SUBSEA 7 S.A.

ANNUAL REPORT 2021

SUBSEA 7 S.A. ANNUAL REPORT 2021

CONTENTS

Strategic report

2 Chairman’s Statement

4 Chief Executive Officer’s Review

6 Our Business Model

8 Our Markets

10 Our Strategy

16 Business Review

18 Sustainability

24 Risk Management

Governance

37 Governance Overview

38 Board of Directors

40 Executive Management Team

42 Corporate Governance Report

Consolidated Financial Statements

52 Financial Review

60 Consolidated Financial Statements

Subsea 7 S.A. Financial Statements

140 Subsea 7 S.A. Financial Statements

Glossary

153 Glossary

155 Additional Information

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2021 FINANCIAL

PERFORMANCE

REVENUE

$5.0BN

2020: $3.5BN

CASH AND CASH

EQUIVALENTS

$598M

2020: $512M

NET INCOME

$36M

2020: $(1.1)BN

BACKLOG

$7.2BN

2020: $6.2BN

ADJUSTED EBITDA

$521M

2020: $337M

DIVIDENDS AND

SHARE REPURCHASES

$93M

2020: $10M

DILUTED EARNINGS

PER SHARE

$0.11

2020: $(3.67)

ORDER INTAKE

$6.1BN

2020: $4.4BN

OUR

VISION

To lead the way in the delivery

of offshore projects and services

for the energy industry

OUR

STRATEGY

In an evolving energy sector,

we create sustainable value

by being the industry’s partner

and employer of choice in

delivering the efficient offshore

solutions the world needs

SUBSEA FIELD

OF THE FUTURE –

SYSTEMS AND

DELIVERY

ENERGY

TRANSITION –

PROACTIVE

PARTICIPATION

OUR

VALUES

OUR

STAKEHOLDERS

Delivering sustainable value

for our stakeholders

OUR

DIFFERENTIATORS

Culture

Creativity

Relationships

Reliability

Solutions

Understand how our Values help drive our

performance on page 3

Information on our strategic priorities

and progress is set out on pages 10 to 15

Learn more about what differentiates our

approach to business on page 11

See how we create better outcomes for

our stakeholders on pages 6 and 7

Discover online how we are fulfilling our vision.

Visit www.subsea7.com

Safety

Integrity

Sustainability

Performance

Collaboration

Innovation

SUBSEA 7 | ANNUAL REPORT 2021 |

CHAIRMAN’S STATEMENT

Subsea 7 delivered an

acceptable performance in

2021 that reflected the early

stages of a recovery in the

oil and gas industry and

continued progress in the

offshore wind sector,

against a backdrop of

challenges relating to the

Covid-19 pandemic.

TO THE SHAREHOLDERS

OF SUBSEA 7 S.A.

Group revenue increased 45% to $5.0

billion due to higher activity in both the

subsea and renewables businesses. Group

Adjusted EBITDA of $521 million resulted

in a margin of 10%. Diluted earnings per

share were $0.11, an improvement from

the loss of $3.67 per share in 2020.

Order intake increased 39% to $6.1 billion,

compared with $4.4 billion in 2020, with a

strong contribution from Subsea and

Conventional as the recovery in oil and gas

prices supported decisions by our clients

to increase offshore field developments.

ENTERING A LESS CAPITAL-INTENSIVE

PHASE IN SUBSEA AND CONVENTIONAL

As the current early-stage recovery in the

subsea market evolves we expect our

existing backlog of work, plus anticipated

new orders, to drive a recovery in our

Subsea and Conventional business unit. In

particular, higher levels of later-cycle

offshore activity over the longer term should

drive an expansion of margins. Subsea 7 is a

global player and well represented in the

improving markets of Norway, Brazil and

Gulf of Mexico.

At the same time, we anticipate Subsea

and Conventional will enter a phase with

much-reduced requirement for capital

investment. Following the delivery of

Seven Vega in 2020, Subsea 7 has a

comprehensive fleet of young vessels that

will enable us to win market share and

execute projects safely and efficiently

without the need for incremental new

build capacity.

While a focus on capital discipline by many

of our clients may limit the upcycle in the

subsea market, a more sustained and

healthy level of industry activity, combined

with an anticipated low level of investment in

vessel capacity by the industry, suggests a

positive long-term dynamic for the market.

We are confident that the favourable

outlook for the subsea industry, combined

with the strong competitive positioning

of Subsea and Conventional, leaves us

poised for a new phase of value creation

for our shareholders.

UNLOCKING VALUE IN RENEWABLES

Subsea 7 made a step change in its

energy transition strategy through the

combination of its offshore wind farm

construction business with OHT ASA to

create Seaway 7 ASA, a market-leading,

pure-play, renewables company. Its listing

on the Euronext Growth market enables

a standalone valuation for Subsea 7’s

Renewables business unit and gives it

direct access to debt and equity markets

to fund growth opportunities.

When appropriate, we expect Seaway 7

ASA to migrate to the main market in

Oslo, with an associated increase in its

free float. We intend to take advantage of

opportunities for the further development

of our renewable activities in an industry

which is likely to experience strong growth

for many years.

EXPANDING OUR COMMITMENT

TO SUSTAINABILITY

Subsea 7 holds Sustainability as one of its

core Values and during the year we made

an important commitment to align with the

UN Paris Agreement goal to target Net

Zero emissions by 2050. With over 90%

of our Scope 1 and 2 emissions coming

from our vessels, a great deal of work was

undertaken to identify the technologies

that will help us decarbonise our operations.

We have established a pathway to target

Net Zero by 2050, with an interim goal of a

50% reduction in our carbon emissions by

2035. We will be reporting on our progress

in the Sustainability Report each year.

The Company’s third Sustainability Report

is published concurrently with this Annual

Report. We are proactively engaged in

improving our position with key

sustainability rankings through enhanced

disclosures and we note recent progress

made in this area, showing improvements

each year since inception. In addition, we

continue to make progress in aligning our

disclosures with the guidelines of the Task

Force on Climate-related Financial

Disclosures (TCFD).

POSITIONED TO CREATE

LONG-TERM VALUE FOR

OUR STAKEHOLDERS

Kristian Siem

Chairman

| SUBSEA 7 | ANNUAL REPORT 2021

DEFINING OUR POLICY OF

SHAREHOLDER RETURNS

2021 saw the capital requirements of our

two business units diverge, with Subsea

and Conventional entering a phase

characterised by low reinvestment, while

Renewables increased its commitment to

new build installation capacity ahead of

the anticipated growth in the fixed offshore

wind market.

Listing the Renewables business as

Seaway 7 ASA allows us to transition to

an independent capital structure for this

growth business. It also enables us to

establish a policy regarding the allocation

of free cash flow from the Subsea and

Conventional business unit.

The Board recognises the merits of

establishing a regular dividend at this

point in the evolution of the Group and

recommends that, at the AGM on

12 April 2022, shareholders approve a

dividend of NOK 1.00 per share, equivalent

to $33 million. The return of excess cash

in the form of a special dividend or share

repurchase will continue to be assessed

by the Board annually. In 2022, reflecting

the current valuation of Subsea 7 shares, the

Group intends to distribute approximately

$70 million through share repurchases.

MY THANKS

On behalf of the Board of Directors, I am

grateful to all our teams at Subsea 7 for

their contributions in the delivery of the

Group’s solid operational performance

during another year in which we operated

amid a global pandemic. Particular thanks

go to our offshore crews, who have

continued to contribute to the delivery

of projects safely and efficiently despite

challenging travel logistics and long

periods away from their families. The

pandemic has affected everyone, our

operations more than many, and it has

been costly for the Group. The ‘can do’

attitude of our people has been exemplary

and crucial to the operating results.

I thank our shareholders for their ongoing

support during a year of uncertainty and

volatile equity markets, and for their

confidence in our long-term strategy for

value creation in both the subsea and

renewable energy industries.

Kristian Siem

Chairman

SAFETY

Our goal is an incident-free workplace.

We work every day, everywhere to

make sure all our people are safe.

INTEGRITY

We apply the highest ethical standards

in everything we do. We treat clients,

our people, partners and suppliers fairly

and with respect.

SUSTAINABILITY

We take a proactive approach towards

our social responsibilities, mitigate the

impact of our activities on our planet’s

environment and respond to the effects

of climate change.

PERFORMANCE

We are driven to achieve the outcomes

our clients want. We are trusted to

achieve superior performance from

every project.

COLLABORATION

We work closely and openly together

with clients, partners and suppliers at

a local and global level to deliver safer

and stronger results for all.

INNOVATION

We create smarter and simpler

solutions to meet the industry’s needs.

We combine technology, expertise,

assets and partnerships to deliver

projects in new ways.

OUR VALUES

STRATEGIC REPORT

GOVERNANCE

CONSOLIDATED FINANCIAL STATEMENTS SUBSEA 7 S.A. FINANCIAL STATEMENTS GLOSSARY

SUBSEA 7 | ANNUAL REPORT 2021 |

Subsea 7 delivered a solid

operational and financial

performance in 2021

supported by improving oil

and gas prices and enabled

by work practices that have

adapted to the ongoing

challenges posed by the

Covid-19 pandemic.

Our Subsea and Conventional business

experienced an increase in activities

associated with the early stages of a

recovery in the oil and gas industry,

including a sharp upturn in tendering

activity and greater demand for our

engineering services. Our Renewables

business, which had proved somewhat

more resilient during the global economic

downturn of 2020, continued to make

good progress although issues largely

related to Covid-19 delayed certain

projects in Taiwan.

A SOLID PERFORMANCE AMID A GLOBAL

ECONOMIC RECOVERY

Overall Group revenue increased 45% to

$5.0 billion driven by growth in both

business units. Revenues in Subsea and

Conventional increased 33% but the

Adjusted EBITDA margin fell to 13% from

15% in 2020, reflecting the shift in mix

towards earlier-stage activities. Revenues

in Renewables doubled as activity on the

major Seagreen project increased but

margins remained low due to challenges in

Taiwan. Overall, the Group’s Adjusted

EBITDA increased 55% to $521 million.

Following the recovery in tendering

activity, new order intake was strong in

2021 at $6.1 billion, up 39% compared

with the prior year. Significant new awards

included the major Bacalhau and Mero-3

projects in Brazil, and the fast-track

development of the large Sakarya gas field

in Turkey. These were supplemented by

the conversion to full EPCI of the

Scarborough project in Australia and

several awards in Norway where tax

incentives are beginning to yield higher

activity. Furthermore, in Brazil, we were

awarded new three-year contracts for our

pipelay support vessels (PLSVs),

enhancing our long-term revenue visibility.

Cash generated by the Group was

adversely affected by an increased

investment in working capital of $202

million driven mainly by extended payment

terms in certain regions. The build in

working capital is a planned and temporary

phenomenon which we are confident will

fully reverse as these projects progress

given the low counterparty risk associated

with our client base.

DELIVERING PROGRESS ON OUR

TWOFOLD STRATEGY

Our strategy for the subsea field of the

future, as well as for energy transition,

played a crucial role in the successful

outcome of many recent tenders in the

Subsea and Conventional business unit.

In 2021, 60% of our SURF contract awards

by value featured early engagement, 62%

included integrated solutions and 64%

leveraged our Carbon Estimator to deliver

optimised developments for clients.

These statistics support our view that

by working closely with our clients from

concept through to commissioning we

can deliver optimised subsea solutions

that maximise clients’ returns, while

reducing emissions.

In energy transition, we made significant

progress in both the established

renewables market and emerging energy

sectors. The formation of Seaway 7 ASA

created a market leader in fixed offshore

wind with a comprehensive fleet and

experienced management team. With two

high specification new builds scheduled

for delivery in 2023, Seaway 7 ASA is

well-positioned to capture an enhanced

share of this high-growth market. Although

it will be largely financially independent,

Seaway 7 ASA will retain a close

relationship with Subsea 7, which will

retain majority ownership and will support

the new business as it makes progress on

the pathway to delivering sustainable,

profitable growth.

Our strategy in emerging energies was

also reinforced in 2021 through a step up

in our participation in floating wind and our

first award in carbon capture. Our

acquisition of a majority stake in Nautilus

Floating Solutions has given us direct

involvement in the development of floating

wind technology, positioning us well for

this high-potential market. During the year,

we won our first carbon capture contract,

part of the Northern Lights project in

Norway. The total offshore carbon capture

market is expected to surpass $5 billion

per annum by 2025

, with strong growth

thereafter, making it an important part of

Subsea 7’s strategy to be a proactive

participant in the energy transition.

A POSITIVE OUTLOOK FOR OUR SERVICES

ACROSS THE ENERGY LANDSCAPE

Through the implementation of its strategy

for the subsea field of the future, alongside

its proactive participation in energy

transition, Subsea 7 is well-positioned

for both near-term and long-term growth

across the spectrum of energy markets.

The Subsea and Conventional business

unit will leverage a young fleet that is

capable of harvesting opportunities as

the recovery in oil and gas markets

evolves, with reduced requirements for

reinvestment. The Renewables business

unit, through Seaway 7 ASA, is poised

to benefit from accelerating growth in the

fixed offshore wind market that will see

it deploy its new build installation vessels

in 2023. Meanwhile, Subsea 7 will continue

to nurture its emerging businesses in

floating wind, carbon capture and other

emerging energy markets as these mature.

IN THE EARLY PHASE

OF A RECOVERY

John Evans

Chief Executive Officer

CHIEF EXECUTIVE OFFICER’S REVIEW

1. Source: Rystad Energy CCS Solution

| SUBSEA 7 | ANNUAL REPORT 2021

Within Subsea and Conventional, Brazil

will remain a strong focus following the

award of Bacalhau, Mero-3 and the PLSV

contracts in 2021. With a promising

tendering pipeline of major greenfield

projects, the region is likely to be a key

driver of long-term growth. Norway will

also continue to be a core market, as the

significant increase in early-stage

engineering activity that it experienced in

2021 is expected to translate into EPCI

contract awards during 2022. Our strong

position in the Norwegian market,

including through our alliance with Aker

BP, leaves us well-placed to capture a

meaningful share of this important market.

Finally, we anticipate continued demand

for our cost-efficient, fast-payback subsea

tieback solutions in the active Gulf of

Mexico market.

After a hiatus in major awards for Subsea 7

and the industry in fixed offshore wind in

2021, we expect the high level of tendering

in the Renewables business unit to yield

major awards from 2022 onward. Europe

is likely to remain a key market, with the

next wave of projects expected to be

awarded in the UK in July. The US is an

exciting new market for fixed offshore

wind, where the scale of the projects is

pushing new boundaries that play into our

strength and track record in executing

BOOK-TO-BILL

1.2

with $6.1 billion of new orders in 2021

DIGITAL EFFICIENCY

We will reduce our

emissions by managing

the performance of our

vessels through the use

of digital tools

HYBRIDISATION/

SHORE POWER

We will reduce our

emissions from how we

power our vessels in

two ways: install battery

packs on certain vessels

(hybridisation) and use

clean electricity from shore

to power certain vessels

while docked (shore power)

CLEAN FUELS

We will reduce emissions

by using fuels with reduced

carbon footprint (e.g.

bio fuels, synthetic fuels)

In addition, we will

look into implementing

changes and solutions

available today as

well as the deployment of

new cleaner technologies

as they become

commercially available

at scale in the market.

TARGET

NET ZERO

MORE THAN

90%

of our emissions come from our vessels.

– Managing their performance

– Using new and cleaner technologies,

fuels and energy sources to lower

emissions at our operations and sites

From a baseline in 2018, our target is to

– Reduce our Scope 1 and Scope 2

emissions by 50% by 2035

– Target Net Zero greenhouse gas

emissions by 2050

large, complex projects. Several ongoing

US wind tenders are due for award to the

industry in 2022 and beyond. Further

afield, we will take a cautious approach to

near-term opportunities in Taiwan given the

operating challenges experienced in 2021.

In conclusion, Subsea 7 is well-positioned

for long-term growth in its services as

we deliver the infrastructure required to

move molecules and electrons across

the energy landscape.

John Evans

Chief Executive Officer

STRATEGIC REPORT

GOVERNANCE

CONSOLIDATED FINANCIAL STATEMENTS SUBSEA 7 S.A. FINANCIAL STATEMENTS GLOSSARY

SUBSEA 7 | ANNUAL REPORT 2021 |

FULL SERVICE ACROSS

THE FIELD LIFECYCLE

Subsea 7 provides project management, engineering and construction expertise

across the full field lifecycle. These services are delivered to clients across the

energy landscape, in oil, gas, offshore wind and emerging energies.

CONCEPT DESIGN ENGINEER PROCURE AND FABRICATE

Input at the concept

phase allows for

optimisation of later

lifecycle stages.

Being involved at the earliest

stage of developments enables

us to deliver maximum value,

whether in oil and gas or

offshore wind. The concept

stage is key to lowering costs

in the later lifecycle stages.

We incorporate new

technologies, fit for purpose

solutions and standardisation

into the concept design to

lower the total cost of

development.

Our clients

Our collaborative way of working helps us to develop the best

solutions for our clients’ needs. We are able to lower our clients’

costs by utilising our technology, our assets and efficient work

processes. Our culture ensures good performance without

compromising safety.

Our shareholders

We seek to create long-term value for our shareholders in all that

we do. We have a disciplined approach to capital allocation and a

commitment to good governance. Through roadshows and

conferences, we aim to communicate effectively with our existing

and potential new shareholders.

clients supported by Subsea 7 in 2021

320

meetings with investors in 2021

Robust FEED ensures

minimal change and

accurate forecasting

during design.

We deliver front-end

engineering and design (FEED)

for our clients. These services

are essential in selecting the

right solution to fully optimise

the development.

We work with our alliance

and client partners to optimise

solutions, align schedules

and accurately forecast full

lifecycle costs.

Detailed engineering by

experienced personnel

delivers the best solution.

Engineering is at the core of

what we do. Detailed

engineering involves taking the

initial solutions developed in

the concept and FEED stage

and refining these for

execution. For EPCI wind

projects, our engineering

teams support clients in their

bids for offshore licences.

Our global teams of experts

have a track record for

designing the best solutions

and executing them. This

stems from our ability to solve

problems and engineer

solutions.

Efficient procurement

and high-quality

fabrication delivered

on time.

Our teams are able to execute

the large EPCI projects in all

our business units and in all

geographies. The scale and

global reach of our supply

chain management

differentiates us.

We have a clear understanding

of the risks and opportunities

that exist when working

with a large, global supply

chain network.

OUR BUSINESS MODEL

What we do

How we add value

Creating better outcomes for our stakeholders

| SUBSEA 7 | ANNUAL REPORT 2021

INSTALL AND COMMISSION MAINTAIN EXTEND DECOMMISSION

We install and commission

subsea infrastructure for

hydrocarbon and new energy

developments in all water

depths. We install foundations

and inner-array cables for fixed

and floating wind farms.

Our people

Our people are the foundation of our business. Our experts,

onshore and offshore, can deliver solutions around the world,

leading the industry in know-how and the ability to innovate. We

invest in our people, giving them opportunities to learn and grow.

Society

We engage with the societies we work in. Through local

partnerships we create and develop local content opportunities,

and contribute to the communities in which we work. With

Integrity as a Value we have a zero tolerance attitude towards

non-compliant business practices.

28,000

digital learning courses completed by our employees in 2021

community assistance events delivered in 2021

Our fleet of high specification

vessels allows us to install

market-leading solutions.

Our onshore and offshore

experts have the experience to

deliver these solutions safely

and efficiently.

We specialise in maintaining

offshore infrastructure through

use of our fleet of ROVs. Our

digital products and services

help optimise maintenance and

reduce downtime and

unplanned outages.

We incorporate our

maintenance knowledge and

digital monitoring into the

design of the field, lowering the

total cost of ownership

for our clients.

We have a growing portfolio

of technologies that enable

clients to extend the life of

their assets through production

enhancement as well as the

tie-in of satellite reserves.

Our technology portfolio offers

a range of solutions for all field

extension needs. We

collaborate with partners

across the supply chain to

deliver these solutions.

We have the capacity

to undertake large-scale

infrastructure abandonments

inboth oil and gas and

wind markets.

We can manage all aspects

ofdecommissioning projects

including regulation,

technology, environment,

planning, execution and costs.

Safe, on-schedule

and cost-efficient

installation by

world-class vessels.

Effective and responsive

maintenance, reducing

the cost of ownership.

Return on investment

maximised by utilising

new technologies to

extend the life of the

field development.

Facilitation of

abandonment,

decommissioning and

re-use of infrastructure.

What we do

How we add value

Creating better outcomes for our stakeholders

STRATEGIC REPORT

SUBSEA 7 | ANNUAL REPORT 2021 |

GLOSSARYSUBSEA 7 S.A. FINANCIAL STATEMENTSCONSOLIDATED FINANCIAL STATEMENTSGOVERNANCE

SUBSEA 7 | ANNUAL REPORT 2021 |

OUR MARKETS

Actual

Forecast

2025

2024

2023

2022

2021

2020

2019

2018

2017

2016

GLOBAL SUBSEA MARKET

Billion USD

Source: Rystad Energy, January 2022

UNDERSTANDING OUR

OPERATING ENVIRONMENT

Subsea 7 is a global leader in the offshore energy industry, delivering

engineering and project management services for oil and gas and

offshore wind farm developments.

THE OIL AND GAS MARKET

Although commodity prices remained

volatile in 2021, driven by concerns

regarding new waves and variants of

Covid-19, the overall direction was positive

for most of the year. The Brent oil price

began the year at around $50 per barrel,

before reaching $76 in July, representing

the highest level since 2018. Although

there were some pullbacks later in the year

as the Delta and Omicron variants

emerged, the upward trend was driven by

the underlying recovery in demand for oil,

linked to the reopening of economies and

international travel.

The European gas price experienced a

gradual rally throughout the first eight

months of the year. However, in the fourth

quarter it rallied sharply, exceeding $30

per mmtbu driven by strong demand for

LNG, numerous supply disruptions

affecting LNG and nuclear power plants,

falling European gas production, and low

inventories in Europe with the winter

heating season looming.

Demand for our subsea services

Despite this volatile backdrop, which

reflected uncertainty regarding the pace of

the global economic recovery, the market

for Subsea and Conventional services

remained robust throughout the year.

Tendering activity, which had begun to

recover in the second half of 2020,

continued to increase, although it

remained concentrated in Brazil, Norway

and the Gulf of Mexico. The pace of

contract awards gained momentum in

2021 and, overall, the three main players in

Subsea 7’s subsea market recorded order

intake of $15 billion in 2021, up more than

20% from 2020.

Assuming no material change in the

economic outlook, the market for Subsea

and Conventional is expected to continue

recovering in 2022 and beyond. The sharp

rise in tendering, which had translated to

higher early-stage engineering activity in

2021, should drive increased procurement

activity in 2022 before ultimately leading to

a pick-up in offshore activity and vessel

utilisation later in 2023. During this period,

new order intake is also expected to

remain robust. As illustrated below,

the global subsea market is expected to

grow from $22 billion in 2021 to $25 billion

in 2022 and $29 billion by 2025, equating

to a compound annual growth rate of 7%.

Long-term outlook for oil and gas

Subsea 7 is positioned across the energy

landscape, enabling society’s transition to

a more sustainable future. Over the long

term, we expect our exposure to

renewable energy to increase, driven by

fixed and floating wind, as well as

emerging energy markets such as carbon

capture and hydrogen. However, it is clear

that the hydrocarbon industry will remain a

key component of the energy mix under all

likely transition scenarios. We anticipate

sustained demand for our subsea services

into the next decade with a growing

emphasis on lower carbon gas, and an

accelerating push to minimise the

emissions footprint of our developments.

THE OFFSHORE WIND MARKET

Having proved resilient throughout 2020,

tendering for fixed offshore wind farm

projects accelerated in 2021 as political

and social pressures to fast-track the

transition to low carbon sources of energy

intensified. In the core European market,

the industry was poised for the next wave

of major UK projects in June 2021, but the

key Contracts for Difference Allocation

Round 4 was repeatedly delayed by the

UK government and is now expected in

the second quarter of 2022. It is currently

scheduled for July 2022, causing a

year-long hiatus in project sanction and

order intake from the region. In the US,

| SUBSEA 7 | ANNUAL REPORT 2021

Americas

Asia Pacific (excluding China)

Europe

2026

2021

2022

2023

2024

2025

020

2029

2027

2028

2030

2031

2034

2032

2033

2035

25GW

11x

269GW

the list of prospective major wind projects

off the North East coast increased during

2021 and the first three projects were

awarded to the market. More than 12

projects are currently in the planning

stages in the US market, representing 20

gigawatts of power, equivalent to around

40% of the currently installed global

offshore wind base. The main challenge for

this market remains the inclusion of local

content in development plans, the maturity

of the supply chain and navigation of the

Jones Act and the use of non-US vessels

in US waters.

Overall, the outlook for capital expenditure in

the fixed offshore wind market remains very

strong, with a compound annual growth rate

of 16% estimated between 2020 and 2035.

The step up in activity forecast in 2025 is

translating to demand from clients to begin

firming up installation capacity, and this

is expected to lead to an improvement

in pricing and higher long-term vessel

utilisation. As European, US and Asian

markets each gain critical mass it is

envisaged that the industry will begin

to dedicate vessels to particular regions

resulting in reduced transit times between

projects with a further benefit to utilisation

and reduced costs.

As wind farm developments move further

away from shorelines and as countries

with deeper territorial waters begin to

participate in the wind industry, floating

wind is expected to become a more

meaningful part of the market. While the

industry remains in its infancy today with

just a handful of pilot studies, developers

and contractors are accelerating efforts to

improve the economics of floating wind

and advance commercial-scale projects.

The oil majors, which became increasingly

active in the offshore wind industry during

2021, have shown strong interest in

floating wind given the plethora of

applications relevant to their broader

energy portfolios including off-grid power

for oil and gas developments and a key

source of renewable energy for the

production of green hydrogen.

OUR SUPPLY CHAIN

There has been increasing concern about

the impact of raw material price inflation

and widespread supply chain bottlenecks

across many sectors of the global

economy. Towards the year end, the cost

of key components necessary for both oil

and gas, and wind development increased

rapidly, predominantly driven by higher

steel and copper prices. Manufacturing

capacity for certain products also began to

tighten, pushing prices higher. The cost of

key components and equipment such as

flowlines, umbilicals and pipelines

increased between 25% and 35% in 2021.

Subsea 7 mitigated the risk of price inflation

through various contractual mechanisms

including back-to-back supplier pricing and

index-linked pricing. The early engagement

and close collaboration with our clients that

is a core part of our strategy proved to be a

key advantage in providing our clients with

the visibility of prices and capacity required

to enable successful project delivery.

COVID-19 IMPACT

Subsea 7’s operations continued to

be impacted by the Covid-19 pandemic

in 2021, but our embedded new work

practices allowed us to deliver projects

for clients while preserving our focus

on safety and wellbeing.

During the year, most of our vessels’

crews remained on extended offshore

rotations, with strict quarantine and

testing regimes. Over the course of the

year, our crews undertook over 78,000

Covid-19 tests and spent over 116,000

days in quarantine. Vaccinations were

rolled out across our fleet and 90% of

our offshore workforce were vaccinated

by year-end. Our onshore operational

bases and fabrication sites adopted

flexible plant layouts, reflecting local

regulations for social distancing.

These precautions continued to come

at a financial cost in terms of both

direct expenses and as indirect costs

of unavoidable inefficiencies.

Nevertheless, throughout the year,

we remained impressed by the agility

and resilience shown by our employees

in adapting to the new reality and

continuing the safe delivery of projects.

GLOBAL OFFSHORE WIND MARKET

Cumulative installations (GW)

Numbers exclude floating wind

Source: BNEF, December 2021

STRATEGIC REPORT

GOVERNANCE

CONSOLIDATED FINANCIAL STATEMENTS SUBSEA 7 S.A. FINANCIAL STATEMENTS GLOSSARY

SUBSEA 7 | ANNUAL REPORT 2021 |

WE HAVE TWO CLEAR

STRATEGIC GOALS:

SUBSEA FIELD

OF THE FUTURE –

SYSTEMS AND

DELIVERY

ENERGY

TRANSITION –

PROACTIVE

PARTICIPATION

OUR STRATEGY

| SUBSEA 7 | ANNUAL REPORT 2021

Subsea 7 is differentiated by our collaborative

working relationships and our ability to

develop creative solutions. We have taken

this to the next level with our ambition for the

subsea field of the future, which aims to create

value by further improving our solutions and

the way we deliver them.

During 2021, we achieved significant progress

in several aspects of this strategy with major

integrated awards preceded by significant

early engagement activity. We also had

notable success installing our new state-

of-the-art flowlines.

As global energy demand continues to

grow, society is looking for cleaner and

more sustainable sources to meet its needs.

Subsea 7’s strategy is to be a proactive

participant in the energy transition by

assisting our clients in reducing the carbon

footprint of their developments, through

the reduction of our own emissions, and by

being a major contractor in the renewable

energy market.

In 2021, we made a step change in our

renewables strategy, while our focus on

reducing emissions intensified.

OUR

DIFFERENTIATORS

We add value to our

clients’ businesses as we

support them with cost-

effective solutions enabled

by technology

CULTURE

Global team with expertise, passion

andcommitment to deliver. Our

Values are strongly embedded and

underpin the behaviours and ways

of working of our teams. Our people

take great pride in livingour Values

and applying them consistently

across our global operations.

CREATIVITY

Ability to innovate through

technology, processes and

partnerships. Weembrace new

challenges, and apply our expertise

and experience to generate

technical, commercial and

operational solutions, which

benefit all our stakeholders.

RELATIONSHIPS

Working and learning together to

achieve success for all. We have

built long-standing client and

supplier relationships through

consistent high-quality delivery,

transparency and adaptability.

We respond to what our clients

need to support them in creating

long-term value.

RELIABILITY

Trusted partner in delivering

projects. We are proud of the

execution track recordthat keeps

our clients coming back,with over

1,000 projects successfully executed

in all water depths worldwide. Our

reliability is enhanced by our secure

financial profile and liquidity position.

SOLUTIONS

Client-focused mindset to create

theright solution. Our clients rely

on usto develop fit for purpose

solutions thatreliably meet project

requirements. We deliver these

solutions whether for complex

programmes or for small,

standardised projects or services.

Read more about

our strategy in

action from page 12

STRATEGIC REPORT

GOVERNANCE CONSOLIDATED FINANCIAL STATEMENTS SUBSEA 7 S.A. FINANCIAL STATEMENTS GLOSSARY

SUBSEA 7 | ANNUAL REPORT 2021 |

OUR STRATEGY CONTINUED

SUBSEA FIELD OF THE FUTURE –

SYSTEMS AND DELIVERY

Subsea 7 is differentiated by our collaborative working relationships

and our ability to develop creative solutions. We are taking this to the

next level with our ambition for the subsea field of the future, which

aims to create value by further improving our solutions and the way

we deliver them.

EARLY

ENGAGEMENT

AND

PARTNERSHIPS

Early engagement has been a highly-

successful element of our subsea field

of the future strategy. We have executed

more than 340 front-end engineering and

design (FEED) studies. In 2021, 60% of

our subsea order intake by value included

early engagement with the client to

influence the development and add value.

In 2021, seven out of 10 projects awarded

to Subsea 7 in Norway were the result of

partnerships, and the level of early

engagement activity on partnership

projects remains high. This should

lead to further EPCI awards in 2022.

DIGITAL DELIVERY

OF PROJECTS AND

SERVICES

Our digital efforts extend across the full

project lifecycle from concept through

operations to decommissioning. They are

key to creating a connected and

collaborative environment for our clients,

as well as unlocking cost reductions. In

2021 we completed a second phase of a

pilot which will standardise and automate

significant parts of our project delivery

while streamlining collaboration across

regions and with partners and clients.

We have installed secure data gathering

architecture on several of our offshore

vessels and shown how the insights

obtained from this data can help us improve

the efficiency of our offshore operations

and reduce our environmental footprint.

SYSTEM

INNOVATION

AND ENABLING

PRODUCTS

System innovation and enabling products

leverage our technology to enable the

standardisation and modularisation that

underpins our cost-effective solutions. In

2021 we successfully commissioned our

first Electrically Heat-Traced Flowlines, our

new technologically advanced pipeline that

helps reduce emissions by eliminating the

need for standalone surface facilities. 2021

also saw the introduction of Glubi clad

reeled pipeline and its first use on the Aker

BP Hod project. We also standardised and

streamlined the production of our pipeline

bundles to reduce the time from concept

to delivery.

INTEGRATED

SPS AND SURF

We have embraced the integration of

SPS and SURF solutions through Subsea

Integration Alliance, our strategic global

alliance with OneSubsea

, as well as

through our partnership with Aker BP

in Norway. The continuous focus on

strengthening this offering has firmly

positioned us as one of only two fully

integrated suppliers with a global

presence. Working as an alliance

facilitates standardisation and optimisation

ofsystems across the full subsea spectrum,

further differentiating our services. Since

January 2020, Subsea Integration Alliance

has won 76% by revenue of the industry’s

integrated projects.

Our ambition for

the subsea field of

the future is based

on four pillars:

| SUBSEA 7 | ANNUAL REPORT 2021

FIELD OF THE FUTURE

SPOTLIGHT: SAKARYA

FIELD DEVELOPMENT,

TURKEY

Project at a glance

A project to develop a major gas field,

leveraging our core strategies of early

engagement and alliances.

– Phase 1 designed to handle

350 MMscfd gas production

– Awarded to Subsea Integration

Alliance after strong and

collaborative early engagement

process with the client

– An industry-leading timeline from

discovery to first gas

– An expanded, integrated scope

covering the subsurface solutions

to onshore production including

SPS, SURF and the onshore

production facility

Subsea 7’s phase 1 scope

– Award worth over $750 million

– Engineering, procurement,

installation and commissioning of

subsea pipelines and associated

equipment including

– 167 kilometre gas export pipeline

– 166 kilometre monoethylene

glycol injection pipeline

– Utilisation of several vessels from

Subsea 7’s fleet

Read more about the

Sakarya project at

www.subsea7.com

OUR PROGRESS

THIS YEAR

– Conversion of Bacalhau FEED to full

EPCI worth over $750 million. Brazil’s

first integrated SPS-SURF project

– Award of Sakarya as a fast-track,

integrated project worth over $750 million

– Installation of three Electrically Heat-

Traced Flowlines, our most technically

advanced product to date

– Delivery and deployment of Seven

Vega, marking the latest addition to our

young and comprehensive fleet, which

is well-positioned for the future

STRATEGIC PRIORITIES

FOR THE YEAR AHEAD

– Expand capabilities to support our

evolving early engagement service

– Pursue new client partnerships

– Continue to evolve the Subsea

Integration Alliance offering

– Enhance the digitalisation of

project delivery

– Support the growth of Xodus

and 4Subsea

EARLY

ENGAGEMENT

60%

of 2021 SURF orders

by value leveraged

early engagement

INTEGRATED

SOLUTIONS

76%

market share by value

since January 2020

STRATEGIC REPORT

GOVERNANCE CONSOLIDATED FINANCIAL STATEMENTS SUBSEA 7 S.A. FINANCIAL STATEMENTS GLOSSARY

SUBSEA 7 | ANNUAL REPORT 2021 |

OUR STRATEGY CONTINUED

As global energy demand continues to grow, society is looking

for cleaner and more sustainable sources to meet its needs.

Subsea 7’s strategy is to be a proactive participant in the energy

transition by assisting our clients in reducing the carbon footprint

of their developments, by reducing our own emissions and by

being a major contractor in the renewable energy market.

RENEWABLES –

OFFSHORE WIND

Through Subsea 7’s Renewables business

unit, branded Seaway 7, we have built and

installed nearly 800 foundations and laid

over 1,200 kilometres of inner-array cables

for fixed offshore wind farms worldwide. Our

technical expertise combined with extensive

track record in project and supply chain

management puts us in a strong position to

seize opportunities in this growing market. In

2021, this strategy made a step change

with the creation of Seaway 7 ASA. More

details are available on page 17. We also

advanced our floating wind strategy

through involvement in the Salamander

pilot floating wind project and through the

acquisition of a majority stake in Nautilus

Floating Solutions.

OIL AND GAS –

LOWER CARBON

DEVELOPMENTS

As part of their own energy transition

strategies, our oil and gas clients

areincreasingly focused on reducing

the carbon footprint of their oil and gas

developments. Our proprietary technology,

engineering capability and digital solutions

support them in developing fields more

efficiently, with improved asset performance

and lower carbon emissions at every stage

of the lifecycle. Our Carbon Estimator tool

achieved strong traction with clients during

2021 and is now a fundamental part of our

engineering studies.

EMERGING ENERGY –

NEW MARKETS AND

OPPORTUNITIES

We continue to advance our strategy

for new energy markets such as carbon

capture and hydrogen. In 2021 we were

awarded our first EPCI carbon capture

contract, part of the Northern Lights

development offshore Norway. Through

Xodus’s advisory and technical capabilities

we are supporting carbon capture as well

as hydrogen developments across the

globe, with 60 studies completed to date.

With collaboration, partnerships and

alliances firmly part of our DNA, we will

look at opportunities to enhance our

participation in these emerging markets.

OPERATIONS –

SUSTAINABLE

AND EFFICIENT

We recognise the importance of

continuing our focus on sustainable and

efficientoperations to reduce the carbon

footprint of our own activities. In 2021,

we committed to target Net Zero by 2050,

with a 50% reduction in emissions by

2035. We are enhancing the efficiency of our

vessels with the roll-out of our proprietary

4insight

software. This optimises uptime by

combining satellite monitoring of sea states

with machine-learning, to accurately predict

our vessels’ performance in different

operating conditions.

Our ambition

for proactive

participation in

energy transition

is based on

four pillars:

| SUBSEA 7 | ANNUAL REPORT 2021

ENERGY TRANSITION –

PROACTIVE PARTICIPATION

OUR PROGRESS

THIS YEAR

– Created Seaway 7 ASA, a pure-play,

listed renewables company

– Won our first contract in carbon

capture, Northern Lights, in Norway

– Acquired a majority stake in Nautilus

Floating Solutions, a floating wind

technology company

– Established a joint venture for the

Salamander floating wind development,

a pilot wind farm offshore Scotland

– Committed to target Net Zero by 2050

and the associated implementation plan

STRATEGIC PRIORITIES

FOR THE YEAR AHEAD

– Support the growth of Seaway 7 ASA

– Secure pilot projects for Nautilus

Floating Solutions

– Build on our early engagement

capabilities in emerging energies

through Xodus and Subsea 7’s Field

Development Group

– Secure further carbon capture awards

– Actively form collaborations and be part

of the development of emerging energy

ecosystems

– Implement the first stage of the fleet

emissions reduction plan

30+

Renewables projects

installed

Carbon capture and

hydrogen studies

performed by Xodus

RENEWABLES SPOTLIGHT

SEAWAY 7 ASA

The creation of Seaway 7 ASA

– The combination of Subsea 7’s fixed

offshore wind business and OHT

ASA on 1 October 2021

– Pure-play, listed renewables

company based in Oslo

– A global organisation with a track

record of over 10 years and

relationships with the majority

of developers

– A comprehensive and differentiated

fleet with enabling capabilities

– A single supplier of standalone,

integrated or EPCI services including

the installation of wind turbines,

foundations, substations and heavy

transportation

Priorities for 2022

– Finalise the construction of Seaway

Alfa Lift, our new build state-of-the-

art foundation installation vessel

– Progress the construction of the

industry-leading Seaway Ventus

for delivery in 2023

– Install the remaining 104 foundations

and 330 kilometres of inner-array

cables on the Seagreen project

– Expand our project portfolio into the

US market, subject to appropriate

pricing and terms

Read more at

www.seaway7.com

STRATEGIC REPORT

GOVERNANCE CONSOLIDATED FINANCIAL STATEMENTS SUBSEA 7 S.A. FINANCIAL STATEMENTS GLOSSARY

SUBSEA 7 | ANNUAL REPORT 2021 |

BUSINESS REVIEW

DELIVERING ACROSS

OUR BUSINESS UNITS

SUBSEA AND

CONVENTIONAL

Our Subsea and Conventional

business unit is a world

leader in delivering complex

offshore projects to the energy

industry. It operates under the

Subsea 7 brand.

Subsea 7’s Subsea and Conventional

business unit offers integrated solutions for

oil and gas field developments incorporating

the engineering, procurement, installation

and commissioning of subsea umbilicals,

risers and flowlines (SURF) in all water

depths. It also offers services for surface

infrastructure in shallow water locations.

Drawing on decades of experience of

designing and executing projects across the

globe, we optimise developments in order to

maximise return on investment for our clients

while minimising carbon emissions.

Subsea and Conventional is the

cornerstone of our vision of the subsea

field of the future and its market-leading

position leverages all four principles of this

strategy: early engagement and

partnerships, integrated subsea production

systems (SPS) and SURF, system

innovation and enabling products, and

digital delivery and services.

Our journey in developing an oil and gas

field typically begins with early engagement

with the client to deliver feasibility studies

and front-end engineering and design

(FEED) solutions. This collaborative

approach has seen us develop deep

relationships with our clients and suppliers

that allow us to optimise the cost efficiency

of field designs. Since 2019, Subsea 7 has

been awarded SURF contracts worth $7.5

billion, over $5.5 billion of which has utilised

our Field Development Group’s early

engagement capabilities.

Early engagement can have the greatest

impact on field economics by combining

both SPS and SURF in an integrated

approach to field development. We

achieve this through Subsea Integration

Alliance (SIA), which combines SURF

services provided by Subsea 7 with SPS

offered by OneSubsea

SUBSEA AND CONVENTIONAL

NUMBER OF ACTIVE

PROJECTS

RENEWABLES

NUMBER OF ACTIVE

PROJECTS

2021 STRATEGIC

HIGHLIGHTS

– High share of the subsea

industry’s integrated order

flow with 76% by value of

the industry’s awards since

January 2020

– Successful commissioning of our

first high-technology, Electrically

Heat-Traced Flowlines in Norway

and the US

– Seven Vega, our new state-of-

the-art reel-lay vessel,

completed its first pipelay

campaigns

– First award in carbon capture,

the Northern Lights project

offshore Norway

– Completion of the combination

of our fixed offshore wind

business with OHT ASA to

create Seaway 7 ASA

– Delivery of foundations and

inner-array cables for the

Seagreen project on time and

budget. Successful installation

of the first 10 jackets in the

North Sea

– Enhanced our position in floating

wind through the acquisition

of a majority holding in Nautilus

Floating Solutions

– Commitment to target Net Zero

Scope 1 and 2 emissions by 2050

with a 50% reduction by 2035

Subsea 7 delivers its strategy for the subsea field of the future

and its proactive participation in the energy transition through

two business units. Subsea and Conventional is focused on the

offshore oil and gas market, while Renewables is focused on

fixed offshore wind.

Subsea and

Conventional

$3,675m

Renewables

$1,260m

Subsea and

Conventional

$5,521m

Renewables

$494m

Subsea and

Conventional

$5,961m

Renewables

$1,238m

GROUP REVENUE

ORDER INTAKE

BACKLOG

| SUBSEA 7 | ANNUAL REPORT 2021

The alliance has rapidly gained traction

with clients particularly for large, greenfield

projects, resulting in a market share (by

revenue) of 76% of the industry’s

integrated orders since January 2020. In

2021, notable awards included the major

fast-tracked development of the Sakarya

gas field in Turkey, Scarborough in

Australia, as well as smaller tie-back

projects in Norway. Work on the Bacalhau

project, which was awarded in early 2020

and was Brazil’s first ever integrated

project, has made good progress during

the year.

In the design of optimal field solutions, our

engineering services go hand-in-hand with

our strategy of systems innovation and

enabling products in finding more cost-

efficient ways to develop fields. Our

proprietary Electrically Heat-Traced Flowline

(EHTF) enables longer tie-backs of satellite

reserves, extending the reach of existing

infrastructure, thereby reducing costs, as

well as minimising the development’s carbon

footprint by eliminating the need for surface

facilities. In 2021 we commissioned our first

EHTFs utilising our new high-specification

reel-lay vessel, Seven Vega. Seven Vega

is the latest addition to our young fleet of

global enabler vessels that leaves us

well-placed to deliver projects safely and

efficiently in the coming decades with

reduced need for major capital reinvestment.

Digitisation of our services and products is

key to delivering faster and more efficient

field developments. Subsea Integration

Alliance has the leading concept evaluation

tool in the marketplace, allowing clients to

easily assess design choices and their

impact on overall returns. Subsea 7’s

Carbon Estimator extends this assessment

to include the impact of the design choices

on lifetime carbon emissions. As an

important tool in assessing emissions, the

Carbon Estimator gained rapid adoption by

our clients in 2021.

Whether through early engagement,

integration, novel technologies, or

digitisation of products and workflows, our

vision of the subsea field of the future will

drive cost efficiency for clients and

continued differentiation for Subsea 7.

The major projects of the Subsea and

Conventional business unit are commonly

up to three years in duration, typically

progressing through engineering and

procurement in the first two years, before

entering the higher-margin offshore

installation phase in the final year. In 2021,

as the industry recovered from the

downturn in the prior year, the business unit

reported a high level of order intake at $5.5

billion and this will contribute to improved

vessel utilisation from late 2023 onwards.

RENEWABLES

Subsea 7’s Renewables business

unit primarily comprises Seaway 7

ASA, which is listed on the

Euronext Growth market (ticker

SEAW7). It is a top-tier service

provider for the offshore wind

industry and is a fundamental part

of our energy transition strategy.

In October 2021, Subsea 7 completed the

combination of its fixed offshore wind

business with OHT ASA, a leading player

in heavy transportation for the energy

sector that had two new build wind

installation vessels under construction.

The combination created Seaway 7 ASA,

a global leader in the delivery of fixed

offshore wind farm solutions.

The Group has a strong fleet of vessels for

foundation installation and inner-array

cable lay, as well as heavy transportation

vessels that are increasingly deployed to

transport large offshore wind structures.

It also has two high-specification new

build vessels under construction. Seaway

Alfa Lift is a state-of-the-art wind turbine

foundation installation vessel equipped

with a unique smart-deck for efficient

monopile installation. Seaway Ventus

is a jack-up heavy lift vessel capable of

efficiently installing the largest wind turbines

as well as wind turbine foundations. Both

are due for delivery in 2023.

The combined Group has been involved in

the offshore wind market since the early

days of the industry’s commercialisation.

With over 10 years of experience, it has

built and installed nearly 800 wind turbine

foundations and laid over 1,200 kilometres

of inner-array cables for fixed offshore

wind farms worldwide. The global offshore

wind farm market has grown rapidly, with

more than 30 gigawatts of capacity

installed by the end of 2021. Looking

ahead, strong growth is projected as

society drives increased investment in

carbon neutral energy sources.

Seaway 7’s flexible offering in renewables

is tailored to its clients’ needs, ranging

from standalone transport and installation

(T&I) to full-scale engineering,

procurement, construction and installation

(EPCI) contracts. These two contracting

models can encompass turbine

foundations, inner-array cables or both as

an integrated package. While T&I contracts

are currently more commonplace, with

engineering and project management

performed in-house by the client, the rapid

growth in the size of projects combined

with a push into new territories is expected

to drive increasing appetite

for outsourcing and growth in demand

for EPCI services. This trend plays to its

core strengths in managing major offshore

projects, dealing with complex supply

chains and managing the risks associated

with turnkey contracts. These competitive

advantages are underpinned by the global

reach and local knowledge that it has

gained through decades of experience

in oil and gas, and together differentiate

us from many other contractors in the

offshore wind industry.

During 2021, the Group made good

progress in the execution of its $1.4 billion

Seagreen contract covering the EPCI of

114 wind turbine foundations, 330

kilometres of inner-array cables and

associated infrastructure off the east coast

of Scotland. By the end of 2021, 50% of

the foundations had been delivered to the

UK and a total of 10 foundations had been

installed, with the remainder scheduled

for installation in 2022. The Seagreen

project extends Seaway 7’s collaborative

relationship with developer SSE and follows

its successful execution of SSE’s Beatrice

EPCI project between 2016 and 2019.

At 31 December 2021, Subsea 7 had

a 72% majority holding in Seaway 7

ASA and fully consolidated its financial

performance, balance sheet and cash

flows in its financial statements. More

details of Seaway 7 ASA’s activities and

financial performance are available in its

Annual Report for 2021 and on its website:

www.seaway7.com.

STRATEGIC REPORT

GOVERNANCE

CONSOLIDATED FINANCIAL STATEMENTS SUBSEA 7 S.A. FINANCIAL STATEMENTS GLOSSARY

SUBSEA 7 | ANNUAL REPORT 2021 |

OUR KPIs

We have been focusing on our

sustainability priorities and report on our

progress in the following sections. An

important part of driving and monitoring

our progress is the use ofrelevant KPIs.

SUSTAINABILITY

Environmental spill

litres per 200,000 hours worked

(2020: 36; target: < 25 litres)

Environmental incident

frequency rate

1.18

per 200,000 hours worked

(2020: 0.86; target: < 0.70)

Cumulative power capacity of

renewables projects supported

to end of 2021

7.5GW

(2020: 6.0GW)

% of waste reused or recycled

from onshore owned sites

77%

(2020: 76%)

Carbon emissions

535,642

tonnes of Scope 1 CO

emissions

(2020: 410,446)

Lost-time injury

frequency rate

0.12

per 200,000 hours worked

(2020: 0.07; target <0.05)

Number of employees

completing compliance and

ethics e-learning including

anti-corruption

5,067

98% of target population

(2020: 5,153, 100% of target population)

Percentage of suppliers with

a contract that included

human rights clauses

86%

(2020: 82%)

COMMITTED TO OPERATING

IN A SAFE, ETHICAL AND

RESPONSIBLE MANNER

Subsea 7 has a strong Values-led culture and believes that operating in a safe, ethical

and responsible manner is at the heart of creating sustainable value for all our

stakeholders. Below are some key figures from 2021 across all sustainability dimensions.

Please see Subsea 7’s

2021 Sustainability Report

available at www.subsea7.com

| SUBSEA 7 | ANNUAL REPORT 2021

HEALTH, SAFETY AND WELLBEING

The safety of our people is our first priority.

We aim for an incident-free workplace

every day, everywhere and our policies are

continually reviewed to seek to improve our

safety performance. We believe that all

people working on our sites anywhere in

the world are entitled to the same level of

protection. Subsea 7’s Business

Management System underpins the way in

which we conduct safety training, reporting,

procedures and assessments. Subsea 7’s

line managers are responsible for

implementation and compliance with the

system and ensuring that all employees and

contractors are aware of their

responsibilities. We record all incidents and

near misses in detail and investigate every

event. In 2021 no fatalities were recorded,

our lost-time injury rate was 0.12 and our

recordable injury frequency was 0.19.

Subsea 7 checks activities against our

internal standards and processes as well as

regulatory and legislative requirements. We

promote a healthy work-life balance

through a combination of wellbeing

initiatives, protecting against occupational

health hazards and supporting our

employees when they need it most.

PROGRESS IN 2021

Health and safety: Our underlying lost-time

injury frequency rate increased in 2021

which is cause for concern. Our focus has

been on establishing ways to improve our

safety performance including a focused

campaign to reduce dropped objects.

Assurance and verification: We

enhanced our comprehensive self-

verification process by introducing an

additional measure aimed to bring further

assurance that our activities are aligned

with our safety processes. We are close

to our target of 75% and will continue

this initiative throughout 2022.

Wellbeing: We have developed a

Company approach to wellbeing that

covers all aspects contributing to our

wellbeing at home and in the workplace.

Covid-19: Our health screening

programme processed over 30,000

questionnaires and ensured we kept our

people safe and maintained operations.

LABOUR PRACTICES AND HUMAN RIGHTS

Treating our people and those that work

with us fairly and with dignity is

fundamental to the way that we work. We

are committed to fulfilling our responsibility

to respect and protect human rights

including the prevention of modern slavery

and human trafficking anywhere in our

business or supply chain. We have a

Human Rights Policy Statement and a

Slavery and Human Trafficking Statement

that summarise Subsea 7’s commitment

and efforts to improve our understanding

and management of the potential human

rights impacts of our business activities

and, more specifically, to respond to the

UK Modern Slavery Act. We are committed

to fair and lawful employment practices.

We are an equal opportunities employer

and seek to protect our people from

discrimination and bullying. These

principles are embedded within our

policies and procedures in our Business

Management System, and our people are

encouraged to raise any questions or

concerns related to any conduct

inconsistent with our policies. Our people

must abide by our Code of Conduct,

which is clear that we will not accept any

abuse of human rights and we will not

work with suppliers that do so. In 2019 we

became a signatory to the UN Global

Compact and declared our support for the

Building Responsibly Principles.

PROGRESS IN 2021

Baseline setting: We continued reviewing

our global policies and ways of working to

ensure they aligned with the UN Global

Compact and Building Responsibly

standards and commitments.

Risk assessments: We put in place

human rights plans to address risks

identified on two major projects. We also

implemented a new platform for enhanced

human rights risk assessment and due

diligence screening of high-risk suppliers.

Communication and engagement: We

worked with an independent expert firm to

develop human rights awareness training

for relevant employees and completed the

first training for our leadership team.

OUR SUSTAINABILITY PRIORITIES

ENERGY TRANSITION

As a partner of choice to the offshore

energy industry, Subsea 7 will play a

proactive role in the construction of

sustainable offshore energy developments

around the world and will support the

transition of energy supply towards lower

carbon sources.

The offshore wind farm market has

become a significant part of our business.

In 2021, this business unit generated 25%

of Subsea 7’s revenue. Floating offshore

wind is the next most promising growth

area for offshore renewables.

Floating wind offers the possibility to

further support energy transition by

allowing a greater number of offshore wind

farms to be developed in deeper water.

Gas has an important role in the transition.

Our proprietary technology and

engineering capability support our clients

in developing these fields cost effectively

and efficiently.

PROGRESS IN 2021

Transition to lower carbon solutions: We

have utilised our Carbon Estimator tool on

over 200 tenders and studies to determine

areas of largest carbon emissions to

support discussions with clients.

Growth of renewables – offshore wind:

We have strengthened our capabilities

within fixed and floating offshore wind,

including our combination with OHT ASA

and acquiring a majority share in a floating

wind technology developer, Nautilus

Floating Solutions.

Emerging energy – new markets and

opportunities: We established a new

technology programme for energy

transition and appointed a dedicated team.

25% of our R&D funds were allocated

towards energy transition technology

areas. We have been active in developing

our capabilities for emerging energies.

Advocacy of energy transition: We are

now represented on more than 20 key

industry forums across a wide range of

energy transition subjects including the

Hydrogen Council, represented by our CEO.

STRATEGIC REPORT

GOVERNANCE

CONSOLIDATED FINANCIAL STATEMENTS SUBSEA 7 S.A. FINANCIAL STATEMENTS GLOSSARY

SUBSEA 7 | ANNUAL REPORT 2021 |

SUSTAINABILITY CONTINUED

ECOLOGICAL IMPACTS

Subsea 7’s fabrication and construction

activities, offshore and onshore, have an

impact on the environments that surround

them. We conduct our business in a way

that considers the environment, and which

aims to keep any negative impact to a

minimum and put in place procedures to

protect biodiversity and the ecosystems

we work in. Our HSEQ policy focuses on

ensuring regulatory compliance and

improving our environmental performance

through careful selection of consumables

and working practices designed to reduce

waste, energy consumption and

emissions. Subsea 7’s line managers are

responsible for implementation and

compliance with this policy and that all

employees and contractors are aware of

their responsibilities. We take responsibility

for our own end-of-life assets, with all

vessels recycled in accordance with the

Hong Kong Accord. In 2021, Seven Eagle

was decommissioned from the fleet.

PROGRESS IN 2021

Recycling our waste: We have continued

to apply focus guided by our Group waste

protocol. This year we recycled 77% of

onshore waste and segregated for

recycling 69% of non-hazardous offshore

waste.

Partnering with an institution to assist

ina marine environmental initiative:

Together with the UK National

Oceanography Centre, Subsea 7 formed a

global partnership called BORA Blue

Ocean Research Alliance

. This seeks to

bridge the gap between industry and

science in support of a sustainable marine

future. The alliance will explore the health

of our oceans and support biodiversity.

Our first area of focus is the BORAbox

which will monitor and track ocean

variables. We successfully trialled the first

BORAbox

during 2021.

Zero single-use plastics: As a signatory

to the UK Chamber of Shipping Single-Use

Plastic Charter which seeks to eliminate

non-essential single-use plastic, we are

making good progress phasing out four

categories of commonly used single-use

plastic and continue to track progress

through an online database at onshore

sites and vessels.

OPERATIONAL ECO-EFFICIENCY

Subsea 7 recognises the impacts of

climate change and its potential effect on

all our stakeholders. We seek to be more

efficient in the way that we work and invest

in solutions that lower our greenhouse gas

emissions. Over 90% of our emissions

come from our vessels such that our CO

emissions correlate strongly with our

offshore activity levels. Our Environmental

Management System is certified to ISO

14001:2015. In 2021 DNV GL performed a

surveillance audit of our compliance which

confirmed effective fulfilment of

requirements.

We measure key environmental data

against internal targets including fuel and

energy consumption carbon emissions,

waste segregation, spills, and other

incidents. We have a comprehensive risk

management system with procedures and

tools that identify, analyse, report and

manage business risks that are related to

environmental exposure and the effects of

climate change.

PROGRESS IN 2021

Improving environmental efficiency of

our fleet: We published our plans to target

Net Zero by 2050 and included a nearer-

term target of 50% reduction in

greenhouse gas emissions from Scope 1

and 2 by 2035 (from a 2018 baseline). We

have begun deployment of digital fuel

flowmeters and a number of our vessels

have been fitted with digital dashboards to

help us optimise fuel use and reduce

emissions through saving power and fuel.

In 2021, our Scope 1 CO

emissions

totalled 535,642 tonnes (2020: 410,446

tonnes). We also continue to apply focus

to our Clean Operations which has

resulted in a reduction of our carbon

emissions by 74,288 tonnes. A Clean

Operation is an activity where a vessel’s

carbon footprint is reduced without

compromising safety or execution.

Engaging with clients to reduce the

environmental impact of our services:

Our focus has been around establishing a

framework and setting baselines for the

total carbon footprint of our projects,

services and operations including Scope 3.

Improving environmental efficiency

onshore: In 2021, 66% of our total

electricity was generated from renewable

energy tariffs (2020: 45%). This supports

our continued drive to seek ways to reduce

our emissions in line with our target.

BUSINESS ETHICS

We are committed to complying with

applicable laws and applying the highest

ethical standards in everything we do,

treating all our stakeholders fairly and with

respect. All employees are required to

uphold our Code of Conduct, which

integrates our three key policy statements

on Ethics, Human Rights and Health,

Safety, Environment and Quality (HSEQ).

Our Speak Up policy establishes a

mechanism for anyone with concerns to

raise them without fear of retaliation or

detriment, and for cases to be investigated

conscientiously and without bias. This

includes an externally administered and

confidential reporting helpline. Our

compliance and ethics programme has

been developed to prevent bribery,

corruption and other compliance and ethics

breaches by the Company and all who

work for us – including suppliers and other

third parties. Our Code of Conduct for

Suppliers sets out the key principles of

ethical business conduct that our suppliers

are required to uphold. Subsea 7’s Chief

Ethics and Compliance Officer provides

regular reports to the Corporate

Governance and Nominations Committee

of the Board and to the Executive Ethics

Committee to ensure management

understands, accepts and fulfils its

accountability for compliance and ethics.

PROGRESS IN 2021

Embedding a culture of ethics,

compliance and integrity: We have been

focusing on making compliance and ethics

e-learning more engaging and effective for

employees. In 2021, we achieved 100%

completion for our targeted onshore

workforce and so far 81% of our targeted

offshore workforce, with 100% completion

expected by the end of February 2022.

Ensuring all who work for us uphold our

commitment to business ethics: We are

working towards having our anti-bribery/

anti-corruption programme independently

assessed for the whole of Subsea 7,

having completed assessments for France

and the Gulf of Mexico. We have also

continued to embed our new platform for

the risk assessment and due diligence

screening of third parties.

Making a positive impact on business

ethics in our sector including the supply

chain: We promoted UN International

Anti-Corruption Day, including a message

from our CEO. We held Supplier Integrity

webinars, at which senior managers talked

about the importance of integrity.

| SUBSEA 7 | ANNUAL REPORT 2021

Our people are our greatest asset,

the heart of our business and

everything we do. Being 7 is our

employer brand and the backbone

of our culture. It’s the things that

matter to us and what makes

us unique.

At Subsea 7 we offer our people a career

they can be proud of, a place for innovation

and an environment where they can thrive.

Our Being 7 offer is supported through our

Learning and Development, Diversity and

Inclusion (D&I) and Health and Wellbeing

Strategies. In 2021 we launched a new

employee survey approach, which will

facilitate us to run more regular surveys that

will help us build a better picture of how our

people see our organisation and culture. It

will provide actionable insights to our

people’s engagement and how they feel

about D&I, and health and wellbeing.

LEARNING AND DEVELOPMENT

Building on the investment made in 2019

in our digital HR platform for our onshore

population and offshore management

teams, we made further investment in our

digital learning offering with the launch of

‘TrainingPortal’ to our wider offshore

community. TrainingPortal provides a

springboard for greater learning and

development opportunities for our offshore

population. We continue to encourage a

culture of learning through the annual

Festival of Learning, with the 2021 theme

being ‘Create Connections’. Over 3,000 of

our people took part in 40 sessions offered

globally, supporting our people to create

connections with other colleagues, with

the business and with their own wellbeing.

DIVERSITY AND INCLUSION

In 2021 Nathalie Louys, General

Counsel, took over as the Chair of

our Group Diversity and Inclusion

Steering Committee. Our leadership

teams remained focused on this

topic with D&I activities and

initiatives being delivered both

locally and at the global level. In

2021 we increased our internal

advertising of senior roles following

internal feedback to ensure all

employees have equal opportunities

in career advancement. Also in

2021, to remove potential bias, we

changed our approach to our talent

and succession process, by

ensuring that everyone at a certain

level is talent-assessed in advance

of completing a succession plan.

HEALTH AND WELLBEING

Health and wellbeing issues have

never been broader and more

complex. They reach every aspect of

our lives, as individuals, as family

members, as friends and as

colleagues. As an employer that truly

cares about our people, we recognise

the importance of providing health

and wellbeing support across

work, life and home. In 2021 we

commenced the launch of the

Subsea 7 Wellbeing Framework,

which supports our commitment

to the health and wellbeing of our

people, from taking care of our

minds and bodies, to creating an

environment that helps us to

connect and belong and

enables us to flourish

and thrive.

NATIONALITY MIX

AGE

GENDER MIX GROUP-WIDE

GENDER MIX OF THE EXECUTIVE

MANAGEMENT TEAM

Europe (53.2%)

Asia/Pacific (20.6%)

Americas (18.7%)

Other (7.5%)

Male (66.7%)

Female (33.3%)

16-29 (10.4%)

30-39 (33.5%)

40-49 (32.2%)

50+ (23.9%)

Onshore male (39.3%)

Onshore female (13.7%)

Offshore male (45.7%)

Offshore female (1.3%)

A FOCUS

ON OUR PEOPLE

STRATEGIC REPORT

GOVERNANCE

CONSOLIDATED FINANCIAL STATEMENTS SUBSEA 7 S.A. FINANCIAL STATEMENTS GLOSSARY

SUBSEA 7 | ANNUAL REPORT 2021 |

TAXONOMY DISCLOSURE

EU TAXONOMY DISCLOSURE

On 18 June 2020, the European Union (the

“EU”) issued Regulation 2020/852 on the

establishment of a framework to facilitate

investment for companies registered within

the EU. Under this regulation and its

delegated acts (the “EU Taxonomy”), the

Subsea 7 S.A. Group (the “Group”) is

required to publish, for the 2021 financial

year, eligibility indicators highlighting the

proportion of its revenue, capital

expenditure (“CAPEX”) and operating

expenditure (“OPEX”), (collectively, key

performance indicators “the KPIs”)

resulting from economic activities

considered as sustainable as defined by

the EU Taxonomy for the first two climate

objectives of climate change mitigation

and climate change adaptation.

This initial assessment of eligibility was

performed based on a detailed analysis of

all the Group's economic activities

performed in the period, assessed against:

– Delegated Climate Regulation of 4 June,

2021 and its annexes supplementing

Regulation (EU) 2020/852 by specifying

the technical criteria for determining

under which conditions an economic

activity may be considered to contribute

substantially to climate change mitigation

or climate change adaptation;

– Delegated Regulation 2021/2178 of the

European Commission of 6 July, 2021

and its annexes supplementing

Regulation (EU) 2020/852 specifying

how to calculate the KPIs and the

narrative information to be published.

The Group conducted an exercise to

identify each economic activity performed

which contributes to the Consolidated

Financial Statements prepared by the

Group. The identification exercise included

Subsea 7 S.A. (the “Company”) and all

entities controlled by the Company (its

subsidiaries).

The Group applied an analytical

methodology which involves definitions,

assumptions and estimates, the main

elements of which are described below.

The Group will continue to develop its

analytical methodology in accordance

with the EU Taxonomy evolution.

ELIGIBLE ECONOMIC ACTIVITIES

UNDER THE EU TAXONOMY

Under the EU Taxonomy, the Group is

required to identify all eligible economic

activities for each of the first two published

climate objectives: climate change

mitigation and climate change adaptation.

The economic activities identified resulted

from a comprehensive review of the

Group's activity portfolio for 2021.

Where the Group's eligible economic

activities are cited in both the climate

change mitigation and climate change

adaptation objectives, it was determined

that these activities primarily contributed

towards and therefore should be allocated

to the climate change mitigation objective.

The Group’s activities evaluated to be EU

Taxonomy eligible for the climate change

mitigation objective are shown below.

Eligible CAPEX and OPEX are covered by

the activity 7.6 ‘Installation, maintenance

and repair of renewable energy

technologies’ (see description above).

For the fiscal year 2022, the EU Taxonomy

Regulation will require eligible activities to

be further analysed regarding their

compliance with the “alignment” criteria

(Substantial Contribution, Do No Significant

Harm (DNSH) and Minimum Social

Safeguards). This notion of alignment is not

mandatory for first reporting. The Group will

further develop its analysis of eligible

activities during 2022 to include in its 2022

Annual Report.

ENVIRONMENTAL

OBJECTIVE

ACTIVITY COVERED

BY THE EU

TAXONOMY CODE

ASSOCIATED

NACE CODE

DEFINITION OF

THE ACTIVITY

CORRESPONDING

GROUP ACTIVITY

Climate change

mitigation

7.6

Installation,

maintenance

and repair of

renewable energy

technologies

F42.22 Installation,

maintenance and

repair of wind

turbines and the

ancillary technical

equipment.

The Renewables business unit

comprises activities related to the

delivery of fixed offshore wind farm

projects. This includes the procurement

and installation of offshore wind turbine

foundations and inner-array cables as

well as heavy lifting operations and

heavy transportation services for

renewables structures.

Climate change

mitigation

5.11

Transportation

of CO

F42.21 and

H49.50

is delivered to

a permanent CO

storage site that

meets the criteria

for underground

geological storage

of CO

The Group participates in a carbon

capture project leading to permanent

storage of CO

in Norway from an

industrial source.

Scope includes engineering,

fabrication and installation of a

100km CO

pipeline that will connect

the CO

collection facility to the

storage site.

| SUBSEA 7 | ANNUAL REPORT 2021

ELIGIBILITY INDICATORS

The Group has calculated the eligibility

indicators in accordance with the

provisions of the EU Taxonomy based

on its existing processes and reporting

systems, including assumptions made by

management. In this year’s exercise, 2021,

the Group has concluded that all eligibility

indicators for revenue, CAPEX and OPEX

should be reported under the climate

change mitigation objective with nil to be

reported under climate change adaptation.

The eligibility indicator review covered all

Group economic activities included in the

Group’s Consolidated Financial Statements

as of 31 December 2021. In the period,

99% of the eligible revenue relates to the

installation, maintenance and repair of

wind turbines and the ancillary technical

equipment, with the balance consisting of

the Group participation in a carbon capture

project in Norway. The eligible capital

expenditure and operating expenditures

relate exclusively to supporting the offshore

wind farm project activities.

For sake of clarity and completeness,

the oil and gas related economic activities

of the Subsea and Conventional and

Corporate business units were assessed

as non-eligible under the EU Taxonomy.

All activities under both business units

were deemed non-eligible due to the

exclusion of fossil fuel extraction activities

from the EU Taxonomy target scope.

The EU has clarified that support activities

to economic activities excluded from the

regulation scope are also considered out

of scope. The Group’s non-eligible

activities include activities contributing to

reducing the carbon intensity of the energy

transition such as field carbon footprint

optimisation, carbon capture systems

studies, a project for the electrification of an

oil platform using floating wind technology,

and other smaller carbon footprint reducing

activities.

METHODOLOGY FOR CALCULATING

THE INDICATORS

The financial information used for this

first EU Taxonomy report is based on the

Group’s Consolidated Financial Statements

as of 31 December, 2021. The financial

information used was sourced from the

Group's financial information systems at

the period end. It was subject to internal

review and assurance by the central

finance function to ensure consistency

with the revenue, OPEX, and CAPEX

information reported in the Group’s 2021

Annual Report.

The Group’s share of eligible revenue is

determined by dividing the sum of the

revenues of eligible activities by the total

revenue of all activities as reported in the

Group’s Consolidated Financial Statements

as of 31 December, 2021. The Group

eligible and total revenue relates mainly

to engineering, procurement, construction

and installation contracts recognised

in accordance with Note 3 ‘Significant

accounting policies’ of the Group’s

Consolidated Financial Statements as

of 31 December, 2021.

The Group's share of eligible CAPEX is

determined by dividing the sum of the

capital expenditure of eligible activities by

the total of additions to intangible assets,

additions to property, plant and equipment,

and increase in right-of-use assets as

reported in the Consolidated Financial

Statements as of 31 December, 2021.

These include additions acquired as a result

of business combinations. For further

details please refer to Notes 14, 15, and 16

of the Group’s Consolidated Financial

Statements. In this exercise the Group

only included as eligible those capital

expenditures allocated in full to supporting

the execution of eligible activities.

The Group's share of eligible OPEX is

determined by dividing the sum of the

OPEX of eligible activities by the total

OPEX of all activities for the Group during

fiscal year 2021. The only operating

expenses reported under the numerator

and denominator for the Group include:

– Expenses that relate to the

maintenance and repair of property,

plant and equipment,

– Research and development expenses,

including direct personnel costs.

In this exercise the Group only included

as eligible those operating expenditures

allocated in full to supporting the

execution of eligible activities. The

expenses already accounted for under

the capital expenditure KPI have been

excluded from the operating expenditure

KPI numerator and denominator.

KPIs FOR CLIMATE CHANGE MITIGATION

OBJECTIVE AS OF 31 DECEMBER 2021

REVENUE

CAPEX

OPEX

Numerator for Eligible

1,239 403 31

Numerator for Non-Eligible

3,771 115 81

Denominator

5,010 518 112

Eligible Indicator expressed

25% 77% 27%

Non-Eligible Indicator expressed

75% 23% 73%

1. As a result of the business combination with OHT ASA (renamed Seaway 7 ASA) on 1 October 2021,

the Group’s fixed offshore wind activities were executed by Seaway 7 ASA, a non-wholly-owned subsidiary

of the Group from that date. Through this combination the Group acquired $295 million of assets, including

right-of-use assets, reportable under the “addition of asset through acquisition” criteria under the EU

Taxonomy. This amount is included in both the Numerator and Denominator.

STRATEGIC REPORT

GOVERNANCE

CONSOLIDATED FINANCIAL STATEMENTS SUBSEA 7 S.A. FINANCIAL STATEMENTS GLOSSARY

SUBSEA 7 | ANNUAL REPORT 2021 |

RISK MANAGEMENT

PRINCIPAL RISKS

AND UNCERTAINTIES

Effective risk management is fundamental to the Group’s performance

and creates sustainable value for our stakeholders.

The Group’s approach is to identify key

risks at an early stage and develop actions

to measure, monitor and mitigate against

their likelihood and impact. This approach

is embedded throughout the Group and is

an integral part of our day-to-day activities.

The Group’s operations, its strategy for the

subsea field of the future and its proactive

participation in the energy transition are

divided between two business units:

Subsea and Conventional focuses on the

offshore oil and gas and emerging energy

markets, while Renewables – through

Seaway 7 ASA – is focused on fixed

offshore wind. Climate-related risks,

challenges and pressures are a key

consideration in the Group delivering its

strategic objectives and are therefore

subject to ongoing assessment as part of

the risk management processes in place.

Our Subsea and Conventional business

unit executes large and complex offshore

projects to the energy industry. It offers

integrated solutions for oil and gas field

developments incorporating engineering,

procurement, installation and

decommissioning of subsea umbilicals,

risers and flowlines (SURF) in all water

depths. It also offers services for surface

infrastructure in shallow water locations.

In January 2021 the SURF and Life of Field

businesses came together as one single

business unit to drive forward the Group’s

subsea field of the future strategy and

combined its market-leading position across

all four principles of this strategy: early

engagement and partnerships, integrated

subsea production systems (SPS) and

SURF, system innovation and enabling

products, and digital delivery of projects and

services. This business unit reinforces the

Group’s desire to support emerging energies

by actively participating in the development

of floating wind and also being awarded its

first carbon capture project.

The fixed offshore wind Renewables

business – Seaway 7 ASA – is a global

leader in the delivery of fixed offshore wind

farm solutions from foundations installation

to inner-array cable lay services, and

provision of related heavy transportation

services. With the upcoming delivery of

two new assets in the coming years, this

business unit will further expand its

existing foundation installation capabilities

and extend to provision of assets to

support the installation of wind turbines.

Seaway 7 ASA is one of a few contractors

that can provide EPCI expertise for the

execution of offshore wind farm projects,

which are, with increasing frequency,

contracted on a lump-sum basis.

As each country presses forward to meet

its Net Zero targets, the sanction of

offshore wind projects continues to

increase and in some countries, this sector

is supported by government-led initiatives.

Offshore wind has a different contractual

landscape compared to the Subsea and

Conventional business unit, which,

compounded by the present intense level

of competition, can be challenging for the

contractor. As offshore wind develops, the

trend towards increasingly larger wind

farms brings a potential significant

increase in activities and EPCI contracts.

As foundation sizes increase to

accommodate larger wind turbines the

number of assets capable of installing the

largest foundations may decrease. When

contracting on a limited transportation and

installation (T&I) basis, the breadth of the

Group’s expertise is less differentiating

and more service providers can compete,

compared to an EPCI contract.

Offshore operations are required for both

Subsea and Conventional as well as fixed

offshore wind renewable projects. These

involve large, highly complex,

technologically rich systems in diverse

locations, where the Group often faces

harsh and challenging conditions. Weather

is of greater concern as the world

experiences more extreme climate-related

events. With the exception of certain

long-term contracts and day rate IRM

work, the Group generally contracts on a

fixed-price basis. The costs and margins

realised on projects can vary from the

original estimated amounts due to a

number of factors, sometimes resulting in

a reduced margin or loss. Additional

operating costs incurred as a result of

changes in our operational activities to

comply with the ongoing Covid-19 health

measures and legislative requirements are

an example of how certain external factors

can negatively impact margins. The Group

continuously assesses the risks involved in

fixed-price contracts and uses its

negotiated contract terms to mitigate

certain aspects of these risks.

The Group operates in a predominantly

cyclical industry where activity is strongly

influenced by the current and forecast

price of energy, as well as the impact of

decisions taken by governing bodies,

particularly regarding regulation, climate

change, mitigation and adaptation,

subsidies and fiscal incentives.

The Group’s risk management processes

assist the Group to respond to changes in

activity levels and apply appropriate

measures to adjust its cost base as far as

practical, while at the same time ensuring

that an acceptable risk profile is maintained.

ROLES AND RESPONSIBILITIES

The Board of Directors has oversight of the

Group’s risk management activities and

internal control processes. The Executive

Risk Committee is responsible for monitoring

and managing operational and enterprise

risk in pursuit of the Group’s business

objectives and reports to the Board of

Directors. The Executive Management

Team is responsible for designing and

implementing appropriate systems and

procedures for the identification and

management of risks, while ensuring, subject

to an acceptable level of risk, that the Group

is able to optimise stakeholder value.

The CEO determines the level of risk which

can be taken by the business units by

region, country and by functional

management. This is managed through

Group policies and delegated authority

levels which provide the means by which

risks are reviewed and escalated to the

appropriate management level within the

Group, including the Board of Directors.

PRINCIPAL RISKS AND UNCERTAINTIES

Principal risks are those risks that, given

the Group’s current position, could

materially threaten its business model,

future performance, prospects, solvency,

liquidity, reputation, or prevent the Group

from delivering its strategic objectives.

The means which the Group employs to

mitigate or eliminate these risks are shown

on pages 25 to 35.

Additional risks and uncertainties that the

Group is unaware of, or currently deems

immaterial, may in the future have a

material adverse effect on the Group’s

reputation, operations, financial

performance and position. However,

theBoard of Directors believes that the

Group’s risk management and internal

control systems have assisted, and will

continue to assist, the Group to identify

and respond to such risks.

| SUBSEA 7 | ANNUAL REPORT 2021

MARKET RISK

RISK MITIGATION

Strategic

The Group recognises that technology, engineering capabilities

and providing the right solutions to meet clients’ demands are

market differentiators. The Group is committed to delivering on

its subsea field of the future strategy, which aims to create

value by further improving our solutions and the way we deliver

them, optimising developments in order to maximise return on

investment for our clients while minimising carbon emissions.

Focused on the four principles of this strategy: early

engagement and partnerships, integrated subsea production

systems (SPS) and SURF, system innovation and enabling

products, and digital delivery and services, the Group must

deliver on its designs to the satisfaction of its clients. There is a

risk the demand for innovative designs, systems, products and

solutions accelerates into the construction and installation

phase without sufficient time to transition from development to

production. Integrated solutions are offered through the

Strategic Integration Alliance with our partner OneSubsea

This contracting model continues to gain traction as a preferred

option for clients, particularly for large greenfield projects. The

risk(s) are that either alliance partner encounters an interruption

in work activities as a result of the other, which impacts the

overall project delivery. Integrated solutions consolidate risk

into one shared contractual framework, meaning that the risk

profile to the Group is wider than through stand-alone

offerings. While the Group has developed the knowledge and

ability to identify, manage and mitigate the risks associated

with integrated solutions, they may still threaten the Group’s

performance. A failure of our strategy to offer seamless

integrated solutions with our alliance partner(s), appropriate

design led solution, or other systems and products could

impact the Group in winning work and affect its position as

a market leader.

The Group continues to advance its strategy in the energy

transition, in both the established renewables market and

emerging energy sectors. Seaway 7 ASA is well-positioned to

capture an enhanced share of the high-growth fixed offshore

wind market. As the fixed wind sector continues to grow and

emerging energies advance there is a risk that advancements

in the size and complexity of renewables or emerging energy

projects could exceed current expertise, capabilities or asset

base. Fierce competition and the attractiveness of the offshore

wind sector to competitors carries the risks of pricing

pressures and asserting the Group’s position as one of the

market leaders.

From time to time the Group may engage in strategic

combinations, partnerships, joint ventures and acquisitions

to support growth. This brings risk in the form of incorrect

assessments of the target market, new and inherited legal

and contractual liabilities, as well as risks that are operational

and financial in nature. It also carries the risk of failure to integrate

new business combinations and their resources into the

Group and failing to deliver the Group’s strategic objectives.

Technology-related risks are mitigated by employing qualified

personnel, as well as compliance with industry and engineering

standards combined with strict adherence to the Group’s

engineering management and control systems and procedures.

The Group has a multi-stage gate process for the

implementation of new technologies and products. For

integrated solutions, the Group’s risks are mitigated through

considered selection of alliance and collaborative partners and

pre-identified ways of working. In addition, the Group has a

procedure to establish, at tender stage, a risk sharing

methodology to complement the project. It continues to

maintain disciplined contracting principles to mitigate project

and operating risks.

The Group brings extensive experience and engineering

capabilities from a proven track record of project management

and execution in the oil and gas sector to the offshore wind

sector through investing in the right people and having the right

technical capabilities and support assets, as well as keeping

pace, with engineering developments, technologies and

installation methodologies. The Group values partnering with

experienced clients to better control the risks involved in the

energy transition.

The Group has internal resources and external advisers to engage

in thorough due diligence and ensures that an experienced

management team is deployed to manage merger and

acquisition opportunities. This team ensures operational

management is engaged in the integration process immediately

after a corporate transaction to ensure successful execution.

STRATEGIC REPORT

GOVERNANCE

CONSOLIDATED FINANCIAL STATEMENTS SUBSEA 7 S.A. FINANCIAL STATEMENTS GLOSSARY

SUBSEA 7 | ANNUAL REPORT 2021 |

MARKET RISK CONTINUED

RISK MITIGATION

Economic

The Group’s business depends on the level of activity in the

segments of the energy industry in which it operates and,

consequently, any significant change in the level, timing or

nature of clients’ expenditure plans could adversely impact

the Group’s order intake, financial performance, position and

prospects. Global energy demand continues to grow but with

society looking for cleaner and more sustainable energy sources

to meet its needs, the Group’s strategy is to be a proactive

participant in the energy transition and assist our clients in

reducing the carbon footprint of their developments. This involves

the reduction of our own emissions, proposing field solutions

with reduced carbon footprint, and being a major contractor in

the renewable energy market. Legislative changes and society

pressures, led by Environmental, Social and Governance (ESG)

desires for clean energy, could impact the Group’s ability to

partner with stakeholders such as investors, insurers and other

key suppliers, that would no longer offer services to the Group

while it continues to work in the oil and gas sector.

A rapid increase or decrease in demand for the Group’s services

could outpace the Group’s ability to resize its capacity for

service provision. Furthermore, our suppliers could be adversely

affected by the inability to resize but may also struggle to cope

with order demand variability. Any default by them or increase in

pricing could impact a project’s schedule as well as negatively

impacting the Group’s financial performance.

Our clients’ financial strength and the economic viability of their

projects can be impacted by the fluctuation of energy prices

and energy mix which can be driven by political conditions,

technological development, global demand and ESG. These

variable factors are outside the Group’s control but can have

a direct impact on the operational and financial performance

of the Group.

Furthermore, the expansion of offshore wind from a market

centred in north west Europe to Taiwan and the USA brings

potential economic risks associated with establishing an industry

in multiple nascent markets. One such challenge for this market

remains the inclusion of local content in development plans,

including working within the Jones Act regarding the use of

non-US vessels in US waters. History has shown that

stakeholder management of local content, governmental policy,

legislative, social and environmental constraints can influence

the timing and development of renewables projects.

The Group closely monitors market activity and collaborates

with clients to understand their future project and expenditure

plans. Early engagement in the design phase of an energy

project enables the Group to better assess the risks and

opportunities and the economic implications of the projects as

they progress towards construction. Following award, the

Group is able to implement cost reduction measures to adapt

the projects to market conditions and work within the terms of

the contracts to mitigate the effect of client-led changes to

project schedules or work scopes.

The financial strength and solvency of our clients and suppliers

is a specific area of focus before entering into contracts. The

Group has successfully reduced its cost base and continues to

look for ways to improve efficiency and productivity to respond

to market demand to optimise expenditures.

The Group engages with key stakeholders to explain the Group

approach and initiatives on energy transition, climate change,

and ESG to maintain long-term alignment on economic activities.

The Group seeks to diversify selectively into new markets,

including emerging energy markets, which allow it to leverage

resources and competencies, as well as into other geographies

requiring similar services.

Competition

The Group faces competition to win contracts needed to

ensure a sustainable backlog of future work across the

business units. This competition may result in pricing pressures

or a change to a contractor’s risk profile, as competitors strive

to win contracts and secure work. Contractual terms which are

more onerous for the contractor may increase liabilities, both

actual and contingent, and adversely impact the Group’s

financial performance and position.

Furthermore, the competitive landscape includes further

alliances as well as vertical and horizontal consolidations,

to achieve economies of scale and scope and wider control

of the value chain. Such initiatives could represent a threat to

the Group’s profile as a specialised offshore service provider.

The Group endeavours to reduce its exposure to competition

by differentiating itself from competitors. The Group’s experience

and resources, including its people, versatile and modern fleet

and proprietary technology and digital delivery offerings, help it

respond effectively to challenges from competitors. The Group

seeks, within the framework of the business’s contractual risk

profile, to support and maintain industry-recognised balanced

contracting forms.

A further differentiator is the Group’s ability and experience in

partnering with clients and forming alliances with other oilfield

services companies to offer packaged solutions and to contribute

to the early development stages of projects, as well as offering

cost-effective and efficient technical solutions.

Competition in the fixed offshore wind sector is strong, however

through Seaway 7 ASA the Group is confident that it can leverage

its expertise and capabilities in the delivery and execution of

complex projects and market its EPCI track record and versatile

fleet as differentiators over smaller contractors or new entrants.

RISK MANAGEMENT CONTINUED

| SUBSEA 7 | ANNUAL REPORT 2021

BUSINESS ENVIRONMENT RISKS

RISK MITIGATION

Geographic

The Group operates and tenders for work worldwide, with

eachcountry having specific political, economic and social

characteristics which can give rise to various risks and

uncertainties. These can adversely impact project execution

andfinancial performance, including but not limited to:

Country or regional risks are identified and evaluated before

and throughout Group operations in such markets. Appropriate

risk responses are developed and implemented to mitigate the

likelihood and impact of identified risks. The Group adopts a

proactive and rigorous approach to assessing and mitigating

these risks and, where possible, looks to develop local or

regional management teams to strengthen its knowledge of,

and presence in, the countries of operation.

– Economic instability

– Legal, fiscal and regulatory

uncertainty and change,

including individual countries’

commitment, targets and

measures to address climate

control

– Onerous local content

obligations

– Sanction and export controls

– Civil or political unrest,

including war

– Regime change

Technological innovation

Our clients seek cost-effective solutions to develop energy

resources, particularly in deep waters and challenging offshore

environments, to enhance the full field lifecycle. The Group’s

experience of designing and executing projects across the globe

helps optimise developments in order to maximise return on

investment for clients while reducing carbon emissions. In order

to do this the Group has four key elements of the subsea field

of the future strategy: early engagement and partnerships,

integrated subsea production systems (SPS) and SURF, system

innovation and enabling products, and digital delivery and

services. Any failure by the Group to anticipate or respond

appropriately to any of these elements could adversely affect

the Group’s ability to compete effectively for, and win, new work.

The Group’s ambition for proactive participation in the energy

transition is based on four key pillars: offshore wind; emerging

energy; oil and gas – lower carbon developments; and

operations – sustainable and efficient. Technology

advancements are key to advancing in these areas; the risks

to the Group include investing or developing technology for

one or multiple areas identified which becomes superseded or

immediately obsolete, for example vessel fuel sources.

Introducing technology, systems or products that are insufficiently

mature or unsatisfactorily implemented when selected by our client

as a valid solution could have an adverse reputational and financial

impact for the Group. Reliance on the use of data and cloud

storage facilities has the associated risks of information technology,

operational technology, systems and cyber security failures.

The Group monitors industry trends and collaborates

with clients to understand their technology requirements.

This allows the Group to effectively invest in developing

differentiated and cost-effective technologies to meet current

and anticipated client demand.

In developing new technologies, systems and products the

risks associated with selecting and pursuing appropriate

technological solutions, technical completion,

commercialisation and successful implementation are carefully

considered and addressed through ‘gate controls’ operated by

knowledgeable and experienced Subsea 7 personnel .

At every step of the innovation process, safety and the cyber

security aspects of new technology, software and systems are

considered to ensure the continuity of business and operations.

STRATEGIC REPORT

GOVERNANCE

CONSOLIDATED FINANCIAL STATEMENTS SUBSEA 7 S.A. FINANCIAL STATEMENTS GLOSSARY

SUBSEA 7 | ANNUAL REPORT 2021 |

RISK MANAGEMENT CONTINUED

ORGANISATION AND MANAGEMENT RISKS

RISK MITIGATION

Environmental sustainability

The Group is committed to delivering offshore solutions to meet

the needs of its clients as well as its own strategy that supports

sustainable energy sources. The Group is committed to

facilitating the transition towards lower carbon and renewable

energy supplies. The risks to the Group are that society,

interested bodies and their carbon neutral commitments impose

increased pressures on the financial markets, insurers, investors

and other stakeholders to dissociate themselves fromoil and

gas-related companies in favour of emerging energy sources.

The Group is committed to proactively participating in the energy

transition in a safe, ethical and responsible manner. The Group

has invested, and continues to invest, in new technologies and

innovative programmes that reduce both the Group’s and its

clients’ carbon emissions.

The Group participates in the CDP, the UN Global Compact

and the Building Responsibly frameworks and will increase its

alignment with the recommendations of the Task Force on

Climate-related Financial Disclosures. More information on the

Group’s efforts and initiatives can be found in the 2021

Sustainability Report which is published as a separate document.

Climate

The Group is focused on climate change and meeting its own

targets to reduce Scope 1 and 2 emissions by 50% by 2035

and to be Net Zero by 2050. It is also committed to delivering

its strategy for subsea field of the future and the energy

transition, demonstrating commitment to a more sustainable

business environment both internally but also to support its

clients’ objectives. The Group recognises the impacts of

climate change and the potential effect on our business, our

end markets and society and acknowledges the risks and

potential effects on the business’s future associated with not

taking steps to mitigate its impact. These risks include:

– Operational and financial risks relating to the effect of

climatecontrol, for example cost increases associated

withalternative onsite fuel sources, or the introduction

ofcarbon taxes

– The speed with which society, governing bodies and

countries require alternative fuel sources and our ability to

keep pace with the timescale required to provide emerging

energies in a sustainable and cost-efficient way

– Reducing Scope 1 and 2 emissions and sourcing, developing

and upgrading our assets to support this aim

The Group is committed to engaging in more efficient ways of

working and investing in solutions that lower the Group’s

greenhouse gas emissions. The majority of the Group’s

emissions emanate from its vessels and the Group looks for

ways to reduce this impact on the environment. Initiatives taken

include the conversion of the entire fleet to run on low sulphur

fuel, in line with International Maritime Organization (IMO)

guidelines and regulations. It is also undertaking trials with

alternative fuels, including bio-diesel, as we seek to ascertain

future fuel choices and the associated vessel upgrade decisions.

Onshore, the Group is implementing a programme which

includes a transition to clean energy.

We are well-positioned from an asset and project execution

perspective to continue to be the contractor of choice for subsea

construction and installation for traditional and alternative energies

where there continues to be a requirement for an infrastructure

which transfers a product, whatever the product may be, from one

location to another.

| SUBSEA 7 | ANNUAL REPORT 2021

ORGANISATION AND MANAGEMENT RISKS CONTINUED

RISK MITIGATION

People

The Group has introduced flexible working for office-based

personnel which brings with it a risk of ensuring the

continuation of a collaborative working environment. Like many

businesses, the Group carries the risk of failing to attract and

retain suitably skilled and capable personnel across all

business units at a time where societal preferences, particularly

in the younger demographic, are towards opportunities in the

energy transition rather than oil and gas. Failure to attract or

retain talent could adversely impact the Group’s ability to

execute projects and its future growth prospects.

The Group is a signatory to the UN Global Compact and

committed to its 10 principles that summarise responsibilities

to respect human rights, and to avoid and address any adverse

impacts on the Group’s business activities. The Group is

conscious that the geographic diversity of its operations and

the many different types of work required to be performed by

the Group’s workforce and its suppliers and sub-contractors

can present increased risks of human rights violations and

unacceptable labour practices. The Group is particularly

focused on those human rights risks that would have the

greatest impact, such as modern slavery, human trafficking,

child labour and other types of forced labour.

The Group recognises the importance of health and wellness of

its workforce and is aware of the benefits of offering modern and

flexible working arrangements in order to be an employer of

choice. Policies setting out the Group’s flexible working

arrangements and measures for onshore personnel were

enhanced in 2021. Technology roll-outs which make

communication and collaboration between colleagues uniform,

whether in the office or a home office, have mitigated the risk

of reduced communication or less collaboration. The Group’s

proactive engagement in the energy transition and clear

engagement in emerging energy projects and ability to offer

career opportunities across both business units continue to

generate positive employer engagement.

The Group utilises medium-term business projections to assess

resource requirements which allows timely, corrective

intervention to appropriately resource the organisation in terms

of size, profile, competency mix and location.

The Group monitors attrition by function and geography and has

developed appropriate remuneration and incentive packages to

help attract and retain key employees.

Performance management and succession planning processes

are in place to develop staff and identify high-potential

individuals for key roles in the business.

The Group is enhancing its risk assessment activities relating

to its identification of potential human rights violations and

unacceptable labour practices and is working to embed the UN

Global Compact principles and the Building Responsibly Worker

Welfare Principles. With the support of external experts, it has

designed in-person training for delivery to targeted audiences

across the Group and conducted risk assessments to help

further the Group’s understanding of potential risks and best

practice and support the creation of action plans to address

high-risk areas. The Group reinforces the importance of

compliance with the Group Code of Conduct and Code of

Conduct for Suppliers by internal personnel and the supply

chain respectively. Both of these documents include clear

guidance and expectations regarding human rights standards.

STRATEGIC REPORT

GOVERNANCE

CONSOLIDATED FINANCIAL STATEMENTS SUBSEA 7 S.A. FINANCIAL STATEMENTS GLOSSARY

SUBSEA 7 | ANNUAL REPORT 2021 |

ORGANISATION AND MANAGEMENT RISKS CONTINUED

RISK MITIGATION

Compliance and ethics

The Group is committed to conducting business in accordance

with applicable law and the highest ethical standards.

However, there is a risk that its employees, representatives or

other persons associated with it may take actions that breach

the Group’s Code of Conduct or applicable laws, including but

not limited to anti-bribery or anti-corruption.

The Group assesses such risks which vary across the Group’s

geographical locations. The Group has identified the following

as being the most significant corruption risks it faces:

– Small bribes and facilitation payments, especially in relation

to the movement of vessels, people and materials

– Illicit enrichment of public officials through hidden ownership

in local suppliers that local content laws require us to use

– Bribery by third parties working on our behalf

– Bribery to win work

– Bribery to get variation orders approved

– Bribery to get work certified or paid

These risks are inherent in our sector, the Group’s business

model and, to a certain extent, the locations in which it works.

The Group fully supports the goals of local content laws, but

they can increase corruption risks and weaken our

procurement procedures and controls.

Any compliance and ethics breach could result in monetary

penalties, convictions, debarment and damage to the Group’s

reputation and could therefore impact its ability to do business.

The Group is confident that the risks identified are adequately

managed by our compliance and ethics programme, and in

many cases by our clients’ robust procurement procedures.

Integrity is one of the Group’s Values and the Group has an

Ethics Policy Statement and Code of Conduct which clearly

set out the behaviours expected of its employees and those

who work with it. These policies are periodically updated to

ensure they remain current and fresh.

The Group has a compliance and ethics programme

underpinned by its Values and designed in accordance with

international best practice to embed the Code of Conduct,

prevent bribery and corruption, and manage compliance

and ethics risks generally. The programme includes financial

controls, risk assessments and procedures for managing

third-party risks. Mandatory annual compliance and ethics

e-learning for employees raises awareness, highlights the

whole range of consequences and encourages compliance.

Employees are encouraged to raise concerns about possible

non-compliance through an externally administered

whistleblowing helpline. There is a strong focus on a culture

of ethics and integrity. More information can be found on our

website and in our Sustainability Report.

A committee comprising members of the Executive

Management Team sets objectives for the implementation

and continual improvement of the compliance and ethics

programme and monitors progress. Regular reports are

provided to the Board of Directors.

The Group regularly engages an independent third-party

assurance provider to benchmark its compliance and ethics

programme against best practice, including international

standard ISO 37001 2016.

Information technology and operational systems,

cyber risks and security

The Group’s operations depend on the availability and security

of a number of key Information Technology (IT) and operational

systems. The Group’s investment in its digitalisation

programme combined with the acquisition of data driven

businesses means the risk of these systems being disrupted or

compromised by a general failure or by cyber-attacks is

increasingly relevant, particularly at a time where the context

imposes more remote connection into the Group infrastructure.

Such risks include but are not limited to:

– Unauthorised access to key operational, financial or

corporate systems

– Malware (including computer viruses)

– Theft and misappropriation of data and sensitive information

– Targeted fraud attacks

– Data management and non-compliance with legislation such

as the EU General Data Protection Regulation (GDPR)

– Increasing use of IT to interconnect with multiple

stakeholders and the possibility of such interconnectivity

being disrupted to their detriment

– Denial of access to or utilisation of assets with the risk of a

potential loss or damage event

Such breaches in security could adversely impact the Group’s

ability to maintain ongoing business operations and lead to

financial and asset loss, reputational damage, loss of client and

shareholder confidence and regulatory fines.

The Group recognises the increased frequency of cyber

security threats and events and takes this risk seriously.

It reviews its infrastructure, suppliers, policies, procedures

and defences to mitigate associated risks and keep abreast

of risk intelligence by engaging market-leading specialists

where appropriate.

It assesses the technology framework against approved

independent standards and maintains a programme of

investment in new hardware, software and systems to ensure

the integrity of its IT security defences. The Group works with

recognised independent industry experts to audit and test the

sustainability of its security systems and assesses the business

and operational impact of a cyber event, analysing varied

scenarios, interruption types and effectiveness of recovery plans.

The Group has a number of IT policies, including a policy on

information security, designed to protect its systems and

ensure their availability and integrity as well as combatting

attempted fraud. These policies are regularly reviewed to

ensure they continue to address existing and emerging

information security, cyber maritime and cybercrime risks as

well as GDPR.

Mandatory internal e-learning courses and regular phishing

simulation tests are used to maintain a high level of awareness

among employees of IT security risks and of the Group’s

procedures to manage them.

The functional senior management periodically updates the

Executive Risk Committee and the Board’s Audit Committee

on cyber risk exposure and cyber security strategy.

RISK MANAGEMENT CONTINUED

| SUBSEA 7 | ANNUAL REPORT 2021

DELIVERY AND OPERATIONAL RISKS

RISK MITIGATION

Bidding

The Group wins most of its work through a competitive

tendering process. A significant proportion of the Group’s work

is undertaken by way of fixed-price contracts which exposes

the Group to increases in supply chain costs. Failure to secure

and manage costs could impact the Group’s financial

performance; one such risk is the inability to maintain price

validity from our supply chain if there is a delay in project

award, rapid price escalation or re-phasing which leads to

schedule amendments.

An inability to understand and respond to operational and

contractual risks or accurately estimate project costs could

have an adverse impact on the Group’s legal liability and

financial performance and position.

All bids are subject to the Group’s estimating and tendering

processes and authority levels. Cost estimates are prepared on

the basis of a detailed standard costing analysis, and the

selling price and contract terms are based on the Group’s

commercial contracting standards and market conditions.

Where possible key supply chain vendors or subcontractor

terms and conditions are negotiated alongside the main client

contract to reduce the risk of non-alignment or contracting

terms or the absence of price certainty.

Before the tender is submitted, a formal multi-gate review

process is performed. Tenders are first reviewed at a regional

level where the technical, operational, legal and financial

aspects of the proposal are considered in detail. Completion of

the regional review process requires the formal approval of the

appropriate level of management. Dependent on the tender

value and complexity (such as technology and partnering),

there is an escalating level of approval required. Tenders

meeting specific financial and risk criteria are reviewed and

approved by the Tender Committee of the Board of Directors.

Realisation and renewal of backlog

Delays (including those related to the clients’ final investment

decisions), suspensions, cancellations, re-phasing or changes

to scope or content to awarded projects recorded in backlog

could materially impact the financial performance and position

of the Group in current and future years.

The Group works to mitigate these risks through its contract

terms, including, where possible, provision for cancellation fees

or early termination payments.

Joint ventures

The Group may engage in commercial joint ventures with

selected partners to obtain necessary expertise or local

knowledge and contract or partner with specialist companies

to develop new or emerging business opportunities. A failure to

find an appropriate joint venture partner or a failure by a joint

venture partner to perform to the standards required by the

joint venture agreement could result in negative financial and

reputational impact to the Group.

Misalignment between Subsea 7 and a joint venture partner on

strategic matters could lead to a deadlock, impacting

negatively, inter alia, on project execution. In addition, the

failure of a joint venture partner to meet its financial obligations

could result in an adverse impact on the Group’s financial

performance and position.

The Group seeks to ensure that selected joint venture partners

not only have the necessary expertise, local knowledge and

suitable financial profile but are also able to meet the Group’s

health, safety, security, environmental and quality standards

(HSSEQ) and its Code of Conduct obligations. The Group

endeavours to establish appropriate governance and oversight

mechanisms to monitor the performance of its joint ventures

and joint venture partners with regard to such matters.

STRATEGIC REPORT

GOVERNANCE

CONSOLIDATED FINANCIAL STATEMENTS SUBSEA 7 S.A. FINANCIAL STATEMENTS GLOSSARY

SUBSEA 7 | ANNUAL REPORT 2021 |

DELIVERY AND OPERATIONAL RISKS CONTINUED

RISK MITIGATION

Project execution

The Group executes complex projects and a failure to meet

and achieve the necessary contractual requirements could have

several adverse consequences, including contract disputes,

rejected claims and cost overruns, which could adversely impact

the Group’s financial performance, position and reputation.

The contractual landscape for fixed offshore wind projects

continues to apply pressure to contractors with an allocation

of risk which remains imbalanced particularly when compared

to the contractual terms for offshore construction projects in

the oil and gas sector. These contractual risks could expose

the Group to operational and financial losses that are material

to the Group’s overall performance.

For most contracts, the offshore execution phase, which generally

involves the use of either single or multiple vessels, isusually the

most hazardous as this phase is exposed, among other risks, to

adverse weather conditions or the risk of loss or damage to the

contracted works. These hazards can result in scheduling

adjustments, damage to vessels and equipment, repair or rework,

injury to those working offshore, or financial loss.

The Group must continue to innovate and develop products

that allow it to deliver optimal field solutions and cost-efficient

solutions for its clients. Errors or defects in product design and

production can expose the Group to additional warranty or

product liability risks.

The Group assigns a project management team to every

project. Every project is assessed by regional management

using the Project Monthly Status Report review process.

These reviews cover project progress, risk management, cost

management, financial performance and sensitivity analysis.

Detailed assessments of costs and revenue are estimated

and reported upon, taking into account project performance,

planning schedules, contract variations, claims, risk exposure,

allowances and contingency analysis.

The Group factors the risk of adverse weather conditions into

the design of its vessels, equipment and procedures and project

scheduling, as well as the training of its offshore workforce. It

also works to mitigate potential adverse financial consequences

when negotiating contractual terms with its clients.

Innovative products are commercialised after rigorous testing

that is subject to a hierarchy of stage-gate reviews.

RISK MANAGEMENT CONTINUED

| SUBSEA 7 | ANNUAL REPORT 2021

DELIVERY AND OPERATIONAL RISKS CONTINUED

RISK MITIGATION

Supply chain

Failure of a key supplier could result in disruption to the

Group’s ability to complete a project in a timely manner.

A significant period of interruption affecting elements of our

supply chain arising from factors such as pandemics, extreme

weather, financial uncertainty, civil unrest, war or other

unforeseen external factors would have an impact on our ability

to deliver our clients’ projects and could cause disruption to

ongoing Group capital expenditure initiatives such as vessel

construction, dry dockings and upgrades.

In periods of increased activity for the Group, there is a risk

that the supply chain does not or cannot react at the same

pace as demand and insufficient capacity causes a

deterioration in the quality of the product or service, extended

lead times or the inability to secure products. Similarly, the

impact of Covid-19 disruption continues to exist in our direct

and indirect supply chain.

General inflation and unexpected increases in supply chain

pricing could result in higher project costs that impact the

Group’s financial performance.

The resultant time delays or increased costs could lead to

irrecoverable costs to the Group and the imposition of financial

penalties by clients as well as reputational damage and reduced

competitiveness. Cost is a necessary consideration in the

selection of key suppliers and balancing this with quality and

control assurance is a risk. Faulty or damaged components

could result in additional project costs which may not be fully

recoverable from the supplier and will be incurred by the Group.

The Group is at risk of reduced supplier choice as the supply

chain adapt their own business strategies towards sustainable

and alternative energies. A severely diminished pool of suppliers

will affect the Group’s operational and financial performance.

Failure of suppliers to reliably record and control their carbon

emissions or other ESG performance indicator could limit the

Group’s ability to accurately report its own performance.

The financial profile and outlook of the Group’s key suppliers is

reviewed during the pre-qualification process for vendors and

is considered prior to signing project-related contracts.

Unforeseen external factors leading to interruptions in supply

chain delivery are difficult to manage, however the Group

evaluates these risks and where possible will seek to avoid

single source suppliers and will seek to mitigate the financial

impact of such interruptions through appropriate contractual

terms and conditions.

If necessary, appropriate guarantees or performance-related

bonds are requested from our key suppliers. In addition, the

Group seeks to develop strong long-term relationships with

high-quality and competent suppliers, working to balance

costsat a sustainable level and not only engage on a lowest

bid basis. The Group engages qualified quality assurance and

quality control specialists in the supplier selection process who

have an active role throughout the duration of project

execution. These specialists have teams on the ground at key

supplier locations to ensure the quality standards are met and

assurance policies followed as well as the timelines for delivery.

Long-term contractual arrangements, to secure supplier

commitment into the future, helps the Group to mitigate the

risk of key suppliers exiting the sector.

Communicable or infectious diseases including pandemics

Communicable or infectious diseases, such as the Covid-19

pandemic, can expose the Group to operational disruption and

increased costs as a result of measures required to be

undertaken to ensure the safe continuation of the business but

also as a result of unexpected business interruptions. The risks

to the Group include additional operational costs to continue

normal operational activities as well as enhanced working

arrangements to work safely in accordance with the changes

made in law, quarantining crew and logistical issues associated

with the international transit of vessels and people. These costs

are not included in all fixed-price contracts and therefore pose

a financial risk to the Group if they cannot be recovered as a

result of exercising our contractual rights. The risk of a reduced

workforce, unable to maintain minimum manning levels, or

vessel stand-by or quarantine exposures could impact the

Group’s financial and operational results. The Group is at risk

of an interruption caused to the supply chain which is also

likely to be impacted.

The Group first and foremost adheres to the law, guidelines,

protection and mitigation measures set out by each country in

which the Group operates and in accordance with the vessel

flag state. Where flexible working arrangements including

working from home are not possible, such as for certain

onshore fabrication facilities and the offshore vessels, the risk

of incurring a significant or severe outbreak of illness is

mitigated through the implementation of health screening,

cleaning regimes and sanitisation measures as part of infection

control and prevention. The Group aims to establish safe

working environments. To achieve this, some changes to

procedures are required, including in some cases extending

the period of crew rotations offshore and imposing periods of

quarantine prior to embarkation and the workforce returning

home. Reduced workforce numbers and social distancing

measures are built into the operational procedures for onshore

and offshore locations. Where possible, the Group aims to

mitigate some of the additional project cost exposures in

complying with changes in the law by exercising its contractual

rights to issue variation order requests to clients.

STRATEGIC REPORT

GOVERNANCE

CONSOLIDATED FINANCIAL STATEMENTS SUBSEA 7 S.A. FINANCIAL STATEMENTS GLOSSARY

SUBSEA 7 | ANNUAL REPORT 2021 |

DELIVERY AND OPERATIONAL RISKS CONTINUED

RISK MITIGATION

Health, safety, security, environmental and quality

The Group’s projects are complex and are sometimes

performed in unfamiliar environments in varied conditions.

This requires continuous monitoring and management of

health, safety, security, environmental and quality (HSSEQ)

risks associated with the location of work, project specification

and installation method as well as addressing the location

and assets utilised.

A failure to manage these risks could expose our people and

those who work with us to security breaches, illness, injury

or harm.

It could result in an environmental event or cause injury or

damage to other parties. It could result in significant commercial,

legal and reputational damage or potential disbarment from the

affected country.

The nature of the Group’s worldwide operating activities carries

the potential for significant health risks and disruption to our

business operations.

The Group is focused on continuously monitoring HSSEQ

performance at all levels and actively motivates, influences

and guides employees’ individual and collective behaviour.

The Group is committed to protecting the health and safety of

its people and those working on its sites and vessels as well as

minimising its impact on the environment. The Group has an

HSSEQ policy and detailed HSSEQ procedures designed to

identify, assess and reduce such risks while ensuring

compliance with relevant laws and regulations. The policy and

procedures are subject to review, monitoring and certification

by an independent, internationally recognised specialist firm.

The Group mitigates exposure to the risk of communicable or

infectious diseases by developing health procedures and

medical screening that adhere to the guidance and incorporate

the best practice set out by world health organisations and

industry experts. This includes enhanced travel and

embarkation procedures for offshore personnel, to mitigate

the risk of severe illness occurring onboard our vessels.

Fleet management

The Group has a fleet of vessels which are required for the

successful delivery of its projects. These vessels operate in a

number of regions which are subject to political, fiscal, legal

and regulatory risks. This also includes regulatory requirements

related to the crewing of the vessels in the territories where

they are operating. Failure to manage such risks could lead

to an adverse impact on the Group’s financial performance

and position.

Lack of vessel availability is a risk. Uncertainty in operational

vessel schedules may lead to non-availability for other projects in

the tendering or execution phase. Vessel availability could also be

negatively impacted by delays to vessel construction, completion

of maintenance, vessel upgrading and dry-docking activities.

In extreme circumstances, the non-availability of a vessel or

multiple vessels through loss or irreparable damage could

compromise the Group’s ability to meet its contractual

obligations and cause financial loss. Conversely, an

underutilisation of the vessel fleet exposes the Group to a risk

of under recovery of the total fleet costs.

To maintain the competitiveness of the fleet, the Group from

time to time makes significant investments in the construction

or acquisition of new vessels. If the anticipated demand for

those vessels does not materialise, such investments may not

generate the intended financial return.

The Group considers carefully the political, fiscal, legal and

regulatory risks associated with the deployment of its vessels

and crew into regions in which it operates, and monitors

developments to ensure it can respond appropriately.

To minimise the risk of non-availability, the Group dedicates

resources to perform vessel scheduling centrally rather than at a

business unit or region level. Vessel construction, maintenance,

upgrading and dry-docking activities are subject to detailed

planning and controls are deployed to mitigate the risk of

completion delays.

The design and operational capabilities of a vessel are carefully

assessed before its deployment to a particular project and are

then closely monitored during the project’s execution. The

impact of potential non-availability of a vessel is mitigated by

both the size and flexibility of the Group’s fleet and its ability to

access the vessel charter market. The Group adjusts its fleet

size to suit its view of the future market by cold or warm

stacking its excess assets, as well as potentially returning

chartered tonnage to their owners.

Before initiating the construction or acquisition of a new vessel,

the Group conducts detailed analyses of the potential market

and seeks to ensure that the vessel’s technical specifications

and projected capital and operating costs are appropriate for

the anticipated market.

The Group assesses the market’s need for new assets and,

after a rigorous technical and financial review, will decide to

proceed with construction or conversion where there is

sufficient future activity and with acceptable financial returns

on its investment.

RISK MANAGEMENT CONTINUED

| SUBSEA 7 | ANNUAL REPORT 2021

FINANCIAL RISKS

RISK MITIGATION

Revenue and margin recognition

Individual period performance may be significantly affected by

the timing of contract completion, at which point the final

outcome of a project may be fully assessed. Until then, the

Group, in common with other companies in the sector, uses

the percentage-of-completion method of accounting for

revenue and margin recognition. This method relies on the

Group’s ability to estimate future costs in an accurate manner

over the remaining life of a project. As projects may take a

number of years to execute, this process requires a significant

degree of judgement, with changes to estimates or unexpected

costs or recoveries potentially resulting in significant

fluctuations in revenue and profitability.

Inaccurate forecasting of the costs to complete a project and

of the revenue which can be earned from the client for changes

to contract scope could have a negative impact on the Group’s

management of its liquidity and weaken its financial position.

Fixed-price contracts awarded at low or negative margins can

create volatility when accounting for project performance as

forecast unavoidable losses are recognised in full in the period

in which they are identified. Forecasting during pandemics and

economic crises is more complex and subject to increased

volatility as changes unfold.

Project performance is monitored by means of Project Monthly

Status Reports (PMSRs) which record actual costs of work

performed, the estimated cost to complete a project and

the estimated full-life project revenue. The PMSR allows

management to reliably estimate the most likely full-life

profitability of each project. These PMSRs are subject to

rigorous review and challenge, which includes the impact of

the Covid-19 pandemic at key levels of management within

the Group. Note 4, ‘Critical accounting judgements and key

sources of estimation uncertainty’, to the Consolidated

Financial Statements provides more detail of the Group’s

approach to revenue recognition on long-term contracts.

Cash flow and liquidity

The Group’s working capital position will be affected by the

timing of contract cash flows where the timing of receipts from

clients, typically based on achievements of milestones, may

not necessarily match the timing of payments the Group makes

to its suppliers.

In executing some of its contracts, the Group is required by its

clients, in the normal course of business, to issue certain

guarantees e.g. performance, advance payments and bid bonds.

Access to those unsecured bi-lateral guarantee arrangements

from financial institutions in support of these instruments is

fundamental to the Group’s ability to compete, particularly for

large EPIC contracts.

In rare instances clients may request specific payment terms

such as extended payment terms or payment deferrals which

can negatively impact the cash flow profile of projects.

The availability of short-term and long-term external financing

is required to help meet the Group’s financial obligations

as they fall due. In the event that such financing were to be

unavailable, reduced or withdrawn, the Group’s activities

would be significantly constrained.

In addition to using its cash and cash equivalents balance

and cash generated from operations, the Group has access

to committed financing facilities to meet its core financing and

working capital needs. The Group’s cash position, liquidity,

debt leverage and credit rating-related metrics are monitored

closely by both the Executive Management Team and the

Board of Directors.

The Group works to mitigate client payment deferral request

risks through its contract terms. In addition, the Group

continuously assesses the creditworthiness of its client and

supplier base.

STRATEGIC REPORT

GOVERNANCE

CONSOLIDATED FINANCIAL STATEMENTS SUBSEA 7 S.A. FINANCIAL STATEMENTS GLOSSARY

SUBSEA 7 | ANNUAL REPORT 2021 |

RISK MANAGEMENT CONTINUED

RISK MANAGEMENT

AND INTERNAL CONTROL

The Board of Directors is responsible for

oversight of the Group’s system of risk

management and internal controls and for

reviewing its effectiveness. The Board of

Directors recognises that any system of

internal controls can only provide

reasonable and not absolute assurance that

material financial misstatement and/or fraud

will be detected or that the risk of failure to

achieve business objectives is eliminated.

The Group’s systems of internal controls

operate through a number of processes.

The more significant include:

– Delegated authority level matrices with

certain matters being reserved for the

Board of Directors

– Annual review of the strategy, plans and

budgets of individual business units to

identify the key risks to the achievement

of the Group’s objectives

– Monthly financial and operational

performance reviews against budgets

– Individual tender and contract reviews

at various levels throughout the Group

– Capital expenditure and investment

reviews and authorisation

– Regular reviews and reporting on the

effectiveness of the Group’s HSSEQ

processes

– Group treasury policies

– Group taxation compliance and

reporting policies and systems

– The Group’s whistleblowing policy,

which allows individuals to raise

concerns in confidence about potential

breaches of the Code of Conduct

– Data Governance Council – reviews

and monitors the Data Privacy Council

(DPC) work in ensuring the Group’s

adherence to GDPR

– Quarterly reporting to the Executive

Management Team from the Global

Applications and Systems Steering

Committee (GASSC) on the integrity

and security of its business and IT

systems, including cyber risk

– Cyclical reviews of all non wholly-

owned subsidiaries, joint ventures

and associates by the Joint Venture

Steering Committee

The Group’s internal audit function, which

reports directly to the Audit Committee,

performs independent reviews of key

business financial processes and controls

and other areas considered to be of high

business risk. The Audit Committee

annually reviews and approves the internal

audit plan and receives regular updates

on internal audit’s findings and the actions

taken by management to address these.

The role of the Executive Risk Committee

is to meet quarterly to review the risks

identified as impacting or having the

potential to impact the Group’s operations

and strategic objectives as well as

discussing emerging risks.

| SUBSEA 7 | ANNUAL REPORT 2021

CREATING SUSTAINABLE VALUE

FOR SHAREHOLDERS

As Chairman of the Corporate

Governance and Nominations

Committee and Senior

Independent Director my

objective is to provide

independent oversight and

constructive challenge in order

toensure that the Company’s

corporate governance supports

its strategic goals.

CHANGES TO BOARD COMPOSITION

This past year has seen some changes

to our Board composition. The Board

welcomed Eldar Sætre as an Independent

Director and Louisa Siem as a non-

Independent Director (their biographies are

on pages 38 to 39). We also bid farewell to

Ms Elisabeth Proust and I would like to take

this opportunity to thank Elisabeth for her

very valuable contributions to the Board.

During 2021 the Board adopted a Board

Diversity Policy, the purpose of which is to

ensure that theBoard as a whole has the

skills, expertise and experience to guide

the business and strategy of Subsea 7.

This policy will continue to be a focus area

for the Board over the next few years.

WORK OF THE BOARD DURING 2021

Covid-19 related restrictions on travel

meant that Board meetings and

shareholders meetings could not proceed

on an in-person basis for most of the

calendar year 2021. However, in

September the Board was able to resume

face-to-face meetings for the first time

since February 2020. It was great to be

back together and to meet the recently

appointed Board members in person.

Despite the limitations on physical

meetings, it was nonetheless a very

productive year for the Board where we

oversaw a number of important strategic

projects including the combination of

Subsea 7’s fixed offshore wind business

with OHT ASA, creating Seaway 7 ASA,

a global leader in the delivery of fixed

offshore wind farm solutions. Subsea 7

also acquired a majority interest in Nautilus

Floating Solutions S.L., a developer of

technology for the floating wind market

based in Bilbao, Spain and formed a joint

venture partnership with Simply Blue

Energy in order to develop the Salamander

floating wind project off the coast of

Scotland. The Board of Directors was

pleased to approve these transactions,

which represent fundamental building

blocks in our energy transition strategy.

SUSTAINABILITY

Sustainability has continued to be a key

area of focus for the Board. This year

we committed to align with the UN Paris

Agreement to target Net Zero emissions

by 2050, with an interim target of a 50%

reduction in the Company’s carbon

emissions by 2035. In addition, the

alignment of our disclosures with the

guidelines of the Task Force on Climate-

related Financial Disclosures (TCFD) has

been identified by the Board as a focus area.

You will find more detail on the Company’s

work on sustainability in the Sustainability

Report, which has been published

concurrently with the Annual Report.

You can also read more about Subsea 7’s

six sustainability priorities and the progress

made in relation to each priority in 2021

on pages 18 to 20.

BOARD EVALUATION

The periodic external evaluation of the

Board was postponed in 2020 due to

Covid-19 related logistic constraints. I am

pleased to report the external evaluation

was recently completed. An external

independent practice led by experienced

advisers was appointed to conduct an

independent evaluation. The evaluation was

based on a questionnaire and interview

process, which took place in January 2022.

The results were delivered to the Board

in February 2022 and highlighted a

well-performing Board. During 2022 we

will continue to make improvements to

Board practices based upon the results.

REGULATORY FRAMEWORK

Following the forthcoming implementation

of the EU Central Securities Depositories

Regulation in Norway and as a company

listed on the Oslo stock exchange, the

Company is required to transform its

shares from registered form into fully

dematerialised shares. In order to do

this, it will be necessary to first amend

the Articles of Incorporation of the

Company to permit dematerialisation.

An extraordinary general meeting of

shareholders will be convened on 12 April

2022 to request that the shareholders

approve the change. The Board of Directors

believes that the dematerialisation of the

Company’s shares will be in the best

interests of the Company’s shareholders

and recommends that shareholders vote

in favour of the amendment.

Despite the continuing challenges faced,

2021 was again a productive year and as

a Board, we kept our focus on corporate

governance that supports the strategic

goals of the Company and delivers

sustainable value to our shareholders.

GOVERNANCE AT A GLANCE

The areas listed below, on which we

report on the pages indicated, are

aligned with the Norwegian Code of

Practice for Corporate Governance.

Page

Implementation and reporting

on corporate governance 46

Business 42

Equity and dividends 47

Equal treatment of shareholders

and transactions with close

associates 47

Shares and negotiability 47

General meetings 46

Nominations Committee 48

Board of Directors:

composition and independence 43

Work of the Board of Directors 44

Risk management and

internal control 45

Remuneration of the

Board of Directors 49

Remuneration of executive

personnel 49

Information and

communications 51

Take-overs 51

Auditor 51

David Mullen

Chairman of the Corporate

Governance and

Nominations Committee

CONSOLIDATED FINANCIAL STATEMENTS SUBSEA 7 S.A. FINANCIAL STATEMENTS GLOSSARY

GOVERNANCE

STRATEGIC REPORT

SUBSEA 7 | ANNUAL REPORT 2021 |

GOVERNANCE

BOARD OF DIRECTORS

KRISTIAN SIEM

Chairman

Mr Siem brings an extensive

knowledge of the offshore oil

and gas services business

worldwide from previous senior

executive and non-executive

roles combined with long-

standing experience as

chairman of public companies

listed in the US, UK and

Norway. Mr Siem is the founder

of the Siem Industries Group

and has been Director and

Chairman of Siem Industries

since 1982. Prior to joining the

Group, he held several

management positions with the

Fred. Olsen Group in the US

and Norway. Mr Siem has

previously held directorships

and executive positions at

Kvaerner ASA, Transocean Inc.

and Norwegian Cruise Line. He

holds a degree in Business

Economics.

DAVID MULLEN

Senior Independent Director*

Mr Mullen brings over 30

years’ experience in the oil

services business. He has

previously heldthe position of

CEO at two other companies

in the subsea industry,

Wellstream Holdings PLC and

Ocean Rig ASA. Prior to these

appointments he was Senior

Vice President of Global

Marketing, Business

Development and M&A at

Transocean from 2005 to

2008. Mr Mullen also had a

23-year career at

Schlumberger, including as

President of Oilfield Services

for North and South America.

He holds a Bachelor ofArts

degree in Geology and

Physics from Trinity College,

Dublin, and an MSc degree in

Geophysics from the National

University of Ireland.

DOD FRASER

Independent Director*

Mr Fraser brings

comprehensive experience in

corporate finance and

investment banking both

internationally and in the

United States. This is

supplemented by extensive

knowledge of corporate

governance in his current and

prior appointments as audit

committee member. MrFraser

served as a Managing

Director and Group Executive

with Chase Manhattan Bank,

now JP Morgan Chase,

leading the global oil and gas

group from 1995 until 2000.

Until 1995 he was a General

Partner of Lazard Frères & Co.

Mr Fraser has been a trustee

of Resources for the Future, a

Washington-based

environmental policy think-

tank. He is a graduate of

Princeton University.

JEAN CAHUZAC

Director

Mr Cahuzac has wide multi-

country technical, commercial

and general management

experience in senior executive

roles in the oil and gas services

sector spanning a period of 40

years. He was appointed Chief

Executive Officer of Acergy

S.A. in2008 and in 2011, post

merger, became the Chief

Executive Officer of Subsea 7

S.A., a position he held until his

retirement in December 2019.

MrCahuzac was Chief

Operating Officer and then

President at Transocean from

2000 to 2008. He worked at

Schlumberger from 1979 to

1999 in various field

management positions and

thenas President of Sedco

Forex. He holds a Master’s

degree in Engineering from

École des Minesde St-Étienne

and is a graduate of the French

Petroleum Institute in Paris.

Date of appointment

Appointed Director and

Chairman from January 2011.

Prior to the merger of Acergy

S.A. and Subsea 7 Inc. in

January 2011 Mr Siem was

Chairman of Subsea 7 Inc. from

January 2002.

Appointed a Non-Executive

Independent Director from

April 2018 and appointed

Senior Independent Director

from January 2021.

Appointed a Non-Executive

Independent Director from

December 2009 (then named

Acergy S.A.).

Appointed a Director from

May 2008 (then named

Acergy S.A.).

Committee membership

AG A A

Key external appointments

Chairman of Siem Industries

S.A., Siem Offshore Inc. and

Frupor S.A.

CEO and Director of Shelf

Drilling Limited.

Director of Rayonier Inc.

Director of Fleet Topco

Limited, the private holding

company of Argus Media Ltd.

Director of OCI N.V.

Member of the Supervisory

Board of Société Phocéenne

deParticipations.

Director of Seadrill Limited.

Nationality and date of birth

1949

1958

1950

1954

Tenure

Re-elected by shareholders

on14 April 2021 until the

2023AGM.

Re-elected by shareholders

on 7April 2020 until the

2022 AGM.

Re-elected by shareholders

on14 April 2021 until the

2023AGM.

Re-elected by shareholders

on 7April 2020 until the

2022 AGM.

| SUBSEA 7 | ANNUAL REPORT 2021

Committee key

Chairman

Compensation

Committee

Corporate

Governance

and Nominations

Committee

Audit Committee

* ‘Independent’ is defined by the

rules and codes of corporate

governance of the Oslo Børs on

which Subsea 7 S.A. is listed, which

the Board must satisfy, in particular

the Norwegian Code of Practice for

Corporate Governance. Under the

terms of the Company’s Articles of

Incorporation, Directors may be

elected for terms of up to two years

and serve until their successors are

elected. Under the Company’s

Articles of Incorporation, the Board

must consist of not fewer than

three Directors.

Date of appointment

Appointed a Non-Executive

Independent Director from

April2018.

Appointed a Non-Executive

Independent Director from

June 2021.

Appointed a Non-Executive

Director from June 2021.

Committee membership

C C

Key external appointments

Co-founder and CEO of Kirk,

Lovegrove and Company Ltd.

Director of Fjord Base

Holding AS and Trucknor

AS. Chairman of the boards

of Strømberg Gruppen AS,

Vartdal Holding AS and

Vartdal Plastindustri AS.

Advisory role at Nysnø

Climate Investments.

Ms Siem has no other

external appointments

with public companies.

Nationality and date of birth

1962

1956

1992

Tenure

Re-elected by shareholders

on 7 April 2020 until the

2022 AGM.

Elected by shareholders

on 14 April 2021, with effect

from 1 June 2021, until the

2023 AGM.

Elected by shareholders

on 4 June 2021 until the

2023 AGM.

NIELS KIRK

Independent Director*

Mr Kirk brings to the role

over 35years of international

corporate and structured

finance experience combined

with extensive knowledge of

the energy, power and resource

sectors at executive level.

He is a co-founder and Chief

Executive of the energy

advisory firm KirkLovegrove

and Company Ltd. Prior to this,

he worked at Citibank and

Banque Paribas. MrKirk is a

former member of the Advisory

Council of Advanced Power,

which develops, acquires,

owns and manages power

generation and related

infrastructure projects in

Europeand North America.

MrKirk holds an MBA in

Finance and International

Business from the Stern

School at New York University.

ELDAR SÆTRE

Independent Director*

Mr Sætre brings a wealth of

experience in the energy sector

combined with extensive

knowledge of accounting and

finance. Mr Sætre was

President and CEO of Equinor

from February 2015 until he

stepped down in November

2020. As CEO he was

extensively engaged in

transforming the cost base in

the company and creating a

more resilient global business,

as well as transitioning Equinor

into a broader energy company

focused on low carbon

strategies and new energy

solutions. Prior to becoming

CEO, Mr Sætre held several

senior management positions

in the company, mainly in the

fields of accounting, finance

and performance management.

Mr Sætre has an MA in

Business Economics from the

Norwegian School of

Economics and Business

Administration (NHH) in Bergen.

LOUISA SIEM

Director

Ms Siem is the daughter

of Mr Kristian Siem and has

been selected by Siem

Industries S.A. in accordance

with the relationship agreement

entered into between Subsea 7

Inc., Subsea 7 S.A. (then

Acergy S.A.), and Siem

Industries S.A. (then Siem

Industries Inc.) on 20 June

2010, in respect of the

combination of Subsea 7 Inc.

and Acergy S.A., which was

completed on 7 January 2011.

Ms Siem is an artist and holds

a Bachelor of Fine Arts degree

from the Ruskin School of Art

at Oxford University. She has

exhibited her work around the

world and worked as a studio

manager for world-renowned

painter Harold Ancart in New

York and Los Angeles.

CONSOLIDATED FINANCIAL STATEMENTS SUBSEA 7 S.A. FINANCIAL STATEMENTS GLOSSARY

SUBSEA 7 | ANNUAL REPORT 2021 |

GOVERNANCE

STRATEGIC REPORT

GOVERNANCE CONTINUED

EXECUTIVE MANAGEMENT TEAM

Date of appointment

John has been Chief Executive

Officer of Subsea 7 since

January 2020 and on the Board

of Directors of Seaway 7 since

October 2021.

Mark has been Chief Financial

Officer since January 2022.

Olivier was appointed

Executive Vice President –

Subsea and Conventional in

January 2020.

Phil was appointed Executive

Vice President – Projects and

Operations in January 2020.

Nationality and date of birth

1963 1973

1970

1966

JOHN EVANS

Chief Executive Officer

John has over 30 years of

experience in the oil and gas

services industry, primarily in

the SURF and offshore

engineering and construction

sectors. He started his career

in 1986, working with Brown &

Root, and built a successful

track record in general

management, and commercial

and operational roles in the

offshore oil and gas industry.

Prior to his current

appointment, from July 2005,

John held the position of Chief

Operating Officer of Subsea 7.

John has a Bachelor of

Engineering degree in

Mechanical Engineering from

Cardiff University, is a

Chartered Mechanical and

Marine Engineer and a

Chartered Director.

MARK FOLEY

Chief Financial Officer

Mark started his career in 1996

with the UK’s Government

Economic Service. In 2000, he

joined Royal Dutch Shell and

held several finance positions

with increasing responsibility.

Between 2011 and 2012, he

was Vice President Finance for

Baker Hughes in Europe and,

from 2012 to 2017, he was

Group Financial Controller for

Subsea 7. In October 2021, he

returned to Subsea 7 from

Petrofac where he was Group

Financial Controller and Senior

Vice President Finance for its

Engineering & Construction

business unit.

Mark has undergraduate and

postgraduate degrees in

Economics from the Universities

of Stirling and Strathclyde

respectively, an MBA from the

University of Warwick and is a

Fellow of the Association of

Chartered Certified

Accountants.

OLIVIER BLARINGHEM

Executive Vice President

–Subsea and Conventional

Olivier started his career in the

oil and gas engineering and

contracting sector in 1995,

working for seven years with

Entrepose Contracting in

project management and

commercial roles, based in

Nigeria, China and France.

Since joining Subsea 7 in 2002,

Olivier has held a number of

country, regional and corporate

management positions based

in the North Sea, Africa, Asia

and the Middle East. In 2016,

Olivier was appointed Vice

President of Asia Pacific and

the Middle East until his

appointment to Executive Vice

President – SURF and

Conventional in January 2020.

Olivier has a degree in

Mechanical and Electrical

Engineering from the École

Spéciale des Travaux Publics

in Paris.

PHILLIP SIMONS

Executive Vice President

–Projects and Operations

Phil began his career in 1987 in

offshore drilling until 1992 when

he became an engineer for

pipeline installation contractor,

European Marine Contractors.

Phil has more than 20 years’

experience in the subsea

pipelines business.

Phil joined Subsea 7 in

Aberdeen in 2004 as a senior

project manager and in 2011

was appointed Vice President

for Canada, Mediterranean and

Russia. In 2013 he was

appointed Vice President UK

and Canada before taking up

the role of Vice President for

North Sea and Canada in 2016.

In 2018 Phil was appointed

Senior Vice President Global

Projects and Operations.

Phil has a Bachelor of

Engineering degree in Mining

Engineering from the University

of Leeds.

| SUBSEA 7 | ANNUAL REPORT 2021

Date of appointment

Nathalie has been General

Counsel of Subsea 7 since

April2012 and on the Board

of Directors of Seaway 7

since October 2021.

Kate has been Executive

Vice President – Human

Resources since

September 2019.

Nationality and date of birth

1963

1969

NATHALIE LOUYS

General Counsel

Nathalie began her legal career

in 1986, working with Saint-

Gobain and Eurotunnel, gaining

extensive legal experience

across various industries. In

1996 she joined Technip,

based in Paris, progressing to

the role of Vice President Legal

– Offshore.

In 2006 Nathalie joined

Subsea 7 performing senior

corporate and operational

legal roles. Prior to her current

appointment Nathalie was

Vice President Legal –

Commercial.

Nathalie has been admitted to

the Paris Bar and has legal

qualifications from University

Paris I – Panthéon Sorbonne

and Paris XI in France and the

University of Kent in the UK.

KATHERINE LYNE

Executive Vice President

– Human Resources

Kate began her career in the

power generation sector with

Alstom, where she held roles in

Belgium, France, the UKand the

US. In2004 she moved to

Imerys where she was initially

HR Director for the Paper

division before being appointed

as HR Director for the Ceramics,

Refractories, Abrasives, and

Foundry business based

inParis.

In 2012 Kate joined Subsea 7 as

Vice President Group Human

Resources which she held until

her current appointment.

Kate has a business degree

from the University of Brighton

and is a fellow of the Chartered

Institute of Personnel and

Development.

CONSOLIDATED FINANCIAL STATEMENTS SUBSEA 7 S.A. FINANCIAL STATEMENTS GLOSSARY

SUBSEA 7 | ANNUAL REPORT 2021 |

GOVERNANCE

STRATEGIC REPORT

GOVERNANCE CONTINUED

2021 CORPORATE GOVERNANCE REPORT

REGULATORY COMPLIANCE

This section sets out the arrangements

theBoard has put in place to help ensure

that it fulfils its corporate governance

obligations, including the application of

theprinciples of the Norwegian Code

of Practice for Corporate Governance.

LEGAL AND REGULATORY FRAMEWORK

Subsea 7 S.A. is a ‘société anonyme’

organised in the Grand Duchy of

Luxembourg under the Company Law

of1915, as amended, being incorporated

in Luxembourg in 1993, and acts as

the holding company for all of the

Group’s entities.

Subsea 7 S.A.’s registered office is

locatedat 412F, route d’Esch, L-2086

Luxembourg. The Company is registered

with the Luxembourg Register of

Commerce and Companies under the

designation ‘R.C.S. Luxembourg B 43172’.

As a company incorporated in Luxembourg

and with shares traded on the Oslo stock

exchange and ADRs traded over-the-

counter in the US, Subsea 7 S.A. is subject

to Luxembourg laws and regulations with

respect to corporate governance.

As a company listed on the Oslo stock

exchange, where its shares are actively

traded, the Company follows the

Norwegian Code of Practice for Corporate

Governance on a ‘comply or explain’

basis, where this doesnot contradict

Luxembourg laws and regulations. The

Norwegian Code of Practice for Corporate

Governance is available at www.nues.no.

The Group’s corporate governance

policies and procedures are explained

below, with reference to the principles of

corporate governance as set out in the

sections identified in the Norwegian Code

of Practice for Corporate Governance

dated 14 October 2021.

ARTICLES OF INCORPORATION – NATURE

OF THE GROUP’S BUSINESS

As stated in its Articles of Incorporation,

Subsea 7 S.A.’s business activities are

asfollows:

“The objects of the Company are to

investin subsidiaries which predominantly

will provide subsea construction,

maintenance, inspection, survey and

engineering services, in particular for

offshore energy related industries. The

Company may furtheritself provide such

subsea construction, maintenance,

inspection, survey and engineering

services, and services ancillary

tosuchservices.

The Company may, without restriction,

carry out any and all acts and do any and

all things that are not prohibited by law in

connection with its corporate objects and

to do such things in any part of the world

whether as principal, agent, contractor or

otherwise. More generally, the Company

may participate in any manner in all

commercial, industrial, financial and other

enterprises of Luxembourg or foreign

nationality through the acquisition by

participation, subscription, purchase,

option or by any other means of all shares,

stocks, debentures, bonds or securities;

the acquisition of patents and licences

which it will administer and exploit; it may

lend or borrow with or without security,

provided that any monies so borrowed

may only be used for the purposes of the

Company, or companies which are

subsidiaries of or associated with or

affiliated to the Company; it may grant

assistance, including, without limitation,

grant parent company guarantees, to any

affiliated company and take any measure

for the control and supervision of such

companies; in general it may undertake

any operations directly or indirectly

connected with these objects.”

The full text of the Company’s Articles of

Incorporation, as amended, is available

on Subsea 7’s website.

BUSINESS

The Board of Directors has set strategies

and targets for the Company’s business.

Since 1 January 2021, the Group has

structured itself around its diversified

strengths, reporting through two

operational business units: Subsea and

Conventional, and Renewables.

The Subsea and Conventional business

unit isa global leaderin offshore energy

services delivering design, engineering,

procurement, construction and installation

(EPCI), and decommissioning projects in

all water depths, operating under the

Subsea 7 brand.

The Renewables business unit is an

experienced partner for the delivery of

offshore wind farm projects and specialist

foundations and cable lay services, mainly

operating under the Seaway 7 brand.

Further details of the Group’s business

units are outlined in the ‘Strategy’ and

‘Business Review’ sections on pages

10 to 17.

| SUBSEA 7 | ANNUAL REPORT 2021

BOARD OF DIRECTORS: COMPOSITION

AND INDEPENDENCE

As a Luxembourg incorporated entity,

the Company does not have a corporate

assembly.

The Board of Directors comprises seven

Directors. The majority of the Directors

were, during the year ended 31 December

2021, considered independent in

accordance with the rules of the Oslo

stock exchange on which Subsea 7 S.A.

is listed and the independence criteria of

the Norwegian Code of Practice for

Corporate Governance.

The Board has a Senior Independent

Director elected from among its

independent members to provide a

sounding board for the Chairman and

to serve as an intermediary for the

other Directors when necessary.

Biographies of the individual Directors

are detailed on pages 38 to 39.

The charters of the permanent committees

do not permit executive management to

be members. The composition of the

Company’s Board of Directors and the

controls to avoid conflicts of interest are

in accordance with both Luxembourg

company law and good corporate

governance practice.

During 2021 the Board of Directors

adopted a Board Diversity Policy, the

purpose of which is to ensure an inclusive

and diverse membership of the Board of

Directors and that the Board as a whole

has the skills, expertise and experience to

guide the business and strategy of the

Company for the benefit of its

shareholders as a whole, having regard

to the interests of all its stakeholders.

This Board Diversity Policy is applicable

to the Board only but sits alongside the

Company’s Code of Conduct and

associated global policies, which set out

the Company’s broader commitment to

diversity and inclusion. Other details of

the Company’s practices and initiatives

in relation to diversity are disclosed on

page 21.

The Board of Directors aspires to

ultimately have 30% female representation

on the Board, with a commitment to have

at least one female Director whilst

recognising that periods of change in

Board composition may result in periods

when this balance is not achieved.

The Corporate Governance and

Nominations Committee is responsible

for ensuring that the Board has the

right balance of skills, experience and

knowledge and shall, among other things,

report annually, in the Company’s Annual

Report, on the implementation of the

Board Diversity Policy and other matters

as required by regulatory and statutory

requirements applicable to the Company.

Prior to proposing candidates to the

relevant general meeting for election to the

Board of Directors, the Corporate

Governance and Nominations Committee

seeks to consult with the Company’s

major shareholders before recommending

candidates to the Board of Directors.

Directors are elected by a general meeting

for a term not exceeding two years and

may be re-elected. Directors need not be

BOARD OF DIRECTORS

KRISTIAN SIEM

Chairman

JEAN CAHUZAC

Director

DAVID MULLEN

Senior Independent Director

NIELS KIRK

Independent Director

DOD FRASER

Independent Director

ELDAR SÆTRE

Independent Director

shareholders. At a general meeting the

shareholders may dismiss any Director,

with or without cause, at any time

notwithstanding any agreement between

the Company and the Director. Such

dismissal may not prejudice the claims

that a Director may have for

indemnification as provided for in the

Articles of Incorporation or for a breach

of any contract existing between him or

her and the Company.

If there is a vacancy on the Board of

Directors, the remaining Directors

appointed at a general meeting have the

right to appoint a replacement Director until

the next meeting of shareholders, who will

be asked to confirm such appointment.

With the exception of a candidate

recommended by the Board of Directors,

or a Director whose term of office expires

at a general meeting of the Company,

no candidate may be appointed unless at

least three days and no more than 22 days

before the date of the relevant meeting,

a written proposal, signed by a duly

authorised shareholder, shall have been

deposited at the registered office of the

Company together with a written

declaration, signed by the proposed

candidate, confirming his or her wish

to be appointed.

The Directors of the Board are encouraged

to hold shares in the Company as the

Board of Directors believes it promotes a

common financial interest between the

members of the Board of Directors and the

shareholders of the Company. Details of the

Directors’ shareholdings are on page 127.

LOUISA SIEM

Director

CONSOLIDATED FINANCIAL STATEMENTS SUBSEA 7 S.A. FINANCIAL STATEMENTS GLOSSARY

SUBSEA 7 | ANNUAL REPORT 2021 |

GOVERNANCE

STRATEGIC REPORT

GOVERNANCE CONTINUED

WORK OF THE

BOARD OF DIRECTORS

The Board of Directors adheres to a

BoardCharter which sets out the

instructions for the Board.

The main responsibilities of the Board

of Directors are:

1. Setting the Values used to guide the

affairs of the Group. This includes

the Group’s commitment to achieving

its health and safety vision and the

Group’s adherence to the highest

ethical standards in all of its operations

worldwide.

2. Integrating environmental improvement

into business plans and strategies, and

seeking to embed sustainability into

the Group’s business processes.

3. Overseeing the Group’s compliance

with its statutory and regulatory

obligations and ensuring that systems

and processes are in place to enable

these obligations to be met.

4. Setting the strategy and targets of

the Group.

5. Establishing and maintaining an

effective corporate structure for

theGroup.

6. Overseeing the Group’s compliance

with financial reporting and disclosure

obligations.

7. Overseeing the risk management of

the Group.

8. Overseeing Group communications.

9. Determining its own composition,

subject to the provisions of the

Company’s Articles of Incorporation.

10. Ensuring the effective corporate

governance of the Group.

11. Approving the remuneration package

for the CEO based upon the

recommendation of the Compensation

Committee.

12. Setting and approving policies.

The Board of Directors’ Charter is

available on the Subsea 7 website:

www.subsea7.com.

RESPONSIBILITIES DURING THE YEAR

During the year, the Board of Directors

sets a plan for its work for the following

year, which includes a review of strategy,

objectives and theirimplementation, the

review and approval of the annual budget

and the review and monitoring of the

Group’s current year financial

performance. In 2022, the Board of

Directors is scheduled to convene on

seven occasions, but the schedule is

flexible to react to operational or strategic

changes in the market and circumstances

affecting theGroup.

The Board of Directors has overall

responsibility for the management of

theGroup and has delegated the daily

management and operations of the Group

to the CEO, who is appointed by and

serves at the discretion of the Board of

Directors. The CEO is supported by the

other members of the Executive

Management Team, further details

of which are on pages 40 to 41.

The Executive Management Team has

thecollective duty to deliver Subsea 7’s

strategic, financial and other objectives,

aswell as to safeguard the Group’s

assets, organisation and reputation.

TheBoard of Directors has internal

regulations for its own operation and

approves objectives for its own work,

aswell as the work of the Executive

Management Team, with particular

emphasis on clear internal allocation

ofresponsibility and duties.

It is the duty of the Executive Management

Team to provide the Board of Directors

with appropriate, precise and timely

information on the operations and financial

performance of the Group, in order for the

Board of Directors to perform its duties.

The Board of Directors has established a

Corporate Governance and Nominations

2021 MEETING ATTENDANCE

Board

Audit

Committee*

Corporate

Governance and

Nominations

Committee*

Compensation

Committee

Kristian Siem 9/9 6/6 5/5

David Mullen 9/9 5/5 6/6

Jean Cahuzac 9/9 4/4

Dod Fraser 9/9 6/6

Niels Kirk 9/9 2/2 6/6 5/5

Eldar Sætre** 5/5 3/3

Louisa Siem** 4/4

Elisabeth Proust** 4/4 1/1 1/1

Allen Stevens*** 1/1

Total meetings in 2021**** 9 6 6 5

* A joint session of the Audit Committee and the Corporate Governance and Nominations Committee was held on 23 February 2021 at which all members of

both committees were present.

** Eldar Sætre and Louisa Siem were appointed as Directors with effect from 1 June 2021 and 4 June 2021 respectively. Elisabeth Proust’s mandate expired on

14 April 2021.

*** Allen Stevens passed away on 10 January 2021.

**** Each Director’s attendance is shown as a proportion of the total number of meetings they were eligible to attend.

| SUBSEA 7 | ANNUAL REPORT 2021

Committee, a Compensation Committee

and an Audit Committee, each of which

has a charter approved by the Board of

Directors. Matters are delegated to the

committees as appropriate. The Directors

appointed to these committees are

selected based on their experience and

toensure the committees operate in an

effective manner. The minutes of all

committee meetings are circulated to

allDirectors.

The performance and expertise of the

Board of Directors are monitored and

reviewed annually, including an evaluation

of the composition of the Board of

Directors and the manner in which its

members function, both individually and as

a collegiate body. In line with best

practice, the evaluation of the performance

of the Board of Directors is conducted by

an external facilitator every third year.

Following the postponement of the

external review in 2020 as a result of the

Covid-19 pandemic, the evaluation of the

performance of the Board of Directors

during the 2021 year was conducted by an

independent external facilitator and the

results of the evaluation were shared with

the Corporate Governance and

Nominations Committee.

RISK MANAGEMENT AND

INTERNAL CONTROL

The Board of Directors acknowledges its

responsibility for the Group’s identification

and management of risk along with the

system of internal control and for reviewing

the effectiveness of these. The Group’s

system of internal control is designed to

manage, rather than eliminate, the risk of

failure to achieve business objectives and

can only provide reasonable but not

absolute assurance against material

financial misstatement or loss. The Board

of Directors carries out an annual review

ofthe Group’s most important areas of

exposure to risk and its internal control

arrangements, having regard to the

changing nature of risk and the Group’s

ability to cope with them.

The Group adopts internal controls

appropriate to its business activities and

geographical spread. The key components

of the Group’s system of risk management

and internal control are described in the

Risk Management section on pages 24 to

36. The Group has in place clearly defined

lines of responsibility and limits of

delegated authority. Comprehensive

procedures provide for the appraisal,

approval, control and review of capital

expenditure. An Executive Risk Committee

meets on a quarterly basis to review and

discuss the Group’s risk and risk

management procedures and reports to

the Board. The Executive Management

Team also meets with functional senior

management on a regular basis to discuss

particular issues, including key operational

and commercial risks, health and safety

performance, sustainability, environmental

factors, and legal and financial matters.

The Group has a comprehensive annual

planning and management reporting

process. A detailed annual budget is

prepared in advance ofeach year and

supplemented by forecasts updated

during the course of the year. Financial

results are reported monthly to the

Executive Management Team and

quarterly to the Board of Directors and

compared to budget, forecasts, market

consensus and prior yearresults.

The Board of Directors reviews reports on

actual financial performance and forward-

looking financial guidance.

The Board of Directors derives further

assurances from the reports of the

AuditCommittee. The Audit Committee

has been delegated responsibility to

review the effectiveness of the internal

financial control systems implemented

bymanagement and is assisted by the

internal audit function and the external

auditor where appropriate.

SUSTAINABILITY

The Board of Directors is responsible for

guiding the Company’s sustainability

strategy and when defining the objectives,

strategies and risk profiles for the

Company’s business activities,

sustainability risks and opportunities are

considered. Sustainability represents a

permanent feature on every Board agenda,

and this is in line with the Board’s aim to

carry out business in a manner that is

sustainable for the Company’s

shareholders, having regard to financial,

social and environmental considerations.

CONSOLIDATED FINANCIAL STATEMENTS SUBSEA 7 S.A. FINANCIAL STATEMENTS GLOSSARY

SUBSEA 7 | ANNUAL REPORT 2021 |

GOVERNANCE

STRATEGIC REPORT

GOVERNANCE CONTINUED

COMMUNICATION

WITH STAKEHOLDERS

IMPLEMENTATION AND REPORTING

ON CORPORATE GOVERNANCE

Subsea 7 S.A. acknowledges the

divisionof roles between shareholders,

theBoard of Directors and the Executive

Management Team. The Group further

ensures good governance is adopted

byholding regular Board of Directors’

meetings, which the Executive

Management Team attends and at

whichstrategic, operational and

financialmatters are presented.

The Group’s vision is: To lead the way

inthe delivery of offshore projects and

services for the energy industry.

The Group’s Values are: Safety, Integrity,

Sustainability, Innovation, Performance

and Collaboration.

In pursuit of the six Values, the Group has

an Ethics Policy Statement and a Code of

Conduct which reflect its commitment to

clients, shareholders, employees and other

stakeholders to conduct business legally

and with integrity and honesty. The Ethics

Policy Statement and the Code of Conduct

were approved by the Board of Directors

and were issued to all Directors, officers

and employees and are subject to periodic

review and updating.

GENERAL MEETINGS

The Articles of Incorporation provide that

the Annual General Meeting (AGM) shall

beheld within six months from the end of

the financial year and in 2022 it will be

heldon 12 April.

The notice of meeting and agenda

documents for the AGM are posted on the

Group’s website at least 21 days prior to

the meeting and shareholders receive the

information at least 21 days prior to the

meeting by mail. Documentation from

previous AGMs is available on the

Subsea7 website: www.subsea7.com.

All shareholders that are registered

withthe Norwegian Central Securities

Depository System receive a written notice

of the AGM. The Company will set a

record date as close as practicable to the

date of the AGM, taking into account the

differing deadlines for ADR and common

share proxies. Subject to the procedures

described in the Articles of Incorporation,

all shareholders holding individually or

collectively at least 10% of the issued

shares have the right to submit proposals

or draft resolutions. All shareholders on

theregister as at the record date will be

eligible to attend in person, or vote by

proxy, at theAGM.

Proxy forms are available and may be

submitted by eligible shareholders which

allow separate voting instructions to be

given for each proposed resolution to

oneof the representatives indicated on

theproxy form and also allow a person

tobenominated to vote on behalf of

shareholders as their proxy. There will

beaseparate vote for each candidate

nominated for election to the Board of

Directors. Details will be provided in the

resolutions and supporting information

distributed to the shareholders ahead

of the AGM.

Under Luxembourg law, there are

minimum quorum requirements for

extraordinary general meetings but no

minimum quorum requirement for AGMs.

Decisions will be validly made at the

AGMregardless of the number of shares

represented if approval is obtained from

the majority of the votes of those

shareholders that are present or

represented.

The Articles of Incorporation of the

Company provide that the AGM will be

chaired by the Chairman of the Board of

Directors. However, the Board of Directors

ordinarily delegates authority to the

Company Secretary to chair the AGM.

Ifamajority of the shareholders request

analternative independent chairman, one

will be appointed.

At the AGM, the shareholders, inter alia,

elect members of the Board of Directors

for nominated terms of appointment,

approve the Company’s Annual Accounts,

the Group’s Annual Report and

Consolidated Financial Statements,

discharge the Directors from their duties

for the financial year and approve the

statutory auditor’s appointment. In

accordance with Luxembourg law and the

Company’s Articles of Incorporation, the

Chairman of the Board is elected by the

Board of Directors based on its insight

intowho has the most suitable level of

understanding of the Company to carry

out the duties of the Chairman.

| SUBSEA 7 | ANNUAL REPORT 2021

EQUITY AND DIVIDENDS

Shareholders’ equity

Total shareholders’ equity at 31 December

2021 was $4.5 billion (2020: $4.3 billion)

which the Board of Directors believes is

satisfactory given the Group’s strategy,

objectives and risk profile.

Dividend policy

It is Subsea 7’s objective to give its

shareholders an attractive return on

theirinvested capital. The Group’s

commitment to returning capital to

shareholders was reaffirmed by formalising

the dividend policy of Subsea 7 in March

2022. The Board recognises the merits

of establishing a regular dividend at this

point in the evolution of the Group and

recommends a regular, annual dividend

of NOK 1.00 per share, equivalent to

$33 million. The return of excess cash

in the form of a special dividend or share

repurchase will continue to be assessed by

the Board annually. In 2022, reflecting the

current valuation of Subsea 7 shares, the

Group intends to distribute approximately

$70 million through share repurchases.

Thedividend will normally be paid in the

month following its approval at the AGM.

Equity mandates

At the extraordinary general meeting held

on 14 April 2021, the Board of Directors’

authority to approve the purchase of the

Company’s shares up to a maximum of

30,000,000 common shares (representing

10% of the issued common shares as at

14 April 2021) was granted until 14 April

2023. This authority is subject to certain

purchase price conditions and is

conditional on such purchases being made

in open market transactions through the

Oslo stock exchange, subject to certain

limitations. The Board of Directors was

also granted authority for a period ending

on 14 October 2023 to cancel shares

repurchased under such authorisation and

to reduce the issued share capital through

such cancellations.

At the same extraordinary general meeting

the Company’s shareholders approved the

renewal of the authorised share capital at

$900,000,000 (including the issued share

capital) with authority for the Board of

Directors to issue new common shares

within the authorised unissued share

capital and with any authorised but

unissued common shares lapsing on

10 May 2023. Additionally, the Board of

Directors was authorised to issue new

shares within the authorised unissued

share capital. The Board of Directors was

authorised to waive, suppress or limit

existing shareholders’ preferential

subscription rights up to a maximum of

30,000,000 common shares (representing

10% of the issued common shares as at

14 April 2021). These authorisations were

granted for a period of two years, expiring

on 10 May 2023, to reduce inter alia the

administrative burden of convening an

extraordinary general meeting annually.

An extraordinary general meeting will be

held on 12 April 2022 at which it will be

proposed that the shareholders approve

an amendment to the Company’s Articles

of Incorporation in order to allow the

dematerialisation of the Company’s

shares. Further detail of the proposed

amendment can be found on page 37.

EQUAL TREATMENT OF SHAREHOLDERS

AND TRANSACTIONS WITH CLOSE

ASSOCIATES

One class of shares

The Company has one class of shares

which are listed on the Oslo stock

exchange. Eachshare carries equal rights

includingan equal voting right at annual

orextraordinary general meetings of

shareholders of the Company. No shares

carry any special control rights. The

Articles of Incorporation contain no

restrictions on voting rights.

Share issues

The Board of Directors is authorised

tosuppress the pre-emptive rights of

shareholders under certain circumstances

and within the limits set forth previously.

This is to allow flexibility to deal with

matters deemed to be in the best

interestof the Company.

In the event of the Board of Directors

resolving to issue new shares and waive

the pre-emptive rights of existing

shareholders, the Board of Directors

intends to comply with the

recommendation of the Norwegian Code

of Practice for Corporate Governance that

the justification for such waiver is noted in

the stock exchange announcement

relating to such a share issue.

Related party transactions

Any transactions between the Group

andmembers of the Board ofDirectors,

executive management or close associates

are detailed inNote 34 ‘Related party

transactions’ to the Consolidated

FinancialStatements.

The Board of Directors’ instructions

contain provisions on how the Board of

Directors and executive management will

handle agreements with related parties

and the Board of Directors will, from time

to time, determine the necessity of

obtaining third-party valuations on

transactions with related parties. Under

Luxembourg law, Directors may not vote

on transactions in which they are directly

or indirectly financially interested.

The Group’s Code of Conduct requires

any Director or employee to declare if

theyhold any direct or indirect financial

interest in any transaction entered into

bythe Group.

Freely negotiable shares

Subsea 7 S.A.’s shares are traded as

common shares on the Oslo stock

exchange and asADRs over-the-counter

in the US.

All shares are freely negotiable. The

Articles of Incorporation contain no

formofrestriction on the negotiability

ofshares in the Company.

CONSOLIDATED FINANCIAL STATEMENTS SUBSEA 7 S.A. FINANCIAL STATEMENTS GLOSSARY

SUBSEA 7 | ANNUAL REPORT 2021 |

GOVERNANCE

STRATEGIC REPORT

GOVERNANCE CONTINUED

CORPORATE GOVERNANCE

AND NOMINATIONS COMMITTEE

The Board of Directors has established a

Corporate Governance and Nominations

Committee. The composition of this

Committee is for the Board of Directors

todetermine in accordance with the

Company’s Articles of Incorporation.

TheBoard of Directors believes that the

Committee, comprising certain members

of the Board of Directors, the majority of

whom are independent of the Company’s

main shareholders, has the most suitable

level of understanding of the Company to

carry out the duties of the Committee.

The Corporate Governance and

Nominations Committee’s main

responsibilities are:

1. Actively seeking and evaluating

individuals qualified to become

Directors of the Company and

nominating candidates to the

BoardofDirectors.

2. Periodically reviewing the composition

and duties of the Company’s permanent

committees and recommending any

changes to the Board of Directors.

3. Periodically reviewing the

compensation of Directors and making

any recommendations to the Board

of Directors.

4. Annually reviewing the duties and

performance of the Chairman of the

Board and recommending to the Board

of Directors a Director for election by

the Board of Directors to the position

ofChairman of the Board.

5. Annually reviewing the Company’s

corporate governance guidelines,

procedures and policies for the Board

of Directors and recommending to the

Board of Directors any changes and/or

additions thereto that they believe are

desirable and/or required. These

governance guidelines include the

following:

– How the Board of Directors is

selected and compensated

(forexample, the size of the

Board,Directors’ compensation,

qualifications, independence,

retirement and conflicts ofinterests).

– How the Board of Directors

functions (for example, procedures

for Board meetings, agendas,

committee structure and format

anddistribution of Board materials).

– How the Board of Directors interacts

with shareholders and management

(for example, selection and evaluation

of the CEO, succession planning,

communications with shareholders

and access to management).

6. Overseeing the annual evaluation of

theBoard of Directors’ performance.

7. Overseeing all aspects of Subsea 7’s

compliance and ethics programme.

This will include a regular review of the

structure of thecompliance function,

the scope of its activities and the

effective implementation of the

programme (including procedures for

employees to raise concerns about

breaches of the Code ofConduct and

for such concerns to be investigated

andremediated).

8. Annually reviewing the Committee’s

own performance.

The Corporate Governance and

Nominations Committee Charter is

available on the Subsea 7 website:

www.subsea7.com.

COMMITTEE MEMBERS

David Mullen

Committee Chairman

Kristian Siem

Niels Kirk

| SUBSEA 7 | ANNUAL REPORT 2021

COMPENSATION COMMITTEE

COMMITTEE MEMBERS

Kristian Siem

Committee Chairman

Eldar Sætre

Niels Kirk

The Compensation Committee has

beenestablished by the Board to assist

indeveloping a fair compensation

programme for the executive officers

andto ensure compliance with legal

requirements as to executive officer

compensation. The Compensation

Committee’s main responsibilities are:

1. Annually reviewing and approving the

compensation paid to the executive

officers of the Company with the

exception of the CEO where the

Compensation Committee may

makearecommendation to the

Boardof Directors.

2. Establishing annually performance

objectives for the Company’s CEO

andannually reviewing the CEO’s

performance against objectives and

setting the CEO’s compensation

basedon its evaluation.

3. Overseeing the Company’s Benefit

Plans in accordance with the

objectives of the Company established

by the Board of Directors.

– Reviewing executive compensation

plans and making recommendations

tothe Board on the adoption of new

plans or programmes.

4. Recommending to the Board of

Directors the terms of any contractual

agreements and any other similar

arrangements that may be entered into

with executive officers of the Company

and its subsidiaries.

5. Approving appointments of the CEO,

the CEO’s direct reports and certain

other appointments.

6. Preparing the report on executive

compensation to be included in the

Company’s Annual Report and

Consolidated Financial Statements.

7. Annually reviewing the Compensation

Committee’s ownperformance.

The Compensation Committee Charter

isavailable on the Subsea 7 website:

www.subsea7.com.

REMUNERATION OF THE BOARD

OFDIRECTORS

The Company’s Directors receive

remuneration in accordance with their

individual roles and committee

membership. The Directors are encouraged

to own shares in the Company but no

longer participate in any incentive or share

option schemes. The remuneration of the

Board of Directors is approved at the AGM

annually and is disclosed in Note 34

‘Related party transactions’ to the

Consolidated Financial Statements.

Directors are not permitted to undertake

specific assignments for the Group unless

these have been disclosed to and approved

in advance by the Board of Directors.

REMUNERATION OF THE EXECUTIVE

MANAGEMENT

The Group’s remuneration policy is set by

the Compensation Committee. The policy

is designed to provide remuneration

packages which will help to attract, retain

and motivate senior management to

achieve the Group’s strategic objectives

and to enhance shareholder value. The

Compensation Committee also seeks to

ensure that the remuneration policy is

applied consistently across the Group and

thatremuneration is fair and transparent,

while encouraging highperformance.

The Compensation Committee benchmarks

executive remuneration against comparable

companies and seeks to ensure that the

Group offers rewards and incentives which

are competitive withthose offered by the

Group’s peers. Inbenchmarking elements

of remuneration against Subsea 7’s peers,

the Compensation Committee may

fromtime to time take advice from

externalconsultants.

Remuneration comprises base salary,

bonus, share-based payments, benefits

and pension. Performance related

remuneration schemes define limits in

respect of the absolute awards available.

These are defined within the scheme

arrangements and set out limits regarding

total award in a given year and, in specific

instances, the total award available to

certain individuals.

ANNUAL SALARY REVIEW

ARRANGEMENTS

The annual salary review is a key annual

process that allows the Company to

recognise our eligible employees’

performance through an increase to base

salary in line with Company performance,

local performance and with an

understanding of market rates.

Following the challenging year of 2020,

there was no annual salary review

budgeted for our onshore employees in

2021, however, as always we conducted

market reviews across the business to

CONSOLIDATED FINANCIAL STATEMENTS SUBSEA 7 S.A. FINANCIAL STATEMENTS GLOSSARY

SUBSEA 7 | ANNUAL REPORT 2021 |

GOVERNANCE

STRATEGIC REPORT

GOVERNANCE CONTINUED

AUDIT

COMMITTEE

The Audit Committee is responsible for

ensuring that the Group has an independent

and effective external andinternal audit

process. The Audit Committee supports the

Board of Directors in the administration and

exercise of its responsibility for supervisory

oversight of financial reporting and

internalcontrol matters and to maintain

appropriate relationships with the external

auditor. A majority of the Audit Committee,

including the Chairman, are independent as

required by Luxembourg law.

The Audit Committee’s main

responsibilities include:

1. Monitoring the financial reporting process

and submitting recommendations or

proposals toensure its integrity.

2. Monitoring the effectiveness of the

Company’s and the Group’s internal

quality controls, internal audit function,

financial controls framework and, where

applicable, risk management systems.

3. Monitoring the statutory audit of the

Company’s Annual Accounts and the

Consolidated Financial Statements of

the Group, in particular its performance,

taking into account any findings and

conclusions of the competent authority.

4. Reviewing the quarterly, half-yearly,

interim and annual financial statements

of the Group before their approval by

the Board of Directors.

5. Informing the Board of Directors of the

outcome of the statutory audit and

explaining how the statutory audit

contributed to the integrity of financial

reporting and the role of the Committee

in that process.

6. Reviewing and monitoring the

independence of the external auditor,

inparticular with respect to the

appropriateness of the provision of

additional non-audit services to the

Company and the Group and putting

inplace procedures and making

ensure our salaries are aligned with the

local markets we operate in and made

salary adjustments where appropriate.

In recognition of the commitment shown

by our offshore crew in ensuring our vessel

operations continued during the global

pandemic, an annual salary review was

awarded to all our offshore employees.

In addition, we reviewed and enhanced

contractual terms and benefits.

SHORT-TERM INCENTIVE

ARRANGEMENTS

The Group operates a common annual

short-term incentive plan (bonus) with

targets set by the Compensation

Committee. The current performance

conditions for executive officers are

basedupon the following metrics with the

relevant weighting: Financial performance

(45%), Project performance (20%),

Safetyperformance (10%) and Personal

objectives (25%).

For the January to December 2021

performance period, the Adjusted EBITDA

threshold of $515 million was met, and

net income was positive. The Committee

agreed that the outcome corresponded

with Subsea 7’s performance over the

period, therefore approved payment of

the 2021 STIP to participants.

For the CEO, the maximum bonus

opportunity in respect of 2021 was 150%

of base salary. Based on performance

against metrics, the bonus payable to the

CEO in respect of 2021 was $481,913. For

the CFO, the maximum bonus opportunity

in respect of 2021 was 100% of base

salary. Based on performance against

metrics, the bonus payable to the CFO

in respect of 2021 was $219,710.

LONG-TERM INCENTIVE ARRANGEMENTS

The Group currently operates a single

long-term incentive arrangement, the 2018

Long-term Incentive Plan (‘2018 LTIP’) to

reward and incentivise key management.

The 2018 LTIP provides for conditional

awards based upon performance conditions

over a performance period of at least three

years. The performance conditions are

based upon two measures: relative Total

Shareholder Return (TSR) and Return on

Average Invested Capital (ROAIC) based

upon a weighting of 65%/35%.

COMMITTEE MEMBERS

Dod Fraser

Committee Chairman

Jean Cahuzac

David Mullen

There is an award cap such that executive

officers may not be granted shares in a single

year that have an aggregate market value in

excess of 150% of their annual base salary

and must build up a shareholding with a fair

value of 150% of their annual base salary.

There are also former schemes which are

now closed to new awards. Full details of the

2018 LTIP, including details of the LTIP 2018

award vesting, are set out in Note 35

‘Share-based payments’ to the Consolidated

Financial Statements. A conditional award

was made to the CEO on 1 October 2021 in

respect of 50,000 shares, equivalent to 64%

of base salary. No award was made to the

CFO due to planned retirement effective 31

December 2021.

CHIEF EXECUTIVE OFFICER REMUNERATION

The remuneration package of the CEO was

determined by the Board of Directors on

the recommendation of the Compensation

Committee. The compensation of the CEO

is reported in Note 34 ‘Related party

transactions’ to the Consolidated Financial

Statements.

CHIEF FINANCIAL OFFICER REMUNERATION

The remuneration package of the CFO was

determined by the Compensation Committee.

The compensation of the CFO is reported in

Note 34 ‘Related party transactions’ to the

Consolidated Financial Statements.

EXECUTIVE MANAGEMENT TEAM

REMUNERATION

The remuneration package of the other

members of the Executive Management

Team was determined by the

Compensation Committee and is shown in

aggregate inNote 34 ‘Related party

transactions’ totheConsolidated Financial

Statements.

SHARE OWNERSHIP OF THE EXECUTIVE

MANAGEMENTTEAM

Details of total performance shares

andshares held in the Company by the

Executive Management Team are shown

inNote 34 ‘Related party transactions’

tothe Consolidated Financial Statements.

COMPENSATION COMMITTEE

CONTINUED

| SUBSEA 7 | ANNUAL REPORT 2021

DIRECTORS’ AND CHIEF EXECUTIVE

OFFICER’S RESPONSIBILITY

STATEMENT

We confirm that, to the best of

our knowledge, the Consolidated

Financial Statements and the

Unconsolidated Financial

Statements for the year ended

31December 2021 have been

prepared inaccordance with current

applicable accounting standards

and give a true and fair view of the

assets, liabilities, financial position

and results of the Company and the

Group taken as a whole. We also

confirm that, to the best of our

knowledge, the 2021 Annual Report,

Consolidated Financial Statements

and Unconsolidated Financial

Statements include a fair review of

the development and performance

of the business and the position

of the Group, together with a

description of the principal risks

and uncertainties facing the Group.

By Order of the Board of Directors

of Subsea 7 S.A.

Kristian Siem

Chairman

John Evans

Chief Executive

Officer

recommendations with respect to the

selection and the appointment of the

external auditor.

7. Reviewing the report from the external

auditor on key matters arising from

theGroup and the Company

statutoryaudits.

8. Dealing with complaints received

directly or via management, including

information received confidentially and

anonymously, in relation to accounting,

financial reporting, internal controls

andexternal audit issues.

9. Reviewing the disclosure of

transactions involving related parties.

10. Annually reviewing the Audit

Committee’s own performance.

The Audit Committee Charter is available on

the Subsea 7 website: www.subsea7.com.

The terms of reference of the

AuditCommittee, as set out in the

AuditCommittee Charter, satisfy the

requirements of applicable law and

areinaccordance with the Articles of

Incorporation.

The Chairman of the Audit Committee

isDod Fraser, whose biography can be

found on page 38. The Board of Directors

has determined that Mr Fraser is the

AuditCommittee’s financial expert and

competent in accounting and audit practice

with recent and relevant financial

experience. The Audit Committee Charter

requires that the Audit Committee shall

consist of not less than three Directors. The

Audit Committee meets at least fourtimes

a year and its meetings are attended by

representatives of the externalauditor and

by the head of theinternal audit function.

AUDITOR

The external auditor meets the Audit

Committee annually regarding the planning

and preparation of the audit of the Group’s

Consolidated Financial Statements and the

Company’s Annual Accounts.

The Audit Committee members hold

separate discussions with the external

auditor during the year without members

ofthe Executive Management Team being

present. The scope, resources and level of

fees proposed by the external auditor in

relation to the Group’s and the Company’s

audits and related activities are approved

bythe Audit Committee.

The Audit Committee recognises that it is

occasionally in the interest of the Group to

engage its external auditor to undertake

certain other non-prohibited non-audit

assignments. Fees paid to the external

auditor for audit and non-audit services

are reported in Note 6 ‘Net operating

income’ tothe Consolidated Financial

Statements, which are in turn approved at

the AGM. The Audit Committee also

requests the external auditor to confirm

annually in writing that the external auditor

remains independent.

TAKE-OVERS

Subsea 7 S.A.’s Board of Directors endorses

the principles concerning equal treatment of

all shareholders. In the event ofa take-over

bid, it is obliged to act in accordance with

the requirements of applicable Luxembourg

and Norwegian lawprovisions and in

accordance with the applicable principles

for good corporate governance.

The Company has been notified of the

following significant shareholders who

control 5% or more of the voting rights

ofthe Company:

(a)

Siem Industries Inc. 23.2

Folketrygdfondet 7.9

(a) Information is correct as at 31 December 2021.

INFORMATION AND COMMUNICATIONS

Subsea 7 S.A.’s Board of Directors concurs

with the principles of equal treatment of all

shareholders and the Group is committed to

reporting financial results and other

information on an accurate and timely basis.

The Group provides information to the

market through quarterly and annual reports,

investor and analyst presentations which are

available to the media and by making

operational and financial information

available on Subsea 7’s website.

Announcements arereleased through

notification to the company disclosure

systems of the Oslostock exchange and the

Luxembourg Commission de Surveillance du

Secteur Financier and simultaneously on the

Subsea 7 website. As a listed company, the

Company complies with the relevant

regulations regarding disclosure. Information

is only provided in English.

The Company complies in all material

respects with the Oslo stock exchange’s

Code of Practice for IR, which is available at

www.oslobors.no/.

CONSOLIDATED FINANCIAL STATEMENTS SUBSEA 7 S.A. FINANCIAL STATEMENTS GLOSSARY

SUBSEA 7 | ANNUAL REPORT 2021 |

GOVERNANCE

STRATEGIC REPORT

FINANCIAL REVIEW

52 | SUBSEA 7 | ANNUAL REPORT 2021

FINANCIAL REVIEW

Page

Management Report for Subsea 7 Group (the Group) 53

Management Report for Subsea 7 S.A. (the Company) 59

| SUBSEA 7 | ANNUAL REPORT 2021

SUBSEA 7 | ANNUAL REPORT 2021 | 53

MANAGEMENT REPORT FOR SUBSEA 7 GROUP (THE GROUP)

Financial highlights

At a glance

• Revenue of $5.0 billion up 45% year-on-year

• Adjusted EBITDA of $521 million up 55% from 2020, equating to a margin of 10.4% up 70 basis points year-on-year

• Net income of $36 million compared to net loss of $1.1 billion in 2020

• Diluted earnings per share of $0.11 compared to diluted loss per share of $3.67 in 2020

• Cash and cash equivalents of $598 million and net debt (including lease liabilities) of $55 million at year end

• Liquidity of $1.4 billion with $956 million undrawn borrowing facilities at year end

• Backlog of $7.2 billion, the highest since 2015, with order intake of $6.1 billion equating to a book-to-bill of 1.2

• Formation of Seaway 7 ASA created a market leader in fixed offshore wind

• The Board has decided to adopt a regular dividend policy and has approved a $100 million return to shareholders in 2022, comprising

a regular dividend of NOK 1.00 per share, to be recommended for shareholder approval at the AGM, and share repurchases of

approximately $70 million

• Both the regular dividend policy and returns to shareholders mark the Board’s confidence in the financial position and outlook for

the Group

(a) For the explanation and reconciliation of Adjusted EBITDA and Adjusted EBITDA margin refer to ‘Additional Information’ on page 139.

(b) For the explanation and a reconciliation of diluted earnings per share refer to Note 11 ‘Earnings per share’ to the Consolidated Financial Statements.

(c) Backlog is a non-IFRS measure. Book-to-bill ratio represents total order intake (excluding amounts related to business combinations) divided by revenue recognised in the year.

(d) Net cash/(debt) is a non-IFRS measure and is defined as cash and cash equivalents less borrowings.

Summary

The Group’s financial performance in 2021 with revenue of $5.0 billion, net operating income of $72 million and Adjusted EBITDA of $521

million was supported by improving oil and gas prices and increased activities in the renewables fixed offshore wind market. The Covid-19

pandemic continued to have an adverse impact on the Group’s results, particularly in the Renewables business unit which experienced

delays on certain projects in Taiwan. During the year, a new challenge emerged as global supply chains tightened across many industries;

the Group continued to successfully mitigate the majority of its exposure through a variety of mechanisms including back-to-back supplier

contracts and index-linked pricing.

The Subsea and Conventional business unit experienced an increase in activities, associated with the early stages of a recovery in the oil and

gas industry with revenue up 33% year-on-year and net operating income of $103 million compared to net operating loss of $246 million in

2020, which was primarily driven by $294 million of impairment charges related to vessels. There was a sharp upturn in tendering activity

and greater demand for the Group’s engineering services.

The Group’s Renewables business unit continued to make progress and successfully combined with OHT ASA during the fourth quarter to

create Seaway 7 ASA, a market leader in fixed offshore wind. Revenue in the Renewables business unit doubled year-on-year to $1.3 billion

however net operating loss of $60 million reflected challenges in Taiwan related to Covid-19 restrictions.

Net cash generated from operations in 2021 was $293 million and free cash flow was $127 million after capital expenditure of $167 million.

At 31 December 2021, the Group held cash and cash equivalents of $598 million and had liquidity of $1.4 billion with $956 million undrawn

borrowing facilities at year end.

In $ millions, except Adjusted EBITDA margin and per share data

2021

Audited

2020

Audited

Revenue 5,010 3,466

djusted EBITD

(a)

521 337

djusted EBITDA margin

(a)

10.4% 9.7%

Net operating income/(loss) excluding goodwill impairment charges 72 (428)

Goodwill impairment charges – (605)

Net operating income/(loss) 72 (1,034)

Net income/(loss) 36 (1,105)

Earnings per share – in $ per share

Basic 0.11 (3.67)

Diluted

(b)

0.11 (3.67)

t (in $ millions)

2021

31 Dec

2020

31 Dec

Backlog – unaudited

(c)

7,212 6,214

Book-to-bill ratio – unaudited

(c)

1.2 1.3

Cash and cash equivalents 598 512

Borrowings (422) (209)

Net cash excluding lease liabilities

(d)

176 303

Net (debt)/cash including lease liabilities

(d)

(55) 49

GOVERNANCE SUBSEA 7 S.A. FINANCIAL STATEMENTS GLOSSARY

SUBSEA 7 | ANNUAL REPORT 2021 |

CONSOLIDATED FINANCIAL STATEMENTS

STRATEGIC REPORT

FINANCIAL REVIEW CONTINUED

54 | SUBSEA 7 | ANNUAL REPORT 2021

The Group’s strategy in emerging energies was reinforced in 2021 through a step up in the Group’s participation in floating wind, with the

creation of the Salamander floating wind joint venture and the acquisition of a majority holding in Nautilus Floating Solutions. The Group also

succeeded in winning its first carbon capture contract, for the Northern Lights project in Norway.

Outlook

In 2022, revenue is expected to be broadly in line with 2021 and Adjusted EBITDA and net operating income will be in line with or better than

2021. Management firmly believes that the market recovery is underway, supported by high levels of tendering in both business units, and

with signs of improving pricing and payment terms for new awards. Management is confident that the Group’s strong pipeline of prospects

will translate into new orders during the coming year.

INCOME STATEMENT

Revenue

Revenue for the full year was $5.0 billion, an increase of $1.5 billion or 45% compared to 2020. This was driven by increased revenue in

both the Renewables business unit, with increased activity on the Seagreen offshore wind project, UK, and the Subsea and Conventional

business unit, with increased activity in West Africa, the Gulf of Mexico, the Middle East, Brazil, Turkey and Australia.

Adjusted EBITDA

Adjusted EBITDA and Adjusted EBITDA margin for the year were $521 million and 10.4% respectively, compared to Adjusted EBITDA of

$337 million and Adjusted EBITDA margin of 9.7% in 2020.

Net operating income

Net operating income for the year was $72 million, compared to net operating loss of $428 million in 2020, excluding goodwill

impairment charges.

The year-on-year improvement in net operating income was driven by:

• net operating income of $103 million in the Subsea and Conventional business unit, compared to net operating loss of $246 million

in 2020 which included impairment charges related to property, plant and equipment and right-of-use assets of $294 million;

• a credit of $37 million in 2021 related to the Group’s resizing programme compared to a charge of $86 million in 2020. The credit in 2021

resulted from downward revisions to restructuring cost estimates and the collection of aged receivables which had been credit impaired in

the prior year;

• net costs of $27 million related to the Covid-19 pandemic compared to net costs of $70 million in 2020

partly offset by:

• net operating loss of $60 million in the Renewables business unit, which reflected continued delays to projects in Taiwan, compared to net

operating loss of $40 million in 2020.

Net income

Net income was $36 million in 2021, compared to net loss of $1.1 billion in 2020.

The year-on-year improvement was primarily due to:

• increase in net operating income, of $500 million, excluding goodwill impairment charges;

• no goodwill impairment charges recognised in 2021 compared with charges of $605 million in 2020;

• net gain of $44 million in 2021 within other gains and losses, which included net foreign currency gains of $36 million, compared to net

loss of $18 million in 2020, which included net foreign currency losses of $35 million

partly offset by:

• an increase of $31 million in taxation compared to 2020, mainly driven by the increase in income before tax combined with irrecoverable

withholding taxes in certain jurisdictions. The effective tax rate for the year was 64%.

Earnings per share

Diluted earnings per share was $0.11 in 2021 compared to diluted loss per share of $3.67 in 2020, calculated using a weighted average

number of shares of 299 million and 298 million respectively.

| SUBSEA 7 | ANNUAL REPORT 2021

SUBSEA 7 | ANNUAL REPORT 2021 | 55

BUSINESS UNIT HIGHLIGHTS

For the year ended 31 December 2021

(in $ millions)

Subsea and

Conventional

Renewables Corporate Total

Revenue

Fixed-price projects 3,015.2 1,259.3 9.5 4,284.0

Day-rate projects 659.4 0.2 66.4 726.0

3,674.6 1,259.5 75.9 5,010.0

Net operating income/(loss) 102.7 (59.5) 28.5 71.7

Finance income 4.7

Other gains and losses 44.4

Finance costs (20.1)

Income before taxes 100.7

djusted EBITDA

(a)

468.0 3.8 49.1 520.9

djusted EBITDA margin

(a)

12.7% 0.3% 64.7% 10.4%

(a) Adjusted EBITDA and Adjusted EBITDA margin are non-IFRS measures. For explanations and reconciliations of Adjusted EBITDA and Adjusted EBITDA margin refer to ‘Additional Information’

on page 139.

For the year ended 31 December 2020

(in $ millions)

Subsea and

Conventional

Re-presented

(b)

Renewables

Re-presented

(b)

Corporate

Re-presented

(b)

Total

Re-presented

(b)

Revenue

Fixed-price projects 2,122.6 630.3 8.3 2,761.2

Day-rate projects 643.2 1.1 60.9 705.2

2,765.8 631.4 69.2 3,466.4

Net operating loss excluding goodwill

impairment charges (245.8) (39.7) (142.9) (428.4)

Impairment of goodwill (592.2) – (13.2) (605.4)

Net operating loss (838.0) (39.7) (156.1) (1,033.8)

Finance income 4.8

Other gains and losses (18.3)

Finance costs (24.6)

Loss before taxes (1,071.9)

djusted EBITDA

(a)

427.0 11.6 (101.5) 337.1

djusted EBITDA margin

(a)

15.4% 1.8% n/a 9.7%

(a) Adjusted EBITDA and Adjusted EBITDA margin are non-IFRS measures. For explanations and reconciliations of Adjusted EBITDA and Adjusted EBITDA margin refer to Additional Information’ on

page 139.

(b) Re-presented due to new organisational structure implemented from 1 January 2021.

Subsea and Conventional

Revenue for the year was $3.7 billion, an increase of $909 million or 33% compared to 2020.

During the year the Julimar project, Australia, the Lingshui project, China, the Ærfugl Phase 2 project, Norway, the Zinia project, Angola, and

the Ichalkil project, in the Gulf of Mexico, were completed.

Work progressed on the Sangomar project, Senegal, the SLGC project, Angola, the Berri-Zuluf and 28 Jackets projects, Saudi Arabia, the

Barossa project, Australia, the Sakarya project, Turkey, the Mad Dog 2, King’s Quay and Colibri projects in the Gulf of Mexico, and the

Johan Sverdrup Phase 2 project, Norway.

In Brazil, there were high levels of utilisation of the four PLSVs under long-term contracts with Petrobras and work progressed on the

Bacalhau project.

Net operating income was $103 million in 2021 compared to net operating loss of $246 million in 2020 excluding goodwill impairment

charges. The net operating loss in 2020 was primarily driven by impairment charges of $294 million related to vessels, equipment, and

right-of-use assets.

Renewables

Revenue for the year was $1.3 billion compared to $631 million in 2020. The increase in revenue was due to increased activity, particularly

in relation to the Seagreen offshore wind farm project, UK. Net operating loss for the year was $60 million compared to net operating loss of

$40 million in 2020. The net operating loss in 2021 reflected delays to projects in Taiwan. An agreement was reached with the client on the

Formosa 2 project, which defined the Group’s remaining scope, revised schedule and remuneration. Barring any further impact of Covid-19,

it is expected that the project will be substantially completed by mid-2022.

GOVERNANCE SUBSEA 7 S.A. FINANCIAL STATEMENTS GLOSSARY

SUBSEA 7 | ANNUAL REPORT 2021 |

CONSOLIDATED FINANCIAL STATEMENTS

STRATEGIC REPORT

FINANCIAL REVIEW CONTINUED

56 | SUBSEA 7 | ANNUAL REPORT 2021

Corporate

Revenue, which was driven by the Group’s autonomous wholly owned subsidiaries Xodus and 4Subsea and activities related to floating

wind, was $76 million in 2021 compared to $69 million in 2020. Net operating income for the year was $29 million compared to net

operating loss of $143 million in 2020, excluding goodwill impairment charges. The net operating income in 2021 benefitted from a credit

of $37 million related to the Group’s resizing programme following downward revisions of restructuring cost estimates. The net operating

loss in 2020 was primarily driven by restructuring charges of $86 million and impairment charges of $29 million related to property, plant

and equipment.

Vessel utilisation and fleet

Active Vessel Utilisation, which excludes stacked vessels, for 2021 was 83% compared with 77% for 2020. Total Vessel Utilisation was 77%

compared to 69% in 2020.

At 31 December 2021 there were 38 vessels in the Group’s fleet, comprising 34 active vessels, two vessels under construction and two

stacked vessels. The business combination with OHT ASA in the fourth quarter resulted in the addition of five heavy transport vessels to the

active fleet and two vessels under construction.

CASH FLOW

Cash flow statement

Cash and cash equivalents were $598 million at 31 December 2021, an increase of $86 million in the year. The movement in cash and cash

equivalents during the year was mainly attributable to:

• net cash generated from operating activities of $293 million, which included adverse movements of $202 million in net operating assets

and liabilities driven by:

• an increase in operating receivables of $417 million; partly offset by:

• an increase in operating liabilities of $224 million

• net cash used in investing activities of $184 million, which included purchases of property, plant and equipment and intangible assets of

$167 million; and

• net cash used in financing activities of $23 million, which included:

• payments related to lease liabilities of $93 million, dividends paid of $72 million, repayment of borrowings of $25 million and share

repurchases of $21 million; partly offset by:

• proceeds of borrowings of $200 million.

Free cash flow

The Group generated free cash flows of $127 million (2020: $264 million) which is defined as cash generated from operations of $293 million

(2020: $447 million) less purchases of property, plant and equipment and intangible assets of $167 million (2020: $183 million).

BALANCE SHEET

Non-current assets

At 31 December 2021 total non-current assets were $4.7 billion (2020: $4.5 billion). The year-on-year increase of $199 million was driven by:

• increase in goodwill of $76 million, including $70 million recognised in relation to the business combination of the Group’s Renewables

business unit with OHT ASA. The calculation of goodwill related to OHT ASA included a downward fair value adjustment of $32 million

applied to the acquired net assets of OHT ASA resulting from an onerous fixed-price contract provision existing at the date of the business

combination; and

• net increase in property, plant and equipment of $98 million, including: $292 million recognised in relation to the business combination

with OHT ASA; additions of $158 million; partly offset by depreciation charges of $341 million and impairment charges of $4 million.

Non-current liabilities

At 31 December 2021, total non-current liabilities were $638 million (2020: $491 million). The year-on year increase of $147 million was

mainly driven by an increase in non-current borrowings of $176 million due to proceeds from borrowings of $200 million under the Group’s

UK Export Finance facility partly offset by scheduled repayment of borrowings of $25 million. In addition non-current lease liabilities reduced

by $26 million as the Group reduced its commitment to vessels under long-term charters.

Net current assets

At 31 December 2021, total current assets were $2.3 billion (2020: $1.8 billion) and total current liabilities were $1.9 billion (2020: $1.6 billion),

resulting in net current assets of $467 million (2020: $284 million). The increase of $182 million in the year was driven by:

• increase in trade and other receivables of $65 million and an increase in construction contract assets of $318 million, reflecting a

significant increase in operating activities and revenue in Q4 2021 compared to Q4 2020;

• increase in cash and cash equivalents of $86 million

partly offset by:

• increase in trade payables and other liabilities of $371 million reflecting a significant increase in operating activities in Q4 2021 compared

to Q4 2020.

| SUBSEA 7 | ANNUAL REPORT 2021

SUBSEA 7 | ANNUAL REPORT 2021 | 57

Equity

At 31 December 2021 total equity was $4.5 billion (2020: $4.3 billion). The increase of $234 million during the year reflects:

• net income of $36 million;

• recognition of non-controlling interests of $277 million related to the business combination with OHT ASA

partly offset by:

• special dividends declared of $70 million; and

• share repurchases of $21 million.

BORROWINGS, LEASE LIABILITIES, NET CASH/(DEBT) AND LIQUIDITY

Borrowings

At 31 December 2021, total borrowings were $422 million (2020: $209 million). The increase in borrowings of $213 million during the year

was driven by: proceeds from borrowings of $200 million under the Group’s UK Export Finance facility; recognition of a $37 million revolving

credit facility at the date of the business combination with OHT ASA; partly offset by scheduled repayments of $25 million related to the

Group’s South Korean Export Credit Agency facility.

A summary of the borrowing facilities available to the Group at 31 December 2021 is as follows:

(in $ millions) Total facility Drawn Undrawn Maturity date

Seaway 7 ASA Revolving Credit Facility

(a)

37.0 (37.0) – January 2022

he multi-currency revolving credit and guarantee facility 656.0 – 656.0 September 2023

UK Export Finance (UKEF) facility 500.0 (200.0) 300.0 December 2026

South Korean Export Credit Agency (ECA) facility 184.9 (184.9) – July 2027

Total 1,377.9 (421.9) 956.0

(a) The Group recognised the Seaway 7 ASA Revolving Credit Facility on 1 October 2021 following the business combination with OHT ASA; the facility was repaid in full in January 2022.

Lease liabilities

At 31 December 2021, lease liabilities were $231 million, a decrease of $23 million compared with 31 December 2020.

Net cash/(debt)

At 31 December 2021:

• net cash (excluding lease liabilities) was $176 million compared to net cash of $303 million at 31 December 2020; and

• net debt (including lease liabilities) was $55 million, compared to net cash of $49 million at 31 December 2020.

Gearing

At 31 December 2021, gross gearing (borrowings divided by total equity) was 9.4% (2020: 4.9%).

Liquidity

At 31 December 2021, the Group’s liquidity, represented by cash and cash equivalents and undrawn borrowing facilities, was $1.6 billion

(2020: $1.1 billion).

Cash management constraints

The Group operates within a liquidity risk management framework which governs its management of short, medium and long-term funding

and liquidity requirements. The Group manages liquidity risk by ensuring that it has access to sufficient cash, banking and borrowing

facilities. This is achieved by regularly monitoring forecast and actual cash flows and matching the maturity profiles of financial assets

and liabilities where appropriate.

Financial covenant compliance

The Group’s committed borrowing facilities contain financial covenants relating to a maximum level of net debt (excluding lease liabilities) to

EBITDA. During the year, all financial covenants were met. The Group expects to be able to comply with all financial covenants during 2022.

Shareholder distributions

Share repurchase programme

During 2021, 2,724,172 shares were repurchased under the Group’s share repurchase programme authorised on 24 July 2019, extended

on 15 April 2021. At 31 December 2021, the Group had cumulatively repurchased 2,724,172 shares for a total consideration of $21.0

million under this programme. At 31 December 2021, the Group directly held 4,534,107 shares (2020: 2,326,683) as treasury shares,

representing 1.51% (2020: 0.77%) of the total number of issued shares.

Special dividends

During the year ended 31 December 2021, special dividends totalling $70 million were declared (2020: $nil) and $72 million was paid

to shareholders of the parent company (2020: $nil). The special dividend was paid in Norwegian Krone and the difference between the

amount declared and the amount paid related to foreign exchange rate fluctuations between the date of declaration and payment.

GOVERNANCE SUBSEA 7 S.A. FINANCIAL STATEMENTS GLOSSARY

SUBSEA 7 | ANNUAL REPORT 2021 |

CONSOLIDATED FINANCIAL STATEMENTS

STRATEGIC REPORT

FINANCIAL REVIEW CONTINUED

58 | SUBSEA 7 | ANNUAL REPORT 2021

SHAREHOLDERS

The 20 largest shareholders of the Group at 31 December 2021 (with their respective shareholdings at 31 December 2020) and their

beneficial ownership

(a)

as a percentage of the total fully paid and issued common shares of the Company were:

2021

31 Dec

2020

31 Dec

s at % %

Siem Industries S.A. 23.2 24.3

Folketrygdfondet 7.9 9.5

BlackRock Institutional Trust Company, N.A. 4.0 3.7

Fidelity Management & Research Company LLC 3.2 3.1

DNB Asset Management AS 2.6 2.6

rinity Street Asset Management LLP 2.6 3.1

Storebrand Kapitalforvaltning AS 2.2 2.2

he Vanguard Group, Inc. 2.1 2.0

Pareto Asset Management AS 1.9 1.7

SAFE Investment Company Limited 1.9 1.9

Robotti & Company Advisors, LLC 1.8 1.9

ODIN Forvaltning AS 1.7 1.2

KLP Forsikring 1.7 1.7

Nordea Funds Oy 1.7 1.7

Mandarine Gestion 1.2 0.8

SEB Investment Management AB 1.0 0.3

Schroder Investment Management AB 0.9 0.5

hird Avenue Management LLC 0.9 0.6

BlackRock Investment Management (UK) Ltd. 0.9 0.9

Holberg Fondsforvaltning AS 0.9 0.5

(a) The data is provided by NASDAQ, Inc and is obtained through an analysis of beneficial ownership and fund manager information. This is provided in response to disclosure of ownership notices

issued to all custodians on the Subsea 7 VPS share register. While every reasonable effort has been made to verify the data, there may be fluctuations as a result of such events as stock lending or

other non-institutional stock movements, and neither Subsea 7 nor NASDAQ, Inc can guarantee the accuracy of the analysis.

Going concern

The Consolidated Financial Statements have been prepared under the assumption of going concern. This assumption is based on the level

of cash and cash equivalents at the year end, the banking and borrowing facilities in place, the forecast cash flows for the Group and the

backlog position at 31 December 2021.

Risk management and internal control

The Group’s approach to risk management and internal control is detailed in the Risk Management and Governance sections on pages 24

to 51. Financial risk management is as described in Note 33 ‘Financial instruments’.

Post balance sheet events

Regular dividend

The Board of Directors will recommend to the shareholders at the Annual General Meeting on 12 April 2022 that a regular dividend of NOK

1.00 per share be paid, equivalent to a total dividend of approximately $33 million, marking the Board’s confidence in the financial position

and outlook for the Group.

Repayment of borrowings

On 18 January 2022, the Group repaid in full the amount outstanding under the Seaway 7 ASA Revolving Credit Facility of $37.0 million.

| SUBSEA 7 | ANNUAL REPORT 2021

SUBSEA 7 | ANNUAL REPORT 2021 | 59

MANAGEMENT REPORT FOR SUBSEA 7 S.A. (THE COMPANY)

Additional information specific to the Unconsolidated Financial Statements of Subsea 7 S.A.

Unconsolidated Financial Statements of Subsea 7 S.A.

The Unconsolidated Financial Statements of Subsea 7 S.A., the ultimate parent company of the Subsea 7 S.A. Group, are shown on

page 145 to page 152. These were prepared in accordance with Luxembourg’s legal and regulatory requirements and using the going

concern basis of accounting described above. The profit for the year ended 31 December 2021 was $16 million (2020: loss of $0.3 million).

The profit was mainly as a result of income related to parent company guarantees partly offset by operating expenses. It is proposed that

the profit of $16 million for the year ended 31 December 2021 be allocated to profit and loss brought forward at 1 January 2022 resulting

in a profit to be brought forward amounting to $125 million.

Own shares held

During 2021, the Company repurchased 2,724,172 shares for a total consideration of $21 million. At 31 December 2021 the Company

directly held 4,534,107 (2020: 2,326,683) own shares at a carrying amount of $30 million (2020: $17 million).

Distributable amounts

At 31 December 2021, the Company had distributable amounts, as defined by Luxembourg law, totalling $859 million (2020: $925 million).

Distributable amounts include share premium account, profit and loss account brought forward and profit or loss for the year. The year-on-

year reduction was mainly related to special dividends paid of $70 million.

Risk management, internal control and corporate governance

The Company’s approach to risk management, internal control and corporate governance is consistent with that applied to affiliates in the

Subsea 7 S.A. Group and is detailed in the Risk Management and Governance sections on pages 24 to 51. Financial risk management is

described in Note 33 ‘Financial instruments’. Non-financial information required by regulation is provided on pages 1 to 51.

By order of the Board of Directors of Subsea 7 S.A.

Kristian Siem John Evans

Chairman Chief Executive Officer

GOVERNANCE SUBSEA 7 S.A. FINANCIAL STATEMENTS GLOSSARY

SUBSEA 7 | ANNUAL REPORT 2021 |

CONSOLIDATED FINANCIAL STATEMENTS

STRATEGIC REPORT

60 | SUBSEA 7 | ANNUAL REPORT 2021

SUBSEA 7 S.A.

CONSOLIDATED

FINANCIAL

STATEMENTS

FOR YEAR ENDED

31 DECEMBER 2021

| SUBSEA 7 | ANNUAL REPORT 2021

SUBSEA 7 | ANNUAL REPORT 2021 | 61

Page

Report of the Réviseur d’Entreprises Agréé 62

Consolidated Income Statement 68

Consolidated Statement of Comprehensive Income 69

Consolidated Balance Sheet 70

Consolidated Statement of Changes in Equity 71

Consolidated Cash Flow Statement

Notes to the Consolidated Financial Statements

Page

1. General information 74

2. Adoption of new accounting standards 75

3. Significant accounting policies 75

4. Critical accounting judgements and key sources

of estimation uncertainty

5. Segment information 87

6. Net operating income 90

7. Other gains and losses 91

8. Finance income and finance costs 92

9. Taxation 92

10. Dividends 95

11. Earnings per share 95

12. Business combinations 95

13. Goodwill 98

14. Intangible assets 100

15. Property, plant and equipment 101

16. Right-of-use assets 102

17. Interests in associates and joint arrangements 103

18. Advances and receivables 104

19. Inventories 104

20. Trade and other receivables 104

21. Other accrued income and prepaid expenses 104

22. Construction contracts 105

23. Cash and cash equivalents 106

24. Issued share capital 107

25. Treasury shares 107

26. Non-controlling interests 108

27. Borrowings 109

28. Lease liabilities 110

29. Other non-current liabilities 110

30. Trade and other liabilities 110

31. Provisions 111

32. Commitments and contingent liabilities 112

33. Financial instruments 113

34. Related party transactions 127

35. Share-based payments 129

36. Retirement benefit obligations 131

37. Deferred revenue 134

38. Cash flow from operating activities 135

39. Post balance sheet events 135

40. Wholly-owned subsidiaries 136

GOVERNANCE SUBSEA 7 S.A. FINANCIAL STATEMENTS GLOSSARY

SUBSEA 7 | ANNUAL REPORT 2021 |

CONSOLIDATED FINANCIAL STATEMENTS

STRATEGIC REPORT

62 | SUBSEA 7 | ANNUAL REPORT 2021

REPORT OF THE RÉVISEUR D’ENTREPRISES AGRÉÉ

To the shareholders of Subsea 7 S.A.

412F, route d’Esch

L-2086 Luxembourg

REPORT ON THE AUDIT OF THE CONSOLIDATED FINANCIAL STATEMENTS

Opinion

We have audited the Consolidated Financial Statements of Subsea 7 S.A. and its subsidiaries (the “Group”) included on page 68 to page

138, which comprise the Consolidated Balance Sheet at 31 December 2021, the Consolidated Income Statement, the Consolidated

Statement of Comprehensive Income, the Consolidated Statement of Changes in Equity, and the Consolidated Statement of Cash Flows

for the year then ended, and the notes to the Consolidated Financial Statements, including a summary of significant accounting policies.

In our opinion, the accompanying Consolidated Financial Statements give a true and fair view of the consolidated financial position of

the Group at 31 December 2021, and of its consolidated financial performance and consolidated cash flows for the year then ended in

accordance with International Financial Reporting Standards (“IFRS”) as adopted by the European Union.

Basis for opinion

We conducted our audit in accordance with EU Regulation N° 537/2014, the Law of 23 July 2016 on the audit profession (the “Law of

23 July 2016”) and with International Standards on Auditing (“ISAs”) as adopted for Luxembourg by the “Commission de Surveillance

du Secteur Financier” (“CSSF”). Our responsibilities under the EU Regulation Nº 537/2014, the Law of 23 July 2016 and ISAs are further

described in the “Responsibilities of the “réviseur d’entreprises agréé” for the audit of the Consolidated Financial Statements” section of our

report. We are also independent of the Group in accordance with the Code of Ethics for Professional Accountants, including the International

Independence Standards, issued by the International Ethics Standards Board for Accountants’ (“IESBA Code”) as adopted for Luxembourg

by the CSSF together with the ethical requirements that are relevant to our audit of the Consolidated Financial Statements, and have fulfilled

our other ethical responsibilities under those ethical requirements. We believe that the audit evidence we have obtained is sufficient and

appropriate to provide a basis for our opinion.

Key audit matters

Key audit matters are those matters that, in our professional judgement, were of most significance in our audit of the Consolidated Financial

Statements of the current period. These matters were addressed in the context of the audit of the Consolidated Financial Statements as a

whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters.

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SUBSEA 7 | ANNUAL REPORT 2021 | 63

Key audit matter: Recognition of revenues and income on long-term contracts

Description of key

audit matter:

A significant proportion of the Group’s revenues and income are derived from long-term contracts. As detailed in

Note 3 ‘Significant accounting policies’ to the Consolidated Financial Statements, these contracts include complex

technical and commercial risks and often specify performance milestones to be achieved throughout the contract

period, which can last several years.

Due to the contracting nature of the business, revenue recognition involves a significant degree of judgement, with

estimates being made to:

• assess the total contract costs;

• assess the stage of completion of the contract;

• assess the proportion of revenues, including variation orders, to recognise in line with contract completion;

• forecast the profit margin on each contract incorporating appropriate allowances for technical and commercial

risks related to performance milestones yet to be achieved; and

• appropriately identify, estimate and provide for onerous contracts.

There is a range of acceptable outcomes resulting from these judgements that could lead to different revenue or

income being reported in the Consolidated Financial Statements.

The Group has detailed procedures and processes in place to manage the commercial, technical and financial

aspects of long-term contracts. The processes include the preparation of a Project Monthly Status Report (PMSR),

which includes key accounting and forecast information for the relevant contract.

The risk of material misstatement is that the accounting for the Group’s significant contracts does not accurately

reflect the progress made and consequently the contract revenue and margin at the reporting date.

Our response:

Our audit procedures over the recognition of revenues and income on long-term contracts included, among others,

the following:

We evaluated and tested the relevant information technology systems and performed procedures over the

operating effectiveness of internal controls over the accuracy and timing of long-term contract revenue and

margin recognised in the Consolidated Financial Statements, including controls over:

• the detailed contract reviews (being the PMSR process and controls) performed by management and reviewed

at the project and the Group level that included estimating total costs, stage of completion of contracts, profit

margin and evaluating contract profitability; and

• the transactional controls that underpin the production of underlying contract related cost balances including the

purchase-to-pay, vessel costs and payroll cycles.

For the most significant and judgemental contracts, we:

• obtained the PMSR and gained an understanding of the performance and status of the contracts;

• corroborated management’s positions through the examination of externally generated evidence, such as

customer correspondence;

• discussed and understood management’s estimates for total contract costs and forecast costs-to-complete,

including taking into account the historical accuracy of such estimates;

• discussed and understood management’s estimates in recognising actual or potential variation orders,

including taking into account the historical accuracy of such estimates;

• tested the reconciliation of cost models to the PMSR and to the accounting records;

• re-performed the percentage of completion calculation; and

• considered whether provisions for onerous contracts reflect the requirements of IAS 37 ‘Provisions, Contingent

Liabilities and Contingent Assets’.

We read the relevant clauses within selected contracts and discussed each with management to obtain a full

understanding of the specific terms and risks, which informed our consideration of whether revenue for these

contracts was appropriately recognised.

We made enquiries to both Group internal and external legal counsel and considered the positions taken

by management.

We assessed the adequacy of the disclosures in Note 3 ‘Significant accounting policies’ and Note 5 ‘Segment

information’ to the Consolidated Financial Statements in relation to revenue.

GOVERNANCE SUBSEA 7 S.A. FINANCIAL STATEMENTS GLOSSARY

SUBSEA 7 | ANNUAL REPORT 2021 |

CONSOLIDATED FINANCIAL STATEMENTS

STRATEGIC REPORT

REPORT OF THE RÉVISEUR D’ENTREPRISES AGRÉÉ CONTINUED

64 | SUBSEA 7 | ANNUAL REPORT 2021

Key audit matter: Reverse acquisition of OHT ASA and combination with the Subsea 7 Renewables business unit

Description of key

audit matter:

As detailed in Note 12 ‘Business combinations’ to the Consolidated Financial Statements, the Group completed a

significant business combination in the year.

On 8 July 2021 the Group announced an agreement to combine its Renewables business unit with OHT ASA. The

combination was accounted for as a reverse acquisition and the combined company has been renamed Seaway 7

ASA. It is listed on Oslo’s Euronext Growth market and commenced trading on 1 October 2021.

The significant risk arises because of the level of management judgement required in assessing the fair value of net

assets acquired and the impact of any adjustments to consideration in determining the level of goodwill arising on

the acquisition. There is a particular focus on the identification and measurement of intangible assets on acquisition.

The risk of material misstatement is that the fair value of net assets acquired and the resultant goodwill could

be misstated.

Our response:

Our audit procedures over the reverse acquisition of OHT ASA included, among others, the following:

We have obtained an understanding of the key controls and processes in place with regards to IFRS 3 ‘Business

Combinations’ accounting.

We read the sale and purchase agreement alongside management’s accounting papers and considered

whether the appropriate accounting treatment has been applied, including the considerations with regard

to the identification of the accounting acquirer and the treatment of the transaction as a reverse acquisition.

We assessed management’s conclusion on whether the transaction meets the definition of a business combination

and in this context, inspected the assets and liabilities acquired, the allocation of the purchase consideration to

these, and the resultant goodwill recognised by performing the following procedures:

• We examined the consideration transferred to assess whether it was determined and calculated in accordance

with contractual arrangements;

• We assessed management’s judgements in respect of what arrangements should be accounted for as part of

the business combination and those that should be accounted for separately from the business combination;

• We considered the identification of the acquired assets and liabilities based on our understanding of the business

of the acquired companies and the explanations and plans of management that supported these acquisitions;

• We assessed the recognition of intangible assets and made an evaluation of management’s key assumptions in

identifying intangible assets through enquiry and inspection of supporting evidence;

• We tested the fair values of the acquired assets and liabilities based on common valuation models; and

• We considered the consolidation adjustments in respect of accounting for these transactions.

We performed procedures to assess the adequacy of disclosures in Note 12 ‘Business combinations’ to the

Consolidated Financial Statements.

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SUBSEA 7 | ANNUAL REPORT 2021 | 65

Key audit matter: Vessel fleet impairment assessments

Description of key

audit matter:

The Subsea 7 vessel fleet comprises owned and leased vessels.

At 31 December 2021, the carrying amount of the owned vessel fleet was $3.7 billion and the carrying amount

of right-of-use assets related to leased vessels was $126.4 million as detailed in Note 15 ‘Property, plant and

equipment’ and Note 16 ‘Right-of-use assets’ to the Consolidated Financial Statements.

Vessels within property, plant and equipment and right-of-use assets related to leased vessels are subject to an

impairment test where indicators of impairment exist. Impairment charges are recognised when necessary to bring

the carrying amounts of specific assets to their recoverable amount defined as the higher of value-in-use or fair

value less costs to dispose.

The process for determining whether impairment indicators exist is complex and requires significant

management judgement.

The key factors are:

• the forecast utilisation of the owned vessel fleet and the right-of-use assets related to leased vessels;

• the determination of the value-in-use of the cash generating units in which the vessels are allocated; and

• the external broker estimates of market valuation (for owned vessels only).

The subsequent process for determining the amount of impairment which may result from the above indicators is

also complex and requires significant management judgement and estimates.

The risk of material misstatement is that the carrying amount of the owned vessel fleet within property, plant and

equipment and the leased vessels within right-of-use assets could be overstated.

Our response:

Our audit procedures over the vessel fleet impairment assessments included, among others, the following:

We evaluated management’s assessment for indicators of impairment or for indicators of reversal of impairments

related to owned vessels within property, plant and equipment and right-of-use assets related to leased vessels.

We obtained an understanding of the internal financial controls for the owned vessel and right-of-use asset

impairment process including the determination of assumptions used within the models to assess the

recoverable amount.

We obtained management’s impairment assessment for the owned vessels and right-of-use assets related to

vessel leases.

For owned vessels and right-of-use assets relating to leased vessels where an impairment trigger was identified,

we analysed the recoverable amount considering the value-in-use of the cash generating units in which the owned

vessels and right-of-use assets relating to leased vessels are allocated.

For owned vessels we reviewed the external broker valuations obtained by management for each vessel and

assessed the independence, objectivity and competence of the broker as well as the adequacy of the respective

assumptions and methods used, the reasonableness of the conclusions reached and their consistency with

management’s analysis.

We assessed the completeness and the accuracy of the impairments identified by management to the

accounting records.

We evaluated the adequacy of the Group’s disclosures in Note 15 ‘Property, plant and equipment’ and Note 16

‘Right-of-use assets’ regarding the impairments of owned vessels and right-of-use assets related to leased vessels

in the Consolidated Financial Statements.

GOVERNANCE SUBSEA 7 S.A. FINANCIAL STATEMENTS GLOSSARY

SUBSEA 7 | ANNUAL REPORT 2021 |

CONSOLIDATED FINANCIAL STATEMENTS

STRATEGIC REPORT

REPORT OF THE RÉVISEUR D’ENTREPRISES AGRÉÉ CONTINUED

66 | SUBSEA 7 | ANNUAL REPORT 2021

Other information

The Board of Directors is responsible for the other information. The other information comprises the information included in the Consolidated

Management Report from pages 53 to 58 and the accompanying Corporate Governance Statement from pages 37 to 51 but does not

include the Consolidated Financial Statements and our report of “réviseur d’entreprises agréé” thereon.

Our opinion on the Consolidated 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 Consolidated Financial Statements, our responsibility is to read the other information and, in doing so,

consider whether the other information is materially inconsistent with the Consolidated 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, we are required to report this fact. We have nothing to report in this regard.

Responsibilities of the Board of Directors and of those charged with governance for the Consolidated Financial Statements

The Board of Directors is responsible for the preparation and fair presentation of the Consolidated Financial Statements in accordance

with IFRS as adopted by the European Union and for such internal control as the Board of Directors determines is necessary to enable

the preparation of Consolidated Financial Statements that are free from material misstatement, whether due to fraud or error.

The Board of Directors is also responsible for presenting and marking up the Consolidated Financial Statements in compliance with the

requirements set out in the Delegated Regulation 2019/815 on European Single Electronic Format, as amended (“ESEF Regulation”).

In preparing the Consolidated Financial Statements, the Board of Directors is responsible for assessing 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 the

Board of Directors either intends to liquidate the Group or to cease operations, or has no realistic alternative but to do so.

Those charged with governance are responsible for overseeing the Group’s financial reporting process.

Responsibilities of the “réviseur d’entreprises agréé” for the audit of the Consolidated Financial Statements

The objectives of our audit are to obtain reasonable assurance about whether the Consolidated Financial Statements as a whole are

free from material misstatement, whether due to fraud or error, and to issue a report of the “réviseur d’entreprises agréé” that includes

our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with EU

Regulation N° 537/2014, the Law of 23 July 2016 and with the ISAs as adopted for Luxembourg by the CSSF 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 Consolidated Financial Statements.

As part of an audit in accordance with EU Regulation N° 537/2014, the Law of 23 July 2016 and with ISAs as adopted for Luxembourg by

the CSSF, we exercise professional judgement and maintain professional scepticism throughout the audit. We also:

• Identify and assess the risks of material misstatement of the Consolidated 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 Group’s internal control.

• Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made

by the Board of Directors.

• Conclude on the appropriateness of the Board of Directors’ 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 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 report

of the “réviseur d’entreprises agréé” to the related disclosures in the Consolidated 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 report of the

“réviseur d’entreprises agréé”. However, future events or conditions may cause the Group to cease to continue as a going concern.

• Evaluate the overall presentation, structure and content of the Consolidated Financial Statements, including the disclosures, and whether

the Consolidated Financial Statements represent the underlying transactions and events in a manner that achieves fair presentation.

• Assess whether the Consolidated Financial Statements have been prepared, in all material respects, in compliance with the requirements

laid down in the ESEF Regulation.

• Obtain sufficient appropriate audit evidence regarding the financial information of the entities and 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.

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SUBSEA 7 | ANNUAL REPORT 2021 | 67

We communicate with those charged with governance 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 those charged with governance 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, actions taken to eliminate threats or safeguards applied.

From the matters communicated with those charged with governance, we determine those matters that were of most significance in the

audit of the Consolidated Financial Statements of the current period and are therefore the key audit matters. We describe these matters

in our report unless law or regulation precludes public disclosure about the matter.

Report on other legal and regulatory requirements

We have been appointed as “réviseur d’entreprises agréé” by the General Meeting of the Shareholders on 14 April 2021 and the duration

of our uninterrupted engagement, including previous renewals and reappointments, is seven years.

The Consolidated Management Report from pages 53 to 58 is consistent with the Consolidated Financial Statements and has been

prepared in accordance with applicable legal requirements.

The accompanying Corporate Governance Statement on pages 37 to 51 is the responsibility of the Board of Directors. The information

required by article 68ter paragraph (1) letters c) and d) of the law of 19 December 2002 on the commercial and companies register and on

the accounting records and annual accounts of undertakings, as amended, is consistent with the Consolidated Financial Statements and

has been prepared in accordance with applicable legal requirements.

We have checked the compliance of the Consolidated Financial Statements of the Group as at 31 December 2021 with relevant statutory

requirements set out in the ESEF Regulation that are applicable to the financial statements. For the Group, it relates to:

• Financial statements prepared in valid xHTML format;

• The XBRL markup of the Consolidated Financial Statements using the core taxonomy and the common rules on markups specified in the

ESEF Regulation.

In our opinion, the Consolidated Financial Statements of the Group as at 31 December 2021, identified as 222100AIF0CBCY80AH62-2021-

12-31, have been prepared, in all material respects, in compliance with the requirements laid down in the ESEF Regulation.

We confirm that the prohibited non-audit services referred to in EU Regulation No 537/2014 were not provided and that we remained

independent of the Group in conducting the audit.

Ernst & Young

Société anonyme

Cabinet de révision agréé

Olivier Lemaire

Luxembourg, 2 March 2022

GOVERNANCE SUBSEA 7 S.A. FINANCIAL STATEMENTS GLOSSARY

SUBSEA 7 | ANNUAL REPORT 2021 |

CONSOLIDATED FINANCIAL STATEMENTS

STRATEGIC REPORT

CONSOLIDATED INCOME STATEMENT

68 | SUBSEA 7 | ANNUAL REPORT 2021

For the year ended (in $ millions, except per share data) Notes

2021

31 Dec

2020

31 Dec

Revenue 5 5,010.0 3,466.4

Operating expenses 6 (4,714.2) (3,652.9)

Gross profit/(loss) 295.8 (186.5)

dministrative expenses 6 (228.0) (241.4)

Impairment of goodwill 13 – (605.4)

Share of net income/(loss) of associates and joint ventures 17 3.9 (0.5)

Net operating income/(loss) 71.7 (1,033.8)

Finance income 8 4.7 4.8

Other gains and losses 7 44.4 (18.3)

Finance costs 8 (20.1) (24.6)

Income/(loss) before taxes 100.7 (1,071.9)

axation 9 (64.3) (33.3)

Net income/(loss) 36.4 (1,105.2)

Net income/(loss) attributable to:

Shareholders of the parent company 31.8 (1,092.8)

Non-controlling interests 26 4.6 (12.4)

36.4 (1,105.2)

Earnings per share Notes

per share

Basic 11 0.11 (3.67)

Diluted

(a)

11 0.11 (3.67)

(a) For explanation and a reconciliation of earnings per share and diluted earnings per share please refer to Note 11 ‘Earnings per share’ to the Consolidated Financial Statements.

| SUBSEA 7 | ANNUAL REPORT 2021

CONSOLIDATED STATEMENT OF

COMPREHENSIVE INCOME

SUBSEA 7 | ANNUAL REPORT 2021 | 69

For the year ended (in $ millions) Notes

2021

31 Dec

2020

31 Dec

Net income/(loss) 36.4 (1,105.2)

Items

that may be reclassified to the income statement in subsequent periods:

Net foreign currency translation (losses)/gains (4.9) 9.8

Commodity cash flow hedges 12.8 –

ax relating to components of other comprehensive income 9 (2.8) (0.6)

Items that will not be reclassified to the income statement in subsequent periods:

Remeasurement gains on defined benefit pension schemes 36 0.5 0.3

ax relating to remeasurement gains on defined benefit pension schemes 9 (0.1) –

Fair value adjustment on other financial assets 33 1.2 (5.5)

Other comprehensive income 6.7 4.0

Total comprehensive income/(loss) 43.1 (1,101.2)

Total comprehensive income/(loss) attributable to:

Shareholders of the parent company

40.4 (1,090.0)

Non-controlling interests 2.7 (11.2)

43.1 (1,101.2)

GOVERNANCE SUBSEA 7 S.A. FINANCIAL STATEMENTS GLOSSARY

SUBSEA 7 | ANNUAL REPORT 2021 |

CONSOLIDATED FINANCIAL STATEMENTS

STRATEGIC REPORT

CONSOLIDATED BALANCE SHEET

70 | SUBSEA 7 | ANNUAL REPORT 2021

t (in $ millions) Notes

2021

31 Dec

2020

31 Dec

ssets

Non-current assets

Goodwill 13 160.5 84.5

Intangible assets 14 37.3 46.0

Property, plant and equipment 15 4,081.0 3,982.6

Right-of-use assets 16 206.4 213.3

Interest in associates and joint ventures 17 28.6 29.5

dvances and receivables 18 57.4 23.0

Derivative financial instruments 33 24.7 22.9

Other financial assets 33 1.3 2.9

Construction contracts – assets 22 4.4 6.7

Retirement benefit assets 36 – 0.8

Deferred tax assets 9 58.7 49.5

4,660.3 4,461.7

Current assets

Inventories 19 40.3 26.4

rade and other receivables 20 655.9 590.7

Derivative financial instruments 33 35.8 31.4

Construction contracts – assets 22 788.2 470.6

Other accrued income and prepaid expenses 21 204.5 197.6

Restricted cash 5.7 7.1

Cash and cash equivalents 23 597.6 511.6

2,328.0 1,835.4

Total assets 6,988.3 6,297.1

Equity

Issued share capital 24 600.0 600.0

reasury shares 25 (32.9) (17.8)

Paid in surplus 2,503.9 2,505.2

ranslation reserve (582.5) (582.0)

Other reserves (14.2) (25.0)

Retained earnings 1,709.5 1,747.4

Equity attributable to shareholders of the parent company 4,183.8 4,227.8

Non-controlling interests 26 305.4 27.3

Total equity 4,489.2 4,255.1

Liabilities

Non-current liabilities

Borrowings 27 360.3 184.4

Lease liabilities 28 142.9 168.6

Retirement benefit obligations 36 12.3 14.3

Deferred tax liabilities 9 46.0 32.2

Provisions 31 58.8 49.5

Contingent liabilities recognised 32 5.5 6.0

Derivative financial instruments 33 5.7 21.1

Other non-current liabilities 29 6.1 14.7

637.6 490.8

Current liabilities

rade and other liabilities 30 1,352.5 981.8

Derivative financial instruments 33 23.7 26.4

Current tax liabilities 41.5 32.6

Borrowings 27 61.6 24.6

Lease liabilities 28 88.0 85.4

Provisions 31 87.6 118.5

Construction contracts – liabilities 22 205.7 279.5

Deferred revenue 37 0.9 2.4

1,861.5 1,551.2

Total liabilities 2,499.1 2,042.0

Total e

uit

and liabilities

6,988.3

6,297.1

| SUBSEA 7 | ANNUAL REPORT 2021

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

For the year ended 31 December 2021

SUBSEA 7 | ANNUAL REPORT 2021 | 71

(in $ millions)

Issued

capital

Treasury

Paid in

surplus

Translation

reserve

Other

reserves

Retained

earnings Total

Non-

controlling

interests

Total

equity

Balance at 1 January 2021 600.0 (17.8) 2,505.2 (582.0) (25.0) 1,747.4 4,227.8 27.3 4,255.1

Comprehensive income

Net income – – – – – 31.8 31.8 4.6 36.4

Net foreign currency translation gains – – – (3.0) – – (3.0) (1.9) (4.9)

Commodity cash flow hedges – – – – 12.8 – 12.8 – 12.8

Remeasurement losses on defined

benefit pension schemes – – – – 0.5 – 0.5 – 0.5

Fair value adjustment on other financial assets – – – – 1.2 – 1.2 – 1.2

ax relating to components of other

comprehensive income

– – – (0.4) (2.5) – (2.9) – (2.9)

Total comprehensive income – – – (3.4) 12.0 31.8 40.4 2.7 43.1

Transactions with owners

Shares repurchased – (21.0) – – – – (21.0) – (21.0)

Dividends declared – – – – – (69.5) (69.5) – (69.5)

Share-based payments – – 3.9 – – – 3.9 – 3.9

esting of share-based payments – – (5.2) – – 5.2 – – –

Shares reallocated relating to share-based

payments – 5.9 – – – (5.9) – – –

Reclassification adjustment relating to business

combination – – – 2.9 – – 2.9 (2.9) –

ransfer on disposal of other financial assets – – – – (1.2) 1.2 – – –

ddition of non-controlling interests – – – – – (0.7) (0.7) 278.3 277.6

Total transactions with owners – (15.1) (1.3) 2.9 (1.2) (69.7) (84.4) 275.4 191.0

Balance at 31 December 2021 600.0 (32.9) 2,503.9 (582.5) (14.2) 1,709.5 4,183.8 305.4 4,489.2

GOVERNANCE SUBSEA 7 S.A. FINANCIAL STATEMENTS GLOSSARY

SUBSEA 7 | ANNUAL REPORT 2021 |

CONSOLIDATED FINANCIAL STATEMENTS

STRATEGIC REPORT

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

For the year ended 31 December 2020

72 | SUBSEA 7 | ANNUAL REPORT 2021

(in $ millions)

Issued

capital

Treasury

Paid in

surplus

Translation

reserve

Other

reserves

Retained

earnings Total

Non-

controlling

interests

Total

equity

Balance at 1 January 2020 600.0 (14.0) 2,507.5 (590.0) (20.2) 2,845.4 5,328.7 34.3 5,363.0

Comprehensive loss

Net loss – – – – – (1,092.8) (1,092.8) (12.4) (1,105.2)

Net foreign currency translation gains – – – 8.6 – – 8.6 1.2 9.8

Remeasurement losses on defined

benefit pension schemes – – – – 0.3 – 0.3 – 0.3

Fair value adjustment on other financial assets – – – – (5.5) – (5.5) – (5.5)

ax relating to components of other

comprehensive income

– – – (0.6) – – (0.6) – (0.6)

Total comprehensive income/(loss) – – – 8.0 (5.2) (1,092.8) (1,090.0) (11.2) (1,101.2)

Transactions with owners

Shares repurchased – (9.8) – – – – (9.8) – (9.8)

Dividends declared – – – – – – – (1.1) (1.1)

Share-based payments – – 4.2 – – – 4.2 – 4.2

esting of share-based payments – – (6.5) – – 6.5 – – –

Shares reallocated relating to share-based

payments – 6.0 – – – (6.0) – – –

Reclassification of deferred tax on defined benefit

pension schemes – – – – 0.4 (0.4) – – –

Reclassification adjustment relating to non-

controlling interests

– – – – – (5.3) (5.3) 5.3 –

Total transactions with owners – (3.8) (2.3) – 0.4 (5.2) (10.9) 4.2 (6.7)

Balance at 31 December 2020 600.0 (17.8) 2,505.2 (582.0) (25.0) 1,747.4 4,227.8 27.3 4 ,255.1

| SUBSEA 7 | ANNUAL REPORT 2021

CONSOLIDATED CASH FLOW STATEMENT

SUBSEA 7 | ANNUAL REPORT 2021 | 73

For the year ended (in $ millions) Notes

2021

31 Dec

2020

31 Dec

Net cash generated from operating activities 38 293.0 446.8

Cash flows from investing activities

Proceeds from disposal of property, plant and equipment 6.6 1.7

Purchases of property, plant and equipment (157.7) (157.3)

Purchases of intangible assets (8.8) (25.3)

Net proceeds from recognition of assets related to business combinations – post

measurement period – 16.6

Loan to joint venture (33.0) –

Repayment of loan to joint venture 1.8 –

Repayment of advances from joint ventures (3.0) –

Investments in associates and joint ventures 17 – (0.6)

Interest received 8 4.7 4.8

cquisition of businesses (net of cash acquired) 4.5 –

Payment of contingent consideration in respect of acquisitions 33 – (1.3)

Proceeds from sale of other financial assets 2.8 –

Investment in other financial assets (1.6) (3.2)

Net cash used in investing activities (183.7) (164.6)

Cash flows from financing activities

Interest paid (12.1) (9.4)

Repayments of borrowings (24.6) (24.6)

Proceeds from borrowings 200.0 –

Cost of share repurchases 25 (21.0) (9.8)

Payments related to lease liabilities 28 (93.1) (103.6)

Dividends paid to shareholders of the parent company 10 (72.0) –

Dividends paid to non-controlling interests – (10.2)

Net cash used in financing activities 33 (22.8) (157.6)

Net increase in cash and cash equivalents 86.5 124.6

Cash and cash equivalents at beginning of year 23 511.6 397.7

Decrease/(increase) in restricted cash 1.4 (2.8)

Effect of foreign exchange rate movements on cash and cash equivalents (1.9) (7.9)

Cash and cash equivalents at end of year 23 597.6 511.6

GOVERNANCE SUBSEA 7 S.A. FINANCIAL STATEMENTS GLOSSARY

SUBSEA 7 | ANNUAL REPORT 2021 |

CONSOLIDATED FINANCIAL STATEMENTS

STRATEGIC REPORT

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

74 | SUBSEA 7 | ANNUAL REPORT 2021

1. GENERAL INFORMATION

Subsea 7 S.A. is a company registered in Luxembourg whose common shares trade on the Oslo Børs and as American Depositary Receipts

(ADRs) over-the-counter in the US. The address of the registered office is 412F, route d’Esch, L-2086 Luxembourg.

Subsea 7 is a global leader in the delivery of offshore projects and services for the evolving energy industry. The ‘Group’ consists of Subsea

7 S.A. and its subsidiaries at 31 December 2021.

The Group provides products and services required for subsea field development, including project management, design and engineering,

procurement, fabrication, survey, installation, and commissioning of production facilities on the seabed and the tie-back of these facilities

to fixed or floating platforms or to the shore. The Group offers a full spectrum of products and capabilities including remotely operated

vehicles and tooling services to support exploration and production activities and to deliver full life of field services to its clients. Through

its Renewables business unit, the Group offers expertise in the fixed offshore wind market, including the procurement and installation

of offshore wind turbine foundations and inner-array cables as well as heavy lifting operations for renewables structures and heavy

transportation services. The Group’s interest in Nautilus Floating Solutions enhances its presence in the floating foundations market,

supporting research and development initiatives and technology prototypes. The Group provides engineering and advisory services

to clients in the oil and gas, renewables and utilities industries through its wholly-owned autonomous subsidiaries Xodus and 4Subsea.

Authorisation of Consolidated Financial Statements

Under Luxembourg law, the Consolidated Financial Statements are approved by the shareholders at the Annual General Meeting.

The Consolidated Financial Statements were authorised for issue by the Board of Directors on 2 March 2022.

Presentation of Consolidated Financial Statements

The Consolidated Financial Statements have been prepared in accordance with International Financial Reporting Standards (IFRS) as

issued by the International Accounting Standards Board (IASB) and as adopted by the European Union (EU). The Consolidated Financial

Statements comply with Article 4 of the EU IAS Regulation.

Amounts in the Consolidated Financial Statements are stated in US Dollars ($), the currency of the primary economic environment in which

the Group operates. Group entities whose functional currency is not the US Dollar are consolidated in accordance with the policies set out

in Note 3 ‘Significant accounting policies’.

The Consolidated Financial Statements have been prepared on the historical cost basis except for the revaluation of certain financial

instruments and balances required to be measured at fair value. The principal accounting policies adopted are consistent with the

Consolidated Financial Statements for the year ended 31 December 2020, except where noted in Note 2 ‘Adoption of new

accounting standards’.

Going concern

The Consolidated Financial Statements have been prepared on the going concern basis.

The global economy remains impacted by the unprecedented health and economic crisis following the outbreak of the Covid-19 pandemic.

Management continues to monitor the potential operational, market and financial impacts to the Group including the mitigating impacts

of the vaccination roll-out. Despite the remaining uncertainty regarding the potential impacts of the Covid-19 pandemic, management

considers that there are no significant doubts over the application of the going concern assumption and no disclosable material

uncertainties which cast doubt upon the Group’s ability to continue as a going concern.

During 2021, the Group incurred net Covid-19 costs of approximately $27.0 million (2020: $70.0 million) related to factors such as vessel

standby days due to onboard outbreaks of the virus, additional vessel crew change-over times and costs, and additional operational costs

as a result of supply chain and travel restrictions. These were partly offset by reduced travel costs incurred by onshore employees and some

cost compensation by certain clients. Management expects that net Covid-19 costs will continue to be incurred in 2022. Management will

continue to work with its clients and suppliers to mitigate the impacts of the pandemic on operations.

The Group retained a strong cash position with cash and cash equivalents of $597.6 million at 31 December 2021. Total borrowings at

31 December 2021 were $421.9 million, in relation to the Group’s South Korean Export Credit Agency facility, drawdowns on the loan facility

from UK Export Finance and the revolving credit facility acquired in relation to the OHT ASA business combination. The Group’s $656 million

multi-currency revolving credit and guarantee facility remained unutilised. The Group ended the year with backlog of $7.2 billion, an increase

of $1.0 billion compared to 31 December 2020, demonstrating improving, near to medium-term activity levels. Forecasts continue to

demonstrate that the Group will generate cash flows more than sufficient to support the assumption that the Group will continue as a going

concern. Management has performed stress tests of future cash flow forecasts to evaluate the impact of plausible downside scenarios.

These include scenarios which reflect extended periods of low energy prices and potential operational and Covid-19 related issues which

could adversely impact the Group. Management has also performed reverse stress testing through modelling of reasonable worst-case

scenarios. In all scenarios management identified no forecast breaches of banking covenants and demonstrated sufficient liquidity for

the Group.

As a Group, operational risks and resultant financial exposures arising due to the Covid-19 pandemic are described below. Management will

continue to monitor these risks during 2022.

| SUBSEA 7 | ANNUAL REPORT 2021

SUBSEA 7 | ANNUAL REPORT 2021 | 75

Onerous contract provisions

Onerous contract provisions were assessed in light of the requirements of IFRS 15 ‘Revenue from Contracts with Customers’ and IAS 37

‘Provisions, Contingent Liabilities and Contingent Assets’. Certain inefficiencies were identified as a direct consequence of additional costs

incurred, and expected to be incurred, as a result of the Covid-19 pandemic. Management concluded that these costs did not contribute

to the overall progression of contracts and were recognised as incurred. Costs of this nature will continue to be monitored by management

during 2022.

Credit impairment and expected credit losses

During 2021, no material credit impairments were recognised as a result of the Covid-19 pandemic and the associated impacts on

the global economy. The Group’s expected credit loss allowances, calculated in accordance with IFRS 9 ‘Financial Instruments’, were

reviewed and individual assessments were undertaken where appropriate. Although this calculation utilises market-based credit analytics

incorporating market and financial information which enables forward-looking analysis of the probability of default, the Group does not

consider the actual risk of credit impairment to be materially higher than before the pandemic. The Group does not have a significant

exposure to any single counterparty and this is expected to continue to be the case during 2022.

Asset impairment, including goodwill and right-of-use assets

The Group’s annual impairment review was performed during the fourth quarter of 2021, no significant impairments were recognised in

relation to goodwill, intangible assets, property, plant and equipment and right-of-use assets.

2. ADOPTION OF NEW ACCOUNTING STANDARDS

Effective new accounting standards

No new International Financial Reporting Standards (IFRS) were adopted by the Group for the financial year beginning 1 January 2021.

Several amendments to IFRS were applied for the first time in 2021 but did not have an impact on the Consolidated Financial Statements

of the Group.

3. SIGNIFICANT ACCOUNTING POLICIES

Basis of consolidation

The Consolidated Financial Statements incorporate the financial statements of Subsea 7 S.A. (the Company) and entities controlled by the

Company (its subsidiaries). Control is assumed to exist where the Group is exposed, or has rights, to variable returns from its involvement

with the investee and has the ability to affect those returns through its power over the investee.

The Group reassesses whether or not it controls an investee if facts and circumstances indicate that there are changes to one or more of

the elements of control. If the Group loses control over a subsidiary it derecognises related assets, liabilities and non-controlling interests

and other components of equity, while any resultant gain or loss is recognised in income or loss. Any investment retained is recognised at

fair value.

The Group consolidates non-wholly-owned subsidiaries where it can be considered to exercise control over the entity. In some cases this

may result in the consolidation of non-wholly-owned subsidiaries in which the Group holds less than 50% of the voting rights when there is

no history of the other shareholders exercising their votes to outvote the Group.

Subsidiaries

Assets, liabilities, income and expenses of a subsidiary are included in the Consolidated Financial Statements from the date the Group

obtains control over the subsidiary until the date the Group ceases to control the subsidiary. Changes in the Group’s interest in a subsidiary

that do not result in the Group ceasing to control that subsidiary are accounted for as equity transactions.

Where necessary, adjustments are made to the financial statements of subsidiaries to align these with the accounting policies of the Group.

All intra-group transactions, balances, income and expenses are eliminated on consolidation.

Note 40 ‘Wholly-owned subsidiaries’ includes information related to wholly-owned subsidiaries which are included in the Consolidated

Financial Statements of the Group.

All subsidiaries are wholly-owned (100%) except those listed in Note 26 ‘Non-controlling interests’. Non-controlling interests comprise

equity interests in subsidiaries which are not attributable, directly or indirectly, to the Company. Non-controlling interests in the net assets or

liabilities of subsidiaries are identified separately from the equity attributable to shareholders of the parent company. Non-controlling interests

consist of the amount of those interests at the date that the Group obtains control over the subsidiary together with the non-controlling

shareholders’ share of net income or loss and other comprehensive income or loss since that date.

Interests in associates and joint arrangements

An associate is an entity over which the Group has significant influence, but not control, and which is neither a subsidiary nor a joint venture.

Significant influence is defined as the right to participate in the financial and operating policy decisions of the investee, but is not control or

joint control over those policies.

A joint arrangement is an arrangement in which two or more parties have joint control. A joint arrangement is classified as either a joint

venture or a joint operation depending upon the rights and obligations of the parties to the arrangement.

GOVERNANCE SUBSEA 7 S.A. FINANCIAL STATEMENTS GLOSSARY

SUBSEA 7 | ANNUAL REPORT 2021 |

CONSOLIDATED FINANCIAL STATEMENTS

STRATEGIC REPORT

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS CONTINUED

76 | SUBSEA 7 | ANNUAL REPORT 2021

3. SIGNIFICANT ACCOUNTING POLICIES CONTINUED

A joint venture is a joint arrangement whereby the parties that have joint control of the arrangement have rights to the net assets of

the arrangement.

A joint operation is a joint arrangement whereby the parties that have joint control of the arrangement have rights to the assets, and

obligations for the liabilities, relating to the arrangement.

Interests in associates and joint ventures are accounted for using the equity method. Under this method, the investment is recognised in the

Consolidated Balance Sheet at cost plus post-acquisition changes in the Group’s share of net assets of the associate or joint venture, less

any provisions for impairment. The Consolidated Income Statement reflects the Group’s share of net income or loss of the associate or joint

venture. Losses in excess of the Group’s interest (which includes any long-term interests that, in substance, form part of the Group’s net

investment) are only recognised to the extent that the Group has incurred legal or constructive obligations or made payments on behalf of

the associate or joint venture. Where there has been a change recognised directly in the equity of the associate or joint venture, the Group

recognises its share in the Consolidated Statement of Comprehensive Income.

Interests in joint operations are accounted for in line with the Group’s proportional interest in the joint operations. As a joint operator the

Group recognises its interest in: assets (including its share of any assets held jointly); liabilities (including its share of any liabilities incurred

jointly); revenue from the sale of its share of output by the joint operation; and expenses (including its share of any expenses incurred jointly).

Foreign currency translation

Each entity in the Group determines its own functional currency and items included in the financial statements of each entity are measured

using that functional currency. Functional currency is defined as the currency of the primary economic environment in which the entity

operates. While this is usually the local currency, the US Dollar is designated as the functional currency of certain entities where transactions

and cash flows are predominantly in US Dollars.

All transactions in non-functional currencies are initially translated into the functional currency of each entity at the exchange rate prevailing at

the date of the transaction. Monetary assets and liabilities denominated in non-functional currencies are translated to the functional currency

at the exchange rate prevailing at the balance sheet date.

All resulting exchange rate gains and losses are recognised in the Consolidated Income Statement. Non-monetary items which are

measured at historical cost in a non-functional currency are translated into the functional currency using the exchange rates prevailing at

the dates of the initial transactions. Non-monetary items which are measured at fair value in a non-functional currency are translated to

the functional currency using the exchange rate prevailing at the date when the fair value was determined.

Foreign exchange revaluations of short-term intra-group balances denominated in non-functional currencies are recognised in the

Consolidated Income Statement. Revaluations of long-term intra-group loans are recognised in the translation reserve in equity.

The assets and liabilities of operations which have a non-US Dollar functional currency are translated into the Group’s reporting currency,

US Dollar, at the exchange rate prevailing at the balance sheet date. The exchange rate differences arising on the translation are recognised

in the translation reserve in equity. Income and expenditure items are translated at the weighted average exchange rates for the year. On

disposal of an entity with a non-US Dollar functional currency the cumulative translation adjustment previously recognised in the translation

reserve in equity is reclassified to the Consolidated Income Statement. At 31 December 2021, the exchange rates of the main currencies

used throughout the Group, compared to the US Dollar, were as follows:

GBP 0.749

EUR 0.883

NOK 8.879

BRL 5.660

CNY 6.370

Revenue from contracts with customers

The Group applies the IFRS 15 ‘Revenue from Contracts with Customers’ five-step model whereby revenue is recognised at an amount

which reflects the consideration to which the Group expects to be entitled in exchange for transferring goods or services to a customer.

The Group’s revenue comprises revenue recognised from contracts with customers for the provision of long-term fixed-price contracts,

services under charter agreements, day-rate contracts, reimbursable contracts, cost-plus contracts (and similar contracts), each of which

are considered to comprise one performance obligation. The following is a description of the principal activities, by operating segment,

from which the Group generates revenue as disclosed in the disaggregated revenue analysis (Note 5 ‘Segment information’).

Subsea and Conventional

Subsea and Conventional work, which includes Engineering, Procurement, Installation and Commissioning (EPIC) contracts, is generally

contracted on a fixed-price basis. The costs and margins realised on such contracts vary dependent on a number of factors which may

result in reduced margins or, in some cases, losses. The promised goods and services within each contract are considered to be distinct as

a bundle under IFRS 15. Due to the significant integration, customisation and highly interrelated nature of the work performed they form one

performance obligation with revenue being recognised over time. During a contract, work is performed for the sole benefit of the client who

continually monitors progress. Clients may also participate in the supplier selection processes for procured items. During the offshore phase

of a contract, the Group typically executes work related to the installation of the client’s assets. Due to the nature of the work performed the

Group would not have an alternative use for the works performed under a contract for a specific client. The transaction price for these types

of contracts, where there is an element of variable consideration, which includes variation orders, claims, bonuses and liquidated damages,

is based upon the single most likely outcome.

| SUBSEA 7 | ANNUAL REPORT 2021

SUBSEA 7 | ANNUAL REPORT 2021 | 77

Any additional work, such as scope changes or variation orders, as well as other variable consideration, will be included within the total price

once the amounts can be reasonably estimated and management has concluded that it is highly probable that recognition will not result in a

significant revenue reversal in a future period.

For EPIC contracts, revenue is recognised in each period based upon the advancement of the work-in-progress. The input method used

to progressively recognise revenue over time is based upon percentage-of-completion whereby total costs incurred to date are compared

with total forecast costs at completion of the contract. This method provides a faithful depiction of the transfer of goods and services to the

customer. Any significant upfront procurement which is not customised for the specific contract is not included within the actual cost of

work performed until such time as the costs incurred are proportionate to the progress in satisfying the performance obligation. Similarly

an adjustment to the measurement of progress may be required where significant inefficiencies occur. Typically payment is due from the

customer between 30 to 60 days following the issuance of the invoice, although this may be longer depending upon the client or customary

payment terms in certain geographies. The contracts have no significant financing component as the period between when the Group

transfers promised goods or services to a customer and when the customer pays for those goods or services will be one year or less.

In circumstances where the Group has recognised revenue, but not issued an invoice, the entitlement to consideration is recognised as

a construction contract asset. The construction contract asset is transferred to trade and other receivables in accordance with the agreed

milestone schedule which reflects the unconditional entitlement to payment. The time elapsing before transfer to trade and other receivables

may be different between contracts depending upon the contractual terms and conditions. Construction contract liabilities arise when

progress billings to date exceed contract revenues recognised. Assurance type warranty periods commence at the completion of the

contractual obligations and typically have a duration of between one to three years. Construction contract asset and liability balances

at 31 December 2021 and 2020 are disclosed within Note 22 ‘Construction contracts’.

The Group’s Pipelay Support Vessel (PLSV) contracts, offshore Brazil, are also included within this category of revenue. PLSV revenue

is based upon an agreed schedule of work applied to a range of daily operating activities pre-agreed with the customer. As such these

contracts are considered to be distinct as a pattern and hence one performance obligation under the guidelines within IFRS 15. Each

day is distinct with the overall promise being the delivery of a series of days which have the same pattern of transfer to the customer. The

transaction price for all PLSV contracts is determined by the expected value approach being the number of days multiplied by the expected

day-rate. This method of revenue recognition for PLSV contracts provides a faithful depiction of the transfer of goods and services. Typically

the value of work completed in any one month corresponds directly with the Group’s right to payment. Payment is due from the client

approximately 60 days following invoice date. These contracts have no significant financing component. Unbilled revenue related to

work completed, which has not been billed to the customer, is included within Note 21 ‘Other accrued income and prepaid expenses’.

Front-end engineering studies (FEED) undertaken by the Group are also included within this category of revenue principally on a day-rate

basis. Revenue recognition for day-rate contracts is described in the paragraph below.

The Group provides Remotely Operated Vehicles (ROVs), survey and inspection, drill-rig support and related solutions on a day-rate basis.

Projects are contracted on the basis of an agreed schedule of rates applied to a range of daily operating activities. These contracts are

considered to be distinct as a pattern and hence one performance obligation under the guidelines within IFRS 15. Each day is distinct with

the overall promise being the delivery of a series of days that have the same pattern of transfer to the customer. The transaction price for

all day-rate contracts is determined by the expected value approach, being the number of days multiplied by the expected day-rate. This

method of revenue recognition for day-rate contracts provides a faithful depiction of the transfer of goods and services. Typically the value

of work completed in any one month corresponds directly with Subsea 7’s right to payment. Payment is due from the client approximately

30-45 days following the invoice date. These contracts have no significant financing component. Unbilled revenue related to work

comp

leted, which has not been billed to clients, is included within Note 21 ‘Other accrued income and prepaid ex

penses’.

Customers,

in certain circumstances, may request the commissioning of bespoke tooling. Revenue in relation to bespoke tooling, which is

not significant in relation to the Group’s overall revenue, is considered distinct in its own right. Dependent on the individual contract with the

customer, revenue from the sale of this bespoke tooling may be recognised over time or at a point in time when control of the asset is

transferred to the customer, generally on delivery.

Renewables

Renewables contracts which include the construction and installation of fixed offshore wind turbine foundations and inner-array cables,

heavy lifting operations, decommissioning and heavy transportation are generally contracted on a fixed-price basis. Similar to EPIC

contracts, the promised goods and services within Renewables contracts are considered to be distinct as a bundle and hence one

performance obligation with revenue being recognised over time. Although the promises within the contract are capable of being distinct,

management has concluded that they are not due to the significant integration, customisation and highly interrelated nature of each

contract. The contract work performed is for the sole benefit of the customer who continually monitors progress and the Group would

not have an alternative use for work performed under a specific contract. Clients may also participate in the supplier selection processes

for procured items. The transaction price for these types of contracts, where there is an element of variable consideration, is based upon

the single most likely outcome.

Any additional work, such as scope changes or variation orders, as well as other variable consideration will be included within the total price once the

amounts can be reasonably estimated and management has concluded that this will not result in a significant revenue reversal in a future period.

For Renewables contracts the input method used to progressively recognise revenue over time is based upon percentage-of-completion

whereby total costs incurred to date are compared with total forecast costs at completion of the contract. This method provides a faithful

depiction of the transfer of the goods and services to the customer. Any significant upfront procurement which is not customised for the

particular contract is not included within the actual cost of work performed at each period end. An adjustment to the measure of progress

may be required where significant inefficiencies occur which were not reflected in the price of the contract. Payment is due from the client

approximately 30-45 days following the issuance of the invoice, although this may be longer depending upon the client or customary

payment terms in certain geographies. These contracts have no significant financing component as the period between when the Group

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3. SIGNIFICANT ACCOUNTING POLICIES CONTINUED

transfers the promised goods or services to the customer and when the customer pays for those goods or services will be one year or less.

In circumstances where the Group has recognised revenue, but not issued an invoice, the entitlement to consideration is recognised as a

construction contract asset. The construction contract asset is transferred to trade and other receivables in accordance with the agreed

milestone schedule which reflects the unconditional entitlement to payment. The time elapsing before transfer to trade and other receivables

may be different between contracts depending upon the contractual terms and conditions. Construction contract liabilities arise when

progress billings exceed contract revenues. Assurance type warranty periods commence at the completion of the contractual obligations.

Construction contract asset and liability balances at 31 December 2021 and 2020 are disclosed within Note 22 ‘Construction contracts’.

The Group operates a fleet of vessels which provide heavy transportation services mainly related to the offshore energy sector, with a focus

on the fixed offshore wind market. Under these contracts the Group’s vessels transport a specific agreed-upon cargo for a single voyage.

The Group treats these as voyage charter contracts, and applies the input method to progressively recognise revenue over time based upon

percentage-of-completion whereby total costs incurred to date are compared with total forecast costs at completion of the contract. This

method provides a faithful depiction of the transfer of the goods and services to the customer. The Group generally has standard payment

terms of approximately 10% freight paid on signing of contract, 40% on loading and 50% on discharge. These contracts have no significant

financing component as the period between when the Group transfers the promised goods or services to the customer and when the

customer pays for those goods or services will be one year or less. Voyage charter contracts consist of a single performance obligation of

transporting cargo within a specified period. The voyage charters generally have variable consideration in the form of demurrage, which is

recognised over the period in which the performance obligations are met under the contract. Demurrage is estimated at contract inception

using either the expected value or most likely amount approaches. Such estimate is reviewed and updated over the term of the voyage

charter contract.

Corporate

Revenue within the Group’s Corporate segment, which is not material to the Group, relates to activities in its autonomous subsidiaries,

Xodus and 4Subsea, and its non-wholly-owned subsidiary, Nautilus Floating Solutions. Contracts with customers in these subsidiaries are

contracted on either a fixed-price or day-rate basis. Revenue related to these contracts is recognised using the method described previously

for similar contracts within the Subsea and Conventional business unit. Payment is due from the client approximately 30-60 days following

the issuance of the invoice. These contracts have no significant financing component as the period between when the Group transfers the

promised goods or services to the customer and when the customer pays for those goods or services will be one year or less. Construction

contract asset and liability balances related to fixed-price contracts at 31 December 2021 and 2020 are disclosed within Note 22

‘Construction contracts’. Unbilled revenue related work completed on day-rate contracts, which has not been billed to clients, is

included within Note 21 ‘Other accrued income and prepaid expenses’.

Advances received from customers

For certain contracts the Group may receive short-term advances from customers which are presented as deferred revenue within the

Consolidated Balance Sheet. Advances received from customers include amounts received before the work is performed on day-rate

and fixed-price contracts. The consideration is not adjusted for the effects of a financing component where the Group expects, at contract

inception, that the period between when the customer pays for the service and when the Group transfers that promised service to the

customer will be 12 months or less.

Principal versus agent

For certain projects the Group provides procurement services and assumes responsibility for the logistics and handling of procured items.

Management’s assessment of whether a principal or agent relationship exists is based upon whether the Group has the ability to control

the goods before they are transferred to the customer. This assessment is performed on a contract-by-contract basis at contract inception.

Variable consideration

Variable consideration is constrained at contract inception to the extent that it is highly probable that a significant reversal in the amount

of cumulative revenue recognised will not occur when the uncertainty associated with the variable consideration is subsequently resolved.

Warranty obligations

The Group provides warranties for the repair of defects which are identified during the contract and within a defined period thereafter. All are

assurance-type warranties, as defined within IFRS 15, which the Group recognises under IAS 37 ‘Provisions, Contingent Liabilities and

Contingent Assets’. The Group does not have any contractual obligations for service-type warranties.

Borrowing costs

Borrowing costs attributable to the acquisition, construction or production of qualifying assets, which are assets that necessarily take

a substantial period of time to prepare for their intended use, are added to the cost of those assets, until such time as the assets are

substantially ready for their intended use. These amounts are calculated using the effective interest rate related to the period of the

expenditure. All other borrowing costs are recognised in the Consolidated Income Statement in the period in which they are incurred.

Finance costs

Finance costs or charges, including premiums on settlement or redemption and direct issue costs, are accounted for on an accruals basis

using the effective interest rate method.

Retirement benefit costs

The Group administers several defined contribution pension plans. Obligations in respect of such plans are charged to the Consolidated

Income Statement as they fall due.

In addition, the Group administers a small number of defined benefit pension plans. The cost of providing benefits under the defined benefit

plans is determined separately for each plan using the projected unit credit actuarial valuation method.

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Remeasurements, comprising actuarial gains and losses and the return on plan assets (excluding net interest) are recognised immediately

through the Consolidated Statement of Comprehensive Income in the period in which they occur with a corresponding adjustment in the

Consolidated Balance Sheet. Remeasurements are not reclassified to the Consolidated Income Statement in subsequent periods. Past

service costs are recognised in the Consolidated Income Statement on the earlier of the date of the plan amendment or curtailment, and

the date that the Group recognises restructuring related costs.

Net interest is calculated by applying the discount rate to the net defined benefit liability or asset. The Group recognises portions of the

service cost (comprising current and past service costs) gains and losses on curtailments, non-routine settlements and net interest expense

or income in the net defined benefit obligation under both operating expenses and administrative expenses in the Consolidated Income

Statement. The Group is also committed to providing lump-sum retirement bonuses to employees upon retirement in certain countries.

These retirement bonuses are unfunded, and are recorded in the Consolidated Balance Sheet at their actuarial valuation.

A defined benefit pension plan is considered settled once all future legal or constructive obligations for part or all of the benefits provided

are eliminated. Upon settlement the defined benefit asset/liability is remeasured using the current fair value of the plan assets and current

actuarial assumptions. Any difference between the current defined benefit asset/liability and the fair value will be recognised as a gain or

loss and released from other reserves to retained earnings.

Taxation

Taxation expense or income recorded in the Consolidated Income Statement or Consolidated Statement of Other Comprehensive Income

represents the sum of the current tax and deferred tax charge or credit for the year.

Current tax

Current tax is based on the taxable income for the year, together with any adjustments to tax payable in respect of prior years. Taxable

income differs from income before taxes as reported in the Consolidated Income Statement because it excludes items of income or

expense that are taxable or deductible in other periods and further excludes items that are never taxable or deductible. The tax laws and

rates used to compute the amount of current tax payable are those that are enacted or substantively enacted at the balance sheet date.

Current tax assets or liabilities are representative of taxes being owed by, or owing to, local tax authorities. In determining current tax assets

or liabilities the Group takes into account the impact of uncertain tax treatments and whether additional taxes or penalties may be due.

Deferred tax

Deferred tax is the tax expected to be payable or recoverable on differences between the carrying amount of assets and liabilities in the

Consolidated Balance Sheet and the corresponding tax bases used in the computation of taxable income, and is accounted for using the

balance sheet liability method. Deferred tax liabilities are generally recognised for all taxable temporary differences and deferred tax assets

are recognised to the extent that it is probable that taxable income will be available against which deductible temporary differences can be

utilised. Such assets or liabilities are not recognised if the temporary difference arises from the initial recognition of goodwill or from the initial

recognition of other assets or liabilities in a transaction (other than in a business combination) that does not affect either the taxable income

or the accounting income before taxes.

Deferred tax liabilities are recognised for taxable temporary differences arising on investments in subsidiaries and interests in associates

and joint ventures, except where the Group is able to control the reversal of the temporary difference and it is probable that the temporary

difference will not reverse in the foreseeable future.

The carrying amount of deferred tax assets is reviewed at each reporting date. Deferred tax assets are only recognised to the extent that

it is probable that taxable income will be available against which deductible temporary differences can be utilised. Deferred tax assets are

derecognised or reduced to the extent that it is no longer probable that sufficient taxable income will be available to allow all or part of the

asset to be recovered.

Deferred tax is calculated at the tax rates that are substantively enacted and expected to apply in the period when the asset is realised or

the liability is settled. Deferred tax is charged or credited to the Consolidated Income Statement, except when it relates to items charged

or credited directly in the Consolidated Statement of Comprehensive Income in which case the deferred tax is also recognised within the

Consolidated Statement of Comprehensive Income.

Deferred tax assets and liabilities are offset when there is a legally enforceable right to set off current tax assets against current tax liabilities

and when they relate to income taxes levied by the same taxation authority and the Group intends to settle its current income tax assets and

liabilities on a net basis.

Uncertain tax treatments

In accordance with IFRIC 23 a provision for an uncertain tax treatment is made where the ultimate outcome of a particular tax matter

is uncertain. In calculating a provision the Group assesses the probability of the liability arising and, where a reasonable estimate can be

made, recognises a provision for the liability it considers probable to be required to settle the present obligation. Provisions are based on

experience of similar transactions, internal estimates and appropriate external advice.

Dry-dock, mobilisation and decommissioning expenditure

Dry-dock expenditure incurred to maintain a vessel’s classification is capitalised in the Consolidated Balance Sheet as a distinct component

of the asset and amortised over the period until the next scheduled dry-docking (usually between two-and-a-half years and five years). At the

date of the next dry-docking, the previous dry-dock asset and accumulated amortisation is derecognised. All other repair and maintenance

costs are recognised in the Consolidated Income Statement as incurred.

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3. SIGNIFICANT ACCOUNTING POLICIES CONTINUED

A provision is recognised for decommissioning expenditures required to restore a leased vessel to its original or agreed condition, together

with a corresponding amount capitalised, when the Group recognises it has a present obligation and a reliable estimate can be made of the

amount of the obligation.

Business combinations and goodwill

Business combinations

Acquisitions of subsidiaries and businesses, including business combinations completed in stages, are accounted for using the acquisition

method. The consideration for each acquisition is measured as the aggregate of the fair values (at the acquisition date) of cash and other

assets given, liabilities incurred or assumed, and equity instruments issued by the Group in exchange for control of the acquiree. Where

an acquisition qualifies as a business combination completed in stages, consideration includes the fair value of the Group’s equity

interest prior to the combination. Any gain or loss associated with the remeasurement of the equity interest to fair value is recognised as

a remeasurement gain or loss in the Consolidated Income Statement. Acquisition-related costs are recognised in the Consolidated Income

Statement as incurred.

Where applicable, the consideration for the acquisition includes any asset or liability resulting from a contingent consideration arrangement,

measured at its acquisition date fair value. Subsequent changes in such fair values are recognised as an adjustment to the cost of

the acquisition where they qualify as measurement period adjustments. All other subsequent changes in the fair value of contingent

consideration classified as an asset or liability are accounted for in accordance with the relevant IFRS. Changes in the fair value of

contingent consideration classified as equity are not recognised. The acquiree’s identifiable assets, liabilities and contingent liabilities that

meet the conditions for recognition under IFRS 3 ‘Business Combinations’ are recognised at fair value on the acquisition date, except that:

• deferred tax assets or liabilities are recognised and measured in accordance with IAS 12 ‘Income Taxes’;

• liabilities or assets related to employee benefit arrangements are recognised and measured in accordance with IAS 19

‘Employee Benefits’;

• lease liabilities for which the Group is lessee are measured as if the lease contract were a new lease in accordance with IFRS 16 ‘Leases’;

• liabilities or equity instruments related to the replacement by the Group of an acquiree’s share-based payment awards are measured in

accordance with IFRS 2 ‘Share-based Payments’; and

• assets (or disposal groups) that are classified as held for sale in accordance with IFRS 5 ‘Non-current Assets Held for Sale and

Discontinued Operations’ are measured in accordance with that standard.

If the initial accounting for a business combination is incomplete by the end of the reporting period in which the combination occurs,

the Group reports provisional amounts for the items for which the accounting is incomplete, to the extent that the amounts can be reliably

calculated. These provisional amounts are adjusted during the measurement period, or additional assets or liabilities are recognised, to

reflect new information obtained regarding facts and circumstances that existed at the acquisition date that, if known, would have affected

the amounts recognised at that date.

The measurement period is the period from the date of acquisition to the date the Group obtains complete information regarding facts and

circumstances that existed as of the acquisition date and is subject to a maximum period of one year.

Goodwill

Goodwill arising in a business combination is recognised as an asset at the date that control is acquired by the Group (the acquisition date).

Goodwill is measured as the sum of the consideration and either the amount of any non-controlling interests in the acquiree or the fair value

of the Group’s previously held equity interest in the entity less the net fair value of the identifiable assets acquired and the liabilities assumed

at the acquisition date. If the Group’s interest in the fair value of the acquiree’s identifiable net assets exceeds the sum of the consideration

and either the amount of any non-controlling interests in the acquiree or the fair value of the Group’s previously held equity interest in the

acquiree, the excess is recognised immediately in the Consolidated Income Statement. Goodwill is reviewed for impairment at least annually.

Intangible assets other than goodwill

Overview

Intangible assets acquired separately are measured at cost at the date of initial acquisition. Following initial recognition, intangible assets are

measured at cost less amortisation and impairment charges. Intangible assets acquired as part of a business combination are measured at

fair value at the date of acquisition. Following initial recognition, intangible assets acquired as part of a business combination are measured

at acquisition date fair value less amortisation and impairment charges.

Internally generated intangible assets are not capitalised, with the exception of development expenditure which meets the criteria for

capitalisation specified in IAS 38 ‘Intangible Assets’.

Intangible assets with finite lives are amortised over their useful economic life and are assessed for impairment whenever there is an

indication that the intangible asset may be impaired. The amortisation period and the amortisation method for intangible assets with finite

useful lives are reviewed annually. Changes in the expected useful life are accounted for by changing the amortisation period or method,

and are treated as changes in accounting estimates. The amortisation expense related to intangible assets with finite lives is recognised

in the Consolidated Income Statement in the expense category consistent with the function of the intangible asset.

Property, plant and equipment

Property, plant and equipment acquired separately, including critical spare parts acquired and held for future use, are measured at cost less

accumulated depreciation and accumulated impairment charges.

Assets under construction are recognised at cost, less any recognised impairment charges. Depreciation of these assets commences when

the assets become operational and are deemed available for use.

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Depreciation is calculated on a straight-line basis over the useful life of the asset as follows:

essels 10 to 25 years

Operating equipment 3 to 10 years

Buildings 20 to 25 years

Other assets 3 to 7 years

Land is not depreciated.

Vessels are depreciated to their estimated residual value. Residual values, useful economic lives and methods of depreciation are reviewed

at least annually and adjusted if appropriate.

Gains or losses arising on disposal of property, plant and equipment are determined as the difference between any disposal proceeds and

the carrying amount of the asset at the date of the transaction. Gains and losses on disposal are recognised in the Consolidated Income

Statement in the period in which the asset is disposed.

Impairment of non-financial assets

At each reporting date the Group assesses whether there is any indication that non-financial assets, including intangible assets, property,

plant and equipment and right-of-use assets, may be impaired. If any such indication exists, or when annual impairment testing for an asset

is required, the Group estimates the asset’s recoverable amount. An asset’s recoverable amount is the higher of the asset’s fair value less

costs of disposal and its value-in-use. Where an asset does not generate cash flows that are independent from other assets, the Group

estimates the recoverable amount of the cash-generating unit (CGU) to which the asset is allocated. Where the carrying amount of an asset

exceeds its recoverable amount, the asset is impaired. In assessing value-in-use, the estimated future cash flows are discounted to their

present value using a pre-tax discount rate that reflects current market assessments of the time value of money and risks specific to the

asset. In determining fair value less costs of disposal, an appropriate valuation model is used. Management has considered the potential

impacts of climate risk and whether this will have an adverse impact on the future use of the Group’s assets, including vessels and

equipment. The Group operates within the offshore renewable sector and it is expected that demand for the Group’s services will

increase due to climate related opportunities. Management does not consider there is a significant risk that the Group’s vessels

will become obsolete due to climate considerations as they form a key part in the transition to the provision of sustainable energy.

Impairment charges are recognised in the Consolidated Income Statement in the expense category consistent with the function of the

impaired asset.

An assessment is made at each reporting date as to whether there is any indication that previously recognised impairment charges

may require to be reversed. If such an indication exists the Group makes an estimate of the recoverable amount. A previously recognised

impairment charge is reversed only if there has been a change in the estimates used to determine the asset’s recoverable amount since

the last impairment charge was recognised. If that is the case the carrying amount of the asset is increased to its recoverable amount. That

increased amount cannot exceed the carrying amount that would have been determined, net of depreciation, had no impairment charge

been recognised for the asset in prior periods. Any such reversal is recognised in the Consolidated Income Statement. The following

criteria are also applied in assessing impairment of specific assets:

Goodwill

An assessment is made at each reporting date as to whether there is an indication of impairment. Goodwill is reviewed for impairment

annually or more frequently if events or changes in circumstances indicate that the carrying amount may be impaired. For the purpose of

impairment testing, goodwill acquired in a business combination is, from the acquisition date, allocated to each of the Group’s CGUs, or

group of CGUs, that are expected to benefit from the combination.

Each CGU or group of CGUs to which the goodwill is allocated initially represents the lowest level within the Group at which the goodwill

is monitored for internal management purposes and is not larger than an operating segment determined in accordance with IFRS 8

‘Operating Segments’. If circumstances give rise to a change in the composition of CGUs and a reallocation is justified, goodwill is

reallocated based on relative value at the time of the change in composition. Following any reorganisation, the CGU cannot be larger

than an operating segment determined in accordance with IFRS 8 ‘Operating Segments’. Impairment is determined by assessing

the recoverable amount of the CGU (or group of CGUs) to which the goodwill relates. Recoverable amounts are determined based

on value-in-use calculations using discounted pre-tax cash flow projections based on risk-adjusted financial forecasts approved by

the Executive Management Team.

As cash flow projections are risk-adjusted for CGU specific risks, risk premiums are not applied to the discount rate which is applied to all

CGUs. The discount rate applied to the cash flow projections is a pre-tax rate and reflects current market assessments of the time value of

money, risks specific to the asset and a normalised capital structure for the industry. Where the recoverable amount of the CGU (or group

of CGUs) is less than the carrying amount, an impairment charge is recognised in the Consolidated Income Statement. Where goodwill

forms part of a CGU (or group of CGUs) and part of the operation within that CGU is disposed, the goodwill associated with the operation

disposed is included in the carrying amount of the operation when determining the gain or loss on disposal of the operation. Goodwill

disposed in this circumstance is measured based on the relative values of the operation disposed and the portion of the CGU retained.

Associates and joint ventures

At each reporting date the Group determines whether there is any objective evidence that the investment in an associate or joint venture is

impaired. If this is the case, the Group calculates the amount of impairment as being the difference between the estimated fair value of the

associate or joint venture and its carrying amount. The resultant impairment charge is recognised in the Consolidated Income Statement.

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Financial instruments

Classification and measurement

The Group’s financial assets include cash and short-term deposits, trade and other receivables, construction contract assets, other

receivables, derivative financial instruments and equity investments which are classified as other financial assets. The Group’s financial

liabilities include trade and other payables, contingent consideration, borrowings and derivative financial instruments.

Initial measurement is based upon one of four IFRS 9 ‘Financial Instruments’ models: amortised cost; fair value through profit and loss

(FVPL); fair value through other comprehensive income (with recycling of accumulated gains and losses); or fair value through other

comprehensive income (without recycling of accumulated gains and losses).

Classification and subsequent measurement is dependent upon the business model under which the Group holds and manages the

financial asset; and whether the contractual cash flows resulting from the instrument represent ‘solely payments of principal and interest’

(the ‘SPPI criterion’).

All financial assets are classified at initial recognition and are initially measured at fair value net of transaction costs, with the exception of

those classified as FVPL. Classification as amortised cost is applicable where the instruments are held within a business model with the

objective to hold the financial assets in order to collect contractual cash flows and the cash flows resulting from the instrument consist

solely of principal and interest. Debt financial assets are subsequently measured at FVPL, amortised cost or fair value through other

comprehensive income (FVOCI) depending on classification.

Equity instruments are reported as other financial assets and are subsequently measured at FVPL when not considered to be strategic in

nature. Where the Group considers other financial assets to be strategic in nature and is expecting to hold them for the foreseeable future

the investments are measured at FVOCI with no recycling of gains or losses to profit or loss on derecognition.

All financial liabilities are classified at initial recognition and are initially measured at fair value net of transaction costs, with the exception of

those classified as FVPL. Financial liabilities are measured at FVPL when they meet the definition of held for trading or when they are

designated as such on initial recognition. Otherwise, financial liabilities are measured at amortised cost.

The Group enters into forward foreign currency contracts, in order to manage its foreign currency exposures; these are measured at FVPL.

The Group regularly enters into multi-currency contracts from which the cash flows may lead to embedded foreign exchange derivatives

in non-financial host contracts, carried at FVPL. The Group reassesses the existence of an embedded derivative if the terms of the host

financial instrument change significantly. The fair values of derivative financial instruments are measured on bid prices for assets held and

offer prices for issued liabilities based on values quoted in active markets. Changes in the fair value of derivative financial instruments which

do not qualify for hedge accounting are recognised in the Consolidated Income Statement within other gains and losses.

Cash and cash equivalents comprise cash at bank, cash on hand, money market funds, and short-term highly liquid assets with an original

maturity of three months or less and which are readily convertible to known amounts of cash. Utilised revolving credit facilities are included

within current borrowings. Cash and cash equivalents are measured at amortised cost.

Hedge accounting

The Group, for the purposes of hedge accounting, recognises cash flow hedges when hedging the exposure to variability in cash flows

which are attributable to commodity prices. At the inception of a hedge relationship, the Group formally designates and documents the

hedge relationship to which it wishes to apply hedge accounting and the risk management objective and strategy for undertaking the hedge.

The documentation includes identification of the hedging instrument, the hedged item, the nature of the risk being hedged and how the

Group will assess whether the hedging relationship meets the hedge effectiveness requirements, including the analysis of sources of hedge

ineffectiveness and how the hedge ratio is determined. A hedging relationship qualifies for hedge accounting if it meets all of the following

effectiveness requirements:

• there is an economic relationship between the hedged item and the hedging instrument;

• the effect of credit risk does not dominate the value changes that result from that economic relationship; and

• the hedge ratio of the hedging relationship is the same as that resulting from the quantity of the hedged item that the Group actually

hedges and the quantity of the hedging instrument that the Group actually uses to hedge that quantity of hedged item.

The effective portion of the gain or loss on the hedging instrument is recognised in Other Comprehensive Income (OCI), in other reserves,

while any ineffective portion is recognised immediately in the Consolidated Income Statement. Other reserves is adjusted to the lower of

the cumulative gain or loss on the hedging instrument and the cumulative change in fair value of the hedged item. The Group uses forward

commodity contracts to manage its exposure to volatility in commodity prices. The ineffective portion relating to commodity contracts is

recognised in other operating expenses. The Group designates only the spot element of forward contracts as a hedging instrument. The

amount accumulated in OCI is reclassified to the Consolidated Income Statement as a reclassification adjustment in the same period or

periods as the hedged cash flows.

Impairment of financial assets and construction contract assets

The Group applies the expected credit loss (ECL) impairment model to record allowances for expected credit losses. The expected credit

loss model applies to all debt financial assets accounted for in accordance with IFRS 9 ‘Financial Instruments’. The expected credit loss

impairment model is also applied to contract assets accounted for under IFRS 15 ‘Revenue from Contracts with Customers’.

For construction contract assets and trade and other receivables which do not contain a significant financing component, the Group

applies the simplified approach. This approach requires the allowance for ECLs to be recognised at an amount equal to lifetime expected

credit losses.

For other debt financial assets the allowance for ECLs is calculated on a 12-month basis and is based on the portion of ECLs expected

to result from default events possible within 12 months of the reporting date. The Group monitors for significant changes in credit risk and

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where this is materially different to ECLs calculated on a 12-month basis changes the allowance to reflect the risk of expected default in

the contractual lifetime of the financial asset. Unless there is a valid mitigating factor, the Group considers there to have been a significant

increase in credit risk when contractual payments are more than 30 days past the due date for payment.

At each reporting date the Group assesses whether any indicators exist that a financial asset or group of financial assets has become credit

impaired. Where an asset is considered to be credit impaired a specific allowance is recognised based on the actual cash flows that the

Group expects to receive and is determined using historical credit loss experience and forward-looking factors specific to the counterparty

and the economic environment. Any shortfall is discounted at the original effective interest rate for the relevant asset.

Except where there are valid mitigating factors, the Group considers a financial asset in default when contractual payments are 90 days past

the due date for payment. However, in certain cases, the Group may also consider a financial asset to be in default when internal or external

information indicates that the Group is unlikely to receive the outstanding contractual amounts in full.

Financial investments

The Group’s non-current financial investments comprise strategic shareholdings in technology companies. These investments are held

at cost, deemed an appropriate estimate of fair value, due to the uncertainty over technical milestones and the wide range of possible

fair value measurements. These investments are reviewed for indicators of impairment at each reporting date.

Inventories

Inventories comprise consumables, materials and non-critical spares and are valued at the lower of cost and net realisable value.

Treasury shares

Treasury shares are the Group’s own equity instruments which are repurchased and shown within equity at cost, using the first-in first-out

basis. Gains or losses realised or incurred on the purchase, sale, reallocation or cancellation of the Group’s own equity instruments are

recognised within equity. No gains or losses are recognised in the Consolidated Income Statement.

Provisions

Provisions are recognised when the Group has a present obligation (legal or constructive) as a result of a past transaction or event, it is

probable that an outflow of resources embodying economic benefits will be required to settle the obligation and a reliable estimate can be

made of the amount of the obligation. The amount recognised represents the best estimate of the expenditure expected to be required

to settle the present obligation. Estimates are determined by the judgement of management supplemented by the experience of similar

transactions, and, in some cases, advice from independent experts. Contingent liabilities are disclosed in Note 32 ‘Commitments and

contingent liabilities’ to the Consolidated Financial Statements, but not recognised until they meet the criteria for recognition as a provision.

Where the Group is virtually certain that some or all of a provision will be reimbursed, that reimbursement is recognised as a separate asset.

The expense relating to any provision is reflected in the Consolidated Income Statement at an amount reflective of the risks specific to the

liability. Where the provision is discounted, any increase in the provision due to the passage of time is recognised as a finance cost in the

Group’s Consolidated Income Statement.

The following criteria are applied for the recognition and measurement of significant classes of provisions:

Onerous contracts

The Group recognises provisions for onerous contracts once the underlying event or conditions leading to the contract becoming onerous

are probable and a reliable estimate can be made. Onerous fixed-price contract provisions are assessed in accordance with IAS 37

‘Provisions, Contingent Liabilities and Contingent Assets’. Onerous provisions are calculated on a least net cost basis, which includes

unavoidable costs only, while comparing these costs to the cost of cancelling a contract and incurring early termination fees.

Legal claims

In the ordinary course of business, the Group is subject to various claims, litigation and complaints. An associated provision is recognised if

it is probable that a liability has been incurred and the amount can be reliably estimated.

Contingent consideration

The Group recognises a provision where, as part of the sale and purchase agreement, contingent consideration has been agreed.

The amount and timing of contingent consideration is often uncertain and is payable based on the achievement of specific targets and

milestones. The liability is initially measured at its acquisition date fair value, determined using the discounted cash flows method and

unobservable inputs and is remeasured at each reporting date. Changes in fair value are recognised in the Consolidated Income Statement.

Share-based payments

Certain employees of the Group receive part of their remuneration in the form of conditional awards of shares based on the performance

of the Group. Equity-settled transactions with employees are measured at fair value at the date on which they are granted. The fair value

is determined using a Monte Carlo simulation model. The cost of equity-settled transactions is recognised, together with a corresponding

increase in equity, over the period in which the performance and/or service conditions are fulfilled, ending on the date on which the relevant

employees become entitled to the award (the vesting date). The cumulative expense recognised for equity-settled transactions at each

balance sheet date, until the vesting date, reflects the extent to which the vesting period has expired and the Group’s best estimate of the

number of equity instruments that will ultimately vest. The cumulative expense also includes the estimated future charge to be borne by the

Group in respect of social security contributions, based on the intrinsic unrealised value of the awards using the share price at the balance

sheet date. The net income or expense for a period represents the difference in cumulative expense recognised at the beginning and end

of that period.

GOVERNANCE SUBSEA 7 S.A. FINANCIAL STATEMENTS GLOSSARY

SUBSEA 7 | ANNUAL REPORT 2021 |

CONSOLIDATED FINANCIAL STATEMENTS

STRATEGIC REPORT

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS CONTINUED

84 | SUBSEA 7 | ANNUAL REPORT 2021

3. SIGNIFICANT ACCOUNTING POLICIES CONTINUED

Where the terms of an equity-settled award are modified, as a minimum, an expense is recognised as if the terms had not been modified.

In addition, an expense is recognised for any modification which increases the total fair value of the share-based payment arrangement,

or is otherwise beneficial to the employee as measured at the date of modification.

Where an equity-settled award is cancelled, it is treated as if it had vested on the date of cancellation, and any expense not yet recognised

for the award is recognised immediately. However, if a new award is substituted for the cancelled award and designated as a replacement

award on the date that it is granted, the cancelled and new awards are treated as if they were a modification of the original award, as

described in the previous paragraph.

Where an equity-settled award is forfeited, due to vesting conditions being unable to be met, the cumulative expense previously recognised

is reversed with a credit recognised in the Consolidated Income Statement. If a new award is substituted for the cancelled award, the new

award is measured at fair value at the date on which it is granted.

Earnings per share

Earnings per share is calculated using the weighted average number of common shares and common share equivalents outstanding during

each period excluding treasury shares. The potentially dilutive effect of outstanding performance shares is reflected as share dilution in the

computation of diluted earnings per share.

Right-of-use assets and lease liabilities

The Group applies IFRS 16 ‘Leases’ and assesses at contract inception whether a contract is, or contains, a lease. That is, if the contract

conveys the right to control the use of an identified asset for a period of time in exchange for consideration. The Group applies a single

recognition and measurement approach for all leases, except for short-term leases and leases of low-value assets. The Group recognises

lease liabilities to make lease payments and right-of-use assets representing the right to use the underlying assets.

Right-of-use assets

The Group recognises right-of-use assets at the commencement date of the lease, which is the date the underlying asset is available

for use. Right-of-use assets are measured at cost, less any accumulated depreciation and impairment losses and adjusted for any

remeasurement of lease liabilities. The cost of right-of-use assets includes the amount of lease liabilities recognised, initial direct costs

incurred, and lease payments made at or before the commencement date less any lease incentives received. Right-of-use assets are

depreciated on a straight-line basis over the shorter of the lease term and the estimated useful lives of the underlying assets which vary

as follows:

Vessels 2 to 5 years

Operating equipment 2 to 5 years

Land and buildings 3 to 10 years

The cost of a right-of-use asset includes an estimate of costs expected to be incurred by the Group on termination of the lease to reinstate

the underlying asset to the condition required by the terms and conditions of the lease. The Group incurs the obligation for those costs either

at the commencement date or as a consequence of having utilised the underlying asset during the period. Right-of-use assets are subject to

a review for indicators of impairment at least annually.

Lease liabilities

The Group recognises lease liabilities measured at the present value of lease payments to be made over the lease term. The lease payments

include fixed payments less any lease incentives receivable, variable lease payments that depend on an index or a rate, and amounts

expected to be paid under residual value guarantees. The lease payments also include the exercise price of purchase options reasonably

certain to be exercised by the Group. Variable lease payments that do not depend on an index or a rate are recognised as expenses

(unless they are incurred to produce inventories) in the period in which the event or condition that triggers the payment occurs.

In calculating the present value of lease payments, the Group uses an incremental borrowing rate at the lease commencement date where

the interest rate implicit in the lease is not readily determinable. After the commencement date, the amount of lease liabilities is increased

to reflect the accretion of interest and reduced for lease payments made. In addition, the carrying amount of lease liabilities is remeasured if

there is a modification, a change in the lease term, a change in the lease payments or a change in the assessment of an option to purchase

the underlying asset.

The Group applies the short-term lease recognition exemption to its short-term leases, which are those leases which have a lease term

of 12 months or less from the commencement date and do not contain a purchase option. The Group also applies the low-value assets

recognition exemption to assets which are considered to be low value. Lease payments on short-term leases and leases of low-value

assets are recognised as expenses in the Consolidated Income Statement on a straight-line basis over the lease term.

| SUBSEA 7 | ANNUAL REPORT 2021

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4. CRITICAL ACCOUNTING JUDGEMENTS AND KEY SOURCES OF ESTIMATION UNCERTAINTY

In the application of the Group’s accounting policies which are described in Note 3 ‘Significant accounting policies’, management is required

to make judgements, estimates and assumptions regarding the carrying amounts of assets and liabilities that are not readily apparent from

other sources. The estimates and associated assumptions are based on historical experience and other assumptions that management

believes to be reasonable under the circumstances. Actual results may differ from these estimates under different assumptions or conditions.

The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised

prospectively in the period in which the estimate is revised.

Revenue recognition

The Group’s accounting policies under IFRS 15 ‘Revenue from Contracts with Customers’ are detailed in Note 3 ‘Significant

accounting policies’.

Revenue recognition on long-term construction contracts

The Group accounts for long-term construction contracts for both engineering, procurement, installation and commissioning (EPIC) projects

using the percentage-of-completion method, which is standard practice in the industry. Contract revenue, total cost estimates and estimates

of physical progression are reviewed by management on a monthly basis. Any adjustments made as a result of these reviews are reflected in

contract revenue or contract costs in the reporting period, based on the percentage-of-completion method.

To the extent that these adjustments result in a reduction or elimination of previously reported contract revenue or costs, a charge or credit

is recognised in the Consolidated Income Statement; amounts in prior periods are not restated. Such a charge or credit may be significant

depending on the size of the project, the stage of project completion and the size of the adjustment. Additional information that enhances

and refines the estimating process is often obtained after the balance sheet date but before the issuance of the Consolidated Financial

Statements, which may result in an adjustment to the Consolidated Financial Statements based on events, favourable or unfavourable,

occurring after the balance sheet date.

The percentage-of-completion method requires management to make reliable estimates of physical progression, costs incurred, full

project contract costs and full project contract revenue. The Group’s Project Monthly Status Reports (PMSRs) evaluate the likely outcome

of each individual project for the purpose of making reliable estimates of cost, revenue and progression, measured either by cost or physical

progression. A key element of the PMSRs is the estimate of contingency. Contingency is an estimate of the costs required to address the

potential future outcome of identified project risks. The Group uses a systematic approach in estimating contingency based on project size.

This approach utilises a project specific risk register in order to identify and assess the likelihood and impact of these risks. The most

significant risks and uncertainties in the Group’s projects typically relate to the offshore phase of operations. Identified risks that materialise

may result in increased costs. Contingency associated with identified risks are removed from the full project cost estimate throughout the

remaining life of the project if the identified risks have not, or are not, expected to materialise.

Revenue recognition on variable consideration

A significant portion of the Group’s revenue is billed under fixed-price contracts. Due to the nature of the services performed, variation

orders and claims are common. A variation order is an instruction by the client for a change in the scope of the work to be performed under

the contract which may lead to an increase or a decrease in contract revenue based on changes in the specifications or design of an asset

and changes in the duration of the contract.

A claim is an amount that may be collected as reimbursement for costs not included in the contract price. A claim may arise from delays

caused by clients, errors in specifications or design, and disputed variations in contract work. The measurement of revenue arising from

claims is subject to a high level of uncertainty and is dependent on the outcome of negotiations.

Recognition of revenue on variation orders and claims is governed by the Group’s revenue recognition policy.

Goodwill carrying amount

Goodwill is reviewed at least annually to assess whether there is objective evidence to indicate that the carrying amount of goodwill requires

impairment at a CGU level. The impairment review is performed on a value-in-use basis which requires the estimation of future cash flows.

Further details relating to the impairment review process are disclosed in Note 13 ‘Goodwill’.

Property, plant and equipment

Property, plant and equipment is recorded at cost and depreciation is recorded on a straight-line basis over the useful lives of the assets.

Management uses its experience to estimate the remaining useful economic life and residual value of an asset.

A review for indicators of impairment is performed at each reporting date. When events or changes in circumstances indicate that the

carrying amount of property, plant and equipment may not be recoverable, a review for impairment is carried out by management. Where

the value-in-use method is used to determine the recoverable amount of an asset, management uses its judgement in determining the CGU

to which the asset belongs, or whether the asset can be considered a CGU in its own right. The level of aggregation of assets is a significant

assumption made by management and includes consideration of which assets generate cash inflows that are largely independent of the

cash inflows from other assets or groups of assets. Management has determined that vessels are not CGUs individually as they do not

generate cash inflows independently of other Group assets. Once the CGU has been determined management uses its judgement in

determining the value-in-use of the CGU, as detailed in Note 13 ‘Goodwill’. Where an asset is considered a CGU in its own right

management uses its judgement to estimate future asset utilisation, cash flows, remaining life and the discount rate used.

GOVERNANCE SUBSEA 7 S.A. FINANCIAL STATEMENTS GLOSSARY

SUBSEA 7 | ANNUAL REPORT 2021 |

CONSOLIDATED FINANCIAL STATEMENTS

STRATEGIC REPORT

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS CONTINUED

86 | SUBSEA 7 | ANNUAL REPORT 2021

4. CRITICAL ACCOUNTING JUDGEMENTS AND KEY SOURCES OF ESTIMATION UNCERTAINTY CONTINUED

Recognition of provisions and disclosure of contingent liabilities

In the ordinary course of business, the Group becomes involved in contract disputes from time-to-time due to the nature of its activities as a

contracting business involved in multiple long-term projects at any given time. The Group recognises provisions to cover the expected risk of

loss to the extent that negative outcomes are likely and reliable estimates can be made. The final outcomes of these contract disputes are

subject to uncertainties as to whether or not they develop into a formal legal action and therefore the resulting liabilities may exceed the

liability anticipated by management.

Furthermore, the Group may be involved in legal proceedings from time-to-time; these proceedings are incidental to the ordinary conduct

of its business. Litigation is subject to many uncertainties, and the outcome of individual matters is not predictable with assurance.

It is reasonably possible that the final resolution of any litigation could require the Group to incur additional expenditures in excess

of provisions that it may have previously recognised.

Management uses its judgement in determining whether the Group should recognise a provision or disclose a contingent liability.

These judgements include whether the Group has a present obligation and the probability that an outflow of economic resource is

required to settle the obligation. Management may also use its judgement to determine the amount of the obligation or contingent liability.

Management uses external advisers to assist with some of these judgements. Further details relating to provisions and contingent liabilities

are shown in Note 31 ‘Provisions’ and Note 32 ‘Commitments and contingent liabilities’.

Measurement of fair value adjustments in business combinations

Management uses judgement to determine the fair value adjustments to identifiable assets acquired and liabilities assumed in a business

combination. Where available, independent market value assessments are obtained for vessels to provide an estimate of fair value.

Fair value adjustments to part-built assets requires significant judgement, including an assessment of the forecast full costs at completion of

the assets. Independent market value assessments are generally not readily available. Management applies judgement in order to determine

the fair value of part-completed assets taking into consideration the underlying strategic rationale for the business combination and the

additional opportunities the acquisition of the vessels will bring to the Group.

Measurement of onerous fixed-price contract provisions in business combinations

The Group recognises provisions for onerous fixed-price contracts where the required fair value exercise indicates that the costs of

completing a project acquired in a business combination exceed the economic benefit. Judgement is applied to determine the underlying

events or conditions leading to the contract becoming onerous to ensure that the facts and circumstances existed at the date of the

business combination. Onerous fixed-price contract provisions are assessed in accordance with IAS 37 ‘Provisions, Contingent Liabilities

and Contingent Assets’. Fixed-price onerous provisions are calculated on a least net cost basis, which includes unavoidable costs only,

while comparing these costs to the cost of cancelling a contract and incurring early termination fees.

Taxation

The Group is subject to taxation in numerous jurisdictions and significant judgement is required in calculating the consolidated tax position.

There are transactions for which the ultimate tax determination is uncertain and for which the Group makes provisions based on an

assessment of internal estimates and appropriate external advice, including decisions regarding whether to recognise deferred tax assets

in respect of tax losses. Each year management completes a detailed review of uncertain tax treatments across the Group and makes

provisions based on the probability of the liability arising. Where the final outcome of these matters differs from the amounts that were

initially recorded, the difference will impact the taxation charge in the period in which the outcome is determined. Details of key

judgements and other issues considered are set out in Note 9 ‘Taxation’.

| SUBSEA 7 | ANNUAL REPORT 2021

SUBSEA 7 | ANNUAL REPORT 2021 | 87

5. SEGMENT INFORMATION

With effect from 1 January 2021, for management and reporting purposes, the Group implemented a new organisational structure

comprising three business units: Subsea and Conventional, Renewables and Corporate. These business units represent the Group’s

operating segments and are defined as follows:

Subsea and Conventional

The Subsea and Conventional business unit includes:

• Subsea Umbilicals, Risers and Flowlines (SURF) activities related to the engineering, procurement, installation and commissioning of highly

complex subsea oil and gas systems in deep waters, including the long-term contracts for PLSVs in Brazil;

• Conventional services including the fabrication, installation, extension and refurbishment of fixed and floating platforms and associated

pipelines in shallow water environments;

• Activities associated with the provision of inspection, repair and maintenance (IRM) services, integrity management of subsea

infrastructure and remote intervention support; and

• Activities associated with heavy lifting operations and decommissioning of redundant offshore structures.

This segment includes costs, including depreciation, amortisation and impairment charges, related to owned and long-term leased vessels,

equipment and offshore personnel deployed in Subsea and Conventional activities.

The Subsea and Conventional business unit provides vessel and crewing services to the Group’s Renewables business unit, which includes

the Group’s non-wholly-owned subsidiary Seaway 7 ASA; these are recharged on an arm’s length basis.

Renewables

The Renewables business unit comprises activities primarily related to the delivery of fixed offshore wind farm projects. Following the

business combination with OHT ASA (renamed Seaway 7 ASA) on 1 October 2021, the Group’s fixed offshore wind farm activities are

executed by Seaway 7 ASA, a non-wholly-owned subsidiary of the Group from that date. Activities include the procurement and installation

of offshore wind turbine foundations and inner-array cables as well as heavy lifting operations and heavy transportation services for

renewables structures. This segment includes costs, including depreciation, amortisation and impairment charges, related to owned

and long-term leased vessels, equipment and offshore personnel deployed in Renewables activities.

Corporate

The Corporate business unit includes group-wide activities, and associated costs, including captive insurance activities, operational support,

corporate services and costs associated with discrete events such as restructuring. The Corporate business unit also includes the results

of the Group’s autonomous subsidiaries, Xodus and 4Subsea, and the Group’s floating wind farm activities including its non-wholly-owned

subsidiary Nautilus Floating Solutions. A significant portion of the Corporate business unit’s costs were allocated to the Subsea and

Conventional business unit (for full year 2021) and the Renewables business unit (until 30 September 2021) based on a percentage of their

respective external revenue. From 1 October 2021 the Corporate business unit provided specific services to the Renewables business unit,

which includes the Group’s non-wholly-owned subsidiary Seaway 7 ASA, on an arm’s length basis.

The accounting policies of the business units are the same as the Group’s accounting policies, which are described in Note 3 ‘Significant

accounting policies’.

Allocations of costs also occur between segments based on the physical location of personnel. The Chief Operating Decision Maker (CODM)

is the Chief Executive Officer of the Group. The CODM is assisted by the other members of the Executive Management Team. Neither total

assets nor total liabilities by operating segment are regularly provided to the CODM and consequently no such disclosure is shown.

Summarised financial information, including the disaggregation of the Group’s revenue from contracts with customers, concerning each

operating segment is as follows:

GOVERNANCE SUBSEA 7 S.A. FINANCIAL STATEMENTS GLOSSARY

SUBSEA 7 | ANNUAL REPORT 2021 |

CONSOLIDATED FINANCIAL STATEMENTS

STRATEGIC REPORT

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS CONTINUED

88 | SUBSEA 7 | ANNUAL REPORT 2021

5. SEGMENT INFORMATION CONTINUED

For the year ended 31 December 2021

(in $ millions)

Subsea and

Conventional

Renewables Corporate Total

Selected financial information:

Revenue

(a)/(b)/(c)

Fixed-price projects

3,015.2 1,259.3 9.5 4,284.0

Day-rate projects

659.4 0.2 66.4 726.0

3,674.6 1,259.5 75.9 5,010.0

Operating expenses

(3,453.4) (1,290.6) 29.8 (4,714.2)

Share of net income of associates and joint ventures 1.0 – 2.9 3.9

Depreciation, mobilisation and amortisation charges (364.1) (63.3) (16.4) (443.8)

Net impairment of intangible assets, property, plant and equipment,

and right-of-use assets (1.2) – (4.2) (5.4)

Reconciliation of net operating income/(loss) to income before taxes:

Net operating income/(loss)

102.7 (59.5) 28.5 71.7

Finance income

4.7

Other gains and losses

44.4

Finance costs

(20.1)

Income before taxes

100.7

djusted EBITDA

(d)

468.0 3.8 49.1 520.9

djusted EBITDA margin

(d)

12.7% 0.3% 64.7% 10.4%

(a) Revenue represents only external revenue for each segment. An analysis of inter-segment revenue has not been included as this information is not provided to the CODM.

(b) Two clients in the year individually accounted for more than 10% of the Group’s revenue. The revenue from these clients was as follows: Client A $793.6 million (2020: $335.5 million) and Client B

$502.7 million (2020: $334.5 million).

(d) Adjusted EBITDA and Adjusted EBITDA margin are non-IFRS measures. For explanations and reconciliations of Adjusted EBITDA and Adjusted EBITDA margin refer to Additional Information.

For the year ended 31 December 2020

(in $ millions)

Subsea and

Conventional

Re-presented

(a)l

Renewables

Re-presented

(a)l

Corporate

Re-presented

(a)l

Total

Selected financial information:

Revenue

(b)/(c)

Fixed-price projects 2,122.6 630.3 8.3 2,761.2

Day-rate projects 643.2 1.1 60.9 705.2

2,765.8 631.4 69.2 3,466.4

Operating expenses

(2,883.1) (645.8) (124.0) (3,652.9)

Impairment of goodwill (592.2) – (13.2) (605.4)

Share of net income/(loss) of associates and joint ventures 5.2 – (5.7) (0.5)

Depreciation, mobilisation and amortisation charges (378.2) (51.3) (12.9) (442.4)

Impairment of intangible assets, property, plant and equipment,

and right-of-use assets (294.6) – (28.5) (323.1)

Reconciliation of net operating loss to loss before taxes:

Net operating loss excluding goodwill impairment charges (245.8) (39.7) (142.9) (428.4)

Net operating loss including goodwill impairment charges (838.0) (39.7) (156.1) (1,033.8)

Finance income 4.8

Other gains and losses (18.3)

Finance costs

(24.6)

Loss before taxes (1,071.9)

djusted EBITDA

(d)

427.0 11.6 (101.5) 337.1

djusted EBITDA margin

(d)

15.4% 1.8% n/a 9.7%

(a) Re-presented due to new organisational structure implemented from 1 January 2021.

(b) Revenue represents only external revenue for each segment. An analysis of inter-segment revenue has not been included as this information is not provided to the CODM.

(d) Adjusted EBITDA and Adjusted EBITDA margin are non-IFRS measures. For explanations and reconciliations of Adjusted EBITDA and Adjusted EBITDA margin refer to Additional Information.

| SUBSEA 7 | ANNUAL REPORT 2021

SUBSEA 7 | ANNUAL REPORT 2021 | 89

Geographic information

Revenue from external clients

Based on the country of registered office of the Group’s subsidiaries or branches, revenue is split as follows:

For the year ended (in $ millions)

2021

31 Dec

2020

31 Dec

United Kingdom 1,682.8 1,292.7

USA 689.0 520.3

Norway 588.0 490.2

Brazil 400.4 186.5

Saudi Arabia 290.8 101.6

ustralia 222.2 133.5

Netherlands 180.0 166.4

aiwan 172.0 126.7

Singapore 165.3 92.9

Mexico 143.5 52.4

Germany 86.3 30.6

zerbaijan 84.8 66.4

urke

74.6 0.0

rinidad & Tobago 60.4 6.8

ngola 60.0 58.0

Senegal 53.5 26.0

Qatar 35.7 15.6

Other countries

(a)

20.7 99.8

5,010.0 3,466.4

(a) Comparative information for the year ended 31 December 2020 includes external revenue of $70.7 million from the Group’s subsidiaries or branches with a registered office in Ghana.

Non-current assets

Based on the country of registered office of the Group’s subsidiaries or branches, non-current assets excluding goodwill, derivative financial

instruments, retirement benefit assets and deferred tax assets are located in the following countries:

t (in $ millions)

2021

31 Dec

2020

31 Dec

United Kingdom 2,194.7 2,375.5

Isle of Man 749.8 864.6

Norway 687.2 274.4

Netherlands 498.7 506.4

USA 75.9 55.2

Nigeria 60.3 65.8

Brazil 36.7 35.4

zerbaijan 30.8 41.9

ngola 23.9 35.2

Other countries

58.4 49.6

4,416.4 4,304.0

GOVERNANCE SUBSEA 7 S.A. FINANCIAL STATEMENTS GLOSSARY

SUBSEA 7 | ANNUAL REPORT 2021 |

CONSOLIDATED FINANCIAL STATEMENTS

STRATEGIC REPORT

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS CONTINUED

90 | SUBSEA 7 | ANNUAL REPORT 2021

6. NET OPERATING INCOME

Net operating income/(loss) includes:

For the year ended (in $ millions)

2021

31 Dec

2020

31 Dec

Research and development costs 11.7 14.6

Employee benefits 1,123.9 933.6

mortisation of intangible assets (Note 14) 14.7 14.7

Depreciation of property, plant and equipment (Note 15) 341.1 334.9

mortisation of right-of-use assets (Note 16) 78.5 82.1

mortisation of mobilisation costs 9.5 10.7

Lease expense for short-term leased assets 520.7 222.4

Lease expense for low-value leased assets 0.6 0.6

ariable lease payments not included within lease liabilities 1.0 2.6

Impairment of goodwill (Note 13) – 605.4

Impairment of intangible assets (Note 14) 4.8 9.2

Impairment of property, plant and equipment (Note 15) 4.1 282.0

Impairment of right-of-use assets (Note 16) 0.2 31.9

Impairment reversal of right-of-use assets (Note 16) (3.7) –

Net (decrease)/increase in allowances for expected credit losses for financial assets (1.4) 1.0

Net (decrease)/increase in allowances for expected credit losses on construction contract assets (Note 22) (0.6) 2.7

Net credit impairment (credit)/loss for financial assets (Note 33) (15.7

)

13.2

uditor’s remuneration 4.0 2.7

The total fees chargeable to the Group by the principal auditing firm Ernst & Young S.A. and other member firms of Ernst & Young Global

Limited were:

For the year ended (in $ millions)

2021

31 Dec

2020

31 Dec

udit fees 3.7 2.6

ax fees 0.3 0.1

4.0 2.7

Audit fees constitute charges incurred for non-prohibited professional services rendered by the Group’s principal auditor and member firms.

Charges were incurred for the audit of the consolidated and statutory financial statements of Subsea 7 S.A. and certain subsidiaries. Fees

were primarily incurred in connection with the year ended 31 December 2021 but include final settlement of charges associated with the

year ended 31 December 2020.

Tax fees constitute charges incurred for non-prohibited professional services rendered by the Group’s principal auditor and member firms

relating to the provision of tax advice and tax compliance services for work undertaken during the year ended 31 December 2021. Fees

were primarily incurred in connection with the year ended 31 December 2021.

The Group’s Audit Committee policy requires pre-approval of audit and non-audit services prior to the appointment of the providers of

professional services together with highlighting excluded services which the Group’s principal auditor cannot provide. The Audit Committee

delegates approval to the Chief Financial Officer based on predetermined limits. The Audit Committee pre-approved or, in cases where

pre-approval was delegated, ratified all audit and non-audit services, provided by the Group’s principal auditor, to Subsea 7 S.A. and its

subsidiaries during the year ended 31 December 2021.

| SUBSEA 7 | ANNUAL REPORT 2021

SUBSEA 7 | ANNUAL REPORT 2021 | 91

Reconciliation of operating expenses and administrative expenses by nature

31 Dec 2021 31 Dec 2020

For the year ended (in $ millions)

Operating

expenses

Administrative

expenses Total expenses

Operating

expenses

Administrative

expenses Total expenses

Direct project related costs, including procurement 2,584.0 – 2,584.0 1,611.4 – 1,611.4

Employee benefits

(a)

996.4 127.5 1,123.9 811.8 121.8 933.6

Depreciation, amortisation and mobilisation 409.5 34.3 443.8 403.5 38.9 442.4

Lease expense for short-term leased assets 520.0 0.7 520.7 221.3 1.1 222.4

Lease expense for low-value leased assets 0.6 – 0.6 0.6 – 0.6

ariable lease expense not included within

lease liabilities 1.0 – 1.0 2.6 – 2.6

Impairment of intangible assets 4.8 – 4.8 9.2 – 9.2

Impairment of property, plant and equipment 4.1 – 4.1 282.0 – 282.0

Impairment of right-of-use assets – 0.2 0.2 14.2 17.7 31.9

Impairment reversal of right-of-use assets – (3.7) (3.7) – – –

Net (decrease)/increase in allowances for expected

credit losses for financial assets (1.4) – (1.4) 1.0 – 1.0

Net (decrease)/increase in allowances for expected

credit losses for construction contract assets

(0.6) – (0.6) 2.7 – 2.7

Net credit impairment (credit)/loss for financial

assets

(a)

(15.7

)

– (15.7

)

13.2 – 13.2

Other expenses 211.5 69.0 280.5 279.4 61.9 341.3

Total 4,714.2 228.0 4,942.2 3,652.9 241.4 3,894.3

(a) Total restructuring related provisions/credit impairments released during the year amounted to $37.2 million (2020: restructuring charges $85.5 million) with $18.9 million of the restructuring

provision release (2020: charge $57.6 million) included in employee benefits. $18.3 million of restructuring related to credit impairments released (2020: $20.8 million charged) was included in net

credit impairment (credit)/loss for financial assets.

7. OTHER GAINS AND LOSSES

For the year ended (in $ millions)

2021

31 Dec

2020

31 Dec

Gains/(Losses) on disposal of property, plant and equipment 3.0 (0.2)

Gain on maturity of lease liabilities 0.2 1.8

Fair value losses on derivative financial instruments mandatorily measured at fair value through profit or loss 1.9 (0.6)

Fair value losses on other financial assets measured at fair value through profit or loss (1.1) (3.0)

Net gain on disposal of subsidiaries – 0.2

Net gains on business combinations post measurement periods 3.3 18.3

Net foreign currency exchange gains/(losses) 37.1 (34.8)

Total 44.4 (18.3)

Net foreign currency exchange gains/(losses) include fair value gains/(losses) on embedded derivatives.

GOVERNANCE SUBSEA 7 S.A. FINANCIAL STATEMENTS GLOSSARY

SUBSEA 7 | ANNUAL REPORT 2021 |

CONSOLIDATED FINANCIAL STATEMENTS

STRATEGIC REPORT

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS CONTINUED

92 | SUBSEA 7 | ANNUAL REPORT 2021

8. FINANCE INCOME AND FINANCE COSTS

For the year ended (in $ millions)

2021

31 Dec

2020

31 Dec

Interest on financial assets measured at amortised cost 4.7 4.8

Total finance income 4.7 4.8

For the year ended (in $ millions)

2021

31 Dec

2020

31 Dec

Interest and fees on financial liabilities measured at amortised cost

11.9 8.9

Total borrowing costs 11.9 8.9

Less: amounts capitalised and included in the cost of qualifying assets (0.6) (4.6)

11.3 4.3

Interest on lease liabilities 6.7 19.7

Interest on tax liabilities 2.1 0.6

Total finance costs 20.1 24.6

Borrowing costs included in the cost of qualifying assets during the year were calculated by applying to expenditure on such assets an

average capitalisation rate of 4.3% dependent on the funding source (2020: 2.1%).

9. TAXATION

Tax recognised in the Consolidated Income Statement

For the year ended (in $ millions)

2021

31 Dec

2020

31 Dec

Tax charged/(credited) in the Consolidated Income Statement

Current tax:

Corporation tax on income for the year 63.4 48.5

djustments in respect of prior years 1.1 (0.2)

Total current tax 64.5 48.3

Deferred tax credit (0.2) (15.0)

Total 64.3 33.3

Tax recognised in the Consolidated Statement of Comprehensive Income

For the year ended (in $ millions)

2021

31 Dec

2020

31 Dec

Tax charge relating to items recognised directly in comprehensive income

Current tax on:

Exchange differences 0.4 0.6

Income tax recognised directly in comprehensive income 0.4 0.6

Deferred tax on:

Commodity cash flow hedges 2.4

Remeasurement gains on defined benefit pension schemes 0.1 –

Deferred tax recognised directly in comprehensive income 2.5 –

Total 2.9 0.6

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Reconciliation of the total tax charge

Income taxes have been provided for in accordance with IAS 12 ‘Income Taxes’, based on the tax laws and rates in the countries where the

Group operates and generates taxable income.

The reconciliation below uses a tax rate of 24.94% (2020: 24.94%) which represents the blended tax rate applicable to Luxembourg entities.

For the year ended (in $ millions)

2021

31 Dec

2020

31 Dec

Income/(loss) before taxes 100.7 (1,071.9)

ax at the blended tax rate of 24.94% (2020: 24.94%) 25.1 (267.3)

Effects of:

Different tax rates of subsidiaries operating in other jurisdictions 16.8 18.3

Non-deductible impairments of goodwill – 150.9

Impact of rate changes 5.8 –

Non-qualifying depreciation 2.8 8.8

Net (benefit)/cost of tonnage tax regimes

(33.7) 35.9

Withholding taxes and unrelieved overseas taxes 24.5 35.9

Non-deductible expenses and non-taxable income 2.1 2.7

ax effect of share of net loss of associates and joint ventures (0.9) –

Movement in unprovided deferred tax 27.1 51.9

Revisions to uncertain tax treatments (0.7) (2.7)

djustments related to prior years (4.6) (1.1)

Taxation in the Consolidated Income Statement 64.3 33.3

Deferred tax

Movements in the net deferred tax balance were:

(in $ millions) 2021 2020

t year beginning 17.3 1.2

Charged to:

Consolidated Income Statement 0.2 15.0

Other Comprehensive Income (2.5) –

Balance sheet reclassifications (0.3) (3.1)

Exchange differences (2.0) 4.2

t year end 12.7 17.3

The deferred tax credit to the Consolidated Income Statement of $0.2 million comprised a credit of $6.0 million from the origination and

reversal of temporary differences and a charge of $5.8 million in respect of the expected impact of the increase in the UK tax rate to 25%,

effective 1 April 2023.

The main categories of deferred tax assets and liabilities recognised in the Consolidated Balance Sheet, before offset of balances within

countries where permitted, were as follows:

At 31 December 2021

(in $ millions)

Deferred tax

asset

Deferred tax

liability

Net recognised

deferred tax

asset/(liability)

Property, plant and equipment – (38.9) (38.9)

ccrued expenses 13.6 – 13.6

Share-based payments 0.7 – 0.7

ax losses 39.9 – 39.9

Other – (2.6) (2.6)

Total 54.2 (41.5) 12.7

GOVERNANCE SUBSEA 7 S.A. FINANCIAL STATEMENTS GLOSSARY

SUBSEA 7 | ANNUAL REPORT 2021 |

CONSOLIDATED FINANCIAL STATEMENTS

STRATEGIC REPORT

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS CONTINUED

94 | SUBSEA 7 | ANNUAL REPORT 2021

9. TAXATION CONTINUED

At 31 December 2020

(in $ millions)

Deferred tax

asset

Deferred

tax liability

Net recognised

deferred tax

asset/(liability)

Intangible assets – (0.3) (0.3)

Property, plant and equipment – (45.4)

(45.4)

ccrued expenses 9.6 (1.6) 8.0

Share-based payments 0.4 – 0.4

ax losses 45.7 – 45.7

Other 8.9 – 8.9

Total 64.6 (47.3)

17.3

Deferred tax is analysed in the Consolidated Balance Sheet, after offset of balances within countries, as:

t (in $ millions)

2021

31 Dec

2020

31 Dec

Deferred tax assets 58.7 49.5

Deferred tax liabilities (46.0) (32.2)

Total 12.7 17.3

At 31 December 2021, the Group had tax losses of $2,572.6 million (2020: $2,667.2 million) available for offset against future taxable

income. A deferred tax asset has been recognised, using the applicable tax rates, in respect of $143.5 million (2020: $182.0 million) of

such losses. No deferred tax asset has been recognised in respect of the remaining $2,429.1 million (2020: $2,485.2 million) as it is not

considered probable that there will be sufficient future taxable income available for offset in the foreseeable future. In addition, the Group

has other unrecognised deferred tax assets of $44.9 million (2020: $45.2 million) in respect of other temporary differences.

No deferred tax has been recognised in respect of taxable temporary differences relating to the unremitted earnings of the Group’s

subsidiaries and branches where remittance is not contemplated and where the timing of distribution is within the control of the Group.

The aggregate amount of unremitted earnings giving rise to such temporary differences for which deferred tax liabilities were not recognised

at 31 December 2021 was $235.2 million (2020: $227.3 million).

Tonnage tax regime

The Group has elected to have qualifying vessel-related activities taxed under tonnage tax regimes in the UK, Norway and the Netherlands.

In 2021, net profits from qualifying activities resulted in a positive impact on the Group’s tax charge of $33.7 million. In 2020, vessel

impairments resulted in net losses on these activities, and a negative impact of $35.9 million.

Net operating losses

Net operating losses (NOLs) to carry forward in various countries will expire as follows:

t (in $ millions)

2021

31 Dec

2020

31 Dec

Within five years 154.5 240.6

5 to 10 years 90.5 195.9

11 to 20 years 161.1 161.1

Without time limit 2,166.5 2,069.6

Total 2,572.6 2,667.2

Included in the above were $1,422.0 million (2020: $1,476.9 million) of NOLs relating to Luxembourg, which could be subject to future claw-

back if certain transactions were entered into.

Uncertain tax treatments

The Group’s business operations are carried out worldwide and, as such, the Group is subject to the jurisdiction of a significant number

of tax authorities at any point in time.

The Group routinely has to manage tax risks in respect of permanent establishments, transfer pricing and other international tax issues.

In common with other multinational companies, the conflict between the Group’s global operating model and the jurisdictional approach

of tax authorities can lead to uncertainty on tax treatments.

This often results in the Group’s filing positions being subject to audit, enquiry and possible re-assessment. During 2021, the Group was

subject to audits and disputes in, among others, Australia, Brazil, Saudi Arabia, France, Nigeria, and Mexico. These audits are at various

stages of completion. The Group’s policy is to co-operate fully with the relevant tax authorities while seeking to defend its tax positions.

The Group provides for the amount of taxes that it considers probable of being payable as a result of such audits and for which a reasonable

estimate can be made. Furthermore, for each reporting period management completes a detailed review of uncertain tax treatments across

the Group, and makes provisions based on the probability of a liability arising. It is possible that the ultimate resolution of these uncertain

treatments could result in tax charges that are materially higher or lower than the amounts provided for.

| SUBSEA 7 | ANNUAL REPORT 2021

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In the year ended 31 December 2021, the Group recorded a net decrease in its uncertain tax treatments of $6.1 million (2020: $4.5 million

net decrease) as a result of revisions to estimated future obligations, and the closure and settlement of certain audits with the relevant tax

authorities.

10. DIVIDENDS

A special dividend of NOK 2.00 per share was approved by the shareholders of Subsea 7 S.A. at the Annual General Meeting on 14 April

2021 and recognised in shareholders’ equity in April 2021. The total special dividend of $72.0 million was paid on 7 May 2021 to

shareholders of Subsea 7 S.A. During the year ended 31 December 2020 no dividends were approved or paid.

11. EARNINGS PER SHARE

Basic and diluted earnings per share

Basic earnings per share is calculated by dividing the net income/(loss) attributable to shareholders of the parent company by the weighted

average number of common shares in issue during the year, excluding shares repurchased by the Group and held as treasury shares (Note

25 ‘Treasury shares’).

Diluted earnings per share is calculated by adjusting the weighted average number of common shares outstanding to assume conversion of

all potentially dilutive common shares. The Group’s potentially dilutive common shares include those related to performance shares.

The net income/(loss) attributable to shareholders of the parent company and share data used in the basic and diluted earnings per share

calculations were as follows:

For the year ended (in $ millions)

2021

31 Dec

2020

31 Dec

Net income/(loss) attributable to shareholders of the parent company 31.8 (1,092.8)

Earnings used in the calculation of diluted earnings per share 31.8 (1,092.8)

For the year ended

2021

31 Dec

Number of shares

2020

31 Dec

Number of shares

Weighted average number of common shares used in the calculation of basic earnings per share 297,562,898 297,651,231

Performance shares 1,020,873 –

Weighted average number of common shares used in the calculation of diluted earnings

per share 298,583,771 297,651,231

For the year ended (in $ per share)

2021

31 Dec

2020

31 Dec

Basic earnings per share 0.11 (3.67)

Diluted earnings per share 0.11 (3.67)

During the year the following shares, that could potentially dilute the earnings per share, were excluded from the calculation of diluted

earnings per share due to being anti-dilutive:

For the year ended

2021

31 Dec

Number of shares

2020

31 Dec

Number of shares

Performance shares 807,361 1,637,979

12. BUSINESS COMBINATIONS

During 2021, the Group entered into three transactions which qualified as business combinations as follows.

Agreement to combine the Group’s fixed offshore wind business with OHT ASA

On 8 July 2021, the Group announced it had entered into an agreement to combine the Group’s Renewables business unit (consisting of

the Group’s fixed offshore wind business) with OHT ASA (renamed Seaway 7 ASA); the transaction was completed on 1 October 2021.

The business combination meets the criteria to be treated as a reverse acquisition with the deemed accounting acquirer being the Group’s

Renewable business unit. Effective 1 October 2021, the Group owns 72% of the combined entity and the shareholders of the former OHT

ASA Group own 28% of the combined entity. The business combination resulted in the Group recognising goodwill of $70.0 million at the

transaction date.

The former OHT ASA Group specialised in heavy transportation and installation, mainly related to the offshore renewables sector. It was a

leading heavy transportation contractor and a new entrant in the offshore energy installation sector. The strategic rationale for the transaction

was to strengthen Subsea 7’s renewables business with the addition of two new-build vessels under construction, Seaway Alfa Lift, an

offshore wind foundation installation vessel, and Seaway Ventus, an offshore wind turbine installation vessel.

Provisional fair values

The provisional fair values of the acquired identifiable assets and assumed liabilities at 1 October 2021 are shown below. This table includes

fair value adjustments recognised in accordance with IFRS 3 ‘Business Combinations’ which reflect conditions existing at the date of the

transaction. A downward fair value adjustment of $32.3 million was applied to the acquired net assets of OHT ASA resulting from an

onerous fixed-price contract provision existing at the date of the business combination. As a result of supplier delays, the final installation,

testing and commissioning of the equipment for the upending and lowering of monopiles resulted in delays to the construction of Seaway

Alfa Lift. The use of an alternative vessel has resulted in the recognition of an onerous fixed-price contract provision.

GOVERNANCE SUBSEA 7 S.A. FINANCIAL STATEMENTS GLOSSARY

SUBSEA 7 | ANNUAL REPORT 2021 |

CONSOLIDATED FINANCIAL STATEMENTS

STRATEGIC REPORT

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS CONTINUED

96 | SUBSEA 7 | ANNUAL REPORT 2021

12. BUSINESS COMBINATIONS CONTINUED

Stamp duty and other expenses incurred in connection with the acquisition have been accounted for separately and recorded within

administrative expenses in the Group’s Consolidated Income Statement.

(in $ millions) At 1 October 2021

ssets

Property, plant and equipment 291.7

Right-of-use assets 3.0

Inventories 4.6

rade and other receivables 10.3

Construction contracts – assets 8.9

Cash and cash equivalents 12.1

330.6

Liabilities

rade and other liabilities 3.6

Derivative financial instruments 1.0

Borrowings 37.0

Lease liabilities 3.3

Construction contracts – liabilities 46.3

Provisions 32.3

123.5

Identifiable net assets at fair value 207.1

Goodwill arising on acquisition 70.0

277.1

Consideration comprised

Non-controlling interest contributed by the Group as part of the business combination 199.5

Non-controlling interest of acquired entities at fair value 77.6

Total consideration 277.1

Goodwill

Management has recognised goodwill in accordance with the criteria within IFRS 3 ‘Business Combinations’. Aggregate goodwill of

$70.0 million comprised the value of intangible assets which did not meet the criteria for separate recognition, including the assembled

workforce and complementary service capabilities.

The following estimates and judgements were used by management to calculate goodwill:

Consideration

Consideration of $277.1 million, which represents the fair value of the total transaction, was calculated using a price per share for OHT ASA

(renamed Seaway 7 ASA on 1 October 2021) agreed between both parties, which was representative of the share price on the date of

the combination, multiplied by the number of shares outstanding immediately prior to the business combination, with adjustments for

outstanding share warrants. The business combination was a non-cash share only transaction and the consideration at the date of

completion reflected an increase of approximately $38.0 million in the market capitalisation of OHT ASA between 8 July 2021, the

date of announcement of the business combination, and 1 October 2021, the date of completion.

Fair value of acquired assets and assumed liabilities

Property, plant and equipment:

• Heavy transportation vessels – OHT ASA operated a fleet of owned vessels which at the date of the business combination had an

aggregate carrying amount of $122.6 million. Management obtained independent market value assessments for these vessels and as

a result the fair value of the vessels was considered to be $129.2 million, which was within the range of the market value assessments.

• Assets under construction – Seaway Alfa Lift and Seaway Ventus (formerly named Vind 1) were part-completed new-build vessels at the

date of the business combination with an aggregate carrying amount of $152.9 million. The fair valuation of part-build assets requires

significant judgements, including an assessment of the forecast full costs at completion of the assets. Independent market value

assessments were not readily available for these vessels. Management considers that a fair value for these assets of $161.3 million at

the date of the business combination was appropriate. The $8.4 million uplift, compared to the historical carrying amounts, represents

management’s judgement of the additional fair value of these part-completed assets when considering the underlying strategic rationale

for the business combination and the additional opportunities that the acquisition of these vessels will offer the Group.

Trade and other receivables

Trade and other receivables are shown at fair value and represent the gross contractual amounts receivable.

| SUBSEA 7 | ANNUAL REPORT 2021

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Provisions

Management recognised a downward fair value adjustment of $32.3 million resulting from an onerous fixed-price contract provision existing

at the date of the business combination.

The full amount of goodwill was allocated to the Group’s Renewables cash-generating unit and is not expected to be deductible for

tax purposes. As described in Note 13 ‘Goodwill’ management performed an impairment review of the carrying amount of goodwill.

No impairment indicators were identified.

Financial performance

The financial performance, from the date of combination to 31 December 2021, was $32.2 million of revenue and $0.7 million of net income.

If the combination had taken place at the beginning of the year, 2021 Group revenue and income before tax would have been $5,056.9 million

and $93.9 million respectively.

Acquisition of Ocean Geo Solutions Inc.

On 29 July 2021, an indirect subsidiary of Subsea 7 S.A. acquired the entire share capital of Ocean Geo Solutions Inc. Cash consideration

paid for the shares was $1.0 million with associated contingent consideration of $1.0 million. The transaction resulted in the recognition of

a provisional amount of goodwill of $1.3 million.

Ocean Geo Solutions Inc. provides geotechnical and geophysical analysis to its client base across the energy industry in the United States.

The strategic rationale for the transaction was to expand the Group’s worldwide capability for this analysis across both the Subsea and

Conventional and Renewables business units.

Acquisition of a 59.12% shareholding of Nautilus Floating Solutions, S.L.

On 22 September 2021, an indirect subsidiary of Subsea 7 S.A. acquired a 59.12% shareholding of Nautilus Floating Solutions, S.L. Cash

consideration paid for the shares was $7.0 million. The transaction resulted in the recognition of a provisional amount of goodwill of

$5.3 million and non-controlling interest of $1.2 million.

Nautilus Floating Solutions, S.L. is a technology development company researching the design and licence of floating foundations for the

offshore wind market. The strategy rationale for the transaction was to enhance the Group’s presence in the floating foundations offshore

wind market, supporting research and development initiatives and technology prototypes.

Aggregate provisional fair values

The acquisitions of the Group’s interests in Ocean Geo Solutions Inc. and Nautilus Floating Solutions, S.L. are not material to the Group.

Management has presented aggregated provisional fair values of the acquired identifiable assets and liabilities. This table includes fair value

adjustments recognised in accordance with IFRS 3 ‘Business Combinations’ which reflect conditions existing at the date of the transaction.

Stamp duty and other expenses incurred in connection with the acquisitions have been accounted for separately and recorded within

administrative expenses in the Group’s Consolidated Income Statement.

(in $ millions)

At acquisition

date

ssets

Intangible assets 2.3

rade and other receivables 1.4

Cash and cash equivalents 0.5

4.2

Liabilities

rade and other liabilities 0.1

Borrowings 0.5

0.6

Identifiable net assets at fair value 3.6

Goodwill arising on acquisition 6.6

10.2

Consideration comprised

Cash consideration:

Cash paid 8.0

Contingent consideration 1.0

Non-controlling interests 1.2

Total consideration 10.2

Goodwill

Aggregate goodwill of $6.6 million comprised the value of intangible assets which did not meet the criteria for separate recognition, including

the assembled workforce and complementary service capabilities. Goodwill of $1.3 million was allocated to the Xodus cash-generating unit

(CGU) and $5.3 million was allocated to the Nautilus CGU; neither amount is expected to be deductible for tax purposes.

GOVERNANCE SUBSEA 7 S.A. FINANCIAL STATEMENTS GLOSSARY

SUBSEA 7 | ANNUAL REPORT 2021 |

CONSOLIDATED FINANCIAL STATEMENTS

STRATEGIC REPORT

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS CONTINUED

98 | SUBSEA 7 | ANNUAL REPORT 2021

12. BUSINESS COMBINATIONS CONTINUED

Contingent consideration

The sale and purchase agreement included contingent consideration. Additional cash payments to previous owners may be payable should

specific targets be met in future periods. At the acquisition dates and at 31 December 2021 the fair value of contingent consideration was

estimated to be $1.0 million. Fair value was determined using management assumptions based on forecast activity levels. A significant

increase or decrease in forecast activity levels would result in a higher or lower fair value of the provision for contingent consideration.

The range of potential outcomes is estimated to be between $nil and $1.0 million payable between 2022 and 2024.

Trade and other receivables

Trade and other receivables are shown at fair value and represent the gross contractual amounts receivable.

Financial performance

The aggregated financial performance of both acquisitions, from the individual applicable dates of each acquisition to 31 December 2021,

was $0.5 million of revenue and $0.2 million of loss before tax. If the combinations had taken place at the beginning of the year, 2021

Group revenue and income before tax would have been $5,010.6 million and $100.5 million respectively.

13. GOODWILL

(in $ millions) Total

Cost

t 1 January 2020 2,395.5

djustment to identifiable net assets at fair value subsequent to initial recognition 0.1

Exchange differences 44.7

t 31 December 2020 2,440.3

dditions 76.6

Exchange differences (7.8)

t 31 December 2021 2,509.1

ccumulated impairment

t 1 January 2020 1,690.9

Impairment charges 605.4

Exchange differences 59.5

t 31 December 2020 2,355.8

Exchange differences (7.2)

t 31 December 2021 2,348.6

Carrying amount

t 31 December 2020 84.5

t 31 December 2021 160.5

On 8 July 2021, the Group announced it had entered into an agreement to combine the Group’s Renewables business unit (consisting of

the Group’s fixed offshore wind business) with OHT ASA; the transaction was completed on 1 October 2021. The combination resulted

in the recognition of goodwill of $70.0 million on Subsea 7’s Consolidated Balance Sheet at the date of the transaction, allocated to the

Renewables cash-generating unit (CGU).

On 29 July 2021, an indirect subsidiary of Subsea 7 S.A. acquired the entire share capital of Ocean Geo Solutions Inc. The transaction

resulted in the recognition of a provisional amount of goodwill of $1.3 million, allocated to the Xodus CGU.

On 22 September 2021, an indirect subsidiary of Subsea 7 S.A. acquired a 59.12% shareholding of Nautilus Floating Solutions, S.L.

The transaction resulted in the recognition of a provisional amount of goodwill of $5.3 million, allocated to the Nautilus CGU.

For financial management and reporting purposes, the Group is organised into management regions. Management regions are aligned with

the Group’s business units which are used by the Chief Operating Decision Maker (CODM) to allocate resources and appraise performance.

The Group has ten CGUs which are aligned with management regions. At 31 December 2021 the Group’s CGUs comprised:

• CGUs for Africa Middle East and Caspian, Asia Pacific, Brazil, Gulf of Mexico, Norway and UK and GIRM (Global Inspection Repair

and Maintenance) which include activities connected with the performance of regional projects including SURF activities (related to the

engineering, procurement, construction and installation of offshore systems), Conventional services (including the fabrication, installation,

extension and refurbishment of platforms and pipelines in shallow water), the long-term PLSV contracts in Brazil, activities connected with

the provision of inspection, repair and maintenance services, integrity management of subsea infrastructure and remote intervention support;

• Nautilus CGU which includes activities related to floating wind solutions;

• Xodus CGU which includes activities related to engineering services, advisory services and environmental support;

• 4Subsea CGU which includes activities connected with integrity management of subsea infrastructure; and

• Renewables CGU which includes activities connected with three specialist segments of the fixed offshore wind market: the installation

of offshore wind turbine foundations and inner-array cables, heavy lifting and heavy transportation operations related to the renewables

sector, and the decommissioning of redundant offshore structures.

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The Group performed its annual goodwill impairment review at 31 December 2021. Subsequent to this review the carrying amounts of the

goodwill were allocated to the following CGUs:

t (in $ millions)

2021

31 Dec

Nautilus

5.3

Norway

9.5

Renewables 70.0

UK GIRM

40.7

odus 16.1

4Subsea 18.9

Total 160.5

At 31 December 2021 there was no goodwill associated with the Africa Middle East and Caspian, Asia Pacific, Brazil and Gulf of

Mexico CGUs.

The recoverable amounts of the CGUs were determined based on a value-in-use calculation using pre-tax, risk adjusted cash flow

projections approved by the Executive Management Team covering a five-year period from 2022 to 2026. These projections included certain

considerations for climate change related risks and opportunities on the period. Cash flows beyond this five-year period were extrapolated in

perpetuity using a 2.0% (2020: 2.0%) growth rate to determine the terminal value. The pre-tax discount rate applied to the risk adjusted cash

flow projections was 10.6% (2020: 10.8%).

Key assumptions used in value-in-use calculations

Management considers that the calculations of value-in-use for all CGUs are most sensitive to the following key assumptions:

• EBITDA forecasts;

• the pre-tax discount rate; and

• the growth rate used to extrapolate cash flows.

EBITDA forecast – The EBITDA forecast for each CGU is dependent on a combination of factors including market size, market share,

contractual backlog, gross margins, future project awards, asset utilisation and an assessment of the impacts of competition within the

respective segments. Assumptions are based on a combination of internal and external studies, management judgements and historical

information, adjusted for any foreseen changes in market conditions.

Pre-tax discount rate – The pre-tax discount rate was estimated based on the weighted average cost of capital of the Group, amended to

reflect a normalised capital structure for the energy sector. Risk premiums were not applied to the discount rate applied to individual CGUs

as the CGU cash flow projections were risk adjusted.

Growth rate estimates – The 2.0% (2020: 2.0%) growth rate used to extrapolate the cash flow projections beyond the five-year period

is broadly consistent with market expectations for long-term growth in the industry and assumes no significant change in the Group’s

market share and the range of services and products provided.

Sensitivity to changes in key assumptions

In determining the value-in-use recoverable amount for each CGU, sensitivities have been applied to key assumptions. The industry in which

the Group operates is cyclical and highly dependent on energy prices; this could lead to changes in future cash flows which are greater than

the sensitivity ranges applied.

In the performance of sensitivity analysis the impacts of the following changes to key assumptions were assessed:

• an increase in the pre-tax discount rate by 1 percentage point;

• a decrease in the pre-tax discount rate by 1 percentage point;

• an increase in the long-term growth rate by 1 percentage point;

• a decrease in the long-term growth rate by 1 percentage point;

• a 10% increase in the forecast EBITDA assumptions during the five-year period from 2022 to 2026, and the EBITDA upon which terminal

values have been calculated; and

• a 10% decrease in the forecast EBITDA assumptions during the five-year period from 2022 to 2026, and the EBITDA upon which terminal

values have been calculated.

CGUs not impaired and not sensitive to impairment

Changes to any of the key assumptions used in the sensitivity analysis would not, in isolation, cause the recoverable amount of the Norway,

Renewables, UK GIRM, Xodus, Nautilus and 4Subsea CGUs to be materially less than their carrying amount.

The Africa Middle East and Caspian, Asia Pacific, Brazil and Gulf of Mexico CGUs have no goodwill, therefore any future changes in the key

assumptions, in isolation, would not result in an impairment charge being recognised against goodwill.

GOVERNANCE SUBSEA 7 S.A. FINANCIAL STATEMENTS GLOSSARY

SUBSEA 7 | ANNUAL REPORT 2021 |

CONSOLIDATED FINANCIAL STATEMENTS

STRATEGIC REPORT

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS CONTINUED

100 | SUBSEA 7 | ANNUAL REPORT 2021

14. INTANGIBLE ASSETS

(in $ millions) Software

Customer

contracts

(backlog)

Other

intangibles Total

Cost

t 1 January 2020 47.4 30.5 83.3 161.2

dditions 2.0 – 24.0 26.0

Disposals (4.4) – (0.3) (4.7)

Exchange differences 1.1 – 2.5 3.6

t 31 December 2020 46.1 30.5 109.5 186.1

cquisition of businesses – – 2.3 2.3

dditions 8.4 – 0.1 8.5

Disposals (10.4) (30.5) (34.1) (75.0)

Exchange differences (0.2) – 0.3 0.1

t 31 December 2021 43.9 – 78.1 122.0

ccumulated amortisation and impairment

t 1 January 2020 30.2 30.5 57.7 118.4

Charge for the year 3.4 – 11.3 14.7

Impairments – – 9.2 9.2

Eliminated on disposal (3.9) – (0.3) (4.2)

Exchange differences 0.8 – 1.2 2.0

t 31 December 2020 30.5 30.5 79.1 140.1

Charge for the year 3.6 – 11.1 14.7

Impairments – – 4.8 4.8

Eliminated on disposal (10.2) (30.5) (34.1) (74.8)

Exchange differences – – (0.1) (0.1)

t 31 December 2021 23.9 – 60.8 84.7

Carrying amount:

t 31 December 2020 15.6 – 30.4 46.0

t 31 December 2021 20.0 – 17.3 37.3

The table above includes assets under construction of $6.1 million (2020: $15.8 million). Other intangible assets includes capitalised

expenditure related to the Group’s digitalisation programme.

An impairment test was performed on the balances at 31 December 2021 and impairment charges of $4.8 million (2020: $9.2 million) were

recognised. The impairment charges were mainly related to technology assets where future economic benefit is considered to be uncertain.

The charges were recognised in the Consolidated Income Statement within operating expenses in the Corporate business unit.

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15. PROPERTY, PLANT AND EQUIPMENT

(in $ millions) Vessels

Operating

equipment

Land and

buildings

Other

assets Total

Cost

t 1 January 2020 5,874.2 1,020.3 523.0 70.5 7,488.0

dditions 156.7 17.4 2.8 – 176.9

Exchange differences 18.6 13.1 (5.5) (2.3) 23.9

ransfers 7.2 (4.5) – (2.7) –

Disposals (78.7) (28.8) (1.7) (15.1) (124.3)

t 31 December 2020 5,978.0 1,017.5 518.6 50.4 7,564.5

cquisition of businesses 290.5 – – 1.2 291.7

dditions 105.2 28.9 10.3 13.5 157.9

Exchange differences (0.8) (1.3) (5.8) (0.8) (8.7)

ransfers (0.7) 0.3 4.0 (3.6) –

Disposals (374.2) (28.1) (4.0) (2.7) (409.0)

t 31 December 2021 5,998.0 1,017.3 523.1 58.0 7,596.4

ccumulated depreciation and impairment

t 1 January 2020 2,002.5 750.0 256.1 57.1 3,065.7

Charge for the year 255.0 50.6 22.7 6.6 334.9

Impairments 249.3 13.4 19.3 – 282.0

Exchange differences 7.5 11.0 (1.2) (0.2) 17.1

Eliminated on disposals (77.5) (23.9) (1.6) (14.8) (117.8)

t 31 December 2020 2,436.8 801.1 295.3 48.7 3,581.9

Charge for the year 263.2 49.0 21.9 7.0 341.1

Impairments – – 4.1 – 4.1

Exchange differences (1.7) (0.8) (2.9) (0.7) (6.1)

ransfers 2.4 – – (2.4) –

Eliminated on disposals (371.0) (28.0) (4.0) (2.6) (405.6)

t 31 December 2021 2,329.7 821.3 314.4 50.0 3,515.4

Carrying amount:

t 31 December 2020 3,541.2 216.4 223.3 1.7 3,982.6

t 31 December 2021 3,668.3 196.0 208.7 8.0 4,081.0

The table above includes assets under construction of $285.4 million at 31 December 2021 (2020: $85.7 million).

An impairment test was performed on the balances of property, plant and equipment at 31 December 2021 and impairment charges

totalling $4.1 million (2020: $282.0 million) were recognised where the future recoverable amounts were reassessed and reduced. The

charges were recognised in the Consolidated Income Statement within operating expenses. Recoverable amount is defined as the higher

of value-in-use and fair value less costs of disposal and was determined by management based on recent similar market transactions, an

assessment of internal estimates and independent external valuations.

GOVERNANCE SUBSEA 7 S.A. FINANCIAL STATEMENTS GLOSSARY

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CONSOLIDATED FINANCIAL STATEMENTS

STRATEGIC REPORT

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS CONTINUED

102 | SUBSEA 7 | ANNUAL REPORT 2021

16. RIGHT-OF-USE ASSETS

(in $ millions) Vessels

Operating

equipment

Land and

buildings

Other

assets Total

Cost

t 1 January 2020 283.4 6.2 120.4 2.7 412.7

dditions 38.2 0.2 13.4 0.6 52.4

Exchange differences 4.9 0.1 3.4 – 8.4

Remeasurement (9.0) – (0.1) – (9.1)

Disposals (60.3) (4.3) (5.0) (0.4) (70.0)

t 31 December 2020 257.2 2.2 132.1 2.9 394.4

cquisition of businesses – – 3.0 – 3.0

dditions 30.3 8.6 15.3 0.6 54.8

Exchange differences (1.2) (0.7) (4.6) (0.1) (6.6)

Remeasurement (2.5) – 3.0 – 0.5

Disposals – (0.9) (10.2) (0.4) (11.5)

t 31 December 2021 283.8 9.2 138.6 3.0 434.6

ccumulated amortisation and impairment

t 1 January 2020 59.1 2.7 22.3 0.8 84.9

Charge for the year 54.2 2.7 24.3 0.9 82.1

Impairments 12.2 0.4 19.3 – 31.9

Exchange differences 10.0 (0.1) 1.4 – 11.3

Remeasurement 4.0 – 2.4 – 6.4

Eliminated on disposals (26.2) (4.3) (4.6) (0.4) (35.5)

t 31 December 2020 113.3 1.4 65.1 1.3 181.1

Charge for the year 53.7 4.7 19.3 0.8 78.5

Impairments – – 0.2 – 0.2

Impairment reversals – – (3.7) – (3.7)

Exchange differences (5.2) (0.3) (4.7) – (10.2)

Remeasurement (4.4) – (1.8) – (6.2)

Eliminated on disposals – (0.9) (10.2) (0.4) (11.5)

t 31 December 2021 157.4 4.9 64.2 1.7 228.2

Carrying amount:

t 31 December 2020 143.9 0.8 67.0 1.6 213.3

t 31 December 2021 126.4 4.3 74.4 1.3 206.4

The Group leases vessels, operating equipment and properties with contracts which are typically for fixed periods but may have extension

options used to maximise operational flexibility. The majority of extension and termination options held are exercisable only by the Group

not the respective lessors. Lease liabilities are disclosed within Note 28 ‘Lease liabilities’. Commitments to leases which have not yet

commenced are disclosed within Note 32 ‘Commitments and contingent liabilities’.

An impairment test was performed on the balances at 31 December 2021 and impairment charges totalling $0.2 million (2020: $31.9 million)

were recognised. In addition impairment reversals totalling $3.7 million were recognised (2020: $nil).

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17. INTERESTS IN ASSOCIATES AND JOINT ARRANGEMENTS

Interests in associates and joint ventures

At 31 December 2021 the Group had interests in 11 joint ventures. The Group’s ownership interests in joint ventures were as follows:

Year end Country of registration

Operating segment Classification

Subsea 7

ownership %

stori Sp. z.o.o. 31 December Poland Subsea and Conventional Joint Venture 49

Belmet 7 Limited 31 December Ghana Subsea and Conventional Joint Venture 49

Eidesvik Seven AS 31 December Norway Subsea and Conventional Joint Venture 50

Eidesvik Seven Chartering AS 31 December Norway Subsea and Conventional Joint Venture 50

ENMAR S.A. 31 December Mozambique Subsea and Conventional Joint Venture 51

GO FZE 31 December Nigeria Subsea and Conventional Joint Venture 40

Global Oceon Engineers Nigeria Limited 31 December Nigeria Subsea and Conventional Joint Venture 40

SapuraAcergy Assets Pte Ltd

(a)

31 January Malaysia Subsea and Conventional Joint Venture 51

SapuraAcergy Sdn Bhd

(a)

31 January Malaysia Subsea and Conventional Joint Venture 50

Subsea Integration Alliance LLC 31 December US Subsea and Conventional Joint Venture 50

Subsea 7 Malaysia Sdn Bhd 31 December Malaysia Subsea and Conventional Joint Venture 30

(a) The Group has 50% equity ownership of SapuraAcergy Sdn. Bhd and 51% equity ownership in SapuraAcergy Assets Pte Ltd, however, 1% is subject to a put and call option for the benefit of its

joint venture partner.

For all entities the principal place of business is consistent with the country of registration. For the majority of entities the proportion of voting

rights is consistent with the proportion of ownership interest, however in some cases some specific matters require unanimous approval of

all shareholders.

All interests in joint ventures are accounted for using the equity method. Financial information, using consistent accounting policies, for

the year ended 31 December 2021 is used for all entities. The movement in the balance of investments in joint ventures was as follows:

(in $ millions) 2021 2020

t year beginning 29.5 26.2

Share of net income/(loss) of associates and joint ventures 3.9 (0.5)

Investment in joint ventures – 0.6

Derecognition of investments in joint ventures – (1.8)

Net reclassification of investment balances (4.5) 4.4

Exchange differences (0.3) 0.6

t year end 28.6 29.5

Net reclassification of investment balances

This amount relates primarily to reclassification within the Group’s balance sheet of negative investment balances to other

non-current liabilities.

Summarised financial information

At 31 December 2021 none of the Group’s investments in joint ventures were individually material to the Group therefore summarised

financial information has not been provided.

Interests in joint arrangements

The Group executes contracts on a regular basis through unstructured joint operations governed by alliance or consortium agreements.

These agreements provide for joint and several liability for the parties involved. The material joint operations of the Group are detailed below.

The Group participates in Subsea Integration Alliance (SIA), through unincorporated strategic global operations between Subsea 7 and

OneSubsea®, the subsea technologies, production and processing systems division of Schlumberger. As part of the alliance, Subsea 7 and

OneSubsea® agree terms and conditions on a project-by-project basis; this governs the relationship between the entities executing

contracts with clients. SIA operates globally and provides clients with subsea technologies, production and processing systems, bringing

together field development planning, project delivery and total lifecycle solutions under an extensive technology and services portfolio.

Contracts with clients are entered into by individual entities of the Subsea 7 and OneSubsea® groups, with all activities executed on a joint

and several basis.

Saudi Arabian Oil Company awarded a long-term frame agreement to a consortium consisting of Subsea 7 and L&T Hydrocarbon

Engineering. This unincorporated consortium is governed by a consortium agreement, and Subsea 7 and L&T Hydrocarbon Engineering

are jointly and severally liable to Saudi Arabian Oil Company for the various call-off work orders awarded to the consortium via the long-term

frame agreement. The consortium’s activities include project management, engineering, procurement, fabrication, transportation and

installation of offshore facilities and infrastructure. The principal place of business of the unincorporated consortium is the Kingdom of

Saudi Arabia.

GOVERNANCE SUBSEA 7 S.A. FINANCIAL STATEMENTS GLOSSARY

103

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CONSOLIDATED FINANCIAL STATEMENTS

STRATEGIC REPORT

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS CONTINUED

104 | SUBSEA 7 | ANNUAL REPORT 2021

18. ADVANCES AND RECEIVABLES

t (in $ millions)

2021

31 Dec

2020

31 Dec

Non-current amounts due from associates and joint ventures 38.6 7.3

llowance for credit impairment (1.6) (1.6)

37.0 5.7

Capitalised fees for long-term loan facilities 5.3 1.4

Deposits held by third parties 1.0 1.1

Other receivables 14.1 14.8

Total 57.4 23.0

19. INVENTORIES

t (in $ millions)

2021

31 Dec

2020

31 Dec

Materials and non-critical spares 10.4 14.6

Consumables 29.9 11.8

Total 40.3 26.4

For the year ended (in $ millions)

2021

31 Dec

2020

31 Dec

otal cost of inventory charged to the Consolidated Income Statement 114.5 53.7

Write-down of inventories charged to the Consolidated Income Statement 0.5 0.9

Provision for obsolescence charged/(reversal of provision for obsolescence credited) to the Consolidated

Income Statement 2.4 (0.1)

At 31 December 2021 inventories included a provision for obsolescence of $6.5 million (2020: $7.8 million). There were no inventories

pledged as security.

20. TRADE AND OTHER RECEIVABLES

t (in $ millions)

2021

31 Dec

2020

31 Dec

rade receivables 519.2 523.7

llowance for expected credit losses (2.2) (2.7)

llowance for credit impairment (3.9) (23.3)

513.1 497.7

Current amounts due from associates and joint ventures 4.4 9.2

llowance for credit impairment (1.9) (1.9)

2.5 7.3

Other receivables 20.5 25.8

dvances to suppliers 39.0 6.3

Other taxes receivable 80.8 53.6

Total 655.9 590.7

Details of how the Group manages its credit risk and further analysis of the trade receivables balance, allowances for expected credit losses

and allowances for credit impairment are shown in Note 33 ‘Financial instruments’.

Other receivables include insurance receivables, customer retentions and deposits.

Other taxes receivable include value added tax, sales tax, withholding tax, social security tax and other indirect taxes.

21. OTHER ACCRUED INCOME AND PREPAID EXPENSES

t (in $ millions)

2021

31 Dec

2020

31 Dec

Unbilled revenue 88.1 78.4

llowance for expected credit losses (0.4) (1.3)

87.7 77.1

Prepaid expenses 116.8 120.5

Total 204.5 197.6

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Unbilled revenue relates to work completed on day-rate contracts, which had not been billed to clients at the balance sheet date. There

were no contract liability balances which relate to this category of contract revenue. Revenue of $6.0 million (2020: $1.2 million) was

recognised in the year relating to performance obligations satisfied in previous periods. The increase in the balance during the year was due

to increased activity in the UK, partly offset by reduced activity in the Gulf of Mexico.

Prepaid expenses arise in the normal course of business and represent expenditure which has been deferred and which will be recognised

in the Consolidated Income Statement within 12 months of the balance sheet date.

The movement in the allowance for expected credit losses in respect of unbilled revenue during the year was as follows:

(in $ millions)

2021

31 Dec

2020

31 Dec

llowance for expected credit losses

t year beginning (1.3) (0.3)

Decrease/(increase) in allowance recognised in profit or loss 0.9 (1.0)

t year end (0.4) (1.3)

Details of how the Group manages its credit risk are shown in Note 33 ‘Financial instruments’.

At 31 December 2021 the allowance for credit impairment in respect of unbilled revenue was $nil (2020: $nil).

22. CONSTRUCTION CONTRACTS

(in $ millions)

Construction

contracts –

assets

Construction

contracts –

liabilities

t 31 December 2021

Current 791.4 (205.7)

llowance for expected credit losses (3.2) –

788.2 (205.7)

Non-current 4.4 –

Total 792.6 (205.7)

(in $ millions)

Construction

contracts –

assets

Construction

contracts –

liabilities

t 31 December 2020

Current 474.4 (279.5)

llowance for expected credit losses (3.8) –

470.6 (279.5)

Non-current 6.7 –

otal 477.3 (279.5)

(in $ millions)

2021

31 Dec

2020

31 Dec

Revenue recognised which was included in construction contract liabilities at beginning of year 267.9 159.6

Revenue recognised from performance obligations satisfied in previous periods 69.1 52.4

Revenue recognised which was included in construction contract liabilities at the beginning of the year of $267.9 million (2020: $159.6

million) represents amounts included within the construction contract liabilities balance at 1 January 2021 which have been recognised as

revenue during the year. Revenue recognised from performance obligations satisfied in previous periods of $69.1 million (2020: $52.4 million)

represents revenue recognised in the Consolidated Income Statement for projects which were considered operationally complete at the prior

year end.

Significant movements in the construction contract asset and construction contract liability balances

The Group has construction contract asset and construction contract liability balances as a result of long-term projects in the Subsea and

Conventional and Renewables business units. Details of the Group’s treatment of performance obligations are disclosed in Note 3

‘Significant accounting policies’. Due to the number and size of projects within the Group, construction contract asset and liability balances

can vary significantly at each reporting date. Cumulative adjustments to revenue are most commonly caused by a change to the estimate

of the transaction price due to a reassessment of the constraint to variable consideration, awarded variation orders, scope changes or

amendments to the cost profile.

The $315.3 million increase in construction contract assets during 2021 was driven by an increase in activity in the Subsea and

Conventional, primarily in the Gulf of Mexico and Brazil, and Renewables business units.

GOVERNANCE SUBSEA 7 S.A. FINANCIAL STATEMENTS GLOSSARY

105

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CONSOLIDATED FINANCIAL STATEMENTS

STRATEGIC REPORT

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS CONTINUED

106 | SUBSEA 7 | ANNUAL REPORT 2021

22. CONSTRUCTION CONTRACTS CONTINUED

Construction contract assets

An analysis of the ageing of construction contract assets at the balance sheet date has not been provided. Due to the nature of the balances

and the fact that the Group invoices on a milestone basis, the ageing of construction contract assets is not reflective of the credit risk

associated with these balances.

The movement in the allowance for expected credit losses in respect of net construction contract assets during the year was as follows:

(in $ millions)

2021

31 Dec

2020

31 Dec

llowance for expected credit losses

t year beginning (3.8) (1.1)

Decrease/(increase) in allowance recognised in profit or loss 0.6 (2.7)

t year end (3.2) (3.8)

The allowance for expected credit losses decreased during the year due to fluctuations in the mix of customers, the size of receivables due

and the default probability.

At 31 December 2021 the allowance for credit impairment recognised in connection with construction contract assets was $nil (2020: $nil).

Transaction price allocated to the remaining performance obligations

The transaction price allocated to the remaining performance obligations (unsatisfied or partially unsatisfied) was as follows:

At 31 December 2021

Expected year of execution

(in $ millions) 2022 2023 2024

2025

and beyond Total

Subsea and Conventional 3,404.6 1,813.7 614.7 127.9 5,960.9

Renewables 882.0 168.9 186.4 0.4 1,237.7

Corporate 13.1 – – – 13.1

Total 4,299.7 1,982.6 801.1 128.3 7,211.7

t 31 December 2020

Expected year of execution

(in $ millions)

2021

Re-presented

(a)

2022

Re-presented

(a)

2023

Re-presented

(a)

2024

and beyond

Re-presented

(a)

Total

Re-presented

(a)

Subsea and Conventional 2,826.8 913.3 356.7 116.4 4,213.2

Renewables 1,258.4 643.6 84.2 0.4 1,986.6

Corporate 14.4 – – – 14.4

otal 4,099.6 1,556.9 440.9 116.8 6,214.2

(a) Re-presented due to new organisational structure implemented from 1 January 2021.

The estimate of the transaction price does not include any amounts of variable consideration which are constrained.

23. CASH AND CASH EQUIVALENTS

t (in $ millions)

2021

31 Dec

2020

31 Dec

Cash and cash equivalents 597.6 511.6

Cash and cash equivalents included amounts totalling $44.5 million (2020: $31.4 million) held by Group undertakings in certain countries

whose exchange controls may significantly restrict or delay the remittance of these amounts to jurisdictions outside of that country.

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24. ISSUED SHARE CAPITAL

Authorised shares

2021

31 Dec

Number of shares

2021

31 Dec

in $ millions

2020

31 Dec

Number of shares

2020

31 Dec

in $ millions

uthorised common shares, $2.00 par value 450,000,000 900.0 450,000,000 900.0

Issued shares

2021

31 Dec

Number of shares

2021

31 Dec

in $ millions

2020

31 Dec

Number of shares

2020

31 Dec

in $ millions

Fully paid and issued common shares 300,000,000 600.0 300,000,000 600.0

he issued common shares consist of:

Common shares excluding treasury shares 295,465,893 590.9 297,673,317 595.3

reasury shares at par value (Note 25) 4,534,107 9.1 2,326,683 4.7

Total 300,000,000 600.0 300,000,000 600.0

25. TREASURY SHARES

Share repurchase programme

On 24 July 2019, the Board of Directors authorised a new share repurchase programme of up to $200 million, to be executed over two

years. The programme was approved pursuant to the authorisation granted to the Board of Directors at the Extraordinary General Meeting

held on 17 April 2019, which allows for the purchase of up to a maximum of 10% of the Group’s issued share capital, net of purchases

already made. On 15 April 2021, the Board of Directors authorised a 24-month extension to the Group’s share repurchase programme in

accordance with the authority granted to the Board of Directors at the Extraordinary General Meeting held on 14 April 2021.

During 2021, the Group repurchased 2,724,172 (2020: 1,627,968) shares for a total consideration of $21.0 million (2020: $9.8 million).

At 31 December 2021, the cumulative number of shares repurchased under this programme was 4,352,140 for a total consideration

of $30.8 million.

All repurchases were made in the open market on the Oslo Børs, pursuant to certain conditions, and were in conformity with Article 49-2

of Luxembourg Company Law and EU Commission Regulation 2273/2003 on exemptions for repurchase programmes and stabilisation

of financial instruments. At 31 December 2021 the remaining repurchased shares, which had not been reallocated relating to share-based

payments, were held as treasury shares.

Summary

At 31 December 2021 Subsea 7 S.A. held 4,534,107 treasury shares (2020: 2,326,683), which amounted to 1.51% (2020: 0.78%) of the

total number of issued shares.

2021

Number of

2021

in $ millions

2020

Number of

2020

in $ millions

t year beginning 2,326,683 17.8 1,212,860 14.0

Shares repurchased 2,724,172 21.0 1,627,968 9.8

Shares reallocated relating to share-based payments (516,748) (5.9) (514,145) (6.0)

Balance at year end 4,534,107 32.9 2,326,683 17.8

GOVERNANCE SUBSEA 7 S.A. FINANCIAL STATEMENTS GLOSSARY

107

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CONSOLIDATED FINANCIAL STATEMENTS

STRATEGIC REPORT

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS CONTINUED

108 | SUBSEA 7 | ANNUAL REPORT 2021

26. NON-CONTROLLING INTERESTS

At 31 December 2021 the Group’s respective ownership interests in subsidiaries which are non-wholly-owned were as follows:

Year end Country of registration

Subsea 7

ownership %

Globestar Engineering Company (Nigeria) Limited 31 December Nigeria 98.8

Nautilus Floating Solutions S.L. 31 December Spain 59.1

Naviera Subsea 7 S. de R.L. de C.V. 31 December Mexico 49.0

Nigerstar 7 FZE 31 December Nigeria 49.0

Nigerstar 7 Limited 31 December Nigeria 49.0

PT Subsea 7 Indonesia 31 December Indonesia 94.9

Seaway 7 ASA 31 December Norway 72.0

Servicios Subsea 7 S. de R.L. de C.V. 31 December Mexico 52.0

Sonacergy – Serviços E Construções Petrolíferas Lda. 31 December Portugal 55.0

Sonamet Industrial S.A. 31 December Angola 55.0

Subsea Seven Doha Oil and Gas Services and Trading LLC 31 December Qatar 49.0

Subsea 7 Equatorial Guinea S.A. 31 December Equatorial Guinea 65.0

Subsea 7 Volta Contractors Limited 31 December Ghana 49.0

For all entities, the principal place of business is consistent with the country of registration. Financial information for the year ended

31 December 2021 has been used for all entities.

The movement in the equity attributable to non-controlling interests was as follows:

(in $ millions) 2021 2020

t year beginning 27.3 34.3

Share of net income/(loss) for the year 4.6 (12.4)

cquisition of businesses 278.3 –

Dividends declared – (1.1)

Reclassification of non-controlling interests to equity attributable to shareholders of Subsea 7 S.A. – 5.3

Reclassification of cumulative exchange differences from equity attributable to shareholders of Subsea 7

S.A. to non-controlling interests (2.9) –

Exchange differences (1.9) 1.2

ear end 305.4 27.3

Additions

During the year the Group acquired ownership interests in two non-wholly-owned entities, Nautilus Floating Solutions, S.L and Seaway 7

ASA. Further details are disclosed in Note 12 ‘Business combinations’.

Summarised financial information

Financial information of the non-wholly-owned subsidiary which had a material impact on the Consolidated Financial Statements is

shown below:

Seaway 7 ASA

The Group holds a 72% interest in Seaway 7 ASA, a global group operating in the renewables market.

For the year ended (in $ millions)

2021

31 Dec

2020

31 Dec

Revenue 1,260.0 631.4

Net loss (62.5) (49.5)

otal comprehensive loss (61.3) (44.3)

Total comprehensive loss attributable to non-controlling interests (17.2) (12.4)

For the year ended (in $ millions)

2021

31 Dec

2020

31 Dec

Net cash flows generated from/(used in) operating activities 38.6 (3.0)

Net cash flows used in investing activities (38.0) (16.9)

Net cash flows generated from financing activities 15.2 23.4

Net increase in cash and cash equivalents 15.8 3.5

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2021 2020

s at (in $ millions) 31 Dec 31 Dec

Non-current assets 1,025.1 607.8

Current assets 327.6 159.2

Current liabilities (458.5) (181.6)

Net assets 894.2 585.4

Total equity (864.3) (578.1)

otal equity attributable to the shareholders of the parent company (622.3) (416.2)

otal equity attributable to non-controlling interests (242.0) (161.9)

27. BORROWINGS

t (in $ millions)

2021

31 Dec

2020

31 Dec

South Korean Export Credit Agency (ECA) facility 184.4 209.0

UK Export Finance (UKEF) facility 200.0 –

Seaway 7 ASA Revolving Credit Facility 37.0 –

Other 0.5 –

Total 421.9 209.0

Consisting of:

Non-current portion of borrowings 360.3 184.4

Current portion of borrowings 61.6 24.6

Total 421.9 209.0

Commitment fees expensed during the year in respect of unused lines of credit totalled $2.6 million (2020: $2.3 million).

Facilities

The multi-currency revolving credit and guarantee facility

The Group has a $656 million multi-currency revolving credit and guarantee facility, which matures on 4 September 2023. The facility is

available in a combination of guarantees, up to a limit of $200 million, and cash drawings, or in full for cash drawings. The facility is

guaranteed by Subsea 7 S.A. and Subsea 7 Finance (UK) PLC, a wholly-owned subsidiary of the Group. The facility was unutilised at

31 December 2021 and 31 December 2020.

The South Korean Export Credit Agency (ECA) facility

In July 2015 the Group entered into a $357 million senior term loan facility secured on two vessels owned by the Group. The facility is

provided 90% by an Export Credit Agency (ECA) and 10% by two banks and is available for general corporate purposes. The ECA tranche

has a 12-year maturity and a 12-year amortising profile. The commercial tranche initially had a five-year maturity and a 15-year amortising

profile, which commenced in April 2017. The commercial tranche was refinanced during November 2021, now maturing in January 2027,

while retaining the original amortising profile. The facility is guaranteed by Subsea 7 S.A. and Subsea 7 Finance (UK) PLC. At 31 December

2021, the amount outstanding under the facility was $184.9 million (2020: $209.0 million).

UK Export Finance (UKEF) facility

On 24 February 2021, the Group entered into a $500 million five-year amortising committed loan facility backed by a $400 million guarantee

from UK Export Finance. The Group has a two-year availability period during which to draw on the facility. The facility has a five-year tenor

which commences at the end of the availability period or when the facility is fully drawn, whichever is earlier. The facility can be used for

general corporate purposes, including to provide working capital financing for services provided from the UK. The facility is guaranteed

by Subsea 7 S.A. At 31 December 2021, the amount outstanding under the facility was $200.0 million (2020: $nil).

Seaway 7 ASA Revolving Credit Facility

As part of the business combination to combine the Group’s Renewables business unit (consisting of the Group’s fixed offshore wind

business) with OHT ASA (renamed Seaway 7 ASA), the Group acquired the Seaway 7 ASA Revolving Credit Facility. Further details are

disclosed in Note 12 ‘Business combinations’. At 31 December 2021, the amount outstanding under the facility was $37.0 million, which

was subsequently repaid in full during January 2022.

Utilisation of facilities

t (in $ millions)

2021

31 Dec

Utilised

2021

31 Dec

Unutilised

2021

31 Dec

Total

2020

31 Dec

Utilised

2020

31 Dec

Unutilised

2020

31 Dec

Total

Committed borrowing facilities 421.9 956.0 1,377.9 209.0 1,456.0 1,665.0

Other facilities

In addition to the above there are a number of uncommitted, unsecured bi-lateral guarantee arrangements in place in order to provide

specific geographical coverage. The utilisation of these facilities at 31 December 2021 was $1.3 billion (2020: $1.2 billion).

GOVERNANCE SUBSEA 7 S.A. FINANCIAL STATEMENTS GLOSSARY

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STRATEGIC REPORT

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS CONTINUED

110 | SUBSEA 7 | ANNUAL REPORT 2021

27. BORROWINGS CONTINUED

Guarantee arrangements with joint ventures

During April 2021, Eidesvik Seven AS, a 50% owned joint venture between Eidesvik Offshore ASA and the Group, repaid in full a facility loan

secured on the vessel, Seven Viking. The facility had been fully guaranteed by Subsea 7 S.A. with a 50% counter-guarantee from Eidesvik

Shipping AS. The bank facility was replaced by a loan advanced to Eidesvik Seven AS by the Group; further details are disclosed in Note 34

‘Related party transactions’.

28. LEASE LIABILITIES

t (in $ millions)

2021

31 Dec

2020

31 Dec

Maturity analysis – contractual undiscounted cash flows

Within one year 90.3 80.7

ears two to five inclusive 141.8 183.8

fter five years 17.1 5.8

Total undiscounted lease liabilities 249.2 270.3

Effect of discounting (18.3) (16.3)

Discounted lease liabilities 230.9 254.0

Consisting of:

Non-current 142.9 168.6

Current 88.0 85.4

Total discounted lease liabilities 230.9 254.0

Amounts recognised within the Consolidated Income Statement in relation to short-term and low-value leases are disclosed within Note 6

‘Net operating income’. Payments related to lease liabilities disclosed within the Consolidated Cash Flow statement for the year ended

31 December 2021 were $93.1 million (2020: $103.6 million).

29. OTHER NON-CURRENT LIABILITIES

t (in $ millions)

2021

31 Dec

2020

31 Dec

Other 6.1 14.7

Total 6.1 14.7

30. TRADE AND OTHER LIABILITIES

t (in $ millions)

2021

31 Dec

2020

31 Dec

ccruals 887.9 512.3

rade payables 271.1 289.4

Current amounts due to associates and joint ventures 9.1 12.0

ccrued salaries and benefits 106.4 88.0

Withholding taxes 15.4 13.4

Other taxes payable 44.2 47.4

Other current liabilities 18.4 19.3

Total 1,352.5 981.8

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31. PROVISIONS

(in $ millions) Claims Decommissioning Restructuring

Onerous

fixed-price

contracts Other Total

t 1 January 2020 18.8 11.2 1.3 57.4 33.1 121.8

dditional provision in the yea

3.9 3.7 64.7 70.5 13.0 155.8

Utilisation of provision (3.5) (3.5) (22.4) (53.3) (13.5) (96.2)

Unused amounts released during the year (0.7) – – (6.4) (4.2) (11.3)

Exchange differences (2.3) 0.1 3.0 (2.5) (0.4) (2.1)

t 31 December 2020 16.2 11.5 46.6 65.7 28.0 168.0

dditional provision in the yea

2.6 0.4 – 175.8 13.4 192.2

cquisition of businesses – – – 32.3 – 32.3

Utilisation of provision (3.3) (1.6) (24.8) (173.6) (6.5) (209.8)

Unused amounts released during the year (0.8) (0.2) (18.9) (9.9) (5.1) (34.9)

Effect of changes in the discount rate – – – – 1.2 1.2

Unwinding of discount rate – (0.1) – – – (0.1)

Exchange differences (1.0) – (0.1) (1.0) (0.4) (2.5)

t 31 December 2021 13.7 10.0 2.8 89.3 30.6 146.4

t (in $ millions)

2021

31 Dec

2020

31 Dec

Consisting of:

Non-current provisions 58.8 49.5

Current provisions 87.6 118.5

Total 146.4 168.0

The claims provision comprises a number of claims made against the Group including disputes, personal injury cases and tax claims, where

the timing of resolution is uncertain.

The decommissioning provision is mainly in relation to the Group’s obligation to restore leased vessels to their original, or agreed, condition.

The cash outflows related to the provision are expected to occur in the years in which the leases cease, which range from 2022 to 2025.

The restructuring provision relates to expenses associated with cost reduction and headcount resizing activities. The provision includes

employee termination costs and professional fees. The provision is based on statutory requirements and discretionary arrangements for

headcount reductions. The release in 2021 resulted from downward revisions to restructuring cost estimates. Cash outflows associated

with termination costs and professional fees are expected to occur in 2022.

Onerous fixed-price contract provisions relate to projects where total forecast costs at completion exceed the expected transaction price.

The cash outflows related to the provisions are expected to occur during 2022 and 2023.

Other provisions mainly related to onerous day-rate contracts and contingent consideration.

GOVERNANCE SUBSEA 7 S.A. FINANCIAL STATEMENTS GLOSSARY

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CONSOLIDATED FINANCIAL STATEMENTS

STRATEGIC REPORT

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS CONTINUED

112 | SUBSEA 7 | ANNUAL REPORT 2021

32. COMMITMENTS AND CONTINGENT LIABILITIES

Commitments

The Group’s commitments at 31 December 2021 consisted of:

• commitments to purchase property, plant and equipment from external suppliers of $403.0 million (2020: $37.0 million), including

commitments related to Seaway Alfa Lift, an offshore wind foundation installation vessel, and Seaway Ventus, an offshore wind turbine

installation vessel; and

• short-term lease commitments totalling $28.8 million (2020: $35.2 million).

Contingent liabilities

A summary of the contingent liabilities is as follows:

Contingent liability

recognised

Contingent liability

not recognised

(in $ millions) 2021 2020

2021 2020

t year beginning 6.0 7.9

285.2 349.0

Movement in contingent liabilities – (0.5) (91.5) (3.8)

Exchange differences (0.5) (1.4)

(17.3) (60.0)

t year end 5.5 6.0 176.4 285.2

Contingent liabilities recognised in the Consolidated Balance Sheet

As a result of the business combination between Acergy S.A. and Subsea 7 Inc., on 7 January 2011, IFRS 3 ‘Business Combinations’

required the Group to recognise as a provision, as of the acquisition date, the fair value of contingent liabilities assumed if there was a

present obligation that arose from past events, even where payment was not probable. The value of the provision recognised within the

Consolidated Balance Sheet at 31 December 2021 was $5.0 million (2020: $5.5 million). While complying with the requirements of IFRS 3,

management continues to believe that payment relating to the remaining recognised contingent liabilities is not probable.

As part of the accounting for the business combination of Pioneer Lining Technology Limited, the Group was required to recognise a

contingent liability at the acquisition date, in respect of contingent amounts payable to a third party following the acquisition of intangible

assets in 2009, in accordance with IFRS 3. The contingent liability recognised within the Consolidated Balance Sheet at 31 December 2021

was $0.5 million (2020: $0.5 million).

Contingent liabilities not recognised in the Consolidated Balance Sheet

Between 2009 and 2020, the Group’s Brazilian businesses were audited and formally assessed for Imposto sobre Circulaçao de

Mercadorias e Serviços (ICMS and federal taxes including import duty) by the Brazilian state and federal tax authorities. The amount

assessed, including penalties and interest, at 31 December 2021 amounted to BRL 821.5 million, equivalent to $145.1 million (2020: BRL

834.5 million, equivalent to $161.7 million). The Group has challenged these assessments. A contingent liability has been disclosed for

the total amounts assessed as the disclosure criteria have been met however management believes that the likelihood of payment is

not probable.

During 2018, 2019 and 2020 the Group’s Brazilian business received several labour claims and civil tax assessments. The amounts

claimed or assessed at 31 December 2021 totalled BRL 234.8 million, equivalent to $41.5 million (2020: BRL 238.8 million, equivalent

to $46.2 million). The Group has challenged these claims. A contingent liability has been disclosed for BRL 177.4 million, equivalent to

$31.3 million (2020: BRL 187.3 million, equivalent to $36.3 million) as the disclosure criteria has been met however management believes

that the likelihood of payment is not probable. A provision of BRL 57.4 million, equivalent to $10.1 million (2020: BRL 51.5 million, equivalent

to $9.9 million) was recognised within the Consolidated Balance Sheet at 31 December 2021 as the IAS 37 ‘Provisions, Contingent Liabilities

and Contingent Assets’ recognition criteria were met.

The Group is subject to tax audits and receives tax assessments in a number of jurisdictions where it has, or has had, operations. The

estimation of the ultimate outcome of these audits and disputed tax assessments is complex and subjective. The likely outcome of the

audits and associated cash outflow, if any, may be impacted by technical uncertainty and the availability of supporting documentation.

During the first quarter of 2021, the Group reached full and final settlement in respect of an audit by Rivers State, Nigeria. The settlement

did not have a significant impact on the Consolidated Financial Statements of the Group and no future contingent liability disclosure will be

required. At 31 December 2020, a contingent liability was disclosed of NGN 34,190 million, equivalent to $87.2 million.

In the ordinary course of business, various claims, legal actions and complaints have been filed against the Group in addition to those

specifically referred to above. The Group typically also provides contractual warranties for the repair of defects which are identified during

a contract and within a defined period thereafter. Warranty periods vary dependent on contract type and operating segment; engineering,

procurement, installation and commissioning (EPIC) oil and gas contracts typically attract shorter periods than EPIC renewables contracts.

Liability exposure levels are monitored by management and risk transfer mechanisms arranged where deemed appropriate. Although the

final resolution of any of these matters could have a material effect on its operating results for a particular reporting period, management

believes that it is not probable that these matters would materially impact the Group’s Consolidated Financial Statements.

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33. FINANCIAL INSTRUMENTS

Details of the significant accounting policies adopted including the classification, basis of measurement and recognition of income

and expense in respect of each class of financial asset, financial liability and equity instrument are disclosed in Note 3 ‘Significant

accounting policies’.

Classification of financial instruments

Financial instruments are classified as follows:

t (in $ millions)

2021

31 Dec

Carrying

amount

2020

31 Dec

Carrying

amount

Financial assets

Restricted cash 5.7 7.1

Cash and cash equivalents (Note 23) 597.6 511.6

Financial assets mandatorily measured at fair value through profit or loss:

Foreign exchange forward contracts 1.3 1.4

Embedded derivatives 43.5 49.7

Commodity derivatives 2.9 3.2

Financial assets elected to be measured at fair value through other comprehensive income:

Commodity derivatives 12.8 –

Other financial assets – financial investments 1.3 2.9

Financial assets measured at amortised cost:

Net trade receivables (Note 20) 513.1 497.7

Net non-current amounts due from associates and joint ventures (Note 18) 37.0 5.7

Net current amounts due from associates and joint ventures (Note 20) 2.5 7.3

Other financial receivables 19.2 14.9

Financial liabilities

Financial liabilities mandatorily measured at fair value through profit or loss:

Foreign exchange forward contracts (3.9) (1.2)

Embedded derivatives (25.5) (44.2)

Commodity derivatives – (2.1)

Contingent consideration (6.6) (7.7)

Financial liabilities measured at amortised cost:

Trade payables (Note 30) (271.1) (289.4)

Lease liabilities (Note 28) (230.9) (254.0)

Current amounts due to associates and joint ventures (Note 30) (9.1) (12.0)

Borrowings (Note 27) (421.9) (209.0)

Other financial payables (13.4) (13.6)

Fair value

The carrying amounts of financial assets and financial liabilities recorded at amortised cost in the Consolidated Financial Statements

approximate their fair values due to their short-term nature or contractual cash flow characteristics.

Financial instruments – gains and losses recognised within profit or loss

The Group’s financial instruments resulted in the recognition of the following in the Consolidated Income Statement:

For the year ended (in $ millions)

2021

31 Dec

2020

31 Dec

Interest income from financial assets measured at amortised cost 4.7 4.8

Net fair value (losses)/gains on financial assets measured at fair value through profit or loss (6.6) 48.8

Net fair value losses on financial liabilities measured at fair value through profit or loss (18.1) (39.4)

GOVERNANCE SUBSEA 7 S.A. FINANCIAL STATEMENTS GLOSSARY

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CONSOLIDATED FINANCIAL STATEMENTS

STRATEGIC REPORT

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS CONTINUED

114 | SUBSEA 7 | ANNUAL REPORT 2021

33. FINANCIAL INSTRUMENTS CONTINUED

Fees incurred in connection with financial instruments

Total fees incurred during the year in connection with financial instruments measured at amortised cost were $1.6 million (2020: $3.5 million).

Cash and cash equivalents

At 31 December 2021 the Group held cash and cash equivalents of $597.6 million (2020: $511.6 million) which included cash and cash

equivalents available on demand of $321.4 million (2020: $244.1 million) and time deposits with financial institutions of $276.2 million

(2020: $267.5 million).

The table below shows the carrying amount related to amounts on deposit. These are graded and monitored internally by the Group based

on current external credit ratings issued, with ‘prime’ being the highest possible rating.

t (in $ millions)

2021

31 Dec

2020

31 Dec

Deposits:

Counterparties rated prime grade 80.0 80.0

Counterparties rated high grade – 15.0

Counterparties rated upper-medium grade 170.0 131.9

Counterparties rated lower-medium grade 21.4 40.6

Counterparties rated non-investment grade 4.8 –

Total 276.2 267.5

Financial instruments mandatorily measured at fair value through profit or loss

The Group classifies its financial assets at fair value through profit or loss if classified as one of the following:

• debt instruments that do not qualify for measurement at either amortised cost or at fair value through other comprehensive income;

• equity investments that are held for trading; or

• equity investments for which the entity has not elected to recognise fair value gains and losses through other comprehensive income.

Derivative financial instruments recognised in the Consolidated Balance Sheet were as follows:

t (in $ millions)

31 Dec

2021

Assets

31 Dec

2021

Liabilities

31 Dec

2021

Total

31 Dec

2020

Assets

31 Dec

2020

Liabilities

31 Dec

2020

Total

Non-current

Forward foreign exchange contracts –––– – –

Embedded derivatives 23.8 (5.7) 18.1 20.7 (19.8) 0.9

Commodity derivatives 0.9 – 0.9 2.2 (1.3) 0.9

Total 24.7 (5.7) 19.0 22.9 (21.1) 1.8

Current

Forward foreign exchange contracts 1.3 (3.9) (2.6) 1.4 (1.2) 0.2

Embedded derivatives 19.7 (19.8) (0.1) 29.0 (24.4) 4.6

Commodity derivatives 14.8 – 14.8 1.0 (0.8) 0.2

Total 35.8 (23.7) 12.1 31.4 (26.4) 5.0

Contingent consideration

Contingent consideration relates to amounts payable in connection with business combinations. The amounts payable are contingent on

future events and are determined based on current expectations of the achievement of specific targets and milestones.

Financial instruments measured at fair value through profit or loss

Financial assets measured at fair value through profit or loss comprise investments in quoted securities which the Group expects to divest

within 12 months of the balance sheet date. As the investments are non-strategic in nature, changes in fair value are recognised in profit

or loss.

Financial instruments elected to be measured at fair value through other comprehensive income

Financial assets at fair value through other comprehensive income comprise investments in equity securities not held for trading, and for

which the Group has made an irrevocable election, at initial recognition, to recognise changes in fair value through other comprehensive

income rather than profit or loss as these investments are strategic in nature.

Management concluded that due to the nature of these investments, there are a wide range of possible fair value measurements and in

some cases there may be insufficient recent information available to enable the Group to accurately measure fair value. Management reviews

investments at least annually to ensure the carrying amount can be supported by expected future cash flows and has concluded that cost

is considered to represent the best estimate of fair value of each investment within a range of possible outcomes. During the year ended

31 December 2021, fair value was determinable for one of the Group’s equity investments and a fair value remeasurement gain of

$1.2 million (2020: $5.5 million loss) was recognised within other comprehensive income.

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Upon disposal or derecognition of these equity investments, any associated balance accumulated within other comprehensive income will

be reclassified to retained earnings. No investments were derecognised during the year.

During the year no dividends were recognised within profit or loss in connection with the financial investments and there were no transfers of

cumulative gains or losses within equity.

Financial assets measured at amortised cost

The Group classifies its financial assets at amortised cost only if both of the following criteria are met: the asset is held within a business

model with the objective of collecting the contractual cash flows; and the contractual terms give rise on specified dates to cash flows that

are solely payments of principal and interest on the principal outstanding.

Financial risk management objectives

The Group monitors and manages the financial risks relating to its financial operations through internal risk reports which analyse exposures

by degree and magnitude of risks. These risks include market risk (consisting of currency risk and fair value interest rate risk), credit risk

and liquidity risk. The Group seeks to minimise the effects of these risks by using a variety of financial instruments to hedge these financial

risk exposures. Derivative financial instruments are used exclusively for hedging purposes and not as trading or speculative instruments.

Market risk

The Group’s activities expose it primarily to the financial risks of changes in foreign currency exchange rates and interest rates. The Group

enters into a variety of derivative financial instruments to manage its exposure to foreign currency risks, including forward foreign exchange

contracts to hedge the exchange rate risk arising on future revenue, operating expenditures and capital expenditures.

In the year ended 31 December 2021, there was no significant change to the Group’s exposure to market risks or the manner in which it

managed and measured the risk.

Foreign currency risk

The Group conducts operations in many countries and, as a result, is exposed to foreign currency fluctuations related to revenue and

expenditure in the normal course of business. The Group has in place risk management policies that seek to limit the adverse effects

of fluctuations in foreign currency exchange rates on its financial performance.

The Group’s reporting currency is the US Dollar. Revenue and expenses are principally denominated in the reporting currency of the Group.

The Group also has significant operations denominated in British Pound Sterling and Euro as well as other cash flows in Angolan Kwanza,

Australian Dollar, Brazilian Real, Canadian Dollar, Chinese Yuan, Danish Krone, Egyptian Pound, Ghanaian Cedi, Korean Won, Malaysian

Ringgit, Mexican Peso, Nigerian Naira, Norwegian Krone, Saudi Arabian Riyal and Singaporean Dollar.

Foreign currency sensitivity analysis

The Group considers that its principal currency exposure is to movements in the US Dollar against other currencies. The US Dollar is the

Group’s reporting currency, the functional currency of many of its subsidiaries and the currency of a significant volume of the Group’s

cash flows.

At 31 December 2021 the Group performed a sensitivity analysis to indicate the extent to which net income/(loss) and equity would be

affected by changes in the exchange rate between the US Dollar and other currencies in which the Group transacts. The analysis is based

on a strengthening of the US Dollar by 10% against each of the other currencies in which the Group has significant assets and liabilities at

the end of each respective period. A movement of 10% reflects a reasonably possible sensitivity when compared to historical movements

over a five-year time-frame. The Group’s analysis of the impact on net income/(loss) in each year is based on monetary assets and liabilities

in the Consolidated Balance Sheet at the end of each respective year.

The Group’s analysis of the impact on equity includes the impacts on the translation reserve in respect of intra-group balances that form part

of the net investment in a foreign operation. The amounts disclosed have not been adjusted for the impact of taxation.

A 10% strengthening in the US Dollar exchange rate against other currencies in which the Group transacts would increase net foreign

currency exchange gains reported in other gains and losses by $33.8 million for the year ended 31 December 2021 (2020: $29.0 million).

The impact would be an increase in reported equity of $23.1 million (2020: increase of $18.2 million).

Forward foreign exchange contracts

The Group primarily enters into forward foreign exchange contracts with maturities of up to three years, to manage the risk associated with

transactions with a foreign exchange exposure risk. These transactions consist of highly probable cash flow exposures relating to revenue,

operating expenditure and capital expenditure.

The Group does not use derivative instruments to hedge the exposure to exchange rate fluctuations from its net investments in

foreign subsidiaries.

GOVERNANCE SUBSEA 7 S.A. FINANCIAL STATEMENTS GLOSSARY

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CONSOLIDATED FINANCIAL STATEMENTS

STRATEGIC REPORT

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS CONTINUED

116 | SUBSEA 7 | ANNUAL REPORT 2021

33. FINANCIAL INSTRUMENTS CONTINUED

The following table details the external forward foreign exchange contracts outstanding:

At 31 December 2021

Contracted amount by contract maturity Fair value by contract maturity

Buy Sell Maturity

(in $ millions) < 1 Year 1-5 Years < 1 Year 1-5 Years < 1 Year 1-5 Years

British Pound Sterling 74.8 – 123.5 – 0.5 –

Danish Krone 7.5 – – – – –

Euro 37.4 – 211.8 – (1.1) –

Norwegian Krone 3.8 – 88.4 – (1.3) –

Singapore Dollar 2.6 – – – – –

ustralian Dolla

– – 41.8 – (0.7) –

Total 126.1 – 465.5 – (2.6) –

At 31 December 2020

Contracted amount by contract maturity Fair value by contract maturity

Buy Sell Maturity

(in $ millions) < 1 Year 1-5 Years < 1 Year 1-5 Years < 1 Year 1-5 Years

British Pound Sterling 22.4 – 1.3 – (0.4) –

Danish Krone 12.3 – 1.0 – (0.1) –

Euro 21.7 – 23.1 – (0.2) –

Norwegian Krone 7.0 – 10.9 – – –

Singapore Dollar 18.6 – 0.7 – (0.1) –

ustralian Dolla

– – 77.1 – 1.0 –

Total 82.0 – 114.1 – 0.2 –

Hedge accounting

At 31 December 2021 the Group had designated commodity hedges of $12.8 million (2020: $nil) as hedging instruments. The hedging

reserve, included within other reserves in the Consolidated Balance Sheet, represents hedging gains recognised on the effective portion

of commodity cash flow hedges. The movement in the hedging reserve was as follows:

t (in $ millions)

2021

31 Dec

2020

31 Dec

t year beginning – –

Gains on the effective portion of derivative financial instruments

deferred to equity:

Cash flow on commodity hedges 12.8 –

Tax recognised in Other Comprehensive Income (2.4) –

t year end 10.4 –

The Group documents its assessment of whether the hedging instrument which is used in a hedging relationship is effective in offsetting

changes in cash flows of the hedged item, on a prospective basis. The cumulative effective portion is deferred in equity within other reserves

as hedging reserves in the Consolidated Balance Sheet. The resulting cumulative gains or losses will be reclassified to the Consolidated

Income Statement upon the recognition of the underlying transaction or the discontinuance of a hedging relationship. Movements in respect

of effective hedges are detailed in the Consolidated Statement of Changes in Equity. The gains or losses relating to the ineffective portion

of cash flow hedges are recognised in the Consolidated Income Statement and the net amount for the year was $nil (2020: $nil). Hedge

ineffectiveness can arise from differences in the timing of the cash flows of the hedged items and the hedging instruments, different indexes

linked to the hedged risk of the hedged items and hedging instruments, counterparties’ credit risk differently impacting fair value movements

of the hedging instruments and hedged items or changes to the forecasted amount of cash flows of hedged items and hedging instruments.

There is an economic relationship between the hedged items and the hedging instruments as the terms of the commodity forward contracts

match the terms of the expected highly probable forecast transactions. The Group has established a hedge ratio of 1:1 for the hedging

relationships as the underlying risk of the commodity forward contracts are identical to the hedged risk components. To test the hedge

effectiveness, the Group uses the hypothetical derivative method and compares the changes in the fair value of the hedging instruments

against the changes in fair value of the hedged items attributable to the hedged risks.

At 31 December 2021 and at 31 December 2020 none of the Group’s outstanding external forward foreign exchange contracts had been

designated as hedging instruments.

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Commodity hedging

The Group enters into commodity hedging to manage risk on specific exposures, swapping floating price to fixed. At 31 December 2021 the

fair values of commodity trades amounted to $15.7 million within financial assets (2020: $3.2 million) and $nil within financial liabilities (2020:

$2.1 million).

Embedded derivatives

The Group regularly enters into multi-currency contracts from which the cash flows may lead to embedded foreign exchange derivatives in

non-financial host contracts, carried at fair value through profit or loss. Embedded foreign currency derivatives, arising from multi-currency

contracts, are separated where the host contract does not qualify as a financial asset, where the transactional currency differs from the

functional currencies of the involved parties and a separate instrument, with the same terms as the embedded derivative, would meet the

definition of a derivative.

The fair values of the embedded derivatives at 31 December 2021 amounted to $43.5 million related to financial assets (2020: $49.7 million)

and $25.5 million related to financial liabilities (2020: $44.2 million). The effects on the Consolidated Income Statement were reflected in net

foreign currency gains and losses within other gains and losses.

Interest rate risk management

The Group places funds in the money markets to generate an investment return with a range of maturities (generally less than six months)

ensuring a high level of liquidity and reducing the credit risk associated with the deposits. Changes in the interest rates associated with

these deposits will impact the interest income generated.

Interest rate sensitivity analysis

At 31 December 2021, the Group had cash deposits and borrowings. A 1% increase in interest rates would not have a significant impact

on the Group’s finance cost or finance income due to the net cash position the Group held throughout the year.

The Group continues to monitor the reform of the Inter-borrowing Offering Rate (IBOR) and will actively manage the associated outcome.

Credit risk management

Credit risk refers to the risk that a customer or counterparty to a financial instrument will default on its contractual obligations and fail to

make payment as obligations fall due resulting in financial loss for the Group. Credit risk arises from the financial assets of the Group,

which comprise cash and cash equivalents, trade and other receivables and derivative financial instruments.

The maximum exposure of the Group to credit-related loss of financial instruments is the aggregate of the carrying amount of the financial

assets as summarised on page 113.

GOVERNANCE SUBSEA 7 S.A. FINANCIAL STATEMENTS GLOSSARY

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CONSOLIDATED FINANCIAL STATEMENTS

STRATEGIC REPORT

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS CONTINUED

118 | SUBSEA 7 | ANNUAL REPORT 2021

33. FINANCIAL INSTRUMENTS CONTINUED

Financial instruments and cash deposits

The Group has adopted a policy of transacting with creditworthy financial institutions as a means of mitigating the risk of financial loss from

defaults. Credit ratings are supplied by independent rating agencies. The Group’s exposure and the credit ratings of its counterparties are

continually monitored and the aggregate value of transactions undertaken is distributed among approved counterparties. Credit exposure is

controlled by counterparty limits that are reviewed and approved on an annual basis and are monitored daily. The Group uses credit ratings

as well as other publicly available financial information and its own trading records to rate its major counterparties.

The Group considers that its cash and cash equivalents have low credit risk based on the external credit ratings of the counterparties.

Trade receivables and contract assets

The Group’s exposure to credit risk is influenced mainly by the individual characteristics of each customer. The Group’s credit risk

management practices are designed to address the risk characteristics of the key classes of financial asset. Credit exposure is controlled

by counterparty limits that are reviewed and approved on an annual basis and are monitored daily. In respect of its clients and suppliers, the

Group uses credit ratings as well as other publicly available financial information and its own trading records to rate its major counterparties.

The assessment of the Group’s exposure to credit risk includes consideration of historical and forward-looking information regarding both

the financial position and performance of the counterparty and the general macro-economic environment.

Expected credit loss assessment for financial assets

Allowances are recognised as required under the IFRS 9 impairment model and continue to be carried until there are indicators that there is

no reasonable expectation of recovery.

For construction contract assets and trade and other receivables which do not contain a significant financing component, the Group applies

the simplified approach. This approach requires the allowance for expected credit losses to be recognised at an amount equal to lifetime

expected credit losses. For other debt financial assets the Group applies the general approach to providing for expected credit losses as

prescribed by IFRS 9, which permits the recognition of an allowance for the estimated expected loss resulting from default in the subsequent

12-month period. Exposure to credit loss is monitored on a continual basis and, where material, the allowance for expected credit losses is

adjusted to reflect the risk of default during the lifetime of the financial asset should a significant change in credit risk be identified.

In determining expected credit losses, financial assets with the same counterparty are grouped and where appropriate expected credit

losses are measured on a collective basis. In determining the level of allowance the Group uses an internal credit risk grading framework

and applies judgement based on a variety of data in order to predict the likely risk of default. The Group defines default as full or partial non-

payment of contractual cash flows. The determination of expected credit losses is derived from historical and forward-looking information

which includes external ratings, audited financial statements and other publicly available information about customers. Determination of the

level of expected credit loss incorporates a review of factors which can be indicative of default, including the nature of the counterparty (for

example national oil and gas companies, international oil and gas companies or independent oil, gas and energy companies) and the

individual industry sectors in which the counterparty operates.

The majority of the Group’s financial assets are expected to have a low risk of default. A review of the historical occurrence of credit losses

indicates that credit losses are insignificant due to the size of the Group’s clients and the nature of the services provided. The outlook for the

energy industry is not expected to result in a significant change in the Group’s exposure to credit losses. As lifetime expected credit losses

are not expected to be significant the Group has opted not to adopt the practical expedient available under IFRS 9 to utilise a provision

matrix for the recognition of lifetime expected credit losses on trade receivables. Allowances are calculated on a case-by-case basis

based on the credit risk applicable to individual counterparties.

Exposure to credit risk is continually monitored in order to identify financial assets which experience a significant change in credit risk. While

assessing for significant changes in credit risk the Group makes use of operational simplifications permitted by IFRS 9. The Group considers

a financial asset to have low credit risk if the asset has a low risk of default; the counterparty has a strong capacity to meet its contractual

cash flow obligations in the near term; and no adverse changes in economic or business conditions have been identified which in the longer

term may, but will not necessarily, reduce the ability of the counterparty to fulfil its contractual cash flow obligations. Where a financial asset

becomes more than 30 days past its due date additional procedures are performed to determine the reasons for non-payment in order to

identify if a change in the exposure to credit risk has occurred.

Should a significant change in the exposure to credit risk be identified the allowance for expected credit losses is increased to reflect the

risk of expected default in the lifetime of the financial asset. The Group continually monitors for indications that a financial asset has become

credit impaired with an allowance for credit impairment recognised when the loss is incurred. Where a financial asset becomes more than

90 days past its due date additional procedures are performed to determine the reasons for non-payment in order to identify if the asset has

become credit impaired.

The Group considers an asset to be credit impaired once there is evidence that a loss has been incurred. In addition to recognising an

allowance for expected credit loss, the Group monitors for the occurrence of events that have a detrimental impact on the recoverability of

financial assets. Evidence of credit impairment includes, but is not limited to, indications of significant financial difficulty of the counterparty,

a breach of contract or failure to adhere to payment terms, bankruptcy or financial reorganisation of a counterparty or the disappearance

of an active market for the financial asset.

A financial asset is only impaired when there is no reasonable expectation of recovery.

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For trade receivables, the Group’s current credit risk grading framework comprises the following categories:

Category Description Response

Performing The counterparty has a low risk of default. No balances are

aged greater than 30 days past due.

An allowance for lifetime ECLs is recognised where the

impact is determined to be material.

Monitored The counterparty has a low risk of default. Balances aged

greater than 30 days past due have arisen due to ongoing

commercial discussions associated with the close-out of

contractual requirements and are not considered to be

indicative of an increased risk of default.

The allowance for lifetime ECLs is increased where the

impact is determined to be material.

In default Balances are greater than 90 days past due with the ageing

not being as a result of ongoing commercial discussions

associated with the close-out of contractual commitments,

or there is evidence indicating that the counterparty is in

severe financial difficulty and collection of amounts due

is improbable.

The asset is considered to be credit impaired and an

allowance for the estimated incurred loss is recognised

where material.

Written off There is evidence that the counterparty is in severe financial

difficulty and the Group has no realistic prospect of recovery

of balances due.

The gross receivable and associated allowance are

both derecognised.

The credit risk grades disclosed above are consistent with the information used by the Group for credit risk management purposes. Specific

information regarding the counterparty together with past-due information and forward-looking information is utilised in order to determine

the appropriate credit grading category. Trade receivables balances were evaluated using the grading framework as follows:

t (in $ millions)

2021

31 Dec

2020

31 Dec

Performing 434.9 467.5

Monitored 80.4 32.9

In default 3.9 23.3

Gross carrying amount 519.2 523.7

In addition to the credit risk grading framework for trade receivables the Group uses past-due information to assess significant increases

in credit risk for all financial assets. Information related to ageing of material financial assets is included within subsequent disclosures.

Other financial assets, including amounts due from associates and joint ventures, are not subject to the Group’s credit risk grading

framework. The Group assesses the credit risk of these financial assets on a case-by-case basis using all relevant available historical

and forward-looking information. Allowances for expected credit losses or credit impairment are recorded when required.

Trade receivables

t (in $ millions)

2021

31 Dec

2020

31 Dec

Gross carrying amount 519.2 523.7

llowance for expected credit losses (2.2) (2.7)

llowance for credit impairments (3.9) (23.3)

Net carrying amount 513.1 497.7

The table below provides an analysis of the age of trade receivables at the balance sheet date. This includes details of those trade

receivables which are past due, but not impaired, and trade receivables which are individually determined to be impaired.

At 31 December 2021

(in $ millions) Current

More than 30

days past due

More than 60

days past due

More than 90

days past due Total

Gross carrying amount 435.4 18.8 36.7 28.3 519.2

llowance for expected credit losses (2.2) – – – (2.2)

llowance for incurred credit impairments (0.4) – – (3.5) (3.9)

Net carrying amount 432.8 18.8 36.7 24.8 513.1

GOVERNANCE SUBSEA 7 S.A. FINANCIAL STATEMENTS GLOSSARY

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CONSOLIDATED FINANCIAL STATEMENTS

STRATEGIC REPORT

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS CONTINUED

120 | SUBSEA 7 | ANNUAL REPORT 2021

33. FINANCIAL INSTRUMENTS CONTINUED

At 31 December 2020

(in $ millions) Current

More than 30

days past due

More than 60

days past due

More than 90

days past due Total

Gross carrying amount 471.3 9.9 2.9 39.6 523.7

llowance for expected credit losses (2.7) – – – (2.7)

llowance for incurred credit impairments (3.8) – – (19.5) (23.3)

Net carrying amount

464.8 9.9 2.9

20.1

497.7

The movement in the allowance for expected credit losses in respect of trade receivables during the year was as follows:

(in $ millions)

2021

31 Dec

2020

31 Dec

llowance for expected credit losses

t year beginning (2.7) (2.7)

Decrease in allowance recognised in profit or loss 0.5 –

t year end (2.2) (2.7)

The movement in the allowance for credit impairment in respect of trade receivables during the year was as follows:

(in $ millions)

2021

31 Dec

2020

31 Dec

llowance for credit impairment

t year beginning (23.3) (15.9)

Increase in allowance recognised in profit or loss – (14.9)

Utilisation of allowance 4.0 3.4

Unused amounts released during the year 15.7 3.0

Exchange differences (0.3) 1.1

t year end (3.9) (23.3)

During the year ended 31 December 2021, the Group collected $15.7 million of trade receivables which had been credit impaired in the prior

year (2020: $3.0 million).

Amounts due from associates and joint ventures

t (in $ millions)

2021

31 Dec

2020

31 Dec

Gross carrying amount 43.0 16.5

llowance for incurred credit impairments (3.5) (3.5)

Net carrying amount 39.5 13.0

The table below provides an analysis of the ageing of amounts due from associates and joint ventures. This includes balances with

associates and joint ventures which are past due at the end of the reporting period, but not impaired, and balances which are individually

determined to be impaired at the end of the reporting period.

At 31 December 2021

(in $ millions) Current

More than 30

days past due

More than 60

days past due

More than 90

days past due Total

Gross carrying amount 32.1 – – 10.9 43.0

llowance for credit impairments – – – (3.5) (3.5)

Net carrying amount 32.1 – – 7.4 39.5

At 31 December 2020

(in $ millions) Current

More than 30

days past due

More than 60

days past due

More than 90

days past due Total

Gross carrying amount 1.7 0.2 0.9 13.7 16.5

llowance for credit impairments (0.1) – – (3.4) (3.5)

Net carrying amount 1.6 0.2 0.9 10.3 13.0

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The movement in the allowance for credit impairments in respect of amounts due from associates and joint ventures during the year was

as follows:

(in $ millions)

2021

31 Dec

2020

31 Dec

llowance for credit impairments

t year beginning (3.5) (2.2)

Increase in allowance recognised in profit or loss – (1.6)

Unused amounts reversed – 0.3

t year end (3.5) (3.5)

At 31 December 2021 the allowance for expected credit losses recognised in connection with amounts due from associates and joint

ventures was $nil (2020: $nil).

Other financial assets at amortised cost

An analysis of the age of other financial assets at the balance sheet date has not been provided on the grounds of materiality. Other financial

assets are typically non-recurring and are monitored on an asset-by-asset basis. Ageing is not necessarily reflective of credit risk.

At 31 December 2021 the allowances for expected credit losses and credit impairment recognised in connection with other financial assets

at amortised cost were $nil (2020: $nil).

Concentration of credit risk

Credit risk is primarily associated with trade receivables. Net trade receivables (Note 20 ‘Trade and other receivables’) arise from a large

number of clients, dispersed geographically. Continual credit evaluation is performed on the recoverability of trade receivables. The following

table classifies outstanding balances into three categories:

2021

31 Dec

2020

31 Dec

Category

percentage

National energy companies 28% 19%

International energy companies 19% 34%

Independent energy companies 53% 47%

Total 100% 100%

National energy companies are either partially or fully-owned by or directly controlled by the government of their respective country of

incorporation. Both international and independent energy companies are mainly publicly or privately owned. International energy companies

are generally larger in size and scope than independent energy companies.

During the year ended 31 December 2021, two clients (2020: two clients) contributed individually to 10% or more of the Group’s revenue.

The revenue from these clients was $1,296.3 million or 26% of total Group revenue (2020: $670.0 million or 20%).

The five largest receivables balances by client are shown below:

t (in $ millions)

31 Dec

2021

Client A 124.0

Client B 61.5

Client C 42.1

Client D 41.9

Client E 24.1

t (in $ millions)

31 Dec

2020

Client A 57.1

Client B 55.2

Client C 46.1

Client D 40.7

Client E 35.5

The client mix for outstanding accounts receivable balances at 31 December 2021 is not the same as at 31 December 2020. The Group did

not have any significant credit exposure to any single counterparty at 31 December 2021 or 31 December 2020.

The credit risk on liquid funds and derivative financial instruments is limited because the counterparties are primarily banks with high credit

ratings assigned by international credit-rating agencies. At 31 December 2021, 53% (2020: 52%) of cash was held at counterparties with

a credit rating lower than ‘upper-medium grade’ classification.

GOVERNANCE SUBSEA 7 S.A. FINANCIAL STATEMENTS GLOSSARY

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CONSOLIDATED FINANCIAL STATEMENTS

STRATEGIC REPORT

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS CONTINUED

122 | SUBSEA 7 | ANNUAL REPORT 2021

33. FINANCIAL INSTRUMENTS CONTINUED

Liquidity risk management

The Group has a framework for the management of short, medium and long-term funding and liquidity management requirements.

The Group continually monitors forecast and actual cash flows and matches the maturity profiles of financial assets and liabilities. Liquidity

risk is managed by maintaining adequate cash and cash equivalent balances and by ensuring available borrowing facilities are in place.

Included in Note 27 ‘Borrowings’ are details of the undrawn facilities that the Group had at 31 December 2021.

Liquidity tables

The following table details the Group’s remaining contractual maturity for its non-derivative financial liabilities. The table has been prepared

based on the undiscounted cash flows relating to financial liabilities based on the earliest date on which the payment can be required.

Principal cash flows are as follows:

At 31 December 2021

(in $ millions)

Less than

1 month 1-3 months

3 months

to 1 year 1-5 years Total

Borrowings 44.4 7.0 17.0 381.2 449.6

rade payables 231.5 28.6 10.6 0.4 271.1

mounts due to associates and joint ventures 8.6 0.5 – – 9.1

Lease liabilities 8.5 16.6 65.2 158.9 249.2

Total 293.0 52.7 92.8 540.5 979.0

At 31 December 2020

(in $ millions)

Less than

1 month 1-3 months

3 months

to 1 year 1-5 years Total

Borrowings 6.9 6.2 14.5 192.4 220.0

rade payables 275.5 13.3 0.6 – 289.4

mounts due to associates and joint ventures 12.0 – – – 12.0

Lease liabilities 6.1 12.5 62.1 189.6 270.3

otal 300.5 32.0 77.2 382.0 791.7

The following table details the Group’s liquidity profile for its derivative financial instruments. The table has been prepared based on

the undiscounted net cash payments and receipts on the derivative instruments that settle on a net basis and the undiscounted gross

payments and receipts on those derivative financial instruments that require gross settlement. When the amount payable or receivable is not

fixed, the amount disclosed has been determined by reference to the projected interest rates as illustrated by the yield curves existing at the

balance sheet date.

At 31 December 2021

(in $ millions)

Less than

1 month 1-3 months

3 months

to 1 year 1-5 years Total

Net settled:

Embedded derivatives – 5.5 14.3 5.7 25.5

Gross settled:

Foreign exchange forward contract payments 283.3 157.4 – – 440.7

Foreign exchange forward contract receipts (280.6) (156.2) – – (436.8)

Total 2.7 6.7 14.3 5.7 29.4

At 31 December 2020

(in $ millions)

Less than

1 month 1-3 months

3 months

to 1 year 1-5 years Total

Net settled:

Embedded derivatives – 3.0 21.4 19.8 44.2

Commodity hedging 0.3 0.1 0.4 1.3 2.1

Gross settled:

Foreign exchange forward contract payments 72.4 8.0 2.8 – 83.2

Foreign exchange forward contract receipts (71.7) (7.7) (2.6) – (82.0)

otal 1.0 3.4 22.0 21.1 47.5

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Capital risk management

The Group manages its capital to ensure that entities in the Group will be able to continue as going concerns while maximising the return

to shareholders of the parent company.

The capital structure of the Group consists of debt, which includes borrowings disclosed in Note 27 ‘Borrowings’, cash and cash

equivalents disclosed in Note 23 ‘Cash and cash equivalents’ and equity attributable to shareholders of the parent company, comprising

issued share capital, paid in surplus, reserves and retained earnings.

The Group monitors its capital structure using a leverage ratio of net debt to Adjusted EBITDA. The ratio calculates net debt as the principal

value of borrowings and lease liabilities less cash and cash equivalents.

Reconciliation of movements in liabilities arising from financing activities

The table below details changes in the Group’s liabilities arising from financing activities, including both cash and non-cash changes.

Liabilities arising from financing activities are those for which cash flows are classified in the Consolidated Cash Flow Statement as cash

flows from financing activities.

Liabilities Equity Other Total

(in $ millions) Borrowings

Lease

liabilities

Dividends

payable to

shareholders

Treasury

Other

equity

Balance at 1 January 2021 209.0 254.0 – (17.8) (6.0) (6.4) 432.8

Financing cash flows

Interest paid (5.9) – – – – (6.2) (12.1)

Repayment of borrowings (24.6) – – – – – (24.6)

Proceeds from borrowings 200.0 – – – – – 200.0

Cost of share repurchases – – – (21.0) – – (21.0)

Payments related to lease liabilities – (93.1) – – – – (93.1)

Dividends paid to shareholders of

the parent company – – (72.0) – –

– (72.0)

Total financing cash flows 169.5 (93.1) (72.0) (21.0) – (6.2) (22.8)

Non-cash changes

Dividends declared – – 69.5 – – – 69.5

Addition of borrowings 37.5 – – – – – 37.5

Addition of lease liabilities 54.8 54.8

Remeasurement of lease liabilities – 6.7 – – – – 6.7

Shares reallocated relating to

share-based payments

– – – 5.9 (5.9)

––

Interest charges 5.9 6.7 – – – 7.5 20.1

Exchange differences – 1.8 2.5 – – – 4.3

Total non-cash changes 43.4 70.0 72.0 5.9 (5.9) 7.5 192.9

Balance at 31 December 2021 421.9 230.9 – (32.9) (11.9) (5.0) 602.9

GOVERNANCE SUBSEA 7 S.A. FINANCIAL STATEMENTS GLOSSARY

123

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CONSOLIDATED FINANCIAL STATEMENTS

STRATEGIC REPORT

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS CONTINUED

124 | SUBSEA 7 | ANNUAL REPORT 2021

33. FINANCIAL INSTRUMENTS CONTINUED

Liabilities Equity Other Total

(in $ millions) Borrowings

Lease

liabilities

Dividends

payable to

non-

controlling

interests

Treasury

Other

equity

Balance at 1 January 2020 233.6 345.2 11.5 (14.0) – (4.0) 572.3

Financing cash flows

Interest paid (6.2) – – – – (3.2) (9.4)

Repayment of borrowings (24.6) – – – – – (24.6)

Cost of share repurchases – – – (9.8) – – (9.8)

Payments related to lease liabilities – (103.6) – – – – (103.6)

Dividends paid to non-controlling interests – – (10.2) – – – (10.2)

Total financing cash flows (30.8) (103.6) (10.2) (9.8) – (3.2) (157.6)

Non-cash changes

Dividends declared – – 1.1 – – – 1.1

Disposal of lease liabilities – (34.5) – – – – (34.5)

Addition of lease liabilities – 52.4 – – – – 52.4

Remeasurement of lease liabilities – (15.5) – – – – (15.5)

Shares reallocated relating to

share-based payments – – – 6.0 (6.0)

––

Interest charges 6.2 19.7 – – – (1.3) 24.6

Exchange differences – (9.7) (0.3) – – – (10.0)

Total non-cash changes 6.2 12.4 0.8 6.0 (6.0) (1.3) 18.1

Balance at 31 December 2020 209.0 254.0 2.1 (17.8) (6.0) (8.5) 432.8

124

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Fair value hierarchy

The Group classifies fair value measurements using a fair value hierarchy that reflects the significance of the inputs used in making

the measurements. The fair value hierarchy has the following levels:

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

Level 2 Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly

(i.e. as prices) or indirectly (i.e. derived from prices).

Level 3 Inputs for the asset or liability that are not based on observable market data (unobservable inputs).

Fair value measurement

During the year ended 31 December 2021 there were no transfers between levels of the fair value hierarchy. The Group recognises transfers

between levels of the fair value hierarchy from the date of the event or change in circumstances that caused the transfer.

Assets and liabilities which are measured at fair value in the Consolidated Balance Sheet and their level of the fair value hierarchy were

as follows:

(a) A reconciliation of contingent consideration movements during the year is shown on page 126.

t (in $ millions)

2021

31 Dec

Level 1

2021

31 Dec

Level 2

2021

31 Dec

Level 3

2020

31 Dec

Level 1

2020

31 Dec

Level 2

2020

31 Dec

Level 3

Recurring fair value measurements

Financial assets:

Financial assets at fair value through profit or loss –

derivative instruments – 1.3 – – 1.4 –

Financial assets at fair value through profit or loss –

embedded derivatives

– 43.5 – – 49.7 –

Financial assets at fair value through profit or loss –

commodity derivatives – 2.9 – – 3.2 –

Financial assets at fair value through other comprehensive

income – commodity derivatives – 12.8 – – – –

Financial liabilities:

Financial liabilities at fair value through profit or loss –

derivative instruments

– (3.9) – – (1.2) –

Financial liabilities at fair value through profit or loss –

embedded derivatives – (25.5) – – (44.2) –

Financial liabilities at fair value through profit or loss –

commodity derivatives –––– (2.1) –

Contingent consideration

(a)

– – (6.6) – – (7.7)

GOVERNANCE SUBSEA 7 S.A. FINANCIAL STATEMENTS GLOSSARY

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CONSOLIDATED FINANCIAL STATEMENTS

STRATEGIC REPORT

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS CONTINUED

126 | SUBSEA 7 | ANNUAL REPORT 2021

33. FINANCIAL INSTRUMENTS CONTINUED

Recurring fair value measurements

Financial assets and financial liabilities

Financial assets and financial liabilities which are remeasured to fair value on a recurring basis are determined as follows:

• the fair values of financial assets and financial liabilities with standard terms and conditions and traded on active liquid markets

are determined with reference to quoted market prices;

• the fair values of other financial assets and financial liabilities (excluding derivative instruments) are determined in accordance with

generally accepted pricing models based on discounted cash flow analysis using prices from observable current market transactions

and quotes for similar instruments;

• the fair value of other financial assets classified as current assets, which includes quoted securities, is determined using quoted prices;

• the fair value of contingent consideration is determined based on current expectations of the achievement of specific targets and

milestones calculated using the discounted cash flow method and unobservable inputs. Quantitative information about the significant

unobservable inputs used in the fair value measurement and sensitivities to changes in these unobservable inputs are as disclosed below:

• Significant inputs to the fair value of contingent consideration following a business combination include the assumed probability of the

achievement of operational targets and technical milestones. A significant increase or decrease in the assumed probability of achieving

these would result in a higher or lower fair value of the contingent consideration liability, while a significant increase or decrease in the

discount rate would result in a higher or lower fair value of the contingent consideration liability. Gains or losses for the year were

recorded in the Consolidated Income Statement as disclosed within Note 7 ‘Other gains and losses’; and

• the fair values of foreign exchange derivative instruments and embedded derivatives are calculated using quoted foreign exchange

rates and yield curves derived from quoted interest rates matching maturities of the contract. Where such prices are not available, use

is made of discounted cash flow analysis using the applicable yield curve for the duration of the instruments for non-optional derivative

financial instruments.

Non-recurring fair value measurements

Assumptions used in determining fair value of financial assets and financial liabilities which are not remeasured to fair value on a recurring

basis are as follows:

The fair value of receivables and payables is based on their carrying amounts which is representative of contractual amounts due and, where

appropriate, incorporates expectations about future expected credit losses.

Other financial assets which are classified as non-current include equity investments in unlisted companies which are strategic in nature.

Management concluded that due to the nature of these investments, there are a wide range of possible fair value measurements and in

some cases there may be insufficient recent information available to enable the Group to accurately measure fair value. Management review

investments annually to ensure the carrying amount can be supported by expected future cash flows and has concluded cost is considered

to represent the best estimate of fair value of each investment within a range of possible outcomes.

(in $ millions)

Balance at

1 January

2021

Acquisition of

businesses

Fair value

adjustments

Exchange

differences

Balance at

31 December

2021

Contingent consideration 7.7 1.0 (2.0) (0.1) 6.6

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34. RELATED PARTY TRANSACTIONS

Key management personnel

Key management personnel include the Board of Directors and the Executive Management Team. Key management personnel

at 31 December 2021 included 13 individuals (2020: 13 individuals). The remuneration of these personnel is determined by the

Compensation Committee of the Board of Directors of Subsea 7 S.A.

Non-Executive Directors

Details of fees paid to Non-Executive Directors for the year ended 31 December 2021 are set out below:

Name

Annual fee

Member of Audit

Committee

2021

31 Dec

2020

31 Dec

Kristian Siem

200,000 – –

(a)

–

(a)(b)

Dod Fraser 105,000 14,000 119,000 105,613

llen Stevens 2,877 – 2,877

(c)

93,188

Niels Kirk 105,000 2,520 107,520 98,513

Elisabeth Proust (mandate expired 14 April 2021) 29,925 1,710 31,635 96,911

David Mullen 105,000 4,308 109,308 93,188

Jean Cahuzac 105,000 3,504 108,504 93,188

Eldar Sætre (appointed 1 June 2021) 61,530 – 61,530 –

Louisa Siem (appointed 4 June 2021) 60,690 – 60,690 –

(a) Mr Siem’s fee is included within payments to Siem Industries S.A. as detailed in ‘Other related party transactions’ on page 129.

(b) Non-Executive Directors’ fees were temporarily reduced from April 2020 to December 2020 by 15%.

Subsea 7 S.A. shares held by the Non-Executive Directors at 31 December 2021 were as follows:

Shareholdings

Name

Total owned

Kristian Siem

(a)

–

Dod Fraser 4,000

Niels Kirk –

David Mullen 15,000

Jean Cahuzac 198,131

Eldar Sætre 7,000

Louisa Siem –

(a) At 31 December 2021, Siem Industries S.A. which is a company controlled through Mr Siem, owned 69,449,377 shares, representing 23.2% of total common shares of the Company.

Key management (Executive Management Team)

Payments made by the Group in relation to the Executive Management Team during the year were as follows:

For the year ended (in $ millions)

2021

31 Dec

(a)

2020

31 Dec

(a)

Salaries and other short-term employee benefits

(b)

4.5 5.0

Share-based payments

(c)

0.6 0.6

Post-employment benefits

(d)

0.2 0.2

Total 5.3 5.8

(a) Amounts represent payments made to members of the Executive Management Team and the associated costs incurred by the Group.

(b) Salaries and other short-term employee benefits represents payments made during the year in respect of base salary, short-term bonus payments, other short-term benefits, including private

healthcare and car allowances, and the associated social security contributions made by the Group.

(c) Share-based payments represents the market value of the shares transferred to the participants during the year. Shares transferred represent performance shares which vested under the 2013

and 2018 Long-term Incentive Plans and which participants are now entitled to receive. Refer to Note 35 ‘Share-based payments' for details of the plans.

(d) Post-employment benefits represent the cash value of defined pension contribution payments made by the Group during the year.

GOVERNANCE SUBSEA 7 S.A. FINANCIAL STATEMENTS GLOSSARY

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CONSOLIDATED FINANCIAL STATEMENTS

STRATEGIC REPORT

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS CONTINUED

128 | SUBSEA 7 | ANNUAL REPORT 2021

34. RELATED PARTY TRANSACTIONS CONTINUED

Total remuneration for the Chief Executive Officer and Chief Financial Officer during the year was as follows:

John Evans

(Chief Executive Officer)

Ricardo Rosa

(Chief Financial Officer)

For the year ended (in $ thousands)

2021

31 Dec

(a)(b)

2020

31 Dec

(a)(b)

2021

31 Dec

(a)(b)

2020

31 Dec

(a)(b)

Base salary 689.0 568.0

(c)

524.0 418.0

(c)

Short-term incentive bonus

(d)

481.9 – 219.7 –

axable benefits

(e)

22.1 22.1 18.0 17.0

Share-based payments

(f)

174.0 151.0 141.1 119.0

Cash in lieu of pension

(g)

61.0 50.0 – –

Pension contributions made by employer

(h)

– – 51.2 19.0

Total 1,428.0 791.1 954.0 573.0

(a) Amounts in the table are shown gross before deductions of income taxes and social security costs borne by the employee.

(b) Payments are made in GBP. The amounts have been translated to USD using an average rate for the year. The amount represents the cash paid in respect of the year.

(d) Short-term incentive bonus in respect of performance during the year.

(e) Taxable benefits represent the taxable value of benefits provided during the year, including private healthcare insurance and car allowances.

(f) Share-based payments represents the market value of the shares transferred to the participants during the year which vested under the 2013 and 2018 Long-term Incentive Plans.

The shares were transferred when the participant met the service criteria associated with the plans. Refer to Note 35 'Share-based payments' for details of the plans.

(g) Mr Evans received a cash allowance in lieu of a pension contribution.

(h) Employer pension contributions represents the cash value of defined pension contribution payments made by the Group during the year.

Performance shares outstanding and shareholdings held at 31 December 2021 were as follows:

Shares and performance shares

Name

Total

performance

(a)

Total owned

John Evans 182,215 92,481

Ricardo Rosa

(b)

93,264 50,958

Nathalie Louys 97,518 33,073

Kate Lyne 86,747 17,694

Olivier Blaringhem 110,530 18,590

Phil Simons 105,530 9,264

(a) Total performance shares held represent the maximum future entitlement assuming all vesting conditions are met.

(b) Mr Rosa retired on 31 December 2021.

Transactions with key management personnel

During the year, the Executive Management Team were awarded the rights to 180,000 performance shares under the Group’s 2018 Long-

term Incentive Plan. Refer to Note 35 ‘Share-based payments’ for details of the plan.

Transactions with associates and joint ventures

The Consolidated Balance Sheet includes:

t (in $ millions)

2021

31 Dec

2020

31 Dec

Net non-current receivables due from associates and joint ventures (Note 18) 37.0 5.7

Net trade receivables due from associates and joint ventures (Note 20) 2.5 7.3

rade payables due to associates and joint ventures (Note 30) (9.1) (12.0)

Net receivables due from associates and joint ventures 30.4 1.0

During the year, the Group provided services to associates and joint ventures amounting to $1.0 million (2020: $2.2 million) and purchased

goods and services from associates and joint ventures amounting to $17.6 million (2020: $26.2 million). The Group advanced a loan of

$33.0 million to Eidesvik Seven AS, of which $31.2 million remained outstanding at 31 December 2021. The loan is repayable in instalments

with the final amount due 31 December 2025, subject to a one-year extension option.

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Other related party transactions

During the year the Group undertook related party transactions, all of which were conducted on an arm’s length basis.

The Group is an associate of Siem Industries S.A. and is equity accounted for within Siem Industries S.A.’s Consolidated Financial

Statements. Payments were made to Siem Industries S.A. in relation to the services provided by Mr Siem and reimbursement of other

support services and costs incurred by Siem Industries S.A. totalling $0.3 million (2020: $0.5 million).

Purchases by the Group from companies ultimately controlled by Siem Industries S.A. including vessel charters, provision of crew,

associated services and property rental totalling $21.4 million (2020: $17.2), were made during the year.

Revenue generated by the Group from companies ultimately controlled by Siem Industries S.A. including equipment and property rental

totalling $0.5 million (2020: $0.5 million) was recognised during the year.

At 31 December 2021, the Group had outstanding balances payable to companies ultimately controlled by Siem Industries S.A. of

$1.9 million (2020: less than $0.1 million).

At 31 December 2021, the Group had outstanding balances receivable from companies ultimately controlled by Siem Industries S.A. of

less than $0.1 million (2020: less than $0.1 million).

35. SHARE-BASED PAYMENTS

The Group operated two equity-settled share-based payment schemes during 2021.

The following table summarises the compensation expense recognised in the Consolidated Income Statement during the year:

For the year ended (in $ millions)

2021

31 Dec

2020

31 Dec

Expense arising from equity-settled share-based payment transactions:

2013 Long-term Incentive Plan 0.6 1.6

2018 Long-term Incentive Plan 3.3 2.6

Total 3.9 4.2

Equity-settled share-based payment schemes

2013 Long-term Incentive Plan

The 2013 Long-term Incentive Plan (2013 LTIP) was approved by the Company’s shareholders at the Annual General Meeting on 28 June

2013. The 2013 LTIP had a five-year term with awards being made annually until 2017.

The 2013 LTIP provided for conditional awards of shares based upon performance conditions measured over a performance period of three

years. Performance conditions were based on two measures: relative Total Shareholder Return (TSR) against a specified comparator group

of companies and the level of Return on Average Invested Capital (ROAIC) achieved. Both performance conditions were determined over

a three-year period.

During 2021, in accordance with the terms of the 2013 LTIP, shares totalling 225,170 (2020: 514,145) were unconditionally transferred to

participants for $nil consideration.

2018 Long-term Incentive Plan

The 2018 Long-term Incentive Plan (2018 LTIP) was approved by the Company’s shareholders at the Annual General Meeting on 17 April

2018. The 2018 LTIP has a five-year term with awards being made annually. The aggregate number of shares which may be granted in any

calendar year is limited to 0.5% of issued and outstanding share capital on 1 January of that calendar year. The total number of shares that

may be delivered pursuant to awards under the plan shall not exceed 11,500,000. Grants are determined by the Compensation Committee

of the Subsea 7 S.A. Board of Directors, which is responsible for operating and administering the plan.

The 2018 LTIP is an essential component of the Group’s reward strategy, and is designed to align the interests of participants with those of

Subsea 7’s shareholders, and enables participants to share in the success of the Group. The 2018 LTIP provides for conditional awards of

shares based upon performance conditions measured over a performance period of three years.

Performance conditions are based on two measures: relative Total Shareholder Return (TSR) against a specified comparator group of

companies and the level of Return on Average Invested Capital (ROAIC) achieved. Both performance conditions are determined over a

three-year period.

GOVERNANCE SUBSEA 7 S.A. FINANCIAL STATEMENTS GLOSSARY

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CONSOLIDATED FINANCIAL STATEMENTS

STRATEGIC REPORT

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS CONTINUED

130 | SUBSEA 7 | ANNUAL REPORT 2021

35. SHARE-BASED PAYMENTS CONTINUED

Share awards vested in 2021

During 2021, in accordance with the terms of the 2018 LTIP, shares totalling 291,578 were transferred to participants for $nil consideration.

The performance conditions for the vesting of the share awards granted in 2018 are set out below.

As a result of the partial achievement of one of the two performance metrics over the three-year performance period from 2018 – 2021,

61.2% of the total share awards granted in 2018 vested during 2021.

Metric

Percentage of share

awards under each

metric

Range Result

Percentage of

shares to vest under

each metric

Percentage of

shares to vest

SR 65% 50% – 100% 86.6%

(a)

94.1% 61.2%

ROAIC 35% 9% – 14% (1.9%)

(b)

– –

Total 100% 61.2%

(a) Subsea 7 ranked 3rd out of the 16 companies within the selected peer group (above the median but below the 90th percentile). This resulted in 94.1% vesting for the TSR portion – 61.18% of the

total award.

(b) The average over the three-year performance period was (1.9%). This resulted in 0% vesting for the ROAIC portion.

Share awards granted in 2021

During 2021, initial grants comprising 1,234,000 (2020: 1,120,000) conditional awards of shares were made under the terms of the 2018

LTIP; 802,100 awards are subject to relative TSR performance measures and 431,900 are subject to ROAIC performance measures.

TSR based awards

The Group will have to achieve a TSR ranking above the median for any awards to vest. If the ranked TSR position of Subsea 7 during the

three-year period, as converted to a percentage, is equal to 50%, 20% of the share award will vest. If the actual ranked TSR position of

Subsea 7 is greater than 50% and below 90%, the vesting of the share award between 20% and 65% is determined by linear interpolation.

The maximum award of 65% would only vest if the Group achieved top decile TSR ranking.

ROAIC based awards

ROAIC is calculated for each of the three years of the performance period on a quarterly basis. If the average ROAIC achieved by the

Group during the performance period is greater than 9% but less than 11%, vesting between 5% and 15% shall be determined by linear

interpolation. If the actual ROAIC achieved by the Group during the performance period is greater than 11% but less than 14%, vesting

between 15% and 35% shall be determined by linear interpolation. The maximum award of 35% would only vest if the Group achieved

average ROAIC of 14% or greater during the performance period.

Under the terms of the awards LTIP participants are not entitled to receive dividend equivalent payments.

At 31 December 2021, there were approximately 100 participants in the LTIP schemes. Individual award caps are in place such that no

senior executive or other employee may be granted shares under the LTIP in a single calendar year that have an aggregate fair market value

in excess of 150%, in the case of senior executives, or 100%, in the case of other employees, of their annual base salary at the date of the

award. Additionally, a holding requirement for senior executives applies where senior executives must hold 50% of all awards that vest until

they have built up a shareholding with a fair value of 150% of their annual base salary which must be maintained throughout their tenure.

The IFRS 2 ‘Share-based Payments’ fair value of each performance share granted under the 2013 and 2018 LTIP is estimated as of the

grant date using a Monte Carlo simulation model with weighted average assumptions as follows:

For the year ended

2021

31 Dec

2020

31 Dec

Weighted average share price at grant date (in $) 8.79 8.61

SR performance – Weighted average fair value at grant date (in $) 4.90 4.72

ROAIC performance – Weighted average fair value at grant date (in $) 8.12 7.96

Expected volatility 55% 54%

Risk free rate 1.22% 0.30%

Dividend yield 2.00% 2.00%

The expected share price volatility over the performance period is estimated from the Company’s historical share price volatility. The award

fair values were adjusted to recognise that participants are not entitled to receive dividend equivalent payments.

The non-market ROAIC performance condition is not incorporated into the grant date fair value of the ROAIC based awards. The value of

each award will be adjusted at each reporting date to reflect the Group’s current expectation of the number of performance shares which

will vest under the non-market ROAIC performance condition.

Upon vesting, the Group will withhold an amount for an employee’s tax obligation associated with a share-based payment and transfer

that amount, in cash, to the relevant tax authority on the employee’s behalf. In 2021, three plans vested in total, two plans vested under

the LTIP 2013 scheme and a further plan vested under the 2018 scheme. The total estimated withholding tax transferred to the relevant

tax authorities was $1.7 million (2020: $2.3 million). Of this total, $0.4 million was in relation to employee social security contributions and

$1.3 million was in relation to income tax.

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36. RETIREMENT BENEFIT OBLIGATIONS

The Group operates both defined contribution and defined benefit pension plans.

The Group’s contributions under the defined contribution pension plans are determined as a percentage of individual employee’s

pensionable salaries. The expense relating to these plans for the year was $48.5 million (2020: $44.2 million).

Defined benefit plans

The Group operates both funded and unfunded defined benefit pension plans.

France

The defined benefit plan for France is called the indemnités de fin de carrière (retirement indemnity plan) and is pursuant to applicable French

legislation and labour agreements in force in the industry. A lump-sum payment is made to employees upon retirement based on length of

service, employment category and the employee’s final salary. The obligation is unfunded and uninsured, as is standard practice in France.

Since the retirement indemnity plan is based upon specific lengths of service, categories and values set by French legislation and collective

agreements there is no specific trust or internal governance in place for this plan.

Norway

There are two Norwegian defined benefit pension plans which are known as the office (onshore) plan and the sailor plan.

The office (onshore) plan is a defined benefit scheme held with a life insurance company to provide pension benefits to the Group’s

employees. The scheme provides entitlement to benefits based on future service from the commencement date of the scheme. These

benefits are principally dependent on an employee’s pension qualifying period, salary at retirement age and the size of benefits from the

Norwegian National Insurance Scheme. The scheme also includes entitlement to disability, spouses and children’s pensions. The retirement

age under the scheme is 67 years. The office (onshore) plan is closed to new members.

Effective 1 June 2021, the sailor plan, a separate tariff-rated pension scheme for offshore personnel, was terminated. The Group no longer

has any obligations related to the sailor defined benefit pension plan and all assets and liabilities related to this plan were derecognised

during the year ended 31 December 2021.

Under the plans, pensions are paid upon retirement based on the employee’s length of service and final salary. The plans have been

established in accordance with Norwegian legislation and are separately administered funds. Due to Norwegian legislation the pension

scheme must provide an annual guaranteed return on investment, and consequently, the plan assets have a bias toward bonds rather than

equities. While the pension company is responsible for administering the plan according to Norwegian law, the Group is obligated to have

a steering committee for the plan. The steering committee considers and makes recommendations to the Group on matters relating to the

plan, including but not limited to: composition of the investment portfolio, amendments to the scheme, administration and enforcement of

the scheme, transfer of the scheme to another pension provider and termination of the scheme.

GOVERNANCE SUBSEA 7 S.A. FINANCIAL STATEMENTS GLOSSARY

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CONSOLIDATED FINANCIAL STATEMENTS

STRATEGIC REPORT

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS CONTINUED

132 | SUBSEA 7 | ANNUAL REPORT 2021

36. RETIREMENT BENEFIT OBLIGATIONS CONTINUED

Changes in the defined benefit obligation and fair value of plan assets

The following table provides a reconciliation of the changes in retirement benefit obligations and in the fair value of plan assets:

Norway France Total

(in $ millions) 2021 2020 2021 2020 2021 2020

Defined benefit obligation

t year beginning (13.5) (16.4) (12.2) (12.5) (25.7) (28.9)

mounts (charged)/credited to the Consolidated Income Statement:

Service costs – (0.2) (1.0) (1.0) (1.0) (1.2)

Past service credit 5.7 1.9 1.5 – 7.2 1.9

Interest costs (0.1) (0.2) (0.1) (0.1) (0.2) (0.3)

Curtailments – – – 2.8 – 2.8

Employee taxes (0.1) – – – (0.1) –

Sub-total 5.5 1.5 0.4 1.7 5.9 3.2

Remeasurement gains/(losses) recognised

in other comprehensive income:

ctuarial changes arising from changes in

demographic assumptions – – 0.5 (0.4) 0.5 (0.4)

ctuarial changes arising from changes in financial assumptions – – – (0.1) – (0.1)

Experience adjustments (0.7) 0.8 0.4 0.2 (0.3) 1.0

Sub-total (0.7) 0.8 0.9 (0.3) 0.2 0.5

Benefits paid 0.2 0.7 0.2 0.1 0.4 0.8

Exchange differences (0.1) (0.1) 1.0 (1.2) 0.9 (1.3)

t year end (8.6) (13.5) (9.7) (12.2) (18.3) (25.7)

Fair value of plan assets

t year beginning 12.2 14.0 – – 12.2 14.0

mounts (charged)/credited to the Consolidated Income Statement:

Past service credit (6.5) (1.4) – – (6.5) (1.4)

Interest income 0.1 0.2 – – 0.1 0.2

Sub-total (6.4) (1.2) – – (6.4) (1.2)

Remeasurement gains/(losses) recognised in other comprehensive

income:

Return on plan assets (excluding amounts in interest income) 0.4 – – – 0.4 –

dministrative expenses (0.1) (0.2) – – (0.1) (0.2)

Sub-total 0.3 (0.2) – – 0.3 (0.2)

Employer and participant contributions – 0.1 – – – 0.1

Benefits paid (0.2) (0.7) – – (0.2) (0.7)

Exchange differences 0.1 0.2 – – 0.1 0.2

t year end 6.0 12.2 – – 6.0 12.2

Net defined benefit obligation (2.6) (1.3) (9.7) (12.2) (12.3) (13.5)

Presented as:

Retirement benefit assets

– 0.8 – – – 0.8

Retirement benefit obligations (2.6) (2.1) (9.7) (12.2) (12.3) (14.3)

Total (2.6) (1.3) (9.7) (12.2) (12.3) (13.5)

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The retirement benefit assets of $nil (2020: $0.8 million) and retirement benefit obligations of $12.3 million (2020: $14.3 million) for pension

schemes which are in deficit in Norway and France are recognised as non-current assets and non-current liabilities respectively within the

Consolidated Balance Sheet.

Unfunded schemes

Included within the defined benefit obligation are amounts arising from unfunded French plans with a total obligation of $9.7 million

(2020: $12.2 million).

Funded schemes

The Norwegian schemes are funded through a separately administered investment fund. The fair value of the Norwegian scheme assets

were as follows:

t (in $ millions)

2021

31 Dec

2020

31 Dec

Investments quoted in active markets

Quoted equity investments 0.7 1.3

Unquoted investments

Bonds 2.9 6.5

Property 1.1 1.9

Other 1.3 2.5

Total 6.0 12.2

Future cash flows

The estimated contributions expected to be paid into the French and Norwegian plans during 2022 are $0.5 million (2021: $1.3 million).

The average remaining service periods were as follows:

t (in years)

2021

31 Dec

2020

31 Dec

Norway office (onshore) plan 3.0 6.0

Significant actuarial assumptions

The principal assumptions used to determine the present value of the defined benefit obligation were as follows:

Year ended 31 December 2021

(in %) Norway France

Pension increase 0.0 – 2.25 –

Discount rate 2.5 0.9

Future salary increase 2.0 3.0

Year ended 31 December 2020

(in %) Norway France

Pension increase 0.0 – 1.75 –

Discount rate 1.5 0.5

Future salary increase 2.0 2.0

GOVERNANCE SUBSEA 7 S.A. FINANCIAL STATEMENTS GLOSSARY

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CONSOLIDATED FINANCIAL STATEMENTS

STRATEGIC REPORT

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS CONTINUED

134 | SUBSEA 7 | ANNUAL REPORT 2021

36. RETIREMENT BENEFIT OBLIGATIONS CONTINUED

Assumptions regarding future mortality are set based on advice in accordance with published statistics and experience. The average life

expectancies in years of a pensioner retiring at the plan retirement age for participants in the Norway office (onshore) plan are shown below.

Retirement age Sex

2021

31 Dec

2020

31 Dec

Norway office (onshore) plan 67 years Male 23.8 17.9

67 years Female 26.1 25.1

Sensitivity analysis

A quantitative sensitivity analysis for significant assumptions at 31 December 2021 is shown below. The sensitivity analysis has been

determined based on a method that extrapolates the impact on the net defined benefit obligation ((increase)/decrease) as a result of

reasonable changes in key assumptions occurring at the end of the reporting period.

Norway – office plan

(in $ millions) Pension increase Discount rate Future salary increase

Sensitivity level 0.5% increase 0.5% decrease 0.5% increase 0.5% decrease 0.5% increase 0.5% decrease

Impact on the net defined benefit obligation (0.2) 0.2 0.2 (0.2) – –

France

(in $ millions) Discount rate

Sensitivity level 0.25% increase 0.25% decrease

Impact on the net defined benefit obligation 0.3 (0.3)

37. DEFERRED REVENUE

t (in $ millions)

2021

31 Dec

2020

31 Dec

dvances received from clients 0.9 2.4

Advances received from clients include amounts received before the related work is performed on day-rate contracts and amounts paid by

clients in advance of work commencing on fixed-price contracts.

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38. CASH FLOW FROM OPERATING ACTIVITIES

For the year ended (in $ millions) Notes

2021

31 Dec

2020

31 Dec

Cash flow from operating activities:

Income/(loss) before taxes 100.7 (1,071.9)

djustments for non-cash items:

Impairment of goodwill 13 – 605.4

Amortisation of intangible assets 14 14.7 14.7

Impairment of intangible assets 14 4.8 9.2

Depreciation of property, plant and equipment 15 341.1 334.9

Impairment of property, plant and equipment 15 4.1 282.0

Amortisation of right-of-use assets 16 78.5 82.1

Impairment of right-of-use assets 16 0.2 31.9

Reversal of impairment of right-of-use assets 16 (3.7) –

Amortisation of mobilisation costs

6 9.5 10.7

djustments for investing and financing items:

Gain on recognition of assets related to business combinations – post measurement period 7 – (15.5)

Share of net (income)/loss of associates and joint ventures 17 (3.9) 0.5

Net (gain)/loss on disposal of property, plant and equipment 7 (3.0) 0.2

Net gain on maturity of lease liabilities (0.2) (1.8)

Finance income 8 (4.7) (4.8)

Finance costs 8 20.1 24.6

djustments for equity items:

Share-based payments 35 3.9 4.2

562.1 306.4

Changes in operating assets and liabilities:

(Increase)/decrease in inventories (9.3) 4.3

Increase in operating receivables (416.5) (88.5)

Increase in operating liabilities 224.2 276.3

(201.6) 192.1

Income taxes paid (67.5) (51.7)

Net cash generated from operating activities 293.0 446.8

39. POST BALANCE SHEET EVENTS

Regular dividend

The Board of Directors will recommend to the shareholders at the Annual General Meeting on 12 April 2022 that a regular dividend of NOK

1.00 per share be paid, equivalent to a total dividend of approximately $33 million, marking the Board’s confidence in the financial position

and outlook for the Group.

Repayment of borrowings

On 18 January 2022, the Group repaid in full the amount outstanding under the Seaway 7 ASA Revolving Credit Facility of $37.0 million.

GOVERNANCE SUBSEA 7 S.A. FINANCIAL STATEMENTS GLOSSARY

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CONSOLIDATED FINANCIAL STATEMENTS

STRATEGIC REPORT

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS CONTINUED

136 | SUBSEA 7 | ANNUAL REPORT 2021

40. WHOLLY-OWNED SUBSIDIARIES

Subsea 7 S.A. had the following wholly-owned subsidiaries at 31 December 2021.

Name Registered in Nature of business

4Subsea AS Norway General Trading

4Subsea Astori AS Norway General Trading

4Subsea Do Brasil Projetos e Servicos de Integridade Subsea Ltda Brazil General Trading

4Subsea UK Limited United Kingdom General Trading

cergy B.V. Netherlands Holding

cergy France S.A.S. France General Trading

cergy Holdings (Gibraltar) Limited

(a)

Gibraltar Special Purpose

quarius Solutions Inc. Canada General Trading

urora Environmental Limited United Kingdom General Trading

Subsea 7 Saudi Arabia Limited Saudi Arabia General Trading

Globestar FZE Nigeria General Trading

Green Light Environment Pty Limited

ustralia General Trading

Ocean Geo Solutions, Inc. US General Trading

Pelagic Nigeria Limited Nigeria Holding

Pioneer Lining Technology Limited United Kingdom General Trading

PT. Subsea 7 Manufaktur Indonesia Indonesia General Trading

Seaway Heavy Lifting Holding Limited Cyprus Holding

Subsea 7 Servicos Offshore S.A. Brazil Holding

Sevenseas Contractors S. de R.L. de C.V. Mexico General Trading

SHL Contracting B.V. Netherlands General Trading

SO France S.A. France Special Purpose

Subsea 7 (ME) Pte Limited Singapore General Trading

Subsea 7 (Singapore) Pte Limited Singapore General Trading

Subsea 7 (UK Service Company) Limited

(a)

United Kingdom Corporate Service

Subsea 7 (US) LLC US General Trading

Subsea 7 Angola S.A.S. France Special Purpose

Subsea 7 Asia Pacific Sdn Bhd Malaysia Special Purpose

Subsea 7 Australia Contracting Pty Ltd

ustralia General Trading

Subsea 7 Canada Inc. Canada General Trading

Subsea 7 Chartering (UK) Limited United Kingdom General Trading

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Name Registered in Nature of business

Subsea 7 Blue Space Limited United Kingdom General Trading

Subsea 7 Blue Space Investments S.A.S. France General Trading

Subsea 7 Crewing Limited United Kingdom Special Purpose

Subsea 7 Crewing Services Pte. Ltd. Singapore General Trading

Subsea 7 Deep Sea Limited United Kingdom General Trading

Subsea 7 do Brasil Serviços Ltda Brazil General Trading

Subsea 7 Engineering Limited United Kingdom General Trading

Subsea 7 Finance (UK) PLC United Kingdom Special Purpose

Subsea 7 Holding Inc. Cayman Islands Holding

Subsea 7 Holding Norway AS Norway Holding

Subsea 7 Holdings (UK) Limited United Kingdom Holding

Subsea 7 Holdings (US) Inc. US Holding

Subsea 7 International Contracting Limited United Kingdom General Trading

Subsea 7 International Holdings (UK) Limited

(a)

United Kingdom Holding

Subsea 7 i-Tech Australia Pty Limited

ustralia General Trading

Subsea 7 i-Tech do Brasil Serviços Ltda Brazil Dormant

Subsea 7 i-Tech Limited United Kingdom General Trading

Subsea 7 i-Tech Mexico S. de R.L. de C.V. Mexico General Trading

Subsea 7 i-Tech Norway AS Norway General Trading

Subsea 7 i-Tech US Inc. US General Trading

Subsea 7 Limited United Kingdom General Trading

Subsea 7 Luanda Ltd Gibraltar General Trading

Subsea 7 Marine (US) Inc. US Dormant

Subsea 7 Marine LLC US General Trading

Subsea 7 Mexico S. de R.L. de C.V. Mexico General Trading

Subsea 7 Moçambique, Limitada Mozambique General Trading

Subsea 7 Navica AS Norway

essel Owning

Subsea 7 Nigeria Limited Nigeria General Trading

Subsea 7 Nile Delta Limited Egypt General Trading

Subsea 7 Norway AS Norway General Trading

Subsea 7 Offshore Resources (UK) Limited United Kingdom

essel Owning

Subsea 7 Pipeline Production Limited United Kingdom General Trading

Subsea 7 Port Isabel LLC US General Trading

Subsea 7 Portugal Unipessoal Limitada Portugal General Trading

Subsea 7 Senegal SAS Senegal General Trading

Subsea 7 Services (Singapore) Pte Limited Singapore General Trading

Subsea 7 Shipping Limited Isle of Man

essel Owning

Subsea 7 Singapore Contracting Pte Limited Singapore General Trading

Subsea 7 Treasury (UK) Limited United Kingdom Special Purpose

Subsea 7 Vessel Owner AS Norway

essel Owning

Subsea 7 West Africa Contracting Limited United Kingdom General Trading

Subsea 7 West Africa S.A.S. France General Trading

Swagelining Limited United Kingdom General Trading

artaruga Insurance Limited Isle of Man Special Purpose

hames International Enterprise Limited United Kingdom Special Purpose

odus Academy Limited United Kingdom General Trading

odus DMCC United Arab Emirates General Trading

odus Group (Holdings) Limited United Kingdom Holding

odus Group A/S Norway Dormant

odus Group Japan Japan General Trading

odus Oil and Gas Consultants (Pty) Limited South Africa General Trading

GOVERNANCE SUBSEA 7 S.A. FINANCIAL STATEMENTS GLOSSARY

137

SUBSEA 7 | ANNUAL REPORT 2021 |

CONSOLIDATED FINANCIAL STATEMENTS

STRATEGIC REPORT

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS CONTINUED

138 | SUBSEA 7 | ANNUAL REPORT 2021

40. WHOLLY-OWNED SUBSIDIARIES CONTINUED

Name Registered in Nature of business

odus Group B.V. Netherlands General Trading

odus Group Consultants Sdn. Bhd Malaysia General Trading

odus Group Inc United States General Trading

odus Group Limited United Kingdom General Trading

odus Group Pty Limited

ustralia General Trading

ZNM Nigeria Limited Nigeria Dormant

(a) Wholly-owned subsidiaries directly owned by the parent company, Subsea 7 S.A.

For all entities, the principal place of business is consistent with the place of registration.

All subsidiary undertakings are included in the Consolidated Financial Statements of the Group. The proportion of the voting rights in

the subsidiary undertakings held directly by the immediate parent company do not differ from the proportion of shares held. The parent

company does not have any shareholdings in the preference shares of subsidiary undertakings included in the Group.

Details of the addresses of the registered office of each of the wholly-owned subsidiaries are available on request from Subsea 7 S.A.,

registered office, 412F, route d’Esch, L-2086 Luxembourg.

138

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ADDITIONAL INFORMATION – EBITDA

SUBSEA 7 | ANNUAL REPORT 2021 | 139

ADJUSTED EBITDA AND ADJUSTED EBITDA MARGIN

Adjusted earnings before interest, taxation, depreciation and amortisation (Adjusted EBITDA) is a non-IFRS measure that represents net

income before additional specific items that are considered to impact the comparison of the Group’s performance either period-on-period or

with other businesses. The Group defines Adjusted EBITDA as net income adjusted to exclude depreciation and amortisation costs including

amortisation of prepaid mobilisation expenses and amortisation of intangible assets, impairment charges or impairment reversals, finance

income, remeasurement gains and losses on business combinations, other gains and losses (including foreign exchange gains and losses,

gains on disposal of subsidiaries, gains and losses resulting from remeasurement of contingent consideration, gains on distributions and

bargain purchase gains on business combinations), finance costs and taxation. Adjusted EBITDA margin is defined as Adjusted EBITDA

divided by revenue, expressed as a percentage.

The items excluded from Adjusted EBITDA represent items which are individually or collectively material but which are not considered

representative of the performance of the business during the periods presented. Other gains and losses principally relate to disposals

of investments, property, plant and equipment and net foreign exchange gains or losses. Impairments of assets represent the excess

of the assets’ carrying amount over the amount that is expected to be recovered from their use in the future or their sale.

Adjusted EBITDA and Adjusted EBITDA margin are not recognised as a measurement of performance under IFRS as adopted by the EU.

These measures exclude items that can have a significant effect on the Group’s income or loss and therefore should not be considered

as an alternative to, or more meaningful than, net income or loss (as determined in accordance with IFRS) as a measure of the Group’s

operating results or cash flows from operations (as determined in accordance with IFRS) as a measure of the Group’s liquidity.

Management believes that Adjusted EBITDA and Adjusted EBITDA margin are important indicators of the operational strength and

the performance of the Group. These non-IFRS measures provide management with a meaningful comparative for its business units, as

they eliminate the effects of financing, depreciation, amortisation, impairments, taxation and other one-off adjustments to the Consolidated

Income Statement. Management believes that the presentation of Adjusted EBITDA is also useful as it is similar to measures used by

companies within Subsea 7’s peer group and therefore believes it to be a helpful calculation for those evaluating companies within

Subsea 7’s industry. Adjusted EBITDA margin may also be a useful ratio to compare performance to its competitors and is widely used

by shareholders and analysts who monitor the Group’s performance. Notwithstanding the foregoing, Adjusted EBITDA and Adjusted

EBITDA margin as presented by the Group may not be comparable to similarly titled measures reported by other companies.

Reconciliation of net operating income/(loss) to Adjusted EBITDA and Adjusted EBITDA margin:

For the year ended (in $ millions)

2021

31 Dec

2020

31 Dec

Net operating income/(loss) 71.7 (1,033.8)

Depreciation, amortisation and mobilisation 443.8 442.4

Impairment of goodwill – 605.4

Impairment of intangible assets 4.8 9.2

Impairment of property, plant and equipment 4.1 282.0

Net impairment of right-of-use assets (3.5) 31.9

djusted EBITDA 520.9 337.1

Revenue 5,010.0 3,466.4

djusted EBITDA % 10.4% 9.7%

Reconciliation of net income/(loss) to Adjusted EBITDA and Adjusted EBITDA margin:

For the year ended (in $ millions)

2021

31 Dec

2020

31 Dec

Net income/(loss) 36.4 (1,105.2)

Depreciation, amortisation and mobilisation 443.8 442.4

Impairment of goodwill – 605.4

Impairment of intangible assets 4.8 9.2

Impairment of property, plant and equipment 4.1 282.0

Net impairment of right-of-use assets (3.5) 31.9

Finance income (4.7) (4.8)

Other gains and losses (44.4) 18.3

Finance costs 20.1 24.6

axation 67.9 33.3

djusted EBITDA 520.9 337.1

Revenue 5,010.0 3,466.4

djusted EBITDA % 10.4% 9.7%

GOVERNANCE SUBSEA 7 S.A. FINANCIAL STATEMENTS GLOSSARY

139

SUBSEA 7 | ANNUAL REPORT 2021 |

CONSOLIDATED FINANCIAL STATEMENTS

STRATEGIC REPORT

SUBSEA 7 | ANNUAL REPORT 2021 | 140

SUBSEA 7 S.A. FINANCIAL

STATEMENTS AND REPORT

OF THE RÉVISEUR

D’ENTREPRISES AGRÉÉ

FOR YEAR ENDED

31 DECEMBER 2021

412F, route d‘Esch

L-2086

Luxembourg

R.C.S. Luxembourg No. B43172

Page

Report of the Réviseur d’Entreprises Agréé 141

Balance Sheet 145

Profit and Loss Account 146

Notes to the Financial Statements 147

140

| SUBSEA 7 | ANNUAL REPORT 2021

141 | SUBSEA 7 | ANNUAL REPORT 2021

REPORT OF THE RÉVISEUR D’ENTREPRISES AGRÉÉ

To the Shareholders of

Subsea 7 S.A.

412F, route d’Esch

L-2086 Luxembourg

REPORT ON THE AUDIT OF THE FINANCIAL STATEMENTS

Opinion

We have audited the financial statements of Subsea 7 S.A. (the “Company”) included in page 145 to page 152, which comprise the Balance

Sheet at 31 December 2021, the Profit and Loss account for the year then ended, and the notes to the financial statements, including a

summary of significant accounting policies.

In our opinion, the accompanying financial statements give a true and fair view of the financial position of the Company at 31 December

2021, and of the results of its operations for the year then ended in accordance with Luxembourg legal and regulatory requirements relating

to the preparation and presentation of the financial statements.

Basis for opinion

We conducted our audit in accordance with EU Regulation N° 537/2014, the Law of 23 July 2016 on the audit profession (the “Law of

23 July 2016”) and with International Standards on Auditing (“ISAs”) as adopted for Luxembourg by the “Commission de Surveillance du

Secteur Financier” (“CSSF”). Our responsibilities under the EU Regulation Nº 537/2014, the Law of 23 July 2016 and ISAs are further

described in the “Responsibilities of the “réviseur d’entreprises agréé” for the audit of the financial statements” section of our report. We

are also independent of the Company in accordance with the Code of Ethics for Professional Accountants, including the International

Independence Standards, issued by the International Ethics Standards Board for Accountants (“IESBA Code”) as adopted for Luxembourg

by the CSSF together with the ethical requirements that are relevant to our audit of the financial statements, and have fulfilled our other

ethical responsibilities under those ethical requirements. We believe that the audit evidence we have obtained is sufficient and appropriate

to provide a basis for our opinion.

GOVERNANCE CONSOLIDATED FINANCIAL STATEMENTS GLOSSARY

141

SUBSEA 7 | ANNUAL REPORT 2021 |

SUBSEA 7 S.A. FINANCIAL STATEMENTS

STRATEGIC REPORT

REPORT OF THE RÉVISEUR D’ENTREPRISES AGRÉÉ CONTINUED

142 | SUBSEA 7 | ANNUAL REPORT 2021

Key audit matters

Key audit matters are those matters that, in our professional judgement, were of most significance in our audit of the financial statements of

the current period. These matters were addressed in the context of the 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.

Key audit matter: Impairment of investments in affiliated undertakings

Description of key

audit matter:

Subsea 7 S.A., as ultimate parent of the Group, holds shares in affiliated undertakings Acergy Holdings

(Gibraltar) Limited, Subsea 7 International Holdings (UK) Limited and Subsea 7 (UK Service Company) Limited

amounting to an aggregate of $1,690.3 million at 31 December 2021 as disclosed in Note 3 to the annual

accounts, inclusive of a reversal of a value adjustment thereon of $17.1 million recognised during the year.

As stated in Note 2 to the annual accounts, the Company performs an annual review of the carrying

amounts of individual investments with any resulting impairments reflected in the profit and loss account in

the relevant period.

If an impairment indicator is identified, the estimated recoverable amount of the investment is prepared. The

estimated recoverable amount is calculated as the higher of the value-in-use or fair value less costs to sell. The

outcome of the impairment review could vary significantly if different assumptions were applied in the valuation

model. The key factors are:

• the future EBITDA assumptions taken from the Group’s most recent budgets and plans for the next five

years (the “Plan”);

• the long-term growth rate used beyond the period covered by the Plan;

• the pre-tax discount rate applied to future cash flows.

Impairment of shares in affiliated undertakings is considered a key audit matter because of the significant

judgement involved regarding the assessment of their recoverable amount.

Key audit matter: Impairment of investments in affiliated undertakings

Our response:

Our audit procedures in relation to the valuation of the investments in affiliated undertakings included,

among others:

We assessed management’s impairment testing by obtaining the supporting model and assessing the

methodology and key assumptions made:

• Future EBITDA forecasts – we evaluated management’s EBITDA forecasts and tested the underlying values

used in the calculations by comparing management’s forecast to the latest management approved five-year

Plan. We assessed the actual performance in the year against the prior year budgets to evaluate historical

forecasting accuracy;

• Long-term growth rate – we compared the rates applied by management to available externally

developed rates;

• Pre-tax discount rates – we involved our valuations specialists in our evaluation of the discount rate to

consider the appropriateness of the rates used; and

• Net assets – we agreed the net assets to the financial records of the respective companies.

We compared the carrying amount of the investments to their recoverable amount in order to assess

whether an impairment or reversal of previously recognised impairment exists.

We assessed the adequacy and appropriateness of the disclosures in Note 2 and Note 3 of the

Annual Accounts.

Other information

The Board of Directors is responsible for the other information. The other information comprises the information included in the Management

Report on page 59 and the accompanying Corporate Governance Statement from pages 37 to 51 but does not include the financial

statements and our report of “réviseur d’entreprises agréé” thereon.

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, we are required to report this fact. We have nothing to report in this regard.

142

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SUBSEA 7 | ANNUAL REPORT 2021 | 143

Responsibilities of the Board of Directors and of those charged with governance for the financial statements

The Board of Directors is responsible for the preparation and fair presentation of the financial statements in accordance with Luxembourg

legal and regulatory requirements relating to the preparation and presentation of the financial statements, and for such internal control as

the Board of Directors determines is necessary to enable the preparation of financial statements that are free from material misstatement,

whether due to fraud or error.

The Board of Directors is also responsible for presenting the financial statements in compliance with the requirements set out in the

Delegated Regulation 2019/815 on European Single Electronic Format, as amended (“ESEF Regulation”).

In preparing the financial statements, the Board of Directors is responsible for assessing the Company’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 the Board

of Directors either intends to liquidate the Company or to cease operations, or has no realistic alternative but to do so.

Those charged with governance are responsible for overseeing the Company’s financial reporting process.

Responsibilities of the “réviseur d’entreprises agréé” for the audit of the financial statements

The objectives of our audit 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 a report of the “réviseur d’entreprises agréé” that includes our opinion. Reasonable

assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with EU Regulation N° 537/2014, the

Law of 23 July 2016 and with the ISAs as adopted for Luxembourg by the CSSF 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 EU Regulation N° 537/2014, the Law of 23 July 2016 and with ISAs as adopted for Luxembourg by

the CSSF, we exercise professional judgement and maintain professional scepticism throughout the audit. We also:

• 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 internal control.

• Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made

by the Board of Directors.

• Conclude on the appropriateness of Board of Directors’ 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 ability

to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our report of the

“réviseur d’entreprises agréé” 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 report of the “réviseur d’entreprises agréé”.

However, future events or conditions may cause the Company 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.

• Assess whether the financial statements have been prepared, in all material respects, in compliance with the requirements laid down in

the ESEF Regulation.

We communicate with those charged with governance 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 those charged with governance with a statement that we have complied with relevant ethical requirements regarding

independence, and communicate to them all relationships and other matters that may reasonably be thought to bear on our independence,

and where applicable, actions taken to eliminate threats or safeguards applied.

From the matters communicated with those charged with governance, 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 report

unless law or regulation precludes public disclosure about the matter.

GOVERNANCE CONSOLIDATED FINANCIAL STATEMENTS GLOSSARY

143

SUBSEA 7 | ANNUAL REPORT 2021 |

SUBSEA 7 S.A. FINANCIAL STATEMENTS

STRATEGIC REPORT

REPORT OF THE RÉVISEUR D’ENTREPRISES AGRÉÉ CONTINUED

144 | SUBSEA 7 | ANNUAL REPORT 2021

Report on other legal and regulatory requirements

We have been appointed as “réviseur d’entreprises agréé” by the General Meeting of the Shareholders on 14 April 2021 and the duration of

our uninterrupted engagement, including previous renewals and reappointments, is seven years.

The Management Report on page 59 is consistent with the financial statements and has been prepared in accordance with applicable

legal requirements.

The accompanying Corporate Governance Statement on pages 37 to 51 is the responsibility of the Board of Directors. The information

required by article 68ter paragraph (1) letters c) and d) of the law of 19 December 2002 on the commercial and companies register and

on the accounting records and annual accounts of undertakings, as amended, is consistent with the Financial statements and has been

prepared in accordance with applicable legal requirements.

We have checked the compliance of the financial statements of the Company as at 31 December 2021 with relevant statutory requirements

set out in the ESEF Regulation that are applicable to the financial statements. For the Company, it relates to financial statements prepared in

valid xHTML format.

In our opinion, the financial statements of the Company as at 31 December 2021, identified as 222100AIF0CBCY80AH62-2021-12-31, have

been prepared, in all material respects, in compliance with the requirements laid down in the ESEF Regulation.

We confirm that the prohibited non-audit services referred to in EU Regulation No 537/2014 were not provided and that we remained

independent of the Company in conducting the audit.

Ernst & Young

Société anonyme

Cabinet de révision agréé

Olivier Lemaire

Luxembourg, 2 March 2022

144

| SUBSEA 7 | ANNUAL REPORT 2021

SUBSEA 7 S.A. BALANCE SHEET

SUBSEA 7 | ANNUAL REPORT 2021 | 145

(

$ in millions) Notes

2021

31 Dec

2020

31 Dec

ssets

Fixed assets

Financial assets

Shares in affiliated undertakings 3 1,690.3 1,673.2

Current assets

Other debtors

becoming due and payable within one year

– 0.2

Investments

Own shares 6 29.9 16.9

Cash at bank and in hand – –

Prepayments 0.4 0.2

Total assets 1,720.6 1,690.5

Capital, reserves and liabilities

Capital and reserves

Subscribed capital 4 600.0 600.0

Share premium account 4 733.6 746.6

Reserves

Legal reserve 4, 5 60.0 60.0

Reserve for own shares 4, 6 29.9 16.9

Profit or (loss) brought forward 4 108.8 178.7

Profit or (loss) for the financial year 4 16.3 (0.3)

Total capital and reserves 1,548.6 1,601.9

Creditors

mounts owed to affiliated undertakings

becoming due and payable within one year 7 171.2 88.1

Other creditors

Tax authorities 0.1 0.3

Other creditors

becoming due and payable within one year 0.7 0.2

Total liabilities 172.0 88.6

Total capital, reserves and liabilities 1,720.6 1,690.5

The accompanying notes on pages 147 to 152 form an integral part of the Financial Statements for Subsea 7 S.A.

GOVERNANCE CONSOLIDATED FINANCIAL STATEMENTS GLOSSARY

145

SUBSEA 7 | ANNUAL REPORT 2021 |

SUBSEA 7 S.A. FINANCIAL STATEMENTS

STRATEGIC REPORT

SUBSEA 7 S.A. PROFIT AND LOSS ACCOUNT

146 | SUBSEA 7 | ANNUAL REPORT 2021

For the year ended ($ in millions) Notes

2021

31 Dec

2020

31 Dec

Other operating income 8 37.4 42.1

Raw materials and consumables and other external expenses

Other external expenses 10 (1.6) (0.9)

Staff costs

Wages and salaries (0.1) (0.1)

Other operating expenses 11 (21.5) (17.5)

Income from participating interests

derived from affiliated undertakings 12 – 8.0

Other interest receivable and similar income

derived from affiliated undertakings 13 0.3 0.6

alue adjustments

in respect of financial assets and of investments held as current assets 3, 6 9.1 (27.8)

Interest payable and similar expenses

concerning affiliated undertakings 7 (4.6) (4.4)

other interest and similar expenses (2.5) –

Other taxes (0.2) (0.3)

Profit or (loss) for the financial year 16.3 (0.3)

The accompanying notes on pages 147 to 152 form an integral part of the Financial Statements for Subsea 7 S.A.

146

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NOTES TO THE FINANCIAL STATEMENTS

SUBSEA 7 | ANNUAL REPORT 2021 | 147

1. ORGANISATION

Subsea 7 S.A. (the Company) is a holding company which was incorporated under the laws of Luxembourg on 10 March 1993. The

Company has been incorporated for an unlimited period of time. The Subsea 7 S.A. Group (the Group) consists of Subsea 7 S.A. and its

affiliated undertakings at 31 December 2021.

The objects of the Company are to invest in affiliated undertakings which provide subsea construction, maintenance, inspection, survey and

engineering services, predominantly for the offshore oil and gas, renewable energy, heavy lifting and related industries. More generally, the

Company is authorised to participate in any manner in all commercial, industrial, financial and other enterprises of Luxembourg or foreign

nationality through the acquisition by participation, subscription, purchase, option or any other means of all shares, stocks, debentures,

bonds or securities; and the acquisition of patents and licences it will administer and exploit. The Company is authorised to lend or borrow

with or without security, provided that any monies so borrowed may only be used for the purpose of the Company, or companies which

are affiliated undertakings of, or associated with the Company; in general it is authorised to undertake any operations directly or indirectly

connected with these objects.

The Company also prepares Consolidated Financial Statements in conformity with International Financial Reporting Standards as issued by

the International Accounting Standards Board and as adopted by the European Union; these are shown on pages 68 to 138 and are also

available at the registered office of the Company or on www.subsea7.com.

2. SIGNIFICANT ACCOUNTING POLICIES

The Financial Statements were prepared in accordance with Luxembourg legal and regulatory requirements. Accounting policies and

valuation rules are, besides the ones laid down by the law of 19 December 2002 as amended, determined and applied by the Board of

Directors of the Company. The Company maintains its accounting records and presents its Financial Statements in US Dollars ($).

Significant accounting policies are as follows:

2.1 Financial assets

Shares in affiliated undertakings are stated at cost less any accumulated impairment in value. An annual review of the carrying amount is

performed on an individual investment basis with resulting impairments or reversals of impairment reflected in the Profit and Loss account

in the relevant period. Earnings in investee companies are recognised when, and to the extent that, dividends are received from affiliated

undertakings and participating interests.

2.2 Own shares

Own shares are initially measured at acquisition cost and recognised as an asset with a corresponding non-distributable reserve created

from share premium. Own shares are subsequently remeasured at the lower of cost or market value using the FIFO (First In First Out)

method. They are subject to value adjustments where their recovery is compromised. These value adjustments are reversed when the

reasons for which the value adjustments were made have ceased to apply.

2.3 Translation of foreign currencies

The Company maintains its accounts in US Dollars; this is the currency in which its capital is expressed and the Financial Statements are

prepared. Amounts in foreign currencies are translated into US Dollars on the following basis:

• formation expenses, the cost of acquisition of intangible, tangible and financial fixed assets denominated in a currency other than US

Dollars are translated at historical exchange rates;

• all other assets denominated in a currency other than US Dollars are valued individually at the lower of their values translated into US

Dollars at their historical exchange rate or exchange rate prevailing at the balance sheet date;

• all liabilities denominated in a currency other than US Dollars are valued individually at the higher of their values translated at historical

exchange rate or exchange rate prevailing at the balance sheet date; and

• revenue and expenses denominated in a currency other than US Dollars are translated into US Dollars at the exchange rates applicable on

the day on which they are collected or disbursed.

Only realised foreign exchange gains and losses and unrealised foreign exchange losses are recognised in the Profit and Loss account.

2.4 Share-based payments

Awards made under the Group’s Long-term Incentive Plans, in the form of equity-settled share-based payments, are satisfied by the

Company on behalf of its affiliated undertakings. The costs associated with these awards are recognised on the date of issuance to the

employees and recorded in the Profit and Loss account as an adjustment to the value of own shares.

2.5 Parent company guarantees

The Company issues parent company guarantees (PCGs) to third parties on behalf of its direct and indirect affiliated undertakings where

requested. The Company receives a fee in respect of the PCGs issued, which is recorded as other operating income within the Profit and

Loss account. This income is recognised on a straight-line basis over the period of the guarantee.

2.6 Interest payable and receivable

Amounts owed to and owed by affiliated undertakings bear interest at commercial rates.

2.7 Other debtors

Other debtors are recognised initially at nominal amount. Provision for value adjustment is made when there is objective evidence that the

Company may not be able to collect all of the amounts due. Bad debts are written off where necessary.

2.8 Amounts owed to affiliated undertakings and other creditors

Amounts owed to affiliated undertakings and other creditors are stated at nominal amount.

GOVERNANCE CONSOLIDATED FINANCIAL STATEMENTS GLOSSARY

147

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SUBSEA 7 S.A. FINANCIAL STATEMENTS

STRATEGIC REPORT

NOTES TO THE FINANCIAL STATEMENTS CONTINUED

148 | SUBSEA 7 | ANNUAL REPORT 2021

3. FINANCIAL ASSETS

($ in millions)

Shares in affiliated

undertakings

Cost

t 31 December 2020 3,386.9

t 31 December 2021

3,386.9

ccumulated value adjustments

t 31 December 2020 (1,713.7)

Reversal of value adjustments for the year 17.1

t 31 December 2021

(1,696.6)

Carrying amount

t 31 December 2020 1,673.2

t 31 December 2021 1,690.3

A review of the carrying amount of the financial assets was performed at 31 December 2021 which resulted in a reversal of value

adjustments of $17.1 million being recognised in the Company’s shares held in Acergy Holdings (Gibraltar) Limited (2020: $21.0 million).

Shares in affiliated undertakings

Percentage held Carrying amount ($ in millions)

Name of company Registered in 2021 2020 2021 2020

cergy Holdings (Gibraltar) Limited Gibraltar 100% 100% 108.9 91.8

Subsea 7 International Holdings (UK) Limited UK 100% 100% 1,501.5 1,501.5

Subsea 7 (UK Service Company) Limited UK 100% 100% 79.9 79.9

Total shares in affiliated undertakings 1,690.3 1,673.2

The capital, reserves and profit and loss of the affiliated undertakings of the Company are included within the Annual Report and

Consolidated Financial Statements of Subsea 7 S.A. as shown on page 136 to page 138, and the Company has applied the exemption,

in accordance with article 67.3b of the law of 19 December 2002, to not disclose this information.

4. CAPITAL AND RESERVES

($ in millions)

Subscribed

capital

Share premium

account

Legal

reserve

Reserve

for own

Profit or (loss)

brought

forward

Profit or (loss)

for the

financial year

Total

Balance at 1 January 2020 600.0 749.6 65.5 13.9 112.5 60.7 1,602.2

llocation of the result – – – – 60.7 (60.7) –

Release of legal reserve – – (5.5) – 5.5 – –

Net movement of own shares – (3.0) – 3.0 – – –

Loss for the financial year – – – – – (0.3) (0.3)

Balance at 31 December 2020 600.0 746.6 60.0 16.9 178.7 (0.3) 1,601.9

llocation of the result – – – – (0.3) 0.3 –

Dividends declared – – – – (69.6) – (69.6)

Net movement of own shares – (13.0) – 13.0 – – –

Profit for the financial year – – – – – 16.3 16.3

Balance at 31 December 2021 600.0 733.6 60.0 29.9 108.8 16.3 1,548.6

At 31 December 2021, the authorised share capital comprised 450,000,000 $2.00 common shares (2020: 450,000,000 $2.00 common

shares) and the subscribed capital comprised 300,000,000 $2.00 common shares (2020: 300,000,000 $2.00 common shares).

A special dividend of NOK 2.00 per share was approved by the shareholders of the Company at the Annual General Meeting on 14 April

2021, which was paid from the share premium account on 7 May 2021.

During the year ended 31 December 2021, the increase in the reserve for own shares of $13.0 million reflected share repurchases at a

cost of $21.0 million partly offset by reallocations relating to share-based payments of $5.9 million and a downward value adjustment

of $2.1 million.

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5. LEGAL RESERVE

Luxembourg law requires that 5% of the Company’s unconsolidated net income is allocated to a legal reserve annually, prior to declaration

of dividends. This requirement continues until the reserve is 10% of its issued share capital at nominal value, after which no further

allocations are required until further issuance of shares. The legal reserve may also be satisfied by allocation of the required amount at

the issuance of shares or by a transfer from share premium. The legal reserve is not distributable. The legal reserve for all issued common

shares has been satisfied and appropriate allocations are made to the legal reserve account at the time of each issuance of new shares.

6. RESERVE FOR OWN SHARES

2021

Number of

2021

in $ millions

2020

Number of

2020

in $ millions

t year beginning 2,326,683 16.9 1,212,860 13.9

Shares repurchased 2,724,172 21.0 1,627,968 9.8

Shares reallocated relating to share-based payments (516,748) (5.9) (514,145) (6.0)

alue adjustment in yea

– (2.1) – (0.8)

Balance at year end 4,534,107 29.9 2,326,683 16.9

At 31 December 2021, the Company directly held 4,534,107 (2020: 2,326,683) own shares with a total nominal value of $9.1 million

(2020: $4.7 million), representing 0.91% (2020: 0.78%) of the total number of issued shares.

During the year, 2,724,172 shares were repurchased under the Company’s share repurchase programme authorised on 24 July 2019,

extended on 15 April 2021, at a cost of $21.0 million. At 31 December 2021, the Company had cumulatively repurchased 2,724,172 shares

for a total consideration of $21.0 million under this programme.

During the year ended 31 December 2021, 516,748 (2020: 514,145) shares representing 0.17% (2020: 0.17%) of the total number of

issued shares were reallocated for $nil consideration to employees of the Subsea 7 Group to satisfy share awards under the 2013 and 2018

Long-term Incentive Plans.

During the year ended 31 December 2021, the Company recognised a loss of $5.9 million (2020: $6.0 million) related to own shares used

for settlement of Long-term Incentive Plans.

A review of the carrying amount of own shares was performed at 31 December 2021; this resulted in a value adjustment of $2.1 million

(2020: $0.8 million) being recognised.

7. AMOUNTS OWED TO AFFILIATED UNDERTAKINGS

Becoming due and payable within one year

t ($ in millions)

2021

31 Dec

2020

31 Dec

mounts owed to affiliated undertakings 171.2 88.1

Amounts owed to affiliated undertakings were mainly related to amounts due to Subsea 7 Treasury (UK) Limited under a short-term working

capital facility. During the year ended 31 December 2021, interest costs of $4.6 million were recognised by the Company (2020: $4.4 million).

8. OTHER OPERATING INCOME

t ($ in millions)

2021

31 Dec

2020

31 Dec

Parent company guarantee income 37.4 42.1

9. COMMITMENTS AND GUARANTEES

The Company arranges bank guarantees, which collectively refer to bank guarantees, performance bonds, tendering bonds, advance

payment bonds, guarantees or standby letters of credit in respect of the performance obligations certain of its affiliated undertakings have

to their clients.

Facilities

The multi-currency revolving credit and guarantee facility

The Group has a $656 million multi-currency revolving credit and guarantee facility, which matures on 4 September 2023. The facility

is available in a combination of guarantees, up to a limit of $200 million, and cash drawings, or in full for cash drawings. The facility is

guaranteed by the Company and Subsea 7 Finance (UK) PLC, a wholly-owned subsidiary of the Group. The facility was unutilised at

31 December 2021 and 31 December 2020.

The South Korean Export Credit Agency (ECA) facility

In July 2015 the Group entered into a $357 million senior term loan facility secured on two vessels owned by the Group. The facility is

provided 90% by an Export Credit Agency (ECA) and 10% by two banks and is available for general corporate purposes. The ECA tranche

has a 12-year maturity and a 12-year amortising profile. The commercial tranche initially had a five-year maturity and a 15-year amortising

profile, which commenced in April 2017. The commercial tranche was refinanced during November 2021, now maturing in January 2027,

while retaining the original amortising profile. The facility is guaranteed by the Company and Subsea 7 Finance (UK) PLC, a wholly-owned

subsidiary of the Group. At 31 December 2021, the amount outstanding under the facility was $184.9 million (2020: $209.0 million).

GOVERNANCE CONSOLIDATED FINANCIAL STATEMENTS GLOSSARY

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SUBSEA 7 | ANNUAL REPORT 2021 |

SUBSEA 7 S.A. FINANCIAL STATEMENTS

STRATEGIC REPORT

NOTES TO THE FINANCIAL STATEMENTS CONTINUED

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9. COMMITMENTS AND GUARANTEES CONTINUED

UK Export Finance (UKEF) facility

On 24 February 2021, the Group entered into a $500 million five-year amortising committed loan facility backed by a $400 million guarantee

from UK Export Finance. The Group has a two-year availability period during which to draw on the facility. The facility has a five-year tenor

which commences at the end of the availability period or when the facility is fully drawn, whichever is earlier. The facility can be used for

general corporate purposes, including to provide working capital financing for services provided from the UK. The facility is guaranteed by

the Company and Subsea 7 Finance (UK) PLC, a wholly-owned subsidiary of the Group. At 31 December 2021, the amount outstanding

under the facility was $200.0 million (2020: $nil).

Seaway 7 Revolving Credit Facility

As part of the business combination to combine the Group’s Renewables business unit (consisting of the Group’s fixed offshore wind

business) with OHT ASA (renamed Seaway 7 ASA), the Group acquired the Seaway 7 ASA Revolving Credit Facility. Further details are

disclosed in Note 12 ‘Business combinations’ to the Group’s Consolidated Financial Statements. At 31 December 2021, the amount

outstanding under the facility was $37.0 million, which was subsequently repaid in full during January 2022.

Utilisation of facilities

t (in $ millions)

2021

31 Dec

Utilised

2021

31 Dec

Unutilised

2021

31 Dec

Total

2020

31 Dec

Utilised

2020

31 Dec

Unutilised

2020

31 Dec

Total

Committed borrowing facilities 421.9 956.0 1,377.9 209.0 1,456.0 1,665.0

Other facilities

In addition to the above there are a number of uncommitted, unsecured bi-lateral guarantee arrangements in place in order to provide

specific geographical coverage. The utilisation of these facilities at 31 December 2021 was $1.3 billion (2020: $1.2 billion).

Guarantee arrangements with joint ventures

During April 2021, Eidesvik Seven AS, a 50% owned joint venture between Eidesvik Offshore ASA and the Group, repaid in full a facility loan

secured on the vessel, Seven Viking. The facility had been fully guaranteed by Subsea 7 S.A. with a 50% counter-guarantee from Eidesvik

Shipping AS. The bank facility was replaced by a loan advanced to Eidesvik Seven AS by the Group; further details are disclosed in Note 34

‘Related party transactions’ to the Group's Consolidated Financial Statements.

10. OTHER EXTERNAL EXPENSES

For the year ended ($ in millions)

2021

31 Dec

2020

31 Dec

dministrative expenses 1.5 0.8

Statutory audit fees 0.1 0.1

Total 1.6 0.9

11. OTHER OPERATING EXPENSES

For the year ended ($ in millions)

2021

31 Dec

2020

31 Dec

Corporate allocation and shareholders’ costs 20.7 16.3

Other operating expenses 0.8 1.2

Total 21.5 17.5

12. INCOME FROM PARTICIPATING INTERESTS DERIVED FROM AFFILIATED UNDERTAKINGS

No dividends were received during the year ended 31 December 2021 (2020: $8.0 million).

13. OTHER INTEREST RECEIVABLE AND SIMILAR INCOME DERIVED FROM AFFILIATED UNDERTAKINGS

For the year ended ($ in millions)

2021

31 Dec

2020

31 Dec

Guarantee fee commission receivable from Eidesvik Seven AS

0.3 0.6

14. TAX ON PROFIT OR LOSS

For the year ended 31 December 2021 the Company was fully taxable at an effective rate of 24.94% (2020: 24.94%). After taking account of

required book to tax adjustments, the Company recorded a fiscal loss for the year. No benefit has been recorded in respect of those losses

due to uncertainty over their future recoverability.

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15. SHARE-BASED PAYMENTS

Awards made under the Group’s Long-term Incentive Plans, in the form of equity-settled share-based payments, are satisfied by the

Company on behalf of its affiliated undertakings. A charge of $5.9 million (2020: $6.0 million) was recognised as adjustments in respect

of investments held as current assets in relation to the settlement of shared-based compensation.

The share-based schemes operated by the Group are: