    
    
    3.61
    %Hydro
    
    
    8,815,964
    
    
    
    3.40
    %JPMorgan Chase Bank (nominee)
    
    
    5,324,911
    
    
    
    2.06
    %Euroclear
Bank (nominee)
    
    
    3,255,937
    
    
    
    1.26
    %EuroPacific Growth Fund
    
    
    3,175,000
    
    
    
    1.23
    %Mellon Bank (nominee)
    
    
    2,429,660
    
    
    
    0.94
    %The Northern Trust Company (nominee)
    
    
    2,227,673
    
    
    
    0.86
    %Vital Forsikring
    
    
    2,181,886
    
    
    
    0.84
    %New Perspective Fund
    
    
    2,164,000
    
    
    
    0.84
    %State Street
Bank (nominee)
    
    
    1,970,026
    
    
    
    0.76
    %JPMorgan Chase Bank (nominee)
    
    
    1,847,211
    
    
    
    0.71
    %Clearstream Banking (nominee)
    
    
    1,758,869
    
    
    
    0.68
    %Investors Bank & Trust Company
(nominee)
    
    
    1,716,449
    
    
    
    0.66
    %SIS Segaintersettle (nominee)
    
    
    1,538,846
    
    
    
    0.59
    %Storebrand Livsforsikring
    
    
    1,514,659
    
    
    
    0.58
    %Capital World Growth and Income Fund
    
    
    1,465,900
    
    
    
    0.57
    %Investors Bank & Trust Company
(nominee)
    
    
    1,465,194
    
    
    
    0.57
    %
      
 Key figures for the Hydro share
 
 Oslo Stock Exchange
    
    
    New York StockExchangeHigh
    
    
    Low
    
    
    High
    
    
    LowQuarterly period
    
    (in NOK)
    
    
    (in NOK)
    
    
    (in USD)
    
    
    (in USD)First quarter 2004
    
    
    464.66
    
    
    
    361.50
    
    
    
    65.91
    
    
    
    53.44Second quarter 2004
    
    
    467.00
    
    
    
    395.00
    
    
    
    67.50
    
    
    
    54.92Third quarter 2004
    
    
    503.00
    
    
    
    419.00
    
    
    
    74.19
    
    
    
    60.28Fourth quarter 2004
    
    
    521.50
    
    
    
    457.50
    
    
    
    83.62
    
    
    
    71.34First quarter 2005
    
    
    547.50
    
    
    
    462.50
    
    
    
    89.10
    
    
    
    74.00Second quarter 2005
    
    
    600.00
    
    
    
    489.50
    
    
    
    91.93
    
    
    
    75.90Third quarter 2005
    
    
    748.50
    
    
    
    592.00
    
    
    
    117.16
    
    
    
    91.70Fourth quarter 2005
    
    
    741.50
    
    
    
    605.50
    
    
    
    111.44
    
    
    
    92.88First quarter 2006 1)
    
    
    846.00
    
    
    
    692.50
    
    
    
    124.90
    
    
    
    105.83
 
 1)
    
    As of 28 February 2006 
 Oslo Stock Exchange
    
    
    New York StockExchangeMonthly period
    
    High
    
    
    Low
    
    
    High
    
    
    Low(in NOK)
    
    
    (in NOK)
    
    
    (in USD)
    
    
    (in USD)September 2005
    
    
    748.50
    
    
    
    673.00
    
    
    
    117.16
    
    
    
    107.51October 2005
    
    
    740.50
    
    
    
    605.50
    
    
    
    111.44
    
    
    
    92.88November 2005
    
    
    692.00
    
    
    
    637.50
    
    
    
    103.64
    
    
    
    95.75December 2005
    
    
    741.50
    
    
    
    678.00
    
    
    
    111.37
    
    
    
    100.38January 2006
    
    
    846.00
    
    
    
    692.50
    
    
    
    124.34
    
    
    
    105.83February 2006
    
    
    829.50
    
    
    
    752.50
    
    
    
    124.90
    
    
    
    109.20




---



##### 



Investor
Information
    
    (BLACK BOX) 73Shareholder Information
 
 NOK
    
    2005
    
    
    2004
    
    
    2003
    
    
    2002
    
    
    2001Share price high, Oslo 1)
    
    
    748.50
    
    
    
    521.50
    
    
    
    365.91
    
    
    
    388.83
    
    
    
    356.21Share price low, Oslo
    
    
    462.50
    
    
    
    361.50
    
    
    
    231.01
    
    
    
    240.70
    
    
    
    273.33Share price average, Oslo
    
    
    595.69
    
    
    
    443.87
    
    
    
    299.78
    
    
    
    308.24
    
    
    
    326.93Share price year-end, Oslo
    
    
    693.00
    
    
    
    477.00
    
    
    
    361.94
    
    
    
    273.77
    
    
    
    331.52Share price high, NYSE
    
    $
    117.16
    
    
    $
    83.62
    
    
    $
    54.74
    
    
    $
    46.11
    
    
    $
    39.59Share price low, NYSE
    
    $
    74.00
    
    
    $
    53.44
    
    
    $
    31 .65
    
    
    $
    32.67
    
    
    $
    30.86Share price average, NYSE
    
    $
    92.28
    
    
    $
    66.09
    
    
    $
    42.47
    
    
    $
    38.67
    
    
    $
    36.31Share price year-end, NYSE
    
    $
    103.18
    
    
    $
    78.72
    
    
    $
    54.49
    
    
    $
    39.16
    
    
    $
    37.03Earnings per share (EPS)
    
    
    62.70
    
    
    
    49.40
    
    
    
    42.60
    
    
    
    34.00
    
    
    
    30.50EPS from continuing operations
    
    
    62.70
    
    
    
    45.10
    
    
    
    32.50
    
    
    
    27.50
    
    
    
    22.80P/E2)
    
    
    11.05
    
    
    
    10.58
    
    
    
    11.14
    
    
    
    9.96
    
    
    
    14.54Dividend per share
    
    
    22.00
    3)
    
    
    20.00
    
    
    
    11.00
    
    
    
    10.50
    
    
    
    10.00Pay-out ratio 4)
    
    
    35
    %
    
    
    44
    %
    
    
    26
    %
    
    
    31
    %
    
    
    33
    %Dividend growth
    
    
    10
    %
    
    
    82
    %
    
    
    5
    %
    
    
    5
    %
    
    
    5
    %Pay-out ratio five year average 5)
    
    
    34
    %
    
    
    29
    %
    
    
    28
    %
    
    
    31
    %
    
    
    31
    %Debt/equity ratio 6)
    
    
    0.31
    
    
    
    0.11
    
    
    
    0.38
    
    
    
    0.60
    
    
    
    0.34Credit ratine, Standard & Poors
    
    
    A
    
    
    
    A
    
    
    
    A
    
    
    
    A
    
    
    
    ACredit rating, Moodys
    
    
    A1
    
    
    
    A2
    
    
    
    A2
    
    
    
    A2
    
    
    
    A2Beta 7)
    
    
    1.76
    
    
    
    1.56
    
    
    
    0.84
    
    
    
    0.94
    
    
    
    1.18Non-Norwegian ownership, year-end
    
    
    40
    %
    
    
    37
    %
    
    
    35
    %
    
    
    36
    %
    
    
    34
    %Outstanding shares, average
    
    
    250,807,304
    
    
    
    254,411,433
    
    
    
    257,528,511
    
    
    
    257,799,411
    
    
    
    258,434,202Outstanding shares, year-end
    
    
    250,138,464
    
    
    
    250,839,230
    
    
    
    256,712,000
    
    
    
    257,960,532
    
    
    
    257,634,172
 
 1)
    
    Adjustment factor of 0.881699 used for share prices prior to the Agri
demerger on 25 March 2004, in accordance with Oslo Stock Exchangescalculation methods.2)
    
    Share price at year-end divided by EPS from continuing operations.3)
    
    Proposed dividend.4)
    
    Dividend per share divided by earnings per share (2004: EPS from continuing operations).5)
    
    Interest-bearing debt + Net pension liability (tax adjusted) + Operating lease commitments
(discounted).
- cash and cash equivalents  Short-term investments divided by Shareholders Equity + Minority
interest.6)
    
    Total dividend divided by net income for last five years.7)
    
    Change in share price, compared with Oslo Benchmark Index (measured for rolling 48 months). Information from Hydro
  www.hydro.com/ir
 Annual General Meeting
   
 www.hydro.com/register
 Change of address
  Financial calendar
 27 April 2006
    
    First quarter results 20069 May 2006
    
    Annual General Meeting 200625 July 2006
    
    Second quarter results 200624 October 2006
    
    Third quarter results 2006




---



##### 



74
(BLACK BOX)
    
    Investor InformationCorporate Governance
  
  www.hydro.com/governance
 Compliance with legislation and other requirements
   www.hydro.com/governance
    Corporate directives and Code of Conduct




---



##### 



Investor
Information
     
    (BLACK BOX) 75Corporate Governance
 
 Learn more:www.hydro.com/governance
www. hydro.com/principles
 www.hydro.com/principles
  Business planning and control processes
      Controls and procedures




---



##### 



76
(BLACK BOX)
     
     Investor InformationCorporate Governance
    Pre-Approval of Audit Services
  
    
    audit-related,
 
    
    tax, and
 
    
    non-audit related
   Transparency and communication




---



##### 



Investor Information
    
    (BLACK BOX) 77Corporate Governance
 
  Board of Directors remuneration
  Corporate Management Board remuneration
  Executive management share-based compensation
   Share ownership
  Loans to Board Members and members of the Corporate Management Board




---



##### 



78 (BLACK BOX)
    
    Investor InformationCorporate Governance
 Governance Bodies Description
    
    Developments and events in 2005
    
    ReferencesGeneral Meeting of
Shareholders
Company shareholders exercise ultimate authority through
the General Meeting. Shareholders registered in VPS (the
Norwegian Registry of Securities) can vote in person or
by proxy. Invitations are sent to shareholders or to the
shareholders security deposit bank.
The General Meeting of Shareholders:
    
    General Meeting in May
    
    The protocols can be
found at
www.hydro.com/governance
    
    Elects the shareholders representatives in the
Corporate Assembly
    
    Elects the external auditor and determines the
auditors remuneration
    
    Approves the report according to Norwegian
requirements and financial statements, including
dividend proposed by the Board of Directors and
recommended by the Corporate AssemblyShareholders may, at least 14 days before
an ordinary
general meeting, request that proposals for
resolutions are submitted to the General
Meeting, or that points are
added to the agenda.Corporate Assembly

Eighteen members. Twelve are elected by the General
Meeting of Shareholders, six are elected by and among
the groups employees in Norway.
In accordance with Norwegian law, the Corporate Assembly:
     
Elects the Board of Directors and determines their
remuneration     
Nominates the external auditor to be elected by the
General Meeting of Shareholders     
Based on recommendations from the Board of Directors,
makes decisions in matters relating to investments that
are substantial in relation to Hydros resources, and
when closures and reorganizations will lead to
significant changes for the workforce     
Provides recommendations to the General Meeting of
Shareholders on the approval of the Board of Directors
proposal on financial statements and dividend
    
    Five meetings
Members:
Svein Steen Thomassen (chairperson),
Siri Teigum (deputy chairperson), Aase
Gudding Gresvig, Westye Høegh, Idar
Kreutzer, Sylvi Lem, Anne Merete
Steensland, Sigurd Støren, Sten-Arthur
Sa3l0r, Lars Tronsgaard, Karen Helene
Ulltveit-Moe, Svein Aaser, Sven Edin,
Billy Fredagsvik, Kjell Kvinge, Dag
Harald Madsen, Roger Oterholt, Rune
Strande Deputy members:Anne-Margrethe Firing,
Erik Garaas, Wolfgang Ruch, Terje
Venold, Nils Roar Brevik, Tore Amund
Fredriksen, Sónia F. T. Gjesdal, Line
Melkild, Bjørn Nedreaas, Bjørn
Øvstetun
    
    See Note 3 to the
Consolidated Financial
Statements for remuneration
paid to members of the
Corporate Assembly
See the Articles of
Association §§ 7-8 atwww.hydro.com/governanceNomination Committee(Established in 2001) Four
members. Two appointed by the General Meeting of
Shareholders, two appointed by the Corporate Assembly.
The Chair of the Corporate Assembly has a permanent seat
on the committee.
Nominates candidates to the Board of Directors and the
Corporate Assembly and proposes remuneration to the
Board, its sub-committees and to the Corporate
Assembly.
    
    Two meetingsMembers:
Svein Steen Thomassen (chairperson)
Siri Teigum, Westye Høegh, Reier Søberg
    
    See Articles of
Association § 5A
Biographical information of
the Nomination committee
members can be found atwww.hydro.com/governanceBoard of Directors
Nine members. Six elected by the Corporate Assembly.
Three elected by and among the Companys employees in
Norway. Elections are normally made for a period of two
years. 
In accordance with Norwegian law, the Board of Directors
assumes the overall governance of the Company, ensures
that appropriate steering and control systems are in
place and supervises the day-to-day management as
carried out by the President and CEO. 
All shareholder-elected members are external. No members
elected by employees belong to the Companys executive
management. Employee directors have no other
service
    
    Twelve meetings. 94 percent meeting
attendance by the board members.
All shareholder-elected members were
deemed to be independent in accordance
with Norwegian and New York Stock
Exchange (NYSE) standards. Except as
noted below, none of the Companys
non-employee Board members had any
other service contractual agreements
with the Company.
Elisabeth Grieg, who is a member of the
Board of Directors and of the Audit
Committee, partly owns the family
Company Grieg Maturitas AS,
    
    The Boards mandate can
be found atwww.hydro.com/governance
See page 80 for biographical
information on the Board
members




---



##### 



Investor Information
    
    (BLACK BOX) 79Corporate Governance
 Description
    
    Developments and events in 2005
    
    ReferencesBoard of Directors (cont.)contractual agreements with the Company outside of
their employee contracts, though they are subject to
their duties as Board members.
    
    which indirectly owns 65% of Grieg
Logistics AS. Grieg Logistics AS
received compensation of NOK
125,745,650 in 2005, NOK 36,631,635 in
2004, and NOK 1,425,124 in 2003 from
Hydro for transportation services
mainly related to Hydros offshore
operations and services from forwarding
and customs clearance for the onshore
Ormen Lange project.
In May, Sten Roar Martinsen took over
as new employees representative after
Odd SemstrØm.
The Board of Directors conducted a
self-evaluation of its work, competence
and cooperation with management.
    
    See Note 4 to
the Consolidated
Financial
Statements for
remuneration, share
ownership and loans
to Board
membersCompensation committee(Established in October
2001) Consists of three of the Board of Directors
nine members. 
The committee reviews the performance and
recommends proposals on compensation for the President
& CEO to the Board of Directors. The committee assists
in the evaluation of compensation for the Corporate
Management Board and in determination of
performance-promoting schemes for management. The
Board has concluded that each of the members of the
Compensation Committee is independent under Norwegian
and NYSE listing standards.
    
    Three meetings
Members: Jan Reinås (chairperson)
Håkan MogrenIngvild Myhre
    
    The mandate can
be found on
www.hydro.com/governanceAudit
Committee(Established in November 2001)
Consists of four of the Board of Directors nine
members. The Audit Committee meets the SEC and NYSE
rules and requirements regarding independence and
competence.
The Audit Committee assists the Board of Directors
relating to the integrity of the Companys financial
statements and financial reporting processes and
internal controls; the Companys risk assessment and
risk management policies related to financial
reporting; the qualifications, independence and
performance of the external auditor; and the
performance of the internal audit function related to
internal controls over financial reporting.
To ensure the independence of the internal audit
function, the director of Internal Audit may report
any matters directly to the Board Audit Committee, at
his own discretion.
The Audit Committee maintains a pre-approval policy
governing the engagement of the Companys primary and
other external auditors to ensure auditor independence
in accordance with SEC rules and regulations.
    
    Seven meetings
Revised the audit committee mandate to
focus its role related to financial
reporting and auditing issues.
Conducted a self-evaluation in
accordance with its mandate.
Members:
Borger A. Lenth (chairperson)
Elisabeth Grieg
Kurt Anker Nielsen*
Terje Friestad 
* Nielsen serves on the committee as a
financial expert as defined by SEC
rules.
    
    The mandate can
be found onwww.hydro.com/governance
See Corporate
Governance Pre-Approval of
Audit Services on
page 76 of this
report.President & CEO and Corporate Management BoardAccording to Norwegian corporate law, the
President & CEO constitutes a formal governing body
that is responsible for the daily management of the
Company. The division of functions and
responsibilities between the President & CEO and the
Board of Directors is defined in greater detail in the
rules of procedures established by the Board.
The Corporate Management Board (including the
President & CEO) has a shared responsibility for
promoting Hydros objectives and securing the
Companys property, organization and reputation.
Members of the Corporate Management Board are also
Executive Vice Presidents with responsibility for the
respective business areas, Finance and Leadership &
Culture.
    
    Met on a weekly basis 
No member of Hydros Board of Directors
or the Corporate Management Board has
any family relationship with any other
director or member of the Corporate
Management Board.
    
    See page 81 for
biographical
information on the
Corporate
Management Board
See Note 4 to the
Consolidated
Financial
Statements for
remuneration, share
ownership and loans
to the President &
CEO and members of
the Corporate
Management
Board




---



##### 



80
(BLACK BOX)
    
    Investor InformationCorporate Governance
  Name
    
    Place of Residence
    
    
    Year of birth
    

Position
    
    Term ExpiresJan
Reinås
    
    Oslo, Norway
    
    
    1944
    
    
    Chairperson
    
    2006Borger A. Lenth
    
    Koppang, Norway
    
    
    1937
    
    
    Deputy Chairperson
    
    2006Elisabeth Grieg
    
    Oslo, Norway
    
    
    1959
    
    
    Director
    
    2006Håkan Mogren
    
    Stockholm, Sweden
    
    
    1944
    
    
    Director
    
    2006Ingvild R. Myhre
    
    Oslo, Norway
    
    
    1957
    
    
    Director
    
    2006Kurt Anker Nielsen
    
    Copenhagen, Denmark
    
    
    1945
    
    
    Director
    
    2006Terje Friestad
    
    Skudeneshavn, Norway
    
    
    1952
    
    
    Director
    
    2005Sten Roar Martinsen
    
    Kopervik, Norway
    
    
    1962
    
    
    Director
    
    2005Geir Nilsen
    
    Porsgrunn, Norway
    
    
    1955
    
    
    Director
    
    2005
 Jan
Reinås
 Borger A. Lenth
 Elisabeth Grieg
 Håkan Mogren
 Ingvild Myhre
 Kurt Anker Nielsen
 Terje Friestad
 Sten Roar Martinsen
 Geir Nilsen




---



##### 



Investor
Information
    
    (BLACK BOX) 81Corporate Governance
  Name
    
    Place of Residence
    
    Year of birth
    
    PositionEivind Reiten
    
    Oslo, Norway
    
    1953
    
    President and Chief Executive OfficerJohn Ove Ottestad
    
    Lier, Norway
    
    1949
    
    Executive Vice President and Chief Financial OfficerHilde Merete Aasheim
    
    Oslo, Norway
    
    1958
    
    Executive Vice President Leadership & CultureTore Torvund
    
    Bergen, Norway
    
    1952
    
    Executive Vice President Oil & EnergyJon-Harald Nilsen
    
    Oslo, Norway
    
    1951
    
    Executive Vice President Aluminium MetalSvein
Richard Brandtzaeg
    
    Düsseldorf, Germany
    
    1957
    
    Executive Vice President Aluminium Products
 Eivind Reiten
 John Ove Ottestad
 Hilde Merete Aasheim
 Tore Torvund
 Jon-Harald Nilsen
 Svein
Richard Brandtzaeg




---



##### 



03:
    
    Society, People, EnvironmentCONTENT84
    
    About the Reporting86
    
    Facts and Figures




---



##### 



Society, People, Environment
 
 Annual Report and Form 20-F Annual Review www.hydro.com/reports
 www.hydro.com/gri www.hydro.com/globalcompact
 Principles for reporting on Society, People, Environment
    Reporting scope and limitations
   Assurance principles and scope
  www.hydro.com/gri
www.hydro.com/globalcompact
www.hydro.com/principles
www.hydro.com/reports




---



##### 



Society, People, Environment
   www.hydro.com/society
 GEOGRAPHICAL DISTRIBUTION OF SALES
 NOK million
    
    2005
    
    
    2004
    
    
    2003
    
    
    2002
    
    
    2001Norway
    
    
    24,835
    
    
    
    23,477
    
    
    
    13,522
    
    
    
    16,493
    
    
    
    11,052Germany
    
    
    17,702
    
    
    
    19,350
    
    
    
    17,909
    
    
    
    17,050
    
    
    
    16,418Other Europe
    
    
    98,198
    
    
    
    85,472
    
    
    
    78,764
    
    
    
    78,475
    
    
    
    72,295Total Europe
    
    
    140,735
    
    
    
    128,299
    
    
    
    110,195
    
    
    
    112,018
    
    
    
    99,765USA
    
    
    13,394
    
    
    
    10,357
    
    
    
    10,466
    
    
    
    11,552
    
    
    
    12,220Canada
    
    
    3,439
    
    
    
    5,188
    
    
    
    2,690
    
    
    
    2,742
    
    
    
    552Other Americas
    
    
    8,211
    
    
    
    2,526
    
    
    
    1,879
    
    
    
    1,481
    
    
    
    863Africa
    
    
    981
    
    
    
    548
    
    
    
    266
    
    
    
    283
    
    
    
    451Asia
    
    
    6,366
    
    
    
    6,000
    
    
    
    5,567
    
    
    
    4,813
    
    
    
    2,147Australia and New Zealand
    
    
    1,076
    
    
    
    972
    
    
    
    715
    
    
    
    446
    
    
    
    149Total outside Europe
    
    
    33,466
    
    
    
    25,592
    
    
    
    21,583
    
    
    
    21,317
    
    
    
    16,382Total
    
    
    174,201
    
    
    
    153,891
    
    
    
    131,778
    
    
    
    133,335
    
    
    
    116,147
 GEOGRAPHICAL DISTRIBUTION OF EMPLOYEES AND PAYROLL
 Number of employees*
    
    

PayrollNOK million
    
    2005
    
    
    2004
    
    
    2003
    
    
    2005
    
    
    2004
    
    
    2003Norway
    
    
    11,638
    
    
    
    12,133
    
    
    
    12,587
    
    
    
    6,322
    
    
    
    6,761
    
    
    
    6,490Germany
    
    
    5,613
    
    
    
    5,591
    
    
    
    5,629
    
    
    
    2,205
    
    
    
    2,287
    
    
    
    2,353Other Europe
    
    
    9,760
    
    
    
    10,536
    
    
    
    10,937
    
    
    
    3,259
    
    
    
    3,539
    
    
    
    3,422Total Europe
    
    
    27,011
    
    
    
    28,260
    
    
    
    29,153
    
    
    
    11,786
    
    
    
    12,587
    
    
    
    12,265USA
    
    
    3,621
    
    
    
    3,780
    
    
    
    3,719
    
    
    
    1,100
    
    
    
    757
    
    
    
    798Canada
    
    
    363
    
    
    
    372
    
    
    
    374
    
    
    
    155
    
    
    
    142
    
    
    
    173Other Americas
    
    
    633
    
    
    
    779
    
    
    
    782
    
    
    
    52
    
    
    
    42
    
    
    
    29Asia
    
    
    582
    
    
    
    811
    
    
    
    949
    
    
    
    54
    
    
    
    54
    
    
    
    72Other
    
    
    555
    
    
    
    602
    
    
    
    596
    
    
    
    315
    
    
    
    265
    
    
    
    237Total outside Europe
    
    
    5,754
    
    
    
    6,344
    
    
    
    6,420
    
    
    
    1,675
    
    
    
    1,260
    
    
    
    1,309Total
    
    
    32,765
    
    
    
    34,604
    
    
    
    35,573
    
    
    
    13,461
    
    
    
    13,847
    
    
    
    13,574
  CURRENT INCOME TAX
 NOK million
    
    2005
    
    
    2004Norway
    
    
    28,784
    
    
    
    22,537Germany
    
    
    146
    
    
    
    783Other Europe
    
    
    504
    
    
    
    71Total Europe
    
    
    29,434
    
    
    
    23,391US
    
    
    (253
    )
    
    
    2Canada
    
    
    691
    
    
    
    127Other Americas
    
    
    15
    
    
    
    36Africa
    
    
    1,072
    
    
    
    490Asia
    
    
    (170
    )
    
    
    2Australia and New Zealand
    
    
    48
    
    
    
    94Total outside Europe
    
    
    1,403
    
    
    
    751Total
    
    
    30,837
    
    
    
    24,142
 TOTAL PAYMENTS TO HOST GOVERNMENTS IN 2005
 Oil & Energy
    
    
    
    
    
    
    
    
    
    
    NOK millionNorway
    
    
    27,579
    
    
    
    Iran
    
    
    
    0US
    
    
    21
    
    
    
    Cuba
    
    
    
    0Canada
    
    
    184
    
    
    
    Denmark
    
    
    
    0Brazil
    
    
    0
    
    
    
    Mozambique
    
    
    
    0.2Angola
    
    
    625
    
    
    
    Morocco
    
    
    
    0Libya
    
    
    268
    
    
    
    Madagascar
    
    
    
    0Russia
    
    
    38
    
    
    
    Nigeria
    
    
    
    0AluminiumBrazil
    
    
    89Jamaica
    
    
    56




---



##### 



Society, People, Environment
  Social investments, gifts and sponsorships
 Research and development
 People
 www.hydro.com/people
 ACTUAL NUMBER OF EMPLOYEES PER 31 DECEMBER
 2005
    
    
    2004
    
    
    2003
    
    
    2002
    
    
    2001Number of employees
    
    
    32,765
    
    
    
    34,648
    
    
    
    42,911
    
    
    
    49,712
    
    
    
    35,567
  DIVERSITY IN MANAGEMENT
 Women
    
    
    Men
    
    
    Non-Norwegians2005
    
    
    2004
    
    
    2003
    
    
    2005
    
    
    2004
    
    
    2003
    
    
    2005
    
    
    2004
    
    
    2003Board of Directors (nine members*)
    
    
    22
    %
    
    
    22
    %
    
    
    33
    %
    
    
    78
    %
    
    
    78
    %
    
    
    67
    %
    
    
    22
    %
    
    
    22
    %
    
    
    11
    %Corporate Management Board
    
    
    20
    %
    
    
    20
    %
    
    
    20
    %
    
    
    80
    %
    
    
    80
    %
    
    
    80
    %
    
    
    0
    %
    
    
    0
    %
    
    
    0
    %Top 50 managers
    
    
    20
    %
    
    
    25
    %
    
    
    23
    %
    
    
    80
    %
    
    
    75
    %
    
    
    77
    %
    
    
    9
    %
    
    
    14
    %
    
    
    14
    %Top 200 managers
    
    
    23
    %
    
    
    19
    %
    
    
    
    
    
    
    77
    %
    
    
    81
    %
    
    
    
    
    
    
    24
    %
    
    
    20
    %
    
    
    
  Diversity in Norway
 WOMEN AND MEN AT DIFFERENT LEVELS
 Women
    
    
    Men2005
    
    
    2004
    
    
    2003
    
    
    2005
    
    
    2004
    
    
    2003Managers
    
    
    18
    %
    
    
    18
    %
    
    
    17
    %
    
    
    82
    %
    
    
    82
    %
    
    
    83
    %Salaried employees
    
    
    44
    %
    
    
    43
    %
    
    
    43
    %
    
    
    56
    %
    
    
    57
    %
    
    
    57
    %Hourly paid
    
    
    14
    %
    
    
    14
    %
    
    
    16
    %
    
    
    86
    %
    
    
    86
    %
    
    
    84
    %Total
    
    
    22
    %
    
    
    21
    %
    
    
    22
    %
    
    
    78
    %
    
    
    79
    %
    
    
    78
    %
 NUMBER OF WOMEN PER BUSINESS AREA
 Oil & Energy
    
    
    Aluminium
    
    
    Other2005
    
    
    2004
    
    
    2005
    
    
    2004
    
    
    2005
    
    
    2004Managers
    
    
    17
    %
    
    
    16
    %
    
    
    15
    %
    
    
    14
    %
    
    
    22
    %
    
    
    22
    %Salaried employees
    
    
    46
    %
    
    
    43
    %
    
    
    40
    %
    
    
    37
    %
    
    
    44
    %
    
    
    45
    %Hourly paid
    
    
    12
    %
    
    
    11
    %
    
    
    14
    %
    
    
    14
    %
    
    
    16
    %
    
    
    17
    %Total
    
    
    24
    %
    
    
    22
    %
    
    
    17
    %
    
    
    17
    %
    
    
    24
    %
    
    
    25
    %
 RECRUITMENT
 Women
    
    
    Men2005
    
    
    2004
    
    
    2005
    
    
    2004Managers
    
    
    32
    %
    
    
    21
    %
    
    
    68
    %
    
    
    79
    %Salaried employees *
    
    
    35
    %
    
    
    38
    %
    
    
    65
    %
    
    
    62
    %Hourly paid
    
    
    16
    %
    
    
    13
    %
    
    
    84
    %
    
    
    87
    %Total
    
    
    27
    %
    
    
    30
    %
    
    
    73
    %
    
    
    70
    %
 *
    
    The group salaried employees largely consists of younger persons with higher educational qualifications. They constitute an important group with respect to managerial recruitment.




---



##### 



Society, People, Environment
           Facts and Figures
 Equal pay
   Part-time employees
  Health and safety
 HEALTH AND SAFETY
 2005
    
    
    2004
    
    
    2003
    
    
    2002
    
    
    2001Total recordable injuries (TRI)*
    
    
    5.4
    
    
    
    6.0
    
    
    
    7.0
    
    
    
    10.3
    
    
    
    9.5Lost-time injuries (LTI)*- Employees
    
    
    2.7
    
    
    
    2.7
    
    
    
    3.6
    
    
    
    4.9
    
    
    
    3.1- Contractors
    
    
    2.4
    
    
    
    2.4
    
    
    
    2.3
    
    
    
    2.8
    
    
    
    3.8Fatalities**- Employees
    
    
    1.9
    
    
    
    2.5
    
    
    
    3.7
    
    
    
    3.7
    
    
    
    4.4- Contractors
    
    
    6.5
    
    
    
    6.1
    
    
    
    5.8
    
    
    
    6.8
    
    
    
    7.0Sick leave
    
    
    3.2
    %
    
    
    3.1
    %
    
    
    3.0
    %
    
    
    2.6
    %
    
    
    3.2
    %
 *
    
    Per million working hours
 **
    
    Per 100 million working hours, five-year rolling average
  Environment
 www.hydro.com/environment
 RESOURCE USE
 1,000 tonnes
    
    2005
    
    
    2004
    
    
    2003
    
    
    2002
    
    
    2001Aluminia
    
    
    2,687
    
    
    
    2,585
    
    
    
    2,347
    
    
    
    2,202
    
    
    
    1,357Sodium chloride (salt)
    
    
    486
    
    
    
    404
    
    
    
    432
    
    
    
    404
    
    
    
    448Magnesite
    
    
    167
    
    
    
    171
    
    
    
    173
    
    
    
    158
    
    
    
    162Aluminium fluoride
    
    
    26
    
    
    
    23
    
    
    
    19
    
    
    
    19
    
    
    
    12
 WATER CONSUMPTION
 Million m3
    
    2005
    
    
    2004
    
    
    2003
    
    
    2002
    
    
    2001Norway
    
    
    133.0
    
    
    
    120.7
    
    
    
    121.8
    
    
    
    113.5
    
    
    
    103.3Europe
    
    
    9.7
    
    
    
    10.9
    
    
    
    12.5
    
    
    
    12.7
    
    
    
    3.9Rest of world
    
    
    13.8
    
    
    
    13.6
    
    
    
    13.4
    
    
    
    12.6
    
    
    
    12.1Total
    
    
    156.5
    
    
    
    145.2
    
    
    
    147.7
    
    
    
    138.8
    
    
    
    119.3




---



##### 



Society,
People,
Environment
 ENERGY CONSUMPTION
 PJ
    
    2005
    
    
    2004
    
    
    2003
    
    
    2002
    
    
    2001Electricity
    
    
    95.9
    
    
    
    92.3
    
    
    
    86.8
    
    
    
    89.6
    
    
    
    61.1Oil
    
    
    2.4
    
    
    
    3.0
    
    
    
    3.4
    
    
    
    5.1
    
    
    
    6.0Coke
    
    
    18.6
    
    
    
    17.5
    
    
    
    17.2
    
    
    
    18.8
    
    
    
    10.4Natural gas
    
    
    57.6
    
    
    
    58.4
    
    
    
    49.1
    
    
    
    59.8
    
    
    
    58.3Natural gas liquid
    
    
    2.6
    
    
    
    2.8
    
    
    
    1.8
    
    
    
    1.5
    
    
    
    1.5Other
    
    
    8.0
    
    
    
    7.6
    
    
    
    7.6
    
    
    
    7.2
    
    
    
    7.3Total
    
    
    185.1
    
    
    
    181.6
    
    
    
    165.9
    
    
    
    182.0
    
    
    
    144.6
 ENERGY CONSUMPTION PER BUSINESS AREA
 PJ
    
    2005
    
    
    2004
    
    
    2003
    
    
    2002
    
    
    2001Oil & Energy
    
    
    50.5
    
    
    
    52.1
    
    
    
    43.8
    
    
    
    55.5
    
    
    
    62.0Aluminium
    
    
    126.0
    
    
    
    121.3
    
    
    
    113.6
    
    
    
    118.3
    
    
    
    74.0Polymers
    
    
    8.6
    
    
    
    8.2
    
    
    
    8.5
    
    
    
    8.3
    
    
    
    8.6Total
    
    
    185.1
    
    
    
    181.6
    
    
    
    165.9
    
    
    
    182.0
    
    
    
    144.6
  GREENHOUSE GASES
 Million tonnes CO2e
    
    2005
    
    
    2004
    
    
    2003
    
    
    2002
    
    
    2001N2O
    
    
    0.04
    
    
    
    0.03
    
    
    
    0.03
    
    
    
    0.01
    
    
    
    0.01SF6
    
    
    0.31
    
    
    
    1.16
    
    
    
    1.20
    
    
    
    1.08
    
    
    
    1.57PFC
    
    
    1.64
    
    
    
    1.54
    
    
    
    1.41
    
    
    
    1.75
    
    
    
    0.79CH4
    
    
    0.03
    
    
    
    0.04
    
    
    
    0.03
    
    
    
    0.03
    
    
    
    0.02CO2
    
    
    6.15
    
    
    
    6.10
    
    
    
    5.52
    
    
    
    6.32
    
    
    
    5.48Total
    
    
    8.17
    
    
    
    8.87
    
    
    
    8.19
    
    
    
    9.19
    
    
    
    7.87
 6
 GREENHOUSE GAS EMISSIONS PER BUSINESS AREA
 Million tonnes CO2e
    
    2005
    
    
    2004
    
    
    2003
    
    
    2002
    
    
    2001Oil & Energy
    
    
    2.89
    
    
    
    2.92
    
    
    
    2.52
    
    
    
    3.25
    
    
    
    3.32Aluminium
    
    
    5.03
    
    
    
    5.72
    
    
    
    5.43
    
    
    
    5.69
    
    
    
    4.29Polymers
    
    
    0.25
    
    
    
    0.23
    
    
    
    0.24
    
    
    
    0.25
    
    
    
    0.26Total
    
    
    8.17
    
    
    
    8.87
    
    
    
    8.19
    
    
    
    9.19
    
    
    
    7.87




---



##### 



Society, People, Environment
 Waste
 HAZARDOUS WASTE
 Tonnes
    
    2005
    
    
    2004
    
    
    2003
    
    
    2002
    
    
    2001Oil & Energy
    
    
    11,198
    
    
    
    10,644
    
    
    
    20,461
    
    
    
    42,925
    
    
    
    24,674Aluminium
    
    
    147,355
    
    
    
    117,768
    
    
    
    102,764
    
    
    
    101,409
    
    
    
    79,802Polymers
    
    
    6,638
    
    
    
    1,948
    
    
    
    1,241
    
    
    
    524
    
    
    
    462Total
    
    
    165,190
    
    
    
    130,360
    
    
    
    124,466
    
    
    
    144,867
    
    
    
    10,4879
  OTHER WASTE
 Tonnes
    
    2005
    
    
    2004
    
    
    2003
    
    
    2002
    
    
    2001Oil & Energy
    
    
    8,582
    
    
    
    2,408
    
    
    
    3,442
    
    
    
    4,732
    
    
    
    4,583Aluminium
    
    
    159,288
    
    
    
    174,281
    
    
    
    173,846
    
    
    
    127,597
    
    
    
    66,311Polymers
    
    
    4,401
    
    
    
    7,667
    
    
    
    2,423
    
    
    
    4,847
    
    
    
    5,863Total
    
    
    172,271
    
    
    
    184,356
    
    
    
    179,712
    
    
    
    137,175
    
    
    
    76,816
  WASTE TREATMENT
 2005
    
    
    2004
    
    
    2003Landfill
    
    
    27
    %
    
    
    28
    %
    
    
    35
    %Energy recovery
    
    
    5
    %
    
    
    4
    %
    
    
    4
    %Reuse/recycling
    
    
    46
    %
    
    
    40
    %
    
    
    37
    %Other treatment
    
    
    22
    %
    
    
    28
    %
    
    
    24
    %
  Emissions
 OIL & ENERGY
 2005
    
    
    2004
    
    
    2003
    
    
    2002
    
    
    2001CO2 from flaring, tonnes
    
    
    196,525
    
    
    
    196,464
    
    
    
    200,969
    
    
    
    
    
    
    
    Oil spillages, number
    
    
    70
    
    
    
    54
    
    
    
    70
    
    
    
    87
    
    
    
    106Oil to water, mill. m3
    
    
    31.4
    
    
    
    30.9
    
    
    
    25.9
    
    
    
    30.7
    
    
    
    31.7
 ALUMINIUM
 Tonnes
    
    2005
    
    
    2004
    
    
    2003
    
    
    2002
    
    
    2001SO2
    
    
    6,544.1
    
    
    
    6,753.5
    
    
    
    6,465.0
    
    
    
    6,220.4
    
    
    
    853.6Fluorides
    
    
    763.2
    
    
    
    658.7
    
    
    
    595.3
    
    
    
    774.7
    
    
    
    400.0PAH, airborne
    
    
    71.8
    
    
    
    56.9
    
    
    
    53.1
    
    
    
    61.6
    
    
    
    51.7
 Financial provisions




---



##### 



(BLACK BOX)
    
    
    91
 04:
    
    Risk, Regulation
and Other Information
 CONTENT
 92
    
    Risk Factors97
    
    Government Regulation and Taxation102
    
    Other Information




---



##### 



Risk, Regulation and Other Information
    Risks Relating to Hydros Businesses
 A substantial or extended decline in oil or natural gas prices or aluminium prices would have a
material adverse effect on Hydros business.
  
    
    Global and regional economic and political developments in resource-producing regions,
particularly in the Middle East;
    
    Changes in the supply of and demand for oil and natural gas;
    
    Agreements among the members of the Organization of the Petroleum Exporting Countries (OPEC)
regarding oil price and production controls; and
    
    Oil companies spending on exploration and production activities.
 1)
  1)
 Hydro businesses are exposed to foreign currency exchange rate fluctuations.
  1)
  Hydros reported earnings are subject to substantial volatility as a result of fluctuations in the
market value of commodity contracts.
  Hydro is exposed to risks relating to trading and commercial activities
  
 1)

    See discussion included in Business and Operating Information  Other  Market risk.
Based on average 2005 prices and expected business volumes for 2006: Oil US dollar 50 per barrel, Aluminium US dollar 1,900 per tonne and Norwegian
krone/US dollar 6.5. USD sensitivities for Oil & Energy and Aluminium includes both USD revenues and USD cost.




---



##### 



Risk, Regulation and Other Information
    

(BLACK BOX)
    
    
    93Risk Factors
  Hydros expansion of business in emerging and transitioning market countries presents a higher
degree of financial, political, economic and business risk.
     Emerging and transitioning market countries represent a competitive threat to Hydros businesses.
  Hydro is subject to a broad range of environmental, health and safety laws and regulations in the
jurisdictions in which it operates.
     Hydro is exposed to the risk of a deterioration or sudden dramatic decline in its reputation among
important stakeholders.




---



##### 



94
    
    (BLACK BOX)
    
    Risk, Regulation and Other InformationRisk Factors
 Future acquisitions, mergers, or strategic alliances may adversely affect Hydros financial
condition.
   Hydro may not be successful in attracting and retaining sufficient skilled employees.
   Risks Relating to the Oil & Energy Business
 The future performance of the Oil & Energy business depends on the ability to find or gain
access to additional oil and gas reserves that are recoverable in a profitable way.
   Hydros oil and gas reserves are only estimates and may prove to be inaccurate.
  The Oil & Energy development projects and production involve many uncertainties and operating risks
that can prevent Hydro from realizing profits and can cause substantial losses.




---



##### 



Risk, Regulation and Other Information
    
    (BLACK BOX)
    
    
    95Risk Factors
  Hydro may be subject to the imposition of sanctions by the US government in connection with its
activities in Iran.
    Hydros Oil & Energy business is exposed to tax increases on its petroleum production
    Hydros Aluminium operations are dependent on substantial amounts of energy and, as a result,
its profitability may decline if energy costs rise.
   Hydros Aluminium business is dependant on securing adequate supplies of alumina to develop and
grow its upstream primary metal business.
   Hydro participates in highly competitive Aluminium markets.
  Hydros Aluminium business is exposed to the nonperformance of its contract partners.




---



##### 



96
    
    (BLACK BOX)
    
    Risk, Regulation and Other InformationRisk Factors
  Hydro could be adversely affected by disruptions of its Aluminium operations.
  Hydro could be subject to unusual or significant litigation or other actions arising out of alleged
defects in Aluminium products.
   Preferential rights may not be available to US holders of Hydros shares.
   Holders of Hydros shares that are registered in a nominee account may not be able to exercise
voting rights as readily as shareholders whose shares are registered in their own names with the
VPS.
  It may be difficult for investors based in the United States to enforce civil liabilities
predicated on US securities laws against Hydro, its Norwegian affiliates, or Hydros directors and
executive officers.




---



##### 



Risk, Regulation and Other Information
    
    (BLACK BOX)
    
    
    97Government Regulation and Taxation
  Oil and Energy Government Regulation
 Norwegian Licensing System
        Organization of Norwegian Gas Sales and Transportation
  Environmental Regulations
   Norway
 Ordinary Taxes




---



##### 



98
    

(BLACK BOX)
    
    Risk, Regulation and Other
InformationGovernment Regulation and
Taxation
  Special Petroleum Tax.
   Taxation Outside Norway
  Production Sharing Agreements.
   Income tax regimes.
 Canada.
 United States, Gulf of Mexico.
 Russia.
 Libya.




---



##### 



Risk, Regulation and Other
Information
    
    (BLACK BOX)
    
    
    99Government Regulation and Taxation
  Angola.
 Taxation of Electricity Production in Norway
 Ordinary Income Taxes
    Resource rent tax on hydroelectric power plants




---



##### 



100
    
    (BLACK BOX)
    
    Risk, Regulation and Other
InformationGovernment Regulation and Taxation
 Aluminium Government Regulation
 Environmental Matters
       Oslo and Paris Commission (OSPAR)
  Integrated Pollution Prevention and Control
  Climate Gases
   EU Aluminium Tariffs




---



##### 



Risk, Regulation and Other
Information
    
    (BLACK BOX)
    
    
    101Government Regulation and Taxation
  Energy Taxation
  Other Businesses Government Regulation
 Environmental matters




---



##### 



102
    
    (BLACK BOX)
    
    Risk, Regulation and Other InformationOther Information
  Taxation
 United States Federal Income Tax Consequences
       Taxation of Dividends




---



##### 



Risk, Regulation and Other Information
    
    (BLACK BOX)
    
    
    103Other Information
    Taxation on Sale, Exchange, or Other Disposition
  Passive Foreign Investment Company Considerations
  US Information and Backup Withholding
 U.S.-
 Norwegian Tax Consequences
 Taxation of Dividends




---



##### 



104
    
    (BLACK BOX)
    
    Risk, Regulation and Other InformationOther Information
 Exchange controls
  Exchange rate information
  Average NoonCalendar Year Period
    
    Buying Rate1)2001
    
    
    9.002002
    
    
    7.932003
    
    
    7.062004
    
    
    6.722005
    
    
    6.46
 Noon Buying Rate2)Calendar Monthly Period
    
    High
    
    
    LowSeptember 2005
    
    
    6.53
    
    
    
    6.21October 2005
    
    
    6.62
    
    
    
    6.43November 2005
    
    
    6.74
    
    
    
    6.46December 2005
    
    
    6.80
    
    
    
    6.59February 2006
    
    
    6.64
    
    
    
    6.85
 1)
    
    The average of the Noon Buying Rates on the last business day of each calendar month
during the year indicated.2)
    
    The Noon Buying Rate on 21 March 2006 was NOK 6.58 = $1.00.




---



##### 



CONTENT
 F 3

    Consolidated Financial Statements US GAAPNotes to the Consolidated Financial StatementsF 8
    
    Note 1
    
    Summary of Significant Accounting PoliciesF 14
    
    Note 2
    
    Business combinations, dispositions and demergerF 16
    
    Note 3
    
    Consolidated shareholders equityF 19
    
    Note 4
    
    Remuneration and Share-Based CompensationF 22
    
    Note 5
    
    Operating and geographical segment informationF 28
    
    Note 6
    
    Restructuring costsF 28
    
    Note 7
    
    Operating cost and expensesF 28
    
    Note 8
    
    Financial income and expenseF 28
    
    Note 9
    
    Other income and expenseF 29
    
    Note 10
    
    Income taxesF 30
    
    Note 11
    
    Short-term investmentsF 30
    
    Note 12
    
    Inventories and other current assetsF 31
    
    Note 13
    
    Non-consolidated InvesteesF 32
    
    Note 14
    
    Intangible assets, prepaid pension,
investments and non-current assetsF 33
    
    Note 15
    
    Property, plant and equipmentF 34
    
    Note 16
    
    Goodwill and intangiblesF 34
    
    Note 17
    
    Bank loans and other interest-bearing short-term debtF 34
    
    Note 18
    
    Other current liabilitiesF 34
    
    Note 19
    
    Long-term debtF 35
    
    Note 20
    
    Employee retirement plansF 37
    
    Note 21
    
    Contingencies and other long-term liabilitiesF 38
    
    Note 22
    
    Secured debt and guaranteesF 39
    
    Note 23
    
    Contractual and other commitments for future
investments and operationsF 39
    
    Note 24
    
    Market risk management and derivative instrumentsF 43
    
    Note 25
    
    External audit remunerationF 44
    
    Note 26
    
    Related parties and Variable Interest EntitiesF 44
    
    Note 27
    
    Supplementary oil and gas informationF 60
    Use of Non-GAAP Financial MeasuresF 67
    IFRS in Hydros Financial Statements




---



##### 



Consolidated financial statements
    
    (IMAGE)
    
    F 3Norsk Hydro ASA and subsidiaries
 
 Year ended 31 December
    
    
    
    
    
    2005
    
    
    2005
    
    
    2004
    
    
    2003Amounts in million (except per share amounts)
    
    Notes
    
    
    NOK
    
    
    EUR 1)
    
    
    NOK
    
    
    NOKOperating revenues
    
    
    5
    
    
    
    174,201
    
    
    
    21,795
    
    
    
    153,891
    
    
    
    131,778Raw materials and energy costs
    
    
    
    
    
    
    88,665
    
    
    
    11,093
    
    
    
    81,477
    
    
    
    72,459Payroll and related costs
    
    
    7,20
    
    
    
    18,366
    
    
    
    2,298
    
    
    
    18,830
    
    
    
    18,569Depreciation, depletion and amortization
    
    
    5,15,16
    
    
    
    16,086
    
    
    
    2,013
    
    
    
    16,898
    
    
    
    13,947Other
    
    
    7,25
    
    
    
    4,652
    
    
    
    582
    
    
    
    4,861
    
    
    
    5,177Restructuring costs (income)
    
    
    6
    
    
    
    
    
    
    
    
    
    
    
    (22
    )
    
    
    Operating costs and expenses
    
    
    
    
    
    
    127,768
    
    
    
    15,986
    
    
    
    122,044
    
    
    
    110,153Operating income
    
    
    5
    
    
    
    46,432
    
    
    
    5,809
    
    
    
    31,847
    
    
    
    21,625Equity in net income of non-consolidated investees
    
    
    5,13
    
    
    
    619
    
    
    
    78
    
    
    
    629
    
    
    
    620Financial income (expense), net
    
    
    8,11,24
    
    
    
    (1,890
    )
    
    
    (236
    )
    
    
    137
    
    
    
    155Other income (expense), net
    
    
    5,9
    
    
    
    990
    
    
    
    124
    
    
    
    169
    
    
    
    (1,253
    )Income from continuing operations before taxes
and minority interest
    
    
    
    
    
    
    46,152
    
    
    
    5,774
    
    
    
    32,781
    
    
    
    21,146Income tax expense
    
    
    10
    
    
    
    (30,317
    )
    
    
    (3,793
    )
    
    
    (21,197
    )
    
    
    (12,923
    )Minority interest
    
    
    
    
    
    
    (118
    )
    
    
    (15
    )
    
    
    (106
    )
    
    
    151Income from continuing operations before cumulative effects
of changes in accounting principles
    
    
    
    
    
    
    15,716
    
    
    
    1,966
    
    
    
    11,477
    
    
    
    8,375Income from discontinued operations
    
    
    2
    
    
    
    
    
    
    
    
    
    
    
    1,083
    
    
    
    2,312Income before cumulative effects of changes in
accounting principles
    
    
    
    
    
    
    15,716
    
    
    
    1,966
    
    
    
    12,560
    
    
    
    10,687Cumulative effects of changes in accounting principles
    
    
    1,21
    
    
    
    (78
    )
    
    
    (10
    )
    
    
    
    
    
    
    281Net income
    
    
    28
    
    
    
    15,638
    
    
    
    1,957
    
    
    
    12,560
    
    
    
    10,968Basic and diluted earnings per share from continuing operations
before cumulative effects of changes in accounting principles
    
    
    3
    
    
    
    62.70
    
    
    
    7.84
    
    
    
    45.10
    
    
    
    32.50Basic and diluted earnings per share from
discontinued operations
    
    
    3
    
    
    
    
    
    
    
    
    
    
    
    4.20
    
    
    
    9.00Basic and diluted earnings per share before cumulative
effects of changes in accounting principles
    
    
    3
    
    
    
    62.70
    
    
    
    7.84
    
    
    
    49.40
    
    
    
    41.50Basic and diluted earnings per share
    
    
    3
    
    
    
    62.40
    
    
    
    7.80
    
    
    
    49.40
    
    
    
    42.60CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME 2)Net income
    
    
    
    
    
    
    15,638
    
    
    
    1,957
    
    
    
    12,560
    
    
    
    10,968Net unrealized loss on securities available-for-sale
    
    
    3
    
    
    
    (9
    )
    
    
    (1
    )
    
    
    (2
    )
    
    
    Minimum pension liability adjustment
    
    
    3
    
    
    
    (510
    )
    
    
    (64
    )
    
    
    (132
    )
    
    
    (113
    )Net investment hedge
    
    
    3
    
    
    
    33
    
    
    
    4
    
    
    
    320
    
    
    
    (333
    )Cash flow hedges
    
    
    3
    
    
    
    (751
    )
    
    
    (94
    )
    
    
    (339
    )
    
    
    35Net foreign currency translation adjustments
    
    
    3
    
    
    
    711
    
    
    
    89
    
    
    
    (1,628
    )
    
    
    4,856Total other comprehensive income (loss), net of tax
    
    
    3
    
    
    
    (526
    )
    
    
    (66
    )
    
    
    (1,781
    )
    
    
    4,445Comprehensive income, net of tax
    
    
    
    
    
    
    15,112
    
    
    
    1,891
    
    
    
    10,779
    
    
    
    15,413
 1)
    
    Presentation in euro is a convenience translation based on the exchange rate at
31.12.2005, which was 7.9927 (unaudited).2)
    
    Changes in shareholders equity include net income together with other changes not related to
investments by and distribution to shareholders (see Note 3).




---



##### 



F 4
    
    (IMAGE)
    
    Consolidated financial statementsNorsk Hydro ASA and subsidiaries
 
 31 December
    
    
    
    
    
    2005
    
    
    2005
    
    
    2004Amounts in million
    
    Notes
    
    
    NOK
    
    
    EUR 1)
    
    
    NOKASSETSCash and cash equivalents
    
    
    
    
    
    
    10,463
    
    
    
    1,309
    
    
    
    14,366Short-term investments
    
    
    11
    
    
    
    3,865
    
    
    
    484
    
    
    
    10,970Accounts receivable, less allowances of NOK 784 and NOK 891
    
    
    
    
    
    
    23,333
    
    
    
    2,919
    
    
    
    20,671Inventories
    
    
    12
    
    
    
    14,553
    
    
    
    1,821
    
    
    
    12,851Prepaid expenses and other current assets
    
    
    12
    
    
    
    15,912
    
    
    
    1,991
    
    
    
    10,478Current deferred tax assets
    
    
    10
    
    
    
    2,166
    
    
    
    271
    
    
    
    1,070Total current assets
    
    
    5
    
    
    
    70,293
    
    
    
    8,795
    
    
    
    70,406Non-consolidated investees
    
    
    13
    
    
    
    10,814
    
    
    
    1,353
    
    
    
    10,017Property, plant and equipment, less accumulated
depreciation, depletion and amortization
    
    
    15
    
    
    
    128,191
    
    
    
    16,038
    
    
    
    106,117Intangible assets
    
    
    14,16
    
    
    
    5,153
    
    
    
    645
    
    
    
    2,325Prepaid pension, investments and other non-current assets
    
    
    14,20
    
    
    
    11,910
    
    
    
    1,490
    
    
    
    10,713Deferred tax assets
    
    
    10
    
    
    
    833
    
    
    
    104
    
    
    
    664Total non-current assets
    
    
    5
    
    
    
    156,902
    
    
    
    19,631
    
    
    
    129,836Total assets
    
    
    5
    
    
    
    227,195
    
    
    
    28,425
    
    
    
    200,243LIABILITIES AND SHAREHOLDERS EQUITYBank loans and other interest-bearing short-term debt
    
    
    17
    
    
    
    4,658
    
    
    
    583
    
    
    
    3,785Current portion of long-term debt
    
    
    19
    
    
    
    379
    
    
    
    47
    
    
    
    568Other current liabilities
    
    
    18
    
    
    
    47,239
    
    
    
    5,910
    
    
    
    41,340Current deferred tax liabilities
    
    
    10
    
    
    
    980
    
    
    
    123
    
    
    
    384Total current liabilities
    
    
    
    
    
    
    53,256
    
    
    
    6,663
    
    
    
    46,077Long-term debt
    
    
    19
    
    
    
    21,387
    
    
    
    2,676
    
    
    
    19,487Accrued pension liabilities
    
    
    20
    
    
    
    9,939
    
    
    
    1,244
    
    
    
    8,569Other long-term liabilities
    
    
    21
    
    
    
    12,424
    
    
    
    1,554
    
    
    
    9,134Deferred tax liabilities
    
    
    10
    
    
    
    33,713
    
    
    
    4,218
    
    
    
    29,515Total long-term liabilities
    
    
    
    
    
    
    77,462
    
    
    
    9,692
    
    
    
    66,705Minority shareholders interest in consolidated subsidiaries
    
    
    
    
    
    
    981
    
    
    
    123
    
    
    
    1,571Share capital
    
    
    3
    
    
    
    4,739
    
    
    
    593
    
    
    
    4,739Additional paid-in capital
    
    
    3
    
    
    
    10,501
    
    
    
    1,314
    
    
    
    10,468Retained earnings
    
    
    3
    
    
    
    85,927
    
    
    
    10,751
    
    
    
    75,310- Treasury shares at cost
    
    
    3
    
    
    
    (3,589
    )
    
    
    (449
    )
    
    
    (3,069
    )Accumulated other comprehensive income (loss)
    
    
    3
    
    
    
    (2,083
    )
    
    
    (261
    )
    
    
    (1,557
    )Shareholders equity
    
    
    3,28
    
    
    
    95,495
    
    
    
    11,948
    
    
    
    85,890Total liabilities and shareholders equity
    
    
    
    
    
    
    227,195
    
    
    
    28,425
    
    
    
    200,243Total number of outstanding shares
    
    
    
    
    
    
    250,138,464
    
    
    
    250,138,464
    
    
    
    250,839,230Nominal value per share
    
    
    
    
    
    
    18.30
    
    
    
    2.29
    
    
    
    18.30
 1)
    
    Presentation in euro is a convenience translation based on the exchange rate at 31.12.2005, which was 7.9927 (unaudited).




---



##### 



Consolidated financial statements
    
    (IMAGE)
    
    F 5Norsk Hydro ASA and subsidiaries
 
 Year ended 31 December
    
    
    
    
    
    2005
    
    
    2005
    
    
    2004
    
    
    2003Amounts in million
    
    Notes
    
    
    NOK
    
    
    EUR *)
    
    
    NOK
    
    
    NOKOperting activities:Net income
    
    
    
    
    
    
    15,638
    
    
    
    1,957
    
    
    
    12,560
    
    
    
    10,968Adjustments to reconcile net income to net cash
provided by operating activities:Income from discontinued operations
    
    
    2
    
    
    
    
    
    
    
    
    
    
    
    (1,083
    )
    
    
    (2,312
    )Depreciation, depletion and amortization
    
    
    5
    
    
    
    16,086
    
    
    
    2,013
    
    
    
    16,898
    
    
    
    13,947Restructuring income
    
    
    6
    
    
    
    
    
    
    
    
    
    
    
    (22
    )
    
    
    Equity in net income of non-consolidated investees
    
    
    5,13
    
    
    
    (619
    )
    
    
    (77
    )
    
    
    (628
    )
    
    
    (620
    )Dividends received from non-consolidated investees
    
    
    
    
    
    
    323
    
    
    
    40
    
    
    
    326
    
    
    
    258Deferred taxes
    
    
    10
    
    
    
    (519
    )
    
    
    (65
    )
    
    
    (2,945
    )
    
    
    (1,585
    )Loss (gain) on sale of non-current assets
    
    
    
    
    
    
    (937
    )
    
    
    (117
    )
    
    
    39
    
    
    
    (726
    )Loss (gain) on foreign currency transactions
    
    
    8
    
    
    
    2,159
    
    
    
    270
    
    
    
    (1,350
    )
    
    
    (1,035
    )Net sales (purchases) of trading securities
    
    
    
    
    
    
    (49
    )
    
    
    (6
    )
    
    
    (177
    )
    
    
    245Other
    
    
    
    
    
    
    782
    
    
    
    98
    
    
    
    779
    
    
    
    2,150
    4)Working capital changes that provided (used) cash:Receivables
    
    
    
    
    
    
    (2,156
    )
    
    
    (270
    )
    
    
    (1,117
    )
    
    
    (576
    )Inventories
    
    
    
    
    
    
    (1,940
    )
    
    
    (243
    )
    
    
    (1,040
    )
    
    
    453Prepaid expenses and other current assets
    
    
    
    
    
    
    (7,951
    )
    
    
    (995
    )
    
    
    1,798
    
    
    
    2,251Other current liabilities
    
    
    
    
    
    
    6,568
    
    
    
    822
    
    
    
    3,686
    
    
    
    (645
    )Net cash provided by continuing operating activities
    
    
    
    
    
    
    27,385
    
    
    
    3,426
    
    
    
    27,724
    
    
    
    22,773Investing activities:Purchases of property, plant and equipment
    
    
    
    
    
    
    (17,562
    )
    
    
    (2,197
    )
    
    
    (16,187
    )
    
    
    (14,537
    )Purchases of other long-term investments
    
    
    
    
    
    
    (17,263
    )
    
    
    (2,160
    )
    
    
    (858
    )
    
    
    (684
    )Purchases of short-term investments
    
    
    
    
    
    
    (15,162
    )
    
    
    (1,897
    )
    
    
    (9,166
    )
    
    
    (702
    )Proceeds from sales of property, plant and equipment
    
    
    
    
    
    
    1,362
    2)
    
    
    170
    
    
    
    837
    
    
    
    647Proceeds from sales of other long-term investments
    
    
    
    
    
    
    1,862
    
    
    
    233
    
    
    
    1,400
    
    
    
    6,384Proceeds from sales of short-term investments
    
    
    
    
    
    
    22,445
    
    
    
    2,808
    
    
    
    12
    
    
    
    1,838Net cash used in continuing investing activities
    
    
    
    
    
    
    (24,318
    )
    
    
    (3,043
    )
    
    
    (23,962
    )
    
    
    (7,054
    )Financing activities:Loan proceeds
    
    
    
    
    
    
    1,844
    
    
    
    231
    
    
    
    143
    
    
    
    264Principal repayments
    
    
    
    
    
    
    (2,102
    )
    
    
    (263
    )
    
    
    (9,271
    )
    
    
    (5,167
    )Ordinary shares purchased
    
    
    3
    
    
    
    (1,589
    )
    
    
    (199
    )
    
    
    (1,684
    )
    
    
    (555
    )Ordinary shares issued
    
    
    
    
    
    
    71
    
    
    
    9
    
    
    
    44
    
    
    
    77Dividends paid
    
    
    3
    
    
    
    (5,021
    )
    
    
    (628
    )
    
    
    (2,811
    )
    
    
    (2,711
    )Net cash used in continuing financing activities
    
    
    
    
    
    
    (6,797
    )
    
    
    (850
    )
    
    
    (13,579
    )
    
    
    (8,092
    )Foreign currency effects on cash
    
    
    
    
    
    
    (173
    )
    
    
    (22
    )
    
    
    (264
    )
    
    
    702Discontinued operations:Net cash provided by operating activities
    
    
    2
    
    
    
    
    
    
    
    
    
    
    
    838
    
    
    
    1,805Net cash provided by (used in) investing activities
    
    
    2
    
    
    
    
    
    
    
    
    
    
    
    8,840
    
    
    
    (744
    )Net cash used in financing activities
    
    
    2
    
    
    
    
    
    
    
    
    
    
    
    (109
    )
    
    
    (141
    )Foreign currency effects on cash
    
    
    2
    
    
    
    
    
    
    
    
    
    
    
    5
    
    
    
    77Net cash provided by discontinued operations
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    9,574
    
    
    
    997Net increase (decrease) in cash and cash equivalents
    
    
    
    
    
    
    (3,903
    )
    
    
    (488
    )
    
    
    (507
    )
    
    
    9,326Cash and cash equivalents at beginning of year
    
    
    
    
    
    
    14,366
    
    
    
    1,797
    
    
    
    14,873
    
    
    
    5,547Cash and cash equivalents at end of year
    
    
    
    
    
    
    10,463
    
    
    
    1,309
    
    
    
    14,366
    
    
    
    14,873Cash disbursements (receipts) regarding:Interest (net of amount capitalized) 3)
    
    
    
    
    
    
    (48
    )
    
    
    (6
    )
    
    
    1,701
    
    
    
    1,190Income taxes
    
    
    
    
    
    
    29,612
    
    
    
    3,705
    
    
    
    19,758
    
    
    
    16,011
 *)
    
    Presentation in euro is a convenience translation based on the exchange rate at 31 December, 2005, which was 7.9927 (unaudited).2)
    
    In January 2005, Hydro received approximately NOK 1.1 billion relating to the sale of its 10% ownership interest in Snøhvit in 2004, and that was reported
as a short term receivable within Other current assets as of 31 December, 2004.3)
    
    Includes cash disbursements relating to early repayment of long term debt (breaking costs) of NOK 6 million in 2005 and NOK 938 million in 2004 (Note 8).4)
    
    Includes non-cash charge relating to an expected state grant pertaining to an asset retirement obligation of NOK 2,207 million.
 The accompanying notes are an integral part of the consolidated financial statements.




---



##### 



F 8
    
    (IMAGE)
    
    Notes to the consolidated financial statementsNorsk Hydro ASA and subsidiaries
 
  Note 1
 Summary of Significant Accounting Policies
   Consolidation
     Business Combinations
  Foreign Currency Translation
  Foreign Currency Transactions
  Revenue Recognition




---



##### 



Notes to the consolidated financial statements
    
    (IMAGE)
    
    F 9Norsk Hydro ASA and subsidiaries
  Cash and Cash Equivalents
  Short-term Investments
  Inventories
  Investments
   Exchanges of Nonmonetary Assets
  Property, Plant and Equipment
   Periodic maintenance
 Capitalized Interest
 Leased Assets
 Exploration and Development Costs of Oil and Gas
Reserves
  Depreciation, Depletion and Amortization
 Machinery and equipment
    
    5  25 percentBuildings
    
    2  5 percentOther
    
    10  20 percent




---



##### 



F 10
    
    (IMAGE)
    
    Notes to the consolidated financial statementsNorsk Hydro ASA and subsidiaries
   Asset Retirement Obligations
  Intangible Assets
  Goodwill
  Contingencies and Guarantees
  Oil and Gas Royalty
  Shipping costs
  Research and Development
  Emission Rights
 2 2 2 2
 Other Income (Expense), net
  Income Taxes
   Derivative Instruments




---



##### 



Notes to the consolidated financial statements
    

(IMAGE)
    
    F 11Norsk Hydro ASA and subsidiaries
       Share-Based Compensation
   Pro Forma Information
  In NOK millions,except for earnings per share
    
    2005
    
    
    2004
    
    
    2003Net income, as reported
    
    
    15,638
    
    
    
    12,560
    
    
    
    10,968Add: share-based employee
compensation expense included
in reported net income, net of tax
    
    
    48
    
    
    
    8
    
    
    
    Less: Total share-based compensation
expense determined under the fair
value method, net of tax
    
    
    29
    
    
    
    11
    
    
    
    3Pro-forma net income
    
    
    15,657
    
    
    
    12,557
    
    
    
    10,965Earnings per share:Basic and diluted as reported
    
    
    62.40
    
    
    
    49.40
    
    
    
    42.60Basic and diluted, pro-forma
    
    
    62.50
    
    
    
    49.40
    
    
    
    42.60
 Employee Retirement Plans
  Discontinued operations




---



##### 



F 12
    

(IMAGE)
    
    Notes to the consolidated financial statementsNorsk Hydro ASA and subsidiaries
    Asset Retirement Obligations
   Inventory Cost
  Exchanges of Nonmonetary Assets
  Suspended well cost
  Consolidation of Variable Interest Entities
  Contractual Mineral Rights




---



##### 



Notes to the consolidated financial statements
    

(IMAGE)
    
    F 13Norsk Hydro ASA and subsidiaries
 Energy contracts
  Exit costs
   Share-Based payment
  Accounting Changes and Error Corrections
  Inventory Counterparty Purchases and Sales
  Altersteilzeit (ATZ) Early Retirement Programs
  Recognition of buy/sell arrangements




---



##### 



F 14
    
    (IMAGE)
    
    Notes to the consolidated financial statementsNorsk Hydro ASA and subsidiaries
    Note 2
 Business combinations,
dispositions and demerger
   2005 Acquisitions
       Amounts in NOK millionCash and cash equivalents
    
    
    89Other current assets
    
    
    1,094Property, plant and equipment
    
    
    18,869Goodwill
    
    
    2,991Short-term liabilities
    
    
    (886
    )Long-term liabilities
    
    
    (5,622
    )Estimated fair value of the net assets of Spinnaker
    
    
    16,534
  2005 Dispositions
  2004 Acquisitions
  2004 Dispositions
  2003 Acquisitions
  2003 Dispositions




---



##### 



Notes to the consolidated financial statements
    
    (IMAGE)
    
    F 15Norsk Hydro ASA and subsidiaries
  Pro forma Information (Unaudited)
  Amounts in NOK million
    
    2005
    
    
    2004Operating revenue
    
    
    176,357
    
    
    
    155,726Operating income
    
    
    45,121
    
    
    
    29,621Income before cumulative effect of
change in accounting principles.
    
    
    14,589
    
    
    
    10,832Net income
    
    
    14,511
    
    
    
    10,832Earnings per share
    
    
    57,90
    
    
    
    42,60
     Demerger 2004
    Income from discontinued operations




---



##### 



F 16
    
    (IMAGE)
    
    Notes to the consolidated financial statementsNorsk Hydro ASA and subsidiaries
     NOK million
    
    2005
    
    
    2004
    
    
    2003Operating revenues
    
    
    
    
    
    
    10,036
    
    
    
    38,334Operating income
    
    
    
    
    
    
    936
    
    
    
    2,633Non-consolidated investees
    
    
    
    
    
    
    131
    
    
    
    610Financial income (expense), net
    
    
    
    
    
    
    (88
    )
    
    
    47Other income, net
    
    
    
    
    
    
    
    
    
    
    40Income before taxes
and minority interest
    
    
    
    
    
    
    979
    
    
    
    3,330Income tax expense
    
    
    
    
    
    
    (307
    )
    
    
    (1,015
    )Minority interest
    
    
    
    
    
    
    26
    
    
    
    (3
    )Income before sale of shares
    
    
    
    
    
    
    698
    
    
    
    2,312Gain from sale of shares
    
    
    
    
    
    
    533
    
    
    
    Tax on gain from sale of shares
    
    
    
    
    
    
    (148
    )
    
    
    Net income US GAAP
    
    
    
    
    
    
    1,083
    
    
    
    2,312
 31 DecemberNOK million
    
    2005
    
    
    2004Current assets
    
    
    
    
    
    
    Non-current assets
    
    
    
    
    
    
    Total assets
    
    
    
    
    
    
    Current liabilities
    
    
    
    
    
    
    Long-term liabilities
    
    
    
    
    
    
    Minority interest
    
    
    
    
    
    
    Discontinued operations, net US GAAP
    
    
    
    
    
    
    
 NOK million
    
    2005
    
    
    2004Net cash provided by operating activities
    
    
    
    
    
    
    838Net cash
provided by (used in) investing activities1)
    
    
    
    
    
    
    8,840Net cash used in financing activities
    
    
    
    
    
    
    (109
    )Foreign currency effects on cash flows
    
    
    
    
    
    
    5Net cash provided by discontinued operations
    
    
    
    
    
    
    9,574
 1)
        Includes proceeds from sale of Yara
shares and loan repayments from Yara.  Note 3
 Consolidated shareholders equity




---



##### 



Notes to the consolidated financial statements
    
    (IMAGE)
    
    F 17Norsk Hydro ASA and subsidiaries
     Amounts in NOK million
    
    Ordinary Shares issued
    
    Additional
    
    Total
    
    
    
    
    
    Treasury Stock
    
    Accumulated
    
    Totalexcept number of shares
    
    Norsk Hydro ASA
    
    paid-in
    
    paid-in
    
    Retained
    
    Norsk Hydro ASA
    
    other compre-
    
    shareholdersin thousands
    
    Number
    
    Amount
    
    capital
    
    capital
    
    earnings
    
    Number
    
    Amount
    
    hensive income
    

equityBalance 31 December 2002
    
    
    266,597
    
    
    
    5,332
    
    
    
    15,088
    
    
    
    20,420
    
    
    
    63,260
    
    
    
    (8,636
    )
    
    
    (3,052
    )
    
    
    (4,761
    )
    
    
    75,867Net income 2003
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    10,968
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    10,968Dividend declared and paid
(NOK 10.50 per share)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (2,711
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (2,711
    )Minimum pension liability
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (113
    )
    
    
    (113
    )Hedge of net investment
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (333
    )
    
    
    (333
    )Cash flow hedges
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    35
    
    
    
    35Purchase of treasury stock
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (1,484
    )
    
    
    (555
    )
    
    
    
    
    
    
    (555
    )Treasury stock reissued to employees
    
    
    
    
    
    
    
    
    
    
    (17
    )
    
    
    (17
    )
    
    
    
    
    
    
    235
    
    
    
    83
    
    
    
    
    
    
    
    66Foreign currency translation
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    4,856
    
    
    
    4,856Balance 31 December 2003
    
    
    266,597
    
    
    
    5,332
    
    
    
    15,071
    
    
    
    20,403
    
    
    
    71,517
    
    
    
    (9,885
    )
    
    
    (3,524
    )
    
    
    (316
    )
    
    
    88,080Net income 2004
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    12,560
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    12,560Dividend declared and paid
(NOK 11.00 per share)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (2,811
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (2,811
    )Net unrealized gain on securities
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (2
    )
    
    
    (2
    )Minimum pension liability
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (132
    )
    
    
    (132
    )Hedge of net investment
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    320
    
    
    
    320Cash flow hedges
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (339
    )
    
    
    (339
    )Purchase of treasury stock
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (2,809
    )
    
    
    (1,239
    )
    
    
    
    
    
    
    (1,239
    )Treasury stock reissued to employees
    
    
    
    
    
    
    
    
    
    
    19
    
    
    
    19
    
    
    
    
    
    
    
    285
    
    
    
    102
    
    
    
    
    
    
    
    121Cancellation treasury stock
    
    
    (4,294
    )
    
    
    (82
    )
    
    
    (1,511
    )
    
    
    (1,593
    )
    
    
    2
    
    
    
    4,294
    
    
    
    1,591
    
    
    
    
    
    
    
    Redeemed shares, the Norwegian State
    
    
    (3,349
    )
    
    
    (63
    )
    
    
    (1,363
    )
    
    
    (1,426
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (1,426
    )Demerger Yara International ASA
    
    
    
    
    
    
    (448
    )
    
    
    (1,749
    )
    
    
    (2,197
    )
    
    
    (5,957
    )
    
    
    
    
    
    
    
    
    
    
    540
    
    
    
    (7,614
    )Foreign currency translation
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (1,628
    )
    
    
    (1,628
    )Balance 31 December 2004
    
    
    258,954
    
    
    
    4,739
    
    
    
    10,467
    
    
    
    15,206
    
    
    
    75,311
    
    
    
    (8,115
    )
    
    
    (3,070
    )
    
    
    (1,557
    )
    
    
    85,890Net income 2005
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    15,638
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    15,638Dividend declared and paid
(NOK 20.00 per share)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (5,021
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (5,021
    )Net unrealized gain on securities
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (9
    )
    
    
    (9
    )Minimum pension liability
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (510
    )
    
    
    (510
    )Hedge of net investment
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    33
    
    
    
    33Cash flow hedges
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (751
    )
    
    
    (751
    )Purchase of treasury stock
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (934
    )
    
    
    (608
    )
    
    
    
    
    
    
    (608
    )Treasury stock reissued to employees
    
    
    
    
    
    
    
    
    
    
    33
    
    
    
    33
    
    
    
    
    
    
    
    234
    
    
    
    88
    
    
    
    
    
    
    
    122Foreign currency translation
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    711
    
    
    
    711Balance 31 December 2005
    
    
    258,954
    
    
    
    4,739
    
    
    
    10,500
    
    
    
    15,239
    
    
    
    85,928
    
    
    
    (8,816
    )
    
    
    (3,590
    )
    
    
    (2,083
    )
    
    
    95,495




---



##### 



F
18
    
    (IMAGE)
    
    Notes to the consolidated financial statementsNorsk Hydro ASA and subsidiaries
 
     Net unrealized
    
    Net unrealized
    
    Net gain
    
    Minimum
    
    Net foreign
    
    Total accumulatedgain
    
    gain (loss)
    
    cash
    
    pension liability
    
    currency translation
    
    other comprehen-Amounts in NOK million
    
    on securities
    
    investment hedge
    
    flow hedge
    
    adjustment
    
    loss
    
    sive income (loss)Balance 31 December 2002
    
    
    11
    
    
    
    81
    
    
    
    1,114
    
    
    
    (883
    )
    
    
    (5,084
    )
    
    
    (4,761
    )Balance 31 December 2003
    
    
    11
    
    
    
    (252
    )
    
    
    1,149
    
    
    
    (996
    )
    
    
    (228
    )
    
    
    (316
    )Balance 31 December 2004
    
    
    9
    
    
    
    102
    
    
    
    810
    
    
    
    (814
    )
    
    
    (1,664
    )
    
    
    (1,557
    )Balance 31 December 2005
    
    
    
    
    
    
    135
    
    
    
    59
    
    
    
    (1,324
    )
    
    
    (953
    )
    
    
    (2,083
    )
       31 December 2005
    
    31 December 2004 1)
    
    31 December 2003Amounts in NOK million
    
    Pretax
    
    Tax
    
    Net
    
    Pretax
    
    Tax
    
    Net
    
    Pretax
    
    Tax
    
    NetNet unrealized gain on securities
    
    
    (12
    )
    
    
    3
    
    
    
    (9
    )
    
    
    (3
    )
    
    
    1
    
    
    
    (3
    )
    
    
    
    
    
    
    
    
    
    
    Net investment hedge
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    445
    
    
    
    (125
    )
    
    
    320
    
    
    
    (462
    )
    
    
    129
    
    
    
    (333
    )Companies sold
    
    
    33
    
    
    
    
    
    
    
    33
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Net investment hedge
    
    
    33
    
    
    
    
    
    
    
    33
    
    
    
    445
    
    
    
    (125
    )
    
    
    320
    
    
    
    (462
    )
    
    
    129
    
    
    
    (333
    )Cash flow hedge
    
    
    (782
    )
    
    
    219
    
    
    
    (563
    )
    
    
    (214
    )
    
    
    60
    
    
    
    (154
    )
    
    
    385
    
    
    
    (112
    )
    
    
    272Less: Reclassification of hedging gain
    
    
    (261
    )
    
    
    73
    
    
    
    (188
    )
    
    
    (256
    )
    
    
    71
    
    
    
    (185
    )
    
    
    (331
    )
    
    
    94
    
    
    
    (237
    )Net cash flow hedge
    
    
    (1,043
    )
    
    
    292
    
    
    
    (751
    )
    
    
    (470
    )
    
    
    131
    
    
    
    (339
    )
    
    
    54
    
    
    
    (18
    )
    
    
    35Minimum pension liability adjustment
    
    
    (744
    )
    
    
    234
    
    
    
    (510
    )
    
    
    (189
    )
    
    
    57
    
    
    
    (132
    )
    
    
    (182
    )
    
    
    69
    
    
    
    (113
    )Foreign currency translation
    
    
    1,081
    
    
    
    
    
    
    
    1,081
    
    
    
    (1,625
    )
    
    
    
    
    
    
    (1,625
    )
    
    
    4,650
    
    
    
    
    
    
    
    4,650Companies sold
    
    
    (370
    )
    
    
    
    
    
    
    (370
    )
    
    
    (3
    )
    
    
    
    
    
    
    (3
    )
    
    
    206
    
    
    
    
    
    
    
    206Net foreign currency translation
    
    
    711
    
    
    
    
    
    
    
    711
    
    
    
    (1,628
    )
    
    
    
    
    
    
    (1,628
    )
    
    
    4,856
    
    
    
    
    
    
    
    4,856Total change in other
comprehensive income
    
    
    (1,055
    )
    
    
    529
    
    
    
    (526
    )
    
    
    (1,845
    )
    
    
    64
    
    
    
    (1,781
    )
    
    
    4,266
    
    
    
    180
    
    
    
    4,445
 
 1)
    
    Effects of the Yara demerger, NOK 540 million, are not included in the changes specified.




---



##### 



Notes to
the consolidated financial statements
    
    (IMAGE)
    
    F 19Norsk Hydro ASA and subsidiaries
  Note 4
 Remuneration and Share-Based Compensation
   Board
    
    Outstanding
    
    NumberBoard Member
    
    Fees 1)
    
    Loans 1) 2)
    
    of Shares 3)Jan Reinås
    
    
    470
    
    
    
    
    
    
    
    Borger A. Lenth
    
    
    420
    
    
    
    
    
    
    
    144Elisabeth Grieg
    
    
    280
    
    
    
    
    
    
    
    6,080Håkan Mogren
    
    
    245
    
    
    
    
    
    
    
    Ingvild Myhre
    
    
    245
    
    
    
    
    
    
    
    Kurt Anker Nielsen
    
    
    280
    
    
    
    
    
    
    
    Geir Nilsen 4)
    
    
    230
    
    
    
    300
    
    
    
    78Terje Friestad 4)
    
    
    280
    
    
    
    50
    
    
    
    259Odd Semstrøm 4) 5)
    
    
    84
    
    
    
    
    
    
    
    152Sten Roar Martinsen 4) 6)
    
    
    146
    
    
    
    
    
    
    
    Total Board fees  2005
    
    
    2,680
 
 1)
    
    Amounts in NOK thousands.2)
    
    Mr. Nilsens loan is at an interest rate of
3.0-3.6 percent and has a repayment period of 4.5
years. Mr. Friestads loan is at an interest rate
of 3.0 percent and has a repayment period of 2.5
years. Both loans are extended to the board members
under an employee benefit scheme applicable to all
employees in Norway.3)
    
    Number of shares includes related party
share holdings as of 31 December 2005, in
addition to the shares held directly by the
board member.4)
    
    Employee representative on the board elected by
the employees in accordance with Norwegian company
law. As such, these individuals are also paid
regular salary, remuneration in kind and pension
benefits that are not included in the table above.5)
    
    Employee board representative until 12 May 2005.6)
    
    Employee board representative from 12 May 2005. Corporate Management Board Remuneration
     EstimatedChange inCorporate
    
    
    
    
    
    Exercise
    
    
    Remu-
    
    
    
    
    
    
    Value of
    
    
    Out-Management
    
    
    
    
    
    of Options
    
    
    neration
    
    
    
    
    
    
    Pension
    
    
    standingBoard
    
    Salary 1)
    
    
    1)2)
    
    
    in kind 1)
    
    
    Bonus 1)
    
    
    Benefits 3)
    
    
    Loans 1)4)E. Reiten
    
    
    4,741
    
    
    
    3,141
    
    
    
    227
    
    
    
    1,500
    
    
    
    5,061
    
    
    
    J.O. Ottestad
    
    
    2,502
    
    
    
    
    
    
    
    169
    
    
    
    374
    
    
    
    3,109
    
    
    
    J.H. Nilsen 4)
    
    
    2,924
    
    
    
    
    
    
    
    210
    
    
    
    453
    
    
    
    2,134
    
    
    
    155T. Torvund 4)
    
    
    3,165
    
    
    
    
    
    
    
    220
    
    
    
    419
    
    
    
    2,144
    
    
    
    944H. Aasheim 5)
    
    
    457
    
    
    
    
    
    
    
    31
    
    
    
    
    
    
    
    329
    
    
    
    A.B. Gjørv 6)
    
    
    567
    
    
    
    
    
    
    
    50
    
    
    
    257
    
    
    
    203
    
    
    
    
 
 1)
    
    Amounts in NOK thousands.2)
    
    Mr. Reiten exercised 9,320 options on 10 November
2005 at an exercise price of NOK 331.14; the
average of the five preceding trading days share
price was NOK 668.20.3)
    
    Estimated change in value of pension benefit is
calculated as the increase in Projected Benefit
Obligations (PBO) calculated with stable
assumptions. As such, the number includes both
the annual accrual of pension benefits and the
interest element related to the total accrued
pension benefits.4)
    
    The loan to Mr. Nilsen was entered into prior to
30 July 2002. The loan has an interest rate of 3
percent and a repayment period of 7.5 years. The
beginning balance of the loan to Mr. Torvund was
entered into prior to 30 July 2002. During 2005,
new loans of NOK 575,000 were entered into. Mr.
Torvunds total loans are in the process of being
repaid and will be finalized in March 2006. The
loans to Mr. Torvund have an interest rate between
3.0-3.6 percent. The loans to Mr. Nilsen and Mr.
Torvund are issued under an employee benefit
scheme applicable to all employees in Norway.5)
    
    Ms. Aasheim joined Hydro as a member of the
corporate management board on 1 October 2005.6)
    
    Ms. Bech Gjørv stepped down from the corporate
management board on 1 May 2005.  Executive Management Share-Based Compensation




---



##### 



F 20
    
    (IMAGE)
    
    Notes to the consolidated financial statementsNorsk Hydro ASA and subsidiaries
     Weighted
    
    
    Intrinsic
    
    
    NumberAverage
    
    
    Value of
    
    
    ofExercise Price
    
    
    Outstanding
    
    
    SharesCorporate
    
    
    
    
    
    SARs
    
    
    SARs
    
    
    
    
    
    
    SARs
    
    
    SARs Out-
    
    
    of SARs Out-
    
    
    Options
    
    
    HeldManagement
    
    SARs
    
    
    Granted
    
    
    Vested
    
    
    SARs
    
    
    Exercised
    
    
    standing
    
    
    standing as of
    
    
    (NOK
    
    
    31.12.Board
    
    31.12.2004
    
    
    01.07.2005
    
    
    in 2005
    
    
    Forfeited 1)
    
    
    in 2005
    
    
    31.12.2005
    
    
    31.12.2005
    
    
    Thousands)2)
    
    
    20053)Eivind Reiten
    
    
    35,000
    
    
    
    15,000
    
    
    
    9,320
    
    
    
    680
    
    
    
    9,320
    
    
    
    40,000
    
    
    
    492.16
    
    
    
    8,034
    
    
    
    13,664John O. Ottestad
    
    
    24,000
    
    
    
    10,000
    
    
    
    6,524
    
    
    
    476
    
    
    
    
    
    
    
    33,524
    
    
    
    459.12
    
    
    
    9,111
    
    
    
    8,261Jon-Harald Nilsen
    
    
    24,000
    
    
    
    10,000
    
    
    
    6,524
    
    
    
    476
    
    
    
    
    
    
    
    33,524
    
    
    
    459.12
    
    
    
    9,111
    
    
    
    293Tore Torvund
    
    
    24,000
    
    
    
    10,000
    
    
    
    6,524
    
    
    
    476
    
    
    
    
    
    
    
    33,524
    
    
    
    459.12
    
    
    
    9,111
    
    
    
    3,686Hilde Aasheim 4)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Alexandra Bech Gjørv 5)
    
    
    21,000
    
    
    
    
    
    
    
    6,524
    
    
    
    476
    
    
    
    6,524
    
    
    
    14,000
    
    
    
    398.81
    
    
    
    4,119
    
    
    
    2,203
 1)
    
    SARs amounting to 6,8 percent of total number granted were forfeited as the total
shareholder return target was not achieved during the vesting period.
 2)
    
    Share price 31 December 2005 less exercise price multiplied by the number of SARs outstanding
as of year-end.
 3)
    
    Number of shares held includes related party share holdings as of 31 December 2005, in
addition to the shares held directly by the corporate management board member.
 4)
    
    Ms. Aasheim joined Hydro as a member of the corporate management board on 1 October 2005.5)
    
    Ms. Bech Gjørv stepped down from the corporate
management board on 1 May 2005.
      2005
    
    
    2004
    
    
    2003Expected option life at grant date
    
    
    4.0
    
    
    
    4.0
    
    
    
    4.0Risk-free interest rate
    
    
    2.78
    %
    
    
    3.35
    %
    
    
    3.87
    %Expected volatility
    
    
    25.32
    %
    
    
    25.79
    %
    
    
    26.79
    %Expected Dividend per share, NOK
    
    
    20.00
    
    
    
    12.00
    
    
    
    11.50Estimated weighted average fair value per option, NOK
    
    
    95.65
    
    
    
    69.95
    
    
    
    47.87Fair value of total options granted during fiscal year, NOK thousands
    
    
    11,287
    
    
    
    8,743
    
    
    
    4,667




---



##### 



Notes to the consolidated financial statements
    
    (IMAGE)
    
    F 21Norsk Hydro ASA and subsidiaries
 WeightedWeighted
    
    
    
    
    
    
    AverageAverage
    
    
    Exercise
    
    
    MarketExercise
    
    
    Price at
    
    
    Price at
    
    
    Vesting
    
    
    ExerciseShare Appreciation Rights 1)
    
    Options
    
    
    Price (NOK)
    
    
    Grant Date
    
    
    Grant Date 2)
    
    
    Period
    
    
    PeriodOutstanding 1 January 2003
    
    
    175,000
    
    
    
    374.80Granted 8 August - 15 September 2003
    
    
    97,500
    
    
    
    
    
    
    
    321.62
    
    
    
    341.03
    
    
    Grant Date  30.06.2006
    
    
    01.07.2006  30.06.2008Exercised
    
    
    Forfeited
    
    
    Expired
    
    
    Outstanding 31 December 2003
    
    
    272,500
    
    
    
    345.98Exercisable 31 December 2003
    
    
    Granted 9 September 2004
    
    
    125,000
    
    
    
    
    
    
    
    476.00
    
    
    
    446.50
    
    
    
    09.09.2004  30.06.2007
    
    
    
    01.07.2007  30.06.2010Exercised
    
    
    Forfeited
    
    
    (82,500
    )
    
    
    390.40Expired
    
    
    Outstanding 31 December 2004
    
    
    315,000
    
    
    
    385.68Exercisable 31 December 2004
    
    
    Granted 1 July 2005
    
    
    118,000
    
    
    
    
    
    
    
    622.00
    
    
    
    603.00
    
    
    
    01.07.2005  30.06.2008
    
    
    
    01.07.2008  30.06.2011Exercised
    
    
    (62,910
    )
    
    
    331.14Forfeited 3) 4)
    
    
    (9,790
    )
    
    
    327.74Expired
    
    
    Outstanding 31 December 2005
    
    
    360,300
    
    
    
    474.17Exercisable 31 December 2005
    
    
    23,300
    
    
    
    331.14
 1)
    
    All options granted and then canceled or exercised related to the 2004 Yara de-merger are
excluded from this table.2)
    
    Close of day share prices, adjusted for changes in group structure, as appropriate.3)
    
    Stock options granted in 2002 totaling 6,290 (6.8 percent of total number options granted)
forfeited as of 30 June 2005. Options were forfeited as the total shareholder return target
was not met during the vesting period.4)
    
    Includes options totaling 3,500 that were forfeited upon resignation from the Company.
  United Kingdom Employee Share-Based Compensation
    Average
    
    
    StrikeNumber
    
    
    Priceof Shares
    
    
    (NOK)
    1)Options outstanding as of 31 December 2004
    
    
    87,503
    
    
    
    345.98Options Exercised during 2005
    
    
    51,593
    
    
    
    352.82Options Expired during 2005
    
    
    993
    
    
    
    342.34Options Outstanding as of 31 December 2005
    
    
    34,917
    
    
    
    337.44
 1)
    
    Presentation in NOK is based on a translation from GBP using the 31 December 2005 exchange
rate of 11.652.




---



##### 



F 22
    
    (IMAGE)
    
    Notes to the consolidated financial statementsNorsk Hydro ASA and subsidiaries
 Employee Share Purchase Plan
   PerformanceMeasurement
    
    01.01.05-
    
    
    01.01.04-
    
    
    01.01.03-
    
    
    01.01.02-Period
    
    31.12.05
    
    
    31.12.04
    
    
    31.12.03
    
    
    31.12.02Total shareholder
return performance
target achieved
    
    
    312
    %
    
    
    312
    %
    
    
    312
    %
    
    
    <12Employee rebate, NOK
    
    
    6,000
    
    
    
    6,000
    
    
    
    6,000
    
    
    
    1,500Employee rebate, percent
    
    
    50
    %
    
    
    50
    %
    
    
    50
    %
    
    
    20
    %Award share price, NOK
    
    
    
    
    
    
    260.25
    
    
    
    212.25
    
    
    
    223.92Total number of shares
issued to employees
    
    
    
    
    
    
    233,634
    
    
    
    285,152
    
    
    
    235,768Compensation expense
related to the award,
NOK thousands
    
    
    
    
    
    
    60,803
    
    
    
    60,524
    
    
    
    13,198
   Note 5
 Operating and geographic segment information




---



##### 



Notes to the consolidated financial statements
    
    (IMAGE)
    
    F 23Norsk Hydro ASA and subsidiaries
 Operating Segment Information




---



##### 



F 24
    
    (IMAGE)
    
    Notes to the consolidated financial statementsNorsk Hydro ASA and subsidiaries
 External revenues
    
    
    Internal revenues
    
    
    Total operating revenuesNOK million
    
    2005
    
    
    2004
    
    
    2003
    
    
    2005
    
    
    2004
    
    
    2003
    
    
    2005
    
    
    2004
    
    
    2003Exploration and Production
    
    
    18,362
    
    
    
    13,519
    
    
    
    12,099
    
    
    
    45,838
    
    
    
    35,444
    
    
    
    25,805
    
    
    
    64,201
    
    
    
    48,962
    
    
    
    37,904Energy and Oil Marketing 1)
    
    
    65,742
    
    
    
    51,303
    
    
    
    41,438
    
    
    
    10,771
    
    
    
    8,037
    
    
    
    6,779
    
    
    
    76,513
    
    
    
    59,339
    
    
    
    48,216Eliminations 1) 2) 6)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (49,224
    )
    
    
    (37,033
    )
    
    
    (27,315
    )
    
    
    (49,224
    )
    
    
    (37,033
    )
    
    
    (27,315
    )Hydro Oil & Energy
    
    
    84,104
    
    
    
    64,821
    
    
    
    53,536
    
    
    
    7,386
    
    
    
    6,448
    
    
    
    5,269
    
    
    
    91,490
    
    
    
    71,269
    
    
    
    58,805Metals 7)
    
    
    36,024
    
    
    
    33,525
    
    
    
    25,729
    
    
    
    18,937
    
    
    
    18,385
    
    
    
    13,411
    
    
    
    54,961
    
    
    
    51,910
    
    
    
    39,140Rolled Products
    
    
    18,949
    
    
    
    18,729
    
    
    
    17,825
    
    
    
    541
    
    
    
    1,559
    
    
    
    552
    
    
    
    19,490
    
    
    
    20,288
    
    
    
    18,377Extrusion and Automotive 7)
    
    
    26,040
    
    
    
    27,086
    
    
    
    24,424
    
    
    
    35
    
    
    
    51
    
    
    
    60
    
    
    
    26,075
    
    
    
    27,137
    
    
    
    24,483Other and eliminations 3)
    
    
    (437
    )
    
    
    50
    
    
    
    190
    
    
    
    (19,252
    )
    
    
    (19,797
    )
    
    
    (13,867
    )
    
    
    (19,689
    )
    
    
    (19,747
    )
    
    
    (13,677
    )Hydro Aluminium
    
    
    80,575
    
    
    
    79,391
    
    
    
    68,167
    
    
    
    261
    
    
    
    198
    
    
    
    156
    
    
    
    80,836
    
    
    
    79,589
    
    
    
    68,323Other activities 2) 4)
    
    
    9,510
    
    
    
    9,665
    
    
    
    10,013
    
    
    
    2,787
    
    
    
    3,204
    
    
    
    3,745
    
    
    
    12,297
    
    
    
    12,869
    
    
    
    13,759Corporate and eliminations 1) 2)
    
    
    11
    
    
    
    14
    
    
    
    61
    
    
    
    (10,434
    )
    
    
    (9,850
    )
    
    
    (9,170
    )
    
    
    (10,422
    )
    
    
    (9,836
    )
    
    
    (9,109
    )Total
    
    
    174,201
    
    
    
    153,891
    
    
    
    131,778
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    174,201
    
    
    
    153,891
    
    
    
    131,778
 1)
    
    Certain internal revenues, including the effect of marked-to-market valuation of internal
derivative contracts, were previously included in external revenues. These revenues, and the
elimination thereof, are now reported as internal revenues. Prior periods have been
reclassified for comparative purposes.2)
    
    Corporate and eliminations includes elimination of unrealized gain/loss on power contracts
between Energy and other units in Hydro with a gain of NOK 1,391 million in 2005, loss of NOK
235 million in 2004 and a loss of NOK 141 million in 2003. In addition, gains and losses on
electricity contracts, NOK 101 million, NOK 13 million and NOK 21 million are eliminated
within the Oil and Energy Area in 2005, 2004 and 2003, respectively.3)
    
    Other and eliminations includes unrealized gains and losses related to LME contracts with a
loss of NOK 1,021 million in 2005, a gain of NOK 175 million in 2004 and a loss of NOK 49
million in 2003.4)
    
    Other activities consist of the following: Polymers, BioMar AS (sold December 2005), Flexible
Packaging (sold in April 2003), the industrial insurance company, Industriforsikring, and
Hydros internal services.5)
    
    Corporate and eliminations operating income (loss) and Adjusted EBITDA includes a net
periodic pension cost of NOK 495 million for 2005, NOK 1,001 million for 2004 and NOK 1,111
million for 2003.6)
    
    Eliminations Oil & Energy includes elimination of unrealized gains on gas contracts with NOK
713 million in 2005 and NOK 144 million in 2004.7)
    
    During 2005 Hydros magnesium operations were transferred from Metals sub segment to
Extrusion and Automotive sub segment because the automotive industry is the dominant customer
segment for this business. In addition, the remelt operations in North America were
transferred from Extrusion and Automotive and included in Metals, in order to combine the
results from these activities with the Companys worldwide primary and remelt metal results.
Prior period amounts are reclassified accordingly.




---



##### 



Notes to the consolidated financial statements
    
    (IMAGE)
    
    F 25Norsk Hydro ASA and subsidiaries
 Depreciation, depletion
    
    
    Other operating
    
    
    Operating income (loss)and amortization
    
    
    expenses
    
    
    before fin. and other incomeNOK million
    
    2005
    
    
    2004
    
    
    2003
    
    
    2005
    
    
    2004
    
    
    2003
    
    
    2005
    
    
    2004
    
    
    2003Exploration and Production
    
    
    9,961
    
    
    
    9,752
    
    
    
    9,052
    
    
    
    13,645
    
    
    
    10,848
    
    
    
    10,352
    
    
    
    40,594
    
    
    
    28,363
    
    
    
    18,500Energy and Oil Marketing
    
    
    651
    
    
    
    640
    
    
    
    592
    
    
    
    72,287
    
    
    
    56,050
    
    
    
    44,956
    
    
    
    3,575
    
    
    
    2,650
    
    
    
    2,668Eliminations 2) 6)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (48,505
    )
    
    
    (37,164
    )
    
    
    (27,290
    )
    
    
    (719
    )
    
    
    132
    
    
    
    (25
    )Hydro Oil & Energy
    
    
    10,612
    
    
    
    10,391
    
    
    
    9,643
    
    
    
    37,427
    
    
    
    29,733
    
    
    
    28,018
    
    
    
    43,451
    
    
    
    31,144
    
    
    
    21,143Metals 7)
    
    
    1,687
    
    
    
    3,798
    
    
    
    1,451
    
    
    
    49,376
    
    
    
    47,253
    
    
    
    35,609
    
    
    
    3,898
    
    
    
    860
    
    
    
    2,080Rolled Products
    
    
    773
    
    
    
    687
    
    
    
    650
    
    
    
    17,962
    
    
    
    18,975
    
    
    
    17,595
    
    
    
    754
    
    
    
    626
    
    
    
    132Extrusion and Automotive 7)
    
    
    2,473
    
    
    
    1,477
    
    
    
    1,314
    
    
    
    24,702
    
    
    
    25,413
    
    
    
    22,859
    
    
    
    (1,100
    )
    
    
    248
    
    
    
    310Other and eliminations 3)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (18,649
    )
    
    
    (19,818
    )
    
    
    (13,610
    )
    
    
    (1,041
    )
    
    
    72
    
    
    
    (67
    )Hydro Aluminium
    
    
    4,934
    
    
    
    5,962
    
    
    
    3,414
    
    
    
    73,391
    
    
    
    71,822
    
    
    
    62,453
    
    
    
    2,511
    
    
    
    1,805
    
    
    
    2,456Other activities 4)
    
    
    517
    
    
    
    532
    
    
    
    878
    
    
    
    11,782
    
    
    
    12,025
    
    
    
    13,285
    
    
    
    (2
    )
    
    
    312
    
    
    
    (404
    )Corporate and eliminations 2) 5)
    
    
    22
    
    
    
    12
    
    
    
    11
    
    
    
    (10,917
    )
    
    
    (8,434
    )
    
    
    (7,551
    )
    
    
    472
    
    
    
    (1,414
    )
    
    
    (1,569
    )Total
    
    
    16,086
    
    
    
    16,898
    
    
    
    13,947
    
    
    
    111,683
    
    
    
    105,146
    
    
    
    96,205
    
    
    
    46,432
    
    
    
    31,847
    
    
    
    21,625
   Equity in net incomenon-consolidated investees
    
    
    Other income (expense), net
    
    
    Adjusted EBITDANOK million
    
    2005
    
    
    2004
    
    
    2003
    
    
    2005
    
    
    2004
    
    
    2003
    
    
    2005
    
    
    2004
    
    
    2003Exploration and Production
    
    
    6
    
    
    
    4
    
    
    
    29
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    50,601
    
    
    
    38,168
    
    
    
    27,624Energy and Oil Marketing
    
    
    108
    
    
    
    73
    
    
    
    81
    
    
    
    65
    
    
    
    59
    
    
    
    815
    
    
    
    4,456
    
    
    
    3,478
    
    
    
    4,226Eliminations 2) 6)
    
    
    (2
    )
    
    
    (2
    )
    
    
    (4
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (719
    )
    
    
    132
    
    
    
    (25
    )Hydro Oil & Energy
    
    
    112
    
    
    
    75
    
    
    
    107
    
    
    
    65
    
    
    
    59
    
    
    
    815
    
    
    
    54,339
    
    
    
    41,777
    
    
    
    31,826Metals 7)
    
    
    272
    
    
    
    281
    
    
    
    379
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    6,025
    
    
    
    5,372
    
    
    
    4,019Rolled Products
    
    
    (27
    )
    
    
    (13
    )
    
    
    (14
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,565
    
    
    
    1,361
    
    
    
    835Extrusion and Automotive 7)
    
    
    100
    
    
    
    113
    
    
    
    67
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,495
    
    
    
    1,850
    
    
    
    1,710Other and eliminations 3)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (1,041
    )
    
    
    72
    
    
    
    (67
    )Hydro Aluminium
    
    
    345
    
    
    
    381
    
    
    
    433
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    8,044
    
    
    
    8,655
    
    
    
    6,498Other activities 4)
    
    
    164
    
    
    
    170
    
    
    
    83
    
    
    
    925
    
    
    
    110
    
    
    
    139
    
    
    
    1,880
    
    
    
    1,363
    
    
    
    1,113Corporate and eliminations 2) 5)
    
    
    (1
    )
    
    
    3
    
    
    
    (3
    )
    
    
    
    
    
    
    
    
    
    
    (2,207
    )
    
    
    1,231
    
    
    
    (680
    )
    
    
    (809
    )Total
    
    
    619
    
    
    
    629
    
    
    
    620
    
    
    
    990
    
    
    
    169
    
    
    
    (1,253
    )
    
    
    65,493
    
    
    
    51,116
    
    
    
    38,627




---



##### 



F 26
    
    (IMAGE)
    
    Notes to the consolidated financial statementsNorsk Hydro ASA and subsidiaries
 Current Assets 1)
    
    
    Non-current Assets
    
    
    Assets 1)NOK million
    
    2005
    
    
    2004
    
    
    2005
    
    
    2004
    
    
    2005
    
    
    2004Exploration and Production
    
    
    14,939
    
    
    
    9,072
    
    
    
    87,536
    
    
    
    61,262
    
    
    
    102,475
    
    
    
    70,334Energy and Oil Marketing
    
    
    17,723
    
    
    
    9,683
    
    
    
    21,934
    
    
    
    18,896
    
    
    
    39,657
    
    
    
    28,579Eliminations
    
    
    (7,308
    )
    
    
    (2,892
    )
    
    
    (287
    )
    
    
    18
    
    
    
    (7,594
    )
    
    
    (2,873
    )Hydro Oil & Energy
    
    
    25,354
    
    
    
    15,863
    
    
    
    109,183
    
    
    
    80,176
    
    
    
    134,537
    
    
    
    96,039Metals 8)
    
    
    15,402
    
    
    
    12,469
    
    
    
    22,473
    
    
    
    21,147
    
    
    
    37,875
    
    
    
    33,616Rolled Products
    
    
    6,930
    
    
    
    6,405
    
    
    
    6,245
    
    
    
    6,782
    
    
    
    13,175
    
    
    
    13,187Extrusion and Automotive 8)
    
    
    8,139
    
    
    
    8,283
    
    
    
    9,947
    
    
    
    10,827
    
    
    
    18,086
    
    
    
    19,109Other and eliminations
    
    
    (2,811
    )
    
    
    (2,323
    )
    
    
    (280
    )
    
    
    (297
    )
    
    
    (3,091
    )
    
    
    (2,621
    )Hydro Aluminium
    
    
    27,660
    
    
    
    24,833
    
    
    
    38,385
    
    
    
    38,459
    
    
    
    66,045
    
    
    
    63,292Other activities 5)
    
    
    4,740
    
    
    
    6,034
    
    
    
    5,202
    
    
    
    5,393
    
    
    
    9,942
    
    
    
    11,427Corporate and eliminations
    
    
    12,539
    
    
    
    23,676
    
    
    
    4,132
    
    
    
    5,809
    
    
    
    16,671
    
    
    
    29,484Total
    
    
    70,293
    
    
    
    70,406
    
    
    
    156,902
    
    
    
    129,836
    
    
    
    227,195
    
    
    
    200,243
 Non-consolidated investees 2)
    
    

Segment debt 3)
    
    
    Investments 4)NOK million
    
    2005
    
    
    2004
    
    
    2005
    
    
    2004
    
    
    2005
    
    
    2004Exploration and Production
    
    
    52
    
    
    
    18
    
    
    
    10,090
    
    
    
    5,411
    
    
    
    33,846
    
    
    
    10,606Energy and Oil Marketing
    
    
    2,528
    
    
    
    2,310
    
    
    
    15,117
    
    
    
    8,137
    
    
    
    2,333
    
    
    
    1,460Eliminations
    
    
    18
    
    
    
    19
    
    
    
    (7,030
    )
    
    
    (3,027
    )
    
    
    
    
    
    
    Hydro Oil & Energy
    
    
    2,598
    
    
    
    2,347
    
    
    
    18,177
    
    
    
    10,520
    
    
    
    36,179
    
    
    
    12,067Metals 8)
    
    
    3,863
    
    
    
    3,066
    
    
    
    6,232
    
    
    
    7,603
    
    
    
    1,792
    6)
    
    
    4,244
    7)Rolled Products
    
    
    1,430
    
    
    
    1,532
    
    
    
    3,115
    
    
    
    3,339
    
    
    
    545
    6)
    
    
    553Extrusion and Automotive 8)
    
    
    1,065
    
    
    
    859
    
    
    
    5,208
    
    
    
    5,332
    
    
    
    1,425
    
    
    
    1,398Other and eliminations
    
    
    
    
    
    
    
    
    
    
    (2,022
    )
    
    
    (2,478
    )
    
    
    
    
    
    
    Hydro Aluminium
    
    
    6,358
    
    
    
    5,457
    
    
    
    12,532
    
    
    
    13,796
    
    
    
    3,762
    
    
    
    6,194Other activities 5)
    
    
    1,125
    
    
    
    1,095
    
    
    
    2,346
    
    
    
    3,068
    
    
    
    1,097
    
    
    
    1,058Corporate and eliminations
    
    
    732
    
    
    
    1,118
    
    
    
    342
    
    
    
    1,535
    
    
    
    72
    
    
    
    145Total
    
    
    10,814
    
    
    
    10,017
    
    
    
    33,396
    
    
    
    28,919
    
    
    
    41,110
    
    
    
    19,464
 1)
    
    Current assets and assets exclude internal cash accounts and accounts receivables related
to group relief.2)
    
    Non-consolidated investees comprices investments and advances, see note 13.3)
    
    Segment debt is defined as short-term interest from liabilities excluding income tax payable
and short-term deferred tax liabilities.4)
    
    Additions to property, plant and equipment plus long-term securities, intangibles assets,
long-term advances and investments in non-consolidated investees.5)
    
    Other activities consist of the following: Polymers, BioMar AS (sold December 2005), Flexible
Packaging (sold in April 2003), the industrial insurance company, Industriforsikring, and
Hydros internal services.6)
    
    Includes non-cash increase in investment from effect of change in accounting principle (FIN
47), of NOK 186 million in Metals and NOK 9 million in Rolled Products.7)
    
    Includes non-cash increase in investment from effect of change in accounting principle (FIN
46R), of NOK 1,275 million.8)
    
    During 2005 Hydros magnesium operations were transferred from Metals sub segment to
Extrusion and Automotive sub segment because the automotive industry is the dominant customer
segment for this business. In addition, the remelt operations in North America were
transferred from Extrusion and Automotive and included in Metals, in order to combine the
results from these activities with the Companys worldwide primary and remelt metal results.
Prior period amounts are reclassified accordingly.




---



##### 



Notes to the consolidated financial statements
    
    (IMAGE)
    
    F 27Norsk Hydro ASA and subsidiaries
 Assets
    
    

Long-lived assets
    
    
    InvestmentsAmounts in NOK million
    
    2005
    
    
    2004
    
    
    2003
    
    
    2005
    
    
    2004
    
    
    2003
    
    
    2005
    
    
    2004
    
    
    2003Norway
    
    
    137,916
    
    
    
    135,005
    
    
    
    124,923
    
    
    
    92,121
    
    
    
    88,096
    
    
    
    88,687
    
    
    
    13,795
    
    
    
    11,988
    
    
    
    12,514Germany
    
    
    15,619
    
    
    
    15,973
    
    
    
    19,099
    
    
    
    8,328
    
    
    
    8,733
    
    
    
    11,895
    
    
    
    835
    
    
    
    1,107
    
    
    
    780Sweden
    
    
    4,299
    
    
    
    4,453
    
    
    
    4,633
    
    
    
    1,085
    
    
    
    1,163
    
    
    
    1,417
    
    
    
    198
    
    
    
    187
    
    
    
    267Great Britain
    
    
    2,669
    
    
    
    2,724
    
    
    
    2,628
    
    
    
    1,093
    
    
    
    1,056
    
    
    
    1,088
    
    
    
    171
    
    
    
    136
    
    
    
    128France
    
    
    2,340
    
    
    
    2,483
    
    
    
    2,713
    
    
    
    627
    
    
    
    690
    
    
    
    729
    
    
    
    60
    
    
    
    99
    
    
    
    155Italy
    
    
    2,284
    
    
    
    2,037
    
    
    
    1,967
    
    
    
    876
    
    
    
    704
    
    
    
    646
    
    
    
    291
    
    
    
    160
    
    
    
    89The Netherlands
    
    
    2,663
    
    
    
    2,321
    
    
    
    3,707
    
    
    
    1,194
    
    
    
    1,309
    
    
    
    485
    
    
    
    1
    
    
    
    98
    
    
    
    372Denmark
    
    
    1,330
    
    
    
    3,664
    
    
    
    4,189
    
    
    
    944
    
    
    
    1,781
    
    
    
    1,941
    
    
    
    136
    
    
    
    152
    
    
    
    338Spain
    
    
    962
    
    
    
    1,191
    
    
    
    1,301
    
    
    
    321
    
    
    
    530
    
    
    
    608
    
    
    
    18
    
    
    
    38
    
    
    
    28Other
    
    
    4,928
    
    
    
    4,684
    
    
    
    2,809
    
    
    
    2,824
    
    
    
    2,718
    
    
    
    1,518
    
    
    
    380
    
    
    
    1,720
    
    
    
    191Total EU
    
    
    37,094
    
    
    
    39,530
    
    
    
    43,046
    
    
    
    17,292
    
    
    
    18,685
    
    
    
    20,328
    
    
    
    2,090
    
    
    
    3,696
    
    
    
    2,345Other Europe
    
    
    1,391
    
    
    
    1,597
    
    
    
    1,728
    
    
    
    1,134
    
    
    
    1,327
    
    
    
    1,559
    
    
    
    49
    
    
    
    169
    
    
    
    258Total Europe
    
    
    176,401
    
    
    
    176,132
    
    
    
    169,697
    
    
    
    110,547
    
    
    
    108,107
    
    
    
    110,573
    
    
    
    15,934
    
    
    
    15,854
    
    
    
    15,117USA
    
    
    28,159
    
    
    
    4,428
    
    
    
    4,340
    
    
    
    21,411
    
    
    
    1,918
    
    
    
    1,983
    
    
    
    21,889
    
    
    
    484
    
    
    
    378Canada
    
    
    6,636
    
    
    
    6,746
    
    
    
    6,980
    
    
    
    5,618
    
    
    
    6,062
    
    
    
    6,121
    
    
    
    806
    
    
    
    1,203
    
    
    
    850Other Americas
    
    
    4,787
    
    
    
    3,855
    
    
    
    3,597
    
    
    
    4,272
    
    
    
    3,432
    
    
    
    3,156
    
    
    
    145
    
    
    
    186
    
    
    
    215Africa
    
    
    5,728
    
    
    
    4,613
    
    
    
    4,248
    
    
    
    4,937
    
    
    
    4,113
    
    
    
    3,464
    
    
    
    1,653
    
    
    
    1,218
    
    
    
    782Australia and New Zealand
    
    
    3,049
    
    
    
    2,588
    
    
    
    2,578
    
    
    
    2,464
    
    
    
    2,081
    
    
    
    2,127
    
    
    
    320
    
    
    
    280
    
    
    
    285Asia
    
    
    2,434
    
    
    
    1,880
    
    
    
    1,623
    
    
    
    1,667
    
    
    
    1,133
    
    
    
    942
    
    
    
    364
    
    
    
    239
    
    
    
    85Total outside Europe
    
    
    50,793
    
    
    
    24,111
    
    
    
    23,367
    
    
    
    40,368
    
    
    
    18,738
    
    
    
    17,792
    
    
    
    25,177
    
    
    
    3,610
    
    
    
    2,595Total continued operations
    
    
    227,195
    
    
    
    200,243
    
    
    
    193,064
    
    
    
    150,915
    
    
    
    126,846
    
    
    
    128,365
    
    
    
    41,110
    
    
    
    19,464
    
    
    
    17,712Discontinued operations
    
    
    
    
    
    
    
    
    
    
    25,566
    
    
    
    
    
    
    
    
    
    
    
    10,801
    
    
    
    
    
    
    
    
    
    
    
    1,188Total
    
    
    227,195
    
    
    
    200,243
    
    
    
    218,629
    
    
    
    150,915
    
    
    
    126,846
    
    
    
    139,166
    
    
    
    41,110
    
    
    
    19,464
    
    
    
    18,900
    Operating revenuesNOK million
    
    2005
    
    
    2004
    
    
    2003Norway
    
    
    24,835
    
    
    
    23,477
    
    
    
    13,522Great Britain
    
    
    35,567
    
    
    
    28,579
    
    
    
    20,178Germany
    
    
    17,702
    
    
    
    19,350
    
    
    
    17,909France
    
    
    9,710
    
    
    
    6,859
    
    
    
    11,661Sweden
    
    
    9,543
    
    
    
    8,400
    
    
    
    9,828Italy
    
    
    6,868
    
    
    
    7,360
    
    
    
    6,517The Netherlands
    
    
    6,694
    
    
    
    6,649
    
    
    
    4,530Spain
    
    
    4,824
    
    
    
    6,168
    
    
    
    4,697Denmark
    
    
    1,220
    
    
    
    1,201
    
    
    
    2,031Other
    
    
    14,791
    
    
    
    12,994
    
    
    
    12,937Total EU
    
    
    106,920
    
    
    
    97,561
    
    
    
    90,287Switzerland
    
    
    6,631
    
    
    
    5,603
    
    
    
    4,659Other Europe
    
    
    2,349
    
    
    
    1,658
    
    
    
    1,727Total Europe
    
    
    140,735
    
    
    
    128,299
    
    
    
    110,195USA
    
    
    13,394
    
    
    
    10,357
    
    
    
    10,466Canada
    
    
    3,439
    
    
    
    5,188
    
    
    
    2,690Other Americas
    
    
    8,211
    
    
    
    2,526
    
    
    
    1,879Asia
    
    
    6,366
    
    
    
    6,000
    
    
    
    5,567Australia and New Zealand
    
    
    1,076
    
    
    
    972
    
    
    
    715Africa
    
    
    981
    
    
    
    548
    
    
    
    266Total outside Europe
    
    
    33,466
    
    
    
    25,592
    
    
    
    21,583Total
    
    
    174,201
    
    
    
    153,891
    
    
    
    131,778




---



##### 



F 28
    
    (IMAGE)
    
    Notes to the consolidated financial statementsNorsk Hydro ASA and subsidiaries
   Note 6
 Restructuring costs
    Note 7
 Operating costs and expenses
   Amounts in NOK million
    
    2005
    
    
    2004
    
    
    2003Research and development expense
    
    
    716
    
    
    
    760
    
    
    
    722Bad debt
    
    
    233
    
    
    
    269
    
    
    
    638Shipping and handling costs
    
    
    3,205
    
    
    
    3,151
    
    
    
    2,966Operating lease expense: 1)Drilling rigs, ships, office space
    
    
    880
    
    
    
    689
    
    
    
    685Office space leased from Hydros
independent pension trust
    
    
    233
    
    
    
    225
    
    
    
    199Total
    
    
    1,112
    
    
    
    914
    
    
    
    884Payroll and related costs:Salaries
    
    
    13,461
    
    
    
    13,847
    
    
    
    13,574Social security costs
    
    
    2,256
    
    
    
    2,319
    
    
    
    2,280Social benefits
    
    
    463
    
    
    
    543
    
    
    
    642Net periodic pension cost (Note 20)
    
    
    2,185
    
    
    
    2,121
    
    
    
    2,073Total
    
    
    18,366
    
    
    
    18,830
    
    
    
    18,569
 1)
    
    Total minimum future rentals of NOK 7,529
million are due under non-cancelable operating
leases as follows (in NOK million): 2006 1,427;
2007  2,317; 2008  1,784; 2009  1,109; 2010 
357; and thereafter  535.
   Note 8
 Financial income and expense
  Amounts in NOK million
    
    2005
    
    
    2004
    
    
    2003Interest income
    
    
    897
    
    
    
    927
    
    
    
    971Net gain on securities
    
    
    168
    
    
    
    72
    
    
    
    182Dividends received
    
    
    170
    
    
    
    164
    
    
    
    136Interest income and other
financial income
    
    
    1,235
    
    
    
    1,163
    
    
    
    1,291Interest expense
    
    
    (1,745
    )
    
    
    (2,077
    )
    
    
    (2,782
    )Capitalized interest
    
    
    867
    
    
    
    664
    
    
    
    715Net foreign exchange gain (loss)
    
    
    (2,159
    )
    
    
    1,350
    
    
    
    1,034Other, net 1)
    
    
    (89
    )
    
    
    (964
    )
    
    
    (104
    )Interest expense and foreign
exchange gain (loss)
    
    
    (3,125
    )
    
    
    (1,027
    )
    
    
    (1,136
    )Financial income (expense), net
    
    
    (1,890
    )
    
    
    137
    
    
    
    155
 1)
    
    Other, net includes premium paid for early
retirement of long-term debt (breaking costs) of NOK 6
million for 2005 and NOK 938 million for 2004.
  Note 9
 Other income and expense




---



##### 



Notes to the consolidated financial statements
    
    (IMAGE)
    
    F 29Norsk Hydro ASA and subsidiaries
  Note 10
 Income taxes
  Amounts in NOK million
    
    2005
    
    
    2004
    
    
    2003Income from continuing operations
before taxes and minority interest:Norway
    
    
    40,254
    
    
    
    29,378
    
    
    
    19,657Other countries
    
    
    5,898
    
    
    
    3,403
    
    
    
    1,489Total
    
    
    46,152
    
    
    
    32,781
    
    
    
    21,146Current taxes:Norway
    
    
    28,784
    
    
    
    22,537
    
    
    
    13,696Other countries
    
    
    2,053
    
    
    
    1,605
    
    
    
    812Current income tax expense
    
    
    30,837
    
    
    
    24,142
    
    
    
    14,508Deferred taxes:Norway
    
    
    (217
    )
    
    
    (2,340
    )
    
    
    (1,487
    )Other countries
    
    
    (302
    )
    
    
    (606
    )
    
    
    (98
    )Deferred tax expense (benefit)
    
    
    (519
    )
    
    
    (2,945
    )
    
    
    (1,585
    )Total income tax expense
    
    
    30,317
    
    
    
    21,197
    
    
    
    12,923
      Amounts in NOK million
    
    2005
    
    
    2004
    
    
    2003Deferred tax expense (benefit),
excluding items below
    
    
    (1,532
    )
    
    
    (2,295
    )
    
    
    734Benefits of tax loss carryforwards
    
    
    (575
    )
    
    
    157
    
    
    
    (79
    )Tax expense (benefit) allocated to other
comprehensive income
    
    
    529
    
    
    
    64
    
    
    
    188Effect of tax law changes
    
    
    5
    
    
    
    (846
    )
    
    
    (70
    )Non-recurring effect of tax law
changes relating to the removal
costs for oil and gas installations
    
    
    
    
    
    
    
    
    
    
    (2,380
    )Net change in valuation allowance
    
    
    1,054
    
    
    
    (25
    )
    
    
    22Deferred tax expense
(benefit)  US GAAP
    
    
    (519
    )
    
    
    (2,945
    )
    
    
    (1,585
    )
       Amounts in NOK million
    
    2005
    
    
    2004
    
    
    2003Expected income taxes at
statutory tax rate 1)
    
    
    12,923
    
    
    
    9,179
    
    
    
    5,921Petroleum surtax 2)
    
    
    18,739
    
    
    
    13,977
    
    
    
    9,980Uplift benefit 2)
    
    
    (1,357
    )
    
    
    (967
    )
    
    
    (990
    )Hydro-electric power surtax 3)
    
    
    84
    
    
    
    163
    
    
    
    152Tax law changes
    
    
    5
    
    
    
    (846
    )
    
    
    (70
    )Non-recurring effect of tax law
changes relating to the removal
costs for oil and gas installations
    
    
    
    
    
    
    
    
    
    
    (2,380
    )Losses and other deductions
with no tax benefit
    
    
    1,067
    
    
    
    139
    
    
    
    216Non-deductible expenses
    
    
    105
    
    
    
    119
    
    
    
    43Foreign tax rate differences
    
    
    319
    
    
    
    145
    
    
    
    170Tax free income
    
    
    (683
    )
    
    
    (473
    )
    
    
    (619
    )Dividend exclusion
    
    
    (23
    )
    
    
    (37
    )
    
    
    (12
    )Losses and other benefits not
previously recognized
    
    
    (579
    )
    
    
    (146
    )
    
    
    (100
    )Other, net
    
    
    (281
    )
    
    
    (56
    )
    
    
    611Income tax expense  US GAAP
    
    
    30,317
    
    
    
    21,197
    
    
    
    12,923Effective tax rate  US GAAP
    
    
    65.7
    %
    
    
    64.7
    %
    
    
    61.1
    %
 1)
    
    Norwegian nominal statutory tax rate is 28 percent.2)
    
    Income from oil and gas activities on the
Norwegian Continental Shelf is taxed according to
the Petroleum Tax Law. This stipulates a surtax of
50 percent after deducting uplift, a special
deduction for surtax, in addition to normal
corporate taxation of 28 percent.3)
    
    A surtax of 27 percent is applied to taxable
income, with certain adjustments, for Norwegian
hydro-electric power plants. The surtax comes in
addition to the normal corporate taxation. Tax
depreciation, including that from the upward
revision of basis under the new law, is deductible
for both corporate tax and surtax purposes.




---



##### 



F 30
    
    (IMAGE)
    
    Notes to the consolidated financial statementsNorsk Hydro ASA and subsidiaries
  US GAAP Deferred TaxAssets
    
    
    Liabilities
    
    
    Assets
    
    
    LiabilitiesAmounts in NOK million
    
    2005
    
    
    2005
    
    
    2004
    
    
    2004Short-term:Marketable securities
    
    
    4
    
    
    
    
    
    
    
    
    
    
    
    (4
    )Inventory valuation
    
    
    435
    
    
    
    (410
    )
    
    
    178
    
    
    
    (295
    )Accrued expenses
    
    
    1,174
    
    
    
    (1,115
    )
    
    
    899
    
    
    
    (558
    )Unrealized exchange
(gains) losses
    
    
    958
    
    
    
    (852
    )
    
    
    354
    
    
    
    (725
    )Uplift benefit
    
    
    1,068
    
    
    
    
    
    
    
    766
    
    
    
    Other
    
    
    5
    
    
    
    
    
    
    
    162
    
    
    
    Long-term:Unrealized exchange
(gains) losses
    
    
    736
    
    
    
    (1,350
    )
    
    
    695
    
    
    
    (223
    )Property, plant
and equipment
    
    
    6,325
    
    
    
    (40,893
    )
    
    
    5,617
    
    
    
    (34,862
    )Capitalized interest
    
    
    
    
    
    
    (3,506
    )
    
    
    
    
    
    
    (3,379
    )Exploration drilling costs
    
    
    
    
    
    
    (2,455
    )
    
    
    
    
    
    
    (2,323
    )Other non-current assets
    
    
    544
    
    
    
    (600
    )
    
    
    338
    
    
    
    (629
    )Accrued expenses
    
    
    1,179
    
    
    
    (681
    )
    
    
    1,005
    
    
    
    (473
    )Pensions
    
    
    2,209
    
    
    
    (1,430
    )
    
    
    1,574
    
    
    
    (1,390
    )Deferred (gains)
losses on sales
    
    
    169
    
    
    
    (575
    )
    
    
    204
    
    
    
    (974
    )Uplift benefit
    
    
    1,740
    
    
    
    
    
    
    
    1,613
    
    
    
    Abandonments and
decommissioning accruals
    
    
    4,866
    
    
    
    
    
    
    
    4,395
    
    
    
    Cash Flow Hedges
    
    
    13
    
    
    
    (42
    )
    
    
    
    
    
    
    (320
    )Other
    
    
    788
    
    
    
    (697
    )
    
    
    842
    
    
    
    (1,156
    )Tax effect of tax loss
carryforwards
    
    
    3,290
    
    
    
    
    
    
    
    1,471
    
    
    
    Subtotal
    
    
    25,503
    
    
    
    (54,606
    )
    
    
    20,113
    
    
    
    (47,311
    )Total valuation
allowance
    
    
    (2,591
    )
    
    
    
    
    
    
    (967
    )
    
    
    Gross deferred tax
assets and liabilities
    
    
    22,912
    
    
    
    (54,606
    )
    
    
    19,146
    
    
    
    (47,311
    )
     Amounts in NOK million2006
    
    
    462007
    
    
    122008
    
    
    652009
    
    
    302010
    
    
    79After 2010
    
    
    6,007Without expiration
    
    
    3,880Total tax loss carryforwards
    
    
    10,118
  Note 11
 Short-term investments
  Amounts in NOK million
    
    2005
    
    
    2004Bank, time deposits
    
    
    1,851
    
    
    
    9,151Marketable equity securities
    
    
    517
    
    
    
    416Debt securities and other
    
    
    1,498
    
    
    
    1,404Total short-term investment
    
    
    3,865
    
    
    
    10,970
   Note 12
 Inventories and other current assets
  Amounts in NOK million
    
    2005
    
    
    2004Finished goods
    
    
    6,736
    
    
    
    6,096Work in progress
    
    
    2,598
    
    
    
    2,211Raw materials
    
    
    5,218
    
    
    
    4,543Total inventories
    
    
    14,553
    
    
    
    12,851Prepaid expenses
    
    
    6,171
    
    
    
    3,653Other current assets
    
    
    9,742
    
    
    
    6,825Total prepaid expenses and other current assets
    
    
    15,912
    
    
    
    10,478




---



##### 



Notes to the consolidated financial statements
    
    (IMAGE)
    
    F 31Norsk Hydro ASA and subsidiaries
  Note 13
 Non-consolidated Investees
  Naturkraft
    
    
    Hydro
    
    
    Alunorf
    
    
    Alunorte
    
    
    Søral
    
    
    Aluchemie
    
    
    Meridian
    
    
    QVC
    
    
    Noretyl
    
    
    Other
    
    
    TotalAmounts in NOK million
    
    
    
    
    
    TexacoBalance 01.01.2004
    
    
    4
    
    
    
    1,057
    
    
    
    1,576
    
    
    
    902
    
    
    
    568
    
    
    
    460
    
    
    
    586
    
    
    
    310
    
    
    
    437
    
    
    
    4,262
    
    
    
    10,162Investments (sale), net
    
    
    43
    
    
    
    8
    
    
    
    
    
    
    
    284
    
    
    
    
    
    
    
    524
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (327
    )
    
    
    532Change in long-term advances, net
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (430
    )
    
    
    
    
    
    
    (54
    )
    
    
    (85
    )
    
    
    (96
    )
    
    
    (665
    )Transfers (to) from other investments
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (64
    )
    
    
    (64
    )Hydros share of net income (loss)
    
    
    (26
    )
    
    
    39
    
    
    
    45
    
    
    
    375
    
    
    
    175
    
    
    
    7
    
    
    
    68
    
    
    
    111
    
    
    
    53
    
    
    
    192
    
    
    
    1,039Amortization and write-down
    
    
    
    
    
    
    (8
    )
    
    
    (59
    )
    
    
    (18
    )
    
    
    
    
    
    
    (10
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (315
    )
    
    
    (410
    )Dividends and other payments
received by Hydro
    
    
    
    
    
    
    (126
    )
    
    
    
    
    
    
    
    
    
    
    (100
    )
    
    
    
    
    
    
    (26
    )
    
    
    
    
    
    
    
    
    
    
    (75
    )
    
    
    (327
    )Foreign currency translation and other
    
    
    
    
    
    
    (7
    )
    
    
    (30
    )
    
    
    1
    
    
    
    
    
    
    
    13
    
    
    
    (35
    )
    
    
    (6
    )
    
    
    
    
    
    
    (186
    )
    
    
    (250
    )Balance 31.12.2004
    
    
    21
    
    
    
    963
    
    
    
    1,532
    
    
    
    1,544
    
    
    
    643
    
    
    
    564
    
    
    
    593
    
    
    
    361
    
    
    
    405
    
    
    
    3,391
    
    
    
    10,017Changes in 2005:Investments (sale), net
    
    
    300
    
    
    
    
    
    
    
    
    
    
    
    180
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (46
    )
    
    
    435Change in long-term advances, net
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (70
    )
    
    
    (400
    )
    
    
    (470
    )Transfers (to) from other investments
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (20
    )
    
    
    (20
    )Hydros share of net income (loss)
    
    
    (41
    )
    
    
    30
    
    
    
    29
    
    
    
    279
    
    
    
    196
    
    
    
    6
    
    
    
    60
    
    
    
    88
    
    
    
    50
    
    
    
    53
    
    
    
    750Amortization and write-down
    
    
    
    
    
    
    
    
    
    
    (56
    )
    
    
    (21
    )
    
    
    
    
    
    
    (15
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (39
    )
    
    
    (131
    )Dividends and other
payments received by Hydro
    
    
    
    
    
    
    (48
    )
    
    
    (12
    )
    
    
    (27
    )
    
    
    (100
    )
    
    
    (2
    )
    
    
    (35
    )
    
    
    
    
    
    
    
    
    
    
    (99
    )
    
    
    (323
    )Foreign currency translation and other
    
    
    
    
    
    
    (51
    )
    
    
    (63
    )
    
    
    413
    
    
    
    (19
    )
    
    
    (18
    )
    
    
    70
    
    
    
    63
    
    
    
    
    
    
    
    160
    
    
    
    555Balance 31.12.2005
    
    
    280
    
    
    
    895
    
    
    
    1,430
    
    
    
    2,368
    
    
    
    721
    
    
    
    537
    
    
    
    688
    
    
    
    512
    
    
    
    385
    
    
    
    3,000
    
    
    
    10,814
       Hydros currentAmounts
    
    Percentage
    
    
    Investments in
    
    
    receivableNOK million,
    
    owned
    
    
    and advances
    
    
    (payable), netexcept ownership
    
    by Hydro
    
    
    to investees
    
    
    with investees2005
    
    
    2005
    
    
    2004
    
    
    2005
    
    
    2004Naturkraft
    
    
    50.0
    %
    
    
    280
    
    
    
    21
    
    
    
    
    
    
    
    Hydro Texaco
    
    
    50.0
    %
    
    
    895
    
    
    
    963
    
    
    
    43
    
    
    
    25Alunorf
    
    
    50.0
    %
    
    
    1,430
    
    
    
    1,532
    
    
    
    254
    
    
    
    (274
    )Alunorte
    
    
    34.0
    %
    
    
    2,368
    
    
    
    1,544
    
    
    
    
    
    
    
    (81
    )Søral
    
    
    49.9
    %
    
    
    721
    
    
    
    643
    
    
    
    (165
    )
    
    
    (110
    )Aluchemie
    
    
    36.2
    %
    
    
    537
    
    
    
    564
    
    
    
    
    
    
    
    (6
    )Meridian
    
    
    49.0
    %
    
    
    688
    
    
    
    593
    
    
    
    36
    
    
    
    (26
    )QVC
    
    
    29.7
    %
    
    
    512
    
    
    
    361
    
    
    
    1
    
    
    
    2Noretyl
    
    
    50.0
    %
    
    
    385
    
    
    
    405
    
    
    
    25
    
    
    
    39Others
    
    
    
    
    
    
    3,000
    
    
    
    3,391
    
    
    
    (245
    )
    
    
    184Total
    
    
    
    
    
    
    10,814
    
    
    
    10,017
    
    
    
    (51
    )
    
    
    (247
    )




---



##### 



F 32
    
    (IMAGE)
    
    Notes to the consolidated financial statementsNorsk Hydro ASA and subsidiaries
         Non-consolidated investees  100 percent basis
        Amounts in NOK million(unaudited)
    
    2005
    
    
    2004
    
    
    2003Operating revenues
    
    
    35,513
    
    
    
    31,454
    
    
    
    24,254Operating income
    
    
    4,341
    
    
    
    4,212
    
    
    
    3,154Income before taxes and
minority interest
    
    
    4,179
    
    
    
    3,816
    
    
    
    3,248Net income
    
    
    3,248
    
    
    
    3,465
    
    
    
    2,670Hydros share of net income
    
    
    750
    
    
    
    1,039
    
    
    
    811
      Amounts in NOK million(unaudited)
    
    2005
    
    
    2004
    
    
    2003Current assets
    
    
    15,721
    
    
    
    15,052
    
    
    
    13,504Non-current assets
    
    
    34,009
    
    
    
    29,759
    
    
    
    30,503Assets
    
    
    49,730
    
    
    
    44,811
    
    
    
    44,007Current
liabilities
    
    
    9,534
    
    
    
    8,572
    
    
    
    8,083Non-current liabilities
    
    
    13,877
    
    
    
    13,275
    
    
    
    14,049Minority interest
    
    
    30
    
    
    
    19
    
    
    
    Shareholders equity
    
    
    26,289
    
    
    
    22,945
    
    
    
    21,875Liabilities and shareholders equity
    
    
    49,730
    
    
    
    44,811
    
    
    
    44,007Hydros investments and advances
    
    
    10,814
    
    
    
    10,017
    
    
    
    10,162
  Note 14
 Intangible assets, prepaid pension, investments and non-current assets
  Amounts in NOK million
    
    2005
    
    
    2004Goodwill for consolidated subsidiaries
    
    
    4,100
    
    
    
    1,028Intangible assets, less accumulated
amortization (Note 16, note 20)
    
    
    1,053
    
    
    
    1,297Total intangible assets
    
    
    5,153
    
    
    
    2,325Prepaid pension (Note 20)
    
    
    4,659
    
    
    
    4,636Available-for-sale securities at fair value 1)
    
    
    
    
    
    
    16Other investments at cost
    
    
    2,046
    
    
    
    2,065Non-current assets
    
    
    5,205
    
    
    
    3,996Prepaid pension, investments
and other non-current assets  US GAAP
    
    
    11,910
    
    
    
    10,713
 1)
    
    As of 31 December 2004, available-for-sale
securities at cost amounted to NOK 4 million and
unrealized holding gain amounted to NOK 12
million.




---



##### 



Notes to the consolidated financial statements
    
    (IMAGE)
    
    F 33Norsk Hydro ASA and subsidiaries
  Note 15
 Property, plant and equipment
  Land-based activitiesMachinery and
    
    
    
    
    
    
    Plant under
    
    
    Oil and GasAmounts in NOK million
    
    Land
    
    
    equipment
    
    
    Buildings
    
    
    construction
    
    
    activities 1)
    
    
    TotalCost:Cost 31.12.2004
    
    
    1,032
    
    
    
    49,337
    
    
    
    17,280
    
    
    
    4,146
    
    
    
    141,142
    
    
    
    212,937Additions at cost
    
    
    12
    
    
    
    1,281
    
    
    
    229
    
    
    
    3,012
    
    
    
    32,576
    
    
    
    37,109Retirements
    
    
    (7
    )
    
    
    (1,911
    )
    
    
    (645
    )
    
    
    (204
    )
    
    
    (552
    )
    
    
    (3,320
    )Transfers
    
    
    26
    
    
    
    3,859
    
    
    
    788
    
    
    
    (4,672
    )
    
    
    
    
    
    
    Foreign currency translation
    
    
    (8
    )
    
    
    675
    
    
    
    202
    
    
    
    132
    
    
    
    1,063
    
    
    
    2,063Implementation effect of
FIN No. 47 Accounting for
Conditional Asset Retirement Obligations
    
    
    
    
    
    
    186
    
    
    
    9
    
    
    
    
    
    
    
    
    
    
    
    195Cost 31.12.2005
    
    
    1,056
    
    
    
    53,426
    
    
    
    17,861
    
    
    
    2,414
    
    
    
    174,229
    
    
    
    248,985Depreciation:Accumulated depreciation 31.12.2004
    
    
    (1
    )
    
    
    (28,064
    )
    
    
    (7,719
    )
    
    
    
    
    
    
    (71,036
    )
    
    
    (106,820
    )Depreciation, depletion
and amortization 2)
    
    
    
    
    
    
    (4,462
    )
    
    
    (890
    )
    
    
    
    
    
    
    (10,011
    )
    
    
    (15,363
    )Retirements
    
    
    
    
    
    
    1,533
    
    
    
    313
    
    
    
    
    
    
    
    463
    
    
    
    2,309Foreign currency translation
and transfers
    
    
    
    
    
    
    (109
    )
    
    
    (122
    )
    
    
    
    
    
    
    (604
    )
    
    
    (835
    )Implementation effect of
FIN No. 47 Accounting for
Conditional Asset Retirement Obligations
    
    
    
    
    
    
    (85
    )
    
    
    (2
    )
    
    
    
    
    
    
    
    
    
    
    (87
    )Accumulated depreciation 31.12.2005
    
    
    (1
    )
    
    
    (31,187
    )
    
    
    (8,420
    )
    
    
    
    
    
    
    (81,188
    )
    
    
    (120,795
    )Net book value 31.12.2004 3)
    
    
    1,032
    
    
    
    21,273
    
    
    
    9,561
    
    
    
    4,146
    
    
    
    70,106
    
    
    
    106,117Net book value 31.12.2005 3)
    
    
    1,055
    
    
    
    22,239
    
    
    
    9,441
    
    
    
    2,414
    
    
    
    93,041
    
    
    
    128,191
 1)
    
    Includes land-based Oil and Gas activities and transportation systems for Hydro Oil &
Energy.2)
    
    Impairment losses for 2005, 2004 and 2003 were NOK 1,467 million, NOK 2,176 million and NOK
88 million, respectively.
The fair value of the impaired assets was generally estimated by discounting the expected future
cash flows of the individual assets. Impairment was indicated by adverse change in market prices,
current period cash flow losses combined with a history of losses, or a significant change in the
manner in which the asset is to be used. Impairment losses in 2005 included a write-down of NOK
1,084 million related to the magnesium business in Hydro Aluminiums sub-segment Extrusion &
Automotive. The write-down was caused by a significant weakening of the magnesium market during
the fourth quarter of 2005. Impairment losses in 2005 did also include NOK 154 million related to
Hydro Aluminiums sub-segment Rolled Products and NOK 208 million related to the Telemark field
in the Gulf of Mexico in Hydro Oil & Energys sub-segment Exploration and Production.3)
    
    Includes NOK 542 million and NOK 153 million related to capital leases for 2005 and 2004,
respectively.




---



##### 



F 34
    
    (IMAGE)
    
    Notes to the consolidated financial statementsNorsk Hydro ASA and subsidiaries
  Note 16
 Goodwill and intangibles
     Finite
    
    
    IndefiniteUseful
    
    
    UsefulAmounts in NOK million
    
    Life
    
    
    Life
    
    
    TotalCost 31.12.2004
    
    
    3,205
    
    
    
    5
    
    
    
    3,210Additions at cost
    
    
    106
    
    
    
    
    
    
    
    106Disposals
    
    
    (184
    )
    
    
    
    
    
    
    (184
    )Foreign currency translation
and other
    
    
    (54
    )
    
    
    
    
    
    
    (54
    )Accumulated amortization 31.12.2005
    
    
    (2,249
    )
    
    
    
    
    
    
    (2,249
    )Net book value 31.12.2005
    
    
    823
    
    
    
    5
    
    
    
    828
   2 2
      Oil &Amounts in NOK million
    
    Energy
    
    
    Aluminium
    
    
    TotalBalance at December 31, 2004
    
    
    
    
    
    
    1,028
    
    
    
    1,028Goodwill acquired
    
    
    2,991
    
    
    
    
    
    
    
    2,991Currency translation effect
    
    
    15
    
    
    
    70
    
    
    
    85Other
    
    
    
    
    
    
    (4
    )
    
    
    (4
    )Balance at December 31, 2005
    
    
    3,005
    
    
    
    1,094
    
    
    
    4,100
   Note 17
 Bank loans and other interest-bearing short-term debt
  Weighted averageinterest ratesAmounts in NOK million
    
    2005
    
    
    2004
    
    
    2005
    
    
    2004Bank loans and
overdraft facilities
    
    
    3.5
    %
    
    
    2.9
    %
    
    
    586
    
    
    
    482Commercial paper
    
    
    8.5
    %
    
    
    8.5
    %
    
    
    2
    
    
    
    3Other
    
    
    2.6
    %
    
    
    1.6
    %
    
    
    4,069
    
    
    
    3,300Total bank loans andother interest-bearing
short-term debt
    
    
    
    
    
    
    
    
    
    
    4,658
    
    
    
    3,785
   Note 18
 Other current liabilities
  Amounts in NOK million
    
    2005
    
    
    2004Accounts payable
    
    
    14,035
    
    
    
    13,352Income taxes payable
    
    
    13,843
    
    
    
    12,421Payroll and value added taxes
    
    
    2,956
    
    
    
    3,142Accrued liabilities
    
    
    10,605
    
    
    
    9,534Other liabilities
    
    
    5,799
    
    
    
    2,891Total other current liabilities  US GAAP
    
    
    47,239
    
    
    
    41,340
  Note 19
 Long-term debt




---



##### 



Notes to the consolidated financial statements
    
    (IMAGE)
    
    F 35Norsk Hydro ASA and subsidiaries
     Weighted
    
    
    Denomi-average
    
    
    nated
    
    
    
    Balanceinterest rates
    
    
    amount
    
    
    
    in NOKAmounts in million
    
    
    
    
    
    2005
    
    
    2005
    
    
    2004USD
    
    
    7.3
    %
    
    
    2,618
    
    
    
    17,708
    
    
    
    15,802NOK
    
    
    5.8
    %
    
    
    174
    
    
    
    174
    
    
    
    527GBP
    
    
    6.5
    %
    
    
    10
    
    
    
    117
    
    
    
    182EUR
    
    
    6.3
    %
    
    
    300
    
    
    
    2,401
    
    
    
    2,473Total unsecured debenture bonds
    
    
    
    
    
    
    
    
    
    
    20,401
    
    
    
    18,984USD
    
    
    5.0
    %
    
    
    50
    
    
    
    338
    
    
    
    164EUR
    
    
    4.0
    %
    
    
    5
    
    
    
    39
    
    
    
    123Other
    
    
    5.3
    %
    
    
    
    

    
    
    84
    
    
    
    114Total unsecured bank loans
    
    
    
    
    
    
    
    
    
    
    461
    
    
    
    401Capital lease obligations
    
    
    
    
    
    
    
    
    
    
    517
    
    
    
    103Mortgage loans
    
    
    
    
    
    
    
    
    
    
    23
    
    
    
    33Other long-term debt
    
    
    
    
    
    
    
    
    
    
    364
    
    
    
    534Outstanding debt
    
    
    
    
    
    
    
    
    
    
    21,766
    
    
    
    20,055Less: Current portion
    
    
    
    
    
    
    
    
    
    
    (379
    )
    
    
    (568
    )Total long-term debt
    
    
    
    
    
    
    
    
    
    
    21,387
    
    
    
    19,487
        Amounts in
    
    Deben-
    
    
    Bank-
    
    
    Capital leaseNOK million
    
    tures
    
    
    loans
    
    
    and other
    
    
    Total2006
    
    
    174
    
    
    
    25
    
    
    
    180
    
    
    
    3792007
    
    
    
    
    
    
    80
    
    
    
    283
    
    
    
    3632008
    
    
    
    
    
    
    76
    
    
    
    67
    
    
    
    1432009
    
    
    2,029
    
    
    
    76
    
    
    
    66
    
    
    
    2,1712010
    
    
    2,401
    
    
    
    154
    
    
    
    36
    
    
    
    2,591Thereafter
    
    
    15,795
    
    
    
    51
    
    
    
    273
    
    
    
    16,119Total
    
    
    20,401
    1)
    
    
    461
    
    
    
    904
    
    
    
    21,766
 1)
    
    Of which Norsk Hydro ASA (the parent company)
is responsible for NOK 20,292 million.
     Note 20
 Employee retirement plans
  Pension Benefits
       Amounts in NOK million
    
    2005
    
    
    2004
    
    
    2003Defined benefit plans:Benefits earned during the year,
net of participants contributions
    
    
    830
    
    
    
    813
    
    
    
    637Interest cost on prior period
benefit obligation
    
    
    1,292
    
    
    
    1,355
    
    
    
    1,259Expected return on plan assets
    
    
    (1,003
    )
    
    
    (1,000
    )
    
    
    (892
    )Recognized loss
    
    
    283
    
    
    
    345
    
    
    
    290Amortization of prior
service cost
    
    
    107
    
    
    
    111
    
    
    
    115Amortization of net
transition (asset) obligation
    
    
    
    
    
    
    3
    
    
    
    (6
    )Curtailment loss
    
    
    1
    
    
    
    59
    
    
    
    20Settlement loss
    
    
    
    
    
    
    30
    
    
    
    199Net periodic pension cost
    
    
    1,510
    
    
    
    1,716
    
    
    
    1,622Defined contribution plans
    
    
    45
    
    
    
    32
    
    
    
    28Multiemployer plans
    
    
    26
    
    
    
    35
    
    
    
    13Termination benefits and other
    
    
    604
    
    
    
    338
    
    
    
    410Total net periodic pension cost
    
    
    2,185
    
    
    
    2,121
    
    
    
    2,073Change in the additional minimum
pension liability included within
other comprehensive income
    
    
    724
    
    
    
    189
    
    
    
    216
      Amounts in NOK million
    
    2005
    
    
    2004Projected benefit obligation
at beginning of year
    
    
    (25,399
    )
    
    
    (23,456
    )Benefits earned during the year
    
    
    (851
    )
    
    
    (840
    )Interest cost on prior period
benefit obligation
    
    
    (1,292
    )
    
    
    (1,355
    )Actuarial loss
    
    
    (4,799
    )
    
    
    (864
    )Plan amendments
    
    
    (20
    )
    
    
    (23
    )Benefits paid
    
    
    875
    
    
    
    870Curtailment loss
    
    
    
    
    
    
    (8
    )Settlements
    
    
    2
    
    
    
    85Special termination benefits
    
    
    (80
    )
    
    
    (52
    )Divestments
    
    
    6
    
    
    
    54Business combinations
    
    
    (40
    )
    
    
    Foreign currency translation
    
    
    38
    
    
    
    190Projected benefit obligation at end of year
    
    
    (31,560
    )
    
    
    (25,399
    )




---



##### 



F 36
    
    (IMAGE)
    
    Notes to the consolidated financial statementsNorsk Hydro ASA and subsidiaries
      Amounts in NOK million
    
    2005
    
    
    2004Fair value of plan assets at beginning of year
    
    
    16,504
    
    
    
    14,669Actual return on plan assets
    
    
    2,528
    
    
    
    1,699Company contributions
    
    
    769
    
    
    
    924Plan participants contributions
    
    
    21
    
    
    
    26Benefits paid
    
    
    (596
    )
    
    
    (605
    )Settlements
    
    
    (2
    )
    
    
    (88
    )Divestments
    
    
    (4
    )
    
    
    (33
    )Foreign currency translation
    
    
    58
    
    
    
    (88
    )Fair value of plan assets at end of year
    
    
    19,277
    
    
    
    16,504
      Amounts in NOK million
    
    2005
    
    
    2004Defined benefit plans:Funded status of the plans
at end of year
    
    
    (12,282
    )
    
    
    (8,895
    )Unrecognized net loss
    
    
    9,498
    
    
    
    6,557Unrecognized prior service cost
    
    
    883
    
    
    
    967Net accrued pension recognized
    
    
    (1,902
    )
    
    
    (1,371
    )Termination benefits and other
    
    
    (1,247
    )
    
    
    (1,161
    )Total net accrued pension recognized
    
    
    (3,148
    )
    
    
    (2,532
    )Amounts recognized in the balance sheet
consist of:Prepaid pension
    
    
    4,659
    
    
    
    4,636Accrued pension liabilities
    
    
    (9,939
    )
    
    
    (8,569
    )Intangible asset
    
    
    225
    
    
    
    219Accumulated other
comprehensive income
    
    
    1,907
    
    
    
    1,183Net amount recognized
    
    
    (3,148
    )
    
    
    (2,532
    )
       Amounts in NOK million
    
    2005
    
    
    2004Projected benefit obligation
    
    
    (15,343
    )
    
    
    (12,581
    )Accumulated benefit obligation (ABO)
    
    
    (12,755
    )
    
    
    (10,582
    )Plan assets
    
    
    4,250
    
    
    
    3,477
      2005
    
    
    2004
    
    
    2003Discount rate
    
    
    5.2
    %
    
    
    5.8
    %
    
    
    6.7
    %Expected return on plan assets
    
    
    6.2
    %
    
    
    7.0
    %
    
    
    7.9
    %Rate of compensation increase
    
    
    3.1
    %
    
    
    3.5
    %
    
    
    3.5
    %
      2005
    
    
    2004Discount rate
    
    
    4.1
    %
    
    
    5.2
    %Rate of compensation increase
    
    
    3.1
    %
    
    
    3.1
    %
      Target Allocation
    
    
    2005
    
    
    2004Asset categoryEquity securities
    
    
    25-42
    %
    
    
    40
    %
    
    
    36
    %Debt securities
    
    
    30-54
    %
    
    
    41
    %
    
    
    36
    %Real estate
    
    
    17
    %
    
    
    15
    %
    
    
    17
    %Other
    
    
    3-10
    %
    
    
    4
    %
    
    
    11
    %Total
    
    
    
    
    
    
    100
    %
    
    
    100
    %
          Amounts in NOK million2006
    
    
    9562007
    
    
    1,0272008
    
    
    1,0742009
    
    
    1,1532010
    
    
    1,2312011-2015
    
    
    7,375




---



##### 



Notes to the consolidated financial statements
    
    (IMAGE)
    
    F 37Norsk Hydro ASA and subsidiaries
 Other Retirement Benefits
   Note 21
 Contingencies and other long-term liabilities
              Amounts in NOK million
    
    2005
    
    
    2004Insurance premiums and loss reserves
    
    
    556
    
    
    
    121Asset retirement obligations
    
    
    7,447
    
    
    
    6,244Postretirement benefits other than pensions
    
    
    150
    
    
    
    136Derivatives
    
    
    2,336
    
    
    
    759Other
    
    
    1,935
    
    
    
    1,875Total US GAAP
    
    
    12,424
    
    
    
    9,134




---



##### 



F 38
    
    (IMAGE)
    
    Notes to the consolidated financial statementsNorsk Hydro ASA and subsidiaries
      Amounts in NOK million
    
    2005
    
    
    2004Total asset retirement obligations 1.1
    
    
    6,281
    
    
    
    5,235Incurred this year
    
    
    761
    
    
    
    106Revisions in estimates
    
    
    326
    
    
    
    818FIN 47 implementation
    
    
    223
    
    
    
    Settlements
    
    
    (356
    )
    
    
    (219
    )Accretions
    
    
    404
    
    
    
    352Currency translation
    
    
    56
    
    
    
    (11
    )Total asset retirement obligations 31.12
    
    
    7,694
    
    
    
    6,281Of which:Short term asset retirement obligations
    
    
    247
    
    
    
    37Long term asset retirement obligations
    
    
    7,447
    
    
    
    6,244
       Amounts in NOK million,except per share data
    
    2005
    
    
    2004
    
    
    2003Net income
    
    
    15,638
    
    
    
    12,560
    
    
    
    10,968Depreciation change (after tax)
    
    
    (31
    )
    
    
    (32
    )
    
    
    (32
    )Other operating cost (after tax)
    
    
    28
    
    
    
    29
    
    
    
    29Cumulative effects of changes
in accounting principles
    
    
    78
    
    
    
    
    
    
    
    Pro forma net income
    
    
    15,713
    
    
    
    12,557
    
    
    
    10,966Reported basic and diluted
earnings per share
    
    
    62.40
    
    
    
    49.40
    
    
    
    42.60Net adjustment changes in accounting
principles earnings per share
    
    
    0.30
    
    
    
    
    
    
    
    Pro forma basic and diluted
earnings per share
    
    
    62.70
    
    
    
    49.40
    
    
    
    42.60Pro forma Asset Retirement
Obligation, 1 January
    
    
    6,500
    
    
    
    5,451
    
    
    
    4,748
  Note 22
 Secured debt and guarantees
  Amounts in NOK million
    
    2005
    
    
    2004Amount of secured debt
    
    
    23
    
    
    
    33Assets used as security:Machinery and equipment
    
    
    32
    
    
    
    41Buildings
    
    
    57
    
    
    
    62Other
    
    
    2
    
    
    
    2Total
    
    
    91
    
    
    
    105Guarantees (off-balance sheet):Non-consolidated investee debt
    
    
    89
    
    
    
    86Contingency for discounted bills
    
    
    113
    
    
    
    92Tax guarantees
    
    
    406
    
    
    
    1,354Sales guarantees
    
    
    7,925
    
    
    
    8,200Commercial guarantees
    
    
    15,702
    
    
    
    9,390Total
    
    
    24,235
    
    
    
    19,122




---



##### 



Notes to the consolidated financial statements
    
    (IMAGE)
    
    F 39Norsk Hydro ASA and subsidiaries
 3 3
   Note 23
 Contractual and other commitments for future investments and operations
  As of 31 December 2005:
    
    
    
    
    
    InvestmentsAmounts in NOK million
    
    2006
    
    
    Thereafter
    
    
    TotalContract commitments for investments
in property, plant and equipment:Land based
    
    
    1,043
    
    
    
    51
    
    
    
    1,094Oil and gas fields and
transport systems
    
    
    9,840
    
    
    
    9,207
    
    
    
    19,047Total
    
    
    10,883
    
    
    
    9,257
    
    
    
    20,140Additional authorized future investments
in property, plant and equipment:Land based
    
    
    851
    
    
    
    602
    
    
    
    1,453Oil and gas fields and
transport systems
    
    
    659
    
    
    
    32
    
    
    
    691Total
    
    
    1,510
    
    
    
    634
    
    
    
    2,144Contract commitments for
other future investments:
    
    
    34
    
    
    
    117
    
    
    
    151
         Amounts in
    
    Transport
    
    
    Raw
    
    
    Energy
    
    
    Sales com-NOK million
    
    and Other
    
    
    materials
    
    
    related
    
    
    mitments2006
    
    
    1,352
    
    
    
    1,784
    
    
    
    7,224
    
    
    
    (20,606
    )2007
    
    
    944
    
    
    
    1,374
    
    
    
    10,797
    
    
    
    (22,723
    )2008
    
    
    797
    
    
    
    1,058
    
    
    
    4,552
    
    
    
    (16,618
    )2009
    
    
    838
    
    
    
    1,057
    
    
    
    3,765
    
    
    
    (14,077
    )2010
    
    
    812
    
    
    
    1,059
    
    
    
    2,221
    
    
    
    (13,810
    )Thereafter
    
    
    4,846
    
    
    
    7,172
    
    
    
    14,217
    
    
    
    (152,190
    )Total
    
    
    9,588
    
    
    
    13,505
    
    
    
    42,774
    
    
    
    (240,024
    )
     Note 24
 Market risk management and derivative instruments
    Accounting for Derivative Instruments
and Hedging Activities
  Oil




---



##### 



F 40
    
    (IMAGE)
    
    Notes to the consolidated financial statementsNorsk Hydro ASA and subsidiaries
  Natural gas
   Electricity
   Aluminium
     Amounts in NOK million
    
    2005
    
    
    2004Assets:Swaps and futures, crude oil
    
    
    9
    
    
    
    55Electricity contracts
    
    
    1,570
    
    
    
    391Natural gas contracts
    
    
    4,275
    
    
    
    1,525Aluminium futures, swaps and options
    
    
    
    
    
    
    177Total
    
    
    5,854
    
    
    
    2,147Liabilities:Electricity contracts
    
    
    (391
    )
    
    
    (197
    )Natural gas contracts
    
    
    (4,063
    )
    
    
    (988
    )Swaps and futures, crude oil
    
    
    (175
    )
    
    
    (62
    )Aluminium futures, swaps and options
    
    
    (902
    )
    
    
    Total
    
    
    (5,530
    )
    
    
    (1,247
    )
   Foreign Currency Risk Exposure




---



##### 



Notes to the consolidated financial statements
    
    (IMAGE)
    
    F 41Norsk Hydro ASA and subsidiaries
     Amounts in NOK million
    
    2005
    
    
    2004Assets:Currency forwards and swaps
    
    
    310
    
    
    
    757Liabilities:Currency forwards and swaps
    
    
    (297
    )
    
    
    (23
    )
    Currency
    
    Nominal
    
    
    Fair value in
    
    
    Maturity by nominalvalue in currency
    
    
    NOK
    
    
    amount in currencyAmount in million
    
    
    
    
    
    
    
    
    
    Within one year
    
    LaterBuying currencyAUD
    
    
    10
    
    
    
    49
    
    
    
    10
    
    
    
    CAD
    
    
    83
    
    
    
    461
    
    
    
    41
    
    
    
    42EUR
    
    
    730
    
    
    
    5,814
    
    
    
    730
    
    
    
    GBP
    
    
    174
    
    
    
    2,004
    
    
    
    174NOK
    
    
    14,294
    
    
    
    14,258
    
    
    
    14,294
    
    
    
    USD
    
    
    63
    
    
    
    326
    
    
    
    
    
    
    
    63Selling currencyDKK
    
    
    (385
    )
    
    
    (413
    )
    
    
    (385
    )
    
    
    JPY
    
    
    (5,142
    )
    
    
    (280
    )
    
    
    (200
    )
    
    
    (4,942
    )SEK
    
    
    (2,775
    )
    
    
    (2,362
    )
    
    
    (2,775
    )
    
    
    USD
    
    
    (2,953
    )
    
    
    (19,847
    )
    
    
    (2,926
    )
    
    
    (27
    )
  Interest Rate Exposure
  Cash Flow Hedges




---



##### 



F 42
    
    (IMAGE)
    
    Notes to the consolidated financial statementsNorsk Hydro ASA and subsidiaries
     Amounts in NOK million
    
    2005
    
    
    2004Assets:Cash flow hedging instruments, currency
    
    
    730
    
    
    
    1,396Total
    
    
    730
    
    
    
    1,396Liabilities:Cash flow hedging instruments, aluminium
    
    
    (844
    )
    
    
    (497
    )Total
    
    
    (844
    )
    
    
    (497
    )
   Economic Hedges
      Fair Value of Derivative Instruments
   Credit Risk Management




---



##### 



Notes to the consolidated financial statements
    

(IMAGE)
    
    F 43Norsk Hydro ASA and subsidiaries
  Note 25
 External audit remuneration
   Audit
    
    
    Other2005
    
    
    
    
    
    related
    
    
    non-auditAmounts in NOK thousands
    
    Audit fees
    
    
    fees
    
    
    fees
    
    
    Tax fees
    
    
    TotalDeloitte Norway 1)
    
    
    32,210
    
    
    
    1,796
    
    
    
    1,444
    
    
    
    631
    
    
    
    36,081Deloitte Abroad
    
    
    25,696
    
    
    
    3,126
    
    
    
    131
    
    
    
    6,784
    
    
    
    35,737Total Deloitte
    
    
    57,906
    
    
    
    4,921
    
    
    
    1,575
    
    
    
    7,416
    
    
    
    71,818Ernst & Young 2)
    
    
    11,312
    
    
    
    396
    
    
    
    
    
    
    
    958
    
    
    
    12,667Others
    
    
    3,041
    
    
    
    403
    
    
    
    1,244
    
    
    
    1,149
    
    
    
    5,836Total fees
    
    
    72,259
    
    
    
    5,720
    
    
    
    2,819
    
    
    
    9,523
    
    
    
    90,321
 Audit
    
    
    Other2004
    
    
    
    
    
    related
    
    
    non-auditAmounts in NOK thousands
    
    Audit fees
    
    
    fees
    
    
    fees
    
    
    Tax fees
    
    
    TotalDeloitte Norway
    
    
    24,691
    
    
    
    2,018
    
    
    
    1,337
    
    
    
    17
    
    
    
    28,063Deloitte Abroad
    
    
    23,399
    
    
    
    4,899
    
    
    
    427
    
    
    
    7,445
    
    
    
    36,170Total Deloitte
    
    
    48,090
    
    
    
    6,917
    
    
    
    1,764
    
    
    
    7,462
    
    
    
    64,233Ernst & Young 2)
    
    
    11,095
    
    
    
    929
    
    
    
    
    
    
    
    2,200
    
    
    
    14,224Others
    
    
    3,660
    
    
    
    1,314
    
    
    
    1,215
    
    
    
    1,774
    
    
    
    7,963Total fees
    
    
    62,845
    
    
    
    9,159
    
    
    
    2,979
    
    
    
    11,436
    
    
    
    86,420
 1)
    
    From 2005 the audit fees from Deloitte Norway include the audit of the oil and gas
licences operated by Hydro. The cost for 2005 was NOK 2,4 million. The corresponding amount
for 2004 was NOK 2,3 million, not included in this table.2)
    
    Amounts for Ernst & Young relate to Hydro subsidiaries under Ernst & Youngs audit.
Ernst & Young provides non-audit services to subsidiaries that it does not audit; such fees are
not included in this table.
  Note 26
 Related parties and Variable Interest Entities
  Related Parties




---



##### 



F 44
    

(IMAGE)
    
    Notes to the consolidated financial statementsNorsk Hydro ASA and subsidiaries
  Number of sharesNils Roar Brevik
    
    
    1Sven Edin
    
    
    224Anne-Margrethe Firing
    
    
    1,164Billy Fredagsvik
    
    
    38Tore Amund Fredriksen
    
    
    24Sónia F. T. Gjesdal
    
    
    117Westye Høegh
    
    
    16,200Kjell Kvinge
    
    
    222Astri Sylvi Lem
    
    
    150Dag Harald Madsen
    
    
    23Line Melkild
    
    
    23Bjørn Nedreaas
    
    
    39Wolfgang Ruch
    
    
    25Anne Merete Steensland
    
    
    24,272Rune Strande
    
    
    1Svein Steen Thomassen
    
    
    100Svein Aaser
    
    
    1,872
 Variable Interest Entities
    Note 27
 Supplementary oil and gas information




---



##### 



Notes to the consolidated financial statements
    
    (IMAGE)
    
    F 45Norsk Hydro ASA and subsidiaries
 Costs Incurred on Oil and Gas Properties
       Norway

    
    International
    
    
    TotalAmounts in NOK million
    
    2005
    
    
    2004
    
    
    2003
    
    
    2005
    
    
    2004
    
    
    2003
    
    
    2005
    
    
    2004
    
    
    2003Capitalized at beginning of year
    
    
    583
    
    
    
    633
    
    
    
    837
    
    
    
    662
    
    
    
    390
    
    
    
    442
    
    
    
    1,245
    
    
    
    1,023
    
    
    
    1,279Exploration well costs
capitalized during the year
    
    
    356
    
    
    
    120
    
    
    
    36
    
    
    
    351
    
    
    
    277
    
    
    
    168
    
    
    
    707
    
    
    
    397
    
    
    
    204Exploration acquisition costs
capitalized during the year 1)
    
    
    
    
    
    
    65
    
    
    
    
    
    
    
    3,918
    
    
    
    148
    
    
    
    
    
    
    
    3,918
    
    
    
    213
    
    
    
    Capitalized exploration costs
charged to expense
    
    
    (45
    )
    
    
    (110
    )
    
    
    (35
    )
    
    
    (4
    )
    
    
    (138
    )
    
    
    (136
    )
    
    
    (49
    )
    
    
    (248
    )
    
    
    (171
    )Transferred to development
    
    
    (292
    )
    
    
    (125
    )
    
    
    (185
    )
    
    
    (142
    )
    
    
    5
    
    
    
    (26
    )
    
    
    (434
    )
    
    
    (120
    )
    
    
    (211
    )Disposals
    
    
    
    
    
    
    
    
    
    
    (19
    )
    
    
    
    
    
    
    
    
    
    
    (78
    )
    
    
    
    
    
    
    
    
    
    
    (97
    )Foreign currency translation
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    56
    
    
    
    (19
    )
    
    
    20
    
    
    
    56
    
    
    
    (19
    )
    
    
    20Capitalized exploration well
costs at end of year
    
    
    538
    
    
    
    518
    
    
    
    633
    
    
    
    791
    
    
    
    504
    
    
    
    365
    
    
    
    1,329
    
    
    
    1,022
    
    
    
    998Capitalized acquisition costs
at end of year
    
    
    65
    
    
    
    65
    
    
    
    
    
    
    
    4,050
    
    
    
    159
    
    
    
    25
    
    
    
    4,115
    
    
    
    224
    
    
    
    25Capitalized exploration costs
at end of year
    
    
    603
    
    
    
    583
    
    
    
    633
    
    
    
    4,841
    
    
    
    662
    
    
    
    390
    
    
    
    5,444
    
    
    
    1,245
    
    
    
    1,023Wells in process of drilling at end of year
    
    
    
    
    
    
    85
    
    
    
    6
    
    
    
    76
    
    
    
    201
    
    
    
    4
    
    
    
    76
    
    
    
    286
    
    
    
    10Wells in areas where the drilling
program is uncompleted or
completed during the year
    
    
    456
    
    
    
    231
    
    
    
    341
    
    
    
    715
    
    
    
    301
    
    
    
    346
    
    
    
    1,171
    
    
    
    532
    
    
    
    687Wells where drilling program
is completed more than one year ago
    
    
    56
    
    
    
    182
    
    
    
    266
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    56
    
    
    
    182
    
    
    
    266Other cost including acquisition
of unproved property
    
    
    91
    
    
    
    85
    
    
    
    20
    
    
    
    4,050
    
    
    
    160
    
    
    
    40
    
    
    
    4,141
    
    
    
    245
    
    
    
    60Capitalized exploration costs
at end of year
    
    
    603
    
    
    
    583
    
    
    
    633
    
    
    
    4,841
    
    
    
    662
    
    
    
    390
    
    
    
    5,444
    
    
    
    1,245
    
    
    
    1,023
 1)
    
    The capitalized acquisition costs in 2005 is related to the purchase of Spinnaker
Exploration, and licences in Morocco, Libya and Angola. In 2004, NOK 213 million was related
to the purchase of license PL 248 in Norway and licenses in the Gulf of Mexico and Madagascar.
        More than1 year
    
    
    2 years
    
    
    3 years
    
    
    4 years
    
    
    5 years
    
    
    5 years
    
    
    TotalAmounts (NOK million)
    
    
    44
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    12
    
    
    
    56Number of projects
    
    
    1
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1
    
    
    
    2
    One year from end of drilling program:
 The Idun project




---



##### 



F 46
    
    (IMAGE)
    
    Notes to the consolidated financial statementsNorsk Hydro ASA and subsidiaries
 More than 5 years from end of drilling program:
 The Grane Outside project
       Norway
    
    
    International
    
    
    TotalAmounts in NOK million
    
    2005
    
    
    2004
    
    
    2003
    
    
    2005
    
    
    2004
    
    
    2003
    
    
    2005
    
    
    2004
    
    
    2003Exploration activity
    
    
    890
    
    
    
    478
    
    
    
    437
    
    
    
    1,692
    
    
    
    934
    
    
    
    1,172
    
    
    
    2,582
    
    
    
    1,412
    
    
    
    1,609Capitalized exploration costs
    
    
    356
    
    
    
    120
    
    
    
    36
    
    
    
    351
    
    
    
    277
    
    
    
    168
    
    
    
    707
    
    
    
    397
    
    
    
    204Capitalized exploration costs
charged to expense
    
    
    (45
    )
    
    
    (110
    )
    
    
    (35
    )
    
    
    (4
    )
    
    
    (138
    )
    
    
    (136
    )
    
    
    (49
    )
    
    
    (248
    )
    
    
    (171
    )Other 1)
    
    
    (9
    )
    
    
    
    
    
    
    
    
    
    
    91
    
    
    
    
    
    
    
    
    
    
    
    82
    
    
    
    
    
    
    
    Exploration costs expensed
during the year
    
    
    587
    
    
    
    468
    
    
    
    437
    
    
    
    1,254
    
    
    
    796
    
    
    
    1,140
    
    
    
    1,839
    
    
    
    1,264
    
    
    
    1,577
 1)
    
    In 2005, NOK 91 million was related to insurance refund in Iran due to an unsuccessful
well drilled in 2004.
 Norway
    
    
    International
    
    
    TotalAmounts in NOK million
    
    2005
    
    
    2004
    
    
    2003
    
    
    2005
    
    
    2004
    
    
    2003
    
    
    2005
    
    
    2004
    
    
    2003Net book value at beginning of year
    
    
    61,401
    
    
    
    62,672
    
    
    
    61,822
    
    
    
    7,461
    
    
    
    7,540
    
    
    
    7,162
    
    
    
    68,862
    
    
    
    70,212
    
    
    
    68,984Implementation SFAS 143
Asset Retirement Obligation
    
    
    
    
    
    
    
    
    
    
    1,021
    
    
    
    
    
    
    
    
    
    
    
    68
    
    
    
    
    
    
    
    
    
    
    
    1,089Cost incurred during the year
    
    
    10,258
    
    
    
    9,093
    
    
    
    7,288
    
    
    
    2,596
    
    
    
    1,585
    
    
    
    1,199
    
    
    
    12,854
    
    
    
    10,678
    
    
    
    8,487Acquisition cost
    
    
    21
    
    
    
    297
    
    
    
    
    
    
    
    15,069
    
    
    
    
    
    
    
    
    
    
    
    15,090
    
    
    
    297
    
    
    
    Transferred from exploration cost
    
    
    292
    
    
    
    125
    
    
    
    185
    
    
    
    142
    
    
    
    (5
    )
    
    
    26
    
    
    
    434
    
    
    
    120
    
    
    
    211Amortization
    
    
    (8,330
    )
    
    
    (8,259
    )
    
    
    (7,525
    )
    
    
    (1,473
    )
    
    
    (1,566
    )
    
    
    (1,589
    )
    
    
    (9,803
    )
    
    
    (9,825
    )
    
    
    (9,114
    )Disposals
    
    
    (32
    )
    
    
    (2,527
    )
    
    
    (119
    )
    
    
    (211
    )
    
    
    (3
    )
    
    
    (4
    )
    
    
    (243
    )
    
    
    (2,530
    )
    
    
    (123
    )Foreign currency translation
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    404
    
    
    
    (90
    )
    
    
    678
    
    
    
    404
    
    
    
    (90
    )
    
    
    678Net book value at end of year
    
    
    63,610
    
    
    
    61,401
    
    
    
    62,672
    
    
    
    23,989
    
    
    
    7,461
    
    
    
    7,540
    
    
    
    87,599
    
    
    
    68,862
    
    
    
    70,212
      Notes to the consolidated financial statements
    
    (IMAGE)
    
    F 47Norsk Hydro ASA and subsidiaries
 Results of Operations for Oil and Gas Producing Activities  (unaudited)
        Norway
    
    
    International
    
    
    TotalAmounts in NOK million
    
    2005
    
    
    2004
    
    
    2003
    
    
    2005
    
    
    2004
    
    
    2003
    
    
    2005
    
    
    2004
    
    
    2003Sales to unaffiliated customers
    
    
    10,528
    
    
    
    6,817
    
    
    
    6,672
    
    
    
    6,700
    
    
    
    5,039
    
    
    
    4,061
    
    
    
    17,228
    
    
    
    11,856
    
    
    
    10,733Intercompany transfers 1)
    
    
    45,344
    
    
    
    35,164
    
    
    
    25,531
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    45,344
    
    
    
    35,164
    
    
    
    25,531Total revenues
    
    
    55,872
    
    
    
    41,981
    
    
    
    32,203
    
    
    
    6,700
    
    
    
    5,039
    
    
    
    4,061
    
    
    
    62,572
    
    
    
    47,020
    
    
    
    36,264Operating costs and expenses:Production costs
    
    
    4,774
    
    
    
    3,922
    
    
    
    3,591
    
    
    
    456
    
    
    
    412
    
    
    
    425
    
    
    
    5,230
    
    
    
    4,334
    
    
    
    4,016Exploration expenses
    
    
    587
    
    
    
    468
    
    
    
    437
    
    
    
    1,252
    
    
    
    796
    
    
    
    1,140
    
    
    
    1,839
    
    
    
    1,264
    
    
    
    1,577Depreciation, depletion
and amortization
    
    
    8,201
    
    
    
    8,101
    
    
    
    7,378
    
    
    
    1,699
    
    
    
    1,578
    
    
    
    1,597
    
    
    
    9,900
    
    
    
    9,679
    
    
    
    8,975Transportation systems
    
    
    1,691
    
    
    
    1,647
    
    
    
    1,257
    
    
    
    140
    
    
    
    118
    
    
    
    125
    
    
    
    1,831
    
    
    
    1,765
    
    
    
    1,382Total expenses
    
    
    15,253
    
    
    
    14,138
    
    
    
    12,663
    
    
    
    3,547
    
    
    
    2,904
    
    
    
    3,287
    
    
    
    18,800
    
    
    
    17,042
    
    
    
    15,950Results of operations before taxes
    
    
    40,619
    
    
    
    27,843
    
    
    
    19,540
    
    
    
    3,153
    
    
    
    2,135
    
    
    
    774
    
    
    
    43,772
    
    
    
    29,978
    
    
    
    20,314Current and deferred
income tax expense
    
    
    (30,810
    )
    
    
    (21,279
    )
    
    
    (14,802
    )
    
    
    (1,602
    )
    
    
    (965
    )
    
    
    (414
    )
    
    
    (32,412
    )
    
    
    (22,244
    )
    
    
    (15,216
    )Results of operations
    
    
    9,809
    
    
    
    6,564
    
    
    
    4,738
    
    
    
    1,551
    
    
    
    1,170
    
    
    
    360
    
    
    
    11,360
    
    
    
    7,734
    
    
    
    5,098
 1)
    
    The majority of intercompany transfers are resold from the Energy and Oil Marketing sub
segment without further processing.
 Proved Reserves of Oil and Gas (unaudited)
      F 48
    
    (IMAGE)
    
    Notes to the consolidated financial statementsNorsk Hydro ASA and subsidiaries
      Norway
    
    
    
    
    
    
    
    
    
    International
    
    
    
    
    
    
    
    
    
    TotalOil
    
    Natural gas
    
    Oil and gas
    
    Oil
    
    Natural gas
    
    Oil and gas
    
    Oil
    
    Natural gas
    
    Oil and gasbillion
    
    billion
    
    
    
    
    
    
    
    
    
    billion 2)
    
    billion
    
    
    
    
    
    
    
    
    
    billion 2)
    
    billionmmboe 1)
    

Sm3 2)
    
    cf 2)
    
    mmboe 3)
    
    mmboe 1)
    

Sm3 2)
    
    cf 2)
    
    mmboe 3)
    
    mmboe 1)
    

Sm3 2)
    
    cf 2)
    
    mmboe 3)As of 31 December, 2002
    
    
    883
    
    
    
    187.4
    
    
    
    6,629
    
    
    
    2,053
    
    
    
    172
    
    
    
    
    
    
    
    
    
    
    
    172
    
    
    
    1,055
    
    
    
    187.4
    
    
    
    6,629
    
    
    
    2,225Revisions of previous estimates 4)
    
    
    59
    
    
    
    (8.9
    )
    
    
    (315
    )
    
    
    8
    
    
    
    (14
    )
    
    
    
    
    
    
    
    
    
    
    (14
    )
    
    
    45
    
    
    
    (8.9
    )
    
    
    (315
    )
    
    
    (6
    )Purchase (sale)/exchange of
reserves in place
    
    
    (2
    )
    
    
    
    
    
    
    
    
    
    
    (2
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (2
    )
    
    
    
    
    
    
    
    
    
    
    (2
    )Extensions and new discoveries
    
    
    22
    
    
    
    36.1
    
    
    
    1,278
    
    
    
    248
    
    
    
    17
    
    
    
    
    
    
    
    
    
    
    
    17
    
    
    
    39
    
    
    
    36.1
    
    
    
    1,278
    
    
    
    265Production for the year
    
    
    (123
    )
    
    
    (7.8
    )
    
    
    (275
    )
    
    
    (173
    )
    
    
    (21
    )
    
    
    
    
    
    
    
    
    
    
    (21
    )
    
    
    (144
    )
    
    
    (7.8
    )
    
    
    (275
    )
    
    
    (194
    )As of 31 December, 2003
    
    
    839
    
    
    
    206.8
    
    
    
    7,317
    
    
    
    2,134
    
    
    
    154
    
    
    
    
    
    
    
    
    
    
    
    154
    
    
    
    993
    
    
    
    206.8
    
    
    
    7,317
    
    
    
    2,288Revisions of previous estimates 4)
    
    
    43
    
    
    
    (3.0
    )
    
    
    (106
    )
    
    
    25
    
    
    
    14
    
    
    
    
    
    
    
    
    
    
    
    14
    
    
    
    57
    
    
    
    (3.0
    )
    
    
    (106
    )
    
    
    39Purchase (sale)/exchange of
reserves in place
    
    
    (6
    )
    
    
    (9.1
    )
    
    
    (324
    )
    
    
    (65
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (6
    )
    
    
    (9.1
    )
    
    
    (324
    )
    
    
    (65
    )Extensions and new discoveries
    
    
    5
    
    
    
    1.4
    
    
    
    51
    
    
    
    14
    
    
    
    9
    
    
    
    
    
    
    
    
    
    
    
    9
    
    
    
    14
    
    
    
    1.4
    
    
    
    51
    
    
    
    23Production for the year
    
    
    (132
    )
    
    
    (8.8
    )
    
    
    (312
    )
    
    
    (188
    )
    
    
    (21
    )
    
    
    
    
    
    
    
    
    
    
    (21
    )
    
    
    (153
    )
    
    
    (8.8
    )
    
    
    (312
    )
    
    
    (209
    )As of 31 December, 2004
    
    
    749
    
    
    
    187.3
    
    
    
    6,626
    
    
    
    1,920
    
    
    
    156
    
    
    
    
    
    
    
    
    
    
    
    156
    
    
    
    905
    
    
    
    187.3
    
    
    
    6,626
    
    
    
    2,076Revisions of previous estimates 4)
    
    
    33
    
    
    
    4.8
    
    
    
    170
    
    
    
    63
    
    
    
    1
    
    
    
    
    
    
    
    
    
    
    
    1
    
    
    
    34
    
    
    
    4.8
    
    
    
    171
    
    
    
    64Purchase (sale)/exchange of
reserves in place
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    21
    
    
    
    5.3
    
    
    
    187
    
    
    
    52
    
    
    
    21
    
    
    
    5.3
    
    
    
    187
    
    
    
    52Extensions and new discoveries
    
    
    36
    
    
    
    3.1
    
    
    
    109
    
    
    
    56
    
    
    
    3
    
    
    
    0.1
    
    
    
    3
    
    
    
    3
    
    
    
    39
    
    
    
    3.2
    
    
    
    112
    
    
    
    59Production for the year
    
    
    (125
    )
    
    
    (9.4
    )
    
    
    (334
    )
    
    
    (185
    )
    
    
    (21
    )
    
    
    
    
    
    
    (1
    )
    
    
    (21
    )
    
    
    (146
    )
    
    
    (9.4
    )
    
    
    (335
    )
    
    
    (206
    )As of 31 December, 2005
    
    
    693
    
    
    
    185.7
    
    
    
    6,571
    
    
    
    1,854
    
    
    
    160
    
    
    
    5.4
    
    
    
    190
    
    
    
    192
    
    
    
    853
    
    
    
    191.1
    
    
    
    6,761
    
    
    
    2,046Proved developed reserves:As of 31 December, 2002
    
    
    559
    
    
    
    124.8
    
    
    
    4,416
    
    
    
    1,339
    
    
    
    93
    
    
    
    
    
    
    
    
    
    
    
    93
    
    
    
    652
    
    
    
    124.8
    
    
    
    4,416
    
    
    
    1,432As of 31 December, 2003
    
    
    690
    
    
    
    124.8
    
    
    
    4,415
    
    
    
    1,470
    
    
    
    88
    
    
    
    
    
    
    
    
    
    
    
    88
    
    
    
    778
    
    
    
    124.8
    
    
    
    4,415
    
    
    
    1,558As of 31 December, 2004
    
    
    607
    
    
    
    118.6
    
    
    
    4,197
    
    
    
    1,350
    
    
    
    97
    
    
    
    
    
    
    
    
    
    
    
    97
    
    
    
    704
    
    
    
    118.6
    
    
    
    4,197
    
    
    
    1,447As of 31 December, 2005
    
    
    576
    
    
    
    128.6
    
    
    
    4,551
    
    
    
    1,380
    
    
    
    93
    
    
    
    1.7
    
    
    
    58
    
    
    
    103
    
    
    
    669
    
    
    
    130.3
    
    
    
    4,609
    
    
    
    1,483
 
 1)
    
    Includes crude oil, NGL and Condensate. 1 Sm3Oil/Condensate = 6.2898 boe. 1
tonne NGL = 11.9506 boe.2)
    
    Sm3= Standard cubic meter at 15 degrees Celcius. cf = cubic feet at 60 degrees
Fahrenheit. 1 Sm3gas at 15 degrees Celcius = 35.3826 cubic feet gas at 60 degrees
Fahrenheit.3)
    
    Includes crude oil, NGL, Condensate and natural gas. When converting natural gas into barrels
of oil equivalents adjustment for calorific value to an equivalent 40 MJ/Sm3volume
is calculated, then 1000 Sm3@ 40 MJ/Sm3= 6.2898 boe.4)
    
    The revision of previous estimates relates to new information
from current years drilling
operations and additional data which is now available.
      Notes to the consolidated financial statements
    
    (IMAGE)
    
    F 49Norsk Hydro ASA and subsidiaries
 US GAAP Standardized Measure of Discounted Future
Net Cash Flows and Changes Therein Relating to Proved
Oil and Gas Reserves (unaudited)
        Norway
    
    
    International
    
    
    TotalAmounts in NOK million
    
    2005
    
    
    2004
    
    
    2003
    
    
    2005
    
    
    2004
    
    
    2003
    
    
    2005
    
    
    2004
    
    
    2003Future cash inflows
    
    
    575,900
    
    
    
    382,800
    
    
    
    372,800
    
    
    
    70,900
    
    
    
    35,800
    
    
    
    28,900
    
    
    
    646,800
    
    
    
    418,600
    
    
    
    401,700Future production costs
    
    
    (105,200
    )
    
    
    (91,500
    )
    
    
    (92,600
    )
    
    
    (17,500
    )
    
    
    (10,600
    )
    
    
    (7,000
    )
    
    
    (122,700
    )
    
    
    (102,100
    )
    
    
    (99,600
    )Future development costs
    
    
    (42,500
    )
    
    
    (38,500
    )
    
    
    (46,000
    )
    
    
    (7,100
    )
    
    
    (5,600
    )
    
    
    (5,300
    )
    
    
    (49,600
    )
    
    
    (44,100
    )
    
    
    (51,300
    )Future income tax expense
    
    
    (324,700
    )
    
    
    (189,800
    )
    
    
    (169,100
    )
    
    
    (13,100
    )
    
    
    (5,200
    )
    
    
    (3,200
    )
    
    
    (337,800
    )
    
    
    (195,000
    )
    
    
    (172,300
    )Future net cash flows
    
    
    103,500
    
    
    
    63,000
    
    
    
    65,100
    
    
    
    33,200
    
    
    
    14,400
    
    
    
    13,400
    
    
    
    136,700
    
    
    
    77,400
    
    
    
    78,500Less: 10% annual discount for
estimated timing of cash flows
    
    
    (40,100
    )
    
    
    (26,400
    )
    
    
    (28,000
    )
    
    
    (8,800
    )
    
    
    (4,700
    )
    
    
    (4,200
    )
    
    
    (48,900
    )
    
    
    (31,100
    )
    
    
    (32,200
    )Standardized measure of discounted future net cash flows
    
    
    63,400
    
    
    
    36,600
    
    
    
    37,100
    
    
    
    24,400
    
    
    
    9,700
    
    
    
    9,200
    
    
    
    87,800
    
    
    
    46,300
    
    
    
    46,300
      Amounts in NOK million
    
    2005
    
    
    2004
    
    
    2003Net changes in prices and production costs
    
    
    127,800
    
    
    
    33,200
    
    
    
    Sales and transfers of oil and gas produced, net of production costs
    
    
    (55,500
    )
    
    
    (40,900
    )
    
    
    (30,900
    )Extensions, unitizations, discoveries and improved recovery,
net of related costs
    
    
    11,200
    
    
    
    2,600
    
    
    
    17,700Purchase/Exchange of interests in fields
    
    
    13,200
    
    
    
    800
    
    
    
    Sale/Exchange of interests in fields
    
    
    
    
    
    
    (3,600
    )
    
    
    (100
    )Changes in estimated development costs
    
    
    (11,300
    )
    
    
    (900
    )
    
    
    (14,300
    )Development costs incurred during the year
    
    
    9,800
    
    
    
    8,400
    
    
    
    7,400Net change in income taxes
    
    
    (72,200
    )
    
    
    (8,500
    )
    
    
    7,900Accretion of discount
    
    
    2,900
    
    
    
    3,100
    
    
    
    4,500Revisions of previous reserve quantity estimates
    
    
    16,300
    
    
    
    5,500
    
    
    
    3,300Other
    
    
    (700
    )
    
    
    300
    
    
    
    300Total change in the standardized measure during the year
    
    
    41,500
    
    
    
    
    
    
    
    (4,200
    )
    Sales Price and Production Cost per Unit (unaudited)
  Norway
    
    
    International
    
    
    TotalAmounts in NOK
    
    2005
    
    
    2004
    
    
    2003
    
    
    2005
    
    
    2004
    
    
    2003
    
    
    2005
    
    
    2004
    
    
    2003Average Sales Pricecrude oil (per barrel)1)
    
    
    342.54
    
    
    
    251.43
    
    
    
    204.01
    
    
    
    340.53
    
    
    
    250.40
    
    
    
    197.08
    
    
    
    342.22
    
    
    
    251.27
    
    
    
    202.90natural gas (per Sm3)
    
    
    1.52
    
    
    
    1.09
    
    
    
    1.03
    
    
    
    2.99
    
    
    
    
    
    
    
    
    
    
    
    1.52
    
    
    
    1.09
    
    
    
    1.03Average production cost
(per boe)
    
    
    25.80
    
    
    
    20.80
    
    
    
    20.80
    
    
    
    21.90
    
    
    
    19.50
    
    
    
    20.20
    
    
    
    25.30
    2)
    
    
    20.70
    2)
    
    
    20.702)
 1)
    
    In the years 2005, 2004 and 2003, Hydro has not had any hedging gain or loss that has
affected the realized oil and gas prices. Average sales price crude oil is realized by Oil &
Energys sub-segment Exploration and Production.2)
    
    Includes the cost of purchased gas for injection with NOK 5.40 per barrel in 2005, NOK 2.80
per barrel in 2004 and NOK 0.70 per barrel in 2003.
      Adjusted net interest-bearing debt, adjusted equity and
adjusted net debt/equity
            Return on average capital employed (RoaCE)
  
    
    Return on average Capital Employed (RoaCE)
    
    Earnings after tax
    
    Capital Employed
  
    
    The rate of return on investments over
time, in each of its capital intensive
businesses
    
    The operating results of its business segments
      
    
    Oil price 25 US dollar per barrel
    
    Aluminium price (London Metal Exchange) 1,500 US dollar per tonne
    
    US dollar  Norwegian kroner exchange rate 7.00
    
    Euro  Norwegian kroner exchange rate 8.00
    
    In addition, unrealized gains and losses on
derivative instruments and items reported as Other
income, net and Restructuring costs according to
generally accepted accounting principles are
excluded when calculating normalized RoaCE.
      December 31
    
    
    December 31NOK million
    
    2005
    
    
    2004Bank loans and other interest-bearing short-term debt
    
    
    (4,658
    )
    
    
    (3,785
    )Current portion of long-term debt
    
    
    (379
    )
    
    
    (568
    )Long-term debt
    
    
    (21,387
    )
    
    
    (19,487
    )Total debt
    
    
    (26,424
    )
    
    
    (23,840
    )Cash and cash equivalents
    
    
    10,463
    
    
    
    14,366Short-term investments
    
    
    3,865
    
    
    
    10,970Net interest-bearing debt
    
    
    (12,095
    )
    
    
    1,496Net pension liabilities at fair value
    
    
    (13,529
    )
    
    
    (10,056
    )Expected income tax benefit on pension liability (30%)
    
    
    4,059
    
    
    
    3,017Operating leases commitments discounted at 6,9%1)
    
    
    (6,287
    )
    
    
    (3,500
    )Adjusted net interest-bearing debt
    
    
    (27,853
    )
    
    
    (9,043
    )Shareholders equity
    
    
    (95,495
    )
    
    
    (85,890
    )Minority interest
    
    
    (981
    )
    
    
    (1,571
    )Shareholders equity and minority interests
    
    
    (96,476
    )
    
    
    (87,461
    )Net pension liabilities not recognized without equity effect
    
    
    8,474
    
    
    
    6,341Expected income tax benefit (30%)
    
    
    (2,542
    )
    
    
    (1,902
    )Equity adjustment off-balance sheet pension liabilities
    
    
    5,932
    
    
    
    4,439Adjusted Shareholders equity and minority
    
    
    (90,544
    )
    
    
    (83,022
    )Adjusted net debt/equity ratio
    
    
    0.31
    
    
    
    0.11
 
 1)
    
    The discount rate for the operating lease commitments have been changed to 6.9% for 2005
from 10% in 2004 to better reflect Hydros
average interest expense. This also corresponds to amended methodology used by major rating
agencies for the purpose of credit rating.    Debt/equity ratio
    
    
    0.28
    
    
    
    0.28
      Year ended
    
    
    Year ended
    
    
    Year endedAmounts in NOK million
    
    
    
    
    
    2005
    
    
    2004
    
    
    2003Operating Income
    
    
    
    
    
    
    46,432
    
    
    
    31,847
    
    
    
    21,625Equity in net income of non-consolidated investees
    
    
    
    
    
    
    619
    
    
    
    629
    
    
    
    620Other income/expense, net
    
    
    
    
    
    
    990
    
    
    
    169
    
    
    
    (1,253
    )Earnings before tax
    
    
    
    
    
    
    48,042
    
    
    
    32,644
    
    
    
    20,992Adjusted Income tax expense
    
    
    
    
    
    
    (31,693
    )
    
    
    (21,165
    )
    
    
    (13,224
    )Earnings after tax
    
    
    
    
    
    
    16,349
    
    
    
    11,479
    
    
    
    7,76831 December
    
    
    31 December
    
    
    31 December
    
    
    31 DecemberAmounts in NOK million
    
    2005
    
    
    2004
    
    
    2003
    
    
    2002Current assets1)
    
    
    55,964
    
    
    
    45,070
    
    
    
    45,468
    
    
    
    46,914Non-consolidated investees
    
    
    10,814
    
    
    
    10,017
    
    
    
    10,162
    
    
    
    9,410Property, plant and equipment
    
    
    128,191
    
    
    
    106,117
    
    
    
    107,779
    
    
    
    105,251Prepaid
pension, investments and other non-current
assets2)
    
    
    17,897
    
    
    
    13,703
    
    
    
    13,228
    
    
    
    15,585Other
current liabilities3)
    
    
    (48,219
    )
    
    
    (41,724
    )
    
    
    (37,725
    )
    
    
    (34,359
    )Other
long-term liabilities4)
    
    
    (56,076
    )
    
    
    (47,218
    )
    
    
    (48,082
    )
    
    
    (49,033
    )Capital Employed
    
    
    108,571
    
    
    
    85,965
    
    
    
    90,831
    
    
    
    93,7682005
    
    
    2004
    
    
    2003Return on average Capital Employed (RoaCE)
    
    
    
    
    
    
    16.8
    %
    
    
    13.0
    %
    
    
    8.4
    %Year ended
    
    
    Year ended
    
    
    Year endedAmounts in NOK million
    
    
    
    
    
    2005
    
    
    2004
    
    
    2003Reported Earnings before tax
    
    
    
    
    
    
    48,042
    
    
    
    32,644
    
    
    
    20,992Normalization Other income
    
    
    
    
    
    
    (990
    )
    
    
    (169
    )
    
    
    1,253Normalization Restructuring costs
    
    
    
    
    
    
    
    
    
    
    (22
    )
    
    
    Normalization Price and currency
    
    
    
    
    
    
    (28,947
    )
    
    
    (13,752
    )
    
    
    (6,023
    )Normalized Earnings before tax
    
    
    
    
    
    
    18,105
    
    
    
    18,701
    
    
    
    16,222Normalized Income tax expense
    
    
    
    
    
    
    (10,610
    )
    
    
    (11,757
    )
    
    
    (10,208
    )Normalized Earnings after tax
    
    
    
    
    
    
    7,495
    
    
    
    6,944
    
    
    
    6,01431 December
    
    
    31 December
    
    
    31 December
    
    
    31 DecemberAmounts in NOK million
    
    2005
    
    
    2004
    
    
    2003
    
    
    2002Reported Capital Employed
    
    
    108,571
    
    
    
    85,965
    
    
    
    90,831
    
    
    
    93,768Normalization Price and currency
    
    
    2,212
    
    
    
    855
    
    
    
    (982
    )
    
    
    5,085Normalization current tax payable
    
    
    10,622
    
    
    
    5,250
    
    
    
    1,611
    
    
    
    989Normalized Capital Employed
    
    
    121,405
    
    
    
    92,070
    
    
    
    91,460
    
    
    
    99,8422005
    
    
    2004
    
    
    2003Normalized Return on average Capital Employed (RoaCE)
    
    
    
    
    
    
    7.0
    %
    
    
    7.6
    %
    
    
    6.3
    %
 
 1)
    
    Excluding Cash and cash equivalents and Short term investments, but including Deferred tax
assets.2)
    
    Including Deferred tax assets.3)
    
    Including Deferred tax liabilities.4)
    
    Including Accrued pension liabilities and Deferred tax liabilities.
      F 64
    

(IMAGE)
    
    Non-GAAP financial measures
      Year ended
    
    
    Year ended
    
    
    Year endedAmounts in NOK million
    
    2005
    
    
    2004
    
    
    2003Operating Income
    
    
    43,451
    
    
    
    31,144
    
    
    
    21,143Equity in net income of non-consolidated investees
    
    
    112
    
    
    
    75
    
    
    
    107Other income/expense, net
    
    
    65
    
    
    
    59
    
    
    
    815Earnings before tax
    
    
    43,628
    
    
    
    31,278
    
    
    
    22,065Adjusted Income tax expense
    
    
    (31,470
    )
    
    
    (22,051
    )
    
    
    (15,089
    )Earnings after tax
    
    
    12,158
    
    
    
    9,227
    
    
    
    6,976
   31 December
    
    
    31 December
    
    
    31 December
    
    
    31 DecemberAmounts in NOK million
    
    2005
    
    
    2004
    
    
    2003
    
    
    2002Current assets 1)
    
    
    25,084
    
    
    
    15,630
    
    
    
    16,015
    
    
    
    21,211Non-consolidated investees
    
    
    2,598
    
    
    
    2,347
    
    
    
    2,406
    
    
    
    1,991Property, plant and equipment
    
    
    96,321
    
    
    
    73,437
    
    
    
    74,460
    
    
    
    73,223Prepaid pension, investments and
other non-current assets 2)
    
    
    10,264
    
    
    
    4,392
    
    
    
    3,903
    
    
    
    4,199Other current liabilities 3)
    
    
    (34,027
    )
    
    
    (23,310
    )
    
    
    (18,829
    )
    
    
    (22,519
    )Other long-term liabilities 4)
    
    
    (43,888
    )
    
    
    (35,985
    )
    
    
    (35,627
    )
    
    
    (34,554
    )Capital Employed
    
    
    56,353
    
    
    
    36,511
    
    
    
    42,329
    
    
    
    43,552
 2005
    
    
    2004
    
    
    2003Return on average Capital Employed (RoaCE)
    
    
    26.2
    %
    
    
    23.4
    %
    
    
    16.2
    %
   Year ended
    
    
    Year ended
    
    
    Year endedAmounts in NOK million
    
    2005
    
    
    2004
    
    
    2003Reported Earnings before tax
    
    
    43,628
    
    
    
    31,278
    
    
    
    22,065Normalization Other income
    
    
    (65
    )
    
    
    (59
    )
    
    
    (815
    )Normalization Price and currency
    
    
    (26,754
    )
    
    
    (12,905
    )
    
    
    (4,123
    )Normalized Earnings before tax
    
    
    16,809
    
    
    
    18,314
    
    
    
    17,127Normalized Income tax expense
    
    
    (11,350
    )
    
    
    (12,990
    )
    
    
    (12,006
    )Normalized Earnings after tax
    
    
    5,458
    
    
    
    5,324
    
    
    
    5,121
   31 December
    
    
    31 December
    
    
    31 December
    
    
    31 DecemberAmounts in NOK million
    
    2005
    
    
    2004
    
    
    2003
    
    
    2002Reported Capital Employed
    
    
    56,353
    
    
    
    36,511
    
    
    
    42,329
    
    
    
    43,552Normalization Price and currency
    
    
    2,073
    
    
    
    (315
    )
    
    
    (37
    )
    
    
    1,420Normalization current tax payable
    
    
    9,602
    
    
    
    4,951
    
    
    
    1,735
    
    
    
    1,039Normalized Capital Employed
    
    
    68,028
    
    
    
    41,147
    
    
    
    44,027
    
    
    
    46,011
 2005
    
    
    2004
    
    
    2003Normalized Return on average Capital Employed (RoaCE)
    
    
    10.0
    %
    
    
    12.3
    %
    
    
    11.3
    %
      Non-GAAP financial measures
    

(IMAGE)
    
    F 65
      Year ended
    
    
    Year ended
    
    
    Year endedAmounts in NOK million
    
    2005
    
    
    2004
    
    
    2003Operating Income
    
    
    2,511
    
    
    
    1,805
    
    
    
    2,456Equity in net income of non-consolidated investees
    
    
    345
    
    
    
    381
    
    
    
    433Other income/expense, net
    
    
    
    
    
    
    
    
    
    
    Earnings before tax
    
    
    2,856
    
    
    
    2,186
    
    
    
    2,888Adjusted Income tax expense
    
    
    (1,313
    )
    
    
    (632
    )
    
    
    (860
    )Earnings after tax
    
    
    1,543
    
    
    
    1,554
    
    
    
    2,029
   31 December
    
    
    31 December
    
    
    31 December
    
    
    31 DecemberAmounts in NOK million
    
    2005
    
    
    2004
    
    
    2003
    
    
    2002Current assets 1)
    
    
    27,212
    
    
    
    24,371
    
    
    
    22,860
    
    
    
    21,715Non-consolidated investees
    
    
    6,358
    
    
    
    5,457
    
    
    
    5,787
    
    
    
    4,902Property, plant and equipment
    
    
    28,106
    
    
    
    28,696
    
    
    
    29,504
    
    
    
    26,496Prepaid pension, investments and
other non-current assets 2)
    
    
    3,920
    
    
    
    4,306
    
    
    
    4,849
    
    
    
    5,246Other current liabilities 3)
    
    
    (14,127
    )
    
    
    (14,595
    )
    
    
    (12,758
    )
    
    
    (10,544
    )Other long-term liabilities 4)
    
    
    (5,258
    )
    
    
    (4,693
    )
    
    
    (5,316
    )
    
    
    (5,800
    )Capital Employed
    
    
    46,211
    
    
    
    43,542
    
    
    
    44,926
    
    
    
    42,015
 2005
    
    
    2004
    
    
    2003Return on average Capital Employed (RoaCE)
    
    
    3.4
    %
    
    
    3.5
    %
    
    
    4.7
    %
   Year ended
    
    
    Year ended
    
    
    Year endedAmounts in NOK million
    
    2005
    
    
    2004
    
    
    2003Reported Earnings before tax
    
    
    2,856
    
    
    
    2,186
    
    
    
    2,888Normalization Other income
    
    
    
    
    
    
    
    
    
    
    Normalization Restructuring costs
    
    
    
    
    
    
    (22
    )
    
    
    Normalization Price and currency
    
    
    (1,055
    )
    
    
    (1,360
    )
    
    
    (250
    )Normalized Earnings before tax
    
    
    1,801
    
    
    
    804
    
    
    
    2,638Normalized Income tax expense
    
    
    (1,025
    )
    
    
    (205
    )
    
    
    (777
    )Normalized Earnings after tax
    
    
    775
    
    
    
    599
    
    
    
    1,861
   31 December
    
    
    31 December
    
    
    31 December
    
    
    31 DecemberAmounts in NOK million
    
    2005
    
    
    2004
    
    
    2003
    
    
    2002Reported Capital Employed
    
    
    46,211
    
    
    
    43,542
    
    
    
    44,926
    
    
    
    42,015Normalization Price and currency
    
    
    1,384
    
    
    
    1,152
    
    
    
    (522
    )
    
    
    2,736Normalization current tax payable
    
    
    288
    
    
    
    460
    
    
    
    82
    
    
    
    199Normalized Capital Employed
    
    
    47,883
    
    
    
    45,154
    
    
    
    44,486
    
    
    
    44,951
 2005
    
    
    2004
    
    
    2003Normalized Return on average Capital Employed (RoaCE)
    
    
    1.7
    %
    
    
    1.3
    %
    
    
    4.2
    %
      F 66
    

(IMAGE)
    
    Non-GAAP financial measures
      Actual RoaCE
 Hydro

    
    Oil & Energy

    
    AluminiumYear ended

    
    Year ended

    
    Year endedAmounts in NOK million
    
    2005
    
    
    2004
    
    
    2005
    
    
    2004
    
    
    2005
    
    
    2004Earnings after tax
    
    
    16,349
    
    
    
    11,479
    
    
    
    12,158
    
    
    
    9,227
    
    
    
    1,543
    
    
    
    1,554Adjustment for write downs
    
    
    1,239
    
    
    
    1,595
    
    
    
    
    
    
    
    
    
    
    
    1,239
    
    
    
    1,595Adjustment for Spinnaker
    
    
    241
    
    
    
    
    
    
    
    241
    
    
    
    
    
    
    
    
    
    
    
    Change in tax regulations
    
    
    
    
    
    
    (989
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Adjusted Earnings after tax
    
    
    17,829
    
    
    
    12,085
    
    
    
    12,399
    
    
    
    9,227
    
    
    
    2,782
    
    
    
    3,149
   31 December


    31 December


    31 DecemberAmounts in NOK million
    
    2005
    
    
    2004
    
    
    2005
    
    
    2004
    
    
    2005
    
    
    2004Capital Employed
    
    
    108,571
    
    
    
    85,965
    
    
    
    56,353
    
    
    
    36,511
    
    
    
    46,211
    
    
    
    43,542Adjustment for write downs
    
    
    1,239
    
    
    
    1,595
    
    
    
    
    
    
    
    
    
    
    
    1,239
    
    
    
    1,595Adjustment for Spinnaker
    
    
    (17,065
    )
    
    
    
    
    
    
    (17,065
    )
    
    
    
    
    
    
    
    
    
    
    Change in tax regulations
    
    
    
    
    
    
    (989
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Adjusted Capital Employed
    
    
    92,745
    
    
    
    86,571
    
    
    
    39,288
    
    
    
    36,511
    
    
    
    47,450
    
    
    
    45,137
 2005
    
    
    2004
    
    
    2005
    
    
    2004
    
    
    2005
    
    
    2004RoaCE adjusted for major events
    
    
    19.9
    %
    
    
    13.6
    %
    
    
    32.7
    %
    
    
    23.4
    %
    
    
    6.0
    %
    
    
    7.0
    %
   Normalized RoaCE
 Hydro

    
    Oil & Energy

    
    AluminiumYear ended

    
    Year ended

    
    Year endedAmounts in NOK million
    
    2005
    
    
    2004
    
    
    2005
    
    
    2004
    
    
    2005
    
    
    2004Earnings after tax
    
    
    7,495
    
    
    
    6,944
    
    
    
    5,458
    
    
    
    5,233
    
    
    
    775
    
    
    
    599Adjustment for write downs
    
    
    1,239
    
    
    
    1,595
    
    
    
    
    
    
    
    
    
    
    
    1,239
    
    
    
    1,595Adjustment for Spinnaker
    
    
    308
    
    
    
    
    
    
    
    308
    
    
    
    
    
    
    
    
    
    
    
    Change in tax regulations
    
    
    
    
    
    
    (989
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Adjusted Earnings after tax
    
    
    9,042
    
    
    
    7,550
    
    
    
    5,766
    
    
    
    5,233
    
    
    
    2,014
    
    
    
    2,194
   31 December


    31 December


    31 DecemberAmounts in NOK million
    
    2005
    
    
    2004
    
    
    2005
    
    
    2004
    
    
    2005
    
    
    2004Capital Employed
    
    
    121,405
    
    
    
    92,070
    
    
    
    68,028
    
    
    
    41,147
    
    
    
    47,883
    
    
    
    45,050Adjustment for write downs
    
    
    1,239
    
    
    
    1,595
    
    
    
    
    
    
    
    
    
    
    
    1,239
    
    
    
    1,595Adjustment for Spinnaker
    
    
    (17,697
    )
    
    
    
    
    
    
    (17,697
    )
    
    
    
    
    
    
    
    
    
    
    Change in tax regulations
    
    
    
    
    
    
    (989
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Adjusted Capital Employed
    
    
    104,947
    
    
    
    92,676
    
    
    
    50,331
    
    
    
    41,147
    
    
    
    49,122
    
    
    
    46,645
 2005
    
    
    2004
    
    
    2005
    
    
    2004
    
    
    2005
    
    
    2004Normalized RoaCE adjusted for major events
    
    
    9.2
    %
    
    
    8.2
    %
    
    
    12.6
    %
    
    
    12.3
    %
    
    
    4.2
    %
    
    
    4.8
    %
      Notes to the consolidated financial statements
    
    (IMAGE)
    
    F 67Norsk Hydro ASA and subsidiaries
      
      thousands
of boe1)
    
    
    
    
    
    2005
    
    
    
    
    
    
    
    
    
    
    2004
    
    
    
    
    
    
    
    
    
    
    2003
    
    
    
    
    
    
    
    
    
    
    2002
    
    
    
    
    
    
    
    
    
    
    2001Location/field
    
    Total
    
    
    Oil
    
    
    Gas
    
    
    Total
    
    
    Oil
    
    
    Gas
    
    
    Total
    
    
    Oil
    
    
    Gas
    
    
    Total
    
    
    Oil
    
    
    Gas
    
    
    Total
    
    
    Oil
    
    
    GasNorwayNorth SeaOseberg
2)
    
    
    102.4
    
    
    
    80.7
    
    
    
    21.7
    
    
    
    115.7
    
    
    
    95.3
    
    
    
    20.4
    
    
    
    115.1
    
    
    
    103.0
    
    
    
    12.1
    
    
    
    114.9
    
    
    
    97.8
    
    
    
    17.1
    
    
    
    99.1
    
    
    
    83.5
    
    
    
    15.5Troll
    
    
    71.5
    
    
    
    25.6
    
    
    
    45.9
    
    
    
    74.9
    
    
    
    32.1
    
    
    
    42.8
    
    
    
    80.0
    
    
    
    37.0
    
    
    
    43.0
    
    
    
    79.7
    
    
    
    37.7
    
    
    
    42.0
    
    
    
    69.7
    
    
    
    34.5
    
    
    
    35.2Grane
    
    
    67.5
    
    
    
    67.5
    
    
    
    
    
    
    
    46.3
    
    
    
    46.3
    
    
    
    
    
    
    
    5.5
    
    
    
    5.5
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Snorre 3)
    
    
    48.5
    
    
    
    46.2
    
    
    
    2.3
    
    
    
    58.1
    
    
    
    56.2
    
    
    
    1.9
    
    
    
    67.5
    
    
    
    65.0
    
    
    
    2.5
    
    
    
    66.4
    
    
    
    63.6
    
    
    
    2.8
    
    
    
    67.4
    
    
    
    64.1
    
    
    
    3.3Sleipner
4)
    
    
    35.3
    
    
    
    10.3
    
    
    
    25.0
    
    
    
    32.8
    
    
    
    10.4
    
    
    
    22.4
    
    
    
    35.2
    
    
    
    12.1
    
    
    
    23.2
    
    
    
    34.1
    
    
    
    11.8
    
    
    
    22.3
    
    
    
    32.1
    
    
    
    13.1
    
    
    
    19.0Ekofisk
5)
    
    
    27.8
    
    
    
    23.5
    
    
    
    4.3
    
    
    
    28.5
    
    
    
    24.0
    
    
    
    4.5
    
    
    
    28.2
    
    
    
    23.9
    
    
    
    4.3
    
    
    
    28.6
    
    
    
    24.0
    
    
    
    4.6
    
    
    
    27.4
    
    
    
    22.9
    
    
    
    4.5Gullfaks
6)
    
    
    27.0
    
    
    
    20.5
    
    
    
    6.5
    
    
    
    28.6
    
    
    
    23.0
    
    
    
    5.6
    
    
    
    26.0
    
    
    
    21.2
    
    
    
    4.8
    
    
    
    24.8
    
    
    
    21.0
    
    
    
    3.9
    
    
    
    25.0
    
    
    
    22.8
    
    
    
    2.2Tune
    
    
    25.0
    
    
    
    3.5
    
    
    
    21.5
    
    
    
    33.4
    
    
    
    6.1
    
    
    
    27.3
    
    
    
    30.8
    
    
    
    7.8
    
    
    
    23.0
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Kvitebjorn
    
    
    18.2
    
    
    
    7.3
    
    
    
    10.9
    
    
    
    2.3
    
    
    
    0.8
    
    
    
    1.5
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Fram
    
    
    7.8
    
    
    
    7.8
    
    
    
    
    
    
    
    12.3
    
    
    
    12.3
    
    
    
    
    
    
    
    2.9
    
    
    
    2.9
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
   
    
    
    
    
    
    
    
    
    
    
    
    Brage
    
    
    5.8
    
    
    
    5.4
    
    
    
    0.4
    
    
    
    6.1
    
    
    
    5.7
    
    
    
    0.4
    
    
    
    7.3
    
    
    
    7.0
    
    
    
    0.4
    
    
    
    9.9
    
    
    
    9.4
    
    
    
    0.4
    
    
    
    10.6
    
    
    
    9.9
    
    
    
    0.7Visund
    
    
    5.4
    
    
    
    4.2
    
    
    
    1.2
    
    
    
    6.2
    
    
    
    6.2
    
    
    
    
    
    
    
    6.6
    
    
    
    6.6
    
    
    
    
    
    
    
    8.2
    
    
    
    8.2
    
    
    
    
    
    
    
    8.9
    
    
    
    8.9
    
    
    
    Heimdal
7)
    
    
    4.1
    
    
    
    1.1
    
    
    
    3.0
    
    
    
    3.8
    
    
    
    1.3
    
    
    
    2.5
    
    
    
    2.2
    
    
    
    0.7
    
    
    
    1.4
    
    
    
    1.2
    
    
    
    0.2
    
    
    
    1.0
    
    
    
    0.5
    
    
    
    0.1
    
    
    
    0.4Frigg
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    4.8
    
    
    
    
    
    
    
    
    
    
    
    3.9
    
    
    
    
    
    
    
    3.9
    
    
    
    3.9
    
    
    
    
    
    
    
    3.9
    
    
    
    4.2
    
    
    
    
    
    
    
    4.2Norwegian SeaAsgard
    
    
    35.9
    
    
    
    19.0
    
    
    
    16.9
    
    
    
    37.7
    
    
    
    21.3
    
    
    
    16.4
    
    
    
    40.5
    
    
    
    24.2
    
    
    
    16.3
    
    
    
    33.5
    
    
    
    21.5
    
    
    
    12.0
    
    
    
    23.2
    
    
    
    16.5
    
    
    
    6.7Norne/Urd
8)
    
    
    9.4
    
    
    
    8.1
    
    
    
    1.3
    
    
    
    11.3
    
    
    
    10.1
    
    
    
    1.2
    
    
    
    13.2
    
    
    
    12.2
    
    
    
    1.0
    
    
    
    15.6
    
    
    
    14.5
    
    
    
    1.1
    
    
    
    17.6
    
    
    
    16.1
    
    
    
    1.5Njord
    
    
    6.3
    
    
    
    6.3
    
    
    
    
    
    
    
    5.8
    
    
    
    5.8
    
    
    
    
    
    
    
    6.1
    
    
    
    6.1
    
    
    
    
    
    
    
    7.2
    
    
    
    7.2
    
    
    
    
    
    
    
    11.4
    
    
    
    11.4
    
    
    
    Mikkel
    
    
    5.9
    
    
    
    2.8
    
    
    
    3.1
    
    
    
    5.5
    
    
    
    2.6
    
    
    
    2.9
    
    
    
    1.5
    
    
    
    0.7
    
    
    
    0.8
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Other fields 9)
    
    
    2.4
    
    
    
    1.9
    
    
    
    0.5
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    3.5
    
    
    
    3.5
    
    
    
    
    
    
    
    9.1
    
    
    
    9.1
    
    
    
    Total Norway
    
    
    506.2
    
    
    
    341.7
    
    
    
    164.5
    
    
    
    514.1
    
    
    
    359.5
    
    
    
    149.8
    
    
    
    472.5
    
    
    
    335.9
    
    
    
    136.6
    
    
    
    431.8
    
    
    
    320.6
    
    
    
    111.2
    
    
    
    406.1
    
    
    
    312.9
    
    
    
    93.2InternationalAngolaGirassol and Jasmim
    
    
    20.0
    
    
    
    20.0
    
    
    
    
    
    
    
    21.7
    
    
    
    21.7
    
    
    
    
    
    
    
    19.6
    
    
    
    19.6
    
    
    
    
    
    
    
    17.6
    
    
    
    17.6
    
    
    
    
    
    
    
    0.4
    
    
    
    0.4
    
    
    
    CanadaTerra Nova
    
    
    14.9
    
    
    
    14.9
    
    
    
    
    
    
    
    16.5
    
    
    
    16.5
    
    
    
    
    
    
    
    20.1
    
    
    
    20.1
    
    
    
    
    
    
    
    15.8
    
    
    
    15.8
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Hibernia
    
    
    9.9
    
    
    
    9.9
    
    
    
    
    
    
    
    10.2
    
    
    
    10.2
    
    
    
    
    
    
    
    10.2
    
    
    
    10.2
    
    
    
    
    
    
    
    9.0
    
    
    
    9.0
    
    
    
    
    
    
    
    7.4
    
    
    
    7.4
    
    
    
    RussiaKharyaga
    
    
    6.4
    
    
    
    6.4
    
    
    
    
    
    
    
    6.7
    
    
    
    6.7
    
    
    
    
    
    
    
    5.5
    
    
    
    5.5
    
    
    
    
    
    
    
    3.4
    
    
    
    3.4
    
    
    
    
    
    
    
    4.4
    
    
    
    4.4
    
    
    
    LibyaMurzuq
    
    
    3.0
    
    
    
    3.0
    
    
    
    
    
    
    
    0.8
    
    
    
    0.8
    
    
    
    
    
    
    
    0.2
    
    
    
    0.2
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Mabruk
    
    
    2.1
    
    
    
    2.1
    
    
    
    
    
    
    
    2.0
    
    
    
    2.0
    
    
    
    
    
    
    
    2.2
    
    
    
    2.2
    
    
    
    
    
    
    
    2.4
    
    
    
    2.4
    
    
    
    
    
    
    
    2.6
    
    
    
    2.6
    
    
    
    USGulf of
Mexico(10)
    
    
    0.8
    
    
    
    0.2
    
    
    
    0.6
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Total International
    
    
    57.1
    
    
    
    56.5
    
    
    
    0.6
    
    
    
    57.9
    
    
    
    57.9
    
    
    
    
    
    
    
    57.7
    
    
    
    57.7
    
    
    
    
    
    
    
    48.2
    
    
    
    48.2
    
    
    
    
    
    
    
    14.8
    
    
    
    14.8
    
    
    
    Total
    
    
    563.3
    
    
    
    398.2
    
    
    
    165.1
    
    
    
    572.0
    
    
    
    417.4
    
    
    
    149.8
    
    
    
    530.2
    
    
    
    393.6
    
    
    
    136.6
    
    
    
    479.9
    
    
    
    368.8
    
    
    
    111.2
    
    
    
    420.9
    
    
    
    327.7
    
    
    
    93.2
 1)
    
    Oil includes crude oil and NGL/condensate.2)
    
    Includes Oseberg, Oseberg West, Oseberg South and Oseberg East fields.3)
    
    Includes Snorre, Tordis, Vigdis, Statfjord øst and Sygna fields.4)
    
    Includes Sleipner West, Sleipner East, Gugne and Sigyn fields.5)
    
    Includes Ekofisk, Eldfisk, Embla and Tor fields.6)
    
    Includes Gullfaks and Gullfaks South fields.7)
    
    Includes Heimdal, Vale and Skirne fields.8)
    
    Includes Urd from 2005.9)
    
    Includes Kristin and Gimle fields in 2005, Varg field in 2002, Varg and Yme fields in 2001.10)
    
    Includes Spinnaker Exploration Companys fields which Hydro acquired 13 December 2005.
      mt
    
    Country
    
    
    2005
    
    
    2004
    
    
    2003
    
    
    2002
    
    
    2001Primary productionKarmøy
    
    Norway
    
    
    277,000
    
    
    
    278,000
    
    
    
    271,000
    
    
    
    273,000
    
    
    
    272,000Årdal
    
    Norway
    
    
    233,000
    
    
    
    222,000
    
    
    
    215,000
    
    
    
    206,000
    
    
    
    206,000Sunndal
    
    Norway
    
    
    362,000
    
    
    
    306,000
    
    
    
    210,000
    
    
    
    153,000
    
    
    
    156,000Høy anger
    
    Norway
    
    
    78,000
    
    
    
    76,000
    
    
    
    74,000
    
    
    
    73,000
    
    
    
    71,000Søral (49.9% share)
    
    Norway
    
    
    81,000
    
    
    
    82,000
    
    
    
    79,000
    
    
    
    67,000
    
    
    
    62,000Slovalco
1)
    
    Slovakia
    
    
    159,000
    
    
    
    157,000
    
    
    
    27,000
    
    
    
    22,000
    
    
    
    18,000Neuss
    
    Germany
    
    
    225,000
    
    
    
    223,000
    
    
    
    221,000
    
    
    
    173,000
    
    
    
    Stade
    
    Germany
    
    
    60,000
    
    
    
    69,000
    
    
    
    69,000
    
    
    
    48,000
    
    
    
    HAW (33.3%
share) 2)
    
    Germany
    
    
    40,000
    
    
    
    44,000
    
    
    
    43,000
    
    
    
    33,000
    
    
    
    Kurri Kurri
    
    Australia
    
    
    152,000
    
    
    
    155,000
    
    
    
    156,000
    
    
    
    122,000
    
    
    
    Tomago (12.4% share)
    
    Australia
    
    
    63,000
    
    
    
    60,000
    
    
    
    59,000
    
    
    
    45,000
    
    
    
    Alouette (20% share)
    
    Canada
    
    
    96,000
    
    
    
    48,000
    
    
    
    49,000
    
    
    
    38,000
    
    
    
    Total primary
aluminium

production
    
    
    
    
    
    
    1,826,000
    
    
    
    1,720,000
    
    
    
    1,473,000
    
    
    
    1,253,000
    
    
    
    785,000Remelting
    
    
    
    
    
    
    1,755,000
    
    
    
    1,733,000
    
    
    
    1,597,000
    
    
    
    1,342,000
    
    
    
    425,000Third party sourcing
    
    
    
    
    
    
    240,000
    
    
    
    185,000
    
    
    
    260,000
    
    
    
    203,000
    
    
    
    216,000Total aluminium supplied to market
    
    
    
    
    
    
    3,821,000
    
    
    
    3,638,000
    
    
    
    3,330,000
    
    
    
    2,798,000
    
    
    
    1,426,000Realized aluminium price US$/mt
including hedges 3)
    
    
    
    
    
    
    1,812
    
    
    
    1,629
    
    
    
    1,440
    
    
    
    1,369
    
    
    
    1,485Realized aluminium price US$/mt
excluding hedges 3)
    
    
    
    
    
    
    1,844
    
    
    
    1,649
    
    
    
    1,404
    
    
    
    1,351
    
    
    
    1,484LME 3-month price US$/mt
    
    
    
    
    
    
    1,900
    
    
    
    1,721
    
    
    
    1,428
    
    
    
    1,365
    
    
    
    1,453Production of alumina
    
    
    
    
    
    
    1,436,000
    
    
    
    1,572,000
    
    
    
    1,502,000
    
    
    
    1,272,000
    
    
    
    1,002,000Extruded products
    
    
    
    
    
    
    614,000
    
    
    
    626,000
    
    
    
    569,000
    
    
    
    556,000
    
    
    
    476,000Rolled products
    
    
    
    
    
    
    953,000
    
    
    
    941,000
    
    
    
    893,000
    
    
    
    693,000
    
    
    
    133,000Wire rod
    
    
    
    
    
    
    71,000
    
    
    
    69,000
    
    
    
    67,000
    
    
    
    65,000
    
    
    
    58,000Castings
    
    
    
    
    
    
    59,000
    
    
    
    62,000
    
    
    
    57,000
    
    
    
    66,000
    
    
    
    59,000Other
    
    
    
    
    
    
    130,000
    
    
    
    131,000
    
    
    
    124,000
    
    
    
    131,000
    
    
    
    117,000Total semi-fabrication
    
    
    
    
    
    
    1,697,000
    
    
    
    1,698,000
    
    
    
    1,586,000
    
    
    
    1,380,000
    
    
    
    726,000
 1)
    
    The annual production capacity of the Slovalco smelter has been expanded by
approximately 34,000 mt from 2003. Hydros share of the smelter is
20 percent, however, as of 1 January 2004, Slovalco has been fully consolidated in Hydro both
in terms of financial results and volumes due to change in accounting standards.2)
    
    Shut down of production was completed by the end of 2005. Metal in pots after stopping the
plant is not included.3)
    
    On LME basis net of product premiums.
      
      Terms
and definitionsADRs
    
    American Depositary Receipts, evidencing a specified number of ADSsADSs
    
    American Depositary Shares, each ADS representing one deposited ordinary shareAluminium
    
    The aluminium business of Hydro, comprising the sub-segments Metals, Rolled Products,and
Extrusion and AutomotiveAluNorf
    
    Aluminium Norf GmbHArticles of Association
    
    The articles of association of the Company, as amended and currently in effectAudit Committee
    
    The audit committee of the Companys Board of DirectorsAutomotive
    
    The Automotive sector of Hydro, comprising precision tubing, structures and shape casting
businesses worldwideBAT
    
    Best Available Techniques for pollution prevention and controlbbl
    
    Barrelsbcm
    
    Billion cubic meters (Sm3)boe
    
    Barrels of oil equivalentsboed
    
    Barrels of oil equivalents per daybcf
    
    Billion cubic feetcf
    
    Cubic feet measured at 60 degrees Fahrenheit. See also Sm3CO2e
    
    CO2 equivalentsCode
    
    The US Internal Revenue Code of 1986, as amended.Company
    
    Norsk Hydro ASA, a Norwegian public company limited by shares, or Norsk Hydro ASA and its
consolidated subsidiaries, as the context requiresCompensation Committee
    
    The compensation committee of the Companys Board of Directorscondensate
    
    Light hydrocarbon substances produced with natural gas, which condense into liquid at normal
temperatures and pressures associated with surface production equipment.Consolidated Financial
Statements
    
    The consolidated financial statements and notes included in the Companys report to
shareholders for the year ended 31 December 2005, included in Appendix F to this report on
Form 20-FCorporate Assembly
    
    The corporate assembly, a body contemplated by Norwegian companies law, with
responsibility, among other things, for the election of the members of the Companys Board
of Directors and nomination of the external auditorCorporate Management Board
    
    The corporate management board established by the Companys President and Chief Executive
Officer to assist him in discharging his responsibilitiesCRU
    
    CRU International LimitedCustodian
    
    DnB NOR ASA, the custodian in connection with the Companys ADR facilitydevelopment well
    
    A well drilled within the proved area of an oil or gas reservoir to the depth of a
stratigraphic horizon known to be productive. See Regulation S-X, Rule 4-10(a)(11)Deposit Agreement
    
    Deposit Agreement, dated as of 3 January 1986, as amended and restated as of 1 October 1987,
and as further amended by Amendment No. 1 thereto, dated 27 May 1999, among the Company, the
Depositary and the holders from time to time of the ADRsDepositary
    
    JPMorgan Chase Bank, as depositary of the ADSsDepositarys Office
    
    The Depositarys office located at [60 Wall Street, New York, New York 10260]Deposited Securities
    
    ADRs, together with all securities, property and cash received by the Depositary or the
Custodian in respect of or in lieu of the Companys ordinary shares
      Terms and definitionsDisclosure Committee
    
    The disclosure committee of the Company, comprised of members of senior
management, which is responsible for reviewing financial and related information before it
is made publicdry well
    
    An exploratory well found to be incapable of producing either oil or gas in
sufficient quantities to justify completion as an oil or gas wellEEA
    
    European Economic AreaEEA Agreement
    
    The European Economic Area AgreementEFTA
    
    European Free Trade AssociationEU
    
    European UnionExchange Act
    
    The US Securities Exchange Act of 1934, as amendedexploratory well
    
    A well drilled to find and produce oil or gas in an unproved area, to find a new
reservoir in a field previously found to be productive of oil or gas in another reservoir,
or to extend a known reservoir. See Regulation S-X, Rule 4-10(a)(10)Extrusion
    
    The Extrusion sector of HydroFDP
    
    Field Development Planfield
    
    An area consisting of a single reservoir or multiple reservoirs all grouped on or
related to the same individual geological structural feature and/or stratigraphic condition.
See Regulation S-X, Rule 4-10(a)(8)FPSO
    
    Floating Production, Storage and OffloadingGFU
    
    The Gas Negotiation Committee (Gassforhandlingsutvalget)gross well
    
    A well in which a whole or fractional working interest is ownedGroup
    
    Norsk Hydro ASA and its consolidated subsidiariesHBP
    
    Hydro Business Partner, a business unit of Norsk Hydro ASA and Norsk Hydro
Produksjon ASHSE
    
    Health, safety and environmentHydro
    
    Norsk Hydro ASA and its consolidated subsidiariesIOR
    
    Increased Oil RecoverykWh
    
    Kilowatt hourLME
    
    London Metals ExchangeLPG
    
    Liquified petroleum gas, a liquid composed chiefly of butane and propaneMetals
    
    Aluminium Metals sub-segment, which comprises the Primary Metal sector
and the Metals Products sectorMinistry
    
    The Norwegian Ministry of Petroleum and Energymm
    
    MillimeterNCS
    
    Norwegian Continental Shelfnet well
    
    The sum of the whole or fractional working interests in gross wells that equals oneNGLs
    
    Oil and gas condensate and natural gas liquids. For purposes of converting
quantities of NGL cited in this report, 1 ton NGL = 11.951 boe.NOC
    
    The National Oil Company of LibyaNOK
    
    Norwegian kronerNomination Committee
    
    The nomination committee provided for in the Companys Articles of Association and
operating under a charter established by the shareholders representatives in the Corporate
AssemblyNoon Buying Rate
    
    The noon buying rate in the City of New York for cable transfers in foreign
currencies, as announced by the Federal Reserve Bank of New York for customs purposes
      Terms
and definitionsNorth America
    
    The North America sector of Hydro AluminiumNYSE
    
    New York Stock ExchangeOil & Energy
    
    The oil and energy business of Hydro, comprising two sub-segments, Exploration and
Production, and Energy and Oil MarketingOPEC
    
    Organization of the Petroleum Exporting CountriesOSE
    
    Oslo Stock ExchangePDO
    
    Plan for development and operationproved reserves,
proved developed
reserves, proved
undeveloped reserves
    
    Proved reserves are estimated quantities of crude oil, natural gas and natural
gas liquids which geological and engineering data demonstrate with reasonable
certainty to be recoverable in future years from known reservoirs
under existing economic and operating conditions (i.e., prices and costs as of the
date the estimate is made).
Proved developed reserves are reserves that can be expected to be
recovered through existing wells with existing equipment and
operating methods.
Proved undeveloped reserves are reserves that are expected to be
recovered from new wells on undrilled acreage, or from existing
wells where a relatively major expenditure is required for
recompletion.
For a more complete understanding of these terms, see Regulation
S-X, Rule 4-10(a) (2), (3) and (4). This information can be
accessed on the website of the SEC at www.sec.govPSA
    
    Production sharing agreementPVC
    
    Polyvinyl chloride, a plastic raw materialP-PVC
    
    Paste PVCS-PVC
    
    Suspension PVCreservoir
    
    A porous and permeable underground formation containing a natural accumulation of
producible oil or gas that is confined by impermeable rock or water barriers and is individual
and separate from other reservoirs. See
Regulation S-X, Rule 4-10(a)(9)Rolled Products
    
    Hydro Rolled Products sub-segmentSanctions Act
    
    The Iran and Libya Sanctions Act of 1996, adopted by the United StatesSarbanes-Oxley Act
    
    The US Sarbanes-Oxley Act of 2002SDFI
    
    The Norwegian States Direct Financial InterestSEC
    
    The United States Securities and Exchange CommissionSecurities Act
    
    The US Securities Act of 1933, as amendedSm3
    
    Standard cubic meters measured at 15 degrees C. For purposes of converting
quantities of natural gas cited in this report, 1 Sm3 = 35.3826 cubic feet. When
converting natural gas into barrels of oil equivalents, Hydro makes an adjustment for
calorific value to an equivalent 40 MegaJoule/Sm3 volume.
1000 Sm3 of natural gas = 6.2898 boe.tonne
    
    One metric tonne (1,000 kilograms or approximately 2,205 pounds)TWh
    
    Terrawatt hour (one billion kilowatt hours)US GAAP
    
    Generally accepted accounting principles in the United StatesVAW
    
    VAW Aluminium AGVCM
    
    Vinyl chloride monomer, the main raw material for PVCVPS or VPS System
    
    The Norwegian Central Securities Depository (Verdipapirsentralen)WTO
    
    World Trade OrganizationYara
    
    Yara International ASA
      
      Form 20-F Item
    
    Disclosure Item in this Annual Report
    
    
    Page1
    
    Identity of Directors, Senior Management and Advisers
    
    Not applicable
    
    
    2
    
    Offer Statistics and Expected Timetable
    
    Not applicable
    
    
    3
    
    Key InformationA. Selected Financial Data
    
    Business and Operating Information-
    
    Financial Information-
    
    Selected Consolidated Financial Data
    
    
    42Risk, Regulation and Other Information-
    
    Other Information-
    
    Exchange Rate Information
    
    
    104B. Capitalization and Indebtedness
    
    Not applicable
    
    
    C. Reasons for the Offer and Use of Proceeds
    
    Not applicable
    
    
    D. Risk Factors
    
    Risk, Regulation and Other Information-
    
    Risk Factors
    
    
    92-964
    
    Information on the CompanyA. History and Development of the Company
    
    Business and Operating Information-
    
    About Hydro
    
    
    8-10-
    
    History and Development of the Company
    
    
    11-
    
    Other Information
    
    
    11Business and Operating Information-
    
    Financial Information-
    
    Investments
    
    
    61-
    
    Material commitments for capital expenditures
    
    
    61Appendix F: Financial Statements and Other Information-
    
    Note 2: Business combinations, dispositions and demerger
    
    
    F14-F16Appendix T: Terms and Definitions
    
    
    T2-T4B. Business Overview
    
    Business and Operating Information
    
    
    8-41Risk, Regulation and Other Information-
    
    Government Regulation and Taxation
    
    
    97-101Society, People, Environment
    
    
    84, 86-90Appendix O: Operating Statistics
    
    
    O2-O3Use of Non-GAAP Financial Measures
    
    
    F60-F66Cautionary Note in
relation to Certain

Forward-Looking Statements
    Back coverC. Organizational Structure
    
    Business and Operating Information-
    
    About Hydro-
    
    Organization (chart)
    
    
    9
      Form 20-F Item
    
    
    
    Disclosure Item in this Annual Report
    
    PageD. Property, Plants and Equipment
    
    
    
    Business and Operating
Information
    
    
    8-41Risk, Regulation and Other Information-  Government Regulation and Taxation
    
    
    97-101Appendix F: Financial Statements and Other Information-  Note 15: Property, plant and equipment
    
    
    F334.A
    
    Unresolved Staff Comments
    
    
    
    Not applicable
    
    
    5
    
    Operating and Financial Review and ProspectsA. Operating Results
    
    
    
    Business and Operating Information-   Financial Information- Financial Review
    
    
    43-57- Hydros Critical Accounting Policies
    
    
    62-64IFRS in Hydros Financial Statements
    
    
    F67Use of Non-GAAP Financial Measures
    
    
    F60-F66Appendix T: Terms and Definitions
    
    
    T2-T4Cautionary Note in relation to CertainForward-Looking Statements
    
    Back coverB. Liquidity and Capital Resources
    
    
    
    Business and Operating Information-       Financial Information- Liquidity and Capital Resources
    
    
    58-61C. Research and Development, Patents and Licenses, etc.
    
    
    
    Business and Operating Information-       Research and Development
    
    
    67D. Trend Information
    
    
    
    Business and Operating Information-       Financial Information- Financial Review
    
    
    43-64E. Off-Balance Sheet Arrangements
    
    
    
    Business and Operating Information-       Financial Information- Contractual obligations, commitmentsand off-balance sheet arrangements
    
    
    60F. Tabular Disclosure of Contractual Obligations
    
    
    
    Business and Operating Information-       Financial Information- Contractual Obligations (table)
    
    
    60Cautionary Note in relation to CertainG. Safe Harbor
    
    
    
    Forward-Looking Statements
    
    Back cover6
    
    Directors, Senior Management and EmployeesA. Directors and Senior Management
    
    
    
    Investor Information-      Corporate Governance- Board of Directors
    
    
    80- Corporate Management Board
    
    
    81
      Form 20-F Item
    
    
    
    Disclosure Item in this Annual Report
    
    PageB. Compensation
    
    
    
    Investor Information- Corporate Governance- Directors and
Officers Compensation,Share Ownership and Loans
    
    
    77Appendix F: Financial Statements andOther Information- Note 4: Remuneration and Share-BasedCompensation
    
    
    F19C. Board Practices
    
    
    
    Investor Information-      Corporate Governance- Governance Bodies
    
    
    74-79D. Employees
    
    
    
    Society, People, Environment-       Facts and Figures- Geographical distribution of employeesand payroll (table)
    
    
    86- People
    
    
    87E. Share Ownership
    
    
    
    Investor Information-      Corporate Governance- Directors and
Officers Compensation,Share Ownership and Loans
    
    
    77Appendix F: Financial Statementsand Other Information-       Note 4: Remuneration and Share-basedCompensation
    
    
    F197
    
    Major Shareholders and Related Party TransactionsA. Major Shareholders
    
    
    
    Investor Information-      Shareholder Information- Major shareholders and voting rights
    
    
    72B. Related Party Transactions
    
    
    
    Appendix F: Financial Statements andOther Information-       Note 4: Remuneration and Share-basedCompensation
    
    
    F19-       Note 13: Non-consolidated Investees
    
    
    F31Investor Information-      Corporate Governance- Governance Bodies- Board of Directors
    
    
    78-79C. Interests of Experts and Counsel
    
    
    
    Not applicable
    
    
    8
    
    Financial InformationA. Consolidated Statements and Other Financial Information
    
    
    
    Appendix F: Financial Statements andOther Information-  Consolidated Financial Statements US GAAP
    
    
    F3-F5-       Notes 1 -27
    
    
    F8-F49Business and Operating Information-      Other- Legal Proceedings
    
    
    68
      Form 20-F Item
    
    
    
    Disclosure Item in this Annual Report
    
    PageInvestor Information-      Shareholder Information- Dividend Policy
    
    
    70B. Significant Changes
    
    
    
    None
    
    
    9
    
    The Offer and ListingA. Offer and Listing Details
    
    
    
    Investor Information-      Shareholder Information- Key Figures for the Hydro share
    
    
    72-73B. Plan of Distribution
    
    
    
    Not applicable
    
    
    C. Markets
    
    
    
    Investor Information-      Shareholder Information
    
    
    70D. Selling Shareholders
    
    
    
    Not applicable
    
    
    E. Dilution
    
    
    
    Not applicable
    
    
    F. Expenses of the Issue
    
    
    
    Not applicable
    
    
    10
    
    Additional InformationA. Share Capital
    
    
    
    Not applicable
    
    
    B. Memorandum and Articles of Association
    
    
    
    See Item 10.A. of the Companys Form 20-F
    
    
    filed with the US Securities and ExchangeCommissionC. Material Contracts
    
    
    
    Not applicable
    
    
    D. Exchange Controls
    
    
    
    Risk, Regulation and Other
Information-       Other Information- Exchange Controls
    
    
    104E. Taxation
    
    
    
    Risk and Regulation and Other
Information-       Other Information- Taxation
    
    
    102-103F. Dividends and Paying Agents
    
    
    
    Not applicable
    
    
    G. Statement by Experts
    
    
    
    Not applicable
    
    
    H. Documents on Display
    
    
    
    Not applicable
    
    
    I. Subsidiary Information
    
    
    
    Not applicable
    
    
    11
    
    Quantitative and Qualitative
Disclosures
    
    
    
    Business and Operating
InformationAbout Market Risk
    
    
    
    -  Other- Market Risk
    
    
    65-6612
    
    Description of Securities Other
than Equity Securities
    
    
    
    Not applicable
    
    
    13
    
    Defaults, Dividend Arrearages
and Delinquencies
    
    
    
    None
    
    
    14
    
    Material Modifications to the
Rights of
    
    
    
    
    
    
    Security Holders and Use of
Proceeds
    
    
    
    None15
    
    Controls and Procedures
    
    
    
    Investor Information-      Corporate Governance- Controls and Procedures
    
    
    75-7616A
    
    Audit Committee Financial
Expert
    
    
    
    Investor Information-      Corporate Governance- Governance Bodies- Audit Committee
    
    
    79
      Form 20-F Item
    
    
    
    Disclosure Item in this Annual Report
    
    Page16B
    
    Code of Ethics
    
    
    
    Investor Information-      Corporate Governance- Corporate Directives and Code of Conduct
    
    
    74-7516C
    
    Principal Accountant Fees and Services
    
    
    
    Appendix F: Financial Statements andOther Information-       Note 25: External audit remuneration
    
    
    F43Investor Information-      Corporate Governance-      Governance Bodies- Audit Committee
    
    
    79Investor Information-      Corporate Governance-  Pre-Approval of Audit Services
    
    
    7616D
    
    Exemption from the Listing Standards forAudit Committees
    
    
    
    Not applicable
    
    
    16E
    
    Purchases of Equity Securities
by the
    
    
    
    Investor InformationIssuer and Affiliated Purchasers
    
    
    
    -  Shareholder Information-       Buyback of shares
    
    
    70-71Appendix F: Financial Statements andOther Information-  Note 26: Related parties and Variable Interest Entities
    
    
    F4317
    
    Financial Statements
    
    
    
    Not applicable
    
    
    18
    
    Financial Statements
    
    
    
    See Item 18 of the Companys Form 20-F filedwith the US Securities and Exchange
Commission for the US Report of Independent Accountants.
    
    
    Appendix F: Financial Statements
andOther Information- Consolidated Financial Statements US GAAP
    
    
    F3-F5-       Notes 1 -27
    
    
    F8-F4919
    
    Exhibits
    
    
    
    See Item 19 of the Companys Form 20-F filedwith the US Securities and Exchange Commission
    
    
    
      Cautionary note in relation to certain forward-looking statements
      NORSK HYDRO ASAN-0240 OsloTelephone:
    
    + 47 22 53 81 00Telefax:
    
    + 47 22 53 27 25E-mail:
    
    corporate@hydro.comwww.hydro.com