Note 1\tBasis of preparation
REPORTING ENTITY
BW Offshore Limited (\u2018BW Offshore\u2019 or \u2018the Company\u2019) was incorporated in Bermuda in 2005 and is domiciled in Bermuda with its registered address at Washington Mall Phase 2, 4thFloor, Suite 400, 22 Church Street, Hamilton HM1189, Bermuda.
BW Offshore Limited and its subsidiaries are referred to as the \u2018Group\u2018. The Group builds, owns and operates Floating, Production, Storage and Offloading (FPSO) assets. The Group also does strategic investments to capture energy transition opportunities. The Company is listed on Oslo Stock Exchange, a stock exchange operated by Euronext.
Basis of accounting
The consolidated financial statements of the Group have been prepared pursuant to IFRS \u00ae Accounting Standards as adopted by the EU (IFRS). The consolidated financial statements have been prepared in accordance with the historical cost convention with some exceptions, as detailed in the accounting policies set out below.
The consolidated financial statements were approved by the Board of Directors on 28 February 2024.
Details of the Group\u2019s material accounting policies, including changes thereto, are included in Note 2.
Functional and presentation currency
These consolidated financial statements are presented in United States Dollars (USD). This is also the functional currency of the parent company and most of its subsidiaries. The functional currency is determined in each entity of the Group based on the currency within the entity\u2019s primary economic environment. All figures are in USD million unless otherwise stated. Due to rounding differences, numbers and or percentages may not add up to the total. Figures in brackets refer to corresponding figures for 2022.
Use of judgements and estimates
The preparation of financial statements in conformity with IFRS requires the use of certain critical accounting estimates. It also requires Management to exercise its judgement in the process of complying with the Group\u2019s accounting policies. Actual results may differ from these estimates. Estimates and judgements are reviewed on an ongoing basis based on historical experience and expectations of future events.
Information about judgements and estimates made in applying accounting policies that have the most significant impact on the amounts recognised in the financial statements is included in the following notes:
\u2022Note 9: uncertain tax treatments
\u2022Note 13: depreciation: useful life and residual value
\u2022Note 13: impairment test of PP&E: key assumption underlying recoverable amounts
\u2022Note 14: impairment test of goodwill and technology: key assumption underlying recoverable amounts
\u2022Note 22: lease classification
Changes in material accounting policies
Material accounting policy information
The Group has adopted Disclosure of Accounting Policies (Amendments to IAS 1 and IFRS Practice Statement 2 Making Materiality Judgements) from 1 January 2023. The amendments have had an impact on the Group\u2019s disclosures of accounting policies, but not on the measurement, recognition or presentation of any items in the Group\u2019s financial statements. The amendments require the disclosure of material rather than significant accounting policies. Management has reviewed the accounting policies and made updates to the information disclosed in Note 2Material accounting policies (2022: Significant accounting policies).
Other new standards effective from 1 January 2023, did not have a material impact on the Group\u2019s financial statements.
", "dimensions": { "concept": "ifrs-full:DisclosureOfBasisOfPreparationOfFinancialStatementsExplanatory", "language": "en", "entity": "scheme:2138008LFKH8V2EOA915", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "f44291": { "value": "REPORTING ENTITYBW Offshore Limited (\u2018BW Offshore\u2019 or \u2018the Company\u2019) was incorporated in Bermuda in 2005 and is domiciled in Bermuda with its registered address at Washington Mall Phase 2, 4thFloor, Suite 400, 22 Church Street, Hamilton HM1189, Bermuda.BW Offshore Limited and its subsidiaries are referred to as the \u2018Group\u2018. The Group builds, owns and operates Floating, Production, Storage and Offloading (FPSO) assets. The Group also does strategic investments to capture energy transition opportunities. The Company is listed on Oslo Stock Exchange, a stock exchange operated by Euronext.", "dimensions": { "concept": "ifrs-full:DescriptionOfNatureOfEntitysOperationsAndPrincipalActivities", "language": "en", "entity": "scheme:2138008LFKH8V2EOA915", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "s8_notes__6__15-1": { "value": "REPORTING ENTITY
BW Offshore Limited (\u2018BW Offshore\u2019 or \u2018the Company\u2019) was incorporated in Bermuda in 2005 and is domiciled in Bermuda with its registered address at Washington Mall Phase 2, 4thFloor, Suite 400, 22 Church Street, Hamilton HM1189, Bermuda.
BW Offshore Limited and its subsidiaries are referred to as the \u2018Group\u2018. The Group builds, owns and operates Floating, Production, Storage and Offloading (FPSO) assets. The Group also does strategic investments to capture energy transition opportunities. The Company is listed on Oslo Stock Exchange, a stock exchange operated by Euronext.
Basis of accounting
The consolidated financial statements of the Group have been prepared pursuant to IFRS \u00ae Accounting Standards as adopted by the EU (IFRS). The consolidated financial statements have been prepared in accordance with the historical cost convention with some exceptions, as detailed in the accounting policies set out below.
The consolidated financial statements were approved by the Board of Directors on 28 February 2024.
Details of the Group\u2019s material accounting policies, including changes thereto, are included in Note 2.
Functional and presentation currency
These consolidated financial statements are presented in United States Dollars (USD). This is also the functional currency of the parent company and most of its subsidiaries. The functional currency is determined in each entity of the Group based on the currency within the entity\u2019s primary economic environment. All figures are in USD million unless otherwise stated. Due to rounding differences, numbers and or percentages may not add up to the total. Figures in brackets refer to corresponding figures for 2022.
", "dimensions": { "concept": "ifrs-full:DisclosureOfGeneralInformationAboutFinancialStatementsExplanatory", "language": "en", "entity": "scheme:2138008LFKH8V2EOA915", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "f44297": { "value": "BW Offshore Limited ", "dimensions": { "concept": "ifrs-full:NameOfReportingEntityOrOtherMeansOfIdentification", "language": "en", "entity": "scheme:2138008LFKH8V2EOA915", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "f44298": { "value": "BW Offshore Limited ", "dimensions": { "concept": "ifrs-full:NameOfParentEntity", "language": "en", "entity": "scheme:2138008LFKH8V2EOA915", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "f44299": { "value": "BW Offshore Limited ", "dimensions": { "concept": "ifrs-full:NameOfUltimateParentOfGroup", "language": "en", "entity": "scheme:2138008LFKH8V2EOA915", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "f44302": { "value": "Limited ", "dimensions": { "concept": "ifrs-full:LegalFormOfEntity", "language": "en", "entity": "scheme:2138008LFKH8V2EOA915", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "f44312": { "value": "Bermuda ", "dimensions": { "concept": "ifrs-full:DomicileOfEntity", "language": "en", "entity": "scheme:2138008LFKH8V2EOA915", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "f44313": { "value": "Bermuda ", "dimensions": { "concept": "ifrs-full:CountryOfIncorporation", "language": "en", "entity": "scheme:2138008LFKH8V2EOA915", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "f44314": { "value": "Bermuda ", "dimensions": { "concept": "ifrs-full:PrincipalPlaceOfBusiness", "language": "en", "entity": "scheme:2138008LFKH8V2EOA915", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "f44328": { "value": "Washington Mall Phase 2, 4thFloor, Suite 400, 22 Church Street, Hamilton HM1189, Bermuda.", "dimensions": { "concept": "ifrs-full:AddressOfRegisteredOfficeOfEntity", "language": "en", "entity": "scheme:2138008LFKH8V2EOA915", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "f44397": { "value": "Basis of accounting
The consolidated financial statements of the Group have been prepared pursuant to IFRS \u00ae Accounting Standards as adopted by the EU (IFRS). The consolidated financial statements have been prepared in accordance with the historical cost convention with some exceptions, as detailed in the accounting policies set out below.
The consolidated financial statements were approved by the Board of Directors on 28 February 2024.
Details of the Group\u2019s material accounting policies, including changes thereto, are included in Note 2.
", "dimensions": { "concept": "ifrs-full:StatementOfIFRSCompliance", "language": "en", "entity": "scheme:2138008LFKH8V2EOA915", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "f44452": { "value": "The consolidated financial statements were approved by the Board of Directors on 28 February 2024.", "dimensions": { "concept": "ifrs-full:DisclosureOfAuthorisationOfFinancialStatementsExplanatory", "language": "en", "entity": "scheme:2138008LFKH8V2EOA915", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "f44488": { "value": "Functional and presentation currency
These consolidated financial statements are presented in United States Dollars (USD). This is also the functional currency of the parent company and most of its subsidiaries. The functional currency is determined in each entity of the Group based on the currency within the entity\u2019s primary economic environment. All figures are in USD million unless otherwise stated. Due to rounding differences, numbers and or percentages may not add up to the total. Figures in brackets refer to corresponding figures for 2022.
", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForFunctionalCurrencyExplanatory", "language": "en", "entity": "scheme:2138008LFKH8V2EOA915", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "f44575": { "value": "Use of judgements and estimates
The preparation of financial statements in conformity with IFRS requires the use of certain critical accounting estimates. It also requires Management to exercise its judgement in the process of complying with the Group\u2019s accounting policies. Actual results may differ from these estimates. Estimates and judgements are reviewed on an ongoing basis based on historical experience and expectations of future events.
Information about judgements and estimates made in applying accounting policies that have the most significant impact on the amounts recognised in the financial statements is included in the following notes:
\u2022Note 9: uncertain tax treatments
\u2022Note 13: depreciation: useful life and residual value
\u2022Note 13: impairment test of PP&E: key assumption underlying recoverable amounts
\u2022Note 14: impairment test of goodwill and technology: key assumption underlying recoverable amounts
\u2022Note 22: lease classification
", "dimensions": { "concept": "ifrs-full:DisclosureOfAccountingJudgementsAndEstimatesExplanatory", "language": "en", "entity": "scheme:2138008LFKH8V2EOA915", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "s8_notes__6__22-1": { "value": "Changes in material accounting policies
Material accounting policy information
The Group has adopted Disclosure of Accounting Policies (Amendments to IAS 1 and IFRS Practice Statement 2 Making Materiality Judgements) from 1 January 2023. The amendments have had an impact on the Group\u2019s disclosures of accounting policies, but not on the measurement, recognition or presentation of any items in the Group\u2019s financial statements. The amendments require the disclosure of material rather than significant accounting policies. Management has reviewed the accounting policies and made updates to the information disclosed in Note 2Material accounting policies (2022: Significant accounting policies).
Other new standards effective from 1 January 2023, did not have a material impact on the Group\u2019s financial statements.
Note 3\tStandards issued but not yet effective
A number of new standards are effective for annual periods beginning after 1 January 2023 and earlier application is permitted; however, the Group has not early adopted the new and amended standards in preparing these consolidated financial statements. The following new and amended standards are not expected to have a significant impact on the Group\u2019s consolidated financial statements.
\u2022Lease Liability in a Sale and Leaseback (Amendments to IFRS 16)
\u2022Classification of Liabilities as Current and Non-current Liabilities with Covenants (Amendments to IAS 1)
\u2022Supplier Finance Arrangements (Amendments to IAS 7 and IFRS 7)
\u2022Lack of exchangeability (Amendments to IAS 21)
", "dimensions": { "concept": "ifrs-full:DisclosureOfChangesInAccountingPoliciesExplanatory", "language": "en", "entity": "scheme:2138008LFKH8V2EOA915", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "f44893": { "value": "Note 2\tMaterial accounting policies
BASIS OF CONSOLIDATION
Subsidiaries
Subsidiaries are legal entities (including special purpose entities) controlled by the Group. The Group \u2018controls\u2019 an entity when it is exposed or has rights to variable returns from its involvement with the entity and has the ability to affect those returns through its power over the entity. See Note 20for details of the Group\u2019s subsidiaries.
Non-controlling interests
Non-controlling interests (NCI) are measured initially at their proportionate share of the acquiree\u2019s identifiable net assets at the date of acquisition. Changes in the Group\u2019s interest in a subsidiary that do not result in a loss of control are accounted as equity transactions. See Note 21for further details.
Interests in equity-accounted investees
The Group\u2019s interests in equity-accounted investees comprise interests in associates and joint ventures.
Associates are those entities in which the Group has a significant influence, but not control, or has joint control, over the financial and operating policies. generally accompanying a shareholding of between 20 per cent and 50 per cent of the voting rights. Joint ventures are joint arrangements in which the parties that share control have rights to the net assets of the arrangement, rather than rights to its assets and obligation for its liabilities.
Interests in associates and joint ventures are accounted for using the equity method. They are initially measured at cost, including transaction costs. Subsequent to initial recognition, the consolidated financial statements
include the Group\u2019s share of the profit or loss and OCI of equity-accounted investees, until the date on which significant influence or joint control ceases. See Note 15for details of the groups interest in equity-accounted investees.
Foreign currency
Foreign currency transactions
Transactions in foreign currency are translated to functional currency using the exchange rate at the date of the transaction. At the end of each reporting period, foreign currency monetary items are translated using the closing rate, non-monetary items that are measured in terms of historical cost are translated using the exchange rate at the date of the transaction, and non-monetary items that are measured at fair value in a foreign currency are translated using the exchange rates at the date when the fair value was measured. Foreign currency differences are generally recognised in profit or loss and presented within finance costs.
However, foreign currency differences arising from qualifying cash flow hedges, to the extent that the hedges are effective, are recognised in OCI.
Foreign operations
The assets and liabilities of entities whose functional currencies are other than USD, are translated into USD at the exchange rates at the balance sheet date. The revenues and expenses of such entities are translated into USD using the monthly average exchange rates. The Group has a material subsidiary BW Ideol AS whose functional currency is EUR.
Exchange differences are recognised in OCI and accumulated in the currency translation reserve in other equity, except to the extent that the translation difference is allocated to NCI.
Revenues
The Group\u2019s revenues derive from chartering of FPSOs, rendering of operational services related to FPSOs, and engineering services.
Revenue from contracts with customers
Revenue from contracts with customers is recognised upon satisfaction of the performance obligations for the transfer of services in each such contract. A performance obligation is satisfied when or as the customer obtains control of the goods or services delivered. It is recognised at an amount that reflects the consideration which the Group expects to receive in exchange for those goods or services. Revenues are presented net of indirect sales taxes. The Group\u2019s performance obligations are to operate and lease FPSOs.
Operational services
Income from the rendering of operational services related to FPSOs and other services are recognised as revenue over time in the period when the services are rendered.
Variable consideration
Certain lease contracts contain variable elements, which include production incentive-, KPI- and maintenance bonuses. If the consideration in a contract includes a variable amount, the Group estimates the amount of consideration to which it will be entitled. The variable
consideration is only recognised when it is highly probable that it would not be subject to significant reversal in the future.
FEED (Front-End Engineering Design)
A FEED study is a preliminary step taken before basic engineering-level work and is undertaken to confirm the technical and economic feasibility of a prospective field development. Income from FEED contracts is recognised as revenue from contracts with customers when a certain milestone is reached and control transfers to the customer.
Lease revenue
Chartering of vessels
Revenue from chartering of FPSOs is based on whether the contract is considered an operating lease or a finance lease.
Operating lease
Leases, in which a significant portion of the risks and rewards of ownership are retained by the lessor, are classified as operating leases. Payments received under operating leases are recognised as revenue on a straight-line basis over the lease term. The lease term period for each lease contract is the non-cancellable period for which the lessee has contracted the asset together with an assessment of any further terms that the lessee has the option to continue the lease, when Management considers it reasonably certain that the lessee will exercise the option. This judgement is based on a combination of information about the field, the market and the client. As lease rates can vary over the lease term, this implies that there might be significant
timing differences between cash flow and recognised revenue from a particular lease.
Taxes
The Company is not subject to any income taxes in Bermuda, but the Company and its subsidiaries may be subject to income tax in the countries in which they operate. The Group provides for tax on profit based on the profit for financial reporting purposes, adjusted for non-taxable revenue and expenses.
Income tax expense represents the sum of tax currently payable, changes in deferred tax liabilities and deferred tax assets, and withholding tax on charter hire and financial items. Charter hire and financial items are presented gross including withholding taxes payable where applicable.
Property, plant and equipment (PP&E)
Measurement
PP&E are recognised at cost and subsequently measured at cost less accumulated depreciation and impairment charges. This includes costs of material, direct labour and any costs directly attributable to bringing the asset to the location and condition necessary for it to be capable of operating in the manner intended by Management, including attributable overheads and estimate of costs of demobilising the asset.
Borrowing costs directly attributable to an acquisition or construction of an asset, which take a substantial period to get ready for their intended use, are added to the cost of the asset until the assets are ready for their intended use. Borrowing cost consists of interest and other cost, which the entity incurs in connection with the borrowing of funds.
Subsequent costs such as life extension activities and repairs are included in the asset\u2019s carrying amount, as appropriate, only when it is probable that future economic benefits associated with the item will flow to the Group and the cost of the item can be measured reliably.
Depreciation
Depreciation will start when an item of PP&E is ready for intended use.
For FPSOs this will be when the unit is successfully installed on the field.
When significant parts of an item of PP&E have different useful lives, those components are accounted for as separate items of PP&E. The different components are depreciated by using a straight-line method over their expected useful life, taking into account the residual value.
The estimated useful lives of the categories of PP&E are as follows:
FPSOs:
\u2022Hull and Marine scope, including associated investments like refurbishment: 15\u201325 years.
\u2022Field-specific equipment and associated investment costs which are incurred for a specific project, e.g. installation costs and transport costs: 3\u201325 years.
\u2022Process equipment and associated investment. (In case of long-term contracts these items can be fully depreciated over the contract duration.): 10\u201325 years.
Other PP&Es, like IT equipment and office equipment, 3\u201310 years.
The assets\u2019 useful life and residual values are reviewed, and if necessary adjusted, at each reporting date.
Impairment
Assets including vessels, vessels under construction and other PP&Es, are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. An impairment loss is recognised for the amount that the asset\u2019s carrying amount exceeds its recoverable amount, being the higher of an asset\u2019s net selling price and its value in use. For the purpose of assessing impairment, assets are grouped at the lowest levels for which there are separate identifiable cash flows (cash-generating units). Each FPSO is identified as a cash-generating unit. Refer to Note 13for further information regarding impairment assessment.
At the end of each reporting period the Group will assess whether there is any indication that an impairment recognised in previous periods may no longer exist or may have decreased. If any such indication exists, the Group will estimate the recoverable amount of the asset. Previously recognised impairments should be reversed if there are significant changes with a favourable effect in the indicators.
Intangible assets and goodwill
Goodwill
Goodwill arising on the acquisition of subsidiaries is measured at cost less accumulated impairment losses. Goodwill is allocated to cash-generating units (CGUs) for the purpose of the annual impairment testing.
Technology
Technology acquired in a business combination is recognised at fair value at the acquisition date when intangible assets criteria are met and amortised on a straight-line basis over the useful life of fifteen years.
Impairment
Intangible assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. An impairment loss is recognised for the amount that the asset\u2019s carrying amount exceeds its recoverable amount, being the higher of an asset\u2019s fair value less cost of disposal and its value in use. Refer to Note 14for further information regarding impairment assessment.
Financial instruments
Financial assets
The Group\u2019s financial assets are derivatives, trade and financial lease receivables and cash and cash equivalents.
The Group classifies its financial assets in two categories:
\u2022Financial assets at amortised cost.
\u2022Financial assets at fair value through profit or loss (FVTPL).
Financial assets at amortised cost
The Group measures financial assets at amortised cost if both of the following conditions are met:
\u2022The financial asset is held within a business model with the objective to hold financial assets in order to collect contractual cash flows.
\u2022The contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding.
Financial assets at amortised cost are subsequently measured using the effective interest method and are subject to impairment.
The Group\u2019s financial assets at amortised cost include trade and other receivables, finance lease and other non-current assets.
Financial assets at fair value through profit or loss
Derivatives at fair value are carried in the statement of financial position at fair value with net changes in fair value through the profit or loss. The category includes foreign exchange contracts and interest rate swaps.
Derecognition of financial assets
A financial asset (or, where applicable, a part of a financial asset or part of a group of similar financial assets) is primarily derecognised when:
\u2022The rights to receive cash flows from the asset have expired, or
\u2022The Group has transferred its rights to receive cash flows from the asset or has assumed an obligation to pay the received cash flows in full without material delay to a third party under a \u2018pass-through\u2019 arrangement; and either:
a.\tthe Group has transferred substantially all the risks and rewards of the asset, or
b.\tthe Group has neither transferred nor retained substantially all the risks and rewards of the asset, but has transferred control of the asset.
Impairment of financial assets
For trade and other receivables, finance lease and other non-current assets, the Group applies a simplified approach in calculating Estimated Credit Losses (ECLs). Therefore, the Group does not track changes in credit risk, but instead recognises a loss allowance based on lifetime ECLs at each reporting date, based on its historical credit loss experience.
The Group considers a financial asset in default when internal or external information indicates that the Group is unlikely to receive the outstanding contractual amounts in full before taking into account any credit enhancements held by the Group. A financial asset is written off when the Group has no reasonable expectations of recovering the contractual cash flows. The Group individually makes an assessment with respect to the timing and amount of write-off based on whether there is a reasonable expectation of recovery. This assessment is based on historical experience of recoveries of similar assets. The Group expects no significant recovery from the amount written off. However, financial assets that are written off could still be subject to enforcement activities in order to comply with the Group\u2019s procedures for recovery of amounts due.
Financial liabilities
Financial liabilities are classified as measured at amortised cost except for financial liabilities held for trading or designated at fair value through profit or loss (FVTPL).
The Group\u2019s financial liabilities measured at amortised costs are net interest bearing debt and trade and other payables. These items are subsequently measured at amortised cost using the effective interest rate method.
The Group\u2019s financial liabilities at FVTPL is Derivative liabilities. Derivatives are financial liabilities when the fair value is negative, accounted for similarly as derivative assets.
Derecognition of financial liabilities
A financial liability is derecognised when the obligation under the liability is discharged or cancelled or expires. When an existing financial liability is replaced by another from the same lender on substantially different terms, or the terms of an existing liability are substantially modified, such an exchange or modification is treated as the derecognition of the original liability and the recognition of a new liability. The difference in the respective carrying amounts is recognised in the statement of profit or loss.
Derivative financial instruments and hedge accounting
The Group holds derivative financial instruments to hedge its foreign currency risk exposures. Derivatives are initially measured at fair value and changes are generally recognised in profit and loss unless the derivative is designated in a hedging relationship.
Cash flow hedges
The Group applies hedge accounting for the forward exchange hedging related to the construction contract of BW Opal for the Barossa contract.
For these derivatives, the Group has documented the risk management objective and strategy for undertaking the hedge, the relationship between the hedged item and the hedging instrument, including whether the changes in cash flows of the hedged item and hedging instrument are expected to offset each other.
The effective portion any fair value changes of derivatives designated as a cash flow hedging instrument are recognised in OCI and accumulated in the hedging reserve. Any ineffective portion of changes in fair value of the derivative is recognised immediately in profit or loss. See not 19 for further details of derivatives.
If the hedged future cash flows are no longer expected to occur, then the amounts that have been accumulated in the hedging reserve and the cost of hedging reserve are immediately reclassified to profit or loss.
Share capital
Ordinary shares
Ordinary shares are classified as equity. Incremental costs directly attributable to the issue of new shares or options are shown in the equity as a deduction, net of tax, from the proceeds.
Treasury shares
When shares recognised as equity are repurchased, the amount of the consideration paid, which includes directly attributable costs, is recognised as a reduction from equity. Repurchased shares are classified as treasury shares and are presented in the treasury share reserve. When treasury shares are sold or reissued subsequently, the amount received is recognised as an increase in equity and the resulting surplus or deficit on the transaction is presented within share premium.
Preference shares
Preference shares in subsidiaries are presented as shareholders\u2019 equity. As these preference shares in subsidiaries are not held by the Group directly, these are presented as non-controlling interest and the result to those preference shares, equivalent to the preference dividend, is presented as the non-controlling interests share of the result regardless of whether dividends have been paid or accumulated. Refer to Note21.
Compound financial instruments
Compound financial instruments issued by the Group comprise convertible bonds denominated in USD, that can be converted to ordinary shares at the option of the holder, when the number of shares to be issued is fixed and does not vary with changes in fair value.
The liability component of compound financial instruments is initially recognised at the fair value of a similar liability that does not have an equity conversion option. The equity component is initially recognised as the difference between the fair value of the compound financial instrument and the fair value of the liability component. Any directly attributable transaction costs are allocated to the liability and equity components in proportion to their initial carrying amounts.
Subsequent to initial recognition, the liability component of a compound financial instrument is measured at amortised cost using the effective interest method. The equity component of a compound financial instrument is not remeasured, unless repurchases of convertible bonds occur before maturity. Upon repurchase, the difference between the repurchase price and carrying amount is allocated between the liability component, equity component and a potential gain or loss is recognised in the consolidated statement of income.
Interest related to the financial liability is recognised in the consolidated statement of income. On conversion at maturity, the financial liability is reclassified to equity and no gain or loss is recognised.
Leases
The Group as a lessor
When the Group acts as a lessor, it assesses whether the lease transfers substantially all of the risks and rewards incidental to ownership of the underlying asset. If this is the case, then the lease is a finance lease. If not, then it is an operating lease. As part of this assessment, the Group considers certain indicators such as whether the lease is for the major part of the economic life of the asset, including the existence and terms of any extension or purchase options.
", "dimensions": { "concept": "ifrs-full:DisclosureOfMaterialAccountingPolicyInformationExplanatory", "language": "en", "entity": "scheme:2138008LFKH8V2EOA915", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "f44902": { "value": "BASIS OF CONSOLIDATION
Subsidiaries
Subsidiaries are legal entities (including special purpose entities) controlled by the Group. The Group \u2018controls\u2019 an entity when it is exposed or has rights to variable returns from its involvement with the entity and has the ability to affect those returns through its power over the entity. See Note 20for details of the Group\u2019s subsidiaries.
Non-controlling interests
Non-controlling interests (NCI) are measured initially at their proportionate share of the acquiree\u2019s identifiable net assets at the date of acquisition. Changes in the Group\u2019s interest in a subsidiary that do not result in a loss of control are accounted as equity transactions. See Note 21for further details.
Interests in equity-accounted investees
The Group\u2019s interests in equity-accounted investees comprise interests in associates and joint ventures.
Associates are those entities in which the Group has a significant influence, but not control, or has joint control, over the financial and operating policies. generally accompanying a shareholding of between 20 per cent and 50 per cent of the voting rights. Joint ventures are joint arrangements in which the parties that share control have rights to the net assets of the arrangement, rather than rights to its assets and obligation for its liabilities.
Interests in associates and joint ventures are accounted for using the equity method. They are initially measured at cost, including transaction costs. Subsequent to initial recognition, the consolidated financial statements
include the Group\u2019s share of the profit or loss and OCI of equity-accounted investees, until the date on which significant influence or joint control ceases. See Note 15for details of the groups interest in equity-accounted investees.
", "dimensions": { "concept": "ifrs-full:DisclosureOfBasisOfConsolidationExplanatory", "language": "en", "entity": "scheme:2138008LFKH8V2EOA915", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "f44907": { "value": "Subsidiaries
Subsidiaries are legal entities (including special purpose entities) controlled by the Group. The Group \u2018controls\u2019 an entity when it is exposed or has rights to variable returns from its involvement with the entity and has the ability to affect those returns through its power over the entity. See Note 20for details of the Group\u2019s subsidiaries.
", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForSubsidiariesExplanatory", "language": "en", "entity": "scheme:2138008LFKH8V2EOA915", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "f44969": { "value": "Non-controlling interests
Non-controlling interests (NCI) are measured initially at their proportionate share of the acquiree\u2019s identifiable net assets at the date of acquisition. Changes in the Group\u2019s interest in a subsidiary that do not result in a loss of control are accounted as equity transactions. See Note 21for further details.
", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForTransactionsWithNoncontrollingInterestsExplanatory", "language": "en", "entity": "scheme:2138008LFKH8V2EOA915", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "f45025": { "value": "Interests in equity-accounted investees
The Group\u2019s interests in equity-accounted investees comprise interests in associates and joint ventures.
Associates are those entities in which the Group has a significant influence, but not control, or has joint control, over the financial and operating policies. generally accompanying a shareholding of between 20 per cent and 50 per cent of the voting rights. Joint ventures are joint arrangements in which the parties that share control have rights to the net assets of the arrangement, rather than rights to its assets and obligation for its liabilities.
Interests in associates and joint ventures are accounted for using the equity method. They are initially measured at cost, including transaction costs. Subsequent to initial recognition, the consolidated financial statements
include the Group\u2019s share of the profit or loss and OCI of equity-accounted investees, until the date on which significant influence or joint control ceases. See Note 15for details of the groups interest in equity-accounted investees.
", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForInvestmentInAssociatesAndJointVenturesExplanatory", "language": "en", "entity": "scheme:2138008LFKH8V2EOA915", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "f45191": { "value": "Foreign currency
Foreign currency transactions
Transactions in foreign currency are translated to functional currency using the exchange rate at the date of the transaction. At the end of each reporting period, foreign currency monetary items are translated using the closing rate, non-monetary items that are measured in terms of historical cost are translated using the exchange rate at the date of the transaction, and non-monetary items that are measured at fair value in a foreign currency are translated using the exchange rates at the date when the fair value was measured. Foreign currency differences are generally recognised in profit or loss and presented within finance costs.
However, foreign currency differences arising from qualifying cash flow hedges, to the extent that the hedges are effective, are recognised in OCI.
Foreign operations
The assets and liabilities of entities whose functional currencies are other than USD, are translated into USD at the exchange rates at the balance sheet date. The revenues and expenses of such entities are translated into USD using the monthly average exchange rates. The Group has a material subsidiary BW Ideol AS whose functional currency is EUR.
Exchange differences are recognised in OCI and accumulated in the currency translation reserve in other equity, except to the extent that the translation difference is allocated to NCI.
", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForForeignCurrencyTranslationExplanatory", "language": "en", "entity": "scheme:2138008LFKH8V2EOA915", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "f45414": { "value": "Revenues
The Group\u2019s revenues derive from chartering of FPSOs, rendering of operational services related to FPSOs, and engineering services.
Revenue from contracts with customers
Revenue from contracts with customers is recognised upon satisfaction of the performance obligations for the transfer of services in each such contract. A performance obligation is satisfied when or as the customer obtains control of the goods or services delivered. It is recognised at an amount that reflects the consideration which the Group expects to receive in exchange for those goods or services. Revenues are presented net of indirect sales taxes. The Group\u2019s performance obligations are to operate and lease FPSOs.
Operational services
Income from the rendering of operational services related to FPSOs and other services are recognised as revenue over time in the period when the services are rendered.
Variable consideration
Certain lease contracts contain variable elements, which include production incentive-, KPI- and maintenance bonuses. If the consideration in a contract includes a variable amount, the Group estimates the amount of consideration to which it will be entitled. The variable
consideration is only recognised when it is highly probable that it would not be subject to significant reversal in the future.
FEED (Front-End Engineering Design)
A FEED study is a preliminary step taken before basic engineering-level work and is undertaken to confirm the technical and economic feasibility of a prospective field development. Income from FEED contracts is recognised as revenue from contracts with customers when a certain milestone is reached and control transfers to the customer.
Lease revenue
Chartering of vessels
Revenue from chartering of FPSOs is based on whether the contract is considered an operating lease or a finance lease.
Operating lease
Leases, in which a significant portion of the risks and rewards of ownership are retained by the lessor, are classified as operating leases. Payments received under operating leases are recognised as revenue on a straight-line basis over the lease term. The lease term period for each lease contract is the non-cancellable period for which the lessee has contracted the asset together with an assessment of any further terms that the lessee has the option to continue the lease, when Management considers it reasonably certain that the lessee will exercise the option. This judgement is based on a combination of information about the field, the market and the client. As lease rates can vary over the lease term, this implies that there might be significant
timing differences between cash flow and recognised revenue from a particular lease.
", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForRecognitionOfRevenue", "language": "en", "entity": "scheme:2138008LFKH8V2EOA915", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "s8_notes__6__30-1": { "value": "Lease revenue
Chartering of vessels
Revenue from chartering of FPSOs is based on whether the contract is considered an operating lease or a finance lease.
Operating lease
Leases, in which a significant portion of the risks and rewards of ownership are retained by the lessor, are classified as operating leases. Payments received under operating leases are recognised as revenue on a straight-line basis over the lease term. The lease term period for each lease contract is the non-cancellable period for which the lessee has contracted the asset together with an assessment of any further terms that the lessee has the option to continue the lease, when Management considers it reasonably certain that the lessee will exercise the option. This judgement is based on a combination of information about the field, the market and the client. As lease rates can vary over the lease term, this implies that there might be significant
timing differences between cash flow and recognised revenue from a particular lease.
Leases
The Group as a lessor
When the Group acts as a lessor, it assesses whether the lease transfers substantially all of the risks and rewards incidental to ownership of the underlying asset. If this is the case, then the lease is a finance lease. If not, then it is an operating lease. As part of this assessment, the Group considers certain indicators such as whether the lease is for the major part of the economic life of the asset, including the existence and terms of any extension or purchase options.
", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForLeasesExplanatory", "language": "en", "entity": "scheme:2138008LFKH8V2EOA915", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "f45882": { "value": "Taxes
The Company is not subject to any income taxes in Bermuda, but the Company and its subsidiaries may be subject to income tax in the countries in which they operate. The Group provides for tax on profit based on the profit for financial reporting purposes, adjusted for non-taxable revenue and expenses.
Income tax expense represents the sum of tax currently payable, changes in deferred tax liabilities and deferred tax assets, and withholding tax on charter hire and financial items. Charter hire and financial items are presented gross including withholding taxes payable where applicable.
", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForIncomeTaxExplanatory", "language": "en", "entity": "scheme:2138008LFKH8V2EOA915", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "f45883": { "value": "Taxes
The Company is not subject to any income taxes in Bermuda, but the Company and its subsidiaries may be subject to income tax in the countries in which they operate. The Group provides for tax on profit based on the profit for financial reporting purposes, adjusted for non-taxable revenue and expenses.
Income tax expense represents the sum of tax currently payable, changes in deferred tax liabilities and deferred tax assets, and withholding tax on charter hire and financial items. Charter hire and financial items are presented gross including withholding taxes payable where applicable.
", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForDeferredIncomeTaxExplanatory", "language": "en", "entity": "scheme:2138008LFKH8V2EOA915", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "f45981": { "value": "Property, plant and equipment (PP&E)
Measurement
PP&E are recognised at cost and subsequently measured at cost less accumulated depreciation and impairment charges. This includes costs of material, direct labour and any costs directly attributable to bringing the asset to the location and condition necessary for it to be capable of operating in the manner intended by Management, including attributable overheads and estimate of costs of demobilising the asset.
Borrowing costs directly attributable to an acquisition or construction of an asset, which take a substantial period to get ready for their intended use, are added to the cost of the asset until the assets are ready for their intended use. Borrowing cost consists of interest and other cost, which the entity incurs in connection with the borrowing of funds.
Subsequent costs such as life extension activities and repairs are included in the asset\u2019s carrying amount, as appropriate, only when it is probable that future economic benefits associated with the item will flow to the Group and the cost of the item can be measured reliably.
Depreciation
Depreciation will start when an item of PP&E is ready for intended use.
For FPSOs this will be when the unit is successfully installed on the field.
When significant parts of an item of PP&E have different useful lives, those components are accounted for as separate items of PP&E. The different components are depreciated by using a straight-line method over their expected useful life, taking into account the residual value.
The estimated useful lives of the categories of PP&E are as follows:
FPSOs:
\u2022Hull and Marine scope, including associated investments like refurbishment: 15\u201325 years.
\u2022Field-specific equipment and associated investment costs which are incurred for a specific project, e.g. installation costs and transport costs: 3\u201325 years.
\u2022Process equipment and associated investment. (In case of long-term contracts these items can be fully depreciated over the contract duration.): 10\u201325 years.
Other PP&Es, like IT equipment and office equipment, 3\u201310 years.
The assets\u2019 useful life and residual values are reviewed, and if necessary adjusted, at each reporting date.
Impairment
Assets including vessels, vessels under construction and other PP&Es, are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. An impairment loss is recognised for the amount that the asset\u2019s carrying amount exceeds its recoverable amount, being the higher of an asset\u2019s net selling price and its value in use. For the purpose of assessing impairment, assets are grouped at the lowest levels for which there are separate identifiable cash flows (cash-generating units). Each FPSO is identified as a cash-generating unit. Refer to Note 13for further information regarding impairment assessment.
At the end of each reporting period the Group will assess whether there is any indication that an impairment recognised in previous periods may no longer exist or may have decreased. If any such indication exists, the Group will estimate the recoverable amount of the asset. Previously recognised impairments should be reversed if there are significant changes with a favourable effect in the indicators.
", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForPropertyPlantAndEquipmentExplanatory", "language": "en", "entity": "scheme:2138008LFKH8V2EOA915", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "f46161": { "value": "Depreciation
Depreciation will start when an item of PP&E is ready for intended use.
For FPSOs this will be when the unit is successfully installed on the field.
When significant parts of an item of PP&E have different useful lives, those components are accounted for as separate items of PP&E. The different components are depreciated by using a straight-line method over their expected useful life, taking into account the residual value.
The estimated useful lives of the categories of PP&E are as follows:
FPSOs:
\u2022Hull and Marine scope, including associated investments like refurbishment: 15\u201325 years.
\u2022Field-specific equipment and associated investment costs which are incurred for a specific project, e.g. installation costs and transport costs: 3\u201325 years.
\u2022Process equipment and associated investment. (In case of long-term contracts these items can be fully depreciated over the contract duration.): 10\u201325 years.
Other PP&Es, like IT equipment and office equipment, 3\u201310 years.
The assets\u2019 useful life and residual values are reviewed, and if necessary adjusted, at each reporting date.
", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForDepreciationExpenseExplanatory", "language": "en", "entity": "scheme:2138008LFKH8V2EOA915", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "s8_notes__6__35-1": { "value": "Impairment
Assets including vessels, vessels under construction and other PP&Es, are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. An impairment loss is recognised for the amount that the asset\u2019s carrying amount exceeds its recoverable amount, being the higher of an asset\u2019s net selling price and its value in use. For the purpose of assessing impairment, assets are grouped at the lowest levels for which there are separate identifiable cash flows (cash-generating units). Each FPSO is identified as a cash-generating unit. Refer to Note 13for further information regarding impairment assessment.
At the end of each reporting period the Group will assess whether there is any indication that an impairment recognised in previous periods may no longer exist or may have decreased. If any such indication exists, the Group will estimate the recoverable amount of the asset. Previously recognised impairments should be reversed if there are significant changes with a favourable effect in the indicators.
Impairment
Intangible assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. An impairment loss is recognised for the amount that the asset\u2019s carrying amount exceeds its recoverable amount, being the higher of an asset\u2019s fair value less cost of disposal and its value in use. Refer to Note 14for further information regarding impairment assessment.
", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForImpairmentOfAssetsExplanatory", "language": "en", "entity": "scheme:2138008LFKH8V2EOA915", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "f46515": { "value": "Intangible assets and goodwill
Goodwill
Goodwill arising on the acquisition of subsidiaries is measured at cost less accumulated impairment losses. Goodwill is allocated to cash-generating units (CGUs) for the purpose of the annual impairment testing.
Technology
Technology acquired in a business combination is recognised at fair value at the acquisition date when intangible assets criteria are met and amortised on a straight-line basis over the useful life of fifteen years.
Impairment
Intangible assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. An impairment loss is recognised for the amount that the asset\u2019s carrying amount exceeds its recoverable amount, being the higher of an asset\u2019s fair value less cost of disposal and its value in use. Refer to Note 14for further information regarding impairment assessment.
", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForIntangibleAssetsAndGoodwillExplanatory", "language": "en", "entity": "scheme:2138008LFKH8V2EOA915", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "f46521": { "value": "Goodwill
Goodwill arising on the acquisition of subsidiaries is measured at cost less accumulated impairment losses. Goodwill is allocated to cash-generating units (CGUs) for the purpose of the annual impairment testing.
Technology
Technology acquired in a business combination is recognised at fair value at the acquisition date when intangible assets criteria are met and amortised on a straight-line basis over the useful life of fifteen years.
", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForGoodwillExplanatory", "language": "en", "entity": "scheme:2138008LFKH8V2EOA915", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "s8_notes__6__39-1": { "value": "Financial instruments
Financial assets
The Group\u2019s financial assets are derivatives, trade and financial lease receivables and cash and cash equivalents.
The Group classifies its financial assets in two categories:
\u2022Financial assets at amortised cost.
\u2022Financial assets at fair value through profit or loss (FVTPL).
Financial assets at amortised cost
The Group measures financial assets at amortised cost if both of the following conditions are met:
\u2022The financial asset is held within a business model with the objective to hold financial assets in order to collect contractual cash flows.
\u2022The contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding.
Financial assets at amortised cost are subsequently measured using the effective interest method and are subject to impairment.
The Group\u2019s financial assets at amortised cost include trade and other receivables, finance lease and other non-current assets.
Financial assets at fair value through profit or loss
Derivatives at fair value are carried in the statement of financial position at fair value with net changes in fair value through the profit or loss. The category includes foreign exchange contracts and interest rate swaps.
Derecognition of financial assets
A financial asset (or, where applicable, a part of a financial asset or part of a group of similar financial assets) is primarily derecognised when:
\u2022The rights to receive cash flows from the asset have expired, or
\u2022The Group has transferred its rights to receive cash flows from the asset or has assumed an obligation to pay the received cash flows in full without material delay to a third party under a \u2018pass-through\u2019 arrangement; and either:
a.\tthe Group has transferred substantially all the risks and rewards of the asset, or
b.\tthe Group has neither transferred nor retained substantially all the risks and rewards of the asset, but has transferred control of the asset.
Impairment of financial assets
For trade and other receivables, finance lease and other non-current assets, the Group applies a simplified approach in calculating Estimated Credit Losses (ECLs). Therefore, the Group does not track changes in credit risk, but instead recognises a loss allowance based on lifetime ECLs at each reporting date, based on its historical credit loss experience.
The Group considers a financial asset in default when internal or external information indicates that the Group is unlikely to receive the outstanding contractual amounts in full before taking into account any credit enhancements held by the Group. A financial asset is written off when the Group has no reasonable expectations of recovering the contractual cash flows. The Group individually makes an assessment with respect to the timing and amount of write-off based on whether there is a reasonable expectation of recovery. This assessment is based on historical experience of recoveries of similar assets. The Group expects no significant recovery from the amount written off. However, financial assets that are written off could still be subject to enforcement activities in order to comply with the Group\u2019s procedures for recovery of amounts due.
Financial liabilities
Financial liabilities are classified as measured at amortised cost except for financial liabilities held for trading or designated at fair value through profit or loss (FVTPL).
The Group\u2019s financial liabilities measured at amortised costs are net interest bearing debt and trade and other payables. These items are subsequently measured at amortised cost using the effective interest rate method.
The Group\u2019s financial liabilities at FVTPL is Derivative liabilities. Derivatives are financial liabilities when the fair value is negative, accounted for similarly as derivative assets.
Derecognition of financial liabilities
A financial liability is derecognised when the obligation under the liability is discharged or cancelled or expires. When an existing financial liability is replaced by another from the same lender on substantially different terms, or the terms of an existing liability are substantially modified, such an exchange or modification is treated as the derecognition of the original liability and the recognition of a new liability. The difference in the respective carrying amounts is recognised in the statement of profit or loss.
Derivative financial instruments and hedge accounting
The Group holds derivative financial instruments to hedge its foreign currency risk exposures. Derivatives are initially measured at fair value and changes are generally recognised in profit and loss unless the derivative is designated in a hedging relationship.
Cash flow hedges
The Group applies hedge accounting for the forward exchange hedging related to the construction contract of BW Opal for the Barossa contract.
For these derivatives, the Group has documented the risk management objective and strategy for undertaking the hedge, the relationship between the hedged item and the hedging instrument, including whether the changes in cash flows of the hedged item and hedging instrument are expected to offset each other.
The effective portion any fair value changes of derivatives designated as a cash flow hedging instrument are recognised in OCI and accumulated in the hedging reserve. Any ineffective portion of changes in fair value of the derivative is recognised immediately in profit or loss. See not 19 for further details of derivatives.
If the hedged future cash flows are no longer expected to occur, then the amounts that have been accumulated in the hedging reserve and the cost of hedging reserve are immediately reclassified to profit or loss.
Compound financial instruments
Compound financial instruments issued by the Group comprise convertible bonds denominated in USD, that can be converted to ordinary shares at the option of the holder, when the number of shares to be issued is fixed and does not vary with changes in fair value.
The liability component of compound financial instruments is initially recognised at the fair value of a similar liability that does not have an equity conversion option. The equity component is initially recognised as the difference between the fair value of the compound financial instrument and the fair value of the liability component. Any directly attributable transaction costs are allocated to the liability and equity components in proportion to their initial carrying amounts.
Subsequent to initial recognition, the liability component of a compound financial instrument is measured at amortised cost using the effective interest method. The equity component of a compound financial instrument is not remeasured, unless repurchases of convertible bonds occur before maturity. Upon repurchase, the difference between the repurchase price and carrying amount is allocated between the liability component, equity component and a potential gain or loss is recognised in the consolidated statement of income.
Interest related to the financial liability is recognised in the consolidated statement of income. On conversion at maturity, the financial liability is reclassified to equity and no gain or loss is recognised.
", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForFinancialInstrumentsExplanatory", "language": "en", "entity": "scheme:2138008LFKH8V2EOA915", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "f46667": { "value": "Financial assets
The Group\u2019s financial assets are derivatives, trade and financial lease receivables and cash and cash equivalents.
The Group classifies its financial assets in two categories:
\u2022Financial assets at amortised cost.
\u2022Financial assets at fair value through profit or loss (FVTPL).
Financial assets at amortised cost
The Group measures financial assets at amortised cost if both of the following conditions are met:
\u2022The financial asset is held within a business model with the objective to hold financial assets in order to collect contractual cash flows.
\u2022The contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding.
Financial assets at amortised cost are subsequently measured using the effective interest method and are subject to impairment.
The Group\u2019s financial assets at amortised cost include trade and other receivables, finance lease and other non-current assets.
Financial assets at fair value through profit or loss
Derivatives at fair value are carried in the statement of financial position at fair value with net changes in fair value through the profit or loss. The category includes foreign exchange contracts and interest rate swaps.
Derecognition of financial assets
A financial asset (or, where applicable, a part of a financial asset or part of a group of similar financial assets) is primarily derecognised when:
\u2022The rights to receive cash flows from the asset have expired, or
\u2022The Group has transferred its rights to receive cash flows from the asset or has assumed an obligation to pay the received cash flows in full without material delay to a third party under a \u2018pass-through\u2019 arrangement; and either:
a.\tthe Group has transferred substantially all the risks and rewards of the asset, or
b.\tthe Group has neither transferred nor retained substantially all the risks and rewards of the asset, but has transferred control of the asset.
Impairment of financial assets
For trade and other receivables, finance lease and other non-current assets, the Group applies a simplified approach in calculating Estimated Credit Losses (ECLs). Therefore, the Group does not track changes in credit risk, but instead recognises a loss allowance based on lifetime ECLs at each reporting date, based on its historical credit loss experience.
The Group considers a financial asset in default when internal or external information indicates that the Group is unlikely to receive the outstanding contractual amounts in full before taking into account any credit enhancements held by the Group. A financial asset is written off when the Group has no reasonable expectations of recovering the contractual cash flows. The Group individually makes an assessment with respect to the timing and amount of write-off based on whether there is a reasonable expectation of recovery. This assessment is based on historical experience of recoveries of similar assets. The Group expects no significant recovery from the amount written off. However, financial assets that are written off could still be subject to enforcement activities in order to comply with the Group\u2019s procedures for recovery of amounts due.
", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForFinancialAssetsExplanatory", "language": "en", "entity": "scheme:2138008LFKH8V2EOA915", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "f46872": { "value": "Financial assets at fair value through profit or loss
Derivatives at fair value are carried in the statement of financial position at fair value with net changes in fair value through the profit or loss. The category includes foreign exchange contracts and interest rate swaps.
", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForFinancialInstrumentsAtFairValueThroughProfitOrLossExplanatory", "language": "en", "entity": "scheme:2138008LFKH8V2EOA915", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "s8_notes__6__42-1": { "value": "Derecognition of financial assets
A financial asset (or, where applicable, a part of a financial asset or part of a group of similar financial assets) is primarily derecognised when:
\u2022The rights to receive cash flows from the asset have expired, or
\u2022The Group has transferred its rights to receive cash flows from the asset or has assumed an obligation to pay the received cash flows in full without material delay to a third party under a \u2018pass-through\u2019 arrangement; and either:
a.\tthe Group has transferred substantially all the risks and rewards of the asset, or
b.\tthe Group has neither transferred nor retained substantially all the risks and rewards of the asset, but has transferred control of the asset.
Derecognition of financial liabilities
A financial liability is derecognised when the obligation under the liability is discharged or cancelled or expires. When an existing financial liability is replaced by another from the same lender on substantially different terms, or the terms of an existing liability are substantially modified, such an exchange or modification is treated as the derecognition of the original liability and the recognition of a new liability. The difference in the respective carrying amounts is recognised in the statement of profit or loss.
", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForDerecognitionOfFinancialInstrumentsExplanatory", "language": "en", "entity": "scheme:2138008LFKH8V2EOA915", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "f47050": { "value": "Impairment of financial assets
For trade and other receivables, finance lease and other non-current assets, the Group applies a simplified approach in calculating Estimated Credit Losses (ECLs). Therefore, the Group does not track changes in credit risk, but instead recognises a loss allowance based on lifetime ECLs at each reporting date, based on its historical credit loss experience.
The Group considers a financial asset in default when internal or external information indicates that the Group is unlikely to receive the outstanding contractual amounts in full before taking into account any credit enhancements held by the Group. A financial asset is written off when the Group has no reasonable expectations of recovering the contractual cash flows. The Group individually makes an assessment with respect to the timing and amount of write-off based on whether there is a reasonable expectation of recovery. This assessment is based on historical experience of recoveries of similar assets. The Group expects no significant recovery from the amount written off. However, financial assets that are written off could still be subject to enforcement activities in order to comply with the Group\u2019s procedures for recovery of amounts due.
", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForImpairmentOfFinancialAssetsExplanatory", "language": "en", "entity": "scheme:2138008LFKH8V2EOA915", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "f47244": { "value": "Financial liabilities
Financial liabilities are classified as measured at amortised cost except for financial liabilities held for trading or designated at fair value through profit or loss (FVTPL).
The Group\u2019s financial liabilities measured at amortised costs are net interest bearing debt and trade and other payables. These items are subsequently measured at amortised cost using the effective interest rate method.
The Group\u2019s financial liabilities at FVTPL is Derivative liabilities. Derivatives are financial liabilities when the fair value is negative, accounted for similarly as derivative assets.
Derecognition of financial liabilities
A financial liability is derecognised when the obligation under the liability is discharged or cancelled or expires. When an existing financial liability is replaced by another from the same lender on substantially different terms, or the terms of an existing liability are substantially modified, such an exchange or modification is treated as the derecognition of the original liability and the recognition of a new liability. The difference in the respective carrying amounts is recognised in the statement of profit or loss.
", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForFinancialLiabilitiesExplanatory", "language": "en", "entity": "scheme:2138008LFKH8V2EOA915", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "f47422": { "value": "Derivative financial instruments and hedge accounting
The Group holds derivative financial instruments to hedge its foreign currency risk exposures. Derivatives are initially measured at fair value and changes are generally recognised in profit and loss unless the derivative is designated in a hedging relationship.
Cash flow hedges
The Group applies hedge accounting for the forward exchange hedging related to the construction contract of BW Opal for the Barossa contract.
For these derivatives, the Group has documented the risk management objective and strategy for undertaking the hedge, the relationship between the hedged item and the hedging instrument, including whether the changes in cash flows of the hedged item and hedging instrument are expected to offset each other.
The effective portion any fair value changes of derivatives designated as a cash flow hedging instrument are recognised in OCI and accumulated in the hedging reserve. Any ineffective portion of changes in fair value of the derivative is recognised immediately in profit or loss. See not 19 for further details of derivatives.
If the hedged future cash flows are no longer expected to occur, then the amounts that have been accumulated in the hedging reserve and the cost of hedging reserve are immediately reclassified to profit or loss.
", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForDerivativeFinancialInstrumentsAndHedgingExplanatory", "language": "en", "entity": "scheme:2138008LFKH8V2EOA915", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "f47423": { "value": "Derivative financial instruments and hedge accounting
The Group holds derivative financial instruments to hedge its foreign currency risk exposures. Derivatives are initially measured at fair value and changes are generally recognised in profit and loss unless the derivative is designated in a hedging relationship.
Cash flow hedges
The Group applies hedge accounting for the forward exchange hedging related to the construction contract of BW Opal for the Barossa contract.
For these derivatives, the Group has documented the risk management objective and strategy for undertaking the hedge, the relationship between the hedged item and the hedging instrument, including whether the changes in cash flows of the hedged item and hedging instrument are expected to offset each other.
The effective portion any fair value changes of derivatives designated as a cash flow hedging instrument are recognised in OCI and accumulated in the hedging reserve. Any ineffective portion of changes in fair value of the derivative is recognised immediately in profit or loss. See not 19 for further details of derivatives.
If the hedged future cash flows are no longer expected to occur, then the amounts that have been accumulated in the hedging reserve and the cost of hedging reserve are immediately reclassified to profit or loss.
", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForDerivativeFinancialInstrumentsExplanatory", "language": "en", "entity": "scheme:2138008LFKH8V2EOA915", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "f47470": { "value": "Cash flow hedges
The Group applies hedge accounting for the forward exchange hedging related to the construction contract of BW Opal for the Barossa contract.
For these derivatives, the Group has documented the risk management objective and strategy for undertaking the hedge, the relationship between the hedged item and the hedging instrument, including whether the changes in cash flows of the hedged item and hedging instrument are expected to offset each other.
The effective portion any fair value changes of derivatives designated as a cash flow hedging instrument are recognised in OCI and accumulated in the hedging reserve. Any ineffective portion of changes in fair value of the derivative is recognised immediately in profit or loss. See not 19 for further details of derivatives.
If the hedged future cash flows are no longer expected to occur, then the amounts that have been accumulated in the hedging reserve and the cost of hedging reserve are immediately reclassified to profit or loss.
", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForHedgingExplanatory", "language": "en", "entity": "scheme:2138008LFKH8V2EOA915", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "f47636": { "value": "Share capital
Ordinary shares
Ordinary shares are classified as equity. Incremental costs directly attributable to the issue of new shares or options are shown in the equity as a deduction, net of tax, from the proceeds.
Treasury shares
When shares recognised as equity are repurchased, the amount of the consideration paid, which includes directly attributable costs, is recognised as a reduction from equity. Repurchased shares are classified as treasury shares and are presented in the treasury share reserve. When treasury shares are sold or reissued subsequently, the amount received is recognised as an increase in equity and the resulting surplus or deficit on the transaction is presented within share premium.
Preference shares
Preference shares in subsidiaries are presented as shareholders\u2019 equity. As these preference shares in subsidiaries are not held by the Group directly, these are presented as non-controlling interest and the result to those preference shares, equivalent to the preference dividend, is presented as the non-controlling interests share of the result regardless of whether dividends have been paid or accumulated. Refer to Note21.
", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForIssuedCapitalExplanatory", "language": "en", "entity": "scheme:2138008LFKH8V2EOA915", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "f47676": { "value": "Treasury shares
When shares recognised as equity are repurchased, the amount of the consideration paid, which includes directly attributable costs, is recognised as a reduction from equity. Repurchased shares are classified as treasury shares and are presented in the treasury share reserve. When treasury shares are sold or reissued subsequently, the amount received is recognised as an increase in equity and the resulting surplus or deficit on the transaction is presented within share premium.
Preference shares
Preference shares in subsidiaries are presented as shareholders\u2019 equity. As these preference shares in subsidiaries are not held by the Group directly, these are presented as non-controlling interest and the result to those preference shares, equivalent to the preference dividend, is presented as the non-controlling interests share of the result regardless of whether dividends have been paid or accumulated. Refer to Note21.
", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForTreasurySharesExplanatory", "language": "en", "entity": "scheme:2138008LFKH8V2EOA915", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "f47857": { "value": "Compound financial instruments
Compound financial instruments issued by the Group comprise convertible bonds denominated in USD, that can be converted to ordinary shares at the option of the holder, when the number of shares to be issued is fixed and does not vary with changes in fair value.
The liability component of compound financial instruments is initially recognised at the fair value of a similar liability that does not have an equity conversion option. The equity component is initially recognised as the difference between the fair value of the compound financial instrument and the fair value of the liability component. Any directly attributable transaction costs are allocated to the liability and equity components in proportion to their initial carrying amounts.
Subsequent to initial recognition, the liability component of a compound financial instrument is measured at amortised cost using the effective interest method. The equity component of a compound financial instrument is not remeasured, unless repurchases of convertible bonds occur before maturity. Upon repurchase, the difference between the repurchase price and carrying amount is allocated between the liability component, equity component and a potential gain or loss is recognised in the consolidated statement of income.
Interest related to the financial liability is recognised in the consolidated statement of income. On conversion at maturity, the financial liability is reclassified to equity and no gain or loss is recognised.
", "dimensions": { "concept": "ifrs-full:DescriptionOfOtherAccountingPoliciesRelevantToUnderstandingOfFinancialStatements", "language": "en", "entity": "scheme:2138008LFKH8V2EOA915", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "f48338": { "value": "Note 4\tOperating segments
The Group\u2019s activities are construction, lease and operation of FPSOs, as well as floating offshore wind.
The Group identifies segments on the basis of those components of the Group that are regularly reviewed by the chief operating decision-maker (\u2018CODM\u2019). The Group identified its Senior Management team as the CODM, reference to Note 8for definition of Senior Management team. The reported measure of segment profit is operating profit/(loss). Deferred tax assets, pension assets and non-current financial assets are not allocated to the segments. Operating segment disclosures are consistent with the information reviewed by the CODM.
Segment performance for 2023 and 2022 is presented below:
2023
USD MILLION | FPSO | Floatingwind | Eliminations | Total |
Revenues | 652.2 | 3.9 | - | 656.1 |
Other revenue | 1.1 | 2.0 | - | 3.1 |
Revenues inter-segment | - | - | - | - |
Total revenues | 653.3 | 5.9 | - | 659.2 |
Operating expenses | (310.0) | (15.1) | - | (325.1) |
Administrative expenses | (28.6) | - | - | (28.6) |
Operating profit before depreciation, amortisation, impairment and sale of assets | 314.7 | (9.2) | - | 305.5 |
Depreciation, amortisation and impairment | (179.1) | (13.2) | - | (192.3) |
Profit/(loss) sale of fixed assets | 24.7 | - | 24.7 | |
Operating profit/(loss) | 160.3 | (22.4) | - | 137.9 |
Capital expenditure | 767.8 | 2.3 | - | 770.1 |
Balance sheet information | ||||
Equity-accounted investees | 360.0 | 24.8 | - | 384.8 |
Non-current segment assets | 2\u00a0875.7 | 95.3 | - | 2\u00a0971.0 |
Non-current assets, not allocated to segments | 78.5 | |||
Total non-current assets | 3\u00a0434.3 |
2022
USD MILLION | FPSO | Floatingwind | Eliminations | Total |
Revenues | 732.6 | 6.6 | - | 739.2 |
Other revenue | 32.6 | 2.3 | - | 34.9 |
Revenues inter-segment | 0.1 | 0.3 | (0.4) | - |
Total revenues | 765.3 | 9.2 | (0.4) | 774.1 |
Operating expenses | (395.5) | (13.5) | - | (409.0) |
Administrative expenses | (19.4) | - | - | (19.4) |
Operating profit before depreciation, amortisation, impairment and sale of assets | 350.4 | (4.3) | (0.4) | 345.7 |
Depreciation, amortisation and impairment | (210.0) | (14.6) | - | (224.6) |
Profit/(loss) sale of fixed assets | 2.5 | - | - | 2.5 |
Operating profit/(loss) | 142.9 | (18.9) | (0.4) | 123.6 |
Capital expenditure | 779.1 | 4.1 | - | 783.2 |
Balance sheet information | ||||
Equity-accounted investees | 320.7 | 17.2 | - | 337.9 |
Non-current segment assets | 2\u00a0441.0 | 99.6 | - | 2\u00a0540.6 |
Non-current assets, not allocated to segments | 86.0 | |||
Total non-current assets | 2\u00a0964.5 |
Geographic information
Revenue
For the FPSO segment, the classification of revenue per region is determined by the final destination of the FPSO, while the classification in the floating offshore wind segment is based on the geographic location of the customer.
USD MILLION | 2023 | 2022 |
Americas | 111.0 | 171.7 |
Europe/Africa | 539.2 | 557.3 |
Asia and the Pacific | 9.0 | 45.1 |
Total revenues from continuing operations | 659.2 | 774.1 |
USD 5.9 million (USD 8.9 million) of revenues in the Europe/Africa region is related to the floating offshore wind segment. Revenues in the other regions are related to the FPSO segment.
Non-current assets
USD MILLION | 2023 | 2022 |
Americas | 165.9 | 213.3 |
Europe/Africa | 948.3 | 1\u00a0109.8 |
Asia and the Pacific | 1\u00a0823.6 | 1\u00a0188.7 |
2\u00a0937.8 | 2\u00a0511.8 |
Non-current assets exclude deferred tax assets, derivatives, equity accounted investees and other non-current assets.
Major customer
The Group has a limited number of customers (see also section regarding credit risk in Note 19). In accordance with IFRS 8.34, the Group has evaluated whether any single customers amount to 10 per cent or more of the total revenue.
In 2023, the Group has identified three such customers. For these, the revenue was USD 500.8 million related to the FPSO segment. In 2022, the Group identified two such customers. For these, the revenue was USD 388.7 million related to the FPSO segment.
", "dimensions": { "concept": "ifrs-full:DisclosureOfEntitysReportableSegmentsExplanatory", "language": "en", "entity": "scheme:2138008LFKH8V2EOA915", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "f49366": { "value": "Note 5\tRevenue
Revenue streams
The Group generates revenue primarily from rendering of services on operating FPSOs and chartering of FPSOs to its customers. The Group recognises most of its revenue over time.
USD MILLION | 2023 | 2022 |
Revenue from contracts with customers | 279.5 | 308.3 |
Leasing revenue | 376.6 | 430.9 |
Other revenue | 3.1 | 34.9 |
Total revenue | 659.2 | 774.1 |
In May 2022, the Group was awarded a limited notice to proceed (LNTP) by Shell Brasil Petr\u00f3leo Ltda (Shell) and its partners for early-stage engineering and supplier reservations for the supply of an FPSO for the Gato do Mato oil and gas field offshore Brazil. In November 2022, Shell paused the project due to concerns about the supply chain market and inflationary pressure. The Group was reimbursed for costs incurred in line with the agreed terms of the LNTP. The Group presents this income as \u2018other revenue\u2019 in the statement of profit or loss in 2022. During 2023, the final settlement was agreed, and the Group has recognised an additional USD 0.4 million as other income and other expenses of USD 0.4 million.
Contract balances
The following table provides information about receivables and contract assets and liabilities.
USD MILLION | 31 Dec 2023 | 31 Dec 2022 |
Receivables included in trade and other current assets | 93.2 | 151.9 |
Contract assets included in trade and other current assets | 18.2 | 58.3 |
Contract liabilities - included in trade and other payables | - | 4.3 |
The majority of the Group\u2019s contracts consist of a lease for the FPSO as well as an operating agreement. The Group has assessed the underlying risk profile to be equal.
The contract assets primarily relate to the Group\u2019s rights to consideration for work completed but not billed at the reporting date.
The contract liabilities primarily relate to advance consideration received from customers. USD 4.3 million recognised in contract liabilities in the beginning of the period has been recognised as revenue during 2023.
The remaining unsatisfied performance obligations to be recognised as revenues from contracts with customers over the remaining firm contract period is USD 1\u00a0470.5 million (USD 1\u00a0652.9 million).
", "dimensions": { "concept": "ifrs-full:DisclosureOfRevenueExplanatory", "language": "en", "entity": "scheme:2138008LFKH8V2EOA915", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "f49367": { "value": "Note 5\tRevenue
Revenue streams
The Group generates revenue primarily from rendering of services on operating FPSOs and chartering of FPSOs to its customers. The Group recognises most of its revenue over time.
USD MILLION | 2023 | 2022 |
Revenue from contracts with customers | 279.5 | 308.3 |
Leasing revenue | 376.6 | 430.9 |
Other revenue | 3.1 | 34.9 |
Total revenue | 659.2 | 774.1 |
In May 2022, the Group was awarded a limited notice to proceed (LNTP) by Shell Brasil Petr\u00f3leo Ltda (Shell) and its partners for early-stage engineering and supplier reservations for the supply of an FPSO for the Gato do Mato oil and gas field offshore Brazil. In November 2022, Shell paused the project due to concerns about the supply chain market and inflationary pressure. The Group was reimbursed for costs incurred in line with the agreed terms of the LNTP. The Group presents this income as \u2018other revenue\u2019 in the statement of profit or loss in 2022. During 2023, the final settlement was agreed, and the Group has recognised an additional USD 0.4 million as other income and other expenses of USD 0.4 million.
Contract balances
The following table provides information about receivables and contract assets and liabilities.
USD MILLION | 31 Dec 2023 | 31 Dec 2022 |
Receivables included in trade and other current assets | 93.2 | 151.9 |
Contract assets included in trade and other current assets | 18.2 | 58.3 |
Contract liabilities - included in trade and other payables | - | 4.3 |
The majority of the Group\u2019s contracts consist of a lease for the FPSO as well as an operating agreement. The Group has assessed the underlying risk profile to be equal.
The contract assets primarily relate to the Group\u2019s rights to consideration for work completed but not billed at the reporting date.
The contract liabilities primarily relate to advance consideration received from customers. USD 4.3 million recognised in contract liabilities in the beginning of the period has been recognised as revenue during 2023.
The remaining unsatisfied performance obligations to be recognised as revenues from contracts with customers over the remaining firm contract period is USD 1\u00a0470.5 million (USD 1\u00a0652.9 million).
", "dimensions": { "concept": "ifrs-full:DisclosureOfOtherOperatingIncomeExplanatory", "language": "en", "entity": "scheme:2138008LFKH8V2EOA915", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "f49368": { "value": "Note 5\tRevenue
Revenue streams
The Group generates revenue primarily from rendering of services on operating FPSOs and chartering of FPSOs to its customers. The Group recognises most of its revenue over time.
USD MILLION | 2023 | 2022 |
Revenue from contracts with customers | 279.5 | 308.3 |
Leasing revenue | 376.6 | 430.9 |
Other revenue | 3.1 | 34.9 |
Total revenue | 659.2 | 774.1 |
In May 2022, the Group was awarded a limited notice to proceed (LNTP) by Shell Brasil Petr\u00f3leo Ltda (Shell) and its partners for early-stage engineering and supplier reservations for the supply of an FPSO for the Gato do Mato oil and gas field offshore Brazil. In November 2022, Shell paused the project due to concerns about the supply chain market and inflationary pressure. The Group was reimbursed for costs incurred in line with the agreed terms of the LNTP. The Group presents this income as \u2018other revenue\u2019 in the statement of profit or loss in 2022. During 2023, the final settlement was agreed, and the Group has recognised an additional USD 0.4 million as other income and other expenses of USD 0.4 million.
Contract balances
The following table provides information about receivables and contract assets and liabilities.
USD MILLION | 31 Dec 2023 | 31 Dec 2022 |
Receivables included in trade and other current assets | 93.2 | 151.9 |
Contract assets included in trade and other current assets | 18.2 | 58.3 |
Contract liabilities - included in trade and other payables | - | 4.3 |
The majority of the Group\u2019s contracts consist of a lease for the FPSO as well as an operating agreement. The Group has assessed the underlying risk profile to be equal.
The contract assets primarily relate to the Group\u2019s rights to consideration for work completed but not billed at the reporting date.
The contract liabilities primarily relate to advance consideration received from customers. USD 4.3 million recognised in contract liabilities in the beginning of the period has been recognised as revenue during 2023.
The remaining unsatisfied performance obligations to be recognised as revenues from contracts with customers over the remaining firm contract period is USD 1\u00a0470.5 million (USD 1\u00a0652.9 million).
", "dimensions": { "concept": "ifrs-full:DisclosureOfRevenueFromContractsWithCustomersExplanatory", "language": "en", "entity": "scheme:2138008LFKH8V2EOA915", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "f49821": { "value": "Note 6\tOperating, administrative and other expenses
The table below sets out expenses by nature for items included in operating expenses, other expenses and administrative expenses.
USD MILLION | 2023 | 2022 |
Employee benefit expenses (Note 8) | 150.3 | 169.5 |
Vessel operating expenses | 171.8 | 235.9 |
Other expenses | 31.6 | 23.0 |
Total operating expenses | 353.7 | 428.4 |
Note 6\tOperating, administrative and other expenses
The table below sets out expenses by nature for items included in operating expenses, other expenses and administrative expenses.
USD MILLION | 2023 | 2022 |
Employee benefit expenses (Note 8) | 150.3 | 169.5 |
Vessel operating expenses | 171.8 | 235.9 |
Other expenses | 31.6 | 23.0 |
Total operating expenses | 353.7 | 428.4 |
Note 6\tOperating, administrative and other expenses
The table below sets out expenses by nature for items included in operating expenses, other expenses and administrative expenses.
USD MILLION | 2023 | 2022 |
Employee benefit expenses (Note 8) | 150.3 | 169.5 |
Vessel operating expenses | 171.8 | 235.9 |
Other expenses | 31.6 | 23.0 |
Total operating expenses | 353.7 | 428.4 |
Note 7\tEarnings per share
Basic earnings per share
The calculation of basic EPS has been based on the following profit attributable to ordinary shareholders are the weighted-average number of ordinary shares outstanding.
Profit/(loss) attributable to ordinary shareholders (basic)
USD MILLION | 2023 | 2022 |
Profit/(loss) attributable to ordinary shareholders | 100.4 | 129.7 |
Weighted-average number of ordinary shares (basic)
IN THOUSAND | 2023 | 2022 |
Issued ordinary shares at 1 January | 184\u00a0956 | 184\u00a0956 |
Effect of treasury shares held | (4 141) | (4\u00a0141) |
Weighted-average number of ordinary shares at 31 December | 180 815 | 180\u00a0815 |
Diluted earnings per share
The calculation of diluted EPS has been based on the following profit attributable to ordinary shareholders and weighted-average number of ordinary shares outstanding after adjustment for the effects of all dilutive potential ordinary shares.
Profit/(loss) attributable to ordinary shareholders (diluted)
USD MILLION | 2023 | 2022 |
Profit/(loss) attributable to ordinary shareholders | 100.4 | 129.7 |
Interest expense on convertible notes | 8.1 | 9.4 |
Profit/(loss) attributable to ordinary shareholders (diluted) | 108.5 | 139.1 |
Weighted-average number of ordinary shares (diluted)
IN THOUSAND | 2023 | 2022 |
Weighted-average number of ordinary shares (basic) | 180\u00a0815 | 180\u00a0815 |
Effect of share option on issue | - | 872 |
Effect of conversion of convertible bonds | 26\u00a0338 | 29\u00a0316 |
Weighted-average number of ordinary shares (diluted) at 31 December | 207 153 | 211\u00a0002 |
Earnings per share
USD MILLION | 2023 | 2022 |
Basic earnings/(loss) per share net | 0.56 | 0.72 |
Diluted earnings/(loss) per share net | 0.52 | 0.66 |
At 31 December 2023, 8 486 513 options were excluded from the diluted weighted-average number of ordinary shares calculation, because their effect would have been anti-dilutive.
Note 8\tEmployee benefit expenses, remuneration to directors and auditors
Employee benefit expenses
USD MILLION | 2023 | 2022 |
Wages, crew | 62.6 | 88.7 |
Wages, administrative personnel | 72.5 | 62.9 |
Social security contributions | 7.2 | 7.4 |
Expenses related to defined contribution scheme | 5.6 | 7.7 |
Expenses related to defined benefit scheme | 0.2 | 0.2 |
Share-based payment | 2.2 | 2.6 |
Total employee benefit expenses | 150.3 | 169.5 |
Average number of employees | 1\u00a0521 | 1\u00a0806 |
Senior management team\u200c1Remuneration
(IN USD) | Salary | Bonus | Pension benefits | Share options | Other benefits | Number of shares |
2023 | 2\u00a0866\u00a0342 | 711\u00a0954 | 192\u00a0077 | 864\u00a0783 | 44\u00a0720 | 430\u00a0518 |
2022 | 2\u00a0570\u00a0225 | 742\u00a0992 | 169\u00a0188 | 847\u00a0799 | 85\u00a0629 | 430\u00a0518 |
1Senior Management team comprises Chief Executive Officer, Chief Financial Officer, Chief Operating Officer, Chief Commercial Officer, General Counsel and Chief Strategy Officer (from 1 July 2023).
Severance
Senior Management team has agreements that give them the right to compensation after termination of employment before retirement that equals 100 per cent of the salary for a maximum of 18 months. Compensation received from other employers during this period reduces this compensation, but not below 25 per cent of the compensation. There are no similar agreements with the members of the Board of Directors.
Board of Directors\u2019 remuneration and shares held
(IN USD) | Number of | Share | |
Year | Directors\u2019 fee | shares | options |
2023 | 385\u00a0000 | 90\u00a0419\u00a0229 | - |
2022 | 385\u00a0000 | 90\u00a0419\u00a0229 | - |
The compensation for members of the Board of Directors for the period May 2023 to May 2024 will be decided at the annual general meeting in May 2024.
Employee remuneration
Variable Compensation Scheme
The Variable Compensation Scheme (VCS) is a system for rewarding employees if and when the Group reaches set goals for the Group\u2019s performance. The VCS plan is established on a year-to-year basis guided from the Board of Directors. The VCS for the performance year 2023 is based on the following parameters:
1.\tOverall company results defined by targeted return on equity
2.\tHealth, Safety, Environment and Quality (HSEQ) performance of Zero Harm
The Board of Directors are assessing the achievements, including applying discretionary evaluations, to determine the Group pay-out pool for the VCS accordingly.
Full pay-out is capped at three months\u2019 base salary for eligible employees, and six months for the Senior Management Team. Individual assessment of VCS pay-out is applied on a discretionary basis evaluating individual contributions, performance and key accomplishments.
Long-term share option programme
In 2019, the Board approved the establishment of a long-term share option programme (LTIP) where key personnel were granted options to purchase shares in the Company. The programme is approved for five years, with annual grants, each grant corresponding to 1 per cent of the total outstanding shares in the Company. The first grant was in 2019, with the last grant in 2023. The programme is discretionary, and participants are invited on an annual basis. The purpose of the programme is to further align the interests of the Group and its shareholders by providing incentives to employees to motivate them to contribute materially to the success and long-term profitability of the Group.
The key terms and conditions related to the grants under these programmes are as follows; all options are to be settled by physical delivery of shares.
Grant date | Number of instruments | Vesting conditions | Contractual life of options |
On 8 April 2019 | 1\u00a0732\u00a0000 | Vesting period of three years, followed by a three-years exercise period | |
6 years | |||
On 6 March 2020 | 1\u00a0832\u00a0250 | Same as above | 6 years |
On 26 February 2021 | 1\u00a0849\u00a0600 | Same as above | 6 years |
On 7 March 2022 | 1\u00a0849\u00a0575 | Same as above | 6 years |
On 7 March 2023 | 1\u00a0849\u00a0567 | Same as above | 6 years |
Total share options | 9\u00a0112\u00a0992 |
Each option will give the holder the right to acquire one BW Offshore share. In 2023, a total of 60 (2022: 60) BW Offshore key employees were invited to participate in the programme.
The strike price of the options is calculated based on the volume weighted average share price five trading days prior to grant date, plus a premium of 15.76 per cent which is corresponding to a 5 per cent increase annually over three years.
The Company\u2019s exposure relating to the 2019 award is hedged by a Total Return Swap (TRS) agreement with financial exposure to 1\u00a0732\u00a0000 shares in BW Offshore. The options are non-tradable and conditional upon the option holder being employed by the Company and not having resigned or being terminated for cause prior to the vesting date.
Measurement of fair values
The fair value of the employee share options has been measured using the Black-Scholes formula. The inputs used in the measurement of the fair value at grant date were as follows.
2023 | 2022 | |
Fair value at grant date (NOK) | 12.01 | 12.20 |
Share price at grant date (NOK) | 28.02 | 28.84 |
Exercise price (NOK) | 32.68 | 33.78 |
Expected volatility (weighted average) | 58% | 59% |
Expected life | 4 years | 4 years |
Expected dividends | n/a | n/a |
Risk-free interest rate (based on government bonds) | 3.26% | 1.86% |
Expected volatility has been based on an evaluation of the historical volatility of the Company\u2019s share price particularly over the historical period equal to the expected term, adjusted for extreme movements. The expected term of the instruments has been based on historical experience and general option holder behaviour.
Reconciliation of outstanding share options
The number and weighted-average exercise prices of share options under the share option programmes were as follows:
2023 | 2022 | |||
Number of options | ||||
Weighted-average exercise price (NOK) | ||||
Number of options | ||||
Weighted-average exercise price (NOK) | ||||
Outstanding at 1 January | 6\u00a0870\u00a0483 | 35.82 | 5\u00a0128\u00a0025 | 40.81 |
Terminated during the year | (233\u00a0537) | 33.01 | (107\u00a0117) | 39.48 |
Adjusted | - | - | 12\u00a0582 | 38.13 |
Expired | - | - | (12\u00a0582) | 38.13 |
Granted during the year | 1\u00a0849\u00a0567 | 31.10 | 1\u00a0849\u00a0575 | 31.68 |
Outstanding at 31 December | 8\u00a0486\u00a0513 | 34.87 | 6\u00a0870\u00a0483 | 38.38 |
Exercisable at 31 December | 3\u00a0296\u00a0750 | 39.01 | 1\u00a0657\u00a0000 | 45.48 |
Expense recognised in profit or loss
For details of the related employee benefit expenses, see the employee benefit expenses table.
Loans to other employees
(IN USD) | 2023 | 2022 |
Loans to other employees | 2\u00a0797\u00a0277 | 303\u00a0901 |
Auditors\u2019 remuneration
USD '000 | 2023 | 2022 |
Statutory audit | 1\u00a0107.0 | 1\u00a0155.8 |
Other attest services | 23.1 | 5.1 |
Total fees | 1\u00a0130.1 | 1\u00a0160.9 |
KPMG is the appointed auditor of the Group.
Note 8\tEmployee benefit expenses, remuneration to directors and auditors
Employee benefit expenses
USD MILLION | 2023 | 2022 |
Wages, crew | 62.6 | 88.7 |
Wages, administrative personnel | 72.5 | 62.9 |
Social security contributions | 7.2 | 7.4 |
Expenses related to defined contribution scheme | 5.6 | 7.7 |
Expenses related to defined benefit scheme | 0.2 | 0.2 |
Share-based payment | 2.2 | 2.6 |
Total employee benefit expenses | 150.3 | 169.5 |
Average number of employees | 1\u00a0521 | 1\u00a0806 |
Senior management team\u200c1Remuneration
(IN USD) | Salary | Bonus | Pension benefits | Share options | Other benefits | Number of shares |
2023 | 2\u00a0866\u00a0342 | 711\u00a0954 | 192\u00a0077 | 864\u00a0783 | 44\u00a0720 | 430\u00a0518 |
2022 | 2\u00a0570\u00a0225 | 742\u00a0992 | 169\u00a0188 | 847\u00a0799 | 85\u00a0629 | 430\u00a0518 |
1Senior Management team comprises Chief Executive Officer, Chief Financial Officer, Chief Operating Officer, Chief Commercial Officer, General Counsel and Chief Strategy Officer (from 1 July 2023).
Severance
Senior Management team has agreements that give them the right to compensation after termination of employment before retirement that equals 100 per cent of the salary for a maximum of 18 months. Compensation received from other employers during this period reduces this compensation, but not below 25 per cent of the compensation. There are no similar agreements with the members of the Board of Directors.
Board of Directors\u2019 remuneration and shares held
(IN USD) | Number of | Share | |
Year | Directors\u2019 fee | shares | options |
2023 | 385\u00a0000 | 90\u00a0419\u00a0229 | - |
2022 | 385\u00a0000 | 90\u00a0419\u00a0229 | - |
The compensation for members of the Board of Directors for the period May 2023 to May 2024 will be decided at the annual general meeting in May 2024.
Employee remuneration
Variable Compensation Scheme
The Variable Compensation Scheme (VCS) is a system for rewarding employees if and when the Group reaches set goals for the Group\u2019s performance. The VCS plan is established on a year-to-year basis guided from the Board of Directors. The VCS for the performance year 2023 is based on the following parameters:
1.\tOverall company results defined by targeted return on equity
2.\tHealth, Safety, Environment and Quality (HSEQ) performance of Zero Harm
The Board of Directors are assessing the achievements, including applying discretionary evaluations, to determine the Group pay-out pool for the VCS accordingly.
Full pay-out is capped at three months\u2019 base salary for eligible employees, and six months for the Senior Management Team. Individual assessment of VCS pay-out is applied on a discretionary basis evaluating individual contributions, performance and key accomplishments.
Long-term share option programme
In 2019, the Board approved the establishment of a long-term share option programme (LTIP) where key personnel were granted options to purchase shares in the Company. The programme is approved for five years, with annual grants, each grant corresponding to 1 per cent of the total outstanding shares in the Company. The first grant was in 2019, with the last grant in 2023. The programme is discretionary, and participants are invited on an annual basis. The purpose of the programme is to further align the interests of the Group and its shareholders by providing incentives to employees to motivate them to contribute materially to the success and long-term profitability of the Group.
The key terms and conditions related to the grants under these programmes are as follows; all options are to be settled by physical delivery of shares.
Grant date | Number of instruments | Vesting conditions | Contractual life of options |
On 8 April 2019 | 1\u00a0732\u00a0000 | Vesting period of three years, followed by a three-years exercise period | |
6 years | |||
On 6 March 2020 | 1\u00a0832\u00a0250 | Same as above | 6 years |
On 26 February 2021 | 1\u00a0849\u00a0600 | Same as above | 6 years |
On 7 March 2022 | 1\u00a0849\u00a0575 | Same as above | 6 years |
On 7 March 2023 | 1\u00a0849\u00a0567 | Same as above | 6 years |
Total share options | 9\u00a0112\u00a0992 |
Each option will give the holder the right to acquire one BW Offshore share. In 2023, a total of 60 (2022: 60) BW Offshore key employees were invited to participate in the programme.
The strike price of the options is calculated based on the volume weighted average share price five trading days prior to grant date, plus a premium of 15.76 per cent which is corresponding to a 5 per cent increase annually over three years.
The Company\u2019s exposure relating to the 2019 award is hedged by a Total Return Swap (TRS) agreement with financial exposure to 1\u00a0732\u00a0000 shares in BW Offshore. The options are non-tradable and conditional upon the option holder being employed by the Company and not having resigned or being terminated for cause prior to the vesting date.
Measurement of fair values
The fair value of the employee share options has been measured using the Black-Scholes formula. The inputs used in the measurement of the fair value at grant date were as follows.
2023 | 2022 | |
Fair value at grant date (NOK) | 12.01 | 12.20 |
Share price at grant date (NOK) | 28.02 | 28.84 |
Exercise price (NOK) | 32.68 | 33.78 |
Expected volatility (weighted average) | 58% | 59% |
Expected life | 4 years | 4 years |
Expected dividends | n/a | n/a |
Risk-free interest rate (based on government bonds) | 3.26% | 1.86% |
Expected volatility has been based on an evaluation of the historical volatility of the Company\u2019s share price particularly over the historical period equal to the expected term, adjusted for extreme movements. The expected term of the instruments has been based on historical experience and general option holder behaviour.
Reconciliation of outstanding share options
The number and weighted-average exercise prices of share options under the share option programmes were as follows:
2023 | 2022 | |||
Number of options | ||||
Weighted-average exercise price (NOK) | ||||
Number of options | ||||
Weighted-average exercise price (NOK) | ||||
Outstanding at 1 January | 6\u00a0870\u00a0483 | 35.82 | 5\u00a0128\u00a0025 | 40.81 |
Terminated during the year | (233\u00a0537) | 33.01 | (107\u00a0117) | 39.48 |
Adjusted | - | - | 12\u00a0582 | 38.13 |
Expired | - | - | (12\u00a0582) | 38.13 |
Granted during the year | 1\u00a0849\u00a0567 | 31.10 | 1\u00a0849\u00a0575 | 31.68 |
Outstanding at 31 December | 8\u00a0486\u00a0513 | 34.87 | 6\u00a0870\u00a0483 | 38.38 |
Exercisable at 31 December | 3\u00a0296\u00a0750 | 39.01 | 1\u00a0657\u00a0000 | 45.48 |
Expense recognised in profit or loss
For details of the related employee benefit expenses, see the employee benefit expenses table.
Loans to other employees
(IN USD) | 2023 | 2022 |
Loans to other employees | 2\u00a0797\u00a0277 | 303\u00a0901 |
Auditors\u2019 remuneration
USD '000 | 2023 | 2022 |
Statutory audit | 1\u00a0107.0 | 1\u00a0155.8 |
Other attest services | 23.1 | 5.1 |
Total fees | 1\u00a0130.1 | 1\u00a0160.9 |
KPMG is the appointed auditor of the Group.
Note 8\tEmployee benefit expenses, remuneration to directors and auditors
Employee benefit expenses
USD MILLION | 2023 | 2022 |
Wages, crew | 62.6 | 88.7 |
Wages, administrative personnel | 72.5 | 62.9 |
Social security contributions | 7.2 | 7.4 |
Expenses related to defined contribution scheme | 5.6 | 7.7 |
Expenses related to defined benefit scheme | 0.2 | 0.2 |
Share-based payment | 2.2 | 2.6 |
Total employee benefit expenses | 150.3 | 169.5 |
Average number of employees | 1\u00a0521 | 1\u00a0806 |
Senior management team\u200c1Remuneration
(IN USD) | Salary | Bonus | Pension benefits | Share options | Other benefits | Number of shares |
2023 | 2\u00a0866\u00a0342 | 711\u00a0954 | 192\u00a0077 | 864\u00a0783 | 44\u00a0720 | 430\u00a0518 |
2022 | 2\u00a0570\u00a0225 | 742\u00a0992 | 169\u00a0188 | 847\u00a0799 | 85\u00a0629 | 430\u00a0518 |
1Senior Management team comprises Chief Executive Officer, Chief Financial Officer, Chief Operating Officer, Chief Commercial Officer, General Counsel and Chief Strategy Officer (from 1 July 2023).
Severance
Senior Management team has agreements that give them the right to compensation after termination of employment before retirement that equals 100 per cent of the salary for a maximum of 18 months. Compensation received from other employers during this period reduces this compensation, but not below 25 per cent of the compensation. There are no similar agreements with the members of the Board of Directors.
Board of Directors\u2019 remuneration and shares held
(IN USD) | Number of | Share | |
Year | Directors\u2019 fee | shares | options |
2023 | 385\u00a0000 | 90\u00a0419\u00a0229 | - |
2022 | 385\u00a0000 | 90\u00a0419\u00a0229 | - |
The compensation for members of the Board of Directors for the period May 2023 to May 2024 will be decided at the annual general meeting in May 2024.
Employee remuneration
Variable Compensation Scheme
The Variable Compensation Scheme (VCS) is a system for rewarding employees if and when the Group reaches set goals for the Group\u2019s performance. The VCS plan is established on a year-to-year basis guided from the Board of Directors. The VCS for the performance year 2023 is based on the following parameters:
1.\tOverall company results defined by targeted return on equity
2.\tHealth, Safety, Environment and Quality (HSEQ) performance of Zero Harm
The Board of Directors are assessing the achievements, including applying discretionary evaluations, to determine the Group pay-out pool for the VCS accordingly.
Full pay-out is capped at three months\u2019 base salary for eligible employees, and six months for the Senior Management Team. Individual assessment of VCS pay-out is applied on a discretionary basis evaluating individual contributions, performance and key accomplishments.
Long-term share option programme
In 2019, the Board approved the establishment of a long-term share option programme (LTIP) where key personnel were granted options to purchase shares in the Company. The programme is approved for five years, with annual grants, each grant corresponding to 1 per cent of the total outstanding shares in the Company. The first grant was in 2019, with the last grant in 2023. The programme is discretionary, and participants are invited on an annual basis. The purpose of the programme is to further align the interests of the Group and its shareholders by providing incentives to employees to motivate them to contribute materially to the success and long-term profitability of the Group.
The key terms and conditions related to the grants under these programmes are as follows; all options are to be settled by physical delivery of shares.
Grant date | Number of instruments | Vesting conditions | Contractual life of options |
On 8 April 2019 | 1\u00a0732\u00a0000 | Vesting period of three years, followed by a three-years exercise period | |
6 years | |||
On 6 March 2020 | 1\u00a0832\u00a0250 | Same as above | 6 years |
On 26 February 2021 | 1\u00a0849\u00a0600 | Same as above | 6 years |
On 7 March 2022 | 1\u00a0849\u00a0575 | Same as above | 6 years |
On 7 March 2023 | 1\u00a0849\u00a0567 | Same as above | 6 years |
Total share options | 9\u00a0112\u00a0992 |
Each option will give the holder the right to acquire one BW Offshore share. In 2023, a total of 60 (2022: 60) BW Offshore key employees were invited to participate in the programme.
The strike price of the options is calculated based on the volume weighted average share price five trading days prior to grant date, plus a premium of 15.76 per cent which is corresponding to a 5 per cent increase annually over three years.
The Company\u2019s exposure relating to the 2019 award is hedged by a Total Return Swap (TRS) agreement with financial exposure to 1\u00a0732\u00a0000 shares in BW Offshore. The options are non-tradable and conditional upon the option holder being employed by the Company and not having resigned or being terminated for cause prior to the vesting date.
Measurement of fair values
The fair value of the employee share options has been measured using the Black-Scholes formula. The inputs used in the measurement of the fair value at grant date were as follows.
2023 | 2022 | |
Fair value at grant date (NOK) | 12.01 | 12.20 |
Share price at grant date (NOK) | 28.02 | 28.84 |
Exercise price (NOK) | 32.68 | 33.78 |
Expected volatility (weighted average) | 58% | 59% |
Expected life | 4 years | 4 years |
Expected dividends | n/a | n/a |
Risk-free interest rate (based on government bonds) | 3.26% | 1.86% |
Expected volatility has been based on an evaluation of the historical volatility of the Company\u2019s share price particularly over the historical period equal to the expected term, adjusted for extreme movements. The expected term of the instruments has been based on historical experience and general option holder behaviour.
Reconciliation of outstanding share options
The number and weighted-average exercise prices of share options under the share option programmes were as follows:
2023 | 2022 | |||
Number of options | ||||
Weighted-average exercise price (NOK) | ||||
Number of options | ||||
Weighted-average exercise price (NOK) | ||||
Outstanding at 1 January | 6\u00a0870\u00a0483 | 35.82 | 5\u00a0128\u00a0025 | 40.81 |
Terminated during the year | (233\u00a0537) | 33.01 | (107\u00a0117) | 39.48 |
Adjusted | - | - | 12\u00a0582 | 38.13 |
Expired | - | - | (12\u00a0582) | 38.13 |
Granted during the year | 1\u00a0849\u00a0567 | 31.10 | 1\u00a0849\u00a0575 | 31.68 |
Outstanding at 31 December | 8\u00a0486\u00a0513 | 34.87 | 6\u00a0870\u00a0483 | 38.38 |
Exercisable at 31 December | 3\u00a0296\u00a0750 | 39.01 | 1\u00a0657\u00a0000 | 45.48 |
Expense recognised in profit or loss
For details of the related employee benefit expenses, see the employee benefit expenses table.
Loans to other employees
(IN USD) | 2023 | 2022 |
Loans to other employees | 2\u00a0797\u00a0277 | 303\u00a0901 |
Auditors\u2019 remuneration
USD '000 | 2023 | 2022 |
Statutory audit | 1\u00a0107.0 | 1\u00a0155.8 |
Other attest services | 23.1 | 5.1 |
Total fees | 1\u00a0130.1 | 1\u00a0160.9 |
KPMG is the appointed auditor of the Group.
Note 8\tEmployee benefit expenses, remuneration to directors and auditors
Employee benefit expenses
USD MILLION | 2023 | 2022 |
Wages, crew | 62.6 | 88.7 |
Wages, administrative personnel | 72.5 | 62.9 |
Social security contributions | 7.2 | 7.4 |
Expenses related to defined contribution scheme | 5.6 | 7.7 |
Expenses related to defined benefit scheme | 0.2 | 0.2 |
Share-based payment | 2.2 | 2.6 |
Total employee benefit expenses | 150.3 | 169.5 |
Average number of employees | 1\u00a0521 | 1\u00a0806 |
Senior management team\u200c1Remuneration
(IN USD) | Salary | Bonus | Pension benefits | Share options | Other benefits | Number of shares |
2023 | 2\u00a0866\u00a0342 | 711\u00a0954 | 192\u00a0077 | 864\u00a0783 | 44\u00a0720 | 430\u00a0518 |
2022 | 2\u00a0570\u00a0225 | 742\u00a0992 | 169\u00a0188 | 847\u00a0799 | 85\u00a0629 | 430\u00a0518 |
1Senior Management team comprises Chief Executive Officer, Chief Financial Officer, Chief Operating Officer, Chief Commercial Officer, General Counsel and Chief Strategy Officer (from 1 July 2023).
Severance
Senior Management team has agreements that give them the right to compensation after termination of employment before retirement that equals 100 per cent of the salary for a maximum of 18 months. Compensation received from other employers during this period reduces this compensation, but not below 25 per cent of the compensation. There are no similar agreements with the members of the Board of Directors.
Board of Directors\u2019 remuneration and shares held
(IN USD) | Number of | Share | |
Year | Directors\u2019 fee | shares | options |
2023 | 385\u00a0000 | 90\u00a0419\u00a0229 | - |
2022 | 385\u00a0000 | 90\u00a0419\u00a0229 | - |
The compensation for members of the Board of Directors for the period May 2023 to May 2024 will be decided at the annual general meeting in May 2024.
Employee remuneration
Variable Compensation Scheme
The Variable Compensation Scheme (VCS) is a system for rewarding employees if and when the Group reaches set goals for the Group\u2019s performance. The VCS plan is established on a year-to-year basis guided from the Board of Directors. The VCS for the performance year 2023 is based on the following parameters:
1.\tOverall company results defined by targeted return on equity
2.\tHealth, Safety, Environment and Quality (HSEQ) performance of Zero Harm
The Board of Directors are assessing the achievements, including applying discretionary evaluations, to determine the Group pay-out pool for the VCS accordingly.
Full pay-out is capped at three months\u2019 base salary for eligible employees, and six months for the Senior Management Team. Individual assessment of VCS pay-out is applied on a discretionary basis evaluating individual contributions, performance and key accomplishments.
Long-term share option programme
In 2019, the Board approved the establishment of a long-term share option programme (LTIP) where key personnel were granted options to purchase shares in the Company. The programme is approved for five years, with annual grants, each grant corresponding to 1 per cent of the total outstanding shares in the Company. The first grant was in 2019, with the last grant in 2023. The programme is discretionary, and participants are invited on an annual basis. The purpose of the programme is to further align the interests of the Group and its shareholders by providing incentives to employees to motivate them to contribute materially to the success and long-term profitability of the Group.
The key terms and conditions related to the grants under these programmes are as follows; all options are to be settled by physical delivery of shares.
Grant date | Number of instruments | Vesting conditions | Contractual life of options |
On 8 April 2019 | 1\u00a0732\u00a0000 | Vesting period of three years, followed by a three-years exercise period | |
6 years | |||
On 6 March 2020 | 1\u00a0832\u00a0250 | Same as above | 6 years |
On 26 February 2021 | 1\u00a0849\u00a0600 | Same as above | 6 years |
On 7 March 2022 | 1\u00a0849\u00a0575 | Same as above | 6 years |
On 7 March 2023 | 1\u00a0849\u00a0567 | Same as above | 6 years |
Total share options | 9\u00a0112\u00a0992 |
Each option will give the holder the right to acquire one BW Offshore share. In 2023, a total of 60 (2022: 60) BW Offshore key employees were invited to participate in the programme.
The strike price of the options is calculated based on the volume weighted average share price five trading days prior to grant date, plus a premium of 15.76 per cent which is corresponding to a 5 per cent increase annually over three years.
The Company\u2019s exposure relating to the 2019 award is hedged by a Total Return Swap (TRS) agreement with financial exposure to 1\u00a0732\u00a0000 shares in BW Offshore. The options are non-tradable and conditional upon the option holder being employed by the Company and not having resigned or being terminated for cause prior to the vesting date.
Measurement of fair values
The fair value of the employee share options has been measured using the Black-Scholes formula. The inputs used in the measurement of the fair value at grant date were as follows.
2023 | 2022 | |
Fair value at grant date (NOK) | 12.01 | 12.20 |
Share price at grant date (NOK) | 28.02 | 28.84 |
Exercise price (NOK) | 32.68 | 33.78 |
Expected volatility (weighted average) | 58% | 59% |
Expected life | 4 years | 4 years |
Expected dividends | n/a | n/a |
Risk-free interest rate (based on government bonds) | 3.26% | 1.86% |
Expected volatility has been based on an evaluation of the historical volatility of the Company\u2019s share price particularly over the historical period equal to the expected term, adjusted for extreme movements. The expected term of the instruments has been based on historical experience and general option holder behaviour.
Reconciliation of outstanding share options
The number and weighted-average exercise prices of share options under the share option programmes were as follows:
2023 | 2022 | |||
Number of options | ||||
Weighted-average exercise price (NOK) | ||||
Number of options | ||||
Weighted-average exercise price (NOK) | ||||
Outstanding at 1 January | 6\u00a0870\u00a0483 | 35.82 | 5\u00a0128\u00a0025 | 40.81 |
Terminated during the year | (233\u00a0537) | 33.01 | (107\u00a0117) | 39.48 |
Adjusted | - | - | 12\u00a0582 | 38.13 |
Expired | - | - | (12\u00a0582) | 38.13 |
Granted during the year | 1\u00a0849\u00a0567 | 31.10 | 1\u00a0849\u00a0575 | 31.68 |
Outstanding at 31 December | 8\u00a0486\u00a0513 | 34.87 | 6\u00a0870\u00a0483 | 38.38 |
Exercisable at 31 December | 3\u00a0296\u00a0750 | 39.01 | 1\u00a0657\u00a0000 | 45.48 |
Expense recognised in profit or loss
For details of the related employee benefit expenses, see the employee benefit expenses table.
Loans to other employees
(IN USD) | 2023 | 2022 |
Loans to other employees | 2\u00a0797\u00a0277 | 303\u00a0901 |
Auditors\u2019 remuneration
USD '000 | 2023 | 2022 |
Statutory audit | 1\u00a0107.0 | 1\u00a0155.8 |
Other attest services | 23.1 | 5.1 |
Total fees | 1\u00a0130.1 | 1\u00a0160.9 |
KPMG is the appointed auditor of the Group.
Note 8\tEmployee benefit expenses, remuneration to directors and auditors
Employee benefit expenses
USD MILLION | 2023 | 2022 |
Wages, crew | 62.6 | 88.7 |
Wages, administrative personnel | 72.5 | 62.9 |
Social security contributions | 7.2 | 7.4 |
Expenses related to defined contribution scheme | 5.6 | 7.7 |
Expenses related to defined benefit scheme | 0.2 | 0.2 |
Share-based payment | 2.2 | 2.6 |
Total employee benefit expenses | 150.3 | 169.5 |
Average number of employees | 1\u00a0521 | 1\u00a0806 |
Senior management team\u200c1Remuneration
(IN USD) | Salary | Bonus | Pension benefits | Share options | Other benefits | Number of shares |
2023 | 2\u00a0866\u00a0342 | 711\u00a0954 | 192\u00a0077 | 864\u00a0783 | 44\u00a0720 | 430\u00a0518 |
2022 | 2\u00a0570\u00a0225 | 742\u00a0992 | 169\u00a0188 | 847\u00a0799 | 85\u00a0629 | 430\u00a0518 |
1Senior Management team comprises Chief Executive Officer, Chief Financial Officer, Chief Operating Officer, Chief Commercial Officer, General Counsel and Chief Strategy Officer (from 1 July 2023).
Severance
Senior Management team has agreements that give them the right to compensation after termination of employment before retirement that equals 100 per cent of the salary for a maximum of 18 months. Compensation received from other employers during this period reduces this compensation, but not below 25 per cent of the compensation. There are no similar agreements with the members of the Board of Directors.
Board of Directors\u2019 remuneration and shares held
(IN USD) | Number of | Share | |
Year | Directors\u2019 fee | shares | options |
2023 | 385\u00a0000 | 90\u00a0419\u00a0229 | - |
2022 | 385\u00a0000 | 90\u00a0419\u00a0229 | - |
The compensation for members of the Board of Directors for the period May 2023 to May 2024 will be decided at the annual general meeting in May 2024.
Employee remuneration
Variable Compensation Scheme
The Variable Compensation Scheme (VCS) is a system for rewarding employees if and when the Group reaches set goals for the Group\u2019s performance. The VCS plan is established on a year-to-year basis guided from the Board of Directors. The VCS for the performance year 2023 is based on the following parameters:
1.\tOverall company results defined by targeted return on equity
2.\tHealth, Safety, Environment and Quality (HSEQ) performance of Zero Harm
The Board of Directors are assessing the achievements, including applying discretionary evaluations, to determine the Group pay-out pool for the VCS accordingly.
Full pay-out is capped at three months\u2019 base salary for eligible employees, and six months for the Senior Management Team. Individual assessment of VCS pay-out is applied on a discretionary basis evaluating individual contributions, performance and key accomplishments.
Long-term share option programme
In 2019, the Board approved the establishment of a long-term share option programme (LTIP) where key personnel were granted options to purchase shares in the Company. The programme is approved for five years, with annual grants, each grant corresponding to 1 per cent of the total outstanding shares in the Company. The first grant was in 2019, with the last grant in 2023. The programme is discretionary, and participants are invited on an annual basis. The purpose of the programme is to further align the interests of the Group and its shareholders by providing incentives to employees to motivate them to contribute materially to the success and long-term profitability of the Group.
The key terms and conditions related to the grants under these programmes are as follows; all options are to be settled by physical delivery of shares.
Grant date | Number of instruments | Vesting conditions | Contractual life of options |
On 8 April 2019 | 1\u00a0732\u00a0000 | Vesting period of three years, followed by a three-years exercise period | |
6 years | |||
On 6 March 2020 | 1\u00a0832\u00a0250 | Same as above | 6 years |
On 26 February 2021 | 1\u00a0849\u00a0600 | Same as above | 6 years |
On 7 March 2022 | 1\u00a0849\u00a0575 | Same as above | 6 years |
On 7 March 2023 | 1\u00a0849\u00a0567 | Same as above | 6 years |
Total share options | 9\u00a0112\u00a0992 |
Each option will give the holder the right to acquire one BW Offshore share. In 2023, a total of 60 (2022: 60) BW Offshore key employees were invited to participate in the programme.
The strike price of the options is calculated based on the volume weighted average share price five trading days prior to grant date, plus a premium of 15.76 per cent which is corresponding to a 5 per cent increase annually over three years.
The Company\u2019s exposure relating to the 2019 award is hedged by a Total Return Swap (TRS) agreement with financial exposure to 1\u00a0732\u00a0000 shares in BW Offshore. The options are non-tradable and conditional upon the option holder being employed by the Company and not having resigned or being terminated for cause prior to the vesting date.
Measurement of fair values
The fair value of the employee share options has been measured using the Black-Scholes formula. The inputs used in the measurement of the fair value at grant date were as follows.
2023 | 2022 | |
Fair value at grant date (NOK) | 12.01 | 12.20 |
Share price at grant date (NOK) | 28.02 | 28.84 |
Exercise price (NOK) | 32.68 | 33.78 |
Expected volatility (weighted average) | 58% | 59% |
Expected life | 4 years | 4 years |
Expected dividends | n/a | n/a |
Risk-free interest rate (based on government bonds) | 3.26% | 1.86% |
Expected volatility has been based on an evaluation of the historical volatility of the Company\u2019s share price particularly over the historical period equal to the expected term, adjusted for extreme movements. The expected term of the instruments has been based on historical experience and general option holder behaviour.
Reconciliation of outstanding share options
The number and weighted-average exercise prices of share options under the share option programmes were as follows:
2023 | 2022 | |||
Number of options | ||||
Weighted-average exercise price (NOK) | ||||
Number of options | ||||
Weighted-average exercise price (NOK) | ||||
Outstanding at 1 January | 6\u00a0870\u00a0483 | 35.82 | 5\u00a0128\u00a0025 | 40.81 |
Terminated during the year | (233\u00a0537) | 33.01 | (107\u00a0117) | 39.48 |
Adjusted | - | - | 12\u00a0582 | 38.13 |
Expired | - | - | (12\u00a0582) | 38.13 |
Granted during the year | 1\u00a0849\u00a0567 | 31.10 | 1\u00a0849\u00a0575 | 31.68 |
Outstanding at 31 December | 8\u00a0486\u00a0513 | 34.87 | 6\u00a0870\u00a0483 | 38.38 |
Exercisable at 31 December | 3\u00a0296\u00a0750 | 39.01 | 1\u00a0657\u00a0000 | 45.48 |
Expense recognised in profit or loss
For details of the related employee benefit expenses, see the employee benefit expenses table.
Loans to other employees
(IN USD) | 2023 | 2022 |
Loans to other employees | 2\u00a0797\u00a0277 | 303\u00a0901 |
Auditors\u2019 remuneration
USD '000 | 2023 | 2022 |
Statutory audit | 1\u00a0107.0 | 1\u00a0155.8 |
Other attest services | 23.1 | 5.1 |
Total fees | 1\u00a0130.1 | 1\u00a0160.9 |
KPMG is the appointed auditor of the Group.
Note 9\tIncome taxes
The income tax expenses for the period comprise corporate income tax, withholding tax and deferred tax.
BW Offshore Limited is a company registered in Bermuda. Currently, the Company is not required to pay taxes in Bermuda on ordinary income or capital gains.
Depending on the jurisdiction, corporate income tax is due on the subsidiary\u2019s actual profits, and withholding tax is levied on a deemed profit basis or revenue basis (simplified calculation in lieu of profits tax). Deferred tax is calculated on temporary differences in jurisdictions where actual profits are the basis for taxation. Where the Group\u2019s activities are subject to withholding taxes, these are normally deducted by the customer who pays the taxes directly to the local tax authorities in the name of the Group.
The Group\u2019s operational activities are subject to taxation rates which range from 0 per cent to 35 per cent.
As the Group\u2019s operations are subject to different methods of taxation, income tax expenses will not necessarily change proportionally with changes in the overall net profit before tax. As a consequence of this, a reduction in net profit will often lead to a higher effective tax rate, while an increase in net profit can lead to a reduction in the effective tax rate.
Tax expense for the year
USD MILLION | 2023 | 2022 |
Deferred tax effect of changes in temporary differences | (5.5) | (1.6) |
Taxes payable current year | 15.2 | 18.6 |
Taxes payable prior years | - | (0.1) |
Withholding taxes | 6.0 | 3.3 |
Total tax expense continuing operations recognised in statement of income | 15.7 | 20.2 |
Effective tax rate
USD MILLION | 2023 | 2022 |
Profit/ (loss) before tax | 113.3 | 149.7 |
Effect on permanent differences | (1.0) | (1.0) |
Deferred tax effect of unrecognised deferred tax asset | 6.0 | 5.5 |
Income tax at Bermuda statutory income tax rate of 0% | - | - |
Withholding taxes | 6.0 | 3.3 |
Taxes payable current year, non-Bermuda jurisdictions | 15.2 | 18.6 |
Taxes payable prior years, non-Bermuda jurisdictions | - | (0.1) |
Deferred tax effect of changes in temporary differences | (5.5) | (1.6) |
Total income tax expense continuing operations at the effective income tax rate | 15.7 | 20.2 |
Effective tax rate | 13.9% | 13.5% |
Tax assets and liabilities
USD MILLION | 2023 | 2022 |
Tax assets at 31 December (included in trade and other current assets) | - | 0.3 |
USD MILLION | 2023 | 2022 |
Tax payable at 31 December | 18.4 | 11.7 |
Deferred tax assets and liabilities are offset when there is a legally enforceable right to offset current tax assets against current tax liabilities and when the deferred income becomes taxable.
Deferred tax liabilities and deferred tax assets are specified as follows:
USD MILLION | 2023 | 2022 |
Deferred tax assets | ||
Losses and unabsorbed capital allowances | 60.7 | 61.0 |
Other | 0.9 | 0.8 |
Deferred tax assets - gross | 61.6 | 61.8 |
Deferred tax liabilities | ||
Vessels | (3.8) | (8.5) |
Other | (11.8) | (12.4) |
Deferred tax liabilities - gross | (15.6) | (20.9) |
Net recognised deferred tax assets/(deferred tax liabilities) | 46.0 | 40.9 |
Net recognised deferred tax assets are expected to be recovered or settled after more than 12 months.
The Group also has tax losses carried forward in several jurisdictions which are not recognised. The losses carried forward are USD 434.8 million (USD 399.5 million). These losses are not recognised as it is not possible to predict with reasonable certainty whether adequate taxable profit will be available in the future against which losses can be utilised. None of these will expire in 2024. Some of the tax losses have no expiry date.
Judgements and estimates
The Group is subject to income taxes payable to various jurisdictions across the globe. Significant judgement is required in some jurisdictions to determine the provision for income taxes. There are many transactions and calculations for which the final tax determination is uncertain during the ordinary course of business. The Group monitors each issue around uncertain tax treatments across the Group in order to ensure that the Group applies sufficient judgement to the resolution of tax disputes that might arise.
The Group recognises liabilities for anticipated tax audit issues based on estimates of whether additional taxes will be due. The income tax liabilities include any penalties and interest that could be associated with a tax audit issue. Where the final tax outcome of these matters is different from the amounts that were initially recorded, such differences will influence the income tax and deferred tax amounts in the period in which such determination is made.
", "dimensions": { "concept": "ifrs-full:DisclosureOfIncomeTaxExplanatory", "language": "en", "entity": "scheme:2138008LFKH8V2EOA915", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "f51914": { "value": "Note 9\tIncome taxes
The income tax expenses for the period comprise corporate income tax, withholding tax and deferred tax.
BW Offshore Limited is a company registered in Bermuda. Currently, the Company is not required to pay taxes in Bermuda on ordinary income or capital gains.
Depending on the jurisdiction, corporate income tax is due on the subsidiary\u2019s actual profits, and withholding tax is levied on a deemed profit basis or revenue basis (simplified calculation in lieu of profits tax). Deferred tax is calculated on temporary differences in jurisdictions where actual profits are the basis for taxation. Where the Group\u2019s activities are subject to withholding taxes, these are normally deducted by the customer who pays the taxes directly to the local tax authorities in the name of the Group.
The Group\u2019s operational activities are subject to taxation rates which range from 0 per cent to 35 per cent.
As the Group\u2019s operations are subject to different methods of taxation, income tax expenses will not necessarily change proportionally with changes in the overall net profit before tax. As a consequence of this, a reduction in net profit will often lead to a higher effective tax rate, while an increase in net profit can lead to a reduction in the effective tax rate.
Tax expense for the year
USD MILLION | 2023 | 2022 |
Deferred tax effect of changes in temporary differences | (5.5) | (1.6) |
Taxes payable current year | 15.2 | 18.6 |
Taxes payable prior years | - | (0.1) |
Withholding taxes | 6.0 | 3.3 |
Total tax expense continuing operations recognised in statement of income | 15.7 | 20.2 |
Effective tax rate
USD MILLION | 2023 | 2022 |
Profit/ (loss) before tax | 113.3 | 149.7 |
Effect on permanent differences | (1.0) | (1.0) |
Deferred tax effect of unrecognised deferred tax asset | 6.0 | 5.5 |
Income tax at Bermuda statutory income tax rate of 0% | - | - |
Withholding taxes | 6.0 | 3.3 |
Taxes payable current year, non-Bermuda jurisdictions | 15.2 | 18.6 |
Taxes payable prior years, non-Bermuda jurisdictions | - | (0.1) |
Deferred tax effect of changes in temporary differences | (5.5) | (1.6) |
Total income tax expense continuing operations at the effective income tax rate | 15.7 | 20.2 |
Effective tax rate | 13.9% | 13.5% |
Tax assets and liabilities
USD MILLION | 2023 | 2022 |
Tax assets at 31 December (included in trade and other current assets) | - | 0.3 |
USD MILLION | 2023 | 2022 |
Tax payable at 31 December | 18.4 | 11.7 |
Deferred tax assets and liabilities are offset when there is a legally enforceable right to offset current tax assets against current tax liabilities and when the deferred income becomes taxable.
Deferred tax liabilities and deferred tax assets are specified as follows:
USD MILLION | 2023 | 2022 |
Deferred tax assets | ||
Losses and unabsorbed capital allowances | 60.7 | 61.0 |
Other | 0.9 | 0.8 |
Deferred tax assets - gross | 61.6 | 61.8 |
Deferred tax liabilities | ||
Vessels | (3.8) | (8.5) |
Other | (11.8) | (12.4) |
Deferred tax liabilities - gross | (15.6) | (20.9) |
Net recognised deferred tax assets/(deferred tax liabilities) | 46.0 | 40.9 |
Net recognised deferred tax assets are expected to be recovered or settled after more than 12 months.
The Group also has tax losses carried forward in several jurisdictions which are not recognised. The losses carried forward are USD 434.8 million (USD 399.5 million). These losses are not recognised as it is not possible to predict with reasonable certainty whether adequate taxable profit will be available in the future against which losses can be utilised. None of these will expire in 2024. Some of the tax losses have no expiry date.
Judgements and estimates
The Group is subject to income taxes payable to various jurisdictions across the globe. Significant judgement is required in some jurisdictions to determine the provision for income taxes. There are many transactions and calculations for which the final tax determination is uncertain during the ordinary course of business. The Group monitors each issue around uncertain tax treatments across the Group in order to ensure that the Group applies sufficient judgement to the resolution of tax disputes that might arise.
The Group recognises liabilities for anticipated tax audit issues based on estimates of whether additional taxes will be due. The income tax liabilities include any penalties and interest that could be associated with a tax audit issue. Where the final tax outcome of these matters is different from the amounts that were initially recorded, such differences will influence the income tax and deferred tax amounts in the period in which such determination is made.
", "dimensions": { "concept": "ifrs-full:DisclosureOfTaxReceivablesAndPayablesExplanatory", "language": "en", "entity": "scheme:2138008LFKH8V2EOA915", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "f51915": { "value": "Note 9\tIncome taxes
The income tax expenses for the period comprise corporate income tax, withholding tax and deferred tax.
BW Offshore Limited is a company registered in Bermuda. Currently, the Company is not required to pay taxes in Bermuda on ordinary income or capital gains.
Depending on the jurisdiction, corporate income tax is due on the subsidiary\u2019s actual profits, and withholding tax is levied on a deemed profit basis or revenue basis (simplified calculation in lieu of profits tax). Deferred tax is calculated on temporary differences in jurisdictions where actual profits are the basis for taxation. Where the Group\u2019s activities are subject to withholding taxes, these are normally deducted by the customer who pays the taxes directly to the local tax authorities in the name of the Group.
The Group\u2019s operational activities are subject to taxation rates which range from 0 per cent to 35 per cent.
As the Group\u2019s operations are subject to different methods of taxation, income tax expenses will not necessarily change proportionally with changes in the overall net profit before tax. As a consequence of this, a reduction in net profit will often lead to a higher effective tax rate, while an increase in net profit can lead to a reduction in the effective tax rate.
Tax expense for the year
USD MILLION | 2023 | 2022 |
Deferred tax effect of changes in temporary differences | (5.5) | (1.6) |
Taxes payable current year | 15.2 | 18.6 |
Taxes payable prior years | - | (0.1) |
Withholding taxes | 6.0 | 3.3 |
Total tax expense continuing operations recognised in statement of income | 15.7 | 20.2 |
Effective tax rate
USD MILLION | 2023 | 2022 |
Profit/ (loss) before tax | 113.3 | 149.7 |
Effect on permanent differences | (1.0) | (1.0) |
Deferred tax effect of unrecognised deferred tax asset | 6.0 | 5.5 |
Income tax at Bermuda statutory income tax rate of 0% | - | - |
Withholding taxes | 6.0 | 3.3 |
Taxes payable current year, non-Bermuda jurisdictions | 15.2 | 18.6 |
Taxes payable prior years, non-Bermuda jurisdictions | - | (0.1) |
Deferred tax effect of changes in temporary differences | (5.5) | (1.6) |
Total income tax expense continuing operations at the effective income tax rate | 15.7 | 20.2 |
Effective tax rate | 13.9% | 13.5% |
Tax assets and liabilities
USD MILLION | 2023 | 2022 |
Tax assets at 31 December (included in trade and other current assets) | - | 0.3 |
USD MILLION | 2023 | 2022 |
Tax payable at 31 December | 18.4 | 11.7 |
Deferred tax assets and liabilities are offset when there is a legally enforceable right to offset current tax assets against current tax liabilities and when the deferred income becomes taxable.
Deferred tax liabilities and deferred tax assets are specified as follows:
USD MILLION | 2023 | 2022 |
Deferred tax assets | ||
Losses and unabsorbed capital allowances | 60.7 | 61.0 |
Other | 0.9 | 0.8 |
Deferred tax assets - gross | 61.6 | 61.8 |
Deferred tax liabilities | ||
Vessels | (3.8) | (8.5) |
Other | (11.8) | (12.4) |
Deferred tax liabilities - gross | (15.6) | (20.9) |
Net recognised deferred tax assets/(deferred tax liabilities) | 46.0 | 40.9 |
Net recognised deferred tax assets are expected to be recovered or settled after more than 12 months.
The Group also has tax losses carried forward in several jurisdictions which are not recognised. The losses carried forward are USD 434.8 million (USD 399.5 million). These losses are not recognised as it is not possible to predict with reasonable certainty whether adequate taxable profit will be available in the future against which losses can be utilised. None of these will expire in 2024. Some of the tax losses have no expiry date.
Judgements and estimates
The Group is subject to income taxes payable to various jurisdictions across the globe. Significant judgement is required in some jurisdictions to determine the provision for income taxes. There are many transactions and calculations for which the final tax determination is uncertain during the ordinary course of business. The Group monitors each issue around uncertain tax treatments across the Group in order to ensure that the Group applies sufficient judgement to the resolution of tax disputes that might arise.
The Group recognises liabilities for anticipated tax audit issues based on estimates of whether additional taxes will be due. The income tax liabilities include any penalties and interest that could be associated with a tax audit issue. Where the final tax outcome of these matters is different from the amounts that were initially recorded, such differences will influence the income tax and deferred tax amounts in the period in which such determination is made.
", "dimensions": { "concept": "ifrs-full:DisclosureOfDeferredTaxesExplanatory", "language": "en", "entity": "scheme:2138008LFKH8V2EOA915", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "f52903": { "value": "Note 10\tInventories
USD MILLION | 2023 | 2022 |
Fuel oil | 1.2 | 1.2 |
Materials and consumables | 2.5 | 5.5 |
Inventories at 31 December | 3.7 | 6.7 |
Note 11\tTrade and other current assets
USD MILLION | 2023 | 2022 |
Trade receivables | 93.2 | 151.9 |
Contract assets | 18.2 | 58.3 |
Other receivables | 36.4 | 16.0 |
Tax assets - current | - | 0.3 |
Prepayments | 4.6 | 6.1 |
Trade and other current assets | 152.4 | 232.6 |
Trade receivables are shown net of a provision for expected losses of USD 0.8 million (USD 20.0 million).
The fair value of trade and other current assets is the same as the carrying amount.
The ageing analysis of trade receivables is as follows:
USD MILLION | 2023 | 2022 |
Not past due | 61.3 | 133.5 |
Up to 3 months | 18.0 | 5.9 |
3\u20136 months | 2.3 | 1.6 |
6\u201312 months | 0.3 | - |
12 -> months | 11.3 | 10.9 |
Trade receivables - net | 93.2 | 151.9 |
As of 31 December 2023 and 2022, the expected credit loss for the Group related to customers was immaterial.
The carrying amount of the Group\u2019s trade and other receivables are mainly denominated in USD.
Movement in expected credit losses in respect of trade receivables is as follows:
USD MILLION | 2023 | 2022 |
Balance at 1 January | 20.0 | 19.6 |
Amounts written off | (13.4) | - |
Net remeasurement of loss allowance | (5.8) | 0.4 |
Balance at 31 December | 0.8 | 20.0 |
Expected credit loss for other classes within trade and other receivables are immaterial.
Credit risk and foreign exchange risk regarding trade receivables are described in Note19.
Note 11\tTrade and other current assets
USD MILLION | 2023 | 2022 |
Trade receivables | 93.2 | 151.9 |
Contract assets | 18.2 | 58.3 |
Other receivables | 36.4 | 16.0 |
Tax assets - current | - | 0.3 |
Prepayments | 4.6 | 6.1 |
Trade and other current assets | 152.4 | 232.6 |
Trade receivables are shown net of a provision for expected losses of USD 0.8 million (USD 20.0 million).
The fair value of trade and other current assets is the same as the carrying amount.
The ageing analysis of trade receivables is as follows:
USD MILLION | 2023 | 2022 |
Not past due | 61.3 | 133.5 |
Up to 3 months | 18.0 | 5.9 |
3\u20136 months | 2.3 | 1.6 |
6\u201312 months | 0.3 | - |
12 -> months | 11.3 | 10.9 |
Trade receivables - net | 93.2 | 151.9 |
As of 31 December 2023 and 2022, the expected credit loss for the Group related to customers was immaterial.
The carrying amount of the Group\u2019s trade and other receivables are mainly denominated in USD.
Movement in expected credit losses in respect of trade receivables is as follows:
USD MILLION | 2023 | 2022 |
Balance at 1 January | 20.0 | 19.6 |
Amounts written off | (13.4) | - |
Net remeasurement of loss allowance | (5.8) | 0.4 |
Balance at 31 December | 0.8 | 20.0 |
Expected credit loss for other classes within trade and other receivables are immaterial.
Credit risk and foreign exchange risk regarding trade receivables are described in Note19.
Note 11\tTrade and other current assets
USD MILLION | 2023 | 2022 |
Trade receivables | 93.2 | 151.9 |
Contract assets | 18.2 | 58.3 |
Other receivables | 36.4 | 16.0 |
Tax assets - current | - | 0.3 |
Prepayments | 4.6 | 6.1 |
Trade and other current assets | 152.4 | 232.6 |
Trade receivables are shown net of a provision for expected losses of USD 0.8 million (USD 20.0 million).
The fair value of trade and other current assets is the same as the carrying amount.
The ageing analysis of trade receivables is as follows:
USD MILLION | 2023 | 2022 |
Not past due | 61.3 | 133.5 |
Up to 3 months | 18.0 | 5.9 |
3\u20136 months | 2.3 | 1.6 |
6\u201312 months | 0.3 | - |
12 -> months | 11.3 | 10.9 |
Trade receivables - net | 93.2 | 151.9 |
As of 31 December 2023 and 2022, the expected credit loss for the Group related to customers was immaterial.
The carrying amount of the Group\u2019s trade and other receivables are mainly denominated in USD.
Movement in expected credit losses in respect of trade receivables is as follows:
USD MILLION | 2023 | 2022 |
Balance at 1 January | 20.0 | 19.6 |
Amounts written off | (13.4) | - |
Net remeasurement of loss allowance | (5.8) | 0.4 |
Balance at 31 December | 0.8 | 20.0 |
Expected credit loss for other classes within trade and other receivables are immaterial.
Credit risk and foreign exchange risk regarding trade receivables are described in Note19.
Note 11\tTrade and other current assets
USD MILLION | 2023 | 2022 |
Trade receivables | 93.2 | 151.9 |
Contract assets | 18.2 | 58.3 |
Other receivables | 36.4 | 16.0 |
Tax assets - current | - | 0.3 |
Prepayments | 4.6 | 6.1 |
Trade and other current assets | 152.4 | 232.6 |
Trade receivables are shown net of a provision for expected losses of USD 0.8 million (USD 20.0 million).
The fair value of trade and other current assets is the same as the carrying amount.
The ageing analysis of trade receivables is as follows:
USD MILLION | 2023 | 2022 |
Not past due | 61.3 | 133.5 |
Up to 3 months | 18.0 | 5.9 |
3\u20136 months | 2.3 | 1.6 |
6\u201312 months | 0.3 | - |
12 -> months | 11.3 | 10.9 |
Trade receivables - net | 93.2 | 151.9 |
As of 31 December 2023 and 2022, the expected credit loss for the Group related to customers was immaterial.
The carrying amount of the Group\u2019s trade and other receivables are mainly denominated in USD.
Movement in expected credit losses in respect of trade receivables is as follows:
USD MILLION | 2023 | 2022 |
Balance at 1 January | 20.0 | 19.6 |
Amounts written off | (13.4) | - |
Net remeasurement of loss allowance | (5.8) | 0.4 |
Balance at 31 December | 0.8 | 20.0 |
Expected credit loss for other classes within trade and other receivables are immaterial.
Credit risk and foreign exchange risk regarding trade receivables are described in Note19.
Note 12\tCash and cash equivalents
Cash and cash equivalents are denominated primarily in USD, SGD, EUR, GBP and NOK. Restricted bank deposits at 31 December 2023 amounted to USD 1.0 million (USD 0.9 million). This relates to taxes withheld from employees.
", "dimensions": { "concept": "ifrs-full:DisclosureOfCashAndCashEquivalentsExplanatory", "language": "en", "entity": "scheme:2138008LFKH8V2EOA915", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "f53392": { "value": "Note 12\tCash and cash equivalents
Cash and cash equivalents are denominated primarily in USD, SGD, EUR, GBP and NOK. Restricted bank deposits at 31 December 2023 amounted to USD 1.0 million (USD 0.9 million). This relates to taxes withheld from employees.
", "dimensions": { "concept": "ifrs-full:DisclosureOfRestrictedCashAndCashEquivalentsExplanatory", "language": "en", "entity": "scheme:2138008LFKH8V2EOA915", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "f53437": { "value": "Note 13\tProperty, plant and equipment
Vessels and other property, plant and equipment
The owned fleet at 31 December 2023 included the following vessels: BW Adolo, BW Catcher, BW Pioneer and Petr\u00f3leo Nautipa.
BW Opal is under construction for the Barossa project. Vessels available for projects include vessels that are currently not in operation.
The contract for Petr\u00f3leo Nautipa reached the end of its term in October 2022. The FPSO was decommissioned from field in Gabon in 2023 and is expected to be sold for recycling in 2024.
Disposals
In March 2023, BW Opportunity was sold for USD 125.0 million. In April 2023, BW Athena was sold for 5.0 million. In June 2023, Espoir Ivoirien was sold for USD 20.0 million, including USD 3.0 million for inventory. In September 2023, Abo FPSO was sold for USD 20 million. The accounting gains and losses on these transactions have been recorded as part of Net gain/(loss) on the sale of property, plant and equipment.
In July 2023, Sendje Berge was sold for USD 15 million. As the consideration was lower than the current net book value, the Group consequently recorded an impairment loss of USD 5.1 million.
In February 2022, BW Cidade de S\u00e3o Vicente was sold for USD 12.8 million. In March 2022, BW Umuroa was sold for USD 14.5 million. The impact from the sale is included in Net gain/(loss) on the sale of tangible fixed assets.
In April 2022, the Group signed an agreement for the sale of the FPSO Polvo to BW Energy. Refer to Note25.
In January 2022, BW Offshore signed an agreement for the sale of PT BW Offshore TSB Invest, the owner of FPSO BW Joko Tole, to PT Bahari Inti Tanker and PT Cahaya Haluan Pasifik, both of which are Indonesian companies, in consortium with PT Buana Lintas Lautan Tbk, a company publicly listed in Indonesia. The transaction was closed on 3 June 2022. Cash consideration was USD 52.2 million, and no gain or loss was recorded in the consolidated statement of income related to this transaction.
2023 USD MILLION | Vessels in operation | Vessels under construction | Vessels available for projects | Other property, plant & equipment | Total |
Cost at 1 January 2023 | 3\u00a0308.3 | 1\u00a0097.0 | 579.2 | 46.8 | 5\u00a0031.3 |
Additions | 13.2 | 726.3 | 27.3 | 0.9 | 767.7 |
Disposal | (681.5) | - | (606.5) | (9.7) | (1\u00a0297.7) |
Exchange differences | - | - | - | 0.7 | 0.7 |
Cost at 31 December 2023 | 2\u00a0640.0 | 1\u00a0823.3 | - | 38.7 | 4\u00a0502.0 |
Accumulated depreciation and impairment charge at 1 January 2023 | |||||
(2\u00a0099.6) | - | (490.6) | (38.3) | (2\u00a0628.5) | |
Current year depreciation | (167.2) | - | (0.4) | (6.6) | (174.2) |
Disposal | 642.1 | - | 491.0 | 9.7 | 1\u00a0142.8 |
Impairment | (5.1) | - | - | - | (5.1) |
Exchange differences | - | - | - | (0.7) | (0.7) |
Accumulated depreciation and impairment charge at 31 December 2023 | |||||
(1\u00a0629.8) | - | - | (35.9) | (1\u00a0665.7) | |
Book value at 31 December 2023 | 1\u00a0010.2 | 1\u00a0823.3 | - | 2.8 | 2\u00a0836.3 |
Useful life | Up to 25 years | ||||
Capitalised interest cost for vessels under construction | |||||
62.6 | |||||
2022 USD MILLION | |||||
Vessels in operation | Vessels under construction | ||||
Vessels available for projects | Other property, plant & equipment | ||||
Total | |||||
Cost at 1 January 2022 | 3\u00a0290.6 | 374.7 | 683.9 | 55.3 | 4\u00a0404.5 |
Additions | 17.7 | 738.1 | 14.1 | 1.7 | 771.6 |
Disposal | - | - | (118.8) | (9.5) | (128.3) |
Exchange differences | - | - | - | (0.7) | (0.7) |
Reclassification to held-for-sale | (15.8) | - | (15.8) | ||
Cost at 31 December 2022 | 3\u00a0308.3 | 1\u00a0097.0 | 579.2 | 46.8 | 5\u00a0031.3 |
Accumulated depreciation and impairment charge at 1 January 2022 | |||||
(1\u00a0917.7) | - | (595.5) | (38.0) | (2\u00a0551.2) | |
Current year depreciation | (181.9) | - | (2.6) | (9.2) | (193.7) |
Disposal | - | - | 107.5 | 9.0 | 116.5 |
Impairment | - | (15.8) | - | - | (15.8) |
Exchange differences | - | - | - | (0.1) | (0.1) |
Derecognition | 15.8 | - | 15.8 | ||
Accumulated depreciation and impairment charge at 31 December 2022 | |||||
(2\u00a0099.6) | - | (490.6) | (38.3) | (2\u00a0628.5) | |
Book value at 31 December 2022 | 1\u00a0208.7 | 1\u00a0097.0 | 88.6 | 8.5 | 2\u00a0402.8 |
Useful life | Up to 25 years | ||||
Capitalised interest cost for vessels under construction | |||||
28.5 |
The FPSO capital expenditure in 2023 was mainly related to investments in BW Opal for the Barossa project, as well as the upgrade to BW Adolo, covered by the client, and the final milestone payment for the repair of BW Opportunity before the FPSO was sold.
The BW Opal contract is preliminary assessed to be an operating lease. The contract has a firm period of 15 years plus 10 years of options. BW Offshore will be responsible for engineering, procurement, construction, installation and operation of the FPSO.
FPSO\u2019s capital expenditure in 2022 was mainly related to investments in BW Opal, as well as upgrade for the BW Adolo for the Ruche field outside Gabon and repair on the BW Opportunity.
Refer to Note 23for information of committed cost relating to construction of FPSO.
The Group has performed an impairment trigger assessment at 31 December 2023. As a result of cost increase driven by inflation and increased interest
rates, the Group has performed an impairment test. The impairment testing did not identify any required impairments.
Each vessel is regarded as a cash-generating unit for impairment testing. The recoverable amount is based on a value-in-use calculation for each of the vessels in the fleet. To estimate the recoverable amount, the Group makes assumptions on contracted net cash flows as well as uncontracted cash flows over the useful life for each vessel. Uncontracted cash flows have been estimated based on experience, expectations on future market conditions and return on invested capital. The assumptions made are built into different scenarios with different cash flows for each unit.
Cash flows were discounted at a rate of 7.9 per cent on a post-tax basis. The use of a post-tax discount rate does not result in a different determination of the need for, or the amount of, impairment (reversal) that would be required if a pre-tax discount rate had been used. The discount rate is based on Weighted Average Cost of Capital (WACC). The following assumptions have been made for the WACC:
\u2022The equity risk premium is based on empirical data of comparable listed companies and is in consensus with the market risk premium observed from the study performed by the Norwegian Society of Financial Analysts. The Group has also included a small cap premiumand ESG premium in setting the overall equity risk premium.
\u2022The equity ratio is based on long-term assumptions on the Group\u2019s financial strategy and capital structure, as well as peer group balance sheet data.
\u2022For the risk-free rate, the Group is using the US 10-year treasury yields as the basis for calculations.
\u2022The debt margin used is based on inputs meant to mirror what market participants would demand if they were to choose an investment generating equivalent cash flows, with the same time horizon and level of risk as the assessment date.
\u2022For estimating beta, the Group has employed various regression models and peer averages to reach a metric of future equity risk for the FPSO segment and BW Offshore.
The value in use calculation is sensitive to assumptions and variables. The key factors are the WACC and increases in construction costs in the event of a delay at yard for BW Opal:
An increase of the WACC by 1 percentage point would lead to a USD 39 million impairment of BW Opal.
A 3-month delay at yard with the associated additional costs would lead to an estimated impairment of USD 21 million of BW Opal.
An increase of construction costs of USD 50 million would not lead to an impairment of BW Opal.
The value in use cash flow used for impairment testing of BW Opal does not reflect the positive cash flow benefit of the USD 61 million deferred tax asset recognised in relation to the project.
The cost of debt component of the WACC used for impairment testing consists of a base rate and an estimated loan margin. A base rate of 3.5 per cent has been applied based on the USD 10-year swap rate observed in the market per year end 2023. The BW Opal debt has been hedged with interest rate swaps maturing
in 2035 and with an average swap rate of 1.874 per cent. The benefit of the interest rate swap portfolio is not reflected in the WACC used for impairment testing.
In 2022, the Group had capitalised FEED expenses, early-stage engineering and supplier reservations for the supply of an FPSO for the Gato do Mato oil and gas field offshore Brazil for Shell Brasil Petr\u00f3leo Ltda (Shell). In November 2022, the Group was informed by Shell that the final investment decision was not to be made within the next 12 to 24 months. Consequently, the Group has impaired capitalised expenses of USD 15.8 million. Refer to Note 5for further information regarding compensation received from Shell.
Judgements and estimates
Depreciation
The level of depreciation depends on the estimated useful life of the different components of the assets and residual value at the end of its useful life. The estimated useful life is based on experience and knowledge of the vessels owned by the Group. Management will have to make assessments as to the expected useful life of the hull and marine scope as well as the process equipment for an FPSO. Assumptions will also have to be made about the expected contract period for non-recoverable components for the assets, which can deviate significantly from the useful life of hull and process equipment.
Assumptions on residual value are based on knowledge of current scrap values, which in turn depend on steel prices in the world market and demobilisation costs, together with an expected inflation.
Impairment
The Group periodically reviews whether vessels and other property, plant and equipment, for potential impairment indicators when circumstances indicate and at least on an annual basis.
The recoverable amounts of each vessel, being defined as a cash-generating unit, is the higher of its fair value less cost of disposal and its value in use. Value in use calculations are based on contracted cash flows and estimates of uncontracted cash flows for the useful lives of each vessel, including residual values discounted by an estimated discount rate.
All impairment assessment calculations demand a high degree of estimation. Management must make complex assessment of the expected cash flows arising from such assets and the selection of discount rates. Changes to these estimates could have significant impact on the impairments recognised and future changes may lead to reversals of recognised impairments.
Note 13\tProperty, plant and equipment
Vessels and other property, plant and equipment
The owned fleet at 31 December 2023 included the following vessels: BW Adolo, BW Catcher, BW Pioneer and Petr\u00f3leo Nautipa.
BW Opal is under construction for the Barossa project. Vessels available for projects include vessels that are currently not in operation.
The contract for Petr\u00f3leo Nautipa reached the end of its term in October 2022. The FPSO was decommissioned from field in Gabon in 2023 and is expected to be sold for recycling in 2024.
Disposals
In March 2023, BW Opportunity was sold for USD 125.0 million. In April 2023, BW Athena was sold for 5.0 million. In June 2023, Espoir Ivoirien was sold for USD 20.0 million, including USD 3.0 million for inventory. In September 2023, Abo FPSO was sold for USD 20 million. The accounting gains and losses on these transactions have been recorded as part of Net gain/(loss) on the sale of property, plant and equipment.
In July 2023, Sendje Berge was sold for USD 15 million. As the consideration was lower than the current net book value, the Group consequently recorded an impairment loss of USD 5.1 million.
In February 2022, BW Cidade de S\u00e3o Vicente was sold for USD 12.8 million. In March 2022, BW Umuroa was sold for USD 14.5 million. The impact from the sale is included in Net gain/(loss) on the sale of tangible fixed assets.
In April 2022, the Group signed an agreement for the sale of the FPSO Polvo to BW Energy. Refer to Note25.
In January 2022, BW Offshore signed an agreement for the sale of PT BW Offshore TSB Invest, the owner of FPSO BW Joko Tole, to PT Bahari Inti Tanker and PT Cahaya Haluan Pasifik, both of which are Indonesian companies, in consortium with PT Buana Lintas Lautan Tbk, a company publicly listed in Indonesia. The transaction was closed on 3 June 2022. Cash consideration was USD 52.2 million, and no gain or loss was recorded in the consolidated statement of income related to this transaction.
2023 USD MILLION | Vessels in operation | Vessels under construction | Vessels available for projects | Other property, plant & equipment | Total |
Cost at 1 January 2023 | 3\u00a0308.3 | 1\u00a0097.0 | 579.2 | 46.8 | 5\u00a0031.3 |
Additions | 13.2 | 726.3 | 27.3 | 0.9 | 767.7 |
Disposal | (681.5) | - | (606.5) | (9.7) | (1\u00a0297.7) |
Exchange differences | - | - | - | 0.7 | 0.7 |
Cost at 31 December 2023 | 2\u00a0640.0 | 1\u00a0823.3 | - | 38.7 | 4\u00a0502.0 |
Accumulated depreciation and impairment charge at 1 January 2023 | |||||
(2\u00a0099.6) | - | (490.6) | (38.3) | (2\u00a0628.5) | |
Current year depreciation | (167.2) | - | (0.4) | (6.6) | (174.2) |
Disposal | 642.1 | - | 491.0 | 9.7 | 1\u00a0142.8 |
Impairment | (5.1) | - | - | - | (5.1) |
Exchange differences | - | - | - | (0.7) | (0.7) |
Accumulated depreciation and impairment charge at 31 December 2023 | |||||
(1\u00a0629.8) | - | - | (35.9) | (1\u00a0665.7) | |
Book value at 31 December 2023 | 1\u00a0010.2 | 1\u00a0823.3 | - | 2.8 | 2\u00a0836.3 |
Useful life | Up to 25 years | ||||
Capitalised interest cost for vessels under construction | |||||
62.6 | |||||
2022 USD MILLION | |||||
Vessels in operation | Vessels under construction | ||||
Vessels available for projects | Other property, plant & equipment | ||||
Total | |||||
Cost at 1 January 2022 | 3\u00a0290.6 | 374.7 | 683.9 | 55.3 | 4\u00a0404.5 |
Additions | 17.7 | 738.1 | 14.1 | 1.7 | 771.6 |
Disposal | - | - | (118.8) | (9.5) | (128.3) |
Exchange differences | - | - | - | (0.7) | (0.7) |
Reclassification to held-for-sale | (15.8) | - | (15.8) | ||
Cost at 31 December 2022 | 3\u00a0308.3 | 1\u00a0097.0 | 579.2 | 46.8 | 5\u00a0031.3 |
Accumulated depreciation and impairment charge at 1 January 2022 | |||||
(1\u00a0917.7) | - | (595.5) | (38.0) | (2\u00a0551.2) | |
Current year depreciation | (181.9) | - | (2.6) | (9.2) | (193.7) |
Disposal | - | - | 107.5 | 9.0 | 116.5 |
Impairment | - | (15.8) | - | - | (15.8) |
Exchange differences | - | - | - | (0.1) | (0.1) |
Derecognition | 15.8 | - | 15.8 | ||
Accumulated depreciation and impairment charge at 31 December 2022 | |||||
(2\u00a0099.6) | - | (490.6) | (38.3) | (2\u00a0628.5) | |
Book value at 31 December 2022 | 1\u00a0208.7 | 1\u00a0097.0 | 88.6 | 8.5 | 2\u00a0402.8 |
Useful life | Up to 25 years | ||||
Capitalised interest cost for vessels under construction | |||||
28.5 |
The FPSO capital expenditure in 2023 was mainly related to investments in BW Opal for the Barossa project, as well as the upgrade to BW Adolo, covered by the client, and the final milestone payment for the repair of BW Opportunity before the FPSO was sold.
The BW Opal contract is preliminary assessed to be an operating lease. The contract has a firm period of 15 years plus 10 years of options. BW Offshore will be responsible for engineering, procurement, construction, installation and operation of the FPSO.
FPSO\u2019s capital expenditure in 2022 was mainly related to investments in BW Opal, as well as upgrade for the BW Adolo for the Ruche field outside Gabon and repair on the BW Opportunity.
Refer to Note 23for information of committed cost relating to construction of FPSO.
The Group has performed an impairment trigger assessment at 31 December 2023. As a result of cost increase driven by inflation and increased interest
rates, the Group has performed an impairment test. The impairment testing did not identify any required impairments.
Each vessel is regarded as a cash-generating unit for impairment testing. The recoverable amount is based on a value-in-use calculation for each of the vessels in the fleet. To estimate the recoverable amount, the Group makes assumptions on contracted net cash flows as well as uncontracted cash flows over the useful life for each vessel. Uncontracted cash flows have been estimated based on experience, expectations on future market conditions and return on invested capital. The assumptions made are built into different scenarios with different cash flows for each unit.
Cash flows were discounted at a rate of 7.9 per cent on a post-tax basis. The use of a post-tax discount rate does not result in a different determination of the need for, or the amount of, impairment (reversal) that would be required if a pre-tax discount rate had been used. The discount rate is based on Weighted Average Cost of Capital (WACC). The following assumptions have been made for the WACC:
\u2022The equity risk premium is based on empirical data of comparable listed companies and is in consensus with the market risk premium observed from the study performed by the Norwegian Society of Financial Analysts. The Group has also included a small cap premiumand ESG premium in setting the overall equity risk premium.
\u2022The equity ratio is based on long-term assumptions on the Group\u2019s financial strategy and capital structure, as well as peer group balance sheet data.
\u2022For the risk-free rate, the Group is using the US 10-year treasury yields as the basis for calculations.
\u2022The debt margin used is based on inputs meant to mirror what market participants would demand if they were to choose an investment generating equivalent cash flows, with the same time horizon and level of risk as the assessment date.
\u2022For estimating beta, the Group has employed various regression models and peer averages to reach a metric of future equity risk for the FPSO segment and BW Offshore.
The value in use calculation is sensitive to assumptions and variables. The key factors are the WACC and increases in construction costs in the event of a delay at yard for BW Opal:
An increase of the WACC by 1 percentage point would lead to a USD 39 million impairment of BW Opal.
A 3-month delay at yard with the associated additional costs would lead to an estimated impairment of USD 21 million of BW Opal.
An increase of construction costs of USD 50 million would not lead to an impairment of BW Opal.
The value in use cash flow used for impairment testing of BW Opal does not reflect the positive cash flow benefit of the USD 61 million deferred tax asset recognised in relation to the project.
The cost of debt component of the WACC used for impairment testing consists of a base rate and an estimated loan margin. A base rate of 3.5 per cent has been applied based on the USD 10-year swap rate observed in the market per year end 2023. The BW Opal debt has been hedged with interest rate swaps maturing
in 2035 and with an average swap rate of 1.874 per cent. The benefit of the interest rate swap portfolio is not reflected in the WACC used for impairment testing.
In 2022, the Group had capitalised FEED expenses, early-stage engineering and supplier reservations for the supply of an FPSO for the Gato do Mato oil and gas field offshore Brazil for Shell Brasil Petr\u00f3leo Ltda (Shell). In November 2022, the Group was informed by Shell that the final investment decision was not to be made within the next 12 to 24 months. Consequently, the Group has impaired capitalised expenses of USD 15.8 million. Refer to Note 5for further information regarding compensation received from Shell.
Judgements and estimates
Depreciation
The level of depreciation depends on the estimated useful life of the different components of the assets and residual value at the end of its useful life. The estimated useful life is based on experience and knowledge of the vessels owned by the Group. Management will have to make assessments as to the expected useful life of the hull and marine scope as well as the process equipment for an FPSO. Assumptions will also have to be made about the expected contract period for non-recoverable components for the assets, which can deviate significantly from the useful life of hull and process equipment.
Assumptions on residual value are based on knowledge of current scrap values, which in turn depend on steel prices in the world market and demobilisation costs, together with an expected inflation.
Impairment
The Group periodically reviews whether vessels and other property, plant and equipment, for potential impairment indicators when circumstances indicate and at least on an annual basis.
The recoverable amounts of each vessel, being defined as a cash-generating unit, is the higher of its fair value less cost of disposal and its value in use. Value in use calculations are based on contracted cash flows and estimates of uncontracted cash flows for the useful lives of each vessel, including residual values discounted by an estimated discount rate.
All impairment assessment calculations demand a high degree of estimation. Management must make complex assessment of the expected cash flows arising from such assets and the selection of discount rates. Changes to these estimates could have significant impact on the impairments recognised and future changes may lead to reversals of recognised impairments.
Note 14\tIntangible assets and goodwill
USD MILLION | Software | R&D | Technology | Goodwill | Total intangible assets |
Cost at 1 January 2023 | 10.7 | 4.6 | 64.0 | 27.4 | 106.7 |
Additions | 0.4 | 2.0 | - | - | 2.4 |
Exchange differences | - | 0.2 | 1.9 | 0.8 | 2.9 |
Disposal | (6.3) | - | - | - | (6.3) |
Carrying amount at 31 December 2023 | 4.8 | 6.8 | 65.9 | 28.2 | 105.7 |
Amortisation and impairment at 1 January 2023 | |||||
(10.5) | (0.5) | (7.7) | - | (18.7) | |
Current year amortisation | (0.1) | (0.8) | (4.3) | - | (5.2) |
Exchange differences | - | - | (0.3) | - | (0.3) |
Disposal | 6.3 | - | - | - | 6.3 |
At 31 December 2023 | (4.3) | (1.3) | (12.3) | - | (17.9) |
Net book value at 31 December 2023 | 0.5 | 5.5 | 53.6 | 28.2 | 87.8 |
Useful life | 1\u20133 years | 5 years | 15 years | ||
Amortisation method | linear | linear | linear | ||
USD MILLION | Software | R&D | Technology | Goodwill | Total intangible assets |
Cost at 1 January 2022 | 20.9 | 4.6 | 68.0 | 28.7 | 122.2 |
Additions | - | 0.3 | - | - | 0.3 |
Additions from business combinations | - | - | - | 0.4 | 0.4 |
Exchange differences | - | (0.3) | (4.0) | (1.7) | (6.0) |
Disposal | (10.2) | (10.2) | |||
Carrying amount at 31 December 2022 | 10.7 | 4.6 | 64.0 | 27.4 | 106.7 |
Amortisation and impairment at 1 January 2022 | |||||
(18.8) | (0.1) | (3.6) | - | (22.5) | |
Current year amortisation | (1.9) | (0.4) | (4.2) | - | (6.5) |
Exchange differences | - | - | 0.1 | - | 0.1 |
Disposal | 10.2 | - | - | - | 10.2 |
At 31 December 2022 | (10.5) | (0.5) | (7.7) | - | (18.7) |
Net book value at 31 December 2022 | 0.2 | 4.1 | 56.3 | 27.4 | 88.0 |
Useful life | 1\u20133 years | 5 years | 15 years | ||
Amortisation method | linear | linear | linear |
Goodwill, Technology and R&D (Research & Development) were initially recognised in March 2021 as part of the acquisition of Ideol SA. R&D assets represent the accumulated capitalised development projects. BW Ideol is pursuing a number of initiatives around its Damping Pool\u00ae patented foundation technology including research and development of innovative building materials, mooring systems and construction methods.
Goodwill has an indefinite useful life and is tested for impairment at least annually.
Goodwill was tested for impairment as of 31 December 2023, including impairment testing of technology assets. A discounted cash flow model was used to determine the fair value less cost of disposal for the CGU. The projected cash flows were based on the most up-to-date forecast by management which includes probability weighted cash flows for prospective offshore wind projects using end-of-life cash flows for projects identified. The impairment calculation demonstrated that the value in use exceeded the carrying amount of the CGU, thus no impairment loss was recognised.
Key assumptions used in the impairment calculation include:
Cash flows, project IRR, price of electricity
For the co-development activity, cash flows related to the estimated projects in portfolio include: (i) development expenses, including expenses related to engineering services provided by BW Ideol to each project during this phase, (ii) capital expenditures during construction phase, including royalties derived from BW Ideol\u2019s technology licensing, (iii) wind farm operating expenses and (iv) reimbursement of project finance debt. The tariff applied to the electricity sold is being determined by using a target IRR of 10.75 per cent estimated at the start of the development phase and takes into account the project financial structure and expenses profiles. An additional probability to successfully develop the project is also applied, ranging from 25 per cent to 66.6 per cent, depending on the maturity of the opportunity (identified project, tender phase, development phase). To reflect the commercial terms reached with ADEME Investissement, all projects under co-development are targeted to be sold at the end of the development period (\u201cFID\u201d). An exit price is therefore being determined using a target IRR for the acquirer set at 9.5 per cent and benchmarked with known sectorial transactions. This approach implies that BW Ideol is essentially involved as a co-developer during the effective development phase of a project, phase that carries the highest level of risk, and does not necessarily intend to remain an investor during construction and operation phases.
For the co-EPCI activity, cash flows related to potential EPCI contracts include engineering services during the development phase, gross profit from procurement and construction and royalties derived from licensing the technology to each project.
Discount rate and Sectorial WACC
For the co-development activity, each project has been valued using a different discount rate to reflect the maturity of the opportunity, with WACC ranging from 9.5 per cent to 15.5 per cent. In order to assess the relevance of our implied discount rate based approach to valuation, we have determined a sectorial post-tax Weighted Average Cost of Capital (WACC) derived from the Capital Asset Pricing Model (CAPM) methodology and incremental borrowing rate, assuming cash flows in Euro. A selected sample of comparable companies active in the renewable power sector was established. The WACC is based on a risk-free rate of 3.1 per cent based on the trailing six-month average yield maturity in France (source: Banque de France), and a market risk premium of 5.9 per cent. The estimated unlevered beta for equity was 0.74. The equity to total capital ratio was 79.6 per cent. A 25 per cent generic tax rate on corporate, irrespective of the specificities of the countries in activity. Country risk premium, inflation differential and project specific risk premiums, ranging from 3 per cent to 7 per cent, in order to capture the maturity of the opportunities have been integrated.
For the co-EPCI activity, a WACC of 13.0 per cent has been retained, in order to assess the relevance of our implied discount rate based approach to valuation, we have determined a sectorial post-tax Weighted Average Cost of Capital (WACC) derived from the Capital Asset Pricing Model (CAPM) methodology and incremental borrowing rate, assuming cash flows in Euro. A selected sample of comparable companies active in the renewable power sector was established. The WACC is based on a risk-free rate of 3.1 per cent based on the trailing six-month average yield maturity in France (source: Banque de France), and a market risk premium of 5.9 per cent. The estimated unlevered beta
for equity was 0.94. The equity to total capital ratio was 64 per cent. A 25 per cent generic tax rate on corporate, irrespective of the specificities of the countries in activity. Finally, a company size premium of 7.8 per cent has been taken into account to reflect the unsecured aspect of EPCI future projects.
Testing procedures of BW Ideol\u2019s single CGU related goodwill as of 31 December 2023 are conducted to meet IFRS requirements, and especially IAS 36. In compliance with IAS 36, BW Ideol\u2019s recoverable value was based on the estimation of its value in use derived from a discounted cash flow approach and is equivalent to BW Ideol\u2019s enterprise value as of 31 December 2023. To determine the recoverable value of assets, the value in use derived from future cash flows was considered.
Sensivities
Buchan success rate
A reduction of 50 per cent of the probability of success in the development of Buchan would result in an impairment charge of USD 2.2 million.
Sensitivity to CoDev Portfolio success rate
A reduction of 50 per cent of the probabilities of success of all projects identified in the co-development pipeline would result in an impairment charge of USD 11.0 million.
Sensitivity to IRR at exit for co-development projects
An increase of 1.0 per cent of the target IRR used to derive project exit value at FID would result in an impairment charge of USD 24.5 million.
Discount rate
A 2.0 per cent increase in the discount rates would not result in an impairment of goodwill and technology assets.
Judgements and estimates
Valuations performed in light of the impairment test of goodwill and technology assets demand a high degree of estimation. Management must make complex assessments of the expected cash flows arising and discount rates used in the valuation models. Changes to these estimates could have significant impact on the impairments recognised and future changes may lead to additional impairments.
The financial forecasts used in the goodwill and technology asset impairment test reflect management\u2019s judgement on the probability of realising projects, and for those projects expected to be developed, the development and capital expenditures, operating expenses and the tariff applied to the electricity sold, which is being determined using a target internal rate of return as well as the discount rate. This judgement is based on present circumstances at the valuation date, as to the most likely set of conditions and the course of action it is most likely to take. It is usually the case that some events and circumstances do not occur as expected or are not anticipated. Therefore, actual results during the forecast period will almost always differ from the forecasts and as such differences may be material. In addition, floating offshore wind is a new industry with no commercial projects yet established globally, resulting in a high degree of estimation uncertainty related to the identification of prospective projects and chances of acquiring such projects.
Note 13\tProperty, plant and equipment
Vessels and other property, plant and equipment
The owned fleet at 31 December 2023 included the following vessels: BW Adolo, BW Catcher, BW Pioneer and Petr\u00f3leo Nautipa.
BW Opal is under construction for the Barossa project. Vessels available for projects include vessels that are currently not in operation.
The contract for Petr\u00f3leo Nautipa reached the end of its term in October 2022. The FPSO was decommissioned from field in Gabon in 2023 and is expected to be sold for recycling in 2024.
Disposals
In March 2023, BW Opportunity was sold for USD 125.0 million. In April 2023, BW Athena was sold for 5.0 million. In June 2023, Espoir Ivoirien was sold for USD 20.0 million, including USD 3.0 million for inventory. In September 2023, Abo FPSO was sold for USD 20 million. The accounting gains and losses on these transactions have been recorded as part of Net gain/(loss) on the sale of property, plant and equipment.
In July 2023, Sendje Berge was sold for USD 15 million. As the consideration was lower than the current net book value, the Group consequently recorded an impairment loss of USD 5.1 million.
In February 2022, BW Cidade de S\u00e3o Vicente was sold for USD 12.8 million. In March 2022, BW Umuroa was sold for USD 14.5 million. The impact from the sale is included in Net gain/(loss) on the sale of tangible fixed assets.
In April 2022, the Group signed an agreement for the sale of the FPSO Polvo to BW Energy. Refer to Note25.
In January 2022, BW Offshore signed an agreement for the sale of PT BW Offshore TSB Invest, the owner of FPSO BW Joko Tole, to PT Bahari Inti Tanker and PT Cahaya Haluan Pasifik, both of which are Indonesian companies, in consortium with PT Buana Lintas Lautan Tbk, a company publicly listed in Indonesia. The transaction was closed on 3 June 2022. Cash consideration was USD 52.2 million, and no gain or loss was recorded in the consolidated statement of income related to this transaction.
2023 USD MILLION | Vessels in operation | Vessels under construction | Vessels available for projects | Other property, plant & equipment | Total |
Cost at 1 January 2023 | 3\u00a0308.3 | 1\u00a0097.0 | 579.2 | 46.8 | 5\u00a0031.3 |
Additions | 13.2 | 726.3 | 27.3 | 0.9 | 767.7 |
Disposal | (681.5) | - | (606.5) | (9.7) | (1\u00a0297.7) |
Exchange differences | - | - | - | 0.7 | 0.7 |
Cost at 31 December 2023 | 2\u00a0640.0 | 1\u00a0823.3 | - | 38.7 | 4\u00a0502.0 |
Accumulated depreciation and impairment charge at 1 January 2023 | |||||
(2\u00a0099.6) | - | (490.6) | (38.3) | (2\u00a0628.5) | |
Current year depreciation | (167.2) | - | (0.4) | (6.6) | (174.2) |
Disposal | 642.1 | - | 491.0 | 9.7 | 1\u00a0142.8 |
Impairment | (5.1) | - | - | - | (5.1) |
Exchange differences | - | - | - | (0.7) | (0.7) |
Accumulated depreciation and impairment charge at 31 December 2023 | |||||
(1\u00a0629.8) | - | - | (35.9) | (1\u00a0665.7) | |
Book value at 31 December 2023 | 1\u00a0010.2 | 1\u00a0823.3 | - | 2.8 | 2\u00a0836.3 |
Useful life | Up to 25 years | ||||
Capitalised interest cost for vessels under construction | |||||
62.6 | |||||
2022 USD MILLION | |||||
Vessels in operation | Vessels under construction | ||||
Vessels available for projects | Other property, plant & equipment | ||||
Total | |||||
Cost at 1 January 2022 | 3\u00a0290.6 | 374.7 | 683.9 | 55.3 | 4\u00a0404.5 |
Additions | 17.7 | 738.1 | 14.1 | 1.7 | 771.6 |
Disposal | - | - | (118.8) | (9.5) | (128.3) |
Exchange differences | - | - | - | (0.7) | (0.7) |
Reclassification to held-for-sale | (15.8) | - | (15.8) | ||
Cost at 31 December 2022 | 3\u00a0308.3 | 1\u00a0097.0 | 579.2 | 46.8 | 5\u00a0031.3 |
Accumulated depreciation and impairment charge at 1 January 2022 | |||||
(1\u00a0917.7) | - | (595.5) | (38.0) | (2\u00a0551.2) | |
Current year depreciation | (181.9) | - | (2.6) | (9.2) | (193.7) |
Disposal | - | - | 107.5 | 9.0 | 116.5 |
Impairment | - | (15.8) | - | - | (15.8) |
Exchange differences | - | - | - | (0.1) | (0.1) |
Derecognition | 15.8 | - | 15.8 | ||
Accumulated depreciation and impairment charge at 31 December 2022 | |||||
(2\u00a0099.6) | - | (490.6) | (38.3) | (2\u00a0628.5) | |
Book value at 31 December 2022 | 1\u00a0208.7 | 1\u00a0097.0 | 88.6 | 8.5 | 2\u00a0402.8 |
Useful life | Up to 25 years | ||||
Capitalised interest cost for vessels under construction | |||||
28.5 |
The FPSO capital expenditure in 2023 was mainly related to investments in BW Opal for the Barossa project, as well as the upgrade to BW Adolo, covered by the client, and the final milestone payment for the repair of BW Opportunity before the FPSO was sold.
The BW Opal contract is preliminary assessed to be an operating lease. The contract has a firm period of 15 years plus 10 years of options. BW Offshore will be responsible for engineering, procurement, construction, installation and operation of the FPSO.
FPSO\u2019s capital expenditure in 2022 was mainly related to investments in BW Opal, as well as upgrade for the BW Adolo for the Ruche field outside Gabon and repair on the BW Opportunity.
Refer to Note 23for information of committed cost relating to construction of FPSO.
The Group has performed an impairment trigger assessment at 31 December 2023. As a result of cost increase driven by inflation and increased interest
rates, the Group has performed an impairment test. The impairment testing did not identify any required impairments.
Each vessel is regarded as a cash-generating unit for impairment testing. The recoverable amount is based on a value-in-use calculation for each of the vessels in the fleet. To estimate the recoverable amount, the Group makes assumptions on contracted net cash flows as well as uncontracted cash flows over the useful life for each vessel. Uncontracted cash flows have been estimated based on experience, expectations on future market conditions and return on invested capital. The assumptions made are built into different scenarios with different cash flows for each unit.
Cash flows were discounted at a rate of 7.9 per cent on a post-tax basis. The use of a post-tax discount rate does not result in a different determination of the need for, or the amount of, impairment (reversal) that would be required if a pre-tax discount rate had been used. The discount rate is based on Weighted Average Cost of Capital (WACC). The following assumptions have been made for the WACC:
\u2022The equity risk premium is based on empirical data of comparable listed companies and is in consensus with the market risk premium observed from the study performed by the Norwegian Society of Financial Analysts. The Group has also included a small cap premiumand ESG premium in setting the overall equity risk premium.
\u2022The equity ratio is based on long-term assumptions on the Group\u2019s financial strategy and capital structure, as well as peer group balance sheet data.
\u2022For the risk-free rate, the Group is using the US 10-year treasury yields as the basis for calculations.
\u2022The debt margin used is based on inputs meant to mirror what market participants would demand if they were to choose an investment generating equivalent cash flows, with the same time horizon and level of risk as the assessment date.
\u2022For estimating beta, the Group has employed various regression models and peer averages to reach a metric of future equity risk for the FPSO segment and BW Offshore.
The value in use calculation is sensitive to assumptions and variables. The key factors are the WACC and increases in construction costs in the event of a delay at yard for BW Opal:
An increase of the WACC by 1 percentage point would lead to a USD 39 million impairment of BW Opal.
A 3-month delay at yard with the associated additional costs would lead to an estimated impairment of USD 21 million of BW Opal.
An increase of construction costs of USD 50 million would not lead to an impairment of BW Opal.
The value in use cash flow used for impairment testing of BW Opal does not reflect the positive cash flow benefit of the USD 61 million deferred tax asset recognised in relation to the project.
The cost of debt component of the WACC used for impairment testing consists of a base rate and an estimated loan margin. A base rate of 3.5 per cent has been applied based on the USD 10-year swap rate observed in the market per year end 2023. The BW Opal debt has been hedged with interest rate swaps maturing
in 2035 and with an average swap rate of 1.874 per cent. The benefit of the interest rate swap portfolio is not reflected in the WACC used for impairment testing.
In 2022, the Group had capitalised FEED expenses, early-stage engineering and supplier reservations for the supply of an FPSO for the Gato do Mato oil and gas field offshore Brazil for Shell Brasil Petr\u00f3leo Ltda (Shell). In November 2022, the Group was informed by Shell that the final investment decision was not to be made within the next 12 to 24 months. Consequently, the Group has impaired capitalised expenses of USD 15.8 million. Refer to Note 5for further information regarding compensation received from Shell.
Judgements and estimates
Depreciation
The level of depreciation depends on the estimated useful life of the different components of the assets and residual value at the end of its useful life. The estimated useful life is based on experience and knowledge of the vessels owned by the Group. Management will have to make assessments as to the expected useful life of the hull and marine scope as well as the process equipment for an FPSO. Assumptions will also have to be made about the expected contract period for non-recoverable components for the assets, which can deviate significantly from the useful life of hull and process equipment.
Assumptions on residual value are based on knowledge of current scrap values, which in turn depend on steel prices in the world market and demobilisation costs, together with an expected inflation.
Impairment
The Group periodically reviews whether vessels and other property, plant and equipment, for potential impairment indicators when circumstances indicate and at least on an annual basis.
The recoverable amounts of each vessel, being defined as a cash-generating unit, is the higher of its fair value less cost of disposal and its value in use. Value in use calculations are based on contracted cash flows and estimates of uncontracted cash flows for the useful lives of each vessel, including residual values discounted by an estimated discount rate.
All impairment assessment calculations demand a high degree of estimation. Management must make complex assessment of the expected cash flows arising from such assets and the selection of discount rates. Changes to these estimates could have significant impact on the impairments recognised and future changes may lead to reversals of recognised impairments.
Note 14\tIntangible assets and goodwill
USD MILLION | Software | R&D | Technology | Goodwill | Total intangible assets |
Cost at 1 January 2023 | 10.7 | 4.6 | 64.0 | 27.4 | 106.7 |
Additions | 0.4 | 2.0 | - | - | 2.4 |
Exchange differences | - | 0.2 | 1.9 | 0.8 | 2.9 |
Disposal | (6.3) | - | - | - | (6.3) |
Carrying amount at 31 December 2023 | 4.8 | 6.8 | 65.9 | 28.2 | 105.7 |
Amortisation and impairment at 1 January 2023 | |||||
(10.5) | (0.5) | (7.7) | - | (18.7) | |
Current year amortisation | (0.1) | (0.8) | (4.3) | - | (5.2) |
Exchange differences | - | - | (0.3) | - | (0.3) |
Disposal | 6.3 | - | - | - | 6.3 |
At 31 December 2023 | (4.3) | (1.3) | (12.3) | - | (17.9) |
Net book value at 31 December 2023 | 0.5 | 5.5 | 53.6 | 28.2 | 87.8 |
Useful life | 1\u20133 years | 5 years | 15 years | ||
Amortisation method | linear | linear | linear | ||
USD MILLION | Software | R&D | Technology | Goodwill | Total intangible assets |
Cost at 1 January 2022 | 20.9 | 4.6 | 68.0 | 28.7 | 122.2 |
Additions | - | 0.3 | - | - | 0.3 |
Additions from business combinations | - | - | - | 0.4 | 0.4 |
Exchange differences | - | (0.3) | (4.0) | (1.7) | (6.0) |
Disposal | (10.2) | (10.2) | |||
Carrying amount at 31 December 2022 | 10.7 | 4.6 | 64.0 | 27.4 | 106.7 |
Amortisation and impairment at 1 January 2022 | |||||
(18.8) | (0.1) | (3.6) | - | (22.5) | |
Current year amortisation | (1.9) | (0.4) | (4.2) | - | (6.5) |
Exchange differences | - | - | 0.1 | - | 0.1 |
Disposal | 10.2 | - | - | - | 10.2 |
At 31 December 2022 | (10.5) | (0.5) | (7.7) | - | (18.7) |
Net book value at 31 December 2022 | 0.2 | 4.1 | 56.3 | 27.4 | 88.0 |
Useful life | 1\u20133 years | 5 years | 15 years | ||
Amortisation method | linear | linear | linear |
Goodwill, Technology and R&D (Research & Development) were initially recognised in March 2021 as part of the acquisition of Ideol SA. R&D assets represent the accumulated capitalised development projects. BW Ideol is pursuing a number of initiatives around its Damping Pool\u00ae patented foundation technology including research and development of innovative building materials, mooring systems and construction methods.
Goodwill has an indefinite useful life and is tested for impairment at least annually.
Goodwill was tested for impairment as of 31 December 2023, including impairment testing of technology assets. A discounted cash flow model was used to determine the fair value less cost of disposal for the CGU. The projected cash flows were based on the most up-to-date forecast by management which includes probability weighted cash flows for prospective offshore wind projects using end-of-life cash flows for projects identified. The impairment calculation demonstrated that the value in use exceeded the carrying amount of the CGU, thus no impairment loss was recognised.
Key assumptions used in the impairment calculation include:
Cash flows, project IRR, price of electricity
For the co-development activity, cash flows related to the estimated projects in portfolio include: (i) development expenses, including expenses related to engineering services provided by BW Ideol to each project during this phase, (ii) capital expenditures during construction phase, including royalties derived from BW Ideol\u2019s technology licensing, (iii) wind farm operating expenses and (iv) reimbursement of project finance debt. The tariff applied to the electricity sold is being determined by using a target IRR of 10.75 per cent estimated at the start of the development phase and takes into account the project financial structure and expenses profiles. An additional probability to successfully develop the project is also applied, ranging from 25 per cent to 66.6 per cent, depending on the maturity of the opportunity (identified project, tender phase, development phase). To reflect the commercial terms reached with ADEME Investissement, all projects under co-development are targeted to be sold at the end of the development period (\u201cFID\u201d). An exit price is therefore being determined using a target IRR for the acquirer set at 9.5 per cent and benchmarked with known sectorial transactions. This approach implies that BW Ideol is essentially involved as a co-developer during the effective development phase of a project, phase that carries the highest level of risk, and does not necessarily intend to remain an investor during construction and operation phases.
For the co-EPCI activity, cash flows related to potential EPCI contracts include engineering services during the development phase, gross profit from procurement and construction and royalties derived from licensing the technology to each project.
Discount rate and Sectorial WACC
For the co-development activity, each project has been valued using a different discount rate to reflect the maturity of the opportunity, with WACC ranging from 9.5 per cent to 15.5 per cent. In order to assess the relevance of our implied discount rate based approach to valuation, we have determined a sectorial post-tax Weighted Average Cost of Capital (WACC) derived from the Capital Asset Pricing Model (CAPM) methodology and incremental borrowing rate, assuming cash flows in Euro. A selected sample of comparable companies active in the renewable power sector was established. The WACC is based on a risk-free rate of 3.1 per cent based on the trailing six-month average yield maturity in France (source: Banque de France), and a market risk premium of 5.9 per cent. The estimated unlevered beta for equity was 0.74. The equity to total capital ratio was 79.6 per cent. A 25 per cent generic tax rate on corporate, irrespective of the specificities of the countries in activity. Country risk premium, inflation differential and project specific risk premiums, ranging from 3 per cent to 7 per cent, in order to capture the maturity of the opportunities have been integrated.
For the co-EPCI activity, a WACC of 13.0 per cent has been retained, in order to assess the relevance of our implied discount rate based approach to valuation, we have determined a sectorial post-tax Weighted Average Cost of Capital (WACC) derived from the Capital Asset Pricing Model (CAPM) methodology and incremental borrowing rate, assuming cash flows in Euro. A selected sample of comparable companies active in the renewable power sector was established. The WACC is based on a risk-free rate of 3.1 per cent based on the trailing six-month average yield maturity in France (source: Banque de France), and a market risk premium of 5.9 per cent. The estimated unlevered beta
for equity was 0.94. The equity to total capital ratio was 64 per cent. A 25 per cent generic tax rate on corporate, irrespective of the specificities of the countries in activity. Finally, a company size premium of 7.8 per cent has been taken into account to reflect the unsecured aspect of EPCI future projects.
Testing procedures of BW Ideol\u2019s single CGU related goodwill as of 31 December 2023 are conducted to meet IFRS requirements, and especially IAS 36. In compliance with IAS 36, BW Ideol\u2019s recoverable value was based on the estimation of its value in use derived from a discounted cash flow approach and is equivalent to BW Ideol\u2019s enterprise value as of 31 December 2023. To determine the recoverable value of assets, the value in use derived from future cash flows was considered.
Sensivities
Buchan success rate
A reduction of 50 per cent of the probability of success in the development of Buchan would result in an impairment charge of USD 2.2 million.
Sensitivity to CoDev Portfolio success rate
A reduction of 50 per cent of the probabilities of success of all projects identified in the co-development pipeline would result in an impairment charge of USD 11.0 million.
Sensitivity to IRR at exit for co-development projects
An increase of 1.0 per cent of the target IRR used to derive project exit value at FID would result in an impairment charge of USD 24.5 million.
Discount rate
A 2.0 per cent increase in the discount rates would not result in an impairment of goodwill and technology assets.
Judgements and estimates
Valuations performed in light of the impairment test of goodwill and technology assets demand a high degree of estimation. Management must make complex assessments of the expected cash flows arising and discount rates used in the valuation models. Changes to these estimates could have significant impact on the impairments recognised and future changes may lead to additional impairments.
The financial forecasts used in the goodwill and technology asset impairment test reflect management\u2019s judgement on the probability of realising projects, and for those projects expected to be developed, the development and capital expenditures, operating expenses and the tariff applied to the electricity sold, which is being determined using a target internal rate of return as well as the discount rate. This judgement is based on present circumstances at the valuation date, as to the most likely set of conditions and the course of action it is most likely to take. It is usually the case that some events and circumstances do not occur as expected or are not anticipated. Therefore, actual results during the forecast period will almost always differ from the forecasts and as such differences may be material. In addition, floating offshore wind is a new industry with no commercial projects yet established globally, resulting in a high degree of estimation uncertainty related to the identification of prospective projects and chances of acquiring such projects.
Note 14\tIntangible assets and goodwill
USD MILLION | Software | R&D | Technology | Goodwill | Total intangible assets |
Cost at 1 January 2023 | 10.7 | 4.6 | 64.0 | 27.4 | 106.7 |
Additions | 0.4 | 2.0 | - | - | 2.4 |
Exchange differences | - | 0.2 | 1.9 | 0.8 | 2.9 |
Disposal | (6.3) | - | - | - | (6.3) |
Carrying amount at 31 December 2023 | 4.8 | 6.8 | 65.9 | 28.2 | 105.7 |
Amortisation and impairment at 1 January 2023 | |||||
(10.5) | (0.5) | (7.7) | - | (18.7) | |
Current year amortisation | (0.1) | (0.8) | (4.3) | - | (5.2) |
Exchange differences | - | - | (0.3) | - | (0.3) |
Disposal | 6.3 | - | - | - | 6.3 |
At 31 December 2023 | (4.3) | (1.3) | (12.3) | - | (17.9) |
Net book value at 31 December 2023 | 0.5 | 5.5 | 53.6 | 28.2 | 87.8 |
Useful life | 1\u20133 years | 5 years | 15 years | ||
Amortisation method | linear | linear | linear | ||
USD MILLION | Software | R&D | Technology | Goodwill | Total intangible assets |
Cost at 1 January 2022 | 20.9 | 4.6 | 68.0 | 28.7 | 122.2 |
Additions | - | 0.3 | - | - | 0.3 |
Additions from business combinations | - | - | - | 0.4 | 0.4 |
Exchange differences | - | (0.3) | (4.0) | (1.7) | (6.0) |
Disposal | (10.2) | (10.2) | |||
Carrying amount at 31 December 2022 | 10.7 | 4.6 | 64.0 | 27.4 | 106.7 |
Amortisation and impairment at 1 January 2022 | |||||
(18.8) | (0.1) | (3.6) | - | (22.5) | |
Current year amortisation | (1.9) | (0.4) | (4.2) | - | (6.5) |
Exchange differences | - | - | 0.1 | - | 0.1 |
Disposal | 10.2 | - | - | - | 10.2 |
At 31 December 2022 | (10.5) | (0.5) | (7.7) | - | (18.7) |
Net book value at 31 December 2022 | 0.2 | 4.1 | 56.3 | 27.4 | 88.0 |
Useful life | 1\u20133 years | 5 years | 15 years | ||
Amortisation method | linear | linear | linear |
Goodwill, Technology and R&D (Research & Development) were initially recognised in March 2021 as part of the acquisition of Ideol SA. R&D assets represent the accumulated capitalised development projects. BW Ideol is pursuing a number of initiatives around its Damping Pool\u00ae patented foundation technology including research and development of innovative building materials, mooring systems and construction methods.
Goodwill has an indefinite useful life and is tested for impairment at least annually.
Goodwill was tested for impairment as of 31 December 2023, including impairment testing of technology assets. A discounted cash flow model was used to determine the fair value less cost of disposal for the CGU. The projected cash flows were based on the most up-to-date forecast by management which includes probability weighted cash flows for prospective offshore wind projects using end-of-life cash flows for projects identified. The impairment calculation demonstrated that the value in use exceeded the carrying amount of the CGU, thus no impairment loss was recognised.
Key assumptions used in the impairment calculation include:
Cash flows, project IRR, price of electricity
For the co-development activity, cash flows related to the estimated projects in portfolio include: (i) development expenses, including expenses related to engineering services provided by BW Ideol to each project during this phase, (ii) capital expenditures during construction phase, including royalties derived from BW Ideol\u2019s technology licensing, (iii) wind farm operating expenses and (iv) reimbursement of project finance debt. The tariff applied to the electricity sold is being determined by using a target IRR of 10.75 per cent estimated at the start of the development phase and takes into account the project financial structure and expenses profiles. An additional probability to successfully develop the project is also applied, ranging from 25 per cent to 66.6 per cent, depending on the maturity of the opportunity (identified project, tender phase, development phase). To reflect the commercial terms reached with ADEME Investissement, all projects under co-development are targeted to be sold at the end of the development period (\u201cFID\u201d). An exit price is therefore being determined using a target IRR for the acquirer set at 9.5 per cent and benchmarked with known sectorial transactions. This approach implies that BW Ideol is essentially involved as a co-developer during the effective development phase of a project, phase that carries the highest level of risk, and does not necessarily intend to remain an investor during construction and operation phases.
For the co-EPCI activity, cash flows related to potential EPCI contracts include engineering services during the development phase, gross profit from procurement and construction and royalties derived from licensing the technology to each project.
Discount rate and Sectorial WACC
For the co-development activity, each project has been valued using a different discount rate to reflect the maturity of the opportunity, with WACC ranging from 9.5 per cent to 15.5 per cent. In order to assess the relevance of our implied discount rate based approach to valuation, we have determined a sectorial post-tax Weighted Average Cost of Capital (WACC) derived from the Capital Asset Pricing Model (CAPM) methodology and incremental borrowing rate, assuming cash flows in Euro. A selected sample of comparable companies active in the renewable power sector was established. The WACC is based on a risk-free rate of 3.1 per cent based on the trailing six-month average yield maturity in France (source: Banque de France), and a market risk premium of 5.9 per cent. The estimated unlevered beta for equity was 0.74. The equity to total capital ratio was 79.6 per cent. A 25 per cent generic tax rate on corporate, irrespective of the specificities of the countries in activity. Country risk premium, inflation differential and project specific risk premiums, ranging from 3 per cent to 7 per cent, in order to capture the maturity of the opportunities have been integrated.
For the co-EPCI activity, a WACC of 13.0 per cent has been retained, in order to assess the relevance of our implied discount rate based approach to valuation, we have determined a sectorial post-tax Weighted Average Cost of Capital (WACC) derived from the Capital Asset Pricing Model (CAPM) methodology and incremental borrowing rate, assuming cash flows in Euro. A selected sample of comparable companies active in the renewable power sector was established. The WACC is based on a risk-free rate of 3.1 per cent based on the trailing six-month average yield maturity in France (source: Banque de France), and a market risk premium of 5.9 per cent. The estimated unlevered beta
for equity was 0.94. The equity to total capital ratio was 64 per cent. A 25 per cent generic tax rate on corporate, irrespective of the specificities of the countries in activity. Finally, a company size premium of 7.8 per cent has been taken into account to reflect the unsecured aspect of EPCI future projects.
Testing procedures of BW Ideol\u2019s single CGU related goodwill as of 31 December 2023 are conducted to meet IFRS requirements, and especially IAS 36. In compliance with IAS 36, BW Ideol\u2019s recoverable value was based on the estimation of its value in use derived from a discounted cash flow approach and is equivalent to BW Ideol\u2019s enterprise value as of 31 December 2023. To determine the recoverable value of assets, the value in use derived from future cash flows was considered.
Sensivities
Buchan success rate
A reduction of 50 per cent of the probability of success in the development of Buchan would result in an impairment charge of USD 2.2 million.
Sensitivity to CoDev Portfolio success rate
A reduction of 50 per cent of the probabilities of success of all projects identified in the co-development pipeline would result in an impairment charge of USD 11.0 million.
Sensitivity to IRR at exit for co-development projects
An increase of 1.0 per cent of the target IRR used to derive project exit value at FID would result in an impairment charge of USD 24.5 million.
Discount rate
A 2.0 per cent increase in the discount rates would not result in an impairment of goodwill and technology assets.
Judgements and estimates
Valuations performed in light of the impairment test of goodwill and technology assets demand a high degree of estimation. Management must make complex assessments of the expected cash flows arising and discount rates used in the valuation models. Changes to these estimates could have significant impact on the impairments recognised and future changes may lead to additional impairments.
The financial forecasts used in the goodwill and technology asset impairment test reflect management\u2019s judgement on the probability of realising projects, and for those projects expected to be developed, the development and capital expenditures, operating expenses and the tariff applied to the electricity sold, which is being determined using a target internal rate of return as well as the discount rate. This judgement is based on present circumstances at the valuation date, as to the most likely set of conditions and the course of action it is most likely to take. It is usually the case that some events and circumstances do not occur as expected or are not anticipated. Therefore, actual results during the forecast period will almost always differ from the forecasts and as such differences may be material. In addition, floating offshore wind is a new industry with no commercial projects yet established globally, resulting in a high degree of estimation uncertainty related to the identification of prospective projects and chances of acquiring such projects.
Note 14\tIntangible assets and goodwill
USD MILLION | Software | R&D | Technology | Goodwill | Total intangible assets |
Cost at 1 January 2023 | 10.7 | 4.6 | 64.0 | 27.4 | 106.7 |
Additions | 0.4 | 2.0 | - | - | 2.4 |
Exchange differences | - | 0.2 | 1.9 | 0.8 | 2.9 |
Disposal | (6.3) | - | - | - | (6.3) |
Carrying amount at 31 December 2023 | 4.8 | 6.8 | 65.9 | 28.2 | 105.7 |
Amortisation and impairment at 1 January 2023 | |||||
(10.5) | (0.5) | (7.7) | - | (18.7) | |
Current year amortisation | (0.1) | (0.8) | (4.3) | - | (5.2) |
Exchange differences | - | - | (0.3) | - | (0.3) |
Disposal | 6.3 | - | - | - | 6.3 |
At 31 December 2023 | (4.3) | (1.3) | (12.3) | - | (17.9) |
Net book value at 31 December 2023 | 0.5 | 5.5 | 53.6 | 28.2 | 87.8 |
Useful life | 1\u20133 years | 5 years | 15 years | ||
Amortisation method | linear | linear | linear | ||
USD MILLION | Software | R&D | Technology | Goodwill | Total intangible assets |
Cost at 1 January 2022 | 20.9 | 4.6 | 68.0 | 28.7 | 122.2 |
Additions | - | 0.3 | - | - | 0.3 |
Additions from business combinations | - | - | - | 0.4 | 0.4 |
Exchange differences | - | (0.3) | (4.0) | (1.7) | (6.0) |
Disposal | (10.2) | (10.2) | |||
Carrying amount at 31 December 2022 | 10.7 | 4.6 | 64.0 | 27.4 | 106.7 |
Amortisation and impairment at 1 January 2022 | |||||
(18.8) | (0.1) | (3.6) | - | (22.5) | |
Current year amortisation | (1.9) | (0.4) | (4.2) | - | (6.5) |
Exchange differences | - | - | 0.1 | - | 0.1 |
Disposal | 10.2 | - | - | - | 10.2 |
At 31 December 2022 | (10.5) | (0.5) | (7.7) | - | (18.7) |
Net book value at 31 December 2022 | 0.2 | 4.1 | 56.3 | 27.4 | 88.0 |
Useful life | 1\u20133 years | 5 years | 15 years | ||
Amortisation method | linear | linear | linear |
Goodwill, Technology and R&D (Research & Development) were initially recognised in March 2021 as part of the acquisition of Ideol SA. R&D assets represent the accumulated capitalised development projects. BW Ideol is pursuing a number of initiatives around its Damping Pool\u00ae patented foundation technology including research and development of innovative building materials, mooring systems and construction methods.
Goodwill has an indefinite useful life and is tested for impairment at least annually.
Goodwill was tested for impairment as of 31 December 2023, including impairment testing of technology assets. A discounted cash flow model was used to determine the fair value less cost of disposal for the CGU. The projected cash flows were based on the most up-to-date forecast by management which includes probability weighted cash flows for prospective offshore wind projects using end-of-life cash flows for projects identified. The impairment calculation demonstrated that the value in use exceeded the carrying amount of the CGU, thus no impairment loss was recognised.
Key assumptions used in the impairment calculation include:
Cash flows, project IRR, price of electricity
For the co-development activity, cash flows related to the estimated projects in portfolio include: (i) development expenses, including expenses related to engineering services provided by BW Ideol to each project during this phase, (ii) capital expenditures during construction phase, including royalties derived from BW Ideol\u2019s technology licensing, (iii) wind farm operating expenses and (iv) reimbursement of project finance debt. The tariff applied to the electricity sold is being determined by using a target IRR of 10.75 per cent estimated at the start of the development phase and takes into account the project financial structure and expenses profiles. An additional probability to successfully develop the project is also applied, ranging from 25 per cent to 66.6 per cent, depending on the maturity of the opportunity (identified project, tender phase, development phase). To reflect the commercial terms reached with ADEME Investissement, all projects under co-development are targeted to be sold at the end of the development period (\u201cFID\u201d). An exit price is therefore being determined using a target IRR for the acquirer set at 9.5 per cent and benchmarked with known sectorial transactions. This approach implies that BW Ideol is essentially involved as a co-developer during the effective development phase of a project, phase that carries the highest level of risk, and does not necessarily intend to remain an investor during construction and operation phases.
For the co-EPCI activity, cash flows related to potential EPCI contracts include engineering services during the development phase, gross profit from procurement and construction and royalties derived from licensing the technology to each project.
Discount rate and Sectorial WACC
For the co-development activity, each project has been valued using a different discount rate to reflect the maturity of the opportunity, with WACC ranging from 9.5 per cent to 15.5 per cent. In order to assess the relevance of our implied discount rate based approach to valuation, we have determined a sectorial post-tax Weighted Average Cost of Capital (WACC) derived from the Capital Asset Pricing Model (CAPM) methodology and incremental borrowing rate, assuming cash flows in Euro. A selected sample of comparable companies active in the renewable power sector was established. The WACC is based on a risk-free rate of 3.1 per cent based on the trailing six-month average yield maturity in France (source: Banque de France), and a market risk premium of 5.9 per cent. The estimated unlevered beta for equity was 0.74. The equity to total capital ratio was 79.6 per cent. A 25 per cent generic tax rate on corporate, irrespective of the specificities of the countries in activity. Country risk premium, inflation differential and project specific risk premiums, ranging from 3 per cent to 7 per cent, in order to capture the maturity of the opportunities have been integrated.
For the co-EPCI activity, a WACC of 13.0 per cent has been retained, in order to assess the relevance of our implied discount rate based approach to valuation, we have determined a sectorial post-tax Weighted Average Cost of Capital (WACC) derived from the Capital Asset Pricing Model (CAPM) methodology and incremental borrowing rate, assuming cash flows in Euro. A selected sample of comparable companies active in the renewable power sector was established. The WACC is based on a risk-free rate of 3.1 per cent based on the trailing six-month average yield maturity in France (source: Banque de France), and a market risk premium of 5.9 per cent. The estimated unlevered beta
for equity was 0.94. The equity to total capital ratio was 64 per cent. A 25 per cent generic tax rate on corporate, irrespective of the specificities of the countries in activity. Finally, a company size premium of 7.8 per cent has been taken into account to reflect the unsecured aspect of EPCI future projects.
Testing procedures of BW Ideol\u2019s single CGU related goodwill as of 31 December 2023 are conducted to meet IFRS requirements, and especially IAS 36. In compliance with IAS 36, BW Ideol\u2019s recoverable value was based on the estimation of its value in use derived from a discounted cash flow approach and is equivalent to BW Ideol\u2019s enterprise value as of 31 December 2023. To determine the recoverable value of assets, the value in use derived from future cash flows was considered.
Sensivities
Buchan success rate
A reduction of 50 per cent of the probability of success in the development of Buchan would result in an impairment charge of USD 2.2 million.
Sensitivity to CoDev Portfolio success rate
A reduction of 50 per cent of the probabilities of success of all projects identified in the co-development pipeline would result in an impairment charge of USD 11.0 million.
Sensitivity to IRR at exit for co-development projects
An increase of 1.0 per cent of the target IRR used to derive project exit value at FID would result in an impairment charge of USD 24.5 million.
Discount rate
A 2.0 per cent increase in the discount rates would not result in an impairment of goodwill and technology assets.
Judgements and estimates
Valuations performed in light of the impairment test of goodwill and technology assets demand a high degree of estimation. Management must make complex assessments of the expected cash flows arising and discount rates used in the valuation models. Changes to these estimates could have significant impact on the impairments recognised and future changes may lead to additional impairments.
The financial forecasts used in the goodwill and technology asset impairment test reflect management\u2019s judgement on the probability of realising projects, and for those projects expected to be developed, the development and capital expenditures, operating expenses and the tariff applied to the electricity sold, which is being determined using a target internal rate of return as well as the discount rate. This judgement is based on present circumstances at the valuation date, as to the most likely set of conditions and the course of action it is most likely to take. It is usually the case that some events and circumstances do not occur as expected or are not anticipated. Therefore, actual results during the forecast period will almost always differ from the forecasts and as such differences may be material. In addition, floating offshore wind is a new industry with no commercial projects yet established globally, resulting in a high degree of estimation uncertainty related to the identification of prospective projects and chances of acquiring such projects.
Note 14\tIntangible assets and goodwill
USD MILLION | Software | R&D | Technology | Goodwill | Total intangible assets |
Cost at 1 January 2023 | 10.7 | 4.6 | 64.0 | 27.4 | 106.7 |
Additions | 0.4 | 2.0 | - | - | 2.4 |
Exchange differences | - | 0.2 | 1.9 | 0.8 | 2.9 |
Disposal | (6.3) | - | - | - | (6.3) |
Carrying amount at 31 December 2023 | 4.8 | 6.8 | 65.9 | 28.2 | 105.7 |
Amortisation and impairment at 1 January 2023 | |||||
(10.5) | (0.5) | (7.7) | - | (18.7) | |
Current year amortisation | (0.1) | (0.8) | (4.3) | - | (5.2) |
Exchange differences | - | - | (0.3) | - | (0.3) |
Disposal | 6.3 | - | - | - | 6.3 |
At 31 December 2023 | (4.3) | (1.3) | (12.3) | - | (17.9) |
Net book value at 31 December 2023 | 0.5 | 5.5 | 53.6 | 28.2 | 87.8 |
Useful life | 1\u20133 years | 5 years | 15 years | ||
Amortisation method | linear | linear | linear | ||
USD MILLION | Software | R&D | Technology | Goodwill | Total intangible assets |
Cost at 1 January 2022 | 20.9 | 4.6 | 68.0 | 28.7 | 122.2 |
Additions | - | 0.3 | - | - | 0.3 |
Additions from business combinations | - | - | - | 0.4 | 0.4 |
Exchange differences | - | (0.3) | (4.0) | (1.7) | (6.0) |
Disposal | (10.2) | (10.2) | |||
Carrying amount at 31 December 2022 | 10.7 | 4.6 | 64.0 | 27.4 | 106.7 |
Amortisation and impairment at 1 January 2022 | |||||
(18.8) | (0.1) | (3.6) | - | (22.5) | |
Current year amortisation | (1.9) | (0.4) | (4.2) | - | (6.5) |
Exchange differences | - | - | 0.1 | - | 0.1 |
Disposal | 10.2 | - | - | - | 10.2 |
At 31 December 2022 | (10.5) | (0.5) | (7.7) | - | (18.7) |
Net book value at 31 December 2022 | 0.2 | 4.1 | 56.3 | 27.4 | 88.0 |
Useful life | 1\u20133 years | 5 years | 15 years | ||
Amortisation method | linear | linear | linear |
Goodwill, Technology and R&D (Research & Development) were initially recognised in March 2021 as part of the acquisition of Ideol SA. R&D assets represent the accumulated capitalised development projects. BW Ideol is pursuing a number of initiatives around its Damping Pool\u00ae patented foundation technology including research and development of innovative building materials, mooring systems and construction methods.
Goodwill has an indefinite useful life and is tested for impairment at least annually.
Goodwill was tested for impairment as of 31 December 2023, including impairment testing of technology assets. A discounted cash flow model was used to determine the fair value less cost of disposal for the CGU. The projected cash flows were based on the most up-to-date forecast by management which includes probability weighted cash flows for prospective offshore wind projects using end-of-life cash flows for projects identified. The impairment calculation demonstrated that the value in use exceeded the carrying amount of the CGU, thus no impairment loss was recognised.
Key assumptions used in the impairment calculation include:
Cash flows, project IRR, price of electricity
For the co-development activity, cash flows related to the estimated projects in portfolio include: (i) development expenses, including expenses related to engineering services provided by BW Ideol to each project during this phase, (ii) capital expenditures during construction phase, including royalties derived from BW Ideol\u2019s technology licensing, (iii) wind farm operating expenses and (iv) reimbursement of project finance debt. The tariff applied to the electricity sold is being determined by using a target IRR of 10.75 per cent estimated at the start of the development phase and takes into account the project financial structure and expenses profiles. An additional probability to successfully develop the project is also applied, ranging from 25 per cent to 66.6 per cent, depending on the maturity of the opportunity (identified project, tender phase, development phase). To reflect the commercial terms reached with ADEME Investissement, all projects under co-development are targeted to be sold at the end of the development period (\u201cFID\u201d). An exit price is therefore being determined using a target IRR for the acquirer set at 9.5 per cent and benchmarked with known sectorial transactions. This approach implies that BW Ideol is essentially involved as a co-developer during the effective development phase of a project, phase that carries the highest level of risk, and does not necessarily intend to remain an investor during construction and operation phases.
For the co-EPCI activity, cash flows related to potential EPCI contracts include engineering services during the development phase, gross profit from procurement and construction and royalties derived from licensing the technology to each project.
Discount rate and Sectorial WACC
For the co-development activity, each project has been valued using a different discount rate to reflect the maturity of the opportunity, with WACC ranging from 9.5 per cent to 15.5 per cent. In order to assess the relevance of our implied discount rate based approach to valuation, we have determined a sectorial post-tax Weighted Average Cost of Capital (WACC) derived from the Capital Asset Pricing Model (CAPM) methodology and incremental borrowing rate, assuming cash flows in Euro. A selected sample of comparable companies active in the renewable power sector was established. The WACC is based on a risk-free rate of 3.1 per cent based on the trailing six-month average yield maturity in France (source: Banque de France), and a market risk premium of 5.9 per cent. The estimated unlevered beta for equity was 0.74. The equity to total capital ratio was 79.6 per cent. A 25 per cent generic tax rate on corporate, irrespective of the specificities of the countries in activity. Country risk premium, inflation differential and project specific risk premiums, ranging from 3 per cent to 7 per cent, in order to capture the maturity of the opportunities have been integrated.
For the co-EPCI activity, a WACC of 13.0 per cent has been retained, in order to assess the relevance of our implied discount rate based approach to valuation, we have determined a sectorial post-tax Weighted Average Cost of Capital (WACC) derived from the Capital Asset Pricing Model (CAPM) methodology and incremental borrowing rate, assuming cash flows in Euro. A selected sample of comparable companies active in the renewable power sector was established. The WACC is based on a risk-free rate of 3.1 per cent based on the trailing six-month average yield maturity in France (source: Banque de France), and a market risk premium of 5.9 per cent. The estimated unlevered beta
for equity was 0.94. The equity to total capital ratio was 64 per cent. A 25 per cent generic tax rate on corporate, irrespective of the specificities of the countries in activity. Finally, a company size premium of 7.8 per cent has been taken into account to reflect the unsecured aspect of EPCI future projects.
Testing procedures of BW Ideol\u2019s single CGU related goodwill as of 31 December 2023 are conducted to meet IFRS requirements, and especially IAS 36. In compliance with IAS 36, BW Ideol\u2019s recoverable value was based on the estimation of its value in use derived from a discounted cash flow approach and is equivalent to BW Ideol\u2019s enterprise value as of 31 December 2023. To determine the recoverable value of assets, the value in use derived from future cash flows was considered.
Sensivities
Buchan success rate
A reduction of 50 per cent of the probability of success in the development of Buchan would result in an impairment charge of USD 2.2 million.
Sensitivity to CoDev Portfolio success rate
A reduction of 50 per cent of the probabilities of success of all projects identified in the co-development pipeline would result in an impairment charge of USD 11.0 million.
Sensitivity to IRR at exit for co-development projects
An increase of 1.0 per cent of the target IRR used to derive project exit value at FID would result in an impairment charge of USD 24.5 million.
Discount rate
A 2.0 per cent increase in the discount rates would not result in an impairment of goodwill and technology assets.
Judgements and estimates
Valuations performed in light of the impairment test of goodwill and technology assets demand a high degree of estimation. Management must make complex assessments of the expected cash flows arising and discount rates used in the valuation models. Changes to these estimates could have significant impact on the impairments recognised and future changes may lead to additional impairments.
The financial forecasts used in the goodwill and technology asset impairment test reflect management\u2019s judgement on the probability of realising projects, and for those projects expected to be developed, the development and capital expenditures, operating expenses and the tariff applied to the electricity sold, which is being determined using a target internal rate of return as well as the discount rate. This judgement is based on present circumstances at the valuation date, as to the most likely set of conditions and the course of action it is most likely to take. It is usually the case that some events and circumstances do not occur as expected or are not anticipated. Therefore, actual results during the forecast period will almost always differ from the forecasts and as such differences may be material. In addition, floating offshore wind is a new industry with no commercial projects yet established globally, resulting in a high degree of estimation uncertainty related to the identification of prospective projects and chances of acquiring such projects.
Note 14\tIntangible assets and goodwill
USD MILLION | Software | R&D | Technology | Goodwill | Total intangible assets |
Cost at 1 January 2023 | 10.7 | 4.6 | 64.0 | 27.4 | 106.7 |
Additions | 0.4 | 2.0 | - | - | 2.4 |
Exchange differences | - | 0.2 | 1.9 | 0.8 | 2.9 |
Disposal | (6.3) | - | - | - | (6.3) |
Carrying amount at 31 December 2023 | 4.8 | 6.8 | 65.9 | 28.2 | 105.7 |
Amortisation and impairment at 1 January 2023 | |||||
(10.5) | (0.5) | (7.7) | - | (18.7) | |
Current year amortisation | (0.1) | (0.8) | (4.3) | - | (5.2) |
Exchange differences | - | - | (0.3) | - | (0.3) |
Disposal | 6.3 | - | - | - | 6.3 |
At 31 December 2023 | (4.3) | (1.3) | (12.3) | - | (17.9) |
Net book value at 31 December 2023 | 0.5 | 5.5 | 53.6 | 28.2 | 87.8 |
Useful life | 1\u20133 years | 5 years | 15 years | ||
Amortisation method | linear | linear | linear | ||
USD MILLION | Software | R&D | Technology | Goodwill | Total intangible assets |
Cost at 1 January 2022 | 20.9 | 4.6 | 68.0 | 28.7 | 122.2 |
Additions | - | 0.3 | - | - | 0.3 |
Additions from business combinations | - | - | - | 0.4 | 0.4 |
Exchange differences | - | (0.3) | (4.0) | (1.7) | (6.0) |
Disposal | (10.2) | (10.2) | |||
Carrying amount at 31 December 2022 | 10.7 | 4.6 | 64.0 | 27.4 | 106.7 |
Amortisation and impairment at 1 January 2022 | |||||
(18.8) | (0.1) | (3.6) | - | (22.5) | |
Current year amortisation | (1.9) | (0.4) | (4.2) | - | (6.5) |
Exchange differences | - | - | 0.1 | - | 0.1 |
Disposal | 10.2 | - | - | - | 10.2 |
At 31 December 2022 | (10.5) | (0.5) | (7.7) | - | (18.7) |
Net book value at 31 December 2022 | 0.2 | 4.1 | 56.3 | 27.4 | 88.0 |
Useful life | 1\u20133 years | 5 years | 15 years | ||
Amortisation method | linear | linear | linear |
Goodwill, Technology and R&D (Research & Development) were initially recognised in March 2021 as part of the acquisition of Ideol SA. R&D assets represent the accumulated capitalised development projects. BW Ideol is pursuing a number of initiatives around its Damping Pool\u00ae patented foundation technology including research and development of innovative building materials, mooring systems and construction methods.
Goodwill has an indefinite useful life and is tested for impairment at least annually.
Goodwill was tested for impairment as of 31 December 2023, including impairment testing of technology assets. A discounted cash flow model was used to determine the fair value less cost of disposal for the CGU. The projected cash flows were based on the most up-to-date forecast by management which includes probability weighted cash flows for prospective offshore wind projects using end-of-life cash flows for projects identified. The impairment calculation demonstrated that the value in use exceeded the carrying amount of the CGU, thus no impairment loss was recognised.
Key assumptions used in the impairment calculation include:
Cash flows, project IRR, price of electricity
For the co-development activity, cash flows related to the estimated projects in portfolio include: (i) development expenses, including expenses related to engineering services provided by BW Ideol to each project during this phase, (ii) capital expenditures during construction phase, including royalties derived from BW Ideol\u2019s technology licensing, (iii) wind farm operating expenses and (iv) reimbursement of project finance debt. The tariff applied to the electricity sold is being determined by using a target IRR of 10.75 per cent estimated at the start of the development phase and takes into account the project financial structure and expenses profiles. An additional probability to successfully develop the project is also applied, ranging from 25 per cent to 66.6 per cent, depending on the maturity of the opportunity (identified project, tender phase, development phase). To reflect the commercial terms reached with ADEME Investissement, all projects under co-development are targeted to be sold at the end of the development period (\u201cFID\u201d). An exit price is therefore being determined using a target IRR for the acquirer set at 9.5 per cent and benchmarked with known sectorial transactions. This approach implies that BW Ideol is essentially involved as a co-developer during the effective development phase of a project, phase that carries the highest level of risk, and does not necessarily intend to remain an investor during construction and operation phases.
For the co-EPCI activity, cash flows related to potential EPCI contracts include engineering services during the development phase, gross profit from procurement and construction and royalties derived from licensing the technology to each project.
Discount rate and Sectorial WACC
For the co-development activity, each project has been valued using a different discount rate to reflect the maturity of the opportunity, with WACC ranging from 9.5 per cent to 15.5 per cent. In order to assess the relevance of our implied discount rate based approach to valuation, we have determined a sectorial post-tax Weighted Average Cost of Capital (WACC) derived from the Capital Asset Pricing Model (CAPM) methodology and incremental borrowing rate, assuming cash flows in Euro. A selected sample of comparable companies active in the renewable power sector was established. The WACC is based on a risk-free rate of 3.1 per cent based on the trailing six-month average yield maturity in France (source: Banque de France), and a market risk premium of 5.9 per cent. The estimated unlevered beta for equity was 0.74. The equity to total capital ratio was 79.6 per cent. A 25 per cent generic tax rate on corporate, irrespective of the specificities of the countries in activity. Country risk premium, inflation differential and project specific risk premiums, ranging from 3 per cent to 7 per cent, in order to capture the maturity of the opportunities have been integrated.
For the co-EPCI activity, a WACC of 13.0 per cent has been retained, in order to assess the relevance of our implied discount rate based approach to valuation, we have determined a sectorial post-tax Weighted Average Cost of Capital (WACC) derived from the Capital Asset Pricing Model (CAPM) methodology and incremental borrowing rate, assuming cash flows in Euro. A selected sample of comparable companies active in the renewable power sector was established. The WACC is based on a risk-free rate of 3.1 per cent based on the trailing six-month average yield maturity in France (source: Banque de France), and a market risk premium of 5.9 per cent. The estimated unlevered beta
for equity was 0.94. The equity to total capital ratio was 64 per cent. A 25 per cent generic tax rate on corporate, irrespective of the specificities of the countries in activity. Finally, a company size premium of 7.8 per cent has been taken into account to reflect the unsecured aspect of EPCI future projects.
Testing procedures of BW Ideol\u2019s single CGU related goodwill as of 31 December 2023 are conducted to meet IFRS requirements, and especially IAS 36. In compliance with IAS 36, BW Ideol\u2019s recoverable value was based on the estimation of its value in use derived from a discounted cash flow approach and is equivalent to BW Ideol\u2019s enterprise value as of 31 December 2023. To determine the recoverable value of assets, the value in use derived from future cash flows was considered.
Sensivities
Buchan success rate
A reduction of 50 per cent of the probability of success in the development of Buchan would result in an impairment charge of USD 2.2 million.
Sensitivity to CoDev Portfolio success rate
A reduction of 50 per cent of the probabilities of success of all projects identified in the co-development pipeline would result in an impairment charge of USD 11.0 million.
Sensitivity to IRR at exit for co-development projects
An increase of 1.0 per cent of the target IRR used to derive project exit value at FID would result in an impairment charge of USD 24.5 million.
Discount rate
A 2.0 per cent increase in the discount rates would not result in an impairment of goodwill and technology assets.
Judgements and estimates
Valuations performed in light of the impairment test of goodwill and technology assets demand a high degree of estimation. Management must make complex assessments of the expected cash flows arising and discount rates used in the valuation models. Changes to these estimates could have significant impact on the impairments recognised and future changes may lead to additional impairments.
The financial forecasts used in the goodwill and technology asset impairment test reflect management\u2019s judgement on the probability of realising projects, and for those projects expected to be developed, the development and capital expenditures, operating expenses and the tariff applied to the electricity sold, which is being determined using a target internal rate of return as well as the discount rate. This judgement is based on present circumstances at the valuation date, as to the most likely set of conditions and the course of action it is most likely to take. It is usually the case that some events and circumstances do not occur as expected or are not anticipated. Therefore, actual results during the forecast period will almost always differ from the forecasts and as such differences may be material. In addition, floating offshore wind is a new industry with no commercial projects yet established globally, resulting in a high degree of estimation uncertainty related to the identification of prospective projects and chances of acquiring such projects.
Note 15\tEquity-accounted investees
USD MILLION | 2023 | 2022 |
Interest in joint ventures | 185.4 | 140.3 |
Interest in associates | 199.4 | 197.6 |
Balance at 31 December | 384.8 | 337.9 |
Equity-accounted investees relates mainly to the investment in BW Energy Limited (BWE) and BW Offshore AUS-JV Pte Ltd.
In 2022, the Board of Directors of BW Offshore decided to increase the annual dividend to include USD 20 million in-kind distribution of BW Energy shares, distributed on a quarterly basis. Dividend shares for the fourth quarter of 2022 and the first three quarters in 2023, equal to USD 18.0 were distributed in 2023. Following the dividend shares distributed in 2023, the Group held 58\u00a0111\u00a0461 shares in BW Energy, representing 22.5 per cent, at year end 2023.
Dividend shares for the first three quarters of 2022, equal to USD 13.6 million, were distributed in 2022.
The following table illustrates the summarised financial information of the Group\u2019s investment in BW Energy.
USD MILLION | 2023 | 2022 |
Percentage ownership interest | 22.5% | 25.4% |
Non-current assets | 1 460.4 | 964.8 |
Current assets | 280.0 | 240.5 |
Non-current liabilities | 704.7 | 409.8 |
Current liabilities | 338.1 | 180.2 |
Net assets (100%) | 697.6 | 615.3 |
Group's share of net assets | 157.1 | 156.3 |
Excess value | 25.3 | 30.0 |
Carrying amount of interest in associate | 182.4 | 186.3 |
Revenue | 507.3 | 277.7 |
Profit for the year (100%) | 81.0 | 45.0 |
Total comprehensive income for the year\u200c1 | 18.6 | 12.2 |
Gain/(loss) dividend shares | (3.3) | (1.3) |
Depreciation of excess value | (1.3) | (1.3) |
Group's share of total comprehensive income for the year | 14.0 | 9.6 |
1Adjusted for change in owned share
In January 2024, the Group sold all of its shares in BW Energy Limited. See Note 28for further details.
For BW Offshore AUS-JV Pte. Ltd. the shareholders agreements between the Group and the external investors resulted in the Group and the external investors having joint control over this company. The Group\u2019s interest in BW Offshore AUS-JV Pte. Ltd. is accounted for using the equity method in the consolidated financial statements.
Refer to Note 9for information about deferred tax asset, Note 19for information about lending agreements and Note 23for information about guarantees.
Summarised financial information of the joint venture and reconciliation with the carrying amount of the investment in the consolidated financial statements are set out below.
USD MILLION | 2023 | 2022 |
Percentage ownership interest | 51.0% | 51.0% |
Non-current assets | 1\u00a0150.9 | 662.6 |
Current assets | 59.9 | 60.8 |
Non-current financial liabilities | 867.2 | 410.3 |
Current liabilities | 1.6 | 68.5 |
Net assets (100%) | 342.0 | 244.6 |
Group's share of net assets | 174.4 | 124.7 |
Elimination of internal net interest | (14.2) | (2.1) |
Carrying amount of interest in joint venture | 160.2 | 122.6 |
Net interest income/(expense) | 24.3 | 4.1 |
Profit for the year (100%) | 22.1 | 2.0 |
Other comprehensive income (100%) | 7.6 | (151.8) |
Total comprehensive income for the year (100%) | 29.7 | (149.8) |
Total comprehensive income for the year (51%) | 15.1 | (76.4) |
Elimination of internal net interest | (12.2) | (2.1) |
Group's share of total comprehensive income for the year | 2.9 | (78.5) |
Additionally the Group has interests in five individually immaterial joint venture/associates, Floating Energy Allyance 1 Limited, OCS Services Limited, Euro Techniques Industries, BW Offshore Nigeria Limited and Fram Wind Solutions AS.
For OCS Services Limited,(OCS), the Group owns 50 per cent, but does not have joint control over this investment. The partner oversees of the daily operation of the company while the Group act as an investment partner. The Group does not have power over more than half of the voting rights in OCS. Further, the Group does not have the power to cast the majority of votes at meetings of the Board of Directors or equivalent governing body. As the Group only acts as an investment partner, OCS is considered an associate. The Group\u2019s interest in OCS is accounted for using the equity method in the consolidated financial statements.
The Group acquired 33.5 per cent ownership interest in Floating Energy Allyance 1 Limited in April 2022. The carrying amount of interests in Floating Energy Allyance 1 Limited was USD 24.8 million at 31 December 2023 (USD 17.2 million).
The following table analyses the carrying amount and share of profit and OCI of these associates.
USD MILLION | 2023 | 2022 |
Carrying amount of interests in associates | 42.2 | 28.9 |
Share of: | ||
Profit | 5.1 | 1.4 |
OCI | - | - |
An equity accounted investment may be impaired and the investor required to test the carrying amount for impairment if objective evidence of impairment exists. Judgements are made in determining if there is objective evidence of impairment exist. Impairment testing for associates and joint ventures also requires significant judgements and estimates to be made.
Note 15\tEquity-accounted investees
USD MILLION | 2023 | 2022 |
Interest in joint ventures | 185.4 | 140.3 |
Interest in associates | 199.4 | 197.6 |
Balance at 31 December | 384.8 | 337.9 |
Equity-accounted investees relates mainly to the investment in BW Energy Limited (BWE) and BW Offshore AUS-JV Pte Ltd.
In 2022, the Board of Directors of BW Offshore decided to increase the annual dividend to include USD 20 million in-kind distribution of BW Energy shares, distributed on a quarterly basis. Dividend shares for the fourth quarter of 2022 and the first three quarters in 2023, equal to USD 18.0 were distributed in 2023. Following the dividend shares distributed in 2023, the Group held 58\u00a0111\u00a0461 shares in BW Energy, representing 22.5 per cent, at year end 2023.
Dividend shares for the first three quarters of 2022, equal to USD 13.6 million, were distributed in 2022.
The following table illustrates the summarised financial information of the Group\u2019s investment in BW Energy.
USD MILLION | 2023 | 2022 |
Percentage ownership interest | 22.5% | 25.4% |
Non-current assets | 1 460.4 | 964.8 |
Current assets | 280.0 | 240.5 |
Non-current liabilities | 704.7 | 409.8 |
Current liabilities | 338.1 | 180.2 |
Net assets (100%) | 697.6 | 615.3 |
Group's share of net assets | 157.1 | 156.3 |
Excess value | 25.3 | 30.0 |
Carrying amount of interest in associate | 182.4 | 186.3 |
Revenue | 507.3 | 277.7 |
Profit for the year (100%) | 81.0 | 45.0 |
Total comprehensive income for the year\u200c1 | 18.6 | 12.2 |
Gain/(loss) dividend shares | (3.3) | (1.3) |
Depreciation of excess value | (1.3) | (1.3) |
Group's share of total comprehensive income for the year | 14.0 | 9.6 |
1Adjusted for change in owned share
In January 2024, the Group sold all of its shares in BW Energy Limited. See Note 28for further details.
For BW Offshore AUS-JV Pte. Ltd. the shareholders agreements between the Group and the external investors resulted in the Group and the external investors having joint control over this company. The Group\u2019s interest in BW Offshore AUS-JV Pte. Ltd. is accounted for using the equity method in the consolidated financial statements.
Refer to Note 9for information about deferred tax asset, Note 19for information about lending agreements and Note 23for information about guarantees.
Summarised financial information of the joint venture and reconciliation with the carrying amount of the investment in the consolidated financial statements are set out below.
USD MILLION | 2023 | 2022 |
Percentage ownership interest | 51.0% | 51.0% |
Non-current assets | 1\u00a0150.9 | 662.6 |
Current assets | 59.9 | 60.8 |
Non-current financial liabilities | 867.2 | 410.3 |
Current liabilities | 1.6 | 68.5 |
Net assets (100%) | 342.0 | 244.6 |
Group's share of net assets | 174.4 | 124.7 |
Elimination of internal net interest | (14.2) | (2.1) |
Carrying amount of interest in joint venture | 160.2 | 122.6 |
Net interest income/(expense) | 24.3 | 4.1 |
Profit for the year (100%) | 22.1 | 2.0 |
Other comprehensive income (100%) | 7.6 | (151.8) |
Total comprehensive income for the year (100%) | 29.7 | (149.8) |
Total comprehensive income for the year (51%) | 15.1 | (76.4) |
Elimination of internal net interest | (12.2) | (2.1) |
Group's share of total comprehensive income for the year | 2.9 | (78.5) |
Additionally the Group has interests in five individually immaterial joint venture/associates, Floating Energy Allyance 1 Limited, OCS Services Limited, Euro Techniques Industries, BW Offshore Nigeria Limited and Fram Wind Solutions AS.
For OCS Services Limited,(OCS), the Group owns 50 per cent, but does not have joint control over this investment. The partner oversees of the daily operation of the company while the Group act as an investment partner. The Group does not have power over more than half of the voting rights in OCS. Further, the Group does not have the power to cast the majority of votes at meetings of the Board of Directors or equivalent governing body. As the Group only acts as an investment partner, OCS is considered an associate. The Group\u2019s interest in OCS is accounted for using the equity method in the consolidated financial statements.
The Group acquired 33.5 per cent ownership interest in Floating Energy Allyance 1 Limited in April 2022. The carrying amount of interests in Floating Energy Allyance 1 Limited was USD 24.8 million at 31 December 2023 (USD 17.2 million).
The following table analyses the carrying amount and share of profit and OCI of these associates.
USD MILLION | 2023 | 2022 |
Carrying amount of interests in associates | 42.2 | 28.9 |
Share of: | ||
Profit | 5.1 | 1.4 |
OCI | - | - |
An equity accounted investment may be impaired and the investor required to test the carrying amount for impairment if objective evidence of impairment exists. Judgements are made in determining if there is objective evidence of impairment exist. Impairment testing for associates and joint ventures also requires significant judgements and estimates to be made.
Note 15\tEquity-accounted investees
USD MILLION | 2023 | 2022 |
Interest in joint ventures | 185.4 | 140.3 |
Interest in associates | 199.4 | 197.6 |
Balance at 31 December | 384.8 | 337.9 |
Equity-accounted investees relates mainly to the investment in BW Energy Limited (BWE) and BW Offshore AUS-JV Pte Ltd.
In 2022, the Board of Directors of BW Offshore decided to increase the annual dividend to include USD 20 million in-kind distribution of BW Energy shares, distributed on a quarterly basis. Dividend shares for the fourth quarter of 2022 and the first three quarters in 2023, equal to USD 18.0 were distributed in 2023. Following the dividend shares distributed in 2023, the Group held 58\u00a0111\u00a0461 shares in BW Energy, representing 22.5 per cent, at year end 2023.
Dividend shares for the first three quarters of 2022, equal to USD 13.6 million, were distributed in 2022.
The following table illustrates the summarised financial information of the Group\u2019s investment in BW Energy.
USD MILLION | 2023 | 2022 |
Percentage ownership interest | 22.5% | 25.4% |
Non-current assets | 1 460.4 | 964.8 |
Current assets | 280.0 | 240.5 |
Non-current liabilities | 704.7 | 409.8 |
Current liabilities | 338.1 | 180.2 |
Net assets (100%) | 697.6 | 615.3 |
Group's share of net assets | 157.1 | 156.3 |
Excess value | 25.3 | 30.0 |
Carrying amount of interest in associate | 182.4 | 186.3 |
Revenue | 507.3 | 277.7 |
Profit for the year (100%) | 81.0 | 45.0 |
Total comprehensive income for the year\u200c1 | 18.6 | 12.2 |
Gain/(loss) dividend shares | (3.3) | (1.3) |
Depreciation of excess value | (1.3) | (1.3) |
Group's share of total comprehensive income for the year | 14.0 | 9.6 |
1Adjusted for change in owned share
In January 2024, the Group sold all of its shares in BW Energy Limited. See Note 28for further details.
For BW Offshore AUS-JV Pte. Ltd. the shareholders agreements between the Group and the external investors resulted in the Group and the external investors having joint control over this company. The Group\u2019s interest in BW Offshore AUS-JV Pte. Ltd. is accounted for using the equity method in the consolidated financial statements.
Refer to Note 9for information about deferred tax asset, Note 19for information about lending agreements and Note 23for information about guarantees.
Summarised financial information of the joint venture and reconciliation with the carrying amount of the investment in the consolidated financial statements are set out below.
USD MILLION | 2023 | 2022 |
Percentage ownership interest | 51.0% | 51.0% |
Non-current assets | 1\u00a0150.9 | 662.6 |
Current assets | 59.9 | 60.8 |
Non-current financial liabilities | 867.2 | 410.3 |
Current liabilities | 1.6 | 68.5 |
Net assets (100%) | 342.0 | 244.6 |
Group's share of net assets | 174.4 | 124.7 |
Elimination of internal net interest | (14.2) | (2.1) |
Carrying amount of interest in joint venture | 160.2 | 122.6 |
Net interest income/(expense) | 24.3 | 4.1 |
Profit for the year (100%) | 22.1 | 2.0 |
Other comprehensive income (100%) | 7.6 | (151.8) |
Total comprehensive income for the year (100%) | 29.7 | (149.8) |
Total comprehensive income for the year (51%) | 15.1 | (76.4) |
Elimination of internal net interest | (12.2) | (2.1) |
Group's share of total comprehensive income for the year | 2.9 | (78.5) |
Additionally the Group has interests in five individually immaterial joint venture/associates, Floating Energy Allyance 1 Limited, OCS Services Limited, Euro Techniques Industries, BW Offshore Nigeria Limited and Fram Wind Solutions AS.
For OCS Services Limited,(OCS), the Group owns 50 per cent, but does not have joint control over this investment. The partner oversees of the daily operation of the company while the Group act as an investment partner. The Group does not have power over more than half of the voting rights in OCS. Further, the Group does not have the power to cast the majority of votes at meetings of the Board of Directors or equivalent governing body. As the Group only acts as an investment partner, OCS is considered an associate. The Group\u2019s interest in OCS is accounted for using the equity method in the consolidated financial statements.
The Group acquired 33.5 per cent ownership interest in Floating Energy Allyance 1 Limited in April 2022. The carrying amount of interests in Floating Energy Allyance 1 Limited was USD 24.8 million at 31 December 2023 (USD 17.2 million).
The following table analyses the carrying amount and share of profit and OCI of these associates.
USD MILLION | 2023 | 2022 |
Carrying amount of interests in associates | 42.2 | 28.9 |
Share of: | ||
Profit | 5.1 | 1.4 |
OCI | - | - |
An equity accounted investment may be impaired and the investor required to test the carrying amount for impairment if objective evidence of impairment exists. Judgements are made in determining if there is objective evidence of impairment exist. Impairment testing for associates and joint ventures also requires significant judgements and estimates to be made.
Note 20\tList of subsidiaries, associates and joint ventures
Subsidiaries | Country of incorporation | Ownership 2023 | Ownership 2022 |
Berge Carmen Singapore Pte Ltd | Singapore | 100% | 100% |
Bergesen Worldwide Mexico, S.A. de C.V. | Mexico | 100% | 100% |
Bergesen Worldwide Offshore Mexico S. de RL de CV | Mexico | 100% | 100% |
BW Abo Pte Ltd | Singapore | 100% | 100% |
BW Adolo Pte Ltd | Singapore | 100% | 100% |
BW Athena Pte Ltd | Singapore | 100% | 100% |
BW Berge Helene Pte Ltd | Singapore | 100% | 100% |
BW Bergesen Worldwide Pte Ltd | Singapore | 100% | 100% |
BW Catcher Limited\u200c1 | Bermuda | 100% | 100% |
BW Cidade de S\u00e3o Vicente Pte Ltd | Singapore | 100% | 100% |
BW Espoir Ivoirien Pte Ltd | Singapore | 100% | 100% |
BW Ideol AS\u200c2 | Norway | 100% | 53% |
BW Ideol Projects Company SAS\u200c2 | France | 76% | - |
BW Offshore Catcher (UK) Limited | United Kingdom | 100% | 100% |
BW Offshore Australia Management Pty Ltd | Australia | 100% | 100% |
BW Offshore China Ltd | China | 100% | 100% |
BW Offshore Cyprus Limited | Cyprus | 100% | 100% |
BW Offshore do Brazil Ltda | Brazil | 100% | 100% |
BW Offshore do Brazil Servicos Maritimos Ltda | Brazil | 100% | 100% |
BW Offshore EPC FZCO\u200c3 | United Arab Emirates | 90% | 100% |
BW Offshore France SAS | France | 100% | 100% |
BW Offshore GDM B.V. | Netherlands | 100% | 100% |
BW Offshore GDM Holdings Pte Ltd | Singapore | 100% | 100% |
BW Offshore GDM Pte Ltd | Singapore | 100% | 100% |
BW Offshore (Ghana) Pte Ltd | Singapore | 100% | 100% |
BW Offshore Global Manning Pte Ltd | Singapore | 100% | 100% |
BW Offshore Holdings Pte Ltd | Singapore | 100% | 100% |
BW Offshore Italy S.r.l | Italy | 100% | 100% |
BW Offshore Management (UK) Limited | United Kingdom | - | 100% |
BW Offshore Management B.V. | Netherlands | 100% | 100% |
Subsidiaries | Country of incorporation | Ownership 2023 | Ownership 2022 |
BW Offshore Nautipa AS | Norway | - | 100% |
BW Offshore Netherlands B.V. | Netherlands | 100% | 100% |
BW Offshore Norway AS | Norway | 100% | 100% |
BW Offshore Norwegian Manning AS | Norway | 100% | 100% |
BW Offshore Opportunity I Limited | Bermuda | - | 100% |
BW Offshore Poland sp z o.o. | Poland | 100% | 100% |
BW Offshore Project Management FZE | United Arab Emirates | 100% | 100% |
BW Offshore Shipholding Cyprus Limited | Cyprus | - | 100% |
BW Offshore Shipholding Pte Ltd | Singapore | 100% | 100% |
BW Offshore Singapore Pte Ltd | Singapore | 100% | 100% |
BW Offshore SPV Bermuda I Limited | Bermuda | 100% | 100% |
BW Offshore SPV Bermuda II Limited | Bermuda | - | 100% |
BW Offshore TSB Invest Pte Ltd | Singapore | 100% | 100% |
BW Offshore (UK) Limited | United Kingdom | 100% | 100% |
BW Offshore USA Management, Inc. | USA | 100% | 100% |
BW Offshore USA, LLC | USA | 100% | 100% |
BW Opportunity Limited | Bermuda | - | 100% |
BW Pioneer (UK) Limited | United Kingdom | 100% | 100% |
BW Polvo Pte Ltd | Singapore | 100% | 100% |
BW Sendje Berge Pte Ltd | Singapore | 100% | 100% |
BW Sirocco Holdings AS | Norway | 64% | - |
BW Umuroa Pte Ltd | Singapore | 100% | 100% |
BWO-Premier Ghana Limited | Ghana | 70% | 70% |
Ideol Japan, LLC\u200c2 | Japan | 100% | 100% |
BW Ideol S.A.\u200c2 | France | 100% | 100% |
Ideol USA, Inc.\u200c2 | USA | 100% | 100% |
Prosafe GFPSO I B.V. | Netherlands | - | 100% |
Prosafe Production B.V. | Netherlands | 100% | 100% |
Prosafe Services Cote d\u2019Ivoire Pte Ltd | Singapore | 100% | 100% |
Tinworth Pte Ltd | Singapore | 100% | 100% |
Tinworth France SAS | France | 100% | 100% |
Tinworth Gabon SA | Gabon | 100% | 100% |
Associates and joint ventures
Subsidiaries | Country of incorporation | Ownership 2023 | Ownership 2022 |
OCS Services Limited | British Virgin Islands | 50% | 50% |
Euro Techniques Industries | France | 40% | 40% |
BW Energy Limited\u200c4 | Bermuda | 23% | 27% |
BW Offshore AUS-JV Pte Ltd\u200c5 | Singapore | 51% | 51% |
BW Offshore Nigeria Limited | Nigeria | 49% | 49% |
Floating Energy Allyance 1 Limited | United Kingdom | 33% | 33% |
Fram Wind Solutions AS | Norway | 50% | - |
1Preference shares are issued with a preferential dividend right to ICBCL. The preferential dividend is a fixed percentage of outstanding preference shares, and accordingly the result allocated to non-controlling interest is independent of underlying result in the subsidiary.
2Owned by BW Sirocco Holdings AS, ownership effectively increased to 64 per cent per cent.
3Macquarie Bank Limited holds 10 per cent from 2022
4Ownership effectively reduced to 23 per cent in 2023 due to distribution of dividend shares, refer to Note16.
5Joint control due to shareholders agreements between the Group and external investors.
Note 15\tEquity-accounted investees
USD MILLION | 2023 | 2022 |
Interest in joint ventures | 185.4 | 140.3 |
Interest in associates | 199.4 | 197.6 |
Balance at 31 December | 384.8 | 337.9 |
Equity-accounted investees relates mainly to the investment in BW Energy Limited (BWE) and BW Offshore AUS-JV Pte Ltd.
In 2022, the Board of Directors of BW Offshore decided to increase the annual dividend to include USD 20 million in-kind distribution of BW Energy shares, distributed on a quarterly basis. Dividend shares for the fourth quarter of 2022 and the first three quarters in 2023, equal to USD 18.0 were distributed in 2023. Following the dividend shares distributed in 2023, the Group held 58\u00a0111\u00a0461 shares in BW Energy, representing 22.5 per cent, at year end 2023.
Dividend shares for the first three quarters of 2022, equal to USD 13.6 million, were distributed in 2022.
The following table illustrates the summarised financial information of the Group\u2019s investment in BW Energy.
USD MILLION | 2023 | 2022 |
Percentage ownership interest | 22.5% | 25.4% |
Non-current assets | 1 460.4 | 964.8 |
Current assets | 280.0 | 240.5 |
Non-current liabilities | 704.7 | 409.8 |
Current liabilities | 338.1 | 180.2 |
Net assets (100%) | 697.6 | 615.3 |
Group's share of net assets | 157.1 | 156.3 |
Excess value | 25.3 | 30.0 |
Carrying amount of interest in associate | 182.4 | 186.3 |
Revenue | 507.3 | 277.7 |
Profit for the year (100%) | 81.0 | 45.0 |
Total comprehensive income for the year\u200c1 | 18.6 | 12.2 |
Gain/(loss) dividend shares | (3.3) | (1.3) |
Depreciation of excess value | (1.3) | (1.3) |
Group's share of total comprehensive income for the year | 14.0 | 9.6 |
1Adjusted for change in owned share
In January 2024, the Group sold all of its shares in BW Energy Limited. See Note 28for further details.
For BW Offshore AUS-JV Pte. Ltd. the shareholders agreements between the Group and the external investors resulted in the Group and the external investors having joint control over this company. The Group\u2019s interest in BW Offshore AUS-JV Pte. Ltd. is accounted for using the equity method in the consolidated financial statements.
Refer to Note 9for information about deferred tax asset, Note 19for information about lending agreements and Note 23for information about guarantees.
Summarised financial information of the joint venture and reconciliation with the carrying amount of the investment in the consolidated financial statements are set out below.
USD MILLION | 2023 | 2022 |
Percentage ownership interest | 51.0% | 51.0% |
Non-current assets | 1\u00a0150.9 | 662.6 |
Current assets | 59.9 | 60.8 |
Non-current financial liabilities | 867.2 | 410.3 |
Current liabilities | 1.6 | 68.5 |
Net assets (100%) | 342.0 | 244.6 |
Group's share of net assets | 174.4 | 124.7 |
Elimination of internal net interest | (14.2) | (2.1) |
Carrying amount of interest in joint venture | 160.2 | 122.6 |
Net interest income/(expense) | 24.3 | 4.1 |
Profit for the year (100%) | 22.1 | 2.0 |
Other comprehensive income (100%) | 7.6 | (151.8) |
Total comprehensive income for the year (100%) | 29.7 | (149.8) |
Total comprehensive income for the year (51%) | 15.1 | (76.4) |
Elimination of internal net interest | (12.2) | (2.1) |
Group's share of total comprehensive income for the year | 2.9 | (78.5) |
Additionally the Group has interests in five individually immaterial joint venture/associates, Floating Energy Allyance 1 Limited, OCS Services Limited, Euro Techniques Industries, BW Offshore Nigeria Limited and Fram Wind Solutions AS.
For OCS Services Limited,(OCS), the Group owns 50 per cent, but does not have joint control over this investment. The partner oversees of the daily operation of the company while the Group act as an investment partner. The Group does not have power over more than half of the voting rights in OCS. Further, the Group does not have the power to cast the majority of votes at meetings of the Board of Directors or equivalent governing body. As the Group only acts as an investment partner, OCS is considered an associate. The Group\u2019s interest in OCS is accounted for using the equity method in the consolidated financial statements.
The Group acquired 33.5 per cent ownership interest in Floating Energy Allyance 1 Limited in April 2022. The carrying amount of interests in Floating Energy Allyance 1 Limited was USD 24.8 million at 31 December 2023 (USD 17.2 million).
The following table analyses the carrying amount and share of profit and OCI of these associates.
USD MILLION | 2023 | 2022 |
Carrying amount of interests in associates | 42.2 | 28.9 |
Share of: | ||
Profit | 5.1 | 1.4 |
OCI | - | - |
An equity accounted investment may be impaired and the investor required to test the carrying amount for impairment if objective evidence of impairment exists. Judgements are made in determining if there is objective evidence of impairment exist. Impairment testing for associates and joint ventures also requires significant judgements and estimates to be made.
Note 20\tList of subsidiaries, associates and joint ventures
Subsidiaries | Country of incorporation | Ownership 2023 | Ownership 2022 |
Berge Carmen Singapore Pte Ltd | Singapore | 100% | 100% |
Bergesen Worldwide Mexico, S.A. de C.V. | Mexico | 100% | 100% |
Bergesen Worldwide Offshore Mexico S. de RL de CV | Mexico | 100% | 100% |
BW Abo Pte Ltd | Singapore | 100% | 100% |
BW Adolo Pte Ltd | Singapore | 100% | 100% |
BW Athena Pte Ltd | Singapore | 100% | 100% |
BW Berge Helene Pte Ltd | Singapore | 100% | 100% |
BW Bergesen Worldwide Pte Ltd | Singapore | 100% | 100% |
BW Catcher Limited\u200c1 | Bermuda | 100% | 100% |
BW Cidade de S\u00e3o Vicente Pte Ltd | Singapore | 100% | 100% |
BW Espoir Ivoirien Pte Ltd | Singapore | 100% | 100% |
BW Ideol AS\u200c2 | Norway | 100% | 53% |
BW Ideol Projects Company SAS\u200c2 | France | 76% | - |
BW Offshore Catcher (UK) Limited | United Kingdom | 100% | 100% |
BW Offshore Australia Management Pty Ltd | Australia | 100% | 100% |
BW Offshore China Ltd | China | 100% | 100% |
BW Offshore Cyprus Limited | Cyprus | 100% | 100% |
BW Offshore do Brazil Ltda | Brazil | 100% | 100% |
BW Offshore do Brazil Servicos Maritimos Ltda | Brazil | 100% | 100% |
BW Offshore EPC FZCO\u200c3 | United Arab Emirates | 90% | 100% |
BW Offshore France SAS | France | 100% | 100% |
BW Offshore GDM B.V. | Netherlands | 100% | 100% |
BW Offshore GDM Holdings Pte Ltd | Singapore | 100% | 100% |
BW Offshore GDM Pte Ltd | Singapore | 100% | 100% |
BW Offshore (Ghana) Pte Ltd | Singapore | 100% | 100% |
BW Offshore Global Manning Pte Ltd | Singapore | 100% | 100% |
BW Offshore Holdings Pte Ltd | Singapore | 100% | 100% |
BW Offshore Italy S.r.l | Italy | 100% | 100% |
BW Offshore Management (UK) Limited | United Kingdom | - | 100% |
BW Offshore Management B.V. | Netherlands | 100% | 100% |
Subsidiaries | Country of incorporation | Ownership 2023 | Ownership 2022 |
BW Offshore Nautipa AS | Norway | - | 100% |
BW Offshore Netherlands B.V. | Netherlands | 100% | 100% |
BW Offshore Norway AS | Norway | 100% | 100% |
BW Offshore Norwegian Manning AS | Norway | 100% | 100% |
BW Offshore Opportunity I Limited | Bermuda | - | 100% |
BW Offshore Poland sp z o.o. | Poland | 100% | 100% |
BW Offshore Project Management FZE | United Arab Emirates | 100% | 100% |
BW Offshore Shipholding Cyprus Limited | Cyprus | - | 100% |
BW Offshore Shipholding Pte Ltd | Singapore | 100% | 100% |
BW Offshore Singapore Pte Ltd | Singapore | 100% | 100% |
BW Offshore SPV Bermuda I Limited | Bermuda | 100% | 100% |
BW Offshore SPV Bermuda II Limited | Bermuda | - | 100% |
BW Offshore TSB Invest Pte Ltd | Singapore | 100% | 100% |
BW Offshore (UK) Limited | United Kingdom | 100% | 100% |
BW Offshore USA Management, Inc. | USA | 100% | 100% |
BW Offshore USA, LLC | USA | 100% | 100% |
BW Opportunity Limited | Bermuda | - | 100% |
BW Pioneer (UK) Limited | United Kingdom | 100% | 100% |
BW Polvo Pte Ltd | Singapore | 100% | 100% |
BW Sendje Berge Pte Ltd | Singapore | 100% | 100% |
BW Sirocco Holdings AS | Norway | 64% | - |
BW Umuroa Pte Ltd | Singapore | 100% | 100% |
BWO-Premier Ghana Limited | Ghana | 70% | 70% |
Ideol Japan, LLC\u200c2 | Japan | 100% | 100% |
BW Ideol S.A.\u200c2 | France | 100% | 100% |
Ideol USA, Inc.\u200c2 | USA | 100% | 100% |
Prosafe GFPSO I B.V. | Netherlands | - | 100% |
Prosafe Production B.V. | Netherlands | 100% | 100% |
Prosafe Services Cote d\u2019Ivoire Pte Ltd | Singapore | 100% | 100% |
Tinworth Pte Ltd | Singapore | 100% | 100% |
Tinworth France SAS | France | 100% | 100% |
Tinworth Gabon SA | Gabon | 100% | 100% |
Associates and joint ventures
Subsidiaries | Country of incorporation | Ownership 2023 | Ownership 2022 |
OCS Services Limited | British Virgin Islands | 50% | 50% |
Euro Techniques Industries | France | 40% | 40% |
BW Energy Limited\u200c4 | Bermuda | 23% | 27% |
BW Offshore AUS-JV Pte Ltd\u200c5 | Singapore | 51% | 51% |
BW Offshore Nigeria Limited | Nigeria | 49% | 49% |
Floating Energy Allyance 1 Limited | United Kingdom | 33% | 33% |
Fram Wind Solutions AS | Norway | 50% | - |
1Preference shares are issued with a preferential dividend right to ICBCL. The preferential dividend is a fixed percentage of outstanding preference shares, and accordingly the result allocated to non-controlling interest is independent of underlying result in the subsidiary.
2Owned by BW Sirocco Holdings AS, ownership effectively increased to 64 per cent per cent.
3Macquarie Bank Limited holds 10 per cent from 2022
4Ownership effectively reduced to 23 per cent in 2023 due to distribution of dividend shares, refer to Note16.
5Joint control due to shareholders agreements between the Group and external investors.
Note 16\tCapital and reserves
Share capital
Authorised share capital:
At 1 January 2023: | 214\u00a0000\u00a0000 ordinary shares at par value USD 0.50 each |
At 31 December 2023: | 214\u00a0000\u00a0000 ordinary shares at par value USD 0.50 each |
Issued and fully paid | USD THOUSAND |
At 1 January 2023 | 92\u00a0478.2 |
At 31 December 2023 | 92\u00a0478.2 |
Hedging reserve
The hedging reserve comprises the effective portion of the cumulative net change in the fair value of hedging instruments used in cash flow hedges pending subsequent recognition in profit or loss.
Convertible bonds
The reserve for the convertible bonds comprises the amount allocated to the equity component for the convertible bonds issued by the Group in November 2019. Refer to Note17.
Treasury share reserve
The reserve for the Company\u2019s treasury shares comprises the cost of the Company\u2019s shares held by the Group. At 31 December 2023, the Group held 4\u00a0141\u00a0437 of the Company\u2019s shares (4\u00a0141\u00a0437). Book value of the treasury shares was USD 10.1 million at 31 December 2023 (USD 10.1 million).
Dividends
The following dividends were declared and paid by the Company for the year.
USD MILLION | 2023 |
Fourth quarter 2022: USD 0.035 per qualifying ordinary share | 6.3 |
First, second and third quarter: USD 0.035 per qualifying ordinary share | 19.0 |
Fourth quarter 2022: Dividend shares - 1\u00a0697\u00a0868 BWE shares | 4.2 |
First quarter: Dividend shares - 1\u00a0933\u00a0051 BWE shares | 4.7 |
Second quarter: Dividend shares - 1\u00a0897\u00a0018 BWE shares | 4.8 |
Third quarter: Dividend shares - 1\u00a0933\u00a0935 BWE shares | 4.3 |
43.3 | |
USD MILLION | 2022 |
Fourth quarter 2021: USD 0.035 per qualifying ordinary share | 6.3 |
First, second and third quarter: USD 0.035 per qualifying ordinary share | 19.0 |
First quarter: Dividend shares - 1\u00a0607\u00a0407 BWE shares | 4.2 |
Second quarter: Dividend shares - 1\u00a0835\u00a0978 BWE shares | 4.4 |
Third quarter: Dividend shares - 1\u00a0824\u00a0735 BWE shares | 5.0 |
38.9 |
Refer to \u2018Shareholder information\u2019 section for information on the 20 largest shareholders at 31 December 2023.
Refer to Note 21, Non-controlling interests, for information on preferred dividends.
Share capital
Authorised share capital:
At 1 January 2023: | 214\u00a0000\u00a0000 ordinary shares at par value USD 0.50 each |
At 31 December 2023: | 214\u00a0000\u00a0000 ordinary shares at par value USD 0.50 each |
Issued and fully paid | USD THOUSAND |
At 1 January 2023 | 92\u00a0478.2 |
At 31 December 2023 | 92\u00a0478.2 |
Hedging reserve
The hedging reserve comprises the effective portion of the cumulative net change in the fair value of hedging instruments used in cash flow hedges pending subsequent recognition in profit or loss.
", "dimensions": { "concept": "ifrs-full:DisclosureOfReservesAndOtherEquityInterestExplanatory", "language": "en", "entity": "scheme:2138008LFKH8V2EOA915", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "f59018": { "value": "Treasury share reserve
The reserve for the Company\u2019s treasury shares comprises the cost of the Company\u2019s shares held by the Group. At 31 December 2023, the Group held 4\u00a0141\u00a0437 of the Company\u2019s shares (4\u00a0141\u00a0437). Book value of the treasury shares was USD 10.1 million at 31 December 2023 (USD 10.1 million).
", "dimensions": { "concept": "ifrs-full:DisclosureOfTreasurySharesExplanatory", "language": "en", "entity": "scheme:2138008LFKH8V2EOA915", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "f59072": { "value": "Dividends
The following dividends were declared and paid by the Company for the year.
USD MILLION | 2023 |
Fourth quarter 2022: USD 0.035 per qualifying ordinary share | 6.3 |
First, second and third quarter: USD 0.035 per qualifying ordinary share | 19.0 |
Fourth quarter 2022: Dividend shares - 1\u00a0697\u00a0868 BWE shares | 4.2 |
First quarter: Dividend shares - 1\u00a0933\u00a0051 BWE shares | 4.7 |
Second quarter: Dividend shares - 1\u00a0897\u00a0018 BWE shares | 4.8 |
Third quarter: Dividend shares - 1\u00a0933\u00a0935 BWE shares | 4.3 |
43.3 | |
USD MILLION | 2022 |
Fourth quarter 2021: USD 0.035 per qualifying ordinary share | 6.3 |
First, second and third quarter: USD 0.035 per qualifying ordinary share | 19.0 |
First quarter: Dividend shares - 1\u00a0607\u00a0407 BWE shares | 4.2 |
Second quarter: Dividend shares - 1\u00a0835\u00a0978 BWE shares | 4.4 |
Third quarter: Dividend shares - 1\u00a0824\u00a0735 BWE shares | 5.0 |
38.9 |
Refer to \u2018Shareholder information\u2019 section for information on the 20 largest shareholders at 31 December 2023.
Refer to Note 21, Non-controlling interests, for information on preferred dividends.
", "dimensions": { "concept": "ifrs-full:DisclosureOfDividendsExplanatory", "language": "en", "entity": "scheme:2138008LFKH8V2EOA915", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "f59340": { "value": "Note 17\tLoans and borrowings
Carrying amount | ||||
USD MILLION | Effective interest rate | Maturity date | 2023 | 2022 |
USD 295 million Corporate Facility | USD SOFR + 2.50% | 10-July-28 | 48.0 | - |
USD 672.5 million Corporate Facility\u200c\u200c1 | USD LIBOR + 2.25% | 16-May-24 | - | 156.5 |
Convertible Bond | 2.50% | 12-Nov-24 | - | 218.7 |
USD 800 million Catcher Facility\u200c1 | USD LIBOR + 2.25% | 15-Jul-24 | - | 142.7 |
USD 200 million Catcher Facility | USD SOFR + 2.25% | 17-Feb-27 | 141.5 | - |
Other facilities | 3.50% | 30-Jun-26 | 3.8 | 4.5 |
BWO06 \u2013 NOK 1\u00a0000 million Bond | NIBOR + 5.00% | 29-Nov-28 | 97.4 | - |
Total long-term debt | 290.7 | 522.4 | ||
Carrying amount | ||||
USD MILLION | Effective interest rate | Maturity date | 2023 | 2022 |
USD 295 million Corporate Facility | USD SOFR + 2.50% | 10-July-28 | (0.6) | - |
USD 672.5 million Corporate Facility\u200c1 | USD LIBOR + 2.25% | 16-May-24 | - | (1.3) |
Convertible Bond | 2.50% | 12-Nov-24 | 184.9 | (0.6) |
USD 800 million Catcher Facility\u200c1 | LIBOR + 2.25% | 15-Jul-24 | - | 113.7 |
USD 200 million Catcher Facility | USD SOFR + 2.25% | 17-Feb-27 | 56.6 | - |
Other facilities | 2.20% | 30-Jun-26 | 1.8 | 1.8 |
BWO05 \u2013 NOK 900 million Bond | NIBOR + 4.50% | 04-Dec-23 | - | 91.7 |
BWO06 \u2013 NOK 1\u00a0000 million Bond | NIBOR + 5.00% | 29-Nov-28 | (0.2) | - |
Total short-term debt | 242.5 | 205.3 | ||
Total interest-bearing debt | 533.2 | 727.7 |
1SOFR from July 2023
The financial liability related to the BW Opal lease has a carrying amount of USD 1\u00a0022.1 million (USD 526.1 million) and implicit interest of 7.82 per cent (7.80 per cent) at 31 December 2023. Reference to Note 19Financial instruments \u2013 Fair values and risk management for information on Barossa finance liability.
The Group is in compliance with all covenants on 31 December 2023. Covenants are calculated and reported on consolidated financials.
USD 295 million corporate facility
In July 2023, the Group refinanced the previous USD 672.5 million revolving credit facility (RCF) into a new five-year senior secured USD 295 million RCF. The new facility is priced at a margin of 250 basis points above USD SOFR and is provided by a consortium of ten international banks. The Group had USD 245 million undrawn under the revolving credit facility at 31 December 2023.
The USD 295 million Corporate Facility is subject to certain covenants, including minimum book equity of at least 25 per cent of total assets, debt to EBITDA of maximum 5.5, minimum USD 75 million available liquidity including undrawn amounts and interest coverage ratio of minimum 3.0.
Catcher USD 200 million facility
In November 2023, the Group refinanced the previous USD 800 million senior secured pre- and post-delivery term loan facility into a new USD 200 million three-and-a-half-year facility. The new facility is priced at a margin of 225 basis points above USD SOFR and is provided by a consortium of seven international banks. The facility is subject to financial covenants similar to the covenants under the USD 295 million Corporate Facility.
BWO06 \u2013 NOK 1\u00a0000 million bond
In November 2023, BW Offshore Limited successfully completed the placement of a NOK 1\u00a0000 million senior unsecured bond with maturity 29 November 2028. The proceeds from the bond loan were used to partly repay the existing bond loan. The bond loan is subject to certain covenants, including minimum book equity of at least 25 per cent of total assets and minimum USD 75 million available liquidity including undrawn amounts available for utilisation by the Group.
Other facilities
Other facilities comprise interest-bearing debt in BW Ideol Group. All debt is in EUR.
Convertible bond
During the fourth quarter of 2019, BW Offshore Limited issued a USD 297.4 million convertible bond with a five-year tenor and coupon of 2.50 per cent per annum, payable semi-annually in arrears. The convertible bond has no regular repayments and matures in full on 12 November 2024. There are no financial covenants in the convertible bond agreement. The proceeds from the convertible bond loan were used to refinance the existing bond loans and for general corporate purposes. The initial conversion price of USD 10.24 corresponds to a conversion premium of 37.5 per cent over the volume weighted average price of the shares on the Oslo Stock Exchange at 5 November 2019 (converted at the prevailing USD:NOK spot rate equal to NOK 9.1921 / USD 1.00). BW Offshore Limited has during 2023 repurchased bonds with an aggregate principal amount of USD 44.2 million (USD 60.6 million in 2022) in its USD 297.4 million Senior Unsecured Convertible Bonds due for cancellation in 2024. Following the cancellation, the principal amount outstanding under the bond loan is USD 192.6 million.
USD MILLION | |
Proceeds from issue of convertible bonds | 297.4 |
Transaction costs | (3.8) |
Net proceeds | 293.6 |
Amount classified as equity (net of transaction costs of USD 0.7 million) | (50.1) |
Accreted interest | 36.5 |
Repayment of convertible bonds | (97.7) |
Expensed capitalised borrowing costs | 2.6 |
Carrying amount of liability at 31 December 2023 | 184.9 |
The conversion price is subject to adjustment for dividends paid and other changes affecting the value of the share.
During 2023, the quarterly dividends resulted in adjustments to the initial conversion rate.
Distribution declared per\u00a0share | Dividend in kind\u200c1 | Conversion price | |
First quarter, 2023 | 0\u00a0035 | 0.0094 | 7.90 |
Second quarter, 2023 | 0\u00a0035 | 0.0107 | 7.70 |
Third quarter, 2023 | 0\u00a0035 | 0.0105 | 7.52 |
Fourth quarter, 2023 | 0\u00a0035 | 0.0107 | 7.31 |
1Dividend in kind relates to shares in BW Energy Limited
Distribution declared per\u00a0share | Dividend in kind\u200c1 | Conversion price | |
First quarter, 2022 | 0\u00a0035 | 8.58 | |
Second quarter, 2022 | 0\u00a0035 | 0.0089 | 8.44 |
Third quarter, 2022 | 0\u00a0035 | 0.0102 | 8.27 |
Fourth quarter, 2022 | 0\u00a0035 | 0.0101 | 8.08 |
1Dividend in kind relates to shares in BW Energy Limited
Reconciliation of movements of liabilities and equity to cash flows arising from financing activities
Interest payable | Other liabilities | Liabilities | Equity | Total | ||
USD MILLION | Interest-bearing short-term debt | Interest-bearing long-term debt\u200c1 | ||||
Balance at 1 January 2023 | 17.9 | 205.3 | 1\u00a0048.5 | 1\u00a0151.1 | ||
Proceeds from loans and borrowings | - | - | 911.9 | - | 911.9 | |
Proceeds from sale of non-controlling interest | - | - | - | 18.9 | 18.9 | |
Paid dividend and redemption | - | - | - | (29.7) | (29.7) | |
Interest paid | (19.7) | - | - | - | - | (19.7) |
Repayment of loans and borrowings | - | (98.8) | (490.9) | - | (589.7) | |
Repurchase of convertible notes | - | - | (41.2) | - | (41.2) | |
Payment of lease liabilities | (6.3) | - | - | - | (6.3) | |
Dividends paid | - | - | - | (25.3) | (25.3) | |
Total changes from financing cash flows | (19.7) | (6.3) | (98.8) | 379.8 | (36.1) | 218.9 |
Effects of changes in foreign exchange rate and interest rate swaps | (0.2) | 7.3 | 4.9 | - | 12.0 | |
Liability-related: | ||||||
Expensed and capitalised borrowing costs | - | 0.9 | (3.0) | - | (2.1) | |
New leases/adjustments | 0.1 | - | - | - | 0.1 | |
Interest expense | 0.5 | - | - | - | 0.5 | |
Accreted interest | - | - | 8.1 | - | 8.1 | |
Non-cash movements | - | 127.8 | (125.5) | - | 2.3 | |
Total liability-related other changes | 0.6 | 128.7 | (120.4) | - | 8.9 | |
Total equity-related other changes | - | - | - | 80.3 | 80.3 | |
Balance at 31 December 2023 | 12.0 | 242.5 | 1\u00a0312.8 | 1\u00a0195.3 |
1Inclusive finance liability relating to Barossa lease
Interest payable | Other liabilities | Liabilities | Equity | Total | ||
USD MILLION | Interest-bearing short-term debt | Interest-bearing long-term debt\u200c1 | ||||
Balance at 1 January 2022 | 14.2 | 120.2 | 1\u00a0005.5 | 1\u00a0021.4 | ||
Proceeds from loans and borrowings | - | - | - | 344.2 | - | 344.2 |
Paid dividend and redemption | - | - | - | - | (30.8) | (30.8) |
Interest paid | (38.5) | - | - | - | - | (38.5) |
Repayment of loans and borrowings | - | - | (8.0) | (174.1) | - | (182.1) |
Repurchase of convertible notes | - | - | - | (52.7) | - | (52.7) |
Payment of lease liabilities | - | (7.2) | - | - | - | (7.2) |
Dividends paid | - | - | - | - | (25.3) | (25.3) |
Total changes from financing cash flows | (38.5) | (7.2) | (8.0) | 117.4 | (56.1) | 7.6 |
Effects of changes in foreign exchange rate and interest rate swaps | (0.1) | - | (10.4) | - | (10.5) | |
Liability-related: | ||||||
Expensed capitalised borrowing costs | - | 0.9 | 3.1 | - | 4.0 | |
New leases/adjustments | 10.6 | - | - | - | 10.6 | |
Interest expense | 0.4 | - | - | - | 0.4 | |
Accreted interest | - | - | 9.4 | - | 9.4 | |
Non-cash movements | - | 92.2 | (76.5) | - | 15.7 | |
Total liability-related other changes | 11.0 | 93.1 | (64.0) | - | 40.1 | |
Total equity-related other changes | - | - | - | 185.8 | 185.8 | |
Balance at 31 December 2022 | 17.9 | 205.3 | 1\u00a0048.5 | 1\u00a0151.1 |
1Inclusive finance liability relating to Barossa lease
Note 18\tTrade, other payables and other non-current liabilities
USD MILLION | 2023 | 2022 |
Trade payables | 79.5 | 81.2 |
Accrued vessel expenses | 21.6 | 60.1 |
Accrued other expenses | 31.2 | 29.6 |
Accrued construction expenses | 18.9 | 114.6 |
Public duties payables | 10.9 | 11.2 |
Contract liabilities | - | 4.3 |
Deferred revenues | 67.4 | 58.8 |
Total trade and other payables | 229.5 | 359.8 |
USD MILLION | 2023 | 2022 |
Deferred revenues | 910.2 | 654.0 |
Other long-term liabilities | 8.7 | 7.3 |
Total other non-current liabilities | 918.9 | 661.3 |
Deferred revenues primarily relate to the advance consideration received from customers for which revenue is recognised over time, mainly over the remaining contract period. The increase in deferred revenues mainly relates to the Barossa contract.
", "dimensions": { "concept": "ifrs-full:DisclosureOfTradeAndOtherPayablesExplanatory", "language": "en", "entity": "scheme:2138008LFKH8V2EOA915", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "f61785": { "value": "Note 18\tTrade, other payables and other non-current liabilities
USD MILLION | 2023 | 2022 |
Trade payables | 79.5 | 81.2 |
Accrued vessel expenses | 21.6 | 60.1 |
Accrued other expenses | 31.2 | 29.6 |
Accrued construction expenses | 18.9 | 114.6 |
Public duties payables | 10.9 | 11.2 |
Contract liabilities | - | 4.3 |
Deferred revenues | 67.4 | 58.8 |
Total trade and other payables | 229.5 | 359.8 |
USD MILLION | 2023 | 2022 |
Deferred revenues | 910.2 | 654.0 |
Other long-term liabilities | 8.7 | 7.3 |
Total other non-current liabilities | 918.9 | 661.3 |
Deferred revenues primarily relate to the advance consideration received from customers for which revenue is recognised over time, mainly over the remaining contract period. The increase in deferred revenues mainly relates to the Barossa contract.
", "dimensions": { "concept": "ifrs-full:DisclosureOfAccruedExpensesAndOtherLiabilitiesExplanatory", "language": "en", "entity": "scheme:2138008LFKH8V2EOA915", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "f61786": { "value": "Note 18\tTrade, other payables and other non-current liabilities
USD MILLION | 2023 | 2022 |
Trade payables | 79.5 | 81.2 |
Accrued vessel expenses | 21.6 | 60.1 |
Accrued other expenses | 31.2 | 29.6 |
Accrued construction expenses | 18.9 | 114.6 |
Public duties payables | 10.9 | 11.2 |
Contract liabilities | - | 4.3 |
Deferred revenues | 67.4 | 58.8 |
Total trade and other payables | 229.5 | 359.8 |
USD MILLION | 2023 | 2022 |
Deferred revenues | 910.2 | 654.0 |
Other long-term liabilities | 8.7 | 7.3 |
Total other non-current liabilities | 918.9 | 661.3 |
Deferred revenues primarily relate to the advance consideration received from customers for which revenue is recognised over time, mainly over the remaining contract period. The increase in deferred revenues mainly relates to the Barossa contract.
", "dimensions": { "concept": "ifrs-full:DisclosureOfDeferredIncomeExplanatory", "language": "en", "entity": "scheme:2138008LFKH8V2EOA915", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "f61787": { "value": "Note 18\tTrade, other payables and other non-current liabilities
USD MILLION | 2023 | 2022 |
Trade payables | 79.5 | 81.2 |
Accrued vessel expenses | 21.6 | 60.1 |
Accrued other expenses | 31.2 | 29.6 |
Accrued construction expenses | 18.9 | 114.6 |
Public duties payables | 10.9 | 11.2 |
Contract liabilities | - | 4.3 |
Deferred revenues | 67.4 | 58.8 |
Total trade and other payables | 229.5 | 359.8 |
USD MILLION | 2023 | 2022 |
Deferred revenues | 910.2 | 654.0 |
Other long-term liabilities | 8.7 | 7.3 |
Total other non-current liabilities | 918.9 | 661.3 |
Deferred revenues primarily relate to the advance consideration received from customers for which revenue is recognised over time, mainly over the remaining contract period. The increase in deferred revenues mainly relates to the Barossa contract.
", "dimensions": { "concept": "ifrs-full:DisclosureOfOtherNoncurrentLiabilitiesExplanatory", "language": "en", "entity": "scheme:2138008LFKH8V2EOA915", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "f61988": { "value": "Note 19\tFinancial instruments \u2013 fair values and risk management
The Group\u2019s finance function has the responsibility for financing, treasury management and financial risk management.
Financial risk factors
Its activities expose the Group to a variety of financial risks: market risk (including currency risk and interest rate risk), credit risk, liquidity risk and climate risk.
The Group\u2019s overall risk management programme focuses on the unpredictability of financial markets and seeks to minimise potential adverse effects on the Group\u2019s financial performance. A finance management team led by the Chief Financial Officer identifies and evaluates financial risks in close co-operation with the Group\u2019s operating units. The finance management team\u2019s activities are governed by policies approved by the Board of Directors for overall risk management, as well as policies covering specific areas such as foreign exchange risk, interest rate risk, credit risk and investing excess liquidity. The finance management team report to the Group\u2019s Senior Management team, the Audit Committee and the Board of Directors on the status of activities on a regular basis.
The Group observes a trend of capital being reallocated from hydrocarbons towards electrification and low carbon emission energy projects. The effect is an increasing cost of capital for the oil and gas sector. However, the Group has been successful in financing projects by keeping an open dialogue on ESG performance with key lenders and partners. The Group is committed to contributing to the energy transition by developing clean energy production solutions as part
of its strategy, applying its offshore engineering and operations capabilities to drive future value creation.
The Group does not use financial instruments, including financial derivatives, for trading purposes.
Market risk
Market risk is the risk that changes in market prices, such as foreign exchange rates and interest rates, will affect the Group\u2019s income or the value of its holding of financial instruments. The Group has international operations and therefore a combination of natural and financial hedging. The Group uses derivatives like FX forwards and interest rate swaps to manage market risk.
Foreign currency risk
The functional currency of the Company and most of its subsidiaries is USD. In general, most operating revenues and a significant portion of operating expenses as well as most interest-bearing debt are denominated in USD. The Group is exposed to expenses and investments incurred in currencies other than USD (\u2018foreign currencies\u2019); the major currencies being Norwegian Kroner (\u2018NOK\u2019), Singapore Dollars (\u2018SGD\u2019), Euro (\u2018EUR\u2019) and British Pounds (\u2018GBP\u2019). Operating expenses denominated in NOK, SGD, GBP and EUR constitute a part of the Group\u2019s total operating expenses. Capital expenditures related to construction projects, repair and upgrade activities on FPSOs would also to some extent be denominated in other currencies than USD. Consequently, fluctuations in the exchange rate on NOK, SGD, GBP, EUR and KRW may have significant impact on the financial statements of the Group.
The Group enters into forward contracts to reduce the exchange rate risk on cash flows nominated in foreign currencies, both related to construction projects and to operating and administrative expenses. The Group does not apply hedge accounting for hedging of its operational and administrative expenses in foreign currencies and the changes in valuation are taken over the profit and loss statement. The exchange rate risk is calculated for each foreign currency and takes into account assets and liabilities, liabilities not recognised in the balance sheet and expected purchases and sales in the currency in question. Currency hedges and other currency effects include changes in fair value of currency hedges, effects of settlement of these hedges, and other currency effects related to operating cash flows.
Total nominal value of the Group\u2019s foreign currency contracts was USD 67.1 million at 31 December 2023 (USD 403.3 million). Fair value of the foreign currency contracts amounted to positive USD 0.7 million in 2023 (negative USD 0.5 million) and are presented gross in the statement of financial position. Net effect of forward exchange contracts recognised in the statement of income in 2023 is negative by USD 3.0 million (positive by USD 3.6 million).
The Group is exposed to foreign currency risk on bonds issued in NOK. The foreign currency exposure of BWO06 is hedged through cross-currency swaps with a nominal value of USD 93.1 million. The market value of the cross-currency swaps was positive by USD 5.7 million at 31 December 2023.
The Group seeks to apply hedge accounting for larger construction projects to manage volatility in the income statement and statement of comprehensive income. BW Offshore applies hedge accounting for the foreign exchange hedging related to the construction contract of BW Opal for the Barossa project.
The Group uses forward currency contracts to eliminate the currency exposure once the Group has entered into a firm commitment of a project contract. For foreign currency risk, the principal terms of the forward currency contract (notional and settlement date) and the future expense (or revenue) (notional and expected cash flow date) are identical. The foreign exchange derivatives are entered to match the respective supplier payments.
The following are identified as sources of hedge ineffectiveness:
\u2022Over-hedging \u2013 if the total amount of exposure is less than the notional amount hedged.
\u2022Timing mismatch \u2013 if the hedged transaction and the maturity date of the hedging instrument does not occur withing the same 31-day period or fiscal month.
The net effect of the hedge accounting recognised in other comprehensive income amounts to positive USD 4.4 million (negative USD 3.9 million). Hedge ineffectiveness recognised in profit or loss during 2023 and 2022 were immaterial.
Cash flow hedges
On 31 December, the Group held the following instruments to hedge exposures to changes in foreign currency.
2023 | 1\u20136 months | 6\u201312 Months | More than one year |
Foreign currency risk | |||
Forward exchange contracts | |||
Net exposure (in USD million) | 67.1 | - | - |
Average USD:SGD forward contract rate | 1.3 | - | - |
Average USD:NOK forward contract rate | 9.8 | - | - |
Average USD:KRW forward contract rate | - | - | - |
Average USD:EUR forward contract rate | 0.9 | - | - |
Average USD:CHF forward contract rate | - | - | - |
2022 | 1\u20136 months | 6\u201312 Months | More than one year |
Foreign currency risk | |||
Forward exchange contracts | |||
Net exposure (in USD million) | 388.5 | 11.7 | 3.1 |
Average USD:SGD forward contract rate | 1.4 | 1.4 | - |
Average USD:NOK forward contract rate | 9.0 | 9.4 | 9.5 |
Average USD:KRW forward contract rate | 1\u00a0283.9 | - | - |
Average USD:EUR forward contract rate | 1.0 | - | - |
Average USD:CHF forward contract rate | 1.0 | - | - |
Sensitivity analysis
A reasonably possible strengthening (weakening) of the NOK, SGD and EUR against USD on 31 December 2023 would have affected the measurement of financial instruments denominated in a foreign currency and affected equity and profit or loss by the amounts shown below. NOK and SGD are being forward hedged in relation to operational and administrative expenses,
additional exposures in SGD and EUR are hedged in relation to ongoing construction of BW Opal for the Barossa project, all other currencies that the Group is exposed to are covered spot. This analysis assumes that all other variables, in particular interest rates, remain constant and ignores any impact of forecasts.
Profit or loss | Equity, net of tax | |||
USD MILLION | Strengthening | Weakening | Strengthening | Weakening |
31 December 2023 | ||||
NOK (5% movement) | 0.2 | (1.2) | 0.2 | (1.2) |
SGD (5% movement) | - | - | 1.8 | (0.8) |
EUR (5% movement) | 2.2 | (0.5) | 2.2 | (0.5) |
31 December 2022 | ||||
NOK (5% movement) | 0.1 | (0.1) | 0.1 | (0.1) |
SGD (5% movement) | 0.4 | (0.4) | 0.3 | (0.3) |
KRW (5% movement) | 0.1 | (0.1) | 0.1 | (0.1) |
Interest rate risk
The Group is exposed to interest rate risk through its funding activities. Most of the Group\u2019s interest-bearing debt has floating interest rate conditions, making the Group subject to influence of changes in the market rates. The Group aims to hedge at least 50 per cent of its interest rate exposure.
A fundamental reform of major interest rate benchmarks is being undertaken globally, including the replacement of some interbank offered rates (IBORs) with alternative nearly risk-free rates (referred to as \u2018IBOR reform\u2019). As announced by the Financial Conduct Authority (FCA) in 2022, the panel bank submissions for the overnight and 12-month US dollar LIBOR ceased on 30 June 2023.
From 1 July, the Group implemented the transition from IBORS to Secured Overnight Financing Rate (SOFR). The transition did not have a material impact on the Group\u2019s financial results.
As of 31 December 2023, the Group\u2019s floating rate debt amounted to 348.3 USD million (USD 742.8 million).
The Group holds interest rate swaps with a nominal value of USD 468.1 million with maturity during 2024\u20132030. The weighted average interest swap rate was 2.2 per cent on 31 December 2023. The swaps are held to hedge the quarterly cash flows from floating rate interest payments on the Corporate Facility, the Catcher
facility and BWO06. During 2022 and until November 2023, the Group also held interest caps. The market value of the interest swaps was positive by USD 30.9 million on 31 December 2023 (2022: positive USD 49.2 million, including caps) and the changes in fair value have been recognised as a fair value gain on financial instruments.
A reasonable possible change of 100 basis points in interest rates at the reporting date would have increased (decreased) profit or loss by the amounts shown in the table below. The analysis assumes that all other variables, in particular foreign currency exchange rates, remain constant.
Profit or loss | Equity, net of tax | |||
USD MILLION | 100 bp increase | 100 bp decrease | 100 bp increase | 100 bp decrease |
31 December 2023 | ||||
Variable rate instruments | (3.4) | 3.4 | (3.4) | 3.4 |
Interest rate swaps | 4.7 | (4.7) | 4.7 | (4.7) |
Cash flow sensitivity | 1.3 | (1.3) | 1.3 | (1.3) |
31 December 2022 | ||||
Variable rate instruments | (4.1) | 4.1 | (3.4) | 3.4 |
Interest rate swaps | 6.5 | (6.5) | 5.4 | (5.4) |
Cash flow sensitivity | 2.4 | (2.4) | 2.0 | (2.0) |
Credit risk
Credit risk is the risk of financial losses if a customer or counterparty to financial receivables and financial instruments fails to meet contractual obligations.
Loans, credit facilities, financial guarantees and derivatives are only conducted with approved counterparties and predominantly with investment grade financial institutions, and are governed by standard agreements (ISDA, Nordic Trustee and LMA documentation). The Group has policies in place limiting the amount of credit exposure against any financial institution. The maximum risk exposure is represented by the carrying amount of the financial assets in the balance sheet except for financial guarantees.
The Group assesses the credit quality of its customers on a regular basis, considering their financial position, credit ratings from international credit rating agencies if available, experience and other factors. New projects and clients will similarly be assessed by reviewing financial statements and external credit ratings, in addition to country-risk will be evaluated in relation to potential financing and legal impact of agreements. Parent company guarantees are negotiated with customers and the Group will normally have contractual clauses to prevent a customer from novating the lease contract to counterparts with credit rating lower than investment grade (or comparable proxy), without consent. Given the limited number of major customers of the Group and the significant portion these represent to the Group\u2019s revenue, the inability of one or more of them to make full payment on any of the Group\u2019s contracted units may have a significant adverse impact on the financial position.
The wars in Ukraine and the Middle East and general market uncertainties has increased the credit risk in most industries. With the additional factors of volatile commodity prices and an increasing transition towards greener energy, credit risk has increased more in the oil and gas industry compared with other industries. As most of the Group\u2019s portfolio is with financially solid counterparties, the Group believes that the credit risk related to counterparties is at an acceptable level.
Overdue trade receivables were USD 31.4 million at the end of 2023, compared to USD 38.2 million at the end of 2022.
The Group is also exposed to certain credit risk related to agreements entered into with suppliers such as yards used for construction projects. The Group manages its exposure to such risks through a thorough evaluation of the counterparty\u2019s financial position, external credit rating if available, and its backlog and ability to deliver on time, and subsequently by continuous monitoring of larger counterparties.
The Group regards its maximum credit risk exposure to the carrying amount of trade receivables (refer to Note 11) and other current assets.
Liquidity risk
Prudent liquidity risk management implies maintaining sufficient cash and marketable securities, the availability of funding through an adequate amount of committed credit facilities and the ability to close out market positions in order to meet obligations of finance liabilities when they become due. Due to the dynamic nature of the underlying businesses, the Group maintains sufficient cash for its daily operations and its investment programme via short-term cash deposits at banks and a commitment to make available funds from the unutilised portion of revolving facilities offered by financial institutions to the Group.
In 2021, the Group completed the debt financing and the equity joint venture partnership for the Barossa project. The Barossa project is financed by a 14-year combined construction and long-term debt facility of USD 1.150 billion with a syndicate of nine international banks and by USD 240.0 million from the equity joint venture, consisting of BW Offshore (51 per cent) and ICMK Offshore Investment Pte Ltd (a 50:50 JV of ITOCHU Corporation and a subsidiary of Meiji Shipping Co Ltd) (25 per cent) and Macquarie Bank Limited (24 per cent). In addition, approximately USD 1 billion in pre-payments will be paid by the Barossa Upstream Joint Venture Partners during the construction period. These pre-payments are linked to progress and milestones of the project. By end of 2023, a total of USD 848.7 million had been received as per plan, USD 195 million was injected in total by equity partners and USD 890 million was drawn under the loan facility.
The Group monitors the liquidity through cash flow forecasting of operational and investment activities in the short-, medium- and long-term.
The refinancing of the USD 295 million Corporate Facility and Catcher facility in 2023, and the placement of the BWO06 bond in 2023 extended tenors of the Groups financings and cashflows from continuing operations are sufficient to fulfil short-term financial obligations. Production from BW Catcher throughout 2023 has been a significant contributor to the cash flow of the Group together with BW Pioneer, BW Adolo, in addition to the divestments of non-core assets.
The following table sets out the maturity profile of the Group\u2019s financial liabilities based on contractual undiscounted payments. When counterparties have a choice of when to settle an amount, the liability is included based on the earliest date of which the counterparty can require settlement.
Maturity profile \u2013 financial liabilities, Year ended 2023
USD MILLION | Carrying amount | Q1 24 | Q2 24 | Q3 24 | Q4 24 | 2024 | 2025\u20132028 | 2029 and beyond | Total |
USD 295 million Corporate Facility | 47.4 | - | - | - | - | - | 50.0 | - | 50.0 |
Convertible Bond\u200c1 | 184.9 | - | - | - | 192.6 | 192.6 | - | - | 192.6 |
USD 200 million Catcher Facility | 198.1 | 14.3 | 14.3 | 14.3 | 14.3 | 57.2 | 142.8 | - | 200.0 |
BWO06 - NOK 1\u00a0000 million bond\u200c2 | 97.2 | - | - | - | - | - | 93.1 | - | 93.1 |
Other facilities | 5.6 | 0.4 | 0.4 | 0.5 | 0.5 | 1.8 | 3.8 | - | 5.6 |
Finance liability related to Barossa lease | 1\u00a0022.1 | - | - | - | - | - | 231.7 | 790.4 | 1\u00a0022.1 |
Interest rate swaps\u200c3 | (35.1) | (3.4) | (3.3) | (3.2) | (3.2) | (13.1) | (40.6) | (8.1) | (61.8) |
Interest payments | 4.4 | 8.1 | 7.7 | 7.4 | 7.0 | 30.2 | 52.8 | - | 83.0 |
Other | - | - | - | 0.1 | - | 0.1 | 0.2 | - | 0.3 |
Lease liabilities | 12.0 | 0.8 | 0.8 | 0.8 | 0.8 | 3.0 | 8.3 | 1.9 | 13.2 |
Trade and other payable current | 229.5 | 117.1 | 37.5 | 37.5 | 37.5 | 229.5 | - | - | 229.5 |
Total | 1\u00a0766.1 | 137.3 | 57.3 | 57.3 | 249.4 | 501.3 | 542.1 | 784.2 | 1\u00a0827.6 |
1The cash flow presented reflects a full repayment of the loan without conversion into equity instruments.
2The cash flow presented reflects swapped USD/NOK rate.
3Interest rate swaps are positive.
Maturity profile \u2013 financial liabilities, Year ended 2022
USD MILLION | Carrying Amount | Q1 23 | Q2 23 | Q3 23 | Q4 23 | 2023 | 2024\u20132027 | 2028 and beyond | Total |
USD 672.5 million Corporate Facility | 155.2 | - | - | - | - | - | 156.9 | - | 156.9 |
Convertible bonds\u200c1 | 218.1 | - | - | - | - | - | 236.8 | - | 236.8 |
Catcher facility | 256.4 | 28.6 | 28.6 | 28.6 | 28.6 | 114.3 | 142.8 | - | 257.1 |
BWO05 \u2013 NOK 900 million bond\u200c2 | 91.7 | - | - | - | 98.8 | 98.8 | - | - | 98.8 |
Other facilities | 6.3 | 0.4 | 0.5 | 0.4 | 0.5 | 1.8 | 4.5 | - | 6.3 |
Finance liability related to Barossa lease | 526.1 | - | - | - | - | - | 155.8 | 370.3 | 526.1 |
Interest rate swaps\u200c3 | (2.1) | (5.0) | (4.6) | (4.6) | (4.4) | (18.6) | (41.4) | (13.5) | (73.5) |
Interest payments | 4.0 | 7.9 | 10.5 | 6.8 | 9.0 | 34.2 | 12.6 | 46.8 | |
Other | 0.4 | 0.4 | 0.5 | 0.5 | 0.3 | 1.8 | 0.9 | - | 2.6 |
Lease liabilities | 17.9 | 1.6 | 1.6 | 1.6 | 1.6 | 6.4 | 9.4 | 3.8 | 19.6 |
Trade and other payable current | 359.8 | 154.1 | 68.6 | 68.6 | 68.6 | 359.8 | - | - | 359.8 |
Total | 1\u00a0633.8 | 187.9 | 105.6 | 101.9 | 203.0 | 598.4 | 678.2 | 360.6 | 1\u00a0637.3 |
1The cash flow presented reflects a full repayment of the loan without conversion into equity instruments.
2The cash flow presented reflects swapped USD/NOK rate.
3Interest rate swaps are positive.
The Group has the following undrawn borrowing facilities:
USD MILLION | 2023 | 2022 |
Expire within one year | 54.4 | - |
Expire beyond one year | 190.6 | 139.0 |
Fair values
IFRS 13 requires disclosures of fair value measurements by the following hierarchy:
\u2022Quoted prices (unadjusted) in active markets for identical assets or liabilities (level 1)
\u2022Inputs other than quoted prices included within level 1 that are observable for the asset or liability, either directly (as prices) or indirectly (derived from prices) (level 2)
\u2022Inputs for the asset or liability that are not based on observable market data (unobservable inputs) (level 3)
The fair value of the Group\u2019s currency forward hedges (plain vanilla hedges) is determined using forward exchange rates at the balance sheet date, with the resulting value discounted to present value (level 2). This is presented on separate lines in the statement of financial position.
The fair value of interest rate swaps is calculated as the present value of the estimated future cash flows based on observable yield curves (level 2).
The following table shows the carrying amounts and fair values of financial assets and financial liabilities, including their levels in the fair value hierarchy. It does not include fair value information for financial assets and financial liabilities not measured at fair value if the carrying amount is a reasonable approximation of fair value.
31 December 2023 | Carrying amount | Fair value | |||||||
USD MILLION | Note | Fair value \u2013 hedging instrument | Financial assets at amortised cost | Other financial liabilities | |||||
Total | Level 1 | Level 2 | Level 3 | Total | |||||
Financial assets measured at fair value | |||||||||
Forward exchange contracts used for hedging | 0.8 | - | - | 0.8 | - | 0.8 | - | 0.8 | |
Forward exchange contracts used in hedge accounting | 0.5 | - | - | 0.5 | - | 0.5 | - | 0.5 | |
Interest rate swaps used for hedging | 32.4 | - | - | 32.4 | - | 32.4 | - | 32.4 | |
Cross-currency swaps used for hedging | 5.7 | - | - | 5.7 | - | 5.7 | - | 5.7 | |
39.4 | - | - | 39.4 | - | 39.4 | - | 39.4 | ||
Financial assets not measured at fair value | |||||||||
Trade and other receivables | - | 152.4 | - | 152.4 | - | - | - | - | |
Cash and cash equivalents | - | 361.0 | - | 361.0 | - | - | - | - | |
Other non-current assets | - | 12.3 | - | 12.3 | - | - | - | - | |
- | 525.7 | - | 525.7 | - | - | - | - | ||
Financial liabilities measured at fair value | |||||||||
Interest rate swaps used for hedging | (3.0) | - | - | (3.0) | - | (3.0) | - | (3.0) | |
Forward exchange contracts used for hedging | (0.6) | - | - | (0.6) | - | (0.6) | - | (0.6) | |
(3.6) | - | - | (3.6) | - | (3.6) | - | (3.6) | ||
Financial liabilities not measured at fair value | |||||||||
Secured bank loans | - | - | (251.1) | (251.1) | - | - | (250.0) | (250.0) | |
Unsecured bond issues | - | - | (282.1) | (282.1) | - | (290.9) | - | (290.9) | |
Finance liability related to Barossa lease | - | - | (1\u00a0022.1) | (1\u00a0022.1) | - | - | - | - | |
Other non-current liabilities | - | - | (918.9) | (918.9) | - | - | - | - | |
Trade and other payables | - | - | (229.5) | (229.5) | - | - | - | - | |
Lease liabilities | - | - | (12.0) | (12.0) | - | - | - | - | |
- | - | (2\u00a0715.7) | (2\u00a0715.7) | - | (290.9) | (250.0) | (540.9) |
31 December 2022 | Carrying amount | Fair value | |||||||
USD MILLION | Note | Fair value \u2013 hedging instrument | Financial assets at amortised cost | Other financial liabilities | Total | Level 1 | Level 2 | Level 3 | Total |
Financial assets measured at fair value | |||||||||
Forward exchange contracts used for hedging | 5.1 | - | - | 5.1 | - | 5.1 | - | 5.1 | |
Forward exchange contracts used in hedge accounting | 6.5 | - | - | 6.5 | 6.5 | 6.5 | |||
Interest rate swaps used for hedging | 50.2 | - | - | 50.2 | - | 50.2 | - | 50.2 | |
61.8 | - | - | 61.8 | - | 61.8 | - | 61.8 | ||
Financial assets not measured at fair value | |||||||||
Trade and other receivables | - | 232.6 | - | 232.6 | - | - | - | - | |
Financial lease receivable | - | 48.4 | - | 48.4 | - | - | - | - | |
Cash and cash equivalents | - | 230.3 | - | 230.3 | - | - | - | - | |
Other non-current assets | - | 7.2 | - | 7.2 | - | - | - | - | |
- | 518.5 | - | 518.5 | - | - | - | - | ||
Financial liabilities measured at fair value | |||||||||
Interest rate swaps used for hedging | (1.0) | - | - | (1.0) | - | (1.0) | - | (1.0) | |
Forward exchange contracts used in hedge accounting | (1.8) | - | - | (1.8) | - | (1.8) | - | (1.8) | |
Forward exchange contracts used for hedging | (10.3) | - | - | (10.3) | - | (10.3) | - | (10.3) | |
Cross-currency swaps used for hedging | (4.7) | - | - | (4.7) | - | (4.7) | - | (4.7) | |
(17.8) | - | - | (17.8) | - | (17.8) | - | (17.8) | ||
Financial liabilities not measured at fair value | |||||||||
Secured bank loans | - | - | (417.9) | (417.9) | - | - | (420.3) | (420.3) | |
Unsecured bond issues | - | - | (309.8) | (309.8) | - | (328.8) | - | (328.8) | |
Finance liability related to Barossa lease | - | - | (526.1) | (526.1) | - | - | - | - | |
Other non-current liabilities | - | - | (661.3) | (661.3) | - | - | - | - | |
Trade and other payables | - | - | (359.8) | (359.8) | - | - | - | - | |
Lease liabilities | - | - | (17.9) | (17.9) | - | - | - | - | |
- | - | (2\u00a0292.8) | (2\u00a0292.8) | - | (328.8) | (420.3) | (749.1) |
The difference between carrying amount and fair value of the unsecured bond relates to amortised loan costs and the equity portion of the convertible bonds.
Capital structure and equity
The primary focus of the Group\u2019s financial strategy is to ensure a healthy capital structure to support its business, fulfil all financial obligations and maximise shareholder value.
The Group monitors and manages its capital structure in light of changes in the economic conditions. To maintain or adjust the capital structure, the Group may adjust dividend payments to its shareholders, return capital to shareholders or issue new shares.
Construction and conversion projects will normally be funded through current loan facilities and/or specific project loan facilities equalling 70\u201380 per cent of the cost of the project. Project loan facilities can be established either before a contract for the conversion project is signed, during the conversion phase of a project or when the FPSO commences operation.
The Group has also issued bonds in NOK and will consider continuing to do so when the market is attractive and if it provides competitive funding as an alternative to traditional bank financing.
The Company has no specific targeted equity ratio. However, the loan facilities of the Group have certain covenants related to equity and equity ratio, both closely monitored by the Company (reference to Note 17).
", "dimensions": { "concept": "ifrs-full:DisclosureOfFinancialInstrumentsExplanatory", "language": "en", "entity": "scheme:2138008LFKH8V2EOA915", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "f61989": { "value": "Note 19\tFinancial instruments \u2013 fair values and risk management
The Group\u2019s finance function has the responsibility for financing, treasury management and financial risk management.
Financial risk factors
Its activities expose the Group to a variety of financial risks: market risk (including currency risk and interest rate risk), credit risk, liquidity risk and climate risk.
The Group\u2019s overall risk management programme focuses on the unpredictability of financial markets and seeks to minimise potential adverse effects on the Group\u2019s financial performance. A finance management team led by the Chief Financial Officer identifies and evaluates financial risks in close co-operation with the Group\u2019s operating units. The finance management team\u2019s activities are governed by policies approved by the Board of Directors for overall risk management, as well as policies covering specific areas such as foreign exchange risk, interest rate risk, credit risk and investing excess liquidity. The finance management team report to the Group\u2019s Senior Management team, the Audit Committee and the Board of Directors on the status of activities on a regular basis.
The Group observes a trend of capital being reallocated from hydrocarbons towards electrification and low carbon emission energy projects. The effect is an increasing cost of capital for the oil and gas sector. However, the Group has been successful in financing projects by keeping an open dialogue on ESG performance with key lenders and partners. The Group is committed to contributing to the energy transition by developing clean energy production solutions as part
of its strategy, applying its offshore engineering and operations capabilities to drive future value creation.
The Group does not use financial instruments, including financial derivatives, for trading purposes.
Market risk
Market risk is the risk that changes in market prices, such as foreign exchange rates and interest rates, will affect the Group\u2019s income or the value of its holding of financial instruments. The Group has international operations and therefore a combination of natural and financial hedging. The Group uses derivatives like FX forwards and interest rate swaps to manage market risk.
Foreign currency risk
The functional currency of the Company and most of its subsidiaries is USD. In general, most operating revenues and a significant portion of operating expenses as well as most interest-bearing debt are denominated in USD. The Group is exposed to expenses and investments incurred in currencies other than USD (\u2018foreign currencies\u2019); the major currencies being Norwegian Kroner (\u2018NOK\u2019), Singapore Dollars (\u2018SGD\u2019), Euro (\u2018EUR\u2019) and British Pounds (\u2018GBP\u2019). Operating expenses denominated in NOK, SGD, GBP and EUR constitute a part of the Group\u2019s total operating expenses. Capital expenditures related to construction projects, repair and upgrade activities on FPSOs would also to some extent be denominated in other currencies than USD. Consequently, fluctuations in the exchange rate on NOK, SGD, GBP, EUR and KRW may have significant impact on the financial statements of the Group.
The Group enters into forward contracts to reduce the exchange rate risk on cash flows nominated in foreign currencies, both related to construction projects and to operating and administrative expenses. The Group does not apply hedge accounting for hedging of its operational and administrative expenses in foreign currencies and the changes in valuation are taken over the profit and loss statement. The exchange rate risk is calculated for each foreign currency and takes into account assets and liabilities, liabilities not recognised in the balance sheet and expected purchases and sales in the currency in question. Currency hedges and other currency effects include changes in fair value of currency hedges, effects of settlement of these hedges, and other currency effects related to operating cash flows.
Total nominal value of the Group\u2019s foreign currency contracts was USD 67.1 million at 31 December 2023 (USD 403.3 million). Fair value of the foreign currency contracts amounted to positive USD 0.7 million in 2023 (negative USD 0.5 million) and are presented gross in the statement of financial position. Net effect of forward exchange contracts recognised in the statement of income in 2023 is negative by USD 3.0 million (positive by USD 3.6 million).
The Group is exposed to foreign currency risk on bonds issued in NOK. The foreign currency exposure of BWO06 is hedged through cross-currency swaps with a nominal value of USD 93.1 million. The market value of the cross-currency swaps was positive by USD 5.7 million at 31 December 2023.
The Group seeks to apply hedge accounting for larger construction projects to manage volatility in the income statement and statement of comprehensive income. BW Offshore applies hedge accounting for the foreign exchange hedging related to the construction contract of BW Opal for the Barossa project.
The Group uses forward currency contracts to eliminate the currency exposure once the Group has entered into a firm commitment of a project contract. For foreign currency risk, the principal terms of the forward currency contract (notional and settlement date) and the future expense (or revenue) (notional and expected cash flow date) are identical. The foreign exchange derivatives are entered to match the respective supplier payments.
The following are identified as sources of hedge ineffectiveness:
\u2022Over-hedging \u2013 if the total amount of exposure is less than the notional amount hedged.
\u2022Timing mismatch \u2013 if the hedged transaction and the maturity date of the hedging instrument does not occur withing the same 31-day period or fiscal month.
The net effect of the hedge accounting recognised in other comprehensive income amounts to positive USD 4.4 million (negative USD 3.9 million). Hedge ineffectiveness recognised in profit or loss during 2023 and 2022 were immaterial.
Cash flow hedges
On 31 December, the Group held the following instruments to hedge exposures to changes in foreign currency.
2023 | 1\u20136 months | 6\u201312 Months | More than one year |
Foreign currency risk | |||
Forward exchange contracts | |||
Net exposure (in USD million) | 67.1 | - | - |
Average USD:SGD forward contract rate | 1.3 | - | - |
Average USD:NOK forward contract rate | 9.8 | - | - |
Average USD:KRW forward contract rate | - | - | - |
Average USD:EUR forward contract rate | 0.9 | - | - |
Average USD:CHF forward contract rate | - | - | - |
2022 | 1\u20136 months | 6\u201312 Months | More than one year |
Foreign currency risk | |||
Forward exchange contracts | |||
Net exposure (in USD million) | 388.5 | 11.7 | 3.1 |
Average USD:SGD forward contract rate | 1.4 | 1.4 | - |
Average USD:NOK forward contract rate | 9.0 | 9.4 | 9.5 |
Average USD:KRW forward contract rate | 1\u00a0283.9 | - | - |
Average USD:EUR forward contract rate | 1.0 | - | - |
Average USD:CHF forward contract rate | 1.0 | - | - |
Sensitivity analysis
A reasonably possible strengthening (weakening) of the NOK, SGD and EUR against USD on 31 December 2023 would have affected the measurement of financial instruments denominated in a foreign currency and affected equity and profit or loss by the amounts shown below. NOK and SGD are being forward hedged in relation to operational and administrative expenses,
additional exposures in SGD and EUR are hedged in relation to ongoing construction of BW Opal for the Barossa project, all other currencies that the Group is exposed to are covered spot. This analysis assumes that all other variables, in particular interest rates, remain constant and ignores any impact of forecasts.
Profit or loss | Equity, net of tax | |||
USD MILLION | Strengthening | Weakening | Strengthening | Weakening |
31 December 2023 | ||||
NOK (5% movement) | 0.2 | (1.2) | 0.2 | (1.2) |
SGD (5% movement) | - | - | 1.8 | (0.8) |
EUR (5% movement) | 2.2 | (0.5) | 2.2 | (0.5) |
31 December 2022 | ||||
NOK (5% movement) | 0.1 | (0.1) | 0.1 | (0.1) |
SGD (5% movement) | 0.4 | (0.4) | 0.3 | (0.3) |
KRW (5% movement) | 0.1 | (0.1) | 0.1 | (0.1) |
Interest rate risk
The Group is exposed to interest rate risk through its funding activities. Most of the Group\u2019s interest-bearing debt has floating interest rate conditions, making the Group subject to influence of changes in the market rates. The Group aims to hedge at least 50 per cent of its interest rate exposure.
A fundamental reform of major interest rate benchmarks is being undertaken globally, including the replacement of some interbank offered rates (IBORs) with alternative nearly risk-free rates (referred to as \u2018IBOR reform\u2019). As announced by the Financial Conduct Authority (FCA) in 2022, the panel bank submissions for the overnight and 12-month US dollar LIBOR ceased on 30 June 2023.
From 1 July, the Group implemented the transition from IBORS to Secured Overnight Financing Rate (SOFR). The transition did not have a material impact on the Group\u2019s financial results.
As of 31 December 2023, the Group\u2019s floating rate debt amounted to 348.3 USD million (USD 742.8 million).
The Group holds interest rate swaps with a nominal value of USD 468.1 million with maturity during 2024\u20132030. The weighted average interest swap rate was 2.2 per cent on 31 December 2023. The swaps are held to hedge the quarterly cash flows from floating rate interest payments on the Corporate Facility, the Catcher
facility and BWO06. During 2022 and until November 2023, the Group also held interest caps. The market value of the interest swaps was positive by USD 30.9 million on 31 December 2023 (2022: positive USD 49.2 million, including caps) and the changes in fair value have been recognised as a fair value gain on financial instruments.
A reasonable possible change of 100 basis points in interest rates at the reporting date would have increased (decreased) profit or loss by the amounts shown in the table below. The analysis assumes that all other variables, in particular foreign currency exchange rates, remain constant.
Profit or loss | Equity, net of tax | |||
USD MILLION | 100 bp increase | 100 bp decrease | 100 bp increase | 100 bp decrease |
31 December 2023 | ||||
Variable rate instruments | (3.4) | 3.4 | (3.4) | 3.4 |
Interest rate swaps | 4.7 | (4.7) | 4.7 | (4.7) |
Cash flow sensitivity | 1.3 | (1.3) | 1.3 | (1.3) |
31 December 2022 | ||||
Variable rate instruments | (4.1) | 4.1 | (3.4) | 3.4 |
Interest rate swaps | 6.5 | (6.5) | 5.4 | (5.4) |
Cash flow sensitivity | 2.4 | (2.4) | 2.0 | (2.0) |
Credit risk
Credit risk is the risk of financial losses if a customer or counterparty to financial receivables and financial instruments fails to meet contractual obligations.
Loans, credit facilities, financial guarantees and derivatives are only conducted with approved counterparties and predominantly with investment grade financial institutions, and are governed by standard agreements (ISDA, Nordic Trustee and LMA documentation). The Group has policies in place limiting the amount of credit exposure against any financial institution. The maximum risk exposure is represented by the carrying amount of the financial assets in the balance sheet except for financial guarantees.
The Group assesses the credit quality of its customers on a regular basis, considering their financial position, credit ratings from international credit rating agencies if available, experience and other factors. New projects and clients will similarly be assessed by reviewing financial statements and external credit ratings, in addition to country-risk will be evaluated in relation to potential financing and legal impact of agreements. Parent company guarantees are negotiated with customers and the Group will normally have contractual clauses to prevent a customer from novating the lease contract to counterparts with credit rating lower than investment grade (or comparable proxy), without consent. Given the limited number of major customers of the Group and the significant portion these represent to the Group\u2019s revenue, the inability of one or more of them to make full payment on any of the Group\u2019s contracted units may have a significant adverse impact on the financial position.
The wars in Ukraine and the Middle East and general market uncertainties has increased the credit risk in most industries. With the additional factors of volatile commodity prices and an increasing transition towards greener energy, credit risk has increased more in the oil and gas industry compared with other industries. As most of the Group\u2019s portfolio is with financially solid counterparties, the Group believes that the credit risk related to counterparties is at an acceptable level.
Overdue trade receivables were USD 31.4 million at the end of 2023, compared to USD 38.2 million at the end of 2022.
The Group is also exposed to certain credit risk related to agreements entered into with suppliers such as yards used for construction projects. The Group manages its exposure to such risks through a thorough evaluation of the counterparty\u2019s financial position, external credit rating if available, and its backlog and ability to deliver on time, and subsequently by continuous monitoring of larger counterparties.
The Group regards its maximum credit risk exposure to the carrying amount of trade receivables (refer to Note 11) and other current assets.
Liquidity risk
Prudent liquidity risk management implies maintaining sufficient cash and marketable securities, the availability of funding through an adequate amount of committed credit facilities and the ability to close out market positions in order to meet obligations of finance liabilities when they become due. Due to the dynamic nature of the underlying businesses, the Group maintains sufficient cash for its daily operations and its investment programme via short-term cash deposits at banks and a commitment to make available funds from the unutilised portion of revolving facilities offered by financial institutions to the Group.
In 2021, the Group completed the debt financing and the equity joint venture partnership for the Barossa project. The Barossa project is financed by a 14-year combined construction and long-term debt facility of USD 1.150 billion with a syndicate of nine international banks and by USD 240.0 million from the equity joint venture, consisting of BW Offshore (51 per cent) and ICMK Offshore Investment Pte Ltd (a 50:50 JV of ITOCHU Corporation and a subsidiary of Meiji Shipping Co Ltd) (25 per cent) and Macquarie Bank Limited (24 per cent). In addition, approximately USD 1 billion in pre-payments will be paid by the Barossa Upstream Joint Venture Partners during the construction period. These pre-payments are linked to progress and milestones of the project. By end of 2023, a total of USD 848.7 million had been received as per plan, USD 195 million was injected in total by equity partners and USD 890 million was drawn under the loan facility.
The Group monitors the liquidity through cash flow forecasting of operational and investment activities in the short-, medium- and long-term.
The refinancing of the USD 295 million Corporate Facility and Catcher facility in 2023, and the placement of the BWO06 bond in 2023 extended tenors of the Groups financings and cashflows from continuing operations are sufficient to fulfil short-term financial obligations. Production from BW Catcher throughout 2023 has been a significant contributor to the cash flow of the Group together with BW Pioneer, BW Adolo, in addition to the divestments of non-core assets.
The following table sets out the maturity profile of the Group\u2019s financial liabilities based on contractual undiscounted payments. When counterparties have a choice of when to settle an amount, the liability is included based on the earliest date of which the counterparty can require settlement.
Maturity profile \u2013 financial liabilities, Year ended 2023
USD MILLION | Carrying amount | Q1 24 | Q2 24 | Q3 24 | Q4 24 | 2024 | 2025\u20132028 | 2029 and beyond | Total |
USD 295 million Corporate Facility | 47.4 | - | - | - | - | - | 50.0 | - | 50.0 |
Convertible Bond\u200c1 | 184.9 | - | - | - | 192.6 | 192.6 | - | - | 192.6 |
USD 200 million Catcher Facility | 198.1 | 14.3 | 14.3 | 14.3 | 14.3 | 57.2 | 142.8 | - | 200.0 |
BWO06 - NOK 1\u00a0000 million bond\u200c2 | 97.2 | - | - | - | - | - | 93.1 | - | 93.1 |
Other facilities | 5.6 | 0.4 | 0.4 | 0.5 | 0.5 | 1.8 | 3.8 | - | 5.6 |
Finance liability related to Barossa lease | 1\u00a0022.1 | - | - | - | - | - | 231.7 | 790.4 | 1\u00a0022.1 |
Interest rate swaps\u200c3 | (35.1) | (3.4) | (3.3) | (3.2) | (3.2) | (13.1) | (40.6) | (8.1) | (61.8) |
Interest payments | 4.4 | 8.1 | 7.7 | 7.4 | 7.0 | 30.2 | 52.8 | - | 83.0 |
Other | - | - | - | 0.1 | - | 0.1 | 0.2 | - | 0.3 |
Lease liabilities | 12.0 | 0.8 | 0.8 | 0.8 | 0.8 | 3.0 | 8.3 | 1.9 | 13.2 |
Trade and other payable current | 229.5 | 117.1 | 37.5 | 37.5 | 37.5 | 229.5 | - | - | 229.5 |
Total | 1\u00a0766.1 | 137.3 | 57.3 | 57.3 | 249.4 | 501.3 | 542.1 | 784.2 | 1\u00a0827.6 |
1The cash flow presented reflects a full repayment of the loan without conversion into equity instruments.
2The cash flow presented reflects swapped USD/NOK rate.
3Interest rate swaps are positive.
Maturity profile \u2013 financial liabilities, Year ended 2022
USD MILLION | Carrying Amount | Q1 23 | Q2 23 | Q3 23 | Q4 23 | 2023 | 2024\u20132027 | 2028 and beyond | Total |
USD 672.5 million Corporate Facility | 155.2 | - | - | - | - | - | 156.9 | - | 156.9 |
Convertible bonds\u200c1 | 218.1 | - | - | - | - | - | 236.8 | - | 236.8 |
Catcher facility | 256.4 | 28.6 | 28.6 | 28.6 | 28.6 | 114.3 | 142.8 | - | 257.1 |
BWO05 \u2013 NOK 900 million bond\u200c2 | 91.7 | - | - | - | 98.8 | 98.8 | - | - | 98.8 |
Other facilities | 6.3 | 0.4 | 0.5 | 0.4 | 0.5 | 1.8 | 4.5 | - | 6.3 |
Finance liability related to Barossa lease | 526.1 | - | - | - | - | - | 155.8 | 370.3 | 526.1 |
Interest rate swaps\u200c3 | (2.1) | (5.0) | (4.6) | (4.6) | (4.4) | (18.6) | (41.4) | (13.5) | (73.5) |
Interest payments | 4.0 | 7.9 | 10.5 | 6.8 | 9.0 | 34.2 | 12.6 | 46.8 | |
Other | 0.4 | 0.4 | 0.5 | 0.5 | 0.3 | 1.8 | 0.9 | - | 2.6 |
Lease liabilities | 17.9 | 1.6 | 1.6 | 1.6 | 1.6 | 6.4 | 9.4 | 3.8 | 19.6 |
Trade and other payable current | 359.8 | 154.1 | 68.6 | 68.6 | 68.6 | 359.8 | - | - | 359.8 |
Total | 1\u00a0633.8 | 187.9 | 105.6 | 101.9 | 203.0 | 598.4 | 678.2 | 360.6 | 1\u00a0637.3 |
1The cash flow presented reflects a full repayment of the loan without conversion into equity instruments.
2The cash flow presented reflects swapped USD/NOK rate.
3Interest rate swaps are positive.
The Group has the following undrawn borrowing facilities:
USD MILLION | 2023 | 2022 |
Expire within one year | 54.4 | - |
Expire beyond one year | 190.6 | 139.0 |
Fair values
IFRS 13 requires disclosures of fair value measurements by the following hierarchy:
\u2022Quoted prices (unadjusted) in active markets for identical assets or liabilities (level 1)
\u2022Inputs other than quoted prices included within level 1 that are observable for the asset or liability, either directly (as prices) or indirectly (derived from prices) (level 2)
\u2022Inputs for the asset or liability that are not based on observable market data (unobservable inputs) (level 3)
The fair value of the Group\u2019s currency forward hedges (plain vanilla hedges) is determined using forward exchange rates at the balance sheet date, with the resulting value discounted to present value (level 2). This is presented on separate lines in the statement of financial position.
The fair value of interest rate swaps is calculated as the present value of the estimated future cash flows based on observable yield curves (level 2).
The following table shows the carrying amounts and fair values of financial assets and financial liabilities, including their levels in the fair value hierarchy. It does not include fair value information for financial assets and financial liabilities not measured at fair value if the carrying amount is a reasonable approximation of fair value.
31 December 2023 | Carrying amount | Fair value | |||||||
USD MILLION | Note | Fair value \u2013 hedging instrument | Financial assets at amortised cost | Other financial liabilities | |||||
Total | Level 1 | Level 2 | Level 3 | Total | |||||
Financial assets measured at fair value | |||||||||
Forward exchange contracts used for hedging | 0.8 | - | - | 0.8 | - | 0.8 | - | 0.8 | |
Forward exchange contracts used in hedge accounting | 0.5 | - | - | 0.5 | - | 0.5 | - | 0.5 | |
Interest rate swaps used for hedging | 32.4 | - | - | 32.4 | - | 32.4 | - | 32.4 | |
Cross-currency swaps used for hedging | 5.7 | - | - | 5.7 | - | 5.7 | - | 5.7 | |
39.4 | - | - | 39.4 | - | 39.4 | - | 39.4 | ||
Financial assets not measured at fair value | |||||||||
Trade and other receivables | - | 152.4 | - | 152.4 | - | - | - | - | |
Cash and cash equivalents | - | 361.0 | - | 361.0 | - | - | - | - | |
Other non-current assets | - | 12.3 | - | 12.3 | - | - | - | - | |
- | 525.7 | - | 525.7 | - | - | - | - | ||
Financial liabilities measured at fair value | |||||||||
Interest rate swaps used for hedging | (3.0) | - | - | (3.0) | - | (3.0) | - | (3.0) | |
Forward exchange contracts used for hedging | (0.6) | - | - | (0.6) | - | (0.6) | - | (0.6) | |
(3.6) | - | - | (3.6) | - | (3.6) | - | (3.6) | ||
Financial liabilities not measured at fair value | |||||||||
Secured bank loans | - | - | (251.1) | (251.1) | - | - | (250.0) | (250.0) | |
Unsecured bond issues | - | - | (282.1) | (282.1) | - | (290.9) | - | (290.9) | |
Finance liability related to Barossa lease | - | - | (1\u00a0022.1) | (1\u00a0022.1) | - | - | - | - | |
Other non-current liabilities | - | - | (918.9) | (918.9) | - | - | - | - | |
Trade and other payables | - | - | (229.5) | (229.5) | - | - | - | - | |
Lease liabilities | - | - | (12.0) | (12.0) | - | - | - | - | |
- | - | (2\u00a0715.7) | (2\u00a0715.7) | - | (290.9) | (250.0) | (540.9) |
31 December 2022 | Carrying amount | Fair value | |||||||
USD MILLION | Note | Fair value \u2013 hedging instrument | Financial assets at amortised cost | Other financial liabilities | Total | Level 1 | Level 2 | Level 3 | Total |
Financial assets measured at fair value | |||||||||
Forward exchange contracts used for hedging | 5.1 | - | - | 5.1 | - | 5.1 | - | 5.1 | |
Forward exchange contracts used in hedge accounting | 6.5 | - | - | 6.5 | 6.5 | 6.5 | |||
Interest rate swaps used for hedging | 50.2 | - | - | 50.2 | - | 50.2 | - | 50.2 | |
61.8 | - | - | 61.8 | - | 61.8 | - | 61.8 | ||
Financial assets not measured at fair value | |||||||||
Trade and other receivables | - | 232.6 | - | 232.6 | - | - | - | - | |
Financial lease receivable | - | 48.4 | - | 48.4 | - | - | - | - | |
Cash and cash equivalents | - | 230.3 | - | 230.3 | - | - | - | - | |
Other non-current assets | - | 7.2 | - | 7.2 | - | - | - | - | |
- | 518.5 | - | 518.5 | - | - | - | - | ||
Financial liabilities measured at fair value | |||||||||
Interest rate swaps used for hedging | (1.0) | - | - | (1.0) | - | (1.0) | - | (1.0) | |
Forward exchange contracts used in hedge accounting | (1.8) | - | - | (1.8) | - | (1.8) | - | (1.8) | |
Forward exchange contracts used for hedging | (10.3) | - | - | (10.3) | - | (10.3) | - | (10.3) | |
Cross-currency swaps used for hedging | (4.7) | - | - | (4.7) | - | (4.7) | - | (4.7) | |
(17.8) | - | - | (17.8) | - | (17.8) | - | (17.8) | ||
Financial liabilities not measured at fair value | |||||||||
Secured bank loans | - | - | (417.9) | (417.9) | - | - | (420.3) | (420.3) | |
Unsecured bond issues | - | - | (309.8) | (309.8) | - | (328.8) | - | (328.8) | |
Finance liability related to Barossa lease | - | - | (526.1) | (526.1) | - | - | - | - | |
Other non-current liabilities | - | - | (661.3) | (661.3) | - | - | - | - | |
Trade and other payables | - | - | (359.8) | (359.8) | - | - | - | - | |
Lease liabilities | - | - | (17.9) | (17.9) | - | - | - | - | |
- | - | (2\u00a0292.8) | (2\u00a0292.8) | - | (328.8) | (420.3) | (749.1) |
The difference between carrying amount and fair value of the unsecured bond relates to amortised loan costs and the equity portion of the convertible bonds.
Capital structure and equity
The primary focus of the Group\u2019s financial strategy is to ensure a healthy capital structure to support its business, fulfil all financial obligations and maximise shareholder value.
The Group monitors and manages its capital structure in light of changes in the economic conditions. To maintain or adjust the capital structure, the Group may adjust dividend payments to its shareholders, return capital to shareholders or issue new shares.
Construction and conversion projects will normally be funded through current loan facilities and/or specific project loan facilities equalling 70\u201380 per cent of the cost of the project. Project loan facilities can be established either before a contract for the conversion project is signed, during the conversion phase of a project or when the FPSO commences operation.
The Group has also issued bonds in NOK and will consider continuing to do so when the market is attractive and if it provides competitive funding as an alternative to traditional bank financing.
The Company has no specific targeted equity ratio. However, the loan facilities of the Group have certain covenants related to equity and equity ratio, both closely monitored by the Company (reference to Note 17).
", "dimensions": { "concept": "ifrs-full:DisclosureOfFinancialRiskManagementExplanatory", "language": "en", "entity": "scheme:2138008LFKH8V2EOA915", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "f62270": { "value": "Market risk
Market risk is the risk that changes in market prices, such as foreign exchange rates and interest rates, will affect the Group\u2019s income or the value of its holding of financial instruments. The Group has international operations and therefore a combination of natural and financial hedging. The Group uses derivatives like FX forwards and interest rate swaps to manage market risk.
Foreign currency risk
The functional currency of the Company and most of its subsidiaries is USD. In general, most operating revenues and a significant portion of operating expenses as well as most interest-bearing debt are denominated in USD. The Group is exposed to expenses and investments incurred in currencies other than USD (\u2018foreign currencies\u2019); the major currencies being Norwegian Kroner (\u2018NOK\u2019), Singapore Dollars (\u2018SGD\u2019), Euro (\u2018EUR\u2019) and British Pounds (\u2018GBP\u2019). Operating expenses denominated in NOK, SGD, GBP and EUR constitute a part of the Group\u2019s total operating expenses. Capital expenditures related to construction projects, repair and upgrade activities on FPSOs would also to some extent be denominated in other currencies than USD. Consequently, fluctuations in the exchange rate on NOK, SGD, GBP, EUR and KRW may have significant impact on the financial statements of the Group.
The Group enters into forward contracts to reduce the exchange rate risk on cash flows nominated in foreign currencies, both related to construction projects and to operating and administrative expenses. The Group does not apply hedge accounting for hedging of its operational and administrative expenses in foreign currencies and the changes in valuation are taken over the profit and loss statement. The exchange rate risk is calculated for each foreign currency and takes into account assets and liabilities, liabilities not recognised in the balance sheet and expected purchases and sales in the currency in question. Currency hedges and other currency effects include changes in fair value of currency hedges, effects of settlement of these hedges, and other currency effects related to operating cash flows.
Total nominal value of the Group\u2019s foreign currency contracts was USD 67.1 million at 31 December 2023 (USD 403.3 million). Fair value of the foreign currency contracts amounted to positive USD 0.7 million in 2023 (negative USD 0.5 million) and are presented gross in the statement of financial position. Net effect of forward exchange contracts recognised in the statement of income in 2023 is negative by USD 3.0 million (positive by USD 3.6 million).
The Group is exposed to foreign currency risk on bonds issued in NOK. The foreign currency exposure of BWO06 is hedged through cross-currency swaps with a nominal value of USD 93.1 million. The market value of the cross-currency swaps was positive by USD 5.7 million at 31 December 2023.
The Group seeks to apply hedge accounting for larger construction projects to manage volatility in the income statement and statement of comprehensive income. BW Offshore applies hedge accounting for the foreign exchange hedging related to the construction contract of BW Opal for the Barossa project.
The Group uses forward currency contracts to eliminate the currency exposure once the Group has entered into a firm commitment of a project contract. For foreign currency risk, the principal terms of the forward currency contract (notional and settlement date) and the future expense (or revenue) (notional and expected cash flow date) are identical. The foreign exchange derivatives are entered to match the respective supplier payments.
The following are identified as sources of hedge ineffectiveness:
\u2022Over-hedging \u2013 if the total amount of exposure is less than the notional amount hedged.
\u2022Timing mismatch \u2013 if the hedged transaction and the maturity date of the hedging instrument does not occur withing the same 31-day period or fiscal month.
The net effect of the hedge accounting recognised in other comprehensive income amounts to positive USD 4.4 million (negative USD 3.9 million). Hedge ineffectiveness recognised in profit or loss during 2023 and 2022 were immaterial.
Cash flow hedges
On 31 December, the Group held the following instruments to hedge exposures to changes in foreign currency.
2023 | 1\u20136 months | 6\u201312 Months | More than one year |
Foreign currency risk | |||
Forward exchange contracts | |||
Net exposure (in USD million) | 67.1 | - | - |
Average USD:SGD forward contract rate | 1.3 | - | - |
Average USD:NOK forward contract rate | 9.8 | - | - |
Average USD:KRW forward contract rate | - | - | - |
Average USD:EUR forward contract rate | 0.9 | - | - |
Average USD:CHF forward contract rate | - | - | - |
2022 | 1\u20136 months | 6\u201312 Months | More than one year |
Foreign currency risk | |||
Forward exchange contracts | |||
Net exposure (in USD million) | 388.5 | 11.7 | 3.1 |
Average USD:SGD forward contract rate | 1.4 | 1.4 | - |
Average USD:NOK forward contract rate | 9.0 | 9.4 | 9.5 |
Average USD:KRW forward contract rate | 1\u00a0283.9 | - | - |
Average USD:EUR forward contract rate | 1.0 | - | - |
Average USD:CHF forward contract rate | 1.0 | - | - |
Sensitivity analysis
A reasonably possible strengthening (weakening) of the NOK, SGD and EUR against USD on 31 December 2023 would have affected the measurement of financial instruments denominated in a foreign currency and affected equity and profit or loss by the amounts shown below. NOK and SGD are being forward hedged in relation to operational and administrative expenses,
additional exposures in SGD and EUR are hedged in relation to ongoing construction of BW Opal for the Barossa project, all other currencies that the Group is exposed to are covered spot. This analysis assumes that all other variables, in particular interest rates, remain constant and ignores any impact of forecasts.
Profit or loss | Equity, net of tax | |||
USD MILLION | Strengthening | Weakening | Strengthening | Weakening |
31 December 2023 | ||||
NOK (5% movement) | 0.2 | (1.2) | 0.2 | (1.2) |
SGD (5% movement) | - | - | 1.8 | (0.8) |
EUR (5% movement) | 2.2 | (0.5) | 2.2 | (0.5) |
31 December 2022 | ||||
NOK (5% movement) | 0.1 | (0.1) | 0.1 | (0.1) |
SGD (5% movement) | 0.4 | (0.4) | 0.3 | (0.3) |
KRW (5% movement) | 0.1 | (0.1) | 0.1 | (0.1) |
Interest rate risk
The Group is exposed to interest rate risk through its funding activities. Most of the Group\u2019s interest-bearing debt has floating interest rate conditions, making the Group subject to influence of changes in the market rates. The Group aims to hedge at least 50 per cent of its interest rate exposure.
A fundamental reform of major interest rate benchmarks is being undertaken globally, including the replacement of some interbank offered rates (IBORs) with alternative nearly risk-free rates (referred to as \u2018IBOR reform\u2019). As announced by the Financial Conduct Authority (FCA) in 2022, the panel bank submissions for the overnight and 12-month US dollar LIBOR ceased on 30 June 2023.
From 1 July, the Group implemented the transition from IBORS to Secured Overnight Financing Rate (SOFR). The transition did not have a material impact on the Group\u2019s financial results.
As of 31 December 2023, the Group\u2019s floating rate debt amounted to 348.3 USD million (USD 742.8 million).
The Group holds interest rate swaps with a nominal value of USD 468.1 million with maturity during 2024\u20132030. The weighted average interest swap rate was 2.2 per cent on 31 December 2023. The swaps are held to hedge the quarterly cash flows from floating rate interest payments on the Corporate Facility, the Catcher
facility and BWO06. During 2022 and until November 2023, the Group also held interest caps. The market value of the interest swaps was positive by USD 30.9 million on 31 December 2023 (2022: positive USD 49.2 million, including caps) and the changes in fair value have been recognised as a fair value gain on financial instruments.
A reasonable possible change of 100 basis points in interest rates at the reporting date would have increased (decreased) profit or loss by the amounts shown in the table below. The analysis assumes that all other variables, in particular foreign currency exchange rates, remain constant.
Profit or loss | Equity, net of tax | |||
USD MILLION | 100 bp increase | 100 bp decrease | 100 bp increase | 100 bp decrease |
31 December 2023 | ||||
Variable rate instruments | (3.4) | 3.4 | (3.4) | 3.4 |
Interest rate swaps | 4.7 | (4.7) | 4.7 | (4.7) |
Cash flow sensitivity | 1.3 | (1.3) | 1.3 | (1.3) |
31 December 2022 | ||||
Variable rate instruments | (4.1) | 4.1 | (3.4) | 3.4 |
Interest rate swaps | 6.5 | (6.5) | 5.4 | (5.4) |
Cash flow sensitivity | 2.4 | (2.4) | 2.0 | (2.0) |
Market risk
Market risk is the risk that changes in market prices, such as foreign exchange rates and interest rates, will affect the Group\u2019s income or the value of its holding of financial instruments. The Group has international operations and therefore a combination of natural and financial hedging. The Group uses derivatives like FX forwards and interest rate swaps to manage market risk.
Foreign currency risk
The functional currency of the Company and most of its subsidiaries is USD. In general, most operating revenues and a significant portion of operating expenses as well as most interest-bearing debt are denominated in USD. The Group is exposed to expenses and investments incurred in currencies other than USD (\u2018foreign currencies\u2019); the major currencies being Norwegian Kroner (\u2018NOK\u2019), Singapore Dollars (\u2018SGD\u2019), Euro (\u2018EUR\u2019) and British Pounds (\u2018GBP\u2019). Operating expenses denominated in NOK, SGD, GBP and EUR constitute a part of the Group\u2019s total operating expenses. Capital expenditures related to construction projects, repair and upgrade activities on FPSOs would also to some extent be denominated in other currencies than USD. Consequently, fluctuations in the exchange rate on NOK, SGD, GBP, EUR and KRW may have significant impact on the financial statements of the Group.
The Group enters into forward contracts to reduce the exchange rate risk on cash flows nominated in foreign currencies, both related to construction projects and to operating and administrative expenses. The Group does not apply hedge accounting for hedging of its operational and administrative expenses in foreign currencies and the changes in valuation are taken over the profit and loss statement. The exchange rate risk is calculated for each foreign currency and takes into account assets and liabilities, liabilities not recognised in the balance sheet and expected purchases and sales in the currency in question. Currency hedges and other currency effects include changes in fair value of currency hedges, effects of settlement of these hedges, and other currency effects related to operating cash flows.
Total nominal value of the Group\u2019s foreign currency contracts was USD 67.1 million at 31 December 2023 (USD 403.3 million). Fair value of the foreign currency contracts amounted to positive USD 0.7 million in 2023 (negative USD 0.5 million) and are presented gross in the statement of financial position. Net effect of forward exchange contracts recognised in the statement of income in 2023 is negative by USD 3.0 million (positive by USD 3.6 million).
The Group is exposed to foreign currency risk on bonds issued in NOK. The foreign currency exposure of BWO06 is hedged through cross-currency swaps with a nominal value of USD 93.1 million. The market value of the cross-currency swaps was positive by USD 5.7 million at 31 December 2023.
The Group seeks to apply hedge accounting for larger construction projects to manage volatility in the income statement and statement of comprehensive income. BW Offshore applies hedge accounting for the foreign exchange hedging related to the construction contract of BW Opal for the Barossa project.
The Group uses forward currency contracts to eliminate the currency exposure once the Group has entered into a firm commitment of a project contract. For foreign currency risk, the principal terms of the forward currency contract (notional and settlement date) and the future expense (or revenue) (notional and expected cash flow date) are identical. The foreign exchange derivatives are entered to match the respective supplier payments.
The following are identified as sources of hedge ineffectiveness:
\u2022Over-hedging \u2013 if the total amount of exposure is less than the notional amount hedged.
\u2022Timing mismatch \u2013 if the hedged transaction and the maturity date of the hedging instrument does not occur withing the same 31-day period or fiscal month.
The net effect of the hedge accounting recognised in other comprehensive income amounts to positive USD 4.4 million (negative USD 3.9 million). Hedge ineffectiveness recognised in profit or loss during 2023 and 2022 were immaterial.
Cash flow hedges
On 31 December, the Group held the following instruments to hedge exposures to changes in foreign currency.
2023 | 1\u20136 months | 6\u201312 Months | More than one year |
Foreign currency risk | |||
Forward exchange contracts | |||
Net exposure (in USD million) | 67.1 | - | - |
Average USD:SGD forward contract rate | 1.3 | - | - |
Average USD:NOK forward contract rate | 9.8 | - | - |
Average USD:KRW forward contract rate | - | - | - |
Average USD:EUR forward contract rate | 0.9 | - | - |
Average USD:CHF forward contract rate | - | - | - |
2022 | 1\u20136 months | 6\u201312 Months | More than one year |
Foreign currency risk | |||
Forward exchange contracts | |||
Net exposure (in USD million) | 388.5 | 11.7 | 3.1 |
Average USD:SGD forward contract rate | 1.4 | 1.4 | - |
Average USD:NOK forward contract rate | 9.0 | 9.4 | 9.5 |
Average USD:KRW forward contract rate | 1\u00a0283.9 | - | - |
Average USD:EUR forward contract rate | 1.0 | - | - |
Average USD:CHF forward contract rate | 1.0 | - | - |
Sensitivity analysis
A reasonably possible strengthening (weakening) of the NOK, SGD and EUR against USD on 31 December 2023 would have affected the measurement of financial instruments denominated in a foreign currency and affected equity and profit or loss by the amounts shown below. NOK and SGD are being forward hedged in relation to operational and administrative expenses,
additional exposures in SGD and EUR are hedged in relation to ongoing construction of BW Opal for the Barossa project, all other currencies that the Group is exposed to are covered spot. This analysis assumes that all other variables, in particular interest rates, remain constant and ignores any impact of forecasts.
Profit or loss | Equity, net of tax | |||
USD MILLION | Strengthening | Weakening | Strengthening | Weakening |
31 December 2023 | ||||
NOK (5% movement) | 0.2 | (1.2) | 0.2 | (1.2) |
SGD (5% movement) | - | - | 1.8 | (0.8) |
EUR (5% movement) | 2.2 | (0.5) | 2.2 | (0.5) |
31 December 2022 | ||||
NOK (5% movement) | 0.1 | (0.1) | 0.1 | (0.1) |
SGD (5% movement) | 0.4 | (0.4) | 0.3 | (0.3) |
KRW (5% movement) | 0.1 | (0.1) | 0.1 | (0.1) |
Interest rate risk
The Group is exposed to interest rate risk through its funding activities. Most of the Group\u2019s interest-bearing debt has floating interest rate conditions, making the Group subject to influence of changes in the market rates. The Group aims to hedge at least 50 per cent of its interest rate exposure.
A fundamental reform of major interest rate benchmarks is being undertaken globally, including the replacement of some interbank offered rates (IBORs) with alternative nearly risk-free rates (referred to as \u2018IBOR reform\u2019). As announced by the Financial Conduct Authority (FCA) in 2022, the panel bank submissions for the overnight and 12-month US dollar LIBOR ceased on 30 June 2023.
From 1 July, the Group implemented the transition from IBORS to Secured Overnight Financing Rate (SOFR). The transition did not have a material impact on the Group\u2019s financial results.
As of 31 December 2023, the Group\u2019s floating rate debt amounted to 348.3 USD million (USD 742.8 million).
The Group holds interest rate swaps with a nominal value of USD 468.1 million with maturity during 2024\u20132030. The weighted average interest swap rate was 2.2 per cent on 31 December 2023. The swaps are held to hedge the quarterly cash flows from floating rate interest payments on the Corporate Facility, the Catcher
facility and BWO06. During 2022 and until November 2023, the Group also held interest caps. The market value of the interest swaps was positive by USD 30.9 million on 31 December 2023 (2022: positive USD 49.2 million, including caps) and the changes in fair value have been recognised as a fair value gain on financial instruments.
A reasonable possible change of 100 basis points in interest rates at the reporting date would have increased (decreased) profit or loss by the amounts shown in the table below. The analysis assumes that all other variables, in particular foreign currency exchange rates, remain constant.
Profit or loss | Equity, net of tax | |||
USD MILLION | 100 bp increase | 100 bp decrease | 100 bp increase | 100 bp decrease |
31 December 2023 | ||||
Variable rate instruments | (3.4) | 3.4 | (3.4) | 3.4 |
Interest rate swaps | 4.7 | (4.7) | 4.7 | (4.7) |
Cash flow sensitivity | 1.3 | (1.3) | 1.3 | (1.3) |
31 December 2022 | ||||
Variable rate instruments | (4.1) | 4.1 | (3.4) | 3.4 |
Interest rate swaps | 6.5 | (6.5) | 5.4 | (5.4) |
Cash flow sensitivity | 2.4 | (2.4) | 2.0 | (2.0) |
Market risk
Market risk is the risk that changes in market prices, such as foreign exchange rates and interest rates, will affect the Group\u2019s income or the value of its holding of financial instruments. The Group has international operations and therefore a combination of natural and financial hedging. The Group uses derivatives like FX forwards and interest rate swaps to manage market risk.
Foreign currency risk
The functional currency of the Company and most of its subsidiaries is USD. In general, most operating revenues and a significant portion of operating expenses as well as most interest-bearing debt are denominated in USD. The Group is exposed to expenses and investments incurred in currencies other than USD (\u2018foreign currencies\u2019); the major currencies being Norwegian Kroner (\u2018NOK\u2019), Singapore Dollars (\u2018SGD\u2019), Euro (\u2018EUR\u2019) and British Pounds (\u2018GBP\u2019). Operating expenses denominated in NOK, SGD, GBP and EUR constitute a part of the Group\u2019s total operating expenses. Capital expenditures related to construction projects, repair and upgrade activities on FPSOs would also to some extent be denominated in other currencies than USD. Consequently, fluctuations in the exchange rate on NOK, SGD, GBP, EUR and KRW may have significant impact on the financial statements of the Group.
The Group enters into forward contracts to reduce the exchange rate risk on cash flows nominated in foreign currencies, both related to construction projects and to operating and administrative expenses. The Group does not apply hedge accounting for hedging of its operational and administrative expenses in foreign currencies and the changes in valuation are taken over the profit and loss statement. The exchange rate risk is calculated for each foreign currency and takes into account assets and liabilities, liabilities not recognised in the balance sheet and expected purchases and sales in the currency in question. Currency hedges and other currency effects include changes in fair value of currency hedges, effects of settlement of these hedges, and other currency effects related to operating cash flows.
Total nominal value of the Group\u2019s foreign currency contracts was USD 67.1 million at 31 December 2023 (USD 403.3 million). Fair value of the foreign currency contracts amounted to positive USD 0.7 million in 2023 (negative USD 0.5 million) and are presented gross in the statement of financial position. Net effect of forward exchange contracts recognised in the statement of income in 2023 is negative by USD 3.0 million (positive by USD 3.6 million).
The Group is exposed to foreign currency risk on bonds issued in NOK. The foreign currency exposure of BWO06 is hedged through cross-currency swaps with a nominal value of USD 93.1 million. The market value of the cross-currency swaps was positive by USD 5.7 million at 31 December 2023.
The Group seeks to apply hedge accounting for larger construction projects to manage volatility in the income statement and statement of comprehensive income. BW Offshore applies hedge accounting for the foreign exchange hedging related to the construction contract of BW Opal for the Barossa project.
The Group uses forward currency contracts to eliminate the currency exposure once the Group has entered into a firm commitment of a project contract. For foreign currency risk, the principal terms of the forward currency contract (notional and settlement date) and the future expense (or revenue) (notional and expected cash flow date) are identical. The foreign exchange derivatives are entered to match the respective supplier payments.
The following are identified as sources of hedge ineffectiveness:
\u2022Over-hedging \u2013 if the total amount of exposure is less than the notional amount hedged.
\u2022Timing mismatch \u2013 if the hedged transaction and the maturity date of the hedging instrument does not occur withing the same 31-day period or fiscal month.
The net effect of the hedge accounting recognised in other comprehensive income amounts to positive USD 4.4 million (negative USD 3.9 million). Hedge ineffectiveness recognised in profit or loss during 2023 and 2022 were immaterial.
Cash flow hedges
On 31 December, the Group held the following instruments to hedge exposures to changes in foreign currency.
2023 | 1\u20136 months | 6\u201312 Months | More than one year |
Foreign currency risk | |||
Forward exchange contracts | |||
Net exposure (in USD million) | 67.1 | - | - |
Average USD:SGD forward contract rate | 1.3 | - | - |
Average USD:NOK forward contract rate | 9.8 | - | - |
Average USD:KRW forward contract rate | - | - | - |
Average USD:EUR forward contract rate | 0.9 | - | - |
Average USD:CHF forward contract rate | - | - | - |
2022 | 1\u20136 months | 6\u201312 Months | More than one year |
Foreign currency risk | |||
Forward exchange contracts | |||
Net exposure (in USD million) | 388.5 | 11.7 | 3.1 |
Average USD:SGD forward contract rate | 1.4 | 1.4 | - |
Average USD:NOK forward contract rate | 9.0 | 9.4 | 9.5 |
Average USD:KRW forward contract rate | 1\u00a0283.9 | - | - |
Average USD:EUR forward contract rate | 1.0 | - | - |
Average USD:CHF forward contract rate | 1.0 | - | - |
Sensitivity analysis
A reasonably possible strengthening (weakening) of the NOK, SGD and EUR against USD on 31 December 2023 would have affected the measurement of financial instruments denominated in a foreign currency and affected equity and profit or loss by the amounts shown below. NOK and SGD are being forward hedged in relation to operational and administrative expenses,
additional exposures in SGD and EUR are hedged in relation to ongoing construction of BW Opal for the Barossa project, all other currencies that the Group is exposed to are covered spot. This analysis assumes that all other variables, in particular interest rates, remain constant and ignores any impact of forecasts.
Profit or loss | Equity, net of tax | |||
USD MILLION | Strengthening | Weakening | Strengthening | Weakening |
31 December 2023 | ||||
NOK (5% movement) | 0.2 | (1.2) | 0.2 | (1.2) |
SGD (5% movement) | - | - | 1.8 | (0.8) |
EUR (5% movement) | 2.2 | (0.5) | 2.2 | (0.5) |
31 December 2022 | ||||
NOK (5% movement) | 0.1 | (0.1) | 0.1 | (0.1) |
SGD (5% movement) | 0.4 | (0.4) | 0.3 | (0.3) |
KRW (5% movement) | 0.1 | (0.1) | 0.1 | (0.1) |
Interest rate risk
The Group is exposed to interest rate risk through its funding activities. Most of the Group\u2019s interest-bearing debt has floating interest rate conditions, making the Group subject to influence of changes in the market rates. The Group aims to hedge at least 50 per cent of its interest rate exposure.
A fundamental reform of major interest rate benchmarks is being undertaken globally, including the replacement of some interbank offered rates (IBORs) with alternative nearly risk-free rates (referred to as \u2018IBOR reform\u2019). As announced by the Financial Conduct Authority (FCA) in 2022, the panel bank submissions for the overnight and 12-month US dollar LIBOR ceased on 30 June 2023.
From 1 July, the Group implemented the transition from IBORS to Secured Overnight Financing Rate (SOFR). The transition did not have a material impact on the Group\u2019s financial results.
As of 31 December 2023, the Group\u2019s floating rate debt amounted to 348.3 USD million (USD 742.8 million).
The Group holds interest rate swaps with a nominal value of USD 468.1 million with maturity during 2024\u20132030. The weighted average interest swap rate was 2.2 per cent on 31 December 2023. The swaps are held to hedge the quarterly cash flows from floating rate interest payments on the Corporate Facility, the Catcher
facility and BWO06. During 2022 and until November 2023, the Group also held interest caps. The market value of the interest swaps was positive by USD 30.9 million on 31 December 2023 (2022: positive USD 49.2 million, including caps) and the changes in fair value have been recognised as a fair value gain on financial instruments.
A reasonable possible change of 100 basis points in interest rates at the reporting date would have increased (decreased) profit or loss by the amounts shown in the table below. The analysis assumes that all other variables, in particular foreign currency exchange rates, remain constant.
Profit or loss | Equity, net of tax | |||
USD MILLION | 100 bp increase | 100 bp decrease | 100 bp increase | 100 bp decrease |
31 December 2023 | ||||
Variable rate instruments | (3.4) | 3.4 | (3.4) | 3.4 |
Interest rate swaps | 4.7 | (4.7) | 4.7 | (4.7) |
Cash flow sensitivity | 1.3 | (1.3) | 1.3 | (1.3) |
31 December 2022 | ||||
Variable rate instruments | (4.1) | 4.1 | (3.4) | 3.4 |
Interest rate swaps | 6.5 | (6.5) | 5.4 | (5.4) |
Cash flow sensitivity | 2.4 | (2.4) | 2.0 | (2.0) |
Credit risk
Credit risk is the risk of financial losses if a customer or counterparty to financial receivables and financial instruments fails to meet contractual obligations.
Loans, credit facilities, financial guarantees and derivatives are only conducted with approved counterparties and predominantly with investment grade financial institutions, and are governed by standard agreements (ISDA, Nordic Trustee and LMA documentation). The Group has policies in place limiting the amount of credit exposure against any financial institution. The maximum risk exposure is represented by the carrying amount of the financial assets in the balance sheet except for financial guarantees.
The Group assesses the credit quality of its customers on a regular basis, considering their financial position, credit ratings from international credit rating agencies if available, experience and other factors. New projects and clients will similarly be assessed by reviewing financial statements and external credit ratings, in addition to country-risk will be evaluated in relation to potential financing and legal impact of agreements. Parent company guarantees are negotiated with customers and the Group will normally have contractual clauses to prevent a customer from novating the lease contract to counterparts with credit rating lower than investment grade (or comparable proxy), without consent. Given the limited number of major customers of the Group and the significant portion these represent to the Group\u2019s revenue, the inability of one or more of them to make full payment on any of the Group\u2019s contracted units may have a significant adverse impact on the financial position.
The wars in Ukraine and the Middle East and general market uncertainties has increased the credit risk in most industries. With the additional factors of volatile commodity prices and an increasing transition towards greener energy, credit risk has increased more in the oil and gas industry compared with other industries. As most of the Group\u2019s portfolio is with financially solid counterparties, the Group believes that the credit risk related to counterparties is at an acceptable level.
Overdue trade receivables were USD 31.4 million at the end of 2023, compared to USD 38.2 million at the end of 2022.
The Group is also exposed to certain credit risk related to agreements entered into with suppliers such as yards used for construction projects. The Group manages its exposure to such risks through a thorough evaluation of the counterparty\u2019s financial position, external credit rating if available, and its backlog and ability to deliver on time, and subsequently by continuous monitoring of larger counterparties.
The Group regards its maximum credit risk exposure to the carrying amount of trade receivables (refer to Note 11) and other current assets.
", "dimensions": { "concept": "ifrs-full:DisclosureOfCreditRiskExplanatory", "language": "en", "entity": "scheme:2138008LFKH8V2EOA915", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "f64541": { "value": "Liquidity risk
Prudent liquidity risk management implies maintaining sufficient cash and marketable securities, the availability of funding through an adequate amount of committed credit facilities and the ability to close out market positions in order to meet obligations of finance liabilities when they become due. Due to the dynamic nature of the underlying businesses, the Group maintains sufficient cash for its daily operations and its investment programme via short-term cash deposits at banks and a commitment to make available funds from the unutilised portion of revolving facilities offered by financial institutions to the Group.
In 2021, the Group completed the debt financing and the equity joint venture partnership for the Barossa project. The Barossa project is financed by a 14-year combined construction and long-term debt facility of USD 1.150 billion with a syndicate of nine international banks and by USD 240.0 million from the equity joint venture, consisting of BW Offshore (51 per cent) and ICMK Offshore Investment Pte Ltd (a 50:50 JV of ITOCHU Corporation and a subsidiary of Meiji Shipping Co Ltd) (25 per cent) and Macquarie Bank Limited (24 per cent). In addition, approximately USD 1 billion in pre-payments will be paid by the Barossa Upstream Joint Venture Partners during the construction period. These pre-payments are linked to progress and milestones of the project. By end of 2023, a total of USD 848.7 million had been received as per plan, USD 195 million was injected in total by equity partners and USD 890 million was drawn under the loan facility.
The Group monitors the liquidity through cash flow forecasting of operational and investment activities in the short-, medium- and long-term.
The refinancing of the USD 295 million Corporate Facility and Catcher facility in 2023, and the placement of the BWO06 bond in 2023 extended tenors of the Groups financings and cashflows from continuing operations are sufficient to fulfil short-term financial obligations. Production from BW Catcher throughout 2023 has been a significant contributor to the cash flow of the Group together with BW Pioneer, BW Adolo, in addition to the divestments of non-core assets.
The following table sets out the maturity profile of the Group\u2019s financial liabilities based on contractual undiscounted payments. When counterparties have a choice of when to settle an amount, the liability is included based on the earliest date of which the counterparty can require settlement.
Maturity profile \u2013 financial liabilities, Year ended 2023
USD MILLION | Carrying amount | Q1 24 | Q2 24 | Q3 24 | Q4 24 | 2024 | 2025\u20132028 | 2029 and beyond | Total |
USD 295 million Corporate Facility | 47.4 | - | - | - | - | - | 50.0 | - | 50.0 |
Convertible Bond\u200c1 | 184.9 | - | - | - | 192.6 | 192.6 | - | - | 192.6 |
USD 200 million Catcher Facility | 198.1 | 14.3 | 14.3 | 14.3 | 14.3 | 57.2 | 142.8 | - | 200.0 |
BWO06 - NOK 1\u00a0000 million bond\u200c2 | 97.2 | - | - | - | - | - | 93.1 | - | 93.1 |
Other facilities | 5.6 | 0.4 | 0.4 | 0.5 | 0.5 | 1.8 | 3.8 | - | 5.6 |
Finance liability related to Barossa lease | 1\u00a0022.1 | - | - | - | - | - | 231.7 | 790.4 | 1\u00a0022.1 |
Interest rate swaps\u200c3 | (35.1) | (3.4) | (3.3) | (3.2) | (3.2) | (13.1) | (40.6) | (8.1) | (61.8) |
Interest payments | 4.4 | 8.1 | 7.7 | 7.4 | 7.0 | 30.2 | 52.8 | - | 83.0 |
Other | - | - | - | 0.1 | - | 0.1 | 0.2 | - | 0.3 |
Lease liabilities | 12.0 | 0.8 | 0.8 | 0.8 | 0.8 | 3.0 | 8.3 | 1.9 | 13.2 |
Trade and other payable current | 229.5 | 117.1 | 37.5 | 37.5 | 37.5 | 229.5 | - | - | 229.5 |
Total | 1\u00a0766.1 | 137.3 | 57.3 | 57.3 | 249.4 | 501.3 | 542.1 | 784.2 | 1\u00a0827.6 |
1The cash flow presented reflects a full repayment of the loan without conversion into equity instruments.
2The cash flow presented reflects swapped USD/NOK rate.
3Interest rate swaps are positive.
Maturity profile \u2013 financial liabilities, Year ended 2022
USD MILLION | Carrying Amount | Q1 23 | Q2 23 | Q3 23 | Q4 23 | 2023 | 2024\u20132027 | 2028 and beyond | Total |
USD 672.5 million Corporate Facility | 155.2 | - | - | - | - | - | 156.9 | - | 156.9 |
Convertible bonds\u200c1 | 218.1 | - | - | - | - | - | 236.8 | - | 236.8 |
Catcher facility | 256.4 | 28.6 | 28.6 | 28.6 | 28.6 | 114.3 | 142.8 | - | 257.1 |
BWO05 \u2013 NOK 900 million bond\u200c2 | 91.7 | - | - | - | 98.8 | 98.8 | - | - | 98.8 |
Other facilities | 6.3 | 0.4 | 0.5 | 0.4 | 0.5 | 1.8 | 4.5 | - | 6.3 |
Finance liability related to Barossa lease | 526.1 | - | - | - | - | - | 155.8 | 370.3 | 526.1 |
Interest rate swaps\u200c3 | (2.1) | (5.0) | (4.6) | (4.6) | (4.4) | (18.6) | (41.4) | (13.5) | (73.5) |
Interest payments | 4.0 | 7.9 | 10.5 | 6.8 | 9.0 | 34.2 | 12.6 | 46.8 | |
Other | 0.4 | 0.4 | 0.5 | 0.5 | 0.3 | 1.8 | 0.9 | - | 2.6 |
Lease liabilities | 17.9 | 1.6 | 1.6 | 1.6 | 1.6 | 6.4 | 9.4 | 3.8 | 19.6 |
Trade and other payable current | 359.8 | 154.1 | 68.6 | 68.6 | 68.6 | 359.8 | - | - | 359.8 |
Total | 1\u00a0633.8 | 187.9 | 105.6 | 101.9 | 203.0 | 598.4 | 678.2 | 360.6 | 1\u00a0637.3 |
1The cash flow presented reflects a full repayment of the loan without conversion into equity instruments.
2The cash flow presented reflects swapped USD/NOK rate.
3Interest rate swaps are positive.
The Group has the following undrawn borrowing facilities:
USD MILLION | 2023 | 2022 |
Expire within one year | 54.4 | - |
Expire beyond one year | 190.6 | 139.0 |
Fair values
IFRS 13 requires disclosures of fair value measurements by the following hierarchy:
\u2022Quoted prices (unadjusted) in active markets for identical assets or liabilities (level 1)
\u2022Inputs other than quoted prices included within level 1 that are observable for the asset or liability, either directly (as prices) or indirectly (derived from prices) (level 2)
\u2022Inputs for the asset or liability that are not based on observable market data (unobservable inputs) (level 3)
The fair value of the Group\u2019s currency forward hedges (plain vanilla hedges) is determined using forward exchange rates at the balance sheet date, with the resulting value discounted to present value (level 2). This is presented on separate lines in the statement of financial position.
The fair value of interest rate swaps is calculated as the present value of the estimated future cash flows based on observable yield curves (level 2).
The following table shows the carrying amounts and fair values of financial assets and financial liabilities, including their levels in the fair value hierarchy. It does not include fair value information for financial assets and financial liabilities not measured at fair value if the carrying amount is a reasonable approximation of fair value.
31 December 2023 | Carrying amount | Fair value | |||||||
USD MILLION | Note | Fair value \u2013 hedging instrument | Financial assets at amortised cost | Other financial liabilities | |||||
Total | Level 1 | Level 2 | Level 3 | Total | |||||
Financial assets measured at fair value | |||||||||
Forward exchange contracts used for hedging | 0.8 | - | - | 0.8 | - | 0.8 | - | 0.8 | |
Forward exchange contracts used in hedge accounting | 0.5 | - | - | 0.5 | - | 0.5 | - | 0.5 | |
Interest rate swaps used for hedging | 32.4 | - | - | 32.4 | - | 32.4 | - | 32.4 | |
Cross-currency swaps used for hedging | 5.7 | - | - | 5.7 | - | 5.7 | - | 5.7 | |
39.4 | - | - | 39.4 | - | 39.4 | - | 39.4 | ||
Financial assets not measured at fair value | |||||||||
Trade and other receivables | - | 152.4 | - | 152.4 | - | - | - | - | |
Cash and cash equivalents | - | 361.0 | - | 361.0 | - | - | - | - | |
Other non-current assets | - | 12.3 | - | 12.3 | - | - | - | - | |
- | 525.7 | - | 525.7 | - | - | - | - | ||
Financial liabilities measured at fair value | |||||||||
Interest rate swaps used for hedging | (3.0) | - | - | (3.0) | - | (3.0) | - | (3.0) | |
Forward exchange contracts used for hedging | (0.6) | - | - | (0.6) | - | (0.6) | - | (0.6) | |
(3.6) | - | - | (3.6) | - | (3.6) | - | (3.6) | ||
Financial liabilities not measured at fair value | |||||||||
Secured bank loans | - | - | (251.1) | (251.1) | - | - | (250.0) | (250.0) | |
Unsecured bond issues | - | - | (282.1) | (282.1) | - | (290.9) | - | (290.9) | |
Finance liability related to Barossa lease | - | - | (1\u00a0022.1) | (1\u00a0022.1) | - | - | - | - | |
Other non-current liabilities | - | - | (918.9) | (918.9) | - | - | - | - | |
Trade and other payables | - | - | (229.5) | (229.5) | - | - | - | - | |
Lease liabilities | - | - | (12.0) | (12.0) | - | - | - | - | |
- | - | (2\u00a0715.7) | (2\u00a0715.7) | - | (290.9) | (250.0) | (540.9) |
31 December 2022 | Carrying amount | Fair value | |||||||
USD MILLION | Note | Fair value \u2013 hedging instrument | Financial assets at amortised cost | Other financial liabilities | Total | Level 1 | Level 2 | Level 3 | Total |
Financial assets measured at fair value | |||||||||
Forward exchange contracts used for hedging | 5.1 | - | - | 5.1 | - | 5.1 | - | 5.1 | |
Forward exchange contracts used in hedge accounting | 6.5 | - | - | 6.5 | 6.5 | 6.5 | |||
Interest rate swaps used for hedging | 50.2 | - | - | 50.2 | - | 50.2 | - | 50.2 | |
61.8 | - | - | 61.8 | - | 61.8 | - | 61.8 | ||
Financial assets not measured at fair value | |||||||||
Trade and other receivables | - | 232.6 | - | 232.6 | - | - | - | - | |
Financial lease receivable | - | 48.4 | - | 48.4 | - | - | - | - | |
Cash and cash equivalents | - | 230.3 | - | 230.3 | - | - | - | - | |
Other non-current assets | - | 7.2 | - | 7.2 | - | - | - | - | |
- | 518.5 | - | 518.5 | - | - | - | - | ||
Financial liabilities measured at fair value | |||||||||
Interest rate swaps used for hedging | (1.0) | - | - | (1.0) | - | (1.0) | - | (1.0) | |
Forward exchange contracts used in hedge accounting | (1.8) | - | - | (1.8) | - | (1.8) | - | (1.8) | |
Forward exchange contracts used for hedging | (10.3) | - | - | (10.3) | - | (10.3) | - | (10.3) | |
Cross-currency swaps used for hedging | (4.7) | - | - | (4.7) | - | (4.7) | - | (4.7) | |
(17.8) | - | - | (17.8) | - | (17.8) | - | (17.8) | ||
Financial liabilities not measured at fair value | |||||||||
Secured bank loans | - | - | (417.9) | (417.9) | - | - | (420.3) | (420.3) | |
Unsecured bond issues | - | - | (309.8) | (309.8) | - | (328.8) | - | (328.8) | |
Finance liability related to Barossa lease | - | - | (526.1) | (526.1) | - | - | - | - | |
Other non-current liabilities | - | - | (661.3) | (661.3) | - | - | - | - | |
Trade and other payables | - | - | (359.8) | (359.8) | - | - | - | - | |
Lease liabilities | - | - | (17.9) | (17.9) | - | - | - | - | |
- | - | (2\u00a0292.8) | (2\u00a0292.8) | - | (328.8) | (420.3) | (749.1) |
The difference between carrying amount and fair value of the unsecured bond relates to amortised loan costs and the equity portion of the convertible bonds.
Fair values
IFRS 13 requires disclosures of fair value measurements by the following hierarchy:
\u2022Quoted prices (unadjusted) in active markets for identical assets or liabilities (level 1)
\u2022Inputs other than quoted prices included within level 1 that are observable for the asset or liability, either directly (as prices) or indirectly (derived from prices) (level 2)
\u2022Inputs for the asset or liability that are not based on observable market data (unobservable inputs) (level 3)
The fair value of the Group\u2019s currency forward hedges (plain vanilla hedges) is determined using forward exchange rates at the balance sheet date, with the resulting value discounted to present value (level 2). This is presented on separate lines in the statement of financial position.
The fair value of interest rate swaps is calculated as the present value of the estimated future cash flows based on observable yield curves (level 2).
The following table shows the carrying amounts and fair values of financial assets and financial liabilities, including their levels in the fair value hierarchy. It does not include fair value information for financial assets and financial liabilities not measured at fair value if the carrying amount is a reasonable approximation of fair value.
31 December 2023 | Carrying amount | Fair value | |||||||
USD MILLION | Note | Fair value \u2013 hedging instrument | Financial assets at amortised cost | Other financial liabilities | |||||
Total | Level 1 | Level 2 | Level 3 | Total | |||||
Financial assets measured at fair value | |||||||||
Forward exchange contracts used for hedging | 0.8 | - | - | 0.8 | - | 0.8 | - | 0.8 | |
Forward exchange contracts used in hedge accounting | 0.5 | - | - | 0.5 | - | 0.5 | - | 0.5 | |
Interest rate swaps used for hedging | 32.4 | - | - | 32.4 | - | 32.4 | - | 32.4 | |
Cross-currency swaps used for hedging | 5.7 | - | - | 5.7 | - | 5.7 | - | 5.7 | |
39.4 | - | - | 39.4 | - | 39.4 | - | 39.4 | ||
Financial assets not measured at fair value | |||||||||
Trade and other receivables | - | 152.4 | - | 152.4 | - | - | - | - | |
Cash and cash equivalents | - | 361.0 | - | 361.0 | - | - | - | - | |
Other non-current assets | - | 12.3 | - | 12.3 | - | - | - | - | |
- | 525.7 | - | 525.7 | - | - | - | - | ||
Financial liabilities measured at fair value | |||||||||
Interest rate swaps used for hedging | (3.0) | - | - | (3.0) | - | (3.0) | - | (3.0) | |
Forward exchange contracts used for hedging | (0.6) | - | - | (0.6) | - | (0.6) | - | (0.6) | |
(3.6) | - | - | (3.6) | - | (3.6) | - | (3.6) | ||
Financial liabilities not measured at fair value | |||||||||
Secured bank loans | - | - | (251.1) | (251.1) | - | - | (250.0) | (250.0) | |
Unsecured bond issues | - | - | (282.1) | (282.1) | - | (290.9) | - | (290.9) | |
Finance liability related to Barossa lease | - | - | (1\u00a0022.1) | (1\u00a0022.1) | - | - | - | - | |
Other non-current liabilities | - | - | (918.9) | (918.9) | - | - | - | - | |
Trade and other payables | - | - | (229.5) | (229.5) | - | - | - | - | |
Lease liabilities | - | - | (12.0) | (12.0) | - | - | - | - | |
- | - | (2\u00a0715.7) | (2\u00a0715.7) | - | (290.9) | (250.0) | (540.9) |
31 December 2022 | Carrying amount | Fair value | |||||||
USD MILLION | Note | Fair value \u2013 hedging instrument | Financial assets at amortised cost | Other financial liabilities | Total | Level 1 | Level 2 | Level 3 | Total |
Financial assets measured at fair value | |||||||||
Forward exchange contracts used for hedging | 5.1 | - | - | 5.1 | - | 5.1 | - | 5.1 | |
Forward exchange contracts used in hedge accounting | 6.5 | - | - | 6.5 | 6.5 | 6.5 | |||
Interest rate swaps used for hedging | 50.2 | - | - | 50.2 | - | 50.2 | - | 50.2 | |
61.8 | - | - | 61.8 | - | 61.8 | - | 61.8 | ||
Financial assets not measured at fair value | |||||||||
Trade and other receivables | - | 232.6 | - | 232.6 | - | - | - | - | |
Financial lease receivable | - | 48.4 | - | 48.4 | - | - | - | - | |
Cash and cash equivalents | - | 230.3 | - | 230.3 | - | - | - | - | |
Other non-current assets | - | 7.2 | - | 7.2 | - | - | - | - | |
- | 518.5 | - | 518.5 | - | - | - | - | ||
Financial liabilities measured at fair value | |||||||||
Interest rate swaps used for hedging | (1.0) | - | - | (1.0) | - | (1.0) | - | (1.0) | |
Forward exchange contracts used in hedge accounting | (1.8) | - | - | (1.8) | - | (1.8) | - | (1.8) | |
Forward exchange contracts used for hedging | (10.3) | - | - | (10.3) | - | (10.3) | - | (10.3) | |
Cross-currency swaps used for hedging | (4.7) | - | - | (4.7) | - | (4.7) | - | (4.7) | |
(17.8) | - | - | (17.8) | - | (17.8) | - | (17.8) | ||
Financial liabilities not measured at fair value | |||||||||
Secured bank loans | - | - | (417.9) | (417.9) | - | - | (420.3) | (420.3) | |
Unsecured bond issues | - | - | (309.8) | (309.8) | - | (328.8) | - | (328.8) | |
Finance liability related to Barossa lease | - | - | (526.1) | (526.1) | - | - | - | - | |
Other non-current liabilities | - | - | (661.3) | (661.3) | - | - | - | - | |
Trade and other payables | - | - | (359.8) | (359.8) | - | - | - | - | |
Lease liabilities | - | - | (17.9) | (17.9) | - | - | - | - | |
- | - | (2\u00a0292.8) | (2\u00a0292.8) | - | (328.8) | (420.3) | (749.1) |
The difference between carrying amount and fair value of the unsecured bond relates to amortised loan costs and the equity portion of the convertible bonds.
Capital structure and equity
The primary focus of the Group\u2019s financial strategy is to ensure a healthy capital structure to support its business, fulfil all financial obligations and maximise shareholder value.
The Group monitors and manages its capital structure in light of changes in the economic conditions. To maintain or adjust the capital structure, the Group may adjust dividend payments to its shareholders, return capital to shareholders or issue new shares.
Construction and conversion projects will normally be funded through current loan facilities and/or specific project loan facilities equalling 70\u201380 per cent of the cost of the project. Project loan facilities can be established either before a contract for the conversion project is signed, during the conversion phase of a project or when the FPSO commences operation.
The Group has also issued bonds in NOK and will consider continuing to do so when the market is attractive and if it provides competitive funding as an alternative to traditional bank financing.
The Company has no specific targeted equity ratio. However, the loan facilities of the Group have certain covenants related to equity and equity ratio, both closely monitored by the Company (reference to Note 17).
", "dimensions": { "concept": "ifrs-full:DisclosureOfObjectivesPoliciesAndProcessesForManagingCapitalExplanatory", "language": "en", "entity": "scheme:2138008LFKH8V2EOA915", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "f68217": { "value": "Note 20\tList of subsidiaries, associates and joint ventures
Subsidiaries | Country of incorporation | Ownership 2023 | Ownership 2022 |
Berge Carmen Singapore Pte Ltd | Singapore | 100% | 100% |
Bergesen Worldwide Mexico, S.A. de C.V. | Mexico | 100% | 100% |
Bergesen Worldwide Offshore Mexico S. de RL de CV | Mexico | 100% | 100% |
BW Abo Pte Ltd | Singapore | 100% | 100% |
BW Adolo Pte Ltd | Singapore | 100% | 100% |
BW Athena Pte Ltd | Singapore | 100% | 100% |
BW Berge Helene Pte Ltd | Singapore | 100% | 100% |
BW Bergesen Worldwide Pte Ltd | Singapore | 100% | 100% |
BW Catcher Limited\u200c1 | Bermuda | 100% | 100% |
BW Cidade de S\u00e3o Vicente Pte Ltd | Singapore | 100% | 100% |
BW Espoir Ivoirien Pte Ltd | Singapore | 100% | 100% |
BW Ideol AS\u200c2 | Norway | 100% | 53% |
BW Ideol Projects Company SAS\u200c2 | France | 76% | - |
BW Offshore Catcher (UK) Limited | United Kingdom | 100% | 100% |
BW Offshore Australia Management Pty Ltd | Australia | 100% | 100% |
BW Offshore China Ltd | China | 100% | 100% |
BW Offshore Cyprus Limited | Cyprus | 100% | 100% |
BW Offshore do Brazil Ltda | Brazil | 100% | 100% |
BW Offshore do Brazil Servicos Maritimos Ltda | Brazil | 100% | 100% |
BW Offshore EPC FZCO\u200c3 | United Arab Emirates | 90% | 100% |
BW Offshore France SAS | France | 100% | 100% |
BW Offshore GDM B.V. | Netherlands | 100% | 100% |
BW Offshore GDM Holdings Pte Ltd | Singapore | 100% | 100% |
BW Offshore GDM Pte Ltd | Singapore | 100% | 100% |
BW Offshore (Ghana) Pte Ltd | Singapore | 100% | 100% |
BW Offshore Global Manning Pte Ltd | Singapore | 100% | 100% |
BW Offshore Holdings Pte Ltd | Singapore | 100% | 100% |
BW Offshore Italy S.r.l | Italy | 100% | 100% |
BW Offshore Management (UK) Limited | United Kingdom | - | 100% |
BW Offshore Management B.V. | Netherlands | 100% | 100% |
Subsidiaries | Country of incorporation | Ownership 2023 | Ownership 2022 |
BW Offshore Nautipa AS | Norway | - | 100% |
BW Offshore Netherlands B.V. | Netherlands | 100% | 100% |
BW Offshore Norway AS | Norway | 100% | 100% |
BW Offshore Norwegian Manning AS | Norway | 100% | 100% |
BW Offshore Opportunity I Limited | Bermuda | - | 100% |
BW Offshore Poland sp z o.o. | Poland | 100% | 100% |
BW Offshore Project Management FZE | United Arab Emirates | 100% | 100% |
BW Offshore Shipholding Cyprus Limited | Cyprus | - | 100% |
BW Offshore Shipholding Pte Ltd | Singapore | 100% | 100% |
BW Offshore Singapore Pte Ltd | Singapore | 100% | 100% |
BW Offshore SPV Bermuda I Limited | Bermuda | 100% | 100% |
BW Offshore SPV Bermuda II Limited | Bermuda | - | 100% |
BW Offshore TSB Invest Pte Ltd | Singapore | 100% | 100% |
BW Offshore (UK) Limited | United Kingdom | 100% | 100% |
BW Offshore USA Management, Inc. | USA | 100% | 100% |
BW Offshore USA, LLC | USA | 100% | 100% |
BW Opportunity Limited | Bermuda | - | 100% |
BW Pioneer (UK) Limited | United Kingdom | 100% | 100% |
BW Polvo Pte Ltd | Singapore | 100% | 100% |
BW Sendje Berge Pte Ltd | Singapore | 100% | 100% |
BW Sirocco Holdings AS | Norway | 64% | - |
BW Umuroa Pte Ltd | Singapore | 100% | 100% |
BWO-Premier Ghana Limited | Ghana | 70% | 70% |
Ideol Japan, LLC\u200c2 | Japan | 100% | 100% |
BW Ideol S.A.\u200c2 | France | 100% | 100% |
Ideol USA, Inc.\u200c2 | USA | 100% | 100% |
Prosafe GFPSO I B.V. | Netherlands | - | 100% |
Prosafe Production B.V. | Netherlands | 100% | 100% |
Prosafe Services Cote d\u2019Ivoire Pte Ltd | Singapore | 100% | 100% |
Tinworth Pte Ltd | Singapore | 100% | 100% |
Tinworth France SAS | France | 100% | 100% |
Tinworth Gabon SA | Gabon | 100% | 100% |
Associates and joint ventures
Subsidiaries | Country of incorporation | Ownership 2023 | Ownership 2022 |
OCS Services Limited | British Virgin Islands | 50% | 50% |
Euro Techniques Industries | France | 40% | 40% |
BW Energy Limited\u200c4 | Bermuda | 23% | 27% |
BW Offshore AUS-JV Pte Ltd\u200c5 | Singapore | 51% | 51% |
BW Offshore Nigeria Limited | Nigeria | 49% | 49% |
Floating Energy Allyance 1 Limited | United Kingdom | 33% | 33% |
Fram Wind Solutions AS | Norway | 50% | - |
1Preference shares are issued with a preferential dividend right to ICBCL. The preferential dividend is a fixed percentage of outstanding preference shares, and accordingly the result allocated to non-controlling interest is independent of underlying result in the subsidiary.
2Owned by BW Sirocco Holdings AS, ownership effectively increased to 64 per cent per cent.
3Macquarie Bank Limited holds 10 per cent from 2022
4Ownership effectively reduced to 23 per cent in 2023 due to distribution of dividend shares, refer to Note16.
5Joint control due to shareholders agreements between the Group and external investors.
Note 21\tNon-controlling interests
The following table summarises the information related to the Group\u2019s subsidiaries that has material NCI.
During 2023, the group increased its investment in BW Ideol AS to 64.0 per cent, reducing the NCI share to 36.0 per cent.
BW Ideol AS
USD MILLION | 31 Dec 2023 | 31 Dec 2022 |
NCI percentage | 36.0% | 46.8% |
Non-current assets | 124.1 | 123.2 |
Current assets | 18.2 | 12.0 |
Non-current liabilities | 29.2 | 25.1 |
Current liabilities | 5.6 | 5.3 |
Net assets (100%) | 107.5 | 104.8 |
Net assets attributable to NCI | 38.7 | 49.0 |
Revenue | 5.9 | 9.2 |
Profit for the year | (18.9) | (17.6) |
OCI | (0.4) | - |
Total comprehensive income (100%) | (19.3) | (17.6) |
Profit allocated to NCI | (9.7) | (8.2) |
OCI allocated to NCI | (0.1) | - |
Cash flows from operating activities | (8.5) | (3.7) |
Cash flows from investing activities | (9.6) | (20.0) |
Cash flows from financing activities (dividends to NCI: nil) | 22.9 | (1.6) |
Net increase (decrease) in cash and cash equivalents (100%) | 4.8 | (25.3) |
In December 2023, the Group acquired an additional 10.8 per cent interest in BW Ideol AS increasing its owenrship from 53.3 per cent to 64.0 per cent.
USD MILLION | |
Carrying amount of NCI acquired | 9.4 |
Consideration paid to NCI | (3.9) |
An increase in equity attributable to owners of the Group | 5.5 |
ICBCL Agreement
In November 2017, the Group closed an agreement with a nominee of the financial leasing firm, ICBC Financial Leasing Co., Ltd. (ICBCL), whereby such nominee became an equity partner in BW Catcher Limited. BW Catcher Limited has issued preference shares with a preferential dividend right to ICBCL, for an aggregate subscription price of USD 275\u00a0000\u00a0000. The aggregate redemption and dividends payments on the preference shares are estimated to reflect approximately 25\u201330 per cent of the estimated free cash flow after debt servicing in the Catcher contract over a similar term. The net proceeds from the issue of the preference shares will be used for general corporate purposes. The investment by ICBCL is presented as a non-controlling interest in the statement of financial position of the Group.
USD 6.8 million (USD 7.9 million) has been paid in dividends during 2023 and the redemption for 2023 amounts to USD 22.9 million (USD 22.9 million).
Note 22\tLeases
The Group as a lessee
The Group leases office premises. Leases of office premises generally have lease terms between one and seven years. The Group has leases of certain office equipment (i.e., personal computers, printing- and photocopying machines, coffee machines) that are considered of low value.
The Group applies the short-term lease recognition exemption to its short-term leases. A short-term lease is a lease that has a lease term of 12 months or less from the commencement date. It also applies the low-value exemption to leases of office equipment that are considered to be low value.
The Group has elected to not separate non-lease components and account for the lease and the non-lease components as a single lease component.
The Group recognises a right-of-use asset and a lease liability at the commencement date of the lease. This is the date the underlying asset is available for use.
Right-of-use assets are measured at cost and depreciated using the straight-line method from the commencement date to the end of the lease term. In addition, the right-of-use asset is periodically reduced by impairment losses, if any, and adjusted for certain remeasurements of the lease liability.
The lease liability is initially measured at the present value of the lease payments that are not paid at the commencement date. In calculating the present value, the Group uses its incremental borrowing rate at the lease commencement date because the interest rate implicit in the lease is not readily determinable. The Group determines its incremental borrowing rate by obtaining interest rates from the external bank financing.
Total cash outflow for leases included in the statement of cash flows is USD 6.3 million (USD 7.2 million).
Right-of-use assets and lease liabilities
Right-of-use assets\u200c1 | Lease liabilities | |
Balance at 1 January 2023 | 21.1 | 17.9 |
Additions | - | - |
Adjustments | 0.1 | 0.1 |
Depreciation expense | (7.8) | n/a |
Interest expense | n/a | 0.5 |
Lease payments | n/a | (6.3) |
Foreign currency translation gain/(loss) | 0.4 | (0.2) |
Balance at 31 December 2023 | 13.8 | 12.0 |
Right-of-use assets\u200c1 | Lease liabilities | |
Balance at 1 January 2022 | 19.2 | 14.2 |
Additions | 10.9 | 10.5 |
Adjustments | 0.1 | 0.1 |
Depreciation expense | (8.6) | n/a |
Interest expense | n/a | 0.4 |
Lease payments | n/a | (7.2) |
Foreign currency translation gain/(loss) | (0.5) | (0.1) |
Balance at 31 December 2022 | 21.1 | 17.9 |
1Right-of-use assets relates to property, plant and equipment
USD MILLION | 2023 | 2022 |
Maturity analysis - contractual undiscounted cash flows | ||
Not later than one year | 2.9 | 6.4 |
Later than one year and not later than five years | 8.4 | 9.4 |
Later than five years | 1.9 | 3.8 |
Total undiscounted lease liabilities at 31 December | 13.2 | 19.6 |
Lease liabilities included in the statement of financial position at 31 December | 12.0 | 17.9 |
Current | 2.6 | 5.9 |
Non-current | 9.4 | 12.0 |
Amounts recognised in profit or loss
USD MILLION | 2023 | 2022 |
Interest on lease liabilities | 0.5 | 0.4 |
Depreciation expense | 7.8 | 8.6 |
Extension options
Some office leases contain contractual rights and options, such as extension and cancellation options, exercisable only by the Group and not by the lessors. These options may impact the estimated lease term. The Group assesses at lease commencement, and subsequently when facts and circumstances under the control of the Group require it, whether it is reasonably certain to exercise these options and reflects this in the lease term.
The Group as a lessor
Lease classification
When the Group enters into a new or amended lease arrangement with customers, the terms and conditions of the contract are analysed in order to assess whether or not the Group retains the significant risks and rewards of ownership of the asset subject of the lease contract. To identify whether risks and rewards are retained, the Group considers the indicators listed by IFRS 16 on a contract-by-contract basis. By performing such assessments, the Group makes significant judgement to determine whether the arrangement results in a finance lease or an operating lease. This judgement can have a significant effect on the amounts recognised in the consolidated financial statements and its recognition of profits in the future.
Operating leases
The contract for Petr\u00f3leo Nautipa reached the end of its term in October 2022. The FPSO was decommissioned from field in Gabon in 2023 and is expected to be sold for recycling in 2024.
The BW Opal lease contract is preliminary assessed to be an operating lease. The contract has a firm period of 15 years plus 10 years of options.
All other FPSOs owned by year-end 2023 are on firm operating lease contracts.
Future minimum payments receivable under non-cancellable operating lease contracts as at 31 December are as follows:
USD MILLION | 2023 | 2022 |
Not later than one year | 252.6 | 267.1 |
Later than one year and not later than five years | 785.5 | 831.9 |
Later than five years | 1\u00a0978.9 | 2\u00a0170.9 |
Total amount | 3\u00a0017.0 | 3\u00a0269.9 |
Note 23\tCommitments and guarantees
Commitments related to construction projects and operations, contracted for at the balance sheet date, but not recognised in the financial statements are as follows:
USD MILLION | 2023 | 2022 |
Nominal amount | 791.6 | 788.7 |
At 31 December, the commitments included committed contract values related to the construction of the FPSO for the Barossa gas field, life extension activities on the fleet, as well as for ongoing operations.
The Group has issued bank guarantees in favour of various customers totalling USD 2.9 million (USD 0.8 million).
The bank debt related to the USD 295 million Corporate Facility, as referred to in Note 17, is secured by:
\u2022a parent company guarantee from BW Offshore Limited
\u2022first priority mortgages over two FPSOs
\u2022first priority secured interest in all earnings and proceeds of insurance related to the same two FPSOs.
The bank debt related to the Catcher loan facility, as referred to in Note 17, is secured by:
\u2022a parent company guarantee from BW Offshore Limited
\u2022a first priority mortgage over the FPSO BW Catcher, owned by BW Catcher Limited, Bermuda
\u2022first priority secured interest in all earnings and proceeds of insurance related to the FPSO.
The bank debt related to the USD 1\u00a0150 million Barossa Loan Facility, as referred to in Note 19, is secured by:
\u2022a parent company guarantee from BW Offshore Limited
\u2022assignment of key construction contracts
\u2022a first priority mortgage over the FPSO, once completed, to be owned by BW Offshore AUS-JV Pte Ltd, Singapore
\u2022first priority secured interest in all earnings and proceeds of insurances related to the FPSO once contract has commenced.
In addition, the Group has provided an insurance bond of USD 100 million to Santos NA Barossa Pty Ltd related to the prepayments received during the construction period. The insurance bond expires in March 2025.
The carrying value of vessels pledged as collateral per 31 December 2023 was USD 1\u00a0002.0 million (USD 514.6 million). In addition, the shares in certain vessel-owning companies in the Group are pledged.
", "dimensions": { "concept": "ifrs-full:DisclosureOfCommitmentsExplanatory", "language": "en", "entity": "scheme:2138008LFKH8V2EOA915", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "f71694": { "value": "Note 24\tContingent assets and liabilities
In September 2021, Petro Rio Explora\u00e7\u00e3o e Produ\u00e7\u00e3o de Petr\u00f3leo Ltda. (\u2018PetroRio\u2019) filed a request for arbitration in relation to the FPSO Polvo against the Group under the Charter and Services Agreements. PetroRio puts forward different heads of claim in the total amount of approximately USD 31 million for overpayment of hire and arbitration costs and fees. In October 2021, BW Offshore filed their Response and put forward substantial counterclaims primarily for unpaid invoices and demobilisation costs for approximately USD 30 million. It is expected that an award will be obtained before the end 2024 or early 2025. The net exposure is considered approximately USD 11 million.
During the normal course of business, the Group is involved in legal and other proceedings which are unresolved and we have accounted for such claims and litigations based on the Group's best judgement.
In addition to the cases mentioned above, the Group is also subject to occasional tax audits and other minor disputes with clients or vendors.
", "dimensions": { "concept": "ifrs-full:DisclosureOfOtherProvisionsContingentLiabilitiesAndContingentAssetsExplanatory", "language": "en", "entity": "scheme:2138008LFKH8V2EOA915", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "f71695": { "value": "Note 24\tContingent assets and liabilities
In September 2021, Petro Rio Explora\u00e7\u00e3o e Produ\u00e7\u00e3o de Petr\u00f3leo Ltda. (\u2018PetroRio\u2019) filed a request for arbitration in relation to the FPSO Polvo against the Group under the Charter and Services Agreements. PetroRio puts forward different heads of claim in the total amount of approximately USD 31 million for overpayment of hire and arbitration costs and fees. In October 2021, BW Offshore filed their Response and put forward substantial counterclaims primarily for unpaid invoices and demobilisation costs for approximately USD 30 million. It is expected that an award will be obtained before the end 2024 or early 2025. The net exposure is considered approximately USD 11 million.
During the normal course of business, the Group is involved in legal and other proceedings which are unresolved and we have accounted for such claims and litigations based on the Group's best judgement.
In addition to the cases mentioned above, the Group is also subject to occasional tax audits and other minor disputes with clients or vendors.
", "dimensions": { "concept": "ifrs-full:DisclosureOfContingentLiabilitiesExplanatory", "language": "en", "entity": "scheme:2138008LFKH8V2EOA915", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "f71902": { "value": "Note 25\tRelated parties transactions
The largest individual shareholder, BW Group Limited owning 49.9 per cent, is incorporated in Bermuda and is controlled by Sohmen family interests.
Investments in subsidiaries are disclosed in Note 20, investments in associates and joint ventures are disclosed in Note 15and remuneration to the Board of Directors,and the Senior Management team is detailed in Note 8.
Other related party transactions:
Transaction values forthe year ended 31 December | Balance outstandingas at 31 December | |||
USD MILLION | 2023 | 2022 | 2023 | 2022 |
Sale of goods and services | ||||
Joint ventures | 728.9 | 690.7 | - | 67.8 |
Associates | 141.2 | 102.1 | 18.1 | 12.3 |
Purchase of goods | ||||
Joint ventures | 300.5 | 333.7 | 43.7 | 48.5 |
Associates | 8.6 | 9.3 | 0.6 | 1.9 |
Others | ||||
Associates | ||||
Short-term receivable | - | - | 0.4 | 0.2 |
Sale and purchase from joint ventures primarily relate to the Barossa project. These transactions are considered a sale leaseback and are eliminated at group level.
In April 2022, the Group signed an agreement for the sale of the FPSO Polvo to BW Energy for a total consideration of USD 50 million, split by USD 5 million in one year charter hire and USD 45 million for purchase of the vessel. BW Energy paid USD 30 million in October 2023, and the remaining USD 20 million will be paid on 30 April 2024, at the latest and is presented as Trade and other assets. Interest on instalments started to accrue from 24 July 2023. In 2022, an independent third-party valuation of the FPSO concluded that the sales price is within a fair market value range. The contract is classified as a financial lease as of 31 December 2022. The title to the FPSO was transferred to BW Energy in October 2023.
", "dimensions": { "concept": "ifrs-full:DisclosureOfRelatedPartyExplanatory", "language": "en", "entity": "scheme:2138008LFKH8V2EOA915", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "s8_notes__6__120-1": { "value": "Note 26\tClimate risks
Based on climate scenarios provided by the International Energy Agency (IEA) and DNV, the Group expects reasonably steady operational conditions in the medium-term. More transformative changes to the global energy supply are expected to materialise towards 2040, where fossil fuel supply in the global energy mix is expected to decline in relative and nominal terms, with natural gas as a potential exception.
Climate-related risks to BW Offshore therefore include market effects from changing demand for oil and gas, increased cost of capital, evolving laws and regulations, disruptive technology, as well as physical effects of climate change.
To respond to climate-related risk, the Group has identified the need to diversify its asset portfolio to include energy transition fuels (such as floating natural gas plants) and renewable technologies. The Group has invested in offshore floating wind technology and owns 64 per cent of BW Ideol.
Divesting legacy assets with marginal contracts approaching end of contract has also been a strategic target for the Group. In 2023, five assets have been divested (three in 2022). The divestment programme addresses a complex global operational set up, reduces residual value risk and operational liabilities, as well as improvs cash-flow visibility.
Stranded assets
Demand for hydrocarbon products in the long-term is uncertain due to the global clean energy transition. Decreased demand for new upstream hydrocarbon developments will result in less demand for FPSOs. The Group\u2019s primary revenue stream is owning, leasing and operating such assets to oil and gas operators. Reduced market demand for upstream production in the long-term could prompt assets within the BW Offshore fleet to become stranded.
An assessment has been made as to whether the Group has assets that are exposed to significant environmental risk or climate risk (\u2018stranded assets\u2019). The Group has not identified any stranded assets at 31 December 2023.
Note 27\tMacroeconomic and geopolitical uncertainty
During the fiscal year ending 31 December 2023, the global macroeconomic and geopolitical landscape continued to influence market conditions, particularly within the energy sector. Persistent concerns regarding regional energy shortages sustained elevated oil and gas prices, prompting energy companies to intensify capital allocation towards traditional hydrocarbon-based projects. However, heightened inflationary pressures, coupled with supply chain and logistics challenges, escalated project execution risks, impacting cost management processes and potentially affecting project profitability. In response to ongoing global supply chain disruptions and commodity inflation, the Group remains committed to mitigating potential adverse effects, with special emphasis on the Barossa project.
Long-term, an observed shift in investor focus towards energy transition activities is likely to continue, characterised by increased capital allocation towards electrification and clean fuels. This trend may introduce increased uncertainty related to access to financing and the capital cost associated with new hydrocarbon-based projects, along with as increased costs to adhere to evolving regulatory requirements.
The Group's operational activities are subject to tax in various jurisdictions., exposing it to tax obligations subject to changes in legislation. Given the long-term nature of its contracts the Group\u2019s financial results are exposed to risk of regulatory alterations impacting taxation policies.
", "dimensions": { "concept": "ifrs-full:DisclosureOfAdditionalInformationExplanatory", "language": "en", "entity": "scheme:2138008LFKH8V2EOA915", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "f72858": { "value": "Note 28\tSubsequent events
In January 2024, the Group sold all of its shares in BW Energy Limited, total of 58\u00a0111\u00a0461 shares at a price of NOK 32 per share, resulting in total proceeds to BW Offshore of NOK 1\u00a0860 million or approximately USD 176 million. Due to currency fluctuations, a loss related to the sale was recognised in 2024.
In January 2024, the contract for BW Catcher was extended to 6 January 2025. BW Catcher is owned and operated by the Group and is leased out under a seven-year fixed term contract, with extension options for an additional 18 years. The original seven-year base term of the contract expires on 6 January 2025 and from 6 January 2024 the contract is subject to a rolling 12-month termination right. Until such a termination notice is received, the contract automatically extends on a day-to-day basis beyond 6 January 2025 into the option period.
", "dimensions": { "concept": "ifrs-full:DisclosureOfEventsAfterReportingPeriodExplanatory", "language": "en", "entity": "scheme:2138008LFKH8V2EOA915", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } } } }