Delivering energy
independence
ANNUAL REPORT 2022
2 Auditor’s report
HÖEGH LNG
Annual
Report
2022
Cover photo
Höegh Esperanza
HÖEGH LNG
Auditor’s report 3
About Höegh LNG
Höegh LNG is a pioneer within maritime energy infrastructure,
providing fast-track floating LNG terminals to facilitate for
national and regional energy security around the world. The
flexibility provided by floating terminal solutions also supports
the transition to clean, carbon-free energy.
We are a leading innovator, owner and operator of Floating
Storage and Regasification Units (FSRUs) and LNG
carriers (LNGCs). Both are critical to energy security, and
a foundation for future technologies and infrastructure for
decarbonisation of global energy systems.
For over 50 years, we have connected energy producers and
end-users via safe and reliable access to critical and cost
competitive LNG infrastructure. FSRUs are strategic assets
that provide countries and energy companies with rapid,
flexible and cost-efficient access to the global LNG market.
Today, half of our capacity is deployed in Europe.
Technical and commercial innovation in addition to
operational excellence and a competent and purpose-built
organisation have made us a leader within the expanding
LNG import terminal market. These factors will remain the
foundation for long-term value creation and future growth,
also within clean energy infrastructure solutions.
Höegh LNG is a Bermudian entity with approximately 900
employees at sea and onshore, with presence in Norway,
Germany, Lithuania, United Kingdom, the USA, Singapore,
Indonesia, Egypt, Colombia, Brazil and the Philippines.
Höegh LNG Holdings Ltd. is owned by Larus Holding Ltd.,
a 50-50 joint venture between Leif Höegh & Co. Ltd. and
Floating Infrastructure LP. Leif Höegh & Co. Ltd. is indirectly
controlled by the third generation of the Høegh family, while
Floating Infrastructure LP is owned by funds managed by
Morgan Stanley Infrastructure Holdings Inc.
Please see: www.hoeghlng.com
4 Auditor’s report
HÖEGH LNG
100% recycled paper
All rights reserved - 2018
Type Ownership (%) Built Flag
Storage capacity
(m
3
)
Regas capacity
(MMscf/d)
Arctic Princess LNGC 34 2006 NIS 147 208
Arctic Lady LNGC 50 2006 NIS 147 208
Neptune FSRU 50 2009 NIS 145 130 750
Cape Ann
FSRU 50 2010 NIS 145 130 750
Independence FSRU 100 2014 SGP 170 132 384
PGN FSRU Lampung FSRU 100 2014 IDN 170 132 360
Höegh Gallant FSRU 100 2014 NIS 170 000 500
Höegh Grace FSRU 100 2016 MHL 170 000 500
Höegh Giant FSRU 100 2017 SGD 170 032 750
Höegh Esperanza FSRU 100 2018 NIS 170 032 750
Hoegh Gannet FSRU 100 2018 SGP 170 000 1000
Höegh Galleon FSRU 100 2019 MHL 170 000 750
KEY FINANCIAL FIGURES
FLEET LIST
(in USD’000 unless otherwise indicated) 2022 2021
INCOME STATEMENT
Total income 380 787 351 834
Operating profit before depreciation and impairment(EBITDA) 153 231 217 194
Operating profit after depreciation and impairment 37 955 103 788
Loss for the year (55 409) (21 284)
BALANCE SHEET AS OF 31 DECEMBER
Equity adjusted for hedging transactions 699 216 743 505
Adjusted equity ratio (%) 29 30
Net interest-bearing debt 1 336 667 1 440 524
CASH FLOWS
Net cash flows from operating activities 163 040 196 513
Net cash flows from investing activities (180 938) (26 527)
Net cash flows from financing activities 30 608 (178 490)
Net increase (decrease) in cash and cash equivalents 12 710 (8 504)
2022 2021
Technical availability (%) 99.7 99.6
Lost time injury frequency (per million work hours) 0.0 0.63
OPERATIONAL KPIs
HÖEGH LNG
Auditor’s report 5
Contents
ACCELERATING COUNTRIES TO ENERGY SECURITY AND TRANSITION 08
DIRECTORS’ REPORT 12
Strategic direction 14
New President and CEO 15
Sustainability 15
Review of 2022 17
LNG and FSRU market in 2022 18
Financial results 19
Risk and risk management 21
Shareholder information 23
Corporate governance 23
Prospects 23
CORPORATE GOVERNANCE REPORT 26
Implementation and reporting on corporate governance 28
Business 29
Equity and dividends 30
Equal treatment of shareholders 31
Shares and negotiability 31
General meetings 31
Nomination committee 32
Board of directors: Composition and independence 32
The work of the board of directors 34
Risk management and internal control 35
Remuneration of the board of directors 36
Remuneration of executive personnel 36
Information and communications 37
Takeovers 37
Auditor 37
FINANCIAL STATEMENTS 38
Consolidated financial statements Höegh LNG Group 40
Consolidated statement of income 42
Consolidated statement of comprehensive income 42
Consolidated statement of financial position 43
Consolidated statement of changes in equity 45
Consolidated statement of cash flows 46
Notes 47
Financial statements Höegh LNG Holdings Ltd. 96
Statement of income 98
Statement of comprehensive income 98
Statement of financial position 99
Statement of changes in equity 101
Statement of cash flows 102
Notes 103
Directors’ responsibility statement 116
Independent auditors report 120
Alternative performance measures 128
01
Accelerating
countries to energy
security and
transition
01
8 Accelerating countries to energy security and transition
HÖEGH LNG
2022 was a turbulent year for the energy markets and demonstrated both the
fragility and the resilience of the global energy systems. In a market mainly driven by
concerns over security of energy supply in Europe, LNG prices were record high and
the global LNG trade grew with 5%, reaching 400 million tonnes.
Accelerating countries to
energy security and transition
Photo: Bård Gudim
Accelerating countries to energy security and transition 9
HÖEGH LNG
In total, Höegh LNG secured four new long-term
contracts in 2022 and the entire fleet is now
either operating under or committed to long-
term contracts with strong counterparties. It is
our ambition to grow our business and in March
2023 we completed the acquisition of the LNG
carrier Golar Seal. The vessel, renamed Hoegh
Gandria, is an excellent addition to our fleet
and may potentially become a candidate for
conversion to FSRU.
Our fleet had stable operations throughout the
year, with technical availability close to 100%.
We had zero lost-time injury (LTI) reported in
2022 on Höegh LNG’s vessels, 99.1% retention
rate for maritime personnel and an average
sickness absence among office employees in
Oslo of 1.6 %. These are stellar results.
Our focus on sustainability and the energy
transition gained momentum during 2022. Höegh
LNG’s overall climate ambition is to reduce total
CO2 emissions by 50% and have the first net
zero-carbon FSRU in operation in 2030. Energy
management, monitoring and optimisation of our
operations are one of the main drivers to reduce
emissions in our existing fleet.
Höegh LNG was awarded a maximum
5-star rating in GRESB infrastructure assets
benchmark report. This placed us as first
among participating energy resource
processing companies. This is a significant
result considering that we are achieving it,
on our first attempt. We are very proud of
this recognition, and it further confirms our
commitment to the sustainability agenda and
that transparency is key to our ESG program.
At Höegh LNG, we have defined our purpose as
“Accelerating Countries to Energy Security and
Transition”. We plan to leverage the extensive
experience from floating terminals, liquid gas
handling and marine gas transportation to
expand our services. Together with customers
and partners, we have initiated several projects
to develop solutions for carbon capture and
storage (CCS), ammonia and hydrogen.
Over the year we continued to develop other
areas of our business. In September we
completed the acquisition of the publicly
held common units in Höegh LNG Partners
LP, becoming sole owner, and delisted the
common units from New York stock exchange.
In this market, Höegh LNG successfully concluded two firm 10-year FSRU contracts
with the Federal Government of Germany. Höegh Esperanza and Hoegh Gannet are
allocated to these two contracts and are already in place in Germany, located in
Wilhelmshaven and Brunsbüttel. Furthermore, Neptune, which is under long-term
charter with TotalEnergies, has commenced regas operations for Deutsche ReGas
in Lubmin, Germany. These three vessels have a combined annual regas capacity
close to a third of the natural gas that was previously imported by Germany from
Russia. The speed at which the gas import terminals were established demonstrates
the versatility and flexibility that our FSRUs provide and their critical role enabling
access to global gas markets. This being my first letter as President and CEO, I am
very proud of the performance and projects delivered by our people at Höegh LNG.
My sincere thanks goes out to our team and our customers and partners whom
together have delivered highly innovative infrastructure solutions securing gas
supply to Germany.
10 Accelerating countries to energy security and transition
HÖEGH LNG
We are a global FSRU leader with the most
modern and sophisticated fleet with an
impeccable track record for operational
excellence.
In December, the partnership applied for
a voluntary delisting and withdrawal of
registration with SEC for its 8.75% Series A
cumulative redeemable preferred units and
the delisting was effective in January 2023.
In January 2023, Höegh LNG signed a new
loan facility agreement to refinance Höegh
Esperanza and Hoegh Gannet, both employed
on long-term contracts in Germany. The new
loan facility is for a total of of USD 685 million,
has a tenor of 10 years and will reduce Höegh
LNG’s average cost of debt. The funds will be
applied to repay the existing loan facilities for
the two vessels and make us well positioned for
future growth.
We are a global FSRU leader with the most
modern and sophisticated fleet with an
impeccable track record for operational
excellence. Höegh LNG is well positioned to
compete for new regasification projects world-
wide including any new fast-track projects for
securing energy supply into Europe.
Erik Nyheim
President and CEO
Accelerating countries to energy security and transition 11
14 Strategic direction
15 New President and CEO
15 Sustainability
17 Review of 2022
18 LNG and FSRU market in 2022
19 Financial results
21 Risk and risk management
23 Shareholder information
23 Corporate governance
23 Prospects
Directors’ report
02
14 Directors' report
HÖEGH LNG
Höegh LNG Holdings Ltd. (“Höegh LNG
Holdings” or the “company”) and its
subsidiaries and joint ventures (together
“Höegh LNG” or “the group”) is a privately
owned group which operate worldwide and is
the global market leader for floating storage
and regasification units (FSRUs).
With the company’s registered office located
in Hamilton, Bermuda, the group operates
worldwide and are present in Oslo (Norway),
Manila (Philippines), London (UK), Singapore,
Miami (USA), Jakarta (Indonesia), Klaipeda
(Lithuania), Cairo (Egypt), Cartagena (Colombia),
Hamburg (Germany) and Santos (Brazil).
Strategic direction
Höegh LNG provides cost competitive and
flexible LNG infrastructure that forms the
basis for energy security and independence,
enabling the transition to a low carbon future.
Our critical LNG infrastructure allows all
countries with a coastline to access global
LNG markets. LNG can be sourced globally
and shipped through specialised LNG carriers,
providing natural gas consumers with an
abundant sourcing flexibility compared to gas
transported in fixed pipelines.
We drive technological and commercial
innovation in our markets and continuously
seek excellence in our operations to maximise
value for our stakeholders while ensuring
safety and well-being of our employees and
minimising the impact on the environment.
We create growth and value by offering
a solution addressing three megatrends
affecting global energy systems;
• Energy security is a top geopolitical priority,
where all nations require a robust plan for
During 2022 LNG demand saw a robust growth, contributing to a buoyant market
with record high LNG prices. The LNG carrier market also experienced record high
sales levels ahead of the winter season, driven by high LNG demand and bottlenecks
at European discharge ports. Global LNG trade grew by 5% in 2022, reaching 400
million tonnes. Amidst this bustling market, Höegh LNG had a successful year in
business development, securing four new long-term FSRU contracts. The entire
fleet is now either operating under or committed to long-term contracts with strong
counterparties. At the time of writing, the market for gas and LNG remains tight and
is still driven by concerns over security of energy supply in Europe. As a result, future
market developments are unusually unpredictable and will depend both on the
availability of commodity, and on gas customers’ technical and economic capacity
to secure supplies. Höegh LNG has ambition to grow within LNG and completed in
March 2023 the acquisition of the LNG carrier Golar Seal. The vessel, renamed Hoegh
Gandria, will be an excellent addition to our fleet and provide flexibility to pursue
FSRU conversion opportunities.
Directors’ report for 2022
HÖEGH LNG
Directors’ report 15
capacity of supply to meet current and future
energy demand and redundancy
• Cost of energy, including universal access to
affordable and abundant energy
• Energy transition and changes to the energy
mix to decarbonise energy systems and
minimise potential environmental and climate
change impacts
Our strategic beliefs, direction and ambitions
consider the impact of these megatrends on
Höegh LNG as a company and our industry. They
guide how we develop to reach our full potential
and generate long-term value. We plan to grow
our LNG infrastructure business and innovate
clean energy terminal solutions for emerging
markets such as carbon capture and storage
(CCS), ammonia, hydrogen and other segments
– all supported by our world-class operations.
New President and CEO
Mr Erik Nyheim joined Höegh LNG as the new
President and CEO from mid-August 2022.
He brings important and relevant experience
which will complement the management team
and contribute to a successful realisation of
the company’s strategy. The board would like
to thank Mr Thor Jørgen Guttormsen for his
dedication and leadership as interim President
and CEO from November 2021 through July 2022.
Sustainability
2022 was an eventful year for Höegh LNG
in terms on delivering on our Sustainability
agenda. Due to our high focus in this area,
Höegh LNG was awarded 5 stars, with a
97/100 score, in GRESB infrastructure assets
benchmark report. This placed Höegh LNG
first among participating energy resource
processing companies.
A significant contributor to this stellar
performance is Höegh LNGs transparent culture
and structured approach to ESG.
Maintaining safe operations and minimising
risk is the number one priority and Höegh LNG
aspires to achieve zero harm to people and
the environment and believe all incidents can
be prevented. The group encourages an open
communication culture, in which reporting is
perceived as a strength and a vital element for
safety and improvement.
As an organisation with global operations, Höegh
LNG navigates a variety of local regulations and
practices. This requires great attention to ethical
behaviour, compliance, and risk mitigation. Along
with sustainability, ethics and compliance are
among the top priorities and strategic enablers
of the group. Business integrity is a fundamental
part of how Höegh LNG operates and how
the company treats its business partners and
employees. Beyond the group’s own internal
measures, Höegh LNG believes in collective
action to achieve our ethical and compliance
goals. Höegh LNG is an active member of the
Maritime Anti-Corruption Network (MACN),
which provides valuable insights into specific
anti-corruption challenges in the maritime
industry. In 2022, Höegh LNG launched the
MACN Anti-Corruption e-learning course to all
seafarers with a completion rate of 84%.
Impact on the external environment
The group`s goal is always to limit any negative
impact the operations might have on the
environment and biodiversity. Höegh LNG
has specific focus on marine ecosystems and
works continuously to minimise the risk of spills
while reducing discharge of excess biocides
and cooling water. Despite performing four dry
dockings during 2022, Höegh LNG managed to
reduce plastic waste by 11%.
A part of the energy sector, the group is
focused on contributing as much as possible to
16 Directors' report
HÖEGH LNG
the reduction of carbon dioxide emissions. This
is one of the main sustainability priorities and
Höegh LNG is actively engaging with operators,
customers and maritime organisations to
develop technology and drive change towards a
low-carbon future.
Höegh LNG has significantly reduced CO
2
and
other emissions per vessel by applying energy
efficient solutions and by adding 10 modern
FSRUs to its fleet since 2009. A key part of
Höegh LNG’s approach has been to develop a
digital platform to harvest big data from the fleet
to track and improve operational performance.
Höegh LNG is committed to reducing carbon
emissions (scope 1) by 50% and provide its
first zero-carbon FSRU by 2030, using 2020 as
a baseline. Some of the most important areas of
focus in relation to achieving zero-carbon FSRU
is to assess potential solutions for providing
green power and heating water from shore.
In 2022, four of the vessels were docked in
preparation for upcoming FSRU operations.
During 2023, nine of Höegh LNG’s ten FSRUs
will be in stationary FSRU operation. The group
will continue to optimise the balance between
local and global suppliers in each location to
ensure the best supply chain structure for each
vessel, with less transportation and emissions.
Clean energy
Höegh LNG is actively seeking areas where the
company can contribute to the transition to a
low-carbon world while growing its business in
a commercially sustainable manner. There are
many similarities between the core business of
Höegh LNG and non-carbon energy solutions.
Höegh LNG plans to leverage the extensive
experience from floating terminals, liquid gas
handling and marine gas transportation to
expand our services into energy transition
markets. Together with customers and partners,
we plan to develop floating terminal solutions
for carbon capture and storage (CCS), ammonia,
hydrogen and other segments. The solutions
will aim to help our customers reduce their
carbon footprint whilst continuing to provide
reliable energy solutions. We look forward to
working with our customers to provide them and
countries with sustainable and cost-efficient
energy solutions.
More detailed information is available in the
company’s sustainability report for 2022 on:
www.hoeghlng.com
Personnel
Höegh LNG had 192 permanent office
employees and 680 maritime personnel on 31
December 2022. The 24-month cumulative
retention rate on 31 December 2022 was 99.1%
for maritime personnel. Average sickness
absence among office employees in Oslo was
1.6% in 2022 which is a decrease of 1% from
previous year. There were zero lost-time injuries
(LTI) reported in 2022 onboard Höegh LNG
vessels. This outstanding performance is due to
that maintaining safe operations and minimising
risk is the number one priority for Höegh LNG.
The occupational health, safety and working
environment (OHS) policy reflect our group Code
of Conduct and includes the principle that Höegh
LNG strive to ensure zero harm to our colleagues
and an injury-free working environment.
Considering the importance of HLNG’s assets
as critical infrastructure, the group have
strengthened the cyber and physical security,
by conducting continuous cyber awareness and
other security campaigns for all employees, both
onshore and on board our vessels.
Diversity
Höegh LNG has a no-tolerance policy regarding
discrimination based on gender, age or
ethnicity. By 2025 Höegh LNG aims to have a
gender balance in the senior leadership team
and other leadership areas in the organisation.
HÖEGH LNG
Directors’ report 17
To progress towards this goal, Höegh LNG has
reviewed its recruitment processes, focusing
i.a. on advertisements to attract female and
multinational applicants and making sure that
recruitment decisions are age and gender
balanced.
There is still a gap to traverse in order to meet
the goal, however in 2022 there was an increase
in the number of female seafarers. Positions
held by women include range from cadets up
to Chief Officer as the highest rank. Women
accounted for 37% of Höegh LNG’s office
employees on 31 December 2022. One of seven
directors on the company’s board are female,
while the Senior Management Team has one
female member out of six.
Review of 2022
Business development
The tragic outbreak of war in Ukraine in
February 2022 led to a surge in interest for LNG
import terminals in Europe, where countries
were looking to secure import capacity for LNG
to reduce dependency on pipeline gas from
Russia. As a consequence, demand for FSRUs
increased significantly.
Höegh LNG had a successful year on the
business development front in 2022. In June,
Australian Industrial Energy (AIE) lifted its
final subjects for the FSRU contract signed
by both parties in 2021. The FSRU contract
has a term of 15 years with early termination
options for AIE after year 5 and 10. AIE is
entitled to time the start-up of the contract
between 2023 and 2025, depending on AIE’s
requirements. Following repositioning from
India during third quarter, Höegh Giant is now
operating in the LNG carrier market on an
interim charter before it is scheduled to go
to Brazil in the second quarter of 2023 and
commence FSRU operations under the 10-year
time charter contract with TSRP/Compass.
The group secured two new firm 10-year FSRU
contracts with the Federal Government of
Germany. Höegh Esperanza and Hoegh Gannet
are allocated to these two contracts and are
already in operations in Germany, located in
Wilhelmshaven and Brunsbüttel.
The business development team is in active
dialogue with several potential new projects
looking for FSRU capacity which could provide
growth opportunities for the group in the future.
The recently completed acquisition of the LNG
carrier Golar Seal (renamed Hoegh Gandria)
provides flexibility to pursue FSRU conversion
opportunities.
Operational performance
The fleet delivered stable operations throughout
the year with technical availability close to 100%
and there were no LTI’s recorded in 2022.
At the start of the year, delays to scheduled
crew changes continued to be the main effect
of the Covid-19 pandemic. Nevertheless, all
FSRUs and LNGCs have been fully operational
during the year and crewed in accordance with
relevant safety and regulatory requirements.
From second quarter onwards, operations have
been focused on preparing the vessels for
FSRU operations in Europe and Brazil. Höegh
Giant was idle from April through September
following the termination of its FRSU contract
in India. Höegh Esperanza, Hoegh Gannet and
Höegh Giant were all idle for a period in second
half of the year while repositioning to yard and
finalising class renewals and modifications of
the vessels. Höegh Esperanza successfully
commenced regas operations in Wilhelmshaven
in late December 2022 and is on hire under
its new contract. Hoegh Gannet arrived in
Brunsbüttel in January 2023 when hire started
to accrue under the new contract. The FSRU is
expected to complete its commissioning and
18 Directors' report
HÖEGH LNG
commence regas operations in March/April
2023. Höegh Giant is expected to commence
FSRU operation in Brazil in second quarter 2023.
Furthermore, Neptune, which is under long-
term charter with TotalEnergies and was out of
service in third quarter for regular class renewal
and maintenance, successfully commenced
regas operations for Deutsche ReGas in Lubmin,
Germany during January/February 2023. The
board of directors recognise that 2022 has been
a very demanding year for the organisation. The
efforts and dedication of all employees onshore
and onboard the vessels are highly appreciated.
Fleet development
On 31 December 2022, Höegh LNG had a fleet
of 10 FSRUs and two LNG carriers (LNGCs),
which was unchanged from the year before.
The average age of the assets in operation is
9.1 years, while the average remaining contract
length per vessel was 9.3 years at the end of
2022.
For 2023, the fleet has close to 100 per cent
contract coverage, with the exception of some
expected idle time between contracts for Höegh
Giant and Höegh Galleon.
In addition to its own fleet, Höegh LNG provides
technical management services to Avenir
LNG and its subsidiaries (“Avenir”) for three of
Avenir’s small-scale LNG vessels.
Corporate activities
Höegh LNG Holdings Ltd. completed the
acquisition of publicly held common units of all
Höegh LNG Partners LP.
With new equity received from its owner, Höegh
LNG Holdings Ltd. completed in September
2023 the acquisition of publicly held common
units of Höegh LNG Partners LP, becoming the
sole owner of its common units. As a result,
the common units were delisted from New
York Stock Exchange 26 September 2023.
On 5 December 2022, Höegh LNG Partners
LP announced a voluntary delisting of the
partnership’s 8.75% Series A cumulative
redeemable preferred units and of its plans
to delist and withdraw the registration of its
preferred units with SEC. The delisting was
effective 2 January 2023.
Acquisition of LNG carrier
On 20 February 2023, Höegh LNG announced
an agreement to acquire the 2013-built LNG
carrier Golar Seal with 160.000 cbm cargo
capacity. Höegh LNG completed the acquisition
22 March 2023 and renamed the vessel to
Hoegh Gandria and plans to employ the vessel
in the carrier market on a term time charter. The
transaction underpins our growth ambitions.
The vessel will be an excellent addition to our
fleet and provides flexibility to pursue FSRU
conversion opportunities.
Refinancing
In February 2023, Höegh LNG signed a new
loan facility agreement with a group of banks
to refinance Höegh Esperanza and Hoegh
Gannet, both employed on long-term contracts
in Germany. The new loan facility agreement is
for a total amount of USD 685 million and has
a tenor of 10 years. The loan amount will be
applied to repay the existing loan facilities for
the two vessels and general corporate use and
will reduce Höegh LNG’s average cost of debt.
The facility is split in two tranches per vessel.
The refinancing of Höegh Esperanza has been
completed and the loan tranche was drawn on
21 February 2023. The refinancing of Hoegh
Gannet is expected to be completed in April
2023, subject to having successfully completed
its commissioning for regas operations in
Germany and customary closing conditions.
LNG and FSRU market in 2022
Global LNG and gas markets were turbulent
and tight in 2022, in large part driven by the
HÖEGH LNG
Directors’ report 19
vastly reduced exports of Russian pipeline
gas to Europe. The extreme price fluctuations
culminated in the third quarter as Europe raced
to fill storages ahead of the heating season,
before receding towards the end of the year as
winter brought unseasonably mild temperatures
– especially in Europe both also across the
northern hemisphere gas markets. Gas and LNG
prices nonetheless remained at elevated levels
in a historical perspective.
During 2022, the annual global LNG trade grew
by 5 percent, up 20 million tonnes as compared
to 2021, reaching 400 million tonnes. The high
commodity prices combined with continued
lockdowns led China to reduce its spot LNG
imports, paving the way for Japan to re-take the
position as the world’s largest importer of LNG.
Europe’s combined imports grew by 61 percent,
reaching a record-high of 129 million tonnes.
LNG carrier spot charter rates were also
volatile through 2022, and spiked to record-
high levels in the second half of the year
due to the disruptive effects of the tight
European gas market. Tonne-mile demand
trended downwards as Europe attracted
virtually all available Atlantic LNG volumes.
Tonne-time nonetheless increased due to
bottlenecks in European discharge ports,
leading to widespread floating storage and a
corresponding lack of available tonnage. In the
beginning of 2023, LNG carrier spot charter
rates have again receded, while term rates
remain firm as charterers are preparing for next
winter. Newbuilding prices for LNG carriers
increased during the year.
The FSRU market continues to grow as
demonstrated by Höegh LNG’s successful
business development activities in 2022. On 31
December 2022, there were 45 FSRUs on the
water globally (excluding four barges with limited
storage and/or send out capacity). There is one
open FSRU newbuild on order with expected
delivery in 2026 and 2-3 ongoing conversions
contracted to specific FSRU projects. Two older
conversions with relatively limited storage
capacity are in layup. Following the recent surge
in demand for FSRUs, most of the world’s fleet of
FSRUs is now either employed on existing long-
term contracts or committed to FSRU contracts
with near-term commencement.
Financial results
Group figures
The financial statements of Höegh LNG
consolidate its subsidiaries and include joint
venture companies in accordance with the
equity method. Unless otherwise stated, figures
for 2022 are compared with those for 2021.
Income statement
Total income was USD 380.7 million in 2022
(2021: USD 351.8 million), while operating profit
before depreciation and amortisation (EBITDA)
was USD 153.2 million (USD 217.2 million).
Although revenues increased, the group also
incurred higher expenses in 2022, through
increased vessel operating expense primarily
related to repositioning of three vessels to make
them ready for FSRU operations and increased
administrative expenses including a settlement
agreement reached with the previous charterer
of Höegh Giant.
Operating profit was USD 38.0 million in
2021 (USD 103.8 million). An impairment
assessment has been carried out for the
group’s vessels, which did not identify any
impairment requirement. However, the group
has recognised an impairment of USD 16 million
through its share of result from investments in
associates and joint ventures related to the two
vessels Arctic Lady and Arctic Princess.
Net financial expenses amounted to USD 90.9
million in 2022 (USD 109.2 million).
20 Directors' report
HÖEGH LNG
Höegh LNG reported a net loss of USD 55.4
million for 2022, which compares with a net loss
of USD 21.3 million for 2021. The decrease is
primarily due to the decrease in EBITDA, partly
offset by reversing parts of a tax provision
recorded for uncertain tax position in Indonesia
in 2021.
Financial position
On 31 December 2022, the consolidated book
value of assets totalled USD 2 431 million (USD
2 429 million). The change during 2002 mainly
reflects the increase in current assets, including
cash and cash equivalents and investments
in associates and joint ventures, offset by
depreciation of vessels and the amortisation of
right-of-use assets.
The carrying amount of equity on 31 December
2022 was USD 726 million (USD 651 million).
Net of mark-to-market of hedging reserves, the
equity adjusted for hedging transactions was
USD 699 million (USD 744 million), bringing the
adjusted equity ratio to 29% (30%). The capital
structure of Höegh LNG is considered to be
adequate given the risks facing the group. The
capital structure will probably be subject in the
future to the issuance of further debt relating to
scheduled refinancing and new debt, net results
and potential new equity capital being issued,
dividend distribution and other factors.
Financing
The group is financing its assets and business
activities through a combination of equity and
interest-bearing debt. The interest-bearing
debt consist of asset-backed bank financing as
well as unsecured loans and bond loans. On 31
December 2022, outstanding interest-bearing
debt carried on the balance sheet totalling USD 1
515 million, net of debt issuance costs, compared
to a total of USD 1 614 million as of 31 December
2021. The decrease is mainly explained by
ordinary debt and lease repayments partially
offset by top-up of the commercial tranche for
the Hoegh Gannet facility by USD 23 million and
sale in aggregate of NOK 396 million of HLNG03
bonds previously held in treasury.
Cash flows and liquidity
Cash flows from operating activities in 2022
was USD 163.0 million, down from USD 196.5
million in 2021, owing mainly to reduced EBITDA
and variations in working capital.
Net cash flows used in investing activities
amounted to USD 180.9 million (USD 26.5
million). The increase is mainly related to
acquisition of public common units in Höegh
LNG Partners LP in 2022.
Cash flows from financing activities was positive
at USD 30.6 million (negative at USD 178.5
million), driven by new equity injected by the
owner to amongst other finance the acquisition
of the public common units in Höegh LNG
Partners LP, lower dividends paid to common
unit holders in Höegh LNG Partners LP and
release of restricted cash and cash collateral.
Total cash flows in 2022 was positive at USD
12.7 million (negative at USD 8.5million).
On 31 December 2022, unrestricted cash and
cash equivalents amounted to USD 146.8 million
(USD 134.0 million).
On 31 December 2022, the group’s current
interest-bearing debt was USD 369.8 million
(USD 404.2 million), including bonds (HLNG03)
of USD 154 million and a corporate bank
facility of USD 29 million. These repayments
will be covered by cash flows generated from
operations and drawing on new debt facilities.
The purchase of Golar Seal will initially be
funded with liquidity from new debt facilities in
the group, but the company plans to arrange a
new loan facility for this vessel.
Going concern
The annual financial statements have been
HÖEGH LNG
Directors’ report 21
prepared under the going concern assumption,
and the board of directors confirms that this
assumption is fulfilled. This assumption rests on
financial forecasts and plans for the coming year
on the basis of several assumptions made about
future events and planned transactions. On 31
December 2022, outstanding interest-bearing
debt carried on the balance sheet totalling USD
1 514 million is expected to be repaid through
the cash flow generated from existing assets in
Höegh LNG and through refinancing when the
debt matures. In addition to the purchase price
to be paid for the acquisition of the vessel Golar
Seal (renamed Hoegh Gandria), the group has
significant debt maturities in aggregate for 2023
and 2024 which will or may require refinancing
or extension of maturity dates. Consequently,
Höegh LNG is exposed to the risk of insufficient
cash flows generated to service its debt, and
the risk of refinancing amounts falling short of
the amount of debt maturing. However, the new
USD 685 million debt facility for the refinancing
of Höegh Esperanza and Hoegh Gannet
significantly improves the group’s liquidity.
Together with a solid contract backlog, this
gives the group a strong position for meeting
its obligations and refinancing its debt ahead of
maturity if necessary.
As further commented in the prospects section,
it is not possible to accurately forecast and
assess the potential effects on the company
of the ongoing war in Ukraine at the time
this report is released, but these are being
continuously monitored.
Parent company financials
The total comprehensive income for the
company on a stand-alone basis in 2022 was
USD 24.1 million (loss of USD 7.3 million). The
improvement from 2021 is mainly related to
reversal of impairment on loans to subsidiaries,
offset by increased administrative expenses
including a settlement agreement reached with
the previous charterer of Höegh Giant.
On 31 December 2022, total assets were USD
947 million (USD 651 million), while the equity
ratio was 57% (49%). Cash flows in 2022
was negative at USD 3.6 million (positive at
USD 2.5 million). On 31 December 2022, the
company held USD 22.6 million in cash and cash
equivalents (USD 26.1 million).
Risk and risk management
Risk management
Höegh LNG manages strategic and operational
risk in line with ISO 31000 in relation to both
new and existing business. The following
certifications are held for management
of quality, the environment, safety and
occupational health:
• International Safety Management.
• ISO 9001 Quality Management System.
• ISO 14001 Environmental Management
System.
Operating in a high-risk environment requires
a strong focus on health, safety, quality and
environment. Höegh LNG devotes continuous
attention to developing and improving
procedures and routines. Risk management
processes are integrated in governance,
Operating in a high-risk environment
requires a strong focus on health, safety,
quality and environment.
22 Directors' report
HÖEGH LNG
management and operations on all levels of
organisation. Enterprise risk is assessed on
monthly basis by the management and reported
to the board on quarterly intervals.
Market risk
Höegh LNG has 10 FSRUs in operation, which
are either operating under or committed on firm
long-term contracts with strong counterparties.
The average remaining contract length per
vessel was 9.3 years at the end of 2022. Höegh
Giant and Höegh Galleon are employed on
interim LNG carrier contracts pending start-
up of long-term FSRU contracts. Höegh LNG
will consequently remain somewhat exposed
to variations in market rates for LNG carriers
for units currently employed on interim trading
contracts.
The two LNG carriers in the fleet are on long-
term contracts with creditworthy counterparties
and not exposed to short-term fluctuations in
the demand for LNG transport.
Operational risk
Höegh LNG assumes operational risks
associated with loading, transporting,
offloading, storing, reloading and regasifying
LNG cargoes, which can cause delays to
operations. In addition, difficulties presented
by port constraints, weather conditions,
vessel compatibility, technical availability
and performance may affect the results of
operations and expose Höegh LNG to adverse
financial consequences.
Cyber risk
Cyber risk is generally on the rise due to
ever increasing digitalization and integration
of information technology and operation
technology, but also increasing due to Höegh
LNGs role in securing energy supply in Europe.
Höegh LNG has worked extensively during
2022 to develop a comprehensive overview
of potential cyber-attack surfaces and to
strengthen both physical and cyber security
related to our offices and vessel installations.
The aim is to strengthen cyber security even
further in 2023.
Financial risk
Höegh LNG is exposed in the ordinary course
of its business to different types of financial
risk, including market risk (interest and foreign
exchange rates impacted by rising inflation),
credit and liquidity risk. Risk management
routines are in place to mitigate such risks.
When such risks are identified, these are
evaluated and if deemed appropriate, mitigating
actions are taken. Höegh LNG’s primary
strategy in mitigating financial market risks is to
apply derivatives, where appropriate, in hedging
its various net financial-market risk positions.
When the use of derivatives is deemed
appropriate, only well-understood, conventional
instruments issued by highly rated financial
institutions are used.
Interest rate risk
Höegh LNG is exposed to increase in interest
rates on its interest-bearing debt as all interest-
bearing debt in Höegh LNG is subject to
floating interest rates. However, the group has
entered into fixed interest-rate swaps for most
debt facilities until end of their maturity and is
therefore not exposed in any material way to
fluctuations in interest-rate levels on existing
debt facilities. Generally, for new debt facilities
to be drawn in the future, including refinancing
of balloon amounts at maturity of existing debt,
the group is exposed to interest rate risk, and
has not entered into any derivatives to hedge
such risk.
Currency risk
Höegh LNG’s business transactions, capitalised
assets and liabilities are mainly denominated
in USD which is the reporting currency. The
majority of its foreign exchange exposure
relates to administrative expenses denominated
HÖEGH LNG
Directors’ report 23
in NOK, totalling around NOK 377 million in
2022. The group has per 31 December 2022
outstanding forward rate agreements (FRA’s)
totalling NOK 334 million (USD 34 million),
to hedge budgeted administration expenses
in NOK by buying NOK and selling USD. In
addition, Höegh LNG has certain revenues in
euros. Höegh LNG’s NOK-denominated bond
loans have been swapped to USD for the
principal amount and the coupons, save for
approximately 27% of HLNG03 bond which is
unhedged for both currency and interest rate
risk.
Inflation risk
Höegh LNG is exposed to inflation risk
on its vessel operating expenses and its
administrative costs. However, for most if
its contracts, the inflation related to vessel
operating expenses are recoverable from
the customers through inflation adjustment
mechanisms agreed in the contracts for the
portion of contracted revenues earmarked for
covering daily operating costs.
Liquidity risk
On 31 December 2022, the group had USD 147
million in total available liquidity. Liquidity risk
is the risk that Höegh LNG will be unable to
fulfil its financial obligations when they fall due,
including servicing its interest-bearing debt and
refinancing debt at maturity. The new USD 685
million debt facility for the refinancing of Höegh
Esperanza and Hoegh Gannet significantly
improves the group’s liquidity. Together with
a solid contract backlog, this give the group
a strong position for meeting its obligations
and refinancing its debt ahead of maturity if
necessary.
Credit risk
Customer credit risk is the risk that a
counterparty does not meet its obligations to
the group under a contract, leading to a financial
loss. Existing FSRUs/LNGCs are chartered to
creditworthy counterparties and/or projects
with a strong strategic rationale for the country
they operate in. Cash funds are only deposited
with internationally recognised financial
institutions which have a high credit rating, or
invested in marketable securities issued by
companies holding a high credit rating.
The maximum exposure to credit risk amounts
to USD 311 million represented by the carrying
amount of each financial asset in the balance
sheet.
Shareholder information
As of 31 December 2022, the company’s
share capital was USD 12.000, consisting of
1.200.000 fully paid common shares, each with
a par value of USD 0.01. All the shares in the
company are owned by Larus Holding Limited,
a 50/50 joint venture between Leif Höegh & Co
Ltd. and funds managed by Morgan Stanley
Infrastructure Partners.
Corporate governance
The board’s statement of policy on corporate
governance is set out in the corporate
governance report included as a separate
chapter in this annual report. Höegh LNG
has adopted and implemented a corporate
governance system which complies with section
6.3.6 of the Oslo Børs rulebook II – issuer rules
and, other than as stated in the said report, with
the Norwegian code of practice for corporate
governance.
Prospects
Höegh LNG’s near-term focus is to ensure our
new FSRU projects commence operations as
planned by our customers in Germany and
24 Directors' report
HÖEGH LNG
Hamilton, Bermuda, 3 April 2023
The Board of Directors and the President and CEO of Höegh LNG Holdings Ltd.
Morten W. Høegh
Chairman
Johan Pfeiffer
Deputy Chairman
Martine Vice Holter
Director
Timothy Faries
Director
Alberto Donzelli
Director
Erik Nyheim
President and CEO
Leif O. Høegh
Director
John Kwaak
Director
Brazil over the coming months. Furthermore, we
are planning for commencement of the contract
with AIE in Australia with expected start towards
the end of 2023.
The demand for FSRUs is expected to remain
strong. While Höegh LNG has secured long-
term contracts for its entire fleet of FSRUs, our
business development team is in active dialogue
with several potential new projects looking
for FSRU capacity. The acquisition of the LNG
carrier Golar Seal provides flexibility to pursue
FSRU conversion opportunities.
The ongoing war in Ukraine may continue to
impact the market for LNG as well as for LNG
carriers and FSRUs, in particular because Russia
is a major global exporter of crude oil and
natural gas, but also generally. The potential
effects are complex to project and therefore
highly uncertain, including any potential effects
on the group’s business and operations. For
example, the situation may lead to further
regional and international conflicts or armed
action. It is possible that such conflict could
disrupt supply chains and cause instability in
the global economy. Additionally, the ongoing
conflict could result in the imposition of further
economic sanctions by the United States and
the European Union against Russia. While much
uncertainty remains regarding the global impact
of the invasion, it is possible that such tensions
could adversely affect our business, financial
condition, results of operation and cash flows.
Furthermore, it is possible that third parties
with whom we have charter contracts may
be impacted by events in Russia and Ukraine,
which could adversely affect our operations.
28 Implementation and reporting on
corporate governance
29 Business
30 Equity and dividends
31 Equal treatment of shareholders
31 Shares and negotiability
31 General meetings
32 Nomination committee
32 Board of directors:
Composition and independence
34 The work of the board of directors
35 Risk management and internal control
36 Remuneration of the board of directors
36 Remuneration of executive personnel
37 Information and communications
37 Takeovers
37 Auditor
Corporate
governance report
03
28 Corporate governance report
HÖEGH LNG
Höegh LNG Holdings Ltd. (“Höegh LNG
Holdings” or “company”) is an exempted
company limited by shares, domiciled and
incorporated under the laws of Bermuda.
Höegh LNG Holdings Ltd. is a private company
owned by Larus Holding Ltd., which is a 50-
50 joint venture between Leif Höegh & Co.
Ltd. and Floating Infrastructure LP. Leif Höegh
& Co. Ltd. is indirectly controlled by Leif O.
Høegh and family trusts under which Morten
W. Høegh and his immediate family are the
primary beneficiaries. Floating Infrastructure LP
is owned by funds which is managed by Morgan
Stanley Infrastructure Holdings Inc.
The company is subject to Bermudian law
regarding corporate governance. As the
company has issued two bonds which are listed
on Oslo Børs (tickers: HLNG03 and HLNG04),
the company is required to provide a report
on its corporate governance as further set out
in section 6.3.6 of the Oslo Børs rulebook II –
issuer rules (the “issuer rules”).
Höegh LNG (the company and its subsidiaries)
has adopted and implemented a corporate
governance system which mainly complies with
the Norwegian code of practice for corporate
governance (the “Norwegian corporate
governance code”). This system aims to
enhance business performance by mitigating
risk and enhancing accountability, which is
crucial for maintaining the trust of stakeholders
and the company’s strong reputation in the
financial market. The deviations from the
Norwegian corporate governance code are
predominantly attributable to the fact that
the company is a privately held company and
incorporated in Bermuda and the deviations are
further described in this report. The Norwegian
corporate governance code is published at
www.nues.no and the issuer rules are published
on the Oslo Børs website at www.euronext.com.
Implementation and
reporting on corporate
governance
The foundation of corporate governance in
Höegh LNG is set out in the company’s bye-
laws, in addition to a governing principles policy
and Höegh LNG’s code of conduct.
The governing principles policy is based on
the Norwegian corporate governance code
and is approved by the board. It identifies the
key governing bodies in Höegh LNG, describes
the roles and responsibilities of the governing
bodies and functions of the group, and specifies
requirements for the business with regard to
important governing processes, documents and
systems. The board has also adopted governing
procedures to implement the principles set
out in the governing principles policy. These
procedures include separate charters for the
board of directors, the coordination committee
and the capital structure committee, as well as
instructions for both the President and CEO and
the group’s chief compliance officer.
Corporate governance report
Governing
policies
Governing
procedures
Functional policies
Functional procedures incl.
processes and key controls
Evaluation and reporting
Roles, responsibility and competence
Corporate governance report 29
HÖEGH LNG
Höegh LNG and the group’s employees are
required to adhere to and comply with laws and
regulations, including on international trade and
economic sanctions, and Höegh LNG’s standards
for ethics, health, safety, the environment
and quality as further set out in Höegh LNG’s
code of conduct, the insider trading policy and
the procedure for governmental investigation
adopted by the board. In addition, the board has
adopted a supplier code of conduct which all
suppliers are required to adhere to.
Through compliance with the above, the board
and management contributes to achieving the
following objectives:
Trust: Good corporate governance establishes a
basis for trust in the board and the management
by the shareholders and other stakeholders.
Transparency: Communication with the
company’s stakeholders will be based on
transparency concerning both Höegh LNG’s
business, which is important for assessing the
company’s development, and its financial position.
Independence: The relationship between the
board, the management and the shareholders
will be on an independent basis to ensure that
decisions are made on a qualified and neutral
basis.
Equality: Höegh LNG aims to give all its
shareholders equal treatment and rights.
Control and management: Good control and
governance mechanisms will contribute to
predictability and risk reduction.
Deviations from the code: None.
Business
In November 2022, the board approved new
purpose and mission statements and a new
strategy and values. The company’s purpose is
accelerating countries to energy security and
transition by providing innovative and flexible
marine energy infrastructure. Höegh LNG’s
values are: (i) we innovate with customers and
partners, (ii) we delivery excellence as one team
and (iii) we care for people and the planet.
Höegh LNG provides cost competitive and
flexible LNG infrastructure that form the
basis for energy security and independence
and enables the transition to a low-carbon
future. Our critical LNG infrastructure allows
all countries with a coastline to access global
LNG markets. LNG can be sourced globally
and shipped through specialised LNG carriers,
which provide consumers of natural gas with an
abundant sourcing flexibility compared to gas
transported in fixed pipelines.
We drive technological and commercial
innovation in our markets and continuously seek
excellence in our operations to maximise value
for our stakeholders while ensuring the welfare
of our employees and minimising the impact on
the environment.
We create growth and value by offering a
solution addressing three megatrends affecting
global energy systems;
• Energy security is a top geopolitical priority,
where all nations require a robust plan for
capacity of supply to meet current and
future energy demand and redundancy
• Cost of energy, including universal access to
affordable and abundant energy
• Energy transition and changes to the
energy mix to decarbonise energy systems
and minimise potential environmental and
climate change impacts
Our strategic beliefs, direction and ambitions
consider the impact of these megatrends on
30 Corporate governance report
HÖEGH LNG
Höegh LNG as a company and our industry.
They guide how we develop to reach our full
potential and generate long-term value. We
plan to grow our LNG infrastructure business
and innovate clean energy terminal solutions for
emerging markets such as carbon capture and
storage (CCS), ammonia, hydrogen and other
segments – all supported by our world-class
operations.
The board evaluates the objectives, strategies
and risk profiles continuously and at least
annually.
The company has guidelines for how it
integrates considerations related to its
stakeholders into its value creation. Since
2014, Höegh LNG has issued a separate
sustainability report in accordance with Oslo
Børs’ Guidance on the Reporting of Corporate
Responsibility and the “core” level of the Global
Reporting Initiative (GRI) standard. Höegh LNG
is increasing its sustainability awareness and
efforts and changed its sustainability reporting
framework to the UN Sustainable Development
Goals (SDGs) with effect from 2021. Reference
is made to the sustainability report for further
details.
The Memorandum of Association and the
company’s bye-laws are available on the
company’s website (www.hoeghlng.com –
corporate governance – governance documents
– other governance documents).
Deviations from the code:
• In line with common practice for
Bermudian-registered companies, the
company’s objectives and powers, as set
out in its Memorandum of Association,
are broad and therefore wider and more
extensive than recommended in the
Norwegian corporate governance code.
Equity and dividends
Capital structure
The issued share capital in the company as of
31 December 2022 was USD 12.000, consisting
of 1 200 000 fully paid common shares, each
with a par value of USD 0.01.
Book equity as of 31 December 2022 totalled
USD 726 million. Net of mark-to-market of
hedging reserves, the adjusted book equity as
of 31 December 2022 was USD 699 million.
The board regards the current level of equity
and financing as adequate in view of Höegh
LNG’s objectives, strategy and risk profile.
However, as noted in the prospects section
of the directors’ report, the ongoing war in
Ukraine may continue to impact the market for
LNG as well as for LNG carriers and FSRUs, in
particular because Russia is a global exporter
of crude oil and natural gas, but also generally.
The potential effects are complex and therefore
highly uncertain, including any potential effects
on the group’s business and operations. The
capital structure will probably be subject in the
future to the issuance of further debt relating to
scheduled refinancing and new debt, net profits
and dividend payments, potential issuance of
new equity capital and other factors.
Dividend policy
As a private company, the board of directors
has not established a dividend policy. Subject
to certain restrictions putting a cap on dividend
distributions, the board of directors will from
time to time decide any dividends payable to
the company’s shareholder.
Deviations from the code:
• Pursuant to Bermudian law and common
practice for Bermudian-registered
companies, it is not necessary to obtain
the general meeting’s approval for payment
of dividends (bye-law 15).
Corporate governance report 31
HÖEGH LNG
Equity issuance
The authorised share capital of the company is
USD 12.000.
Deviations from the code:
The following applies pursuant to Bermudian
law and common practice for Bermudian-
registered companies.
• The board has wide powers to issue any
authorised but unissued shares in the
company on such terms and conditions as it
may decide, and may, subject to any
resolution of the shareholders in a general
meeting and to the rights of any issued
shares, attach such rights and restrictions as
the board may determine.
• The board may, without approval from the
shareholders in a general meeting, acquire
the company’s own shares to be cancelled
or held as treasury shares. These bye-law
provisions (bye-law 3) are neither limited
to specific purposes nor to a specified period
as recommended in the Norwegian corporate
governance code.
Equal treatment of
shareholders
Equal treatment of all shareholders is a core
governance principle in Höegh LNG.
The company has only one class of shares and,
on a poll, each share confers one vote at the
general meeting.
Deviations from the code: None.
Shares and negotiability
The common shares of the company are freely
transferable, and the company’s constitutional
documents impose no transfer restrictions on
the company’s common shares.
Deviations from the code: None
General meetings
Being a Bermudian entity, the general meeting
of the company is held annually in Bermuda.
The shareholders of the company are
responsible for making certain key decisions
concerning the company’s business. At the
annual general meeting (AGM), these include
the appointment of the auditor, the election of
the board of directors and the determination
of the remuneration of directors. Alternate
directors are appointed by the individual
directors and are not elected by the general
meeting. The financial statements are
presented to the AGM for information, but under
Bermudian law, the shareholders’ approval of
these are not required.
Bye-laws 19 to 35 set out extensive rules
regarding the conduct of general meetings,
including in relation to the notice of general
meetings, proceedings, voting, proxies and
corporate representatives.
Deviations from the code:
• The general meeting procedures are aligned
to the fact that the company is privately held
with one shareholder.
• The company does not have a nomination
committee.
• Pursuant to bye-law 27, the chairman or the
President and CEO shall act as chairman of
a general meeting. In their absence, a
chairman shall be appointed or elected by
those present at the meeting and entitled to
vote.
32 Corporate governance report
HÖEGH LNG
Nomination committee
As a private company, the company does not
have a nomination committee.
Deviations from the code: As a private
company, the company does not have a
nomination committee.
Board of directors:
composition and
independence
The board and its chairman are elected or
appointed in the first place at the statutory
meeting of the company and thereafter, except
in the case of a casual vacancy, at the annual
general meeting or at any special general
meeting called for that purpose
1
. The bye-laws
provide for the board to consist of not less than
one director.
The composition of the board of directors
represent diversity in background, expertise
and gender (one female of seven directors).
There are no sub committees of the board. The
full board act as audit committee.
Currently, the board consist of the following
seven directors:
• Morten W. Høegh (born 1973) has served
as chairman of Höegh LNG since 2006.
Since 2003 he has been a director of Höegh
Autoliners ASA (and its predecessors Leif
Höegh & Co. ASA, Leif Höegh & Co. Ltd.
and Höegh Autoliners Ltd.). Morten W.
Høegh is a director of Höegh Eiendom
Holdings AS. He is a director and Chairman
of Gard P&I (Bermuda) Ltd. and chairman
of its risk and election and governance
committees and a director and chairman of
certain of its subsidiaries. He also serves
as the Chairman of the Western Europe
committee of DNV. From 1998 to 2000,
Morten W. Høegh worked as an investment
banker with Morgan Stanley. He holds an
MBA from Harvard Business School with
High Distinction (Baker Scholar) an MSc in
Ocean Systems Management and a BSc in
Ocean Engineering from the Massachusetts
Institute of Technology.
• Johan Pfeiffer (born 1965) has served as
deputy chairman of Höegh LNG since May
2021. Johan Pfeiffer is a Managing Director
and Operating Partner with Morgan Stanley
Infrastructure Partners (MSIP). He serves
on the board of several companies in the
MSIP portfolio. Prior to Morgan Stanley,
Johan Pfeiffer was the President for Europe,
Latin America and Africa for Johnson
Controls and previously Tyco. Prior to
Johnson Controls, Johan Pfeiffer was a Vice
President for FMC Technologies in Houston
and General Manager and Managing Director
in Kongsberg, Norway. Johan Pfeiffer
was previously the Vice Chairman of the
US Petroleum Equipment and Services
Association. He holds an MBA from the
Wharton School, an MA in International
Studies from the University of Pennsylvania,
and an MSC in Material Sciences
Engineering from the Swiss Federal Institute
of Technologies (EPFL).
• Leif O. Høegh (born 1963) has served as
a director of Höegh LNG since 2006. He
is also the chairman of Höegh Autoliners
Autoliners ASA, Höegh Capital Partners and
Höegh Eiendom AS. Leif O. Høegh previously
worked for McKinsey & Company and the
Royal Bank of Canada Group. He holds
an MA in Economics from the University
of Cambridge and an MBA from Harvard
Business School.
• Alberto Donzelli (born 1975) has served as
a director of Höegh LNG since May 2021.
1
The company does not have a corporate assembly.
Corporate governance report 33
HÖEGH LNG
He is a Managing Director and co-head of
Europe for Morgan Stanley Infrastructure
Partners (MSIP). Alberto Donzelli worked
in the investment banking businesses of
UBS and Credit Suisse, where he was part
of the European Utilities Group advising
on numerous M&A transactions in Europe.
Alberto Donzelli holds a degree in Business
Administration from Bocconi University.
• Martine Vice Holter (born 1967) has served
as a director of Höegh LNG since May
2021. Martine Vice Holter has been the
Chief Executive Officer of Hoegh Capital
Partners (HCP) for over fifteen years. HCP
is a family investment office co-located in
London, Oslo and Guernsey which manages
all of the investment interests of the Høegh
family. HCP embraces an active ownership
approach; Martine Vice Holter is shareholder
representative and/or non-executive director
on several direct investment boards in
the HCP portfolio. Prior to HCP, Martine
Vice Holter was Chief Operating Officer of
Arts Alliance Advisors, a venture capital
fund focused on early-stage media and
technology investments (from 2000- 2005).
Previously, she worked as a management
consultant at McKinsey & Company based
in London where she focused on strategy,
finance and organisation-building. She
began her career in investment banking
(corporate finance and M&A) with Goldman
Sachs in New York followed by Hong Kong.
Vice Holter received her MBA from INSEAD
(1994) and graduated with a Bachelor of Arts
(Honours) in Economics and Political Science
from Queen’s University, Canada.
• John Kwaak (born 1982) has served as a
director of Höegh LNG since May 2021.
John Kwaak is the Managing Partner of Zero
Infinity Partners (ZIP), a firm he founded.
ZIP is a New York investment firm focused
on early and growth stage infrastructure
and infra-tech opportunities. Previously,
John Kwaak served as Executive Director
& Head of Americas Transportation Sector
of Morgan Stanley Infrastructure Partners
(MSIP). Before joining MSIP, he was a Senior
Vice President at Fortress Investment Group
in their private equity division with focus on
natural gas and LNG. Prior to that, he was
an investment banker at Evercore. He also
served as First Lieutenant in the Republic of
Korea Air Force. John Kwaak holds an MBA
from the Wharton School of the University of
Pennsylvania and an AB in Government from
Harvard College.
• Timothy Faries (born 1966) has served as
a director of Höegh LNG since June 2022.
Timothy Faries is a partner of Appleby
(Bermuda) Limited in the Corporate
department and a member of the Insurance
team. Mr. Faries was Bermuda Office
Managing Partner from 2015-2021. Timothy
Faries is also Chief Executive Officer of
Appleby Global Services. He has extensive
experience of public and private insurance
company capital raising and M&A activity,
public listings on US, UK and European
securities exchanges, the establishment
and licensing of alternative risk financing
vehicles such as cat bonds, ILWs and other
insurance-linked securities and captive
insurance companies in established and
emerging markets.
The company has one shareholder, Larus
Holding Limited, which is a 50-50 joint venture
between Leif Höegh & Co. Ltd. and Floating
Infrastructure LP.
Leif Höegh & Co. Ltd. is indirectly controlled
by Leif O. Høegh and family trusts under which
Morten W. Høegh and his immediate family are
the primary beneficiaries. Leif Höegh & Co.
Ltd. is represented on the board by Morten W.
Høegh, Leif O. Høegh and Martine Vice Holter.
34 Corporate governance report
HÖEGH LNG
Floating Infrastructure LP is owned by
funds which is managed by Morgan Stanley
Infrastructure Holdings Inc. Floating
Infrastructure LP is represented on the board by
Johan Pfeiffer, Alberto Donzelli and John Kwaak.
The board held three physical board meetings
in 2022 in addition to one physical meeting with
the manager, Höegh LNG AS, with all directors
present, as well as several briefing calls.
The board held 15 interim meetings, with the
Bermuda-resident director and/or alternate(s)
present.
Bye-laws 36 and 40 regulates the appointment
and removal of directors, respectively.
Deviations from the code:
• As a private company, only one director
is independent of the company’s main
shareholders.
• The chairman of the board of directors is
elected by the board of directors.
• As a private company, the members of the
board of directors are not elected for a
specific time period.
• As a private company, the members of the
board of directors are not encouraged to own
shares in the company.
The work of the board of
directors
The board is responsible for overseeing the
management of Höegh LNG, safeguarding the
business and implementing sound corporate
governance for the group to follow.
The board has authorised Höegh LNG AS to
carry out the day-to-day management of Höegh
LNG’s assets under a management agreement
comprising administrative, commercial and
technical activities. The board has established
and defined authorities through a delegation
authority matrix.
The main responsibilities of the board as well as
the framework for proceedings of its work are
set out in a charter for the board of directors.
In general, the board will approve the strategy,
business plans, financial statements, investment
decisions, debt financings and budgets for
Höegh LNG.
The board has adopted procedures and
standards which cover and impose an obligation
on individuals who are members of the group
executive team and hold other group roles to
secure sound governance and control. The
board will also ensure that Höegh LNG protects
its reputation in relation to owners, employees,
customers and the public.
The work of the board is scheduled in an annual
plan with fixed information and decision points.
If required, interim board meetings are arranged
in accordance with the board charter.
Each director is responsible for continuously
assessing whether a conflict exists or could
potentially arise between the interests of the
company and the interests of the director in
question. Existence of a conflict extends to, but
is not limited to, matters put before a director
involving a personal interest, direct or indirect,
financial or otherwise, in the matter concerned.
Circumstances referred to above will be
discussed without undue delay with the
chairman of the board. Where a director’s
employment relationship or other duties
regularly give rise to a conflict of interest to
occur, and in other special circumstances,
specific guidelines will be prepared for review
by the board which prevent, as far as possible,
such conflict of interests from arising.
Corporate governance report 35
HÖEGH LNG
The board conducts a self-evaluation of its own
performance and expertise on an annual basis,
which includes an evaluation of the composition
of the board and the manner in which its
members function, both individually and as a
group, in relation to the objectives set out for
the board’s work.
The work of the board committees
Following the privatisation of the company,
the board has decided that the entire board
of directors shall act as the company’s audit
committee.
As all the directors are independent of the
executive personnel, the company does not
have a remuneration committee.
Deviations from the code:
• As a private company, the full board act as
the company’s audit committee.
• As all of the directors of the board are
independent of the executive personnel,
the company does not have a remuneration
committee.
Risk management and
internal control
The board is responsible for overseeing that
the company has sound internal control and
systems for risk management which are
appropriate in relation to the extent and nature
of the group’s activities.
Risk management
Höegh LNG has an enterprise risk management
system based on ISO 31000 Risk Management.
The board is responsible for overseeing that
the accumulated risks which could influence
the achievement of HLNG’s strategic and key
operational objectives are being consistently
and effectively identified and managed.
The President and CEO assumes the overall
responsibility for enterprise risk management
and reports the enterprise risk status to the
board on a regular basis. The group has a risk
monitoring committee comprising the senior
management team and the VP QA and Risk. Its
objectives are to support business decisions
by monitoring the accumulated strategic
risk for HLNG, and to assess risk mitigation
measures and the effect of changes and new
commitments.
Höegh LNG has a QA and risk management
function, which assists the company in
achieving its objectives by taking a systematic,
disciplined approach to evaluating and
improving the effectiveness of enterprise
risk and security management, control and
governance processes. The function meets
regularly with the full board.
The group has implemented an integrated
governing management system (GMS) to
govern its processes for planning, operating
and controlling the services rendered. Health
(including occupational health), safety and
environmental management, as well as project
and security risk management are all included
in the GMS. The latter is certified to ISO
9001:2015 Quality Management Systems and
ISO 14001:2015 Environmental Management
Systems by an accredited certification body.
The GMS complies with the requirements of
OHSAS 18001:2008 Occupational Health and
Safety Management Systems as well as meeting
the International Safety Management (ISM)
standard. In addition, the group’s integrated
fleet management company has a separate
HSEQ function.
See also the “Risk and risk management” section
in the directors’ report included in this annual
report and Note 13 “Financial risk management
objectives and policies” for further information.
36 Corporate governance report
HÖEGH LNG
Internal control
The group has policies and procedures in place
and an effective system for internal controls
on financial reporting, which is based on COSO
2013 (Committee of Sponsoring Organisations
of the Treadway Commission). The internal
control process is supervised by the chief legal
& compliance officer and the chief financial
officer, and comprises an annual process which
includes risk assessment, evaluating whether
existing controls are designed and operating as
intended, reviewing and testing implementation
and operational effectiveness of the controls,
reporting and continuous performance
monitoring.
Höegh LNG is also subject to extensive external
control by its auditors, external partners in joint
ventures and charterers.
The group has ethical hotlines in place which
allows employees, as well as external parties in
the case of HMLP, to report any non-compliance
issues (anonymously if desired). These reports
are received by Höegh LNG’s chief legal and
compliance officer in the case of the company,
and by the chairman of HMLP’s audit committee
in case of HMLP.
Deviations from the code: None.
Remuneration of the board
of directors
Save as set out in below paragraph, the
current board of directors does not receive any
remuneration.
Appleby Global Services (Bermuda) Ltd. is
remunerated on the basis of invoices for its
services, including the provision of Timothy
Faries as a director and the services of alternate
directors to the company.
The company has no pension or retirement
benefits for directors.
Deviations from the code: None.
Remuneration of executive
personnel
The board approves the remuneration package
for the President and CEO.
In addition, the board approves the main
terms of the remuneration package offered
to employees in Höegh LNG, including the
parameters of any annual salary adjustments,
pension schemes, and short- and long-term
incentives schemes. The compensation and
benefits package is determined on the basis
of an evaluation of the qualifications and
competencies of the individual employee and
is designed to be competitive with comparable
positions in the market and the achievement
of Höegh LNG’s corporate goals, operating
performance and sustainability targets.
Further details on remuneration of the
executive personnel for the current financial
year are provided in Note 6 to the 2022 annual
financial statements.
Deviations from the code:
• The board does not produce a separate
statement on the remuneration of executive
personnel, and consequently no such
statement is submitted to the AGM for
consideration, since the company is a
Bermudian company and the section 6-16a
of the Norwegian Public Company Act and
section 7-31b of the Norwegian Accounting
Act do not apply to the company.
Corporate governance report 37
HÖEGH LNG
Information and
communications
Höegh LNG has a policy of openness on
reporting information to stakeholders. Periodical
reports include quarterly interim reports and the
annual report. All reports are published through
stock exchange releases and on the company’s
website. Important events are also reported
through press and/or stock exchange releases.
The board’s charter includes guidelines to
ensure disclosure in accordance with the
financial calendar adopted by the board.
Contact with the external stakeholders is
handled by the President and CEO and the CFO.
Deviations from the code: None.
Takeovers
As a private company ultimately owned by two
shareholders, the board has not established
explicit guiding principles for dealing with
takeover bids.
Deviation from the code: As a private company,
the board has not established explicit guiding
principles for dealing with takeover bids.
Auditor
The auditor is appointed by the general meeting
and has the duty to audit the company’s
financial reporting. The company’s auditor has
been Ernst & Young since 2006. Lead partners
have been changed in accordance with rotation
requirements for publicly listed entities.
In order to safeguard the board’s access to and
control of the auditor’s work, the auditor meets
with the full board when quarterly and annual
reports are reviewed. The auditor is also given
access to the agenda of, documentation for and
minutes from board meetings.
Deviations from the code: None.
40 4.1 Consolidated financial statements
Höegh LNG Group
96 4.2 Financial statements Höegh LNG
Holdings Ltd.
116 4.3 Directors’ responsibility statement
120 4.4 Independent auditors report
128 4.5 Alternative performance measures (APMs)
Financial
statements
04
HÖEGH LNG
Consolidated financial statements
Höegh LNG Group
4.1
For the year ended 31 December 2022
HÖEGH LNG
42 Consolidated statement of income
42 Consolidated statement of comprehensive income
43 Consolidated statement of financial position
45 Consolidated statement of changes in equity
46 Consolidated statement of cash flows
47 Notes
42 Consolidated Financial Statements Höegh LNG Group
HÖEGH LNG
USD'000 Note 2022 2021
Time charter revenues 3 361 181 322 224
Management and other income 4 22 755 10 114
Share of results from investments in associates and joint ventures 9 (3 149 ) 19 496
TOTAL INCOME 380 787 351 834
Vessel operating expenses 5 (113 168 ) (88 096 )
Administrative expenses 6 (114 388 ) (46 544 )
OPERATING PROFIT BEFORE DEPRECIATION AND AMORTISATION (EBITDA) 153 231 217 194
Depreciation 7 (115 276 ) (113 406 )
OPERATING PROFIT 37 955 103 788
Interest income 2 746 733
Interest expenses 11 (96 821 ) (103 207 )
Income from other financial items 12 12 269 722
Expenses from other financial items 12 (9 053 ) (7 431 )
NET FINANCIAL ITEMS (90 859 ) (109 183 )
ORDINARY LOSS BEFORE TAX (52 904 ) (5 395 )
Income taxes 23 (2 505 ) (15 889 )
ORDINARY LOSS FOR THE YEAR AFTER TAX (55 409 ) (21 284 )
Profit (loss) for the year attributable to (from):
Equity holders of the parent (89 303 ) (54 479 )
Non-controlling interests 33 894 33 195
TOTAL (55 409 ) (21 284 )
CONSOLIDATED STATEMENT OF INCOME 1 JANUARY – 31 DECEMBER
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME 1 JANUARY – 31 DECEMBER
The notes on page 47 to 95 are an integral part of these consolidated financial statements.
USD’000 Note 2022 2021
Loss for the year (55 409 ) (21 284 )
Items that will not be reclassified to loss
Net loss on other capital reserves (799 ) (488 )
Items that may be subsequently reclassified to profit
Net gain on hedging reserves 13 91 018 47 058
Share of other comprehensive income from joint ventures and associates 13, 9 28 285 20 245
OTHER COMPREHENSIVE INCOME FOR THE YEAR NET OF TAX 118 504 66 815
TOTAL COMPREHENSIVE INCOME FOR THE YEAR 63 095 45 531
Total comprehensive income (loss) attributable to (from):
Equity holders of the parent 7 877 (2 942 )
Non-controlling interests 9 55 217 48 473
TOTAL 63 095 45 531
Consolidated Financial Statements Höegh LNG Group 43
HÖEGH LNG
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
USD’000 Note 31 Dec 2022 31 Dec 2021
ASSETS
Non-current assets
Deferred tax assets 23 1 156 1 274
Vessels and spare parts 7 1 895 614 1 963 980
Right-of-use assets 8 99 245 129 916
Investments in associates and joint ventures 9 114 997 91 198
Other non-current financial assets 15 23 334 11 654
Other non-current assets 10 15 018 21 146
Shareholder loans 24 13 800 7 511
Non-current restricted cash 17 15 790 30 662
Total non-current assets 2 178 954 2 257 341
Current assets
Bunkers and inventories 859 76
Shareholder loans 24 - 1 777
Trade and other receivables 18 65 623 27 444
Other current financial assets 16 23 619 13
Investment in marketable securities 13 155 98
Current restricted cash 17 15 264 8 419
Cash and cash equivalents 17 146 751 134 041
Total current assets 252 271 171 868
TOTAL ASSETS 2 431 225 2 429 209
EQUITY AND LIABILITES
Equity
Share capital 22 12 12
Other paid-in capital 907 083 820 461
Hedge and other capital reserves 23 501 (70 285 )
Retained earnings (380 515 ) (422 833 )
Equity attributable to equity holders of the parent 550 081 327 355
Non-controlling interests 176 078 323 676
Total equity 726 159 651 031
Non-current liabilities
Deferred tax liabilities 23 18 713 16 134
Non-current interest-bearing debt 14 1 069 323 1 101 756
Non-current lease liabilities 8,14 75 492 107 790
Other non-current financial liabilities 15 32 072 34 097
Deferred revenues 21 8 540 14 989
Total non-current liabilities 1 204 140 1 274 766
Current liabilities
Current interest-bearing debt 14 337 611 373 385
Current lease liabilities 8,14 32 201 30 814
Income tax payable 23 7 500 11 141
Trade and other payables 19 22 975 19 328
Other current financial liabilities 16 28 420 34 598
Other current liabilities 20 72 219 34 146
Total current liabilities 500 926 503 412
TOTAL EQUITY AND LIABILITIES 2 431 225 2 429 209
The notes on page 47 to 95 are an integral part of these consolidated financial statements.
44 Consolidated Financial Statements Höegh LNG Group
HÖEGH LNG
Hamilton, Bermuda, 3 April 2023
The Board of Directors and the President and CEO of Höegh LNG Holdings Ltd.
Morten W. Høegh
Chairman
Johan Pfeiffer
Deputy Chairman
Martine Vice Holter
Director
Timothy Faries
Director
Alberto Donzelli
Director
Erik Nyheim
President and CEO
Leif O. Høegh
Director
John Kwaak
Director
Consolidated Financial Statements Höegh LNG Group 45
HÖEGH LNG
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
Attributable to equity holders of Höegh LNG Holdings Ltd.
Share
capital
Share
premium
Contributed
surplus
Other
paid-in
capital
Hedging
reserves
Other
capital
reserves
Retained
earnings
TOTAL
Non-
controlling
interests
TOTAL
EQUITY
USD’000
As of 1 January 2022 12 556 262 154 753 109 446 (67 622 ) (2 663 ) (422 833 ) 327 355 323 676 651 031
Profit (loss) for the year - - - - - - (89 303 ) (89 303 ) 33 894 (55 409 )
Other comprehensive
income (loss) for the year
- - - - 97 979 (799 ) - 97 180 21 323 118 503
Total comprehensive
income (loss) for the year
- - - - 97 979 (799 ) (89 303 ) 7 877 55 217 63 094
Shareholder contribution - - 207 368 - - - - 207 368 - 207 368
Acquisition of public common
units in HMLP including inter
-
nal capital changes
- - - (109 446 ) (3 440 ) 462 131 621 19 197 (186 765 ) (167 568 )
Transaction cost - - (11 300 ) - - - - (11 300 ) - (11 300 )
HMLP dividend to non-
controlling interests
- - - - - - - - (16 051 ) (16 051 )
Other changes in equity - - - - - (416 ) - (416 ) - (416 )
Total other transactions
recognised directly in equity
- - 196 068 (109 446 ) (3 440 ) 46 131 621 214 849 (202 816 ) 12 033
As of 31 December 2022 12 556 262 350 821 (0 ) 26 917 (3 416 ) (380 515 ) 550 081 176 078 726 159
On 23 September 2022, pursuant to a merger agreement, Höegh LNG completed the acquisition of the public
common units of Höegh LNG Partners LP. As a result of the partnership being a de-facto-controlled subsidiary,
the merger has been accounted for as an acquisition of minority interests with a corresponding transfer from
non-controlling interests to controlling interests.
Attributable to equity holders of Höegh LNG Holdings Ltd.
Share
capital
Share
premium
Treasury
shares
Con-
tributed
surplus
Other
paid-in
capital
Hedging
reserves
Other
capital
reserves
Retained
earnings
TOTAL
Non-
controlling
interests
TOTAL
EQUITY
USD’000
As of 1 January 2021 7 73 447 716 (11 ) - 108 639 (119 646 ) (2 177 ) (139 538 ) 295 755 301 396 597 151
Profit (loss) for the year - - - - - - - (54 479 ) (54 479 ) 33 195 (21 284 )
Other comprehensive
income (loss) for the year
- - - - - 52 024 (486 ) - 51 538 15 278 66 815
Total comprehensive income
(loss) for the year
- - - - 52 024 (486 ) (54 479 ) (2 941 ) 48 473 45 531
Amalgamation effects (761 ) 108 546 11 106 687 - - - (232 548 ) (18 065 ) - (18 065 )
Shareholder contribution
1
- - - 48 066 - - - - 48 066 - 48 066
HMLP dividend to
non-controlling interests
- - - - - - - - - (31 801 ) (31 801 )
Units granted to the board
of HMLP
- - - - - - - - - 211 211
Net proceeds from issuance of
preferred units
- - - - - - - - - 8 318 8 318
Net proceeds from issuance of
common units
- - - - - - - - - 818 818
Share-based payment cost - - - - 807 - - - 807 1 808
Capital contribution to HMLP - - - - - - - (388 ) (388 ) 388 -
Transfer of assets from HMLP - - - - - - - 4 128 4 128 (4 128 ) -
Other changes in equity - - - - - - - (7 ) (7 ) - (7 )
Total other transactions
recognised directly in equity
(761 ) 108 546 11 154 753 80 7 - - (228 815 ) 34 541 (26 193 ) 8 348
As of 31 December 2021
The notes on page 47 to 95 are an integral part of these consolidated financial statements.
1
The contributed surplus was mainly settled in cash.
46 Consolidated Financial Statements Höegh LNG Group
HÖEGH LNG
CONSOLIDATED STATEMENT OF CASH FLOWS 1 JANUARY - 31 DECEMBER
USD’000 Note 2022 2021
Cash flows from operating activities:
Loss of the year before tax (52 904 ) (5 395 )
Adjustments to reconcile loss before tax to net operational cash flows
Depreciation 7 115 276 113 405
Interest income (2 746 ) (733 )
Interest expenses 11 96 821 103 207
Net loss (gain) on interest rate hedges and other derivatives (5 926 ) 2 503
Loss (gain) on exchange and other non-cash adjustments (124 ) 849
Share of results from investments in associates and joint ventures 9 3 149 (19 496 )
Working capital adjustments
Change in inventories, receivables and payables 10 489 7 372
Payment of corporate income tax (995 ) (5 199 )
I) NET CASH FLOWS FROM OPERATING ACTIVITIES 163 040 196 513
Cash flows from investing activites:
Acquisition of public common units in Höegh LNG Partners LP (163 489 ) -
Investments in marketable securities - (588 )
Investment in FSRUs, assets under construction and class renewals (14 272 ) (11 277 )
Investment in intangibles, equipment and other (162 ) (1 325 )
Loans granted to joint ventures and associates (3 586 ) (4 733 )
Investments in associates 9 - (8 625 )
Interest received 571 21
II) NET CASH FLOWS FROM INVESTING ACTIVITIES (180 938 ) (26 527 )
Cash flows from financing activites:
Net proceeds from equity issuance (HMLP) - 9 136
Capital contribution from owners 203 289 47 213
Dividend paid to non-controlling interests (HMLP) (16 051 ) (31 802 )
Proceeds from borrowings gross 14 22 500 273 342
Payment of refinancing and amalgamation fees and bond discount (1 278 ) (30 029 )
Proceeds from sale of own bonds 14 40 555 -
Repayment and buy-back of bonds 14 - (12 453 )
Repayment of borrowings 14 (115 508 ) (311 935 )
Interest paid on mortgage debt and bonds (80 256 ) (79 427 )
Repayment of leases 8 (30 754 ) (29 885 )
Interest paid on leases 8,11 (5 940 ) (7 422 )
Decrease (increase) in restricted cash and cash collateral 14 051 (5 228 )
III) NET CASH FLOWS FROM FINANCING ACTIVITIES 30 608 (178 490 )
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS (I+II+III) 12 710 (8 504 )
Current cash and cash equivalents as of 1 January 134 041 142 545
CURRENT CASH AND CASH EQUIVALENTS AS OF 31 DECEMBER 17 146 751 134 041
The group’s share of aggregated cash flows in its associates and joint ventures (8 113 ) 11 392
The notes on page 47 to 95 are an integral part of these consolidated financial statements.
Consolidated Financial Statements Höegh LNG Group 47
HÖEGH LNG
Consolidated Financial Statements Höegh LNG Group 49
HÖEGH LNG
50 Consolidated Financial Statements Höegh LNG Group
HÖEGH LNG
Consolidated Financial Statements Höegh LNG Group 51
HÖEGH LNG
52 Consolidated Financial Statements Höegh LNG Group
HÖEGH LNG
Consolidated Financial Statements Höegh LNG Group 53
HÖEGH LNG
54 Consolidated Financial Statements Höegh LNG Group
HÖEGH LNG
Consolidated Financial Statements Höegh LNG Group 55
HÖEGH LNG
56 Consolidated Financial Statements Höegh LNG Group
HÖEGH LNG
Consolidated Financial Statements Höegh LNG Group 57
HÖEGH LNG
58 Consolidated Financial Statements Höegh LNG Group
HÖEGH LNG
Consolidated Financial Statements Höegh LNG Group 59
HÖEGH LNG
60 Consolidated Financial Statements Höegh LNG Group
HÖEGH LNG
Consolidated Financial Statements Höegh LNG Group 61
HÖEGH LNG
62 Consolidated Financial Statements Höegh LNG Group
HÖEGH LNG
Consolidated Financial Statements Höegh LNG Group 63
HÖEGH LNG
64 Consolidated Financial Statements Höegh LNG Group
HÖEGH LNG
Consolidated Financial Statements Höegh LNG Group 65
HÖEGH LNG
66 Consolidated Financial Statements Höegh LNG Group
HÖEGH LNG
Consolidated Financial Statements Höegh LNG Group 67
HÖEGH LNG
68 Consolidated Financial Statements Höegh LNG Group
HÖEGH LNG
Consolidated Financial Statements Höegh LNG Group 69
HÖEGH LNG
70 Consolidated Financial Statements Höegh LNG Group
HÖEGH LNG
Consolidated Financial Statements Höegh LNG Group 71
HÖEGH LNG
72 Consolidated Financial Statements Höegh LNG Group
HÖEGH LNG
Consolidated Financial Statements Höegh LNG Group 73
HÖEGH LNG
74 Consolidated Financial Statements Höegh LNG Group
HÖEGH LNG
Consolidated Financial Statements Höegh LNG Group 75
HÖEGH LNG
76 Consolidated Financial Statements Höegh LNG Group
HÖEGH LNG
Consolidated Financial Statements Höegh LNG Group 77
HÖEGH LNG
78 Consolidated Financial Statements Höegh LNG Group
HÖEGH LNG
Consolidated Financial Statements Höegh LNG Group 79
HÖEGH LNG
80 Consolidated Financial Statements Höegh LNG Group
HÖEGH LNG
Consolidated Financial Statements Höegh LNG Group 81
HÖEGH LNG
82 Consolidated Financial Statements Höegh LNG Group
HÖEGH LNG
Consolidated Financial Statements Höegh LNG Group 83
HÖEGH LNG
84 Consolidated Financial Statements Höegh LNG Group
HÖEGH LNG
Consolidated Financial Statements Höegh LNG Group 85
HÖEGH LNG
86 Consolidated Financial Statements Höegh LNG Group
HÖEGH LNG
Consolidated Financial Statements Höegh LNG Group 87
HÖEGH LNG
88 Consolidated Financial Statements Höegh LNG Group
HÖEGH LNG
Consolidated Financial Statements Höegh LNG Group 89
HÖEGH LNG
90 Consolidated Financial Statements Höegh LNG Group
HÖEGH LNG
Consolidated Financial Statements Höegh LNG Group 91
HÖEGH LNG
92 Consolidated Financial Statements Höegh LNG Group
HÖEGH LNG
Consolidated Financial Statements Höegh LNG Group 93
HÖEGH LNG
94 Consolidated Financial Statements Höegh LNG Group
HÖEGH LNG
Consolidated Financial Statements Höegh LNG Group 95
HÖEGH LNG
HÖEGH LNG
Financial statements
Höegh LNG Holdings Ltd.
4.2
For the year ended 31 December 2022
HÖEGH LNG
98 Statement of income
98 Statement of comprehensive income
99 Statement of financial position
101 Statement of changes in equity
102 Statement of cash flows
103 Notes
98 Financial Statements Höegh LNG Holdings Ltd.
HÖEGH LNG
STATEMENT OF INCOME 1 JANUARY – 31 DECEMBER
STATEMENT OF COMPREHENSIVE INCOME 1 JANUARY – 31 DECEMBER
USD’000 Note 2022 2021
Administrative expenses 9 (57 051) (5 320)
OPERATING RESULT (57 051) (5 320)
Interest income 6 13 376 12 352
Dividends received 16 458 14 532
Reversal of impairment on loans to subsidiaries 5 82 061 -
Interest expenses 7 (32 115) (32 327)
Income from other financial items 17 4 693 403
Expenses from other financial items 17 (3 676) (2 546)
PROFIT (LOSS) FOR THE YEAR AFTER TAX 7 746 (12 906)
USD’000 Note 2022 2021
PROFIT (LOSS) FOR THE YEAR AFTER TAX 7 746 (12 906)
Items that may be subsequently reclassified to profit
Net gain on cash flow hedges 8 16 376 5 572
OTHER COMPREHENSIVE INCOME FOR THE YEAR 16 376 5 572
TOTAL COMPREHENSIVE INCOME (LOSS) FOR THE YEAR 24 122 (7 334)
Financial Statements Höegh LNG Holdings Ltd. 99
HÖEGH LNG
STATEMENT OF FINANCIAL POSITION
USD’000 Note 31 Dec 2022 31 Dec 2021
ASSETS
Non-current assets
Investments in subsidiaries 3 596 382 218 183
Loans to subsidiaries 5 277 082 358 608
Investments in associates 4 43 125 43 125
Loan to associate 5 1 920 -
Cash collateral 13 490 20
Other non-current financial assets 8 137 2 072
Total non-current assets 919 136 622 008
Current assets
Loan to associate 5 - 1 777
Trade receivables 1 663 1 482
Other current financial asset 8 3 135 13
Cash and cash equivalents 10 22 595 26 146
Total current assets 27 394 29 418
TOTAL ASSETS 946 529 651 426
EQUITY AND LIABILITIES
Equity
Share capital 11 12 12
Share premium reserve 556 260 556 260
Contributed surplus 350 821 154 753
Other paid-in equity 295 295
Hedging reserves 8 9 815 (6 561)
Retained earnings (378 590) (386 336)
Total equity 538 613 318 424
Non-current liabilities
Other non-current financial liabilities 8 31 808 9 315
Other debt 14 14 667 44 000
Bonds 12 129 582 -
Total non-current liabilities 176 057 53 315
Current liabilities
Other debt 14 29 333 -
Bonds 12 153 978 266 447
Accrued interest 14 5 673 4 431
Trade and other payables 308 952
Provisions and accruals 26 664 12
Other current financial liabilities 8 15 902 7 846
Total current liabilities 231 859 279 688
TOTAL EQUITY AND LIABILITIES 946 529 651 426
100 Financial Statements Höegh LNG Holdings Ltd.
HÖEGH LNG
Hamilton, Bermuda, 3 April 2023
The Board of Directors and the President and CEO of Höegh LNG Holdings Ltd.
Morten W. Høegh
Chairman
Johan Pfeiffer
Deputy Chairman
Martine Vice Holter
Director
Timothy Faries
Director
Alberto Donzelli
Director
Erik Nyheim
President and CEO
Leif O. Høegh
Director
John Kwaak
Director
Financial Statements Höegh LNG Holdings Ltd. 101
HÖEGH LNG
STATEMENT OF CHANGES IN EQUITY
USD’000 Note
Share
capital
Share
premium
reserve
Treasury
shares
Con-
tributed
surplus
Other
paid-in
equity
Hedging
reserves
Retained
earnings
Total
equity
1 January 2021 773 447 715 ( 11) - 295 (12 133) (140 882) 295 756
Total comprehensive loss 8 - - - - - 5 572 (12 906) (7 334)
Shareholder contribution - - - 48 066 - - - 48 066
Amalgamation effects ( 761) 108 545 11 106 687 - - (232 548) (18 066)
31 December 2021 12 556 260 - 154 753 295 (6 561) (386 336) 318 424
Total comprehensive income 8 - - - - - 16 376 7 746 24 122
Shareholder contribution - - - 207 368 - - - 207 368
Transaction cost - - - (11 300) - - - (11 300)
31 December 2022 12 556 260 - 350 821 295 9 815 (378 590) 538 613
Of the contributed surplus of USD 207.4 million in 2022, USD 203.3 was settled in cash and USD
4.1 million in common units in Höegh LNG Partners LP previously owned by the shareholder. Of the
contributed surplus of USD 48.1 million in 2021, USD 47.2 million was settled in cash.
102 Financial Statements Höegh LNG Holdings Ltd.
HÖEGH LNG
STATEMENT OF CASH FLOWS 1 JANUARY – 31 DECEMBER
USD’000 Note 2022 2021
Cash flows from operating activities:
Profit (loss) for the year before tax 7 746 (12 906)
Adjustments to reconcile profit or loss before tax to net operational cash flows
Interest income 6 (13 376) (12 352)
Interest expenses 7 32 115 32 327
Reversal of impairment on loans to subsidiaries 5 (82 061) -
Net loss (gain) on derivatives and other financial instruments (1 080) 1 992
Dividends received from Höegh LNG Partners LP 16 ( 458) (14 532)
Working capital adjustments (changes in receivables and payables) 38 208 1 590
I) NET CASH FLOWS FROM OPERATING ACTIVITIES (18 906) (3 881)
Cash flows from investing activites:
Dividends received from Höegh LNG Partners LP 16 458 14 532
Grants lending to subsidiaries (49 500) (32 822)
Grants lending to associates - (1 750)
Repayments lending to subsidiaries 16 272 26 000
Interest received 1 776 -
Investments in subsidiaries 3 (166 119) -
Investments in associates 4 - (8 625)
II) NET CASH FLOWS FROM INVESTING ACTIVITIES (197 113) (2 664)
Cash flows from financing activites:
Interest paid (27 605) (25 309)
Payment of debt issuance cost, bond discount, amalgamation fees and financial fees - (24 013)
Repayment of borrowings (3 301) -
Repayment and buy-back of bonds - (12 453)
Repayment of revolving credit facility - (70 000)
Shareholder contribution 203 289 47 213
Proceeds from borrowings gross 12,14 40 555 93 592
Increase in restricted cash and cash collateral 13 ( 470) ( 20)
III) NET CASH FLOWS FROM FINANCING ACTIVITIES 212 468 9 009
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS (I+II+III) (3 551) 2 464
Cash and cash equivalents as of 1 January 26 146 23 682
CASH AND CASH EQUIVALENTS AS OF 31 DECEMBER 22 595 26 146
Financial Statements Höegh LNG Holdings Ltd. 103
HÖEGH LNG
Note 1: Corporate information
Höegh LNG Holdings Ltd. (the company) is an exempted company limited by shares and incorporated
under the laws of Bermuda. The company’s registered office is at Canon’s Court, 22 Victoria Street,
Hamilton HM 12, Bermuda.
The financial statements and note disclosures are presented in USD and all values are rounded to the
nearest thousand (USD’000) unless otherwise indicated. As a result of rounding differences amounts
and percentages may not add up to the total. The annual accounts for the company for the year
ended 31 December 2022 were approved by the Board of Directors 3 April 2023.
Note 2: Summary of significant accounting policies
The financial statements of the company are prepared in accordance with International Financial
Reporting Standards (IFRS) as issued by the International Accounting Standards Board (IASB) and
adopted by the EU.
Summary of significant accounting policies in Note 2 to the consolidated financial statements
generally apply to the company, but the following accounting principles are considered the most
important for assessment of the company’s financial statements:
2.1 Shares in subsidiaries and associates
Shares and units in subsidiaries and shares in associated companies are recorded at historical cost.
These investments are reviewed for impairment when there are indications that carrying value may
not be recoverable. Dividends or other distributions from subsidiaries or associated companies are
recognised as revenue when the company’s right to receive payment is established.
2.2 Financial assets
The company classifies its financial assets in two categories:
• Financial assets at amortised cost, which includes cash and cash equivalents, cash collateral,
intercompany loans and trade receivables and other receivables. Assets are subsequently
measured using the effective interest method and are subject to impairment testing.
• Financial assets at fair value through other comprehensive income (FVTOCI), which includes the
positive balance of interest rate and foreign currency swaps where the hedge is considered
effective.
Financial assets at amortised cost are subject to impairment testing based on expected credit losses.
The company consider its historical credit loss experience, and any changes in the underlying credit
risk based on financial performance and position of the counterparty to determine probability of
default. For assets not having exhibited a significant increase in credit risk, the company will make
provisions for expected losses from default which may arise for the assets 12 months from the
balance sheet date. For other assets, the company will make provisions for expected losses over
104 Financial Statements Höegh LNG Holdings Ltd.
HÖEGH LNG
the asset’s expected remaining lifetime. In order to calculate expected credit losses, the company
assesses the loss given default level based on expected shortfall of contractual cash flows. The
company recognises an impairment if present value of estimated future cash flows is lower than the
asset’s gross carrying value. Financial assets are derecognised when the company’s rights to receive
cash flows from the asset cease.
2.3 Financial liabilities
The company classifies its financial liabilities in two categories:
• Financial liabilities at amortised cost, which includes trade and other payables, bonds and other
debt. Liabilities are subsequently measured using the effective interest method.
• Financial liabilities through other comprehensive income (FVTOCI), which includes the negative
balance of interest rate and foreign currency swaps where the hedge is considered effective.
Financial liabilities are derecognised when its contractual obligations are discharged, cancelled or
expired. Derecognition is also made when terms are modified, and the cash flows of the modified
liability are substantially different, in which case a new financial liability based on the modified terms
is recognised at fair value. The difference between the carrying value and the consideration paid is
recognised in the income statement.
2.4 Income tax
The company is not subject to income tax as it operates in a jurisdiction not imposing such tax.
Note 3: Investments in subsidiaries
USD’000 2022 2021
Carrying value as of 1 January 218 183 218 183
Investment in HMLP 178 198 -
Conversion of intra-group loan to paid-in equity in Höegh LNG Ltd. 200 000 -
CARRYING VALUE AS OF 31 DECEMBER 596 382 218 183
On 23 September 2022, pursuant to a merger agreement, Höegh LNG completed the acquisition of
the public common units of Höegh LNG Partners LP and thereafter delisted the common units from
New York Stock Exchange. The transaction was funded with new equity from its shareholder, of
which USD 163.5 million was contributed in cash and USD 4.1 million was contributed as common
units in Höegh LNG Partners LP. The residual investment in Höegh LNG Partners LP during the year
related to indemnification of USD 8 million in transaction cost for acquisition of the common units and
USD 2.6 million in other indemnification cost related to agreed cost sharing for certain project cost.
The indemnified project cost was paid to HMLP, while the indemnified transaction cost was offset
against the then existing revolving credit facility between the two parties.
Financial Statements Höegh LNG Holdings Ltd. 105
HÖEGH LNG
USD’000 2022 2021
Höegh LNG Ltd. 200 000 -
Höegh LNG Partners LP 396 380 218 182
Höegh LNG General Partner LLC 1 1
CARRYING VALUE AS OF 31 DECEMBER 596 382 218 183
COUNTRY OF INCORPORATION
Companies Country of incorporation
Ownership
share
Carrying value
31 Dec 2022
Höegh LNG Ltd. Bermuda 100% 200 000
Höegh LNG Partners LP Marshall Islands 100% 396 380
Höegh LNG General Partner LLC Marshall Islands 100% 1
TOTAL 596 382
Impairment assessment
There were no impairment indicators related to investments in subsidiaries as of 31 December 2022
and as such no impairments were recognised. No impairments were recognised in 2021.
The company made an investment in Avenir LNG Limited (Avenir LNG) in 2018, initially a joint venture
with Golar LNG Ltd. (Golar LNG) and Stolt-Nielsen Ltd. (Stolt-Nielsen) to pursue opportunities in the
small-scale LNG market. The shares in Avenir LNG were subsequently registered on the Norwegian
OTC market under the ticker AVENIR. Höegh LNG Holdings Ltd. held 23.67% of the shares in Avenir
LNG as of 31 December 2022 (year-end 2021: 23.67%). The company had no remaining capital
commitments as of 31 December 2022.
Avenir LNG Limited has taken delivery of all 6 vessels ordered by the end of 2022, whereof one of
them was sold to a third party in 2021. The LNG storage terminal and distribution terminal facility in
the Italian port of Oristano, Sardinia was completed in 2021. As of 31 December 2022, all assets were
in operation.
Avenir LNG Limited sources and ships LNG to the terminal in Sardinia using its own vessel small LNG
carriers and distributes the LNG through regasification and by trucks into the local gas grid.
Reference is made to Note 9 in the consolidated financials disclosing 100% of condensed numbers
in the associate’s statement of comprehensive income for 2022 and 2021 and statement of financial
position as of 31 December 2022 and 2021, respectively.
Note 4: Investments in associates
USD’000 2022 2021
Carrying value as of 1 January 43 125 34 500
Purchase of shares in Avenir LNG Limited - 8 625
CARRYING VALUE AS OF 31 DECEMBER 43 125 43 125
106 Financial Statements Höegh LNG Holdings Ltd.
HÖEGH LNG
Note 5: Loans to subsidiaries and associates
USD’000 2022 2021
Non-current receivables Höegh LNG Ltd. at face value 277 082 416 124
Non-current receivables Höegh LNG Partners LP at face value - 24 545
GROSS CARRYING VALUE AS OF 31 DECEMBER 277 082 440 669
USD’000 2022 2021
Impairment non-current receivables Höegh LNG Ltd. - 82 061
Impairment non-current receivables Höegh LNG Partners LP - -
IMPAIRMENT AS OF 31 DECEMBER - 82 061
USD’000 Note 2022 2021
Non-current receivables Höegh LNG Ltd. net of impairment 15 277 082 334 063
Non-current receivables Höegh LNG Partners LP net of impairment 15 - 24 545
CARRYING VALUE AS OF 31 DECEMBER NET OF IMPAIRMENT 277 082 358 608
On 22 May 2013, the company entered a loan facility with Höegh LNG Ltd. of up to USD 600 million.
The interest rate of the facility is 3 months LIBOR plus a margin of 2.5%. Repayment of the facility
shall be done in one or several amounts, as agreed between the parties. During the year, drawings on
the loan facility occurred while no repayment event took place.
On 12 August 2014, the company issued a revolving credit facility (RCF) in an aggregate amount of
USD 85 million to the borrower Höegh LNG Partners LP. The RCF was fully repaid during 2022 and
ceased to exist 1 January 2023. The RCF had a floating interest rate equal to 3 months LIBOR plus a
margin of 4.0%.
Based on an impairment assessment by 31 December 2022, it was concluded to reverse the previous
impairment of USD 82.1 million related to the loan to Höegh LNG Ltd. No impairments or reversals of
previous impairments were made during 2021 related to loans to subsidiaries.
On 23 November 2021, the company entered into a revolving loan agreement with Avenir LNG. The
loan initially matured 23 November 2022 but was extended by an amendment agreement signed
13 October 2022 to 13 October 2025. The interest rate remains unchanged at 5% per annum in
the amendment agreement, whilst the commitment fee of 40% of the interest rate on the undrawn
amount was removed and the loan facility was reduced from USD 5.25 million to USD 2.65 million. No
impairment has historically been recognised on the loan to Avenir LNG.
See Note 6 for recognition of interest income and Note 15 for transactions with related parties.
LOANS TO ASSOCIATES
USD’000 2022 2021
Non-current receivables Avenir LNG at face value 1 920 -
Current receivables Avenir LNG at face value - 1 777
CARRYING VALUE AS OF 31 DECEMBER 1 920 1 777
LOANS TO SUBSIDIARIES
Financial Statements Höegh LNG Holdings Ltd. 107
HÖEGH LNG
Note 6: Interest income
See Note 5 for outstanding interest-bearing loan receivables.
USD’000 Note 2022 2021
Interest income from loan to Höegh LNG Ltd. 15 11 458 11 282
Interest income from revolving credit facility with Höegh LNG Partners LP 15 1 384 945
Interest income from revolving loan to Avenir LNG 15 142 27
Other interest income 392 97
TOTAL 13 376 12 352
Note 7: Interest expenses
USD’000 2022 2021
Interest expenses from bond HLNG03 12 937 11 828
Interest expenses from bond HLNG04 13 078 11 673
Interest expenses from corporate facility 6 054 6 853
Interest expenses from revolving credit facility issue 2020 (RCF) - 1 970
Other interest expenses 46 3
TOTAL 32 115 32 327
Note 8: Financial derivatives
Mark-to-market (MTM) of interest rate swaps and swaptions in the financial position
USD’000 2022 2021
MTMs presented as financial assets non-current portion 137 2 072
MTMs presented as financial assets current portion 3 135 -
MTMs presented as financial liabilities non-current portion (8 058) (9 315)
MTMs presented as financial liabilities current portion (15 902) (7 846)
Net MTMs of interest rate swaps as of 31 December (20 688) (15 089)
Accumulated exchange losses (gains) under CCIRS' included in MTM 30 503 8 528
INTEREST RATE SWAPS RECORDED AGAINST EQUITY AS OF 31 DECEMBER 9 815 (6 561)
Changes in MTMs of interest rate swaps and swaptions from previous year (5 599) (5 487)
USD’000 2022 2021
Changes recorded to other comprehensive income 16 376 5 572
Separate component of equity (currency portion of CCIRS) recorded to profit or (loss) (21 975) (11 059)
TOTAL CHANGES IN MTMS OF INTEREST RATE SWAPS FROM PREVIOUS YEAR (5 599) (5 487)
Notional amounts of hedge instruments¹ 961 519 311 322
Maturity dates Multiple Multiple
Hedge ratio 1:1 1:1
INTEREST RATE SWAPS AND SWAPTIONS IN THE FINANCIAL POSITION
1
Includes the notional of swaptions related to future debt.
108 Financial Statements Höegh LNG Holdings Ltd.
HÖEGH LNG
Note 9: Administrative expenses
USD’000 Note 2022 2021
Remuneration to board members 32 146
Audit fees 389 308
External services 54 072 1 109
Indemnification of boil-off claim 15 272 713
Management fee from companies within the group 15 2 236 2 480
Other 51 565
TOTAL 57 051 5 320
The company has entered cross currency interest rate swaps relating to NOK bonds HLNG03 and
HLNG04. On 31 December 2022, the mark-to-market valuation of the interest rate swaps was
recognised in the financial position with a net liability of USD 20.7 million (net liabilities 31 December
2021 USD 15.1 million). On 31 December 2022, interest rate swaps recorded against equity was USD
9.8 million (negative of USD 6.6 million at year-end 2021).
In 2022, the company entered cash flow hedges to mitigate floating interest rate risk for the new loan
facility for USD 685 million to refinance the existing debt for the Höegh Esperanza and the Hoegh
Gannet. A swaption is a single zero-cost derivative instrument, consisting of combination of a written
option and a purchased option with the same notional amounts, that form an interest rate collar
locking future fixed interest rates within a range. On 31 December 2022, swaptions recorded against
equity was USD 2.1 million.
Note 10: Cash and cash equivalents
Currency
Exchange rate
31 Dec 2022
2022
USD'000
Exchange rate
31 Dec 2021
2021
USD'000
US Dollars (USD) 1 22 126 1 26 140
Norwegian Kroner (NOK) 9.7717 469 8.8175 6
CASH AND CASH EQUIVALENTS AS OF 31 DECEMBER 22 595 26 146
As of 31 December 2022, the company’s share capital was USD 12 000, consisting of 1 200 000 fully
paid common shares, each with a par value of USD 0.01. All the shares in the company are owned by
Larus Holding Limited, a 50/50 joint venture between Leif Höegh & Co Ltd. and funds managed by
Morgan Stanley Infrastructure Partners.
Note 11: Share capital
Financial Statements Höegh LNG Holdings Ltd. 109
HÖEGH LNG
Note 12: Bonds
USD’000 2022 2021
Bond HLNG04 133 037 -
Amortisation of bond HLNG04 discount (1 338) -
Debt issuance cost bond HLNG04 (2 117) -
CARRYING VALUE AS OF 31 DECEMBER 129 582 -
NON-CURRENT LIABILITIES
CURRENT LIABILITIES
USD’000 2022 2021
Bond HLNG03 153 505 125 205
Bond HLNG04 - 147 434
Amortisation of bond HLNG04 discount - (1 906)
Debt issuance cost bond HLNG03 474 (1 221)
Debt issuance cost bond HLNG04 - (3 065)
CARRYING VALUE AS OF 31 DECEMBER 153 978 266 447
The HLNG03 and HLNG04 bond loans have maturity dates in August 2023 and January 2025
respectively. However, both loans were classified as current interest-bearing debt as of 31 December
2021 due to the bondholders of each of the bond loans had the right to require the company to
purchase all or some of the bonds held by a bondholder if certain conditions were not met. The
company fulfilled the conditions during 2022 and as such these bondholder rights will not come into
effect and HLNG04 was classified as non-current as of 31 December 2022.
During the year, Höegh LNG Holdings Ltd. sold an aggregate of NOK 396 million of HLNG03
bonds held in treasury at an average price of 99.85% of par value, net of broker commission. Total
outstanding amount on HLNG03 as of 31 December 2022 was NOK 1 500 million. Interest expenses
on the bonds was USD 26.0 million for 2022 (2021: USD 23.5 million).
Note 13: Cash collateral
USD’000 2022 2021
Carrying value as of 1 January 20 -
Change in cash collateral 470 20
CARRYING VALUE AS OF 31 DECEMBER 490 20
In connection with the company’s cross currency interest rate swaps for HLNG03 and HLNG04,
credit support agreements (CSAs) have been requested by swap bank lenders. Höegh LNG Holdings
Ltd. is therefore exposed to liquidity risk if the negative market value of the swaps is higher than a
pre-defined threshold, as the company will be required to post cash collateral for the difference.
As of 31 December 2022, the company had posted USD 490 thousand in cash collateral.
110 Financial Statements Höegh LNG Holdings Ltd.
HÖEGH LNG
Carrying value Fair value
USD’000 31 Dec 2022 31 Dec 2021 31 Dec 2022 31 Dec 2021
Financial assets at fair value through other
comprehensive income (FVTOCI)
Mark-to-market of interest rate swaps
3 272 2 072 3 272 2 072
Total 3 272 2 072 3 272 2 072
Financial assets at fair value through profit or loss (FVTPL)
Derivatives
- 13 - 13
Total - 13 - 13
Financial assets at amortised cost
Interest-bearing receivables 279 002 360 385 279 002 360 385
Trade receivables and other receivables 1 663 1 482 1 663 1 482
Cash collateral 490 20 490 20
Cash and cash equivalents 22 595 26 146 22 595 26 146
Total 303 750 388 032 303 750 388 032
TOTAL FINANCIAL ASSETS 307 023 390 118 307 023 390 118
TOTAL NON-CURRENT FINANCIAL ASSETS 279 629 360 700 279 629 360 700
TOTAL CURRENT FINANCIAL ASSETS 27 394 29 418 27 394 29 418
Note 14: Financial risk management objectives and policies
The groups objectives and policies related to capital management and financial risks are described in
Note 13 in the consolidated financial statements.
FINANCIAL ASSETS
FINANCIAL LIABILITIES
Carrying value Fair value
USD’000 31 Dec 2022 31 Dec 2021 31 Dec 2022 31 Dec 2021
Financial liabilities at fair value through other
comprehensive income (FVTOCI)
Mark-to-market of interest rate swaps
23 960 17 161 23 960 17 161
Total 23 960 17 161 23 960 17 161
Financial liabilities at amortised cost
Trade and other payables and accrued interest 56 395 5 383 56 395 5 383
Other debt 44 000 44 000 44 000 44 000
Bonds excl. debt issuance cost and bond discount 286 542 272 639 291 746 254 033
Total 386 937 322 022 392 141 303 416
TOTAL FINANCIAL LIABILITIES 410 897 339 183 416 101 320 577
TOTAL NON-CURRENT FINANCIAL LIABILITIES 176 057 53 315 182 505 53 315
TOTAL CURRENT FINANCIAL LIABILITIES 231 859 279 676 233 595 267 262
Financial Statements Höegh LNG Holdings Ltd. 111
HÖEGH LNG
On 31 December 2022, accrued interest was USD 5.7 million (4.4 million as of 31 December 2021)
comprising USD 4.2 million and 1.5 million related to bonds and other debt, respectively (USD 3.8
million and 0.7 million as of 31 December 2021).
The fair value of the financial assets and liabilities are included in the amount at which the
instruments could be exchanged in a current transaction between willing parties other than in a
forced or liquidation sale. The following methods and assumptions were used to estimate the fair
value of each class of financial instrument:
The fair values of cash and cash equivalents and trade receivables and other receivables
approximate their carrying values largely due to the short-term maturities of these instruments.
Trade and other payables and accrued interest consist of both current and non-current liabilities.
The fair values of the current portion approximate their carrying values largely due to the short-term
maturities on these financial instruments. The fair values of the non-current portion are considered
to materially approximate their carrying values
Long-term fixed rate and variable-rate receivables are evaluated by the company based on interest
rates and expected recovery of future contractual cash flows. The discounted estimates of cash
flows approximate the carrying value.
The fair value of financial instruments measured at fair value (interest rate swaps and derivatives) is
calculated by using valuation techniques with market observable inputs, including forward pricing
and swap models, using present calculations. The models incorporate various inputs including the
credit quality of counterparties, foreign exchange spot and forward rates and interest rate curves.
The fair value of other debt was determined by using the DCF method using discount rate that
reflected the issuer’s borrowing rate as of the end of the reporting period. The own non-performance
risk as of 31 December 2022 and 2021 was assessed to be insignificant.
The bonds issued by the company (HLNG03 issued January 2017 and HLNG04 issued January
2020) are listed on Oslo Stock Exchange, and the fair values of these are disclosed based on traded
information. As of 31 December 2022, the fair values were 101.44% (94.96% as of 31 December 2021)
and 102.25% (91.66% as of 31 December 2021) for HLNG03 and HLNG04, respectively.
112 Financial Statements Höegh LNG Holdings Ltd.
HÖEGH LNG
CHANGES IN LIABILITIES ARISING FROM FINANCING ACTIVITIES
USD’000 1 Jan 2022
Cash flows new
interest-
bearing debt
Foreign
exchange
movements
Other
movements 31 Dec 2022
Current bonds 266 447 40 555 (12 120) (140 904) 153 978
Non-current bonds - - (14 397) 143 979 129 582
Non-current other debt 44 000 - - (29 333) 14 667
Current other debt - - - 29 333 29 333
TOTAL LIABILITIES FROM
FINANCING ACTIVITIES 310 447 40 555 (26 516) 3 075 327 560
USD’000
1 Jan
2021
Cash flows
repayment
and buy-back
of bonds
Cash flows
new interest-
bearing debt
Foreign
exchange
movement
Other
movements
31 Dec
2021
Current bond issue - - - - 266 447 266 447
Non-current other debt - - 44 000 - - 44 000
Non-current revolving credit facility 60 000 (70 000) 10 000 - - -
Non-current bond issues 250 807 (12 118) 39 592 (9 740) (268 542) -
TOTAL LIABILITIES FROM
FINANCING ACTIVITIES 310 807 (82 118) 93 592 (9 740) (2 095) 310 447
Due to the nature of the USD 44 million facility, no interest rate swap agreements were entered.
The loan has a floating interest rate equal to 3 months LIBOR plus a margin. The loan matures 3 May
2024 and repayments will incur on a quarterly basis with equal instalments each quarter starting
27 January 2023 and as such a portion was reclassified to current as of 31 December 2022. Other
movements also comprise reclassification of bond loan HLNG04 from current to non-current (see
Note 12) and amortisation of debt issuance cost and bond issue discount.
Refer to Note 13 in the consolidated financial statements for fair value hierarchy and for further
outline of financial risk management objectives and policies.
Note 15: Related party transactions
USD’000 Note 31 Dec 2022 31 Dec 2021
Subsidiaries:
Höegh LNG Ltd. 5 277 082 334 063
Höegh LNG Partners LP 5 - 24 545
Associates:
Avenir LNG Limited 5 1 920 1 777
TOTAL 279 002 360 385
LOANS TO RELATED PARTIES
Financial Statements Höegh LNG Holdings Ltd. 113
HÖEGH LNG
The amounts to Höegh LNG Partners LP, include settlement of indemnities for certain excess boil-off
in 2022 and 2021.
USD’000 Note 2022 2021
Subsidiaries:
Höegh LNG AS 9 2 236 2 480
Höegh LNG Partners LP 9 272 713
TOTAL 2 508 3 192
USD’000 Note 2022 2021
Subsidiaries:
Höegh LNG Ltd. 6 11 458 11 282
Höegh LNG Partners LP 6 1 384 945
Associates:
Avenir LNG Limited 6,17 243 397
TOTAL 13 085 12 625
INTEREST INCOME AND FEES FROM RELATED PARTIES
ADMINISTRATIVE EXPENSES TO RELATED PARTIES
Note 16: Dividends
During 2022, the company received dividends from Höegh LNG Partners LP, totalling USD 0.5 million
(2021: USD 14.5 million). The company did not pay out any dividends to its shareholders in 2022 or
2021.
Note 17: Expenses and income from other financial items
USD’000 Note 2022 2021
Income from other financial items
Gain on foreign exchange 4 591 33
Guarantee fees accrued 15 101 370
INCOME FROM OTHER FINANCIAL ITEMS - GROSS 4 693 403
Expenses from other financial items
Loss on foreign exchange (3 600) (1 420)
Fair value adjustment USD/NOK FX call options (13) (847)
Expensed settlement on extinguished NOK 101 million swap related to
buy-back of bonds - (127)
Other financial expenses (63) (151)
EXPENSES FROM OTHER FINANCIAL ITEMS - GROSS (3 676) (2 546)
EXPENSES FROM OTHER FINANCIAL ITEMS - NET 1 016 (2 143)
114 Financial Statements Höegh LNG Holdings Ltd.
HÖEGH LNG
Note 18: Commitments and guarantees
As of 31 December 2022, Höegh LNG had no remaining outstanding investment commitment in
Avenir LNG Limited.
By the end of 2022, Avenir had completed the construction of all of its six newbuilds. In connection
with the debt financing of one of the completed vessels, Höegh LNG Holdings Ltd. has provided a
sponsor’s guarantee with a maximum liability amount of USD 6.9 million plus interests and costs.
Reference is made to Note 25 in the consolidated financial statements disclosing guarantees
provided by the company as well as the group.
Note 19: Subsequent events
Refer to Note 27 in the consolidated financial statements for events after the balance sheet date.
HÖEGH LNG
Directors’
responsibility statement
4.3
HÖEGH LNG
118 Directors’ responsibility statement
HÖEGH LNG
118 | Directors’ Responsibility Statement
Today, the board and the President and CEO
reviewed and approved the board of directors’
report, the corporate governance report, and
the consolidated and separate annual financial
statements for Höegh LNG Holdings Ltd., for the
year ending 31 December 2022 (Annual Report
2022).
Höegh LNG’s parent company and consolidated
financial statements have been prepared
in accordance with International Financial
Reporting Standards as adopted by the EU
(“IFRS”) and additional disclosure requirements
set out in the Norwegian Securities Trading Act.
To the best of our knowledge:
• The consolidated and separate annual
financial statements for 2022 have been
prepared in accordance with IFRS;
• The consolidated and separate annual
financial statements give a true and fair
view of the assets, liabilities, financial
position and result for the period for the
group and the parent company; and
• The board of directors’ report for the group
and the parent company includes a true and
fair review of
• The development and performance of
the business and the position of the
group and the parent company; and
• The principal risks and uncertainties the
group and the parent company face.
Hamilton, Bermuda, 3 April 2023
The Board of Directors and the President and CEO of Höegh LNG Holdings Ltd.
Morten W. Høegh
Chairman
Johan Pfeiffer
Deputy Chairman
Martine Vice Holter
Director
Timothy Faries
Director
Alberto Donzelli
Director
Erik Nyheim
President and CEO
Leif O. Høegh
Director
John Kwaak
Director
Directors’
responsibility statement
HÖEGH LNG
Independent
auditor’s report
4.4
HÖEGH LNG
123 Independent auditor’s report
122 Financial Statements Höegh LNG Holdings Ltd.
HÖEGH LNG
FINANCIAL STATEMENTS FOR HÖEGH LNG HOLDINGS LTD. | 122
HÖEGH LNG
Auditor’s report 123
Statsautoriserte revisorer
Ernst & Young AS
Dronning Eufemias gate 6a, 0191 Oslo
Postboks 1156 Sentrum, 0107 Oslo
Foretaksregisteret: NO 976 389 387 MVA
Tlf: +47 24 00 24 00
www.ey.no
Medlemmer av Den norske
Revisorforening
A member firm of Ernst & Young Global Limited
INDEPENDENT AUDITOR'S REPORT
To the Annual Shareholders' Meeting of Höegh LNG Holdings Ltd
Opinion
We have audited the financial statements of Höegh LNG Holdings Ltd (the Company and the Group),
which comprise the statement of financial position as at 31 December 2022, the statement of income,
statement of comprehensive income, statement of cash flows and statement of changes in equity for the
year then ended, and notes to the financial statements, including a summary of significant accounting
policies.
In our opinion, the financial statements comply with applicable legal requirements and give a true and fair
view of the financial position of the Company and the Group as at 31 December 2022 and their financial
performance and cash flows for the year then ended in accordance with International Financial Reporting
Standards as adopted by the EU.
Our opinion is consistent with our additional report to the board of directors.
Basis for opinion
We conducted our audit in accordance with International Standards on Auditing (ISAs). Our
responsibilities under those standards are further described in the Auditor’s responsibilities for the audit of
the financial statements section of our report. We are independent of the Company and the Group in
accordance with the requirements of the relevant laws and regulations in Norway and the International
Ethics Standards Board for Accountants’ International Code of Ethics for Professional Accountants
(including International Independence Standards) (IESBA Code), and we have fulfilled our other ethical
responsibilities in accordance with these requirements. We believe that the audit evidence we have
obtained is sufficient and appropriate to provide a basis for our opinion.
To the best of our knowledge and belief, no prohibited non-audit services referred to in the Audit
Regulation (537/2014) Article 5.1 have been provided.
We have been the auditor of the Company for 17 years from the incorporation and election by the general
meeting of shareholders in 2006 for the accounting year 2006 with a renewed election on the 27 August
2022.
Key audit matters
Key audit matters are those matters that, in our professional judgment, were of most significance in our
audit of the financial statements for 2022. These matters were addressed in the context of our audit of the
financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate
opinion on these matters. For each matter below, our description of how our audit addressed the matter is
provided in that context.
We have fulfilled the responsibilities described in the Auditor’s responsibilities for the audit of the financial
statements section of our report, including in relation to these matters. Accordingly, our audit included the
performance of procedures designed to respond to our assessment of the risks of material misstatement
of the financial statements. The results of our audit procedures, including the procedures performed to
address the matters below, provide the basis for our audit opinion on the financial statements.
124 Auditor’s report
HÖEGH LNG
2
Independent auditor's report - Höegh LNG Holdings Ltd 2022
A member firm of Ernst & Young Global Limited
Impairment evaluation of vessels
Basis for the key audit matter
The book value of vessels (FSRUs) as of 31
December 2022 was USD 1 886.5 million and
represented 77.6 % of the Group’s total assets, in
addition the Group through joint ventures have
ownership in two LNGC vessels. Management did
not identify indicators of impairment for the
FSRUs, therefore no impairment testing was
performed. The assessment included an
evaluation of current charter contracts as well as
changes in technological, economic and legal
environment. For the two LNGC vessels owned
through joint ventures, impairment indicators were
identified related to market conditions after expiry
of the current contracts. In the joint ventures the
recoverable amounts of each LNGC vessel were
tested, by comparing each vessel’s carrying
amount to value in use. The value in use
impairment testing consisted of discounted cash
flows for the remaining period of the charter and
the expected future market value/broker value
after expiry of the contracts. During 2022, an
impairment charge of USD 16 million was
included in the share of results from investment in
associates and joint ventures.
The estimation of recoverable amount requires
significant judgment especially related to
expected future market value assessment after
expiry of current contracts. We consider the
impairment evaluation a key audit matter due to
the uncertainty of estimates and judgments
involved in establishing the assumptions.
Our audit response
For the FSRUs we reviewed the potential
indicators of impairment that would require
impairment testing and evaluated management’s
assessment of indicators. For the LNGC vessels
we assessed the expected revenue and operating
expenditures up to expiry of the charter as well as
the estimated future market value after expiry of
the contract. We assessed the competence and
objectivity of the broker, and we also checked that
the brokers were provided with the appropriate
input to perform an estimate of fair value, such as
build date, yard and key metrics of the vessels.
Our audit procedures included evaluating
management’s assessment of impairment
indicators for vessels and the assumptions
applied in the value in use calculations. We also
considered assessed the accuracy of prior years’
forecasts, compared expected revenue and
operating expenditures to approved budgets.
Furthermore, we tested the mathematical
accuracy of the value in use calculations.
Refer to note 7 and 9 in the consolidated financial
statements.
.
Provisions for Uncertain Tax Positions in Indonesia
Basis for the key audit matter
As of 31 December 2022, the Group has
recognised a provision of USD 5.2 million (9.0
million) for uncertain tax positions including
associated interest and penalties in Indonesia.
The Group’s tax positions in Indonesia are subject
to audit by local taxing authorities and the
resolution of such audits may take several years.
Indonesian tax law is complex and often subject
to various interpretations, accordingly, the
ultimate outcome with respect to taxes the Group
may owe may differ from the amounts recognized.
We identified the provisions for uncertain tax
positions in Indonesia as a key audit matter
Our audit response
Our audit procedures included, among others,
evaluating management’s interpretation of
Indonesian tax law by developing an independent
assessment. For example, we involved local tax
professionals with specialized skills to assist us in
obtaining an understanding of and assessing the
technical merits and the amount of the provision
recognized related to the Group’s tax positions.
We inspected the Group’s correspondence and
assessments with the relevant Indonesian tax
authorities. We evaluated third-party advice
obtained by management in relation to specific
Indonesian income tax law. We tested the
HÖEGH LNG
Auditor’s report 125
3
Independent auditor's report - Höegh LNG Holdings Ltd 2022
A member firm of Ernst & Young Global Limited
because auditing the identification, recognition
and measurement of the provision includes a
higher degree of judgment. The judgment was
due to the Group’s interpretation of, and
compliance with, numerous and complex tax laws.
In addition, a higher degree of auditor judgment
was required in evaluating the Group’s estimate of
the ultimate resolution of its tax positions in
Indonesia.
completeness and accuracy of the underlying
data used by management to calculate its
uncertain tax positions in Indonesia. We assessed
the adequacy of the Group’s disclosures around
uncertain tax positions.
Refer to note 23 of the consolidated financial
statements.
Other information
Other information consists of the information included in the annual report other than the financial
statements and our auditor’s report thereon. Management (the board of directors and the president and
CEO) is responsible for the other information. Our opinion on the financial statements does not cover the
other information, and we do not express any form of assurance conclusion thereon.
In connection with our audit of the financial statements, our responsibility is to read the other information,
and, in doing so, consider whether the other information is materially inconsistent with the financial
statements or our knowledge obtained in the audit, or otherwise appears to be materially misstated. If,
based on the work we have performed, we conclude that there is a material misstatement of this other
information or that the information required by applicable legal requirements is not included, we are
required to report that fact.
We have nothing to report in this regard.
Responsibilities of management for the financial statements
Management is responsible for the preparation and fair presentation of the financial statements in
accordance with International Financial Reporting Standards as adopted by the EU, and for such internal
control as management determines is necessary to enable the preparation of financial statements that
are free from material misstatement, whether due to fraud or error.
In preparing the financial statements, management is responsible for assessing the Company’s and the
Group’s ability to continue as a going concern, disclosing, as applicable, matters related to going concern
and using the going concern basis of accounting unless management either intends to liquidate the
Company or the Group, or to cease operations, or has no realistic alternative but to do so.
Auditor’s responsibilities for the audit of the financial statements
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are
free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that
includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an
audit conducted in accordance with ISAs will always detect a material misstatement when it exists.
Misstatements can arise from fraud or error and are considered material if, individually or in the
aggregate, they could reasonably be expected to influence the economic decisions of users taken on the
basis of these financial statements.
As part of an audit in accordance with ISAs, we exercise professional judgment and maintain professional
scepticism throughout the audit. We also:
126 Auditor’s report
HÖEGH LNG
4
Independent auditor's report - Höegh LNG Holdings Ltd 2022
A member firm of Ernst & Young Global Limited
• Identify and assess the risks of material misstatement of the financial statements, whether due to
fraud or error, design and perform audit procedures responsive to those risks, and obtain audit
evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not
detecting a material misstatement resulting from fraud is higher than for one resulting from error,
as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override
of internal control.
• Obtain an understanding of internal control relevant to the audit in order to design audit
procedures that are appropriate in the circumstances, but not for the purpose of expressing an
opinion on the effectiveness of the Company’s and the Group’s internal control.
• Evaluate the appropriateness of accounting policies used and the reasonableness of accounting
estimates and related disclosures made by management.
• Conclude on the appropriateness of management’s use of the going concern basis of accounting
and, based on the audit evidence obtained, whether a material uncertainty exists related to
events or conditions that may cast significant doubt on the Company’s and the Group’s ability to
continue as a going concern. If we conclude that a material uncertainty exists, we are required to
draw attention in our auditor’s report to the related disclosures in the financial statements or, if
such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit
evidence obtained up to the date of our auditor’s report. However, future events or conditions
may cause the Company and the Group to cease to continue as a going concern.
• Evaluate the overall presentation, structure and content of the financial statements, including the
disclosures, and whether the financial statements represent the underlying transactions and
events in a manner that achieves fair presentation.
• Obtain sufficient appropriate audit evidence regarding the financial information of the entities or
business activities within the Group to express an opinion on the consolidated financial
statements. We are responsible for the direction, supervision and performance of the group audit.
We remain solely responsible for our audit opinion.
We communicate with the board of directors regarding, among other matters, the planned scope and
timing of the audit and significant audit findings, including any significant deficiencies in internal control
that we identify during our audit.
We also provide the board of directors with a statement that we have complied with relevant ethical
requirements regarding independence, and to communicate with them all relationships and other matters
that may reasonably be thought to bear on our independence, and where applicable, related safeguards.
From the matters communicated with the board of directors, we determine those matters that were of
most significance in the audit of the financial statements of the current period and are therefore the key
audit matters. We describe these matters in our auditor’s report unless law or regulation precludes public
disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should
not be communicated in our report because the adverse consequences of doing so would reasonably be
expected to outweigh the public interest benefits of such communication.
Report on other legal and regulatory requirement
Report on compliance with regulation on European Single Electronic Format (ESEF)
Opinion
As part of our audit of the financial statements of Höegh LNG Holdings Ltd we have performed an
assurance engagement to obtain reasonable assurance whether the financial statements included in the
annual report, with the file name hoeghlngholdingsltd-2022-12-31-en, has been prepared, in all material
respects, in compliance with the requirements of the Commission Delegated Regulation (EU) 2019/815
on the European Single Electronic Format (ESEF Regulation) and regulation given with legal basis in
Section 5-5 of the Norwegian Securities Trading Act, which includes requirements related to the
HÖEGH LNG
Auditor’s report 127
5
Independent auditor's report - Höegh LNG Holdings Ltd 2022
A member firm of Ernst & Young Global Limited
preparation of the annual report in XHTML format and iXBRL tagging of the consolidated financial
statements.
In our opinion, the financial statements included in the annual report have been prepared, in all material
respects, in compliance with the ESEF Regulation.
Management’s responsibilities
Management is responsible for the preparation of an annual report and iXBRL tagging of the consolidated
financial statements that complies with the ESEF Regulation. This responsibility comprises an adequate
process and such internal control as management determines is necessary to enable the preparation of
an annual report and iXBRL tagging of the consolidated financial statements that is compliant with the
ESEF Regulation.
Auditor’s responsibilities
Our responsibility is to express an opinion on whether, in all material respects, the financial statements
included in the annual report have been prepared in accordance with the ESEF Regulation based on the
evidence we have obtained. We conducted our engagement in accordance with the International
Standard for Assurance Engagements (ISAE) 3000 – “Assurance engagements other than audits or
reviews of historical financial information”. The standard requires us to plan and perform procedures to
obtain reasonable assurance that the financial statements included in the annual report have been
prepared in accordance with the ESEF Regulation.
As part of our work, we performed procedures to obtain an understanding of the company’s processes for
preparing its annual report in XHTML format. We evaluated the completeness and accuracy of the iXBRL
tagging and assessed management’s use of judgement. Our work comprised reconciliation of the iXBRL
tagged data with the audited financial statements in human-readable format. We believe that the
evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
Oslo, 13 April 2023
ERNST & YOUNG AS
The auditor's report is signed electronically
Jon-Michael Grefsrød
State Authorised Public Accountant (Norway)
HÖEGH LNG
Alternative performance
measures (APMs)
4.5
HÖEGH LNG
130 Alternative performance measures
130 Consolidated Financial Statements Höegh LNG Group
HÖEGH LNG
Alternative performance measures (APMs)
Höegh LNG’s financial information is prepared in accordance with the International Financial
Reporting Standards (IFRS). In addition, it is management’s intent to provide additional performance
measures when this is deemed relevant for the understanding of Höegh LNG’s financial performance.
Alternative performance measures are used by Höegh LNG to provide supplemental information
to the different users of its external financial reporting. Financial APMs are intended to enhance
comparability of the results and to give supplemental information related to measures not within the
applicable financial reporting framework, and it is Höegh LNG’s experience that these measures are
frequently used by equity and debt investors, analysts and other stakeholders. Management uses
these measures internally to drive performance in terms of target setting and as basis for measuring
actual financial performance. These measures are adjusted IFRS measures defined, calculated and
used in a consistent and transparent manner over the years and across the group.
Operational measures such as, but not limited to, volumes, technical availability of vessels/fleet and
contract backlog are not defined as financial APMs.
Financial APMs should not be considered as a substitute for measures of performance in accordance
with the IFRS. The alternative performance measures presented may be determined or calculated
differently by other companies.
Höegh LNG’s APMs
• Earnings before interest, depreciation, amortisation and impairments (EBITDA): EBITDA is
defined as the line-item Operating profit before depreciation and impairment in the consolidated
statement of income
• Net interest-bearing debt: non-current and current interest-bearing debt deducted cash,
marketable securities and restricted cash (current and non-current)
• Equity adjusted for hedging: Total book equity adjusted for mark-to-market value of financial
derivative swaps recorded against equity (hedging reserves). Financial derivative swaps consist
of interest-rate and cross-currency interest-rate swaps. In the money mark-to-market, financial
derivative swaps will increase equity, while out of the money mark-to-market financial derivative
swaps will reduce equity. Mark-to-market value of interest-rate swaps in Höegh LNG’s joint
ventures are recorded as part of line-item Investment in joint ventures. The computation of
equity adjusted for hedging is consistent with the definitions set out in the group’s covenants in
loan agreements
• Equity ratio adjusted for hedging: Total book equity adjusted for hedging reserves divided by
total assets adjusted for hedging related assets. Hedging related assets represents an increase
in investment in joint ventures when removing the negative impact of out of the money mark-to-
market financial derivative swaps
Consolidated Financial Statements Höegh LNG Group 131
HÖEGH LNG
USD’000 31 Dec 2022 31 Dec 2021
Net interest-bearing debt 1 336 667 1 440 524
Equity adjusted for hedging 699 216 743 505
EQUITY RATIO ADJUSTED FOR HEDGING 29% 30%
ALTERNATIVE PERFORMANCE MEASURES, SUMMARY
USD’000 31 Dec 2022 31 Dec 2021
Interest-bearing debt, current and non-current (1 514 628) (1 613 745)
Restricted cash, non-current 15 790 30 662
Cash and cash equivelents including restricted cash and marketable securities 162 171 142 558
NET INTEREST-BEARING DEBT (1 336 667) (1 440 524)
USD’000 Note 31 Dec 2022 31 Dec 2021
Net MTMs of financial liabilities in parent and subsidiaries 13 20 289 (54 808)
Net MTMs of financial liabilities in joint ventures and associates 13 (17 168) (46 675)
Changes in MTMs not recorded as OCI:
Net foreign exchange (gain) losses under cross currency swaps included in MtM 30 502 5 225
Accumulated break cost paid (7 586) (4 285)
Accumulated loss on swap in profit or loss 906 8 068
HEDGE RESERVES INCLUDING NON-CONTROLLING INTEREST SHARE 26 942 (92 474)
USD’000 31 Dec 2022 31 Dec 2021
Equity 726 159 651 031
Hedge reserve, including non-controlling interest share (26 942) 92 474
EQUITY ADJUSTED FOR HEDGING TRANSACTIONS 699 216 743 505
USD’000 31 Dec 2022 31 Dec 2021
Total assets 2 431 225 2 429 209
Hedge reserves in JVs for investments presented as assets 17 168 46 675
Hedges recorded as assets (44 249) (2 780)
TOTAL ASSETS ADJUSTED FOR HEDGING TRANSACTIONS 2 404 144 2 473 104
EQUITY ADJUSTED FOR HEDGING TRANSACTIONS 699 216 743 505
EQUITY RATIO ADJUSTED FOR HEDGING TRANSACTIONS 29% 30%
NET INTEREST-BEARING DEBT
HEDGE RESERVES
EQUITY ADJUSTED FOR HEDGING TRANSACTIONS
EQUITY RATIO ADJUSTED FOR HEDGING TRANSACTIONS
www.hoeghlng.com