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MAKE
POSSIBLE
Annual Report 2023
Delivering
sustainable
value for our
stakeholders
Seven Oceans at the Vigra spoolbase
Renewable
The outer ring of the pie
chart should be grey and
dark blue - The dark blue
representing the renewables
number (e.g. Pie chart 1
2.1bn) and the grey
representing the subsea and
conventional number (e.g.
first pie chart 5.3bn)
Subsea and Conventional
2023
2022
Our vision
To make possible the global
delivery of offshore energy
for today and tomorrow.
Our strategy
We create sustainable value by
delivering the offshore energy
transition solutions the world needs.
How we make possible
Early engagement and system innovation
Collaboration and partnerships
Integrated services
Sustainable delivery
Digital solutions
Enabling products
Contents
Strategic Report
Chairman’s Statement 2
Chief Executive Officer’s Review 4
Our Business Model 6
Our Markets 8
Our Strategy 10
Business Unit Review 16
Sustainability 20
EU Taxonomy Disclosure 24
Risk Management 28
Governance
Governance Overview 48
Board of Directors 50
Executive Management Team 52
Corporate Governance Report 54
Remuneration Report 65
Consolidated Financial Statements
Financial Review 71
Consolidated Financial Statements 79
Subsea 7 S.A. Financial Statements
Subsea 7 S.A. Financial Statements 155
Other Information
Glossary 168
Additional Information 170
Subsea and Conventional 2023
Renewables 2022
2023 $7.4bn
2022 $7.1bn
2023 $6.0bn
2022 $5.1bn
2023 $714m
2022 $559m
Order intake
Revenue
EBITDA
1
Subsea 7 S.A. Annual Report 2023
Strategic Report Governance Consolidated Financial Statements Subsea 7 S.A. Financial Statements Glossary
To the shareholders
ofSubsea7S.A.
In 2023, the Group delivered solid
operational and financial results
as the upcycles in our industries
gathered pace. Revenue increased
16% to $6.0 billion, and Adjusted
EBITDA was $714 million, resulting
in an EBITDA margin of 12%.
Diluted earnings per share were
$0.05, down from $0.19 in 2022.
Order intake increased 5% year-
on-year to $7.4 billion, a book-
to-bill of 1.2 times, resulting in
continued growth of the backlog
to$10.6 billion – the highest
backlog since 2013.
At the heart of offshore energy
decarbonisation
Against a backdrop of heightened
geopolitical uncertainty and
conflict, the world continues to
grapple with the so-called energy
trilemma: addressing the need
for secure and affordable energy,
while simultaneously working to
decarbonise our energy sources.
In 2023, this challenge was
compounded by high inflation and
rising interest rates – representing
significant headwinds to the
economics of offshore renewable
energy developments. Industries
across the globe, including our
own, must continue to tackle the
challenge and seize opportunities to
deliver a diverse range of innovative
solutions that, together, can help
decarbonise our economies.
Subsea7’s focus on subsea oil and
gas, carbon capture, offshore wind,
and new energies places the Group
at the heart of the energy transition.
Industry dynamics suggest
aprolonged upcycle
Subsea7 experienced a recovery in
demand for both its traditional and
renewable energy businesses in
2023, supported by the continued
drive of major economies for energy
security and decarbonisation.
TheGroup is well placed to benefit
from strong demand for our services,
which is expected to be sustained
over several years. The upward
trajectory of demand is moderated
by the capital discipline of our clients,
but this is mirrored onthe supply side
– by Subsea7 and its peers – with
limited additions to the global fleet
due to the increased cost of newbuild
vessels and internal capital discipline.
A return to acceptable profitability
within both the subsea and
renewables sectors is necessary
to allow our industry and its supply
chain to earn a fair return on its
invested capital, ensuring the delivery
of the energy developments that the
world needs. Subsea7 has invested
$5 billion in its assets over the last
12 years and its modern, efficient
fleet of subsea and wind vessels
positions it as a market leader in both
industries. In 2023, the Group’s return
on average invested capital (ROAIC)
was just 1%, and remains significantly
below its cost of capital. However,
the foundations for improvement
are firmly in place with an improved
risk/reward profile embedded in our
backlog. Through more favourable
new contract awards and a
commitment to capital discipline,
we are well placed to deliver
improved returns and strong growth
in cash flow in the coming years.
Kristian Siem Chairman
Chairman’s Statement
Powering the energy transition
Financial performance
2023 Net income
$10m
2022: $36m
2023 Net debt
$552m
2022: $33m net cash
Safety performance
2023 Lost-time injury (LTI)
frequency
0.03
per 200,000 hours worked
2
Subsea 7 S.A. Annual Report 2023
Looking back on 2023, I am
satisfied with the achievements
and progress made to advance the
Group’s strategies. We completed
the turnaround of Seaway7, and
the business is now well positioned
and profitable. Subsea Integration
Alliance is firmly established, and
our investment in OneSubsea
has cemented our long-term
relationship with our partners
SLB and Aker Solutions. Our
collaborative approach to project
planning and execution is gaining
further momentum with clients
and, above all, our operations were
executed safely.
Continued progress
insustainability
Over recent years, Subsea7’s
journey into renewable energy
has seen significant progress.
We have built up a substantial
offshore wind business, that has
supported development of a total
of 11.9GW of renewable energy
to our clients, enough to power
over 14 million European homes.
In parallel we remain focused on
the sustainability of our activities
– including our progress towards
Net Zero – and the development
of our environmental, social and
governance (ESG) reporting.
During 2023 we prepared for the
EU’s Corporate Sustainability
Reporting Directive, a significant
undertaking requiring challenging
data collection and auditing,
but one that should improve
the comparability of Subsea7
against our peers and allow
ustodemonstrate our progress
inthe coming years.
As part of this we concluded an
update to the double materiality
assessment that underpins
our strategy. The assessment
demonstrated a high level of
convergence with the sustainability
areas we have been focusing
onsince 2019.
Return $1 billion through
dividend and share repurchases
Reflecting its confidence in the
outlook and the expected financial
performance of Subsea7, the Board
of Directors proposes that the
Company returns at least $1 billion
to shareholders over four years, from
2024 to 2027. This extends Subsea7’s
track record of shareholder returns to
$3 billion since 2011, and underscores
the commitment of the Board to
strong capital stewardship.
At the Annual General Meeting on
2 May 2024, the Board of Directors
will propose that shareholders
approve a cash dividend of NOK 6.00
per share, equating to approximately
$170 million, payable in two equal
instalments in May and November
2024. The Company’s dividend policy
will be revised toreflect an increase
in the regular dividend to NOK 6.00
from NOK 1.00 per share to be paid
in two equal instalments.
The Company has also committed to
repurchase approximately $80 million
of its own shares in 2024, resulting in
shareholder returns of approximately
$250 million.
My thanks
The success of Subsea7 is the
product of the collective drive
and good work of nearly 15,000
individuals, in collaboration with our
clients and suppliers. It is testament
to the strong, positive culture within
our organisation that we have been
able to grow our headcount rapidly
this year, while continuing todeliver a
solid performance, not just financially
but also operationally. Only with
arelentless focus on safety can we
deliver large and complex projects
in challenging conditions, while
accumulating millions of manhours
free of lost-time injuries. My thanks to
everyone within the Subsea7 family
and across our stakeholder groups
formaking this possible.
Kristian Siem
Chairman
Our Values
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.
3
Subsea 7 S.A. Annual Report 2023
Strategic Report Governance Consolidated Financial Statements Subsea 7 S.A. Financial Statements Glossary
John Evans Chief Executive Officer
Chief Executive Officer’s Review
Delivering a strong operational
and financial performance
Financial performance
2023 Backlog
$10.6bn
2022: $9.0bn
2023 Revenue
$6.0bn
2022: $5.1bn
2023 Adjusted EBITDA
$714m
2022: $559m
2023 Net income
$10m
2022: $36m
Our Subsea and Conventional
business delivered strong,
quality backlog growth that
should underpin increasing
cash flow in the years ahead.
In our Renewables business,
profitability has recovered and
our backlog of work supports
high activity through 2024
and2025.
Solid financial results in 2023
Group revenue increased 16%
year-on-year to $6.0 billion, driven by
growth in Subsea and Conventional,
partially offset by a decline in
Renewables.
Revenue in Subsea and
Conventional increased 26% year-
on-year, driven by high activity in
Norway, Türkiye and Brazil and our
Adjusted EBITDA margin was 12%.
Over the course of the year, our
portfolio of projects began a gradual
shift from those won in weaker
market conditions to more recent
awards with improved pricing and
cash flow profile.
Revenue in Renewables fell 14%
year-on-year, driven by the phasing
of major projects in the UK and as
aconsequence of greater selectivity
in tendering new work. However,
as a result, the Renewables margin
recovered to 11% through a stronger
focus on execution combined with
improved contractual risk allocation.
Overall, the Group’s Adjusted
EBITDA increased 28% to
$714 million, a margin of 12%.
2023 was a year of reinvestment
in the business, with capital
expenditure of $581 million, mainly
relating to newbuild fixed offshore
wind vessels, and the first of two
$153 million payments for our 10%
stake in the OneSubsea joint venture
with SLB and Aker Solutions. At
year end, net debt was $552 million
(comprising net financial debt
of $94 million and lease liabilities
of$458 million), which is expected
tomaterially reduce in the near term.
Tendering activity continued at high
levels in 2023, with order intake of
$7.4 billion, equivalent to a book-to-
bill of 1.2 times, including the award
of Mero 4, Sakarya 2a, Agogoand
East Anglia THREE. At the year end,
our teams were actively tendering
projects worth around $30 billion,
a dramatic recovery from the
$15 billion in preparation in 2020,
further supporting confidence in
theupcycle for both subsea oil
andgas and fixed offshore wind.
Reinforcing our market-leading
position in subsea through
collaborations and partnerships
2023 was an important year for our
subsea business as we extended
several key relationships and
established new alliances.
During the year, the OneSubsea joint
venture between Subsea7, SLB and
Aker Solutions was completed and,
simultaneously, Subsea Integration
Alliance between Subsea7 and
OneSubsea was extended to
2033. The joint venture and the
Alliance leverage our combined
market-leading assets, services
and technologies to reinforce our
ability to deliver greater efficiencies
to clients, enabling them to unlock
subsea reserves.
4
Subsea 7 S.A. Annual Report 2023
for demand, combined with stability
in the competitive landscape, should
ensure we generate an appropriate
return on the substantial capital
already invested in our subsea fleet.
In fixed offshore wind, despite the
recent uncertainty in the regulatory
and fiscal environments in the UK
and US markets, demand for our
services is strong, including in the
Netherlands, Germany and Poland,
and we expect a recovery in UK
awards during 2024. With a focus
on balancing risk and returns, we
believe our offshore wind business
will deliver sustainable value creation
for shareholders.
Overall, through strong positions
in subsea oil and gas, as well
asoffshore wind, Subsea7 is well
placed to deliver the energy the
world needs for today and tomorrow.
John Evans
Chief Executive Officer
The benefits of Subsea Integration
Alliance were showcased this year in
Türkiye where, in close collaboration
with Türkiye Petrolleri Anonim
Ortaklı
ğı (TPAO) and our partners,
we completed the first phase of the
Sakarya gas development. This
fast-track project delivered first gas
just 30 months after the discovery
of the field and is testament to what
can be achieved when we adopt
anintegrated approach and work
in close collaboration with our client.
The subsequent award of the second
phase of Sakarya was the ultimate
endorsement ofthis accomplishment.
During the year, Subsea Integration
Alliance signed a memorandum of
understanding with bp regarding
integrated subsea developments,
working in a collaboration that will
create value for bp, Subsea7 and
OneSubsea through enhanced
visibility and optimised delivery.
Subsea Integration Alliance
will work with bp from concept
selection and through the full
field lifecycle, to deliver enhanced
subsea project performance, based
on new ways of working and an
innovative commercial model.
2023 also marked the start of
the delivery of our next portfolio
of projects for Aker BP in Norway.
Subsea7 has partnered with Aker
BP for a decade and has worked
in a fully collaborative alliance
incorporating Aker Solutions
(now part of OneSubsea) to deliver
subsea projects. During this time
Subsea7 supported Aker BP in
growing its production from 4 to
450 thousand barrels per day.
Collaborations and partnerships are
a cornerstone of our strategy. As the
energy landscape evolves, we will
leverage Subsea7’s market-leading
position and strong relationships
along the value chain as we continue
to adapt togrow, delivering value
creation for ourshareholders.
Driving the energy transition
with carbon capture and
offshore wind
2023 was a year of change for
our fixed offshore wind business.
At the beginning of the year
we completed the acquisition
ofminority interests in Seaway7,
simplifying its ownership and
funding structure, and streamlining
its strategic decision-making
processes. Despite the many
challenges faced by the wind
industry during the year, Seaway7
was successful in rebalancing the
risk/reward profile of its backlog,
returning to a stable, improved level
of profitability while also securing
several key new awards including
the inner-array cable-lay scope
for Iberdrola’s 1.4GW East Anglia
THREE development.
The delivery of newbuilds Seaway
Alfa Lift and (in early 2024)
Seaway Ventus has increased our
renewables fleet to 13 vessels,
which includes cable-lay and
heavy-lift vessels capable of
installing some of the largest wind
developments in the market. These
vessels support our expectations
for the growth of the fixed offshore
wind business in the coming years.
During the year, Subsea7 continued
to pursue other new energy markets
including floating wind and carbon
capture. We delivered the initial
offshore pipelay campaign of the
Northern Lights development in
Norway, part of the world’s first
full-scale carbon capture project
named Longship. Over its lifetime,
this initial phase will enable the
transportation of 128 million tonnes
of CO
2
to a storage field in the North
Sea, demonstrating the strategic
importance of carbon capture as
part of the energy transition. This
market offers Subsea7 – on both
a standalone basis and through
Subsea Integration Alliance – a new
avenue of growth utilising existing
subsea assets and engineering
expertise.
Foundations in place for strong
cash flow generation
Supported by a high backlog of
quality projects, we anticipate that
2024 Adjusted EBITDA will be within
a range of $950 million to $1.0 billion,
while we expect capital expenditure
to reduce significantly. We therefore
anticipate a sharp increase in free
cash flow in 2024.
Longer term, we see sustained
capital expenditure by clients in the
subsea market. A positive outlook
5
Subsea 7 S.A. Annual Report 2023
Strategic Report Governance Consolidated Financial Statements Subsea 7 S.A. Financial Statements Glossary
Concept
Input at the concept
phase allows for
optimisation of later
lifecycle stages.
Design
Robust front-end
engineering and design
(FEED) ensures minimal
change and accurate
forecasting during design.
Engineer
Detailed engineering by
experienced personnel
delivers the best solution.
Procure and Fabricate
Efficient procurement and
high-quality fabrication
optimise costs.
Install and Commission
World-class vessels enable
safe, on-schedule and
cost-efficient installation.
Maintain
Effective and responsive
maintenance reduces the
cost of ownership.
Extend
New technologies
extend the life of the field
development and maximise
return on investment.
Decommission
Facilitation of abandonment,
decommissioning and reuse
of infrastructure.
What we do
Whether in oil and
gas, windor emerging
energies, being involved
at the earliest stage of
development enables
us to deliver maximum
value. The concept stage
is key to optimising costs
and emissions during
development and in the
later lifecycle stages.
We advance the conceptual
development through
ourFEED services to
ensure the right solution
isselected to fully optimise
the development.
Engineering is at the core
of what we do. Detailed
engineering involves
taking the initial solutions
developed in the concept
and FEED stages and
refining these for execution.
For certain wind projects,
our engineering teams also
support clients in their bids
for offshore licences.
Our teams are able to
execute 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 install and commission
subsea infrastructure for
hydrocarbon and renewable
energy developments in
all water depths. We install
turbines, foundations and
inner-array cables for fixed
and floating wind farms.
We specialise in
maintaining offshore
infrastructure through use
of our dedicated fleet and
technologies. Our digital
products and services
help optimise maintenance
and reduce downtime and
unplanned outages.
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.
We have the capacity to
decommission large-scale
infrastructure in both oil
and gas and wind markets.
Wecan manage all aspects
including regulation,
technology, environment,
planning, execution and costs.
How we add value
We incorporate new
technologies and
standardisation into the
design process to lower the
total cost of development
and optimise emissions. Our
carbon estimator tool is used
in all our significant tenders.
We work with our alliance
and client partners to
optimise solutions, align
schedules and accurately
forecast full lifecycle costs.
The earlier our involvement,
the more value we can add
through optimised design.
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.
We have a clear
understanding of the risks
and opportunities that exist
when working with a large,
global supply chain network.
We have strong, collaborative
relationships with our suppliers.
Our fleet of modern,
high-specification vessels
allows us to install market-
leading solutions. Our
experts have the experience
to deliver these solutions
safely andefficiently.
We incorporate our
maintenance knowledge
and digital monitoring into
the design of the field,
lowering the total cost of
ownership for our clients.
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 draw on our skills
inengineering and project
management, as well as
our enabling vessels, to
decommission fields, with
high standards of safety and
sustainability as a priority.
Creating better outcomes for our stakeholders
Our clients
We work collaboratively with our clients to make possible the
energy transition. We offer cost effective solutions and explore
carbon reduction opportunities through our technology, assets
and strategic partnerships. We insist on high standards in safe
and responsible operations.
Our shareholders
Our strategy aims to create resilient value for shareholders.
Weare committed to strong capital stewardship and corporate
governance. Transparent reporting enables our shareholders
to measure our performance, and through investor events
weaim to communicate our strategy and listen to feedback.
Our people
Our people are the foundation of our business and their
health, safety and wellbeing are our top priority. We invest
in our people, giving them opportunities to learn and grow.
Creating, maintaining and promoting an inclusive work
environment is vital for our employees to thrive.
Society
With a well-established international presence, we take care
tounderstand and respect local customs and sensitivities.
Throughclose relationships with local stakeholders, we create
opportunities that foster sustainable energy development for all.
Weaim to minimise the impact of our operations on ecosystems.
100
clients supported by Subsea7 in 2023
>200
meetings with investment firms in 2023
>7,000
attendees at our Festival of Learning in 2023
91%
onshore waste recycled
Our Business Model
Full service across
the field lifecycle
6
Subsea 7 S.A. Annual Report 2023
Subsea7 provides project management, engineering and
construction expertise across the full field lifecycle. These services
are delivered to clients across the energy landscape: in oil and gas,
offshore wind and emerging energies.
Concept
Input at the concept
phase allows for
optimisation of later
lifecycle stages.
Design
Robust front-end
engineering and design
(FEED) ensures minimal
change and accurate
forecasting during design.
Engineer
Detailed engineering by
experienced personnel
delivers the best solution.
Procure and Fabricate
Efficient procurement and
high-quality fabrication
optimise costs.
Install and Commission
World-class vessels enable
safe, on-schedule and
cost-efficient installation.
Maintain
Effective and responsive
maintenance reduces the
cost of ownership.
Extend
New technologies
extend the life of the field
development and maximise
return on investment.
Decommission
Facilitation of abandonment,
decommissioning and reuse
of infrastructure.
What we do
Whether in oil and
gas, windor emerging
energies, being involved
at the earliest stage of
development enables
us to deliver maximum
value. The concept stage
is key to optimising costs
and emissions during
development and in the
later lifecycle stages.
We advance the conceptual
development through
ourFEED services to
ensure the right solution
isselected to fully optimise
the development.
Engineering is at the core
of what we do. Detailed
engineering involves
taking the initial solutions
developed in the concept
and FEED stages and
refining these for execution.
For certain wind projects,
our engineering teams also
support clients in their bids
for offshore licences.
Our teams are able to
execute 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 install and commission
subsea infrastructure for
hydrocarbon and renewable
energy developments in
all water depths. We install
turbines, foundations and
inner-array cables for fixed
and floating wind farms.
We specialise in
maintaining offshore
infrastructure through use
of our dedicated fleet and
technologies. Our digital
products and services
help optimise maintenance
and reduce downtime and
unplanned outages.
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.
We have the capacity to
decommission large-scale
infrastructure in both oil
and gas and wind markets.
Wecan manage all aspects
including regulation,
technology, environment,
planning, execution and costs.
How we add value
We incorporate new
technologies and
standardisation into the
design process to lower the
total cost of development
and optimise emissions. Our
carbon estimator tool is used
in all our significant tenders.
We work with our alliance
and client partners to
optimise solutions, align
schedules and accurately
forecast full lifecycle costs.
The earlier our involvement,
the more value we can add
through optimised design.
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.
We have a clear
understanding of the risks
and opportunities that exist
when working with a large,
global supply chain network.
We have strong, collaborative
relationships with our suppliers.
Our fleet of modern,
high-specification vessels
allows us to install market-
leading solutions. Our
experts have the experience
to deliver these solutions
safely andefficiently.
We incorporate our
maintenance knowledge
and digital monitoring into
the design of the field,
lowering the total cost of
ownership for our clients.
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 draw on our skills
inengineering and project
management, as well as
our enabling vessels, to
decommission fields, with
high standards of safety and
sustainability as a priority.
Creating better outcomes for our stakeholders
Our clients
We work collaboratively with our clients to make possible the
energy transition. We offer cost effective solutions and explore
carbon reduction opportunities through our technology, assets
and strategic partnerships. We insist on high standards in safe
and responsible operations.
Our shareholders
Our strategy aims to create resilient value for shareholders.
Weare committed to strong capital stewardship and corporate
governance. Transparent reporting enables our shareholders
to measure our performance, and through investor events
weaim to communicate our strategy and listen to feedback.
Our people
Our people are the foundation of our business and their
health, safety and wellbeing are our top priority. We invest
in our people, giving them opportunities to learn and grow.
Creating, maintaining and promoting an inclusive work
environment is vital for our employees to thrive.
Society
With a well-established international presence, we take care
tounderstand and respect local customs and sensitivities.
Throughclose relationships with local stakeholders, we create
opportunities that foster sustainable energy development for all.
Weaim to minimise the impact of our operations on ecosystems.
100
clients supported by Subsea7 in 2023
>200
meetings with investment firms in 2023
>7,000
attendees at our Festival of Learning in 2023
91%
onshore waste recycled
7
Subsea 7 S.A. Annual Report 2023
Strategic Report Governance Consolidated Financial Statements Subsea 7 S.A. Financial Statements Glossary
5
10
15
20
25
30
0
Ultra deepwater Deepwater
2019
2020
2021
2022
2023
2024
2025
2026
2027
The oil and gas market
Commodity prices remained volatile
during 2023 as the market reflected
inflation data, expectations for future
interest rates, and the implications
for economic growth. The Brent oil
price ended the year down 10% at
$77 per barrel, having spent much of
the year between $75 and $85 per
barrel, supported by a commitment
to production quotas by OPEC+. In
April, OPEC+ announced a 1.7 Mbpd
production cut, with an additional
1 Mbpd voluntary cut by Saudi Arabia
from May. The conflict that began in
October between Israel and Hamas
increased geopolitical tension in the
Middle East and raised security
concerns for the Strait of Hormuz.
The situation escalated in early
2024, but with little direct impact on
commodity shipments and prices.
European gas prices normalised
during 2023, despite the continued
absence of volumes from Russia
through the Nord Stream 1 pipeline,
as industrial and power generation
demand fell while LNG imports
reached record highs and storage
capacity neared full utilisation. Having
spiked at €330 per megawatt hour
(MWh) in 2022, the TTF gas price
returned to a more normal range
between €23 and €36/MWh in 2023.
While the market prices for oil and
gas fluctuate, our clients continue
to base their investment decisions
on long-term planning assumptions
that remain supportive. In addition,
the strategic impetus behind gas –
including the need to back-fill existing
LNG capacity with new production –
remained robust given the importance
of natural gas to energy security, as
well as the energy transition.
Against this positive backdrop, the
market for our deepwater subsea
services strengthened throughout
the year as the recovery from the
industry nadir in 2020 continued.
The message from many major oil
companies remained one of capital
discipline but, after years of under-
investment, tendering activity for
new subsea developments was
high. Continued strength in the core
deepwater regions of Brazil and
the Gulf of Mexico was boosted
by increased activity in West Africa
and the Guianas. Overall, order
intake in 2023 increased for a third
consecutive year and the three
Tier 1 players ended the year with
a combined subsea backlog of
approximately $40 billion, a decade
high. At the same time, and reflecting
the capital discipline of the subsea
contractors as well as the retirement
of some older vessels, the global
fleet of deepwater pipelay vessels is
smaller than in 2014, supporting the
improved contracting dynamic for
Subsea7 and its peers.
As a source of reliable energy, the
hydrocarbon industry is likely to
remain a key contributor to global
Our Markets
Understanding our
operating environment
Subsea spending (actuals and forecasts)
($bn, capex and opex)
Source: Rystad Energy ServiceCube, February 2024
8
Subsea 7 S.A. Annual Report 2023
production under all probable energy
transition scenarios. Achieving this
output will require significant ongoing
investment given the depletive
nature of the resource. Deepwater
reserves typically have low economic
breakevens, making these among the
most attractive development options
within global oil and gas. In addition,
deepwater fields can represent
aless carbon-intensive means
ofextracting oil and gas due to the
large size of hydrocarbon reservoirs
and developments resulting in
economies of scale that minimise the
carbon footprint of extraction when
measured per barrel. (This excludes
the carbon emissions associated
with end-user combustion.) As
such, Rystad expects the global
deepwater subsea market to grow
from $16 billion in 2023 to $24 billion
in 2027, equating to a compound
annual growth rate of 6%. Against this
backdrop we anticipate continued
robust demand for Subsea7’s subsea
services, alongside increasing
demand to offset the emissions
footprint of our clients’ developments,
including through carbon capture
and electrification.
The fixed offshore wind market
In 2023, while new offshore wind
licences were awarded to developers
in countries such as Germany (where
financial close was reached on a
record 12.3GW of new capacity),
the market faltered in two of the
largest markets, the UK and the
US. Here, projects were cancelled
or delayed due to increased supply
chain and financing costs, insufficient
government support and challenging
offtake pricing levels. The UK
government received no bids from
developers for the 2023 contract
for difference allocation round and,
in the US, developers cancelled
several projects that had become
uneconomic. Despite the impact
of inflation, the levelised cost of
electricity for offshore wind of around
$74/MWh compares favourably with
gas and nuclear, making it both clean
and affordable with the appropriate
governmental support.
Global ambitions for increased
renewables capacity remain high,
driven by both societal demand
to address climate change as well
as national and regional strategies
to ensure affordable, diverse and
secure sources of energy. Project
delays and cancellations therefore
put many countries under pressure
and prompted a swift response,
with positive indications for 2024.
In November, the UK announced
a 66% increase in the maximum
strike price for the 2024 fixed
offshore wind allocation round,
from £44/MWh to £73/MWh, and
new, more favourable agreements
were announced in the US.
Overall, the growth trajectory for the
offshore wind market may not be
smooth, but the long-term outlook is
positive. By 2035, a global (ex-China)
installed offshore wind capacity
approaching 290GW is forecast,
approximately 12 times the 25GW
capacity installed by the end of
2020. Even viewed through a more
conservative lens, the long-term
demand outlook for offshore wind field
development services significantly
outweighs the current fleet capacity of
the industry, and the market dynamics
are expected to remain in favour of
Subsea7 and its peers.
Risk management remains central
toprofitability in the wind market,
anda selective tendering approach
isrequired, focused on known clients,
early engagement, specific scopes
and acceptable risk profiles, to ensure
a full understanding of technical,
supply chain and operating risks.
Emerging energy markets
The carbon capture and storage
(CCS) industry is likely to play an
important role in reducing the impact
of carbon emissions, especially
in hard-to-abate sectors. Rystad
estimates that the amount of CO
2
captured per year globally will exceed
500 million tonnes by 2030, up from
40 million tonnes in 2022. While
the precise size of the CCS market
for Subsea7 remains unclear, it
represents an incremental opportunity
to utilise our existing subsea vessels.
The market for floating wind remains
nascent, with most activity focused on
pilot, non-commercial developments.
In the long term, offshore hydrogen
could become a significant market,
and we are in the process of defining
the size of the opportunity.
AmericasAsia Pacific (excluding China)Europe
2020
2021
2022
2023
2024
2025
2026
2027
2028
2029
2030
2031
2032
2033
2034
2035
25GW
287GW
~12x
Global fixed offshore wind market
Cumulative installations (GW)
Source: BNEF December 2023, Seaway7
9
Subsea 7 S.A. Annual Report 2023
Strategic Report Governance Consolidated Financial Statements Subsea 7 S.A. Financial Statements Glossary
1. Continuous evolution of oil and gas
towards decarbonisation
Subsea7 is playing a significant role in the offshore
energy transition, through the decarbonisation of
subsea and conventional developments, life-of-field
services and the electrification of offshore facilities.
Our world
Subsea7 creates sustainable value
by delivering the offshore energy
transition solutions the world needs.
Our Strategy
Subsea 7 S.A. Annual Report 2023
10
Lower-carbon
oil and gas
Carbon capture
and storage
Fixed and
floating wind
Hydrogen
2. Enabling the growth of renewables
and emerging energies
Subsea7 is making renewables and emerging energies possible
by enabling the change and innovation required to deliver
projects in offshore wind, carbon capture and hydrogen.
11
Subsea 7 S.A. Annual Report 2023
11
Strategic Report Governance Consolidated Financial Statements Subsea 7 S.A. Financial Statements Glossary
Subsea and Conventional
developments
Subsea7 is a global leader in the
provision of subsea installation
services. We design and install
subsea systems that leverage
enabling products, digitalisation
andlower-carbon intensity solutions
to deliver optimal field architectures.
In addition to standalone SURF
services we offer an integrated
SPS-SURF package though Subsea
Integration Alliance. We create value
for our clients by accelerating field
development and lowering the total
expenditure over the life of the field
to optimise field economics and
reduce carbon footprints.
Our lower-carbon oil and gas
strategy addresses the carbon
emissions of the factors within
our influence, prior to end-user
combustion. This involves a two-
pronged approach that offers
solutions to our clients that could
reduce the carbon footprint of their
developments as well as measuring
and reducing the emissions of our
own operations. All our significant
field development tenders include
analysis using our carbon estimator
tool, enabling an evaluation of
the impact of design options on
lifetime carbon emissions. As well
as engineering the solutions that
enable our clients to reduce their
carbon footprints, our strategy
encompasses the reduction of
emissions from our own operations,
primarily our vessels. We continue
to make progress converting select
vessels to hybrid power. After the
successful trial of biofuels in 2022,
we continue to assess the viability
of this option for our fleet, although
challenges remain regarding the
availability of clean fuels at scale
ona global basis.
Progress in 2023
• Acquired 10% of the OneSubsea
joint venture with SLB and Aker
Solutions, which became our
new partner in Subsea Integration
Alliance. For more details, refer
tothe Spotlight on page 13
• Extended the Subsea Integration
Alliance partnership to 2033
• Initiated a memorandum of
understanding with bp for
integrated subsea developments
Priorities for 2024
• Integrate the new OneSubsea
joint venture within Subsea
Integration Alliance and
strengthen the technology
engagement between Subsea7
and OneSubsea
• Continue to develop partnerships
and collaboration agreements
with certain clients
• Position the business for new
regions including Suriname,
Namibia and north-east Brazil
• Continue to ensure access to
capacity and technology through
our long-term relationships with
third-party suppliers
• Optimise fleet utilisation by
dedicating vessels to specific
regions and reducing transit times
• Continue to work to reduce our
Scope 1 emissions, with the
hybridisation of Seven Arctic’s
power systems
Our Strategy continued
1. Continuous evolution of oil and
gas towards decarbonisation
Our strategy for the continuous evolution
of lower-carbon oil and gas
Subsea7 is playing a significant
role in the offshore energy
transition, enabling the
continuous evolution of
subsea and conventional
developments, life-of-field
services and the electrification
of offshore facilities.
Integrated SPS-SURF
$8bn
Contracts awarded to
Subsea Integration Alliance
since 2016
12
Subsea 7 S.A. Annual Report 2023
Electrification of offshore facilities
Offshore electrification, including subsea power
distribution and host facility electrification, is a
transformative solution in the drive to reduce the
emissions intensity of oil and gas developments.
Clean power can be sourced from onshore
grids or offshore sources such as fixed and
floating wind. Combining our ability to assess
greenhouse gas emissions using our carbon
estimator tool with over a decade of experience
in offshore wind, we are well positioned to bring
traditional and new energy systems together.
Progress in 2023
• Performed a number of studies for our clients
to assess decarbonisation alternatives for
existing offshore assets, including power
from shore and renewable power
• Launched our joint technology development
programme with Siemens Energy for the
subsea power hub connector system
StarConnect
Priorities for 2024
• Continue to enhance our capabilities
inelectrical systems and products
• Evolve the functionality of OceanPlan –
ourdigital engineering platform – to support
wind and electrification solutions
• Advance the development of StarConnect
with Siemens Energy
Life-of-field services
Subsea7 provides fully integrated solutions,
services and products that optimise the
performance of subsea infrastructure
throughout the life of a field. Working together
with our autonomous subsidiaries, 4Subsea
and Xodus, we are developing digital
solutions for asset integrity management,
condition monitoring and remote operations.
Our combined capabilities allow clients
tomaximise recovery rates across the life
ofafield, enabling the highest levels of uptime
and availability, at an optimised cost.
Progress in 2023
• Won a further two-year extension of our
frame agreement with bp for inspection,
repair and maintenance services
• Piloted a workclass ROV from Aberdeen
performing operations offshore Brazil
• 4Subsea positioned itself as the leading
supplier for riser condition monitoring
solutions, with contracts for the Búzios 8
and Mero 4 riser monitoring systems
Priorities for 2024
• Continue to improve subsea system
reliability through the development
oflifecycle solutions
• Expand the market footprint of 4Subsea
and Xodus
Spotlight: OneSubsea joint venture
At a glance
In October 2023, we completed the transaction to create
thenew OneSubsea joint venture with our partners SLB and
Aker Solutions.
• OneSubsea now comprises the subsea businesses of SLB
and Aker Solutions
• SLB holds a 70% equity stake in the joint venture, with Aker
Solutions and Subsea7 holding 20% and 10% respectively
• Subsea7 will pay a cash consideration of $306.5 million
in two equal instalments. One was paid in 2023 and the
second will be paid in 2024
• OneSubsea brings together an extensive complementary
subsea production and processing technology portfolio,
world-class manufacturing scale and capacity, access to
industry-leading reservoir and digital domain expertise,
unique pore-to-process integration capabilities, and
strengthened R&Dcapabilities
• Adopting the OneSubsea name, the joint venture will drive
innovation and efficiency in subsea production by helping
customers unlock reserves and reduce cycle times
What it means for Subsea7
• OneSubsea is Subsea7’s exclusive partner in Subsea
Integration Alliance, bringing together field development
planning, project delivery, innovative contracting models
andtotal lifecycle solutions
• Investment in the joint venture cements Subea7’s relationship
with SLB
• The new venture enhances our integrated offering in Norway
and aligns our partner model in the Aker BP relationship
• We have become the strategic part-owner of an umbilical
manufacturer, a key element of our supply chain
• Subsea7’s standalone SURF offering continues as usual
13
Subsea 7 S.A. Annual Report 2023
Strategic Report Governance Consolidated Financial Statements Subsea 7 S.A. Financial Statements Glossary
Offshore wind
Seaway7, part of the Subsea7
Group, is a leader in fixed offshore
wind with over 10 years’ experience
in delivering offshore wind projects.
To date, it has contributed to the
production of 11.9GW through
theinstallation of foundations
andinner-array cables in Europe,
Asia and the US.
Seaway7 is recognised as one
ofthe most experienced partners
for clients working on either a
full EPCI (engineer, procure,
construct and install) basis or on a
T&I (transport and install) scope.
Separately, Subsea7 has executed
floating wind cable-lay projects, has
invested in floating wind technology
and continues todevelop cost
effective innovative solutions.
Seaway7’s market-leading capabilities
have been reinforced with the
delivery of two newbuild vessels,
Seaway Alfa Lift and Seaway Ventus
(see Spotlight panel opposite).
In 2023, our floating wind business
– previously included in the
Corporate business unit – was
consolidated into Seaway7, and
Subsea7 took full ownership
ofSeaway7 (see page 19).
Progress in 2023
• Added Seaway Alfa Lift and
(in early 2024) Seaway Ventus
newbuild vessels to our active fleet
• Secured $450 million funding
from UK Export Finance for
Seaway7
• Rebalanced the risk/reward profile
of our offshore wind backlog
toensure improved returns
• Completed the Seagreen and
Hollandse Kust Zuid fixed
offshore wind projects
• Delivered a strong operational
performance using Seaway
Strashnov on the Dogger Bank A
monopile scope
• Won a contract to transport
and install 95 monopiles for
the 1.4GW East Anglia THREE
development in the UK
• Commercial collaboration
agreement with Saipem to jointly
identify, bid and execute fixed
offshore wind projects
Priorities for 2024
• Continue our selective approach
to tendering, focused on
key markets, key clients and
acceptable risk profiles to deliver
sustained profitability and returns
• Maximise the opportunities for
Seaway7 in advantaged markets
such as the UK and Europe
• Further develop client partnerships
in offshore wind, leveraging our
leading market position
• Deliver our first turbine installation
operations at the Gode Wind 3
and Borkum Riffgrund 3 offshore
wind farms in Germany, utilising
Seaway Ventus
• Continue to work to reduce
ourScope 1 emissions with the
hybridisation of Seaway Alfa Lift
Our Strategy continued
2. Enabling the growth of
renewables and emerging energies
Our strategy for enabling the growth
ofrenewables and emerging energies
Subsea7 is making renewables
and emerging energies possible
by enabling the change and
innovation required to deliver
projects in offshore wind,
carbon capture and hydrogen.
Offshore wind
11.9GW
Cumulative installations
supported by year end 2023
CCS and hydrogen studies
57
Completed by Xodus in 2023
14
Subsea 7 S.A. Annual Report 2023
Carbon capture and storage
Carbon capture and storage (CCS) will be
essential to reduce the amount of CO
2
in
our ecosystems, especially that emanating
from hard-to-abate industries such as steel,
cement and petrochemicals. Subsea7 is
executing its first CCS contract, for Equinor’s
Northern Lights project, which will enable the
storage of 1.5 million tonnes of CO
2
per year.
In addition, Subsea Integration Alliance is
actively developing integrated solutions for CO
2
transportation and storage and has delivered
several CCS studies, supporting clients in
developing their CO
2
transport and storage
projects. Xodus continues to support the
business with advisory and consulting services
to public authorities and developers. This has
recently included the mapping of North Sea
CCS infrastructure from today to 2050.
Progress in 2023
• Completed the first phase of our pipelay
scope for the world’s first open-source
CO
2
transport and storage project,
NorthernLights
• Delivered six concept and pre-FEED
studies for offshore CCS developments
Priorities for 2024
• Secure new CCS projects, capitalising
onthe completion of Northern Lights
• Implement the integrated CO
2
transport
and storage offering of Subsea
IntegrationAlliance
Hydrogen
Where wind farms are further from shore,
the energy they produce is more efficiently
transported as hydrogen molecules through
pipelines or vessels rather than as electrons
in power cables. We are adapting our oil
and gas experience and technologies to
thetransportation and storage of hydrogen.
We are in the process of defining the size
ofthe opportunity which is likely to materialise
within the next decade.
Progress in 2023
• Subsea7, together with partners, was
awarded two grants from the Scottish
Emerging Energy Technology Fund
toperform studies relating to specific
greenhydrogen technology solutions
• Our Field Development Group (FDG) and
Xodus worked on 24 studies for hydrogen
technology and development solutions
Priorities for 2024
• Continue to perform studies for application
of green hydrogen in Germany, the
Netherlands and the UK North Sea
Spotlight: Fixed offshore windinstallation
At a glance
In 2023 and early 2024 we took delivery of two newbuild
windinstallation vessels, Seaway Alfa Lift and Seaway Ventus.
• Seaway Alfa Lift is a large monohull heavy-lift vessel
capable of transporting and installing offshore structures
including wind turbine foundation jackets and monopiles,
and transition pieces. Seaway Alfa Lift is expected to
beconverted to hybrid power when the schedule allows,
following the delivery of the batteries.
– In 2024 and 2025 it will be fully utilised on the Dogger
Bank A&B contract, and on Dogger Bank C
• Seaway Ventus is a self-propelled, dual-purpose turbine and
foundation installation vessel. It includes systems for energy
and heat recovery, hybrid power supply and a sophisticated
electrical and control system, that together reduce CO
2
emissions by 20% compared to similar units.
– In 2024 it will be fully utilised on Borkum Riffgrund
andGode Wind installing wind turbines
– In 2025 it will be fully utilised on the East Anglia
THREEproject installing foundations
What it means for Subsea7
• The investments expand our owned Renewables fleet
to11vessels: three heavy-lift vessels, twocable-lay
vessels, awalk-to-work vessel andfive heavy transportation
vessels. We have an additional cable-lay vessel and a heavy
transportation vessel under long-term charter
• The two new vessels will ensure that Seaway7 remains
positioned as a market leader in offshore wind, with the
capability to install the entire ‘balance of plant’ scope
• Subsea7 aims to support the cumulative installation of
18GWby 2025 and 35GW by 2030, from an existing project
track record that represents 11.9GW by year end 2023
15
Subsea 7 S.A. Annual Report 2023
Strategic Report Governance Consolidated Financial Statements Subsea 7 S.A. Financial Statements Glossary
Subsea7 reports the financial
results of three business units:
Subsea and Conventional
Renewables
Corporate
The Corporate business unit
includes our early-stage activities
inhydrogen, as well as contributions
from Xodus and 4Subsea. While
these form an important part of
ourstrategy for the future, they did
not make a significant contribution
to the financial results in 2023.
Business Unit 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 oil
and gas industry. It operates
under the Subsea7 brand. It
includes the financial results
of all three parts of our ‘lower-
carbon oil and gas’ strategy
– subsea and conventional,
electrification and life-of-
field – as well as overlapping
with our ‘renewables and
emerging energies’ strategy by
encompassing our activities in
carbon capture.
Within Subsea and Conventional,
we deliver a full range of early
concept and design, engineering,
procurement, construction and
installation (EPCI) services that
integrate pioneering products, and
digital and lower-carbon intensity
solutions, into oil and gas subsea
field architectures. Although our
activities include shallow-water
operations in select geographies,
the majority of our projects are
in deepwater environments,
where developments typically
offer advantaged economics and
reduced carbon intensity. Inwater
depths up to 3,000 metres,
these developments leverage our
specialist engineering knowledge
16
Subsea 7 S.A. Annual Report 2023
EBITDA
Revenue
2023
2022
2023
2022
Beyond
Year ahead
and high-specification pipelay
vessels. Combined with strong
competitive dynamics – a stable
landscape of three Tier 1 players
with a small fleet of enabling
deepwater pipelay vessels –
itrepresents the most compelling
subsector within traditional
energyservices.
During the year we completed
installation of the $1.2 billion
fast-track, deepwater Sakarya
Phase 1 project in Türkiye and
thedevelopment achieved first
gas in April, just 30 months after
the initial gas discovery by the
client. The ambitious schedule
was successfully executed in a
new country to Subsea7, and in a
new consortium. While the project
was co-ordinated from our offices
in Istanbul, it drew on engineering
and project management expertise
from our global operations in
Paris, London, Kuala Lumpur
and Perth (Australia). The project
encompassed approximately
1,000days’ utilisation of our largest
‘global enabler’ pipelay vessels
andover 4,000 vessel days in total.
The successful result is testament
to the strong collaboration both
withthe client and with SLB,
our alliance partner in Subsea
Integration Alliance.
We received a similar endorsement
of our offering when, in October
2023, Petrobras awarded the Mero
4 subsea project to Subsea7. This
followed ‘Best Supplier’ awards
from Petrobras for ‘EPCI subsea
projects’ and ‘Installation of
flexibles’. Mero 4 represents our
fifth major greenfield EPCI award
in Brazil and has been combined
with our existing Mero 3 scope into
one project. Together the renamed
‘Mero 3 and 4’ development covers
a total of 156 kilometres of risers
and flowlines, plus flexible service
lines, umbilicals and associated
infrastructure. It will utilise Seven
Vega and Seven Oceans, two
of themost capable deepwater
pipelay vessels in our fleet, as well
as Seven Sisters, one of our pipelay
support vessels.
In 2023 we completed the initial
phase of our first carbon capture
pipelay scope for Equinor’s
Northern Lights project, part of
Longship, the world’s first full-scale
Subsea and Conventional
2023 in numbers
• Supported clients on
71projects
• 7,312 days of vessel activity
with 95% uptime, equivalent
to 82% utilisation
• Installed ~500 kilometres
ofrigid pipelines and
61subsea structures
• Fabricated 600 kilometres
ofpipe at spoolbases at Vigra
in Norway, Ingleside in the
USand Ubu in Brazil
• Managed a supply chain
of over 8,000 entities in
79countries (in subsea and
offshore wind industries)
open-source carbon capture and
storage project. It will enable the
storage of up to 1.5 million tonnes
of CO
2
a year from mid-2024 by
taking CO
2
from industrial sites
onshore, to storage reservoirs
offshore. During the year Seven
Oceans successfully installed 55
kilometres of the 108-kilometre
pipeline, with the remaining pipeline
to be installed in spring 2024.
Subsea and Conventional
2023financial results
In 2023, revenue from the Subsea
and Conventional business unit
increased 26% to $4.9 billion, but
the Adjusted EBITDA margin fell
year-on-year to 12.4%, from 13.6%
in 2022. This reflected a mix of
activity skewed towards projects
won in a challenging environment
in2020 and 2021.
After depreciation and amortisation
of $419 million, net operating
income was $196 million.
Backlog
In 2023, our Subsea and
Conventional backlog grew 5% to
$8.6 billion including projects with
improved margins that are expected
to drive growth in Adjusted EBITDA
in the coming years.
Notable new awards included the
major Mero 4 project inBrazil and
the second phase of the Sakarya
project in Türkiye. Both projects
represent repeat awards, following
the success of earlier projects.
Reinvestment
In 2023, capital expenditure in
Subsea and Conventional remained
low at $150 million, reflecting
maintenance of the existing fleet
ofvessels as well as investment
in our digitalisation strategies.
Ourprimary focus is on maximising
the long-term cash generation from
our highly capable, modern asset
base to support the return of capital
to shareholders.
Backlog by year of execution
Adjusted EBITDA
EBITDA
2023: $612m
2022: $532m
Backlog
2023: $8.6bn
2022: $8.1bn
17
Subsea 7 S.A. Annual Report 2023
Strategic Report Governance Consolidated Financial Statements Subsea 7 S.A. Financial Statements Glossary
Renewables
Subsea7’s Renewables business
unit primarily comprises the
activities of Seaway7, a market
leader in fixed offshore wind.
Seaway7 is also responsible
for our activities in floating
offshore wind, although this
remains early-stage and did not
make asignificant contribution
tothe2023 financial results.
Seaway7 is a market leader in the
offshore wind industry and is a
fundamental part of our strategy for
renewables and emerging energies.
It has a presence in all the major
offshore wind markets of the world
and offers services along the value
Subsea7 reports financial
results of three business units:
Subsea and Conventional
Renewables
Corporate
Business Unit Review continued
chain focused on installation and
project delivery for wind turbine
foundations, inner-array cables,
wind turbine generators and
heavy transportation. It achieves
this through various contract
models ranging from single-scope
transport and installation (T&I)
tointegrated multi-scope T&I
andfixed price (EPCI) delivery.
Seaway7’s client base mainly
comprises utility companies and
dedicated offshore wind project
developers, but new players have
been entering the offshore wind
market, notably the major integrated
energy companies. This provides
the Group with opportunities
18
Subsea 7 S.A. Annual Report 2023
Revenue
EBITDA
2023
2022
Renewables
2023 in numbers
• Supported the installation
of1.4GW of renewable
energy capacity during the
year including 99 foundations
and over 600 kilometres
ofinner-array cables as part
of 13 projects
• Cumulatively, by the end of
2023, Seaway7 had installed
1,127 foundations, 2,569
kilometres of inner-array cables
and 35 offshore substations
on projects with a combined
capacity of 11.9GW of
renewable energy, capable
ofpowering 14 million homes
toleverage its existing relationships
from its legacy work in the offshore
oil and gas sector.
During 2023, the Group completed
the Seagreen EPCI project after
an 18-month offshore campaign
to install 114 foundations and 300
kilometres of inner-array cables.
This included the world’s deepest
fixed foundation in 59 metres of
water. With a capacity of 1.1GW,
the development will generate
around 5GWh of renewable energy
annually, enough to power more
than 1.6 million UK homes.
Last year we also finalised the
installation of 139 foundations and
inner-array cables at Hollandse
Kust Zuid in the Netherlands. It was
the world’s first installation with a
vessel in dynamic positioning mode,
significantly improving efficiency
compared to a jackup or moored
vessel. The wind farm will have a
capacity of 1.5GW, equivalent to
the consumption of over 1.5 million
Dutch households.
Seaway7 made good progress on
the Dogger Bank projects in 2023,
with the completion of the
95 foundation monopiles at Dogger
Bank A, using Seaway Strashnov,
and the commencement of the
installation of transition pieces using
Seaway Alfa Lift. Both vesselsare
expected to begin installation
activities at Dogger Bank B in 2024,
and move to Dogger Bank C
in 2025.
During 2023, two high-specification
newbuild vessels were delivered
and joined our Renewables fleet,
as discussed on page 15. With
the addition of these new vessels,
Seaway Yudin, owned since 1991,
was sold in early 2024 after executing
over 20 renewables projects.
Renewables 2023
financial results
In 2023, revenue from the Renewables
business unit decreased 14% to
$1.0 billion, following the completion
of the Seagreen project and as activity
on the East Anglia THREE project
remained in the early stages.
Adjusted EBITDA improved to
$103 million from $5 million in the
prior year, resulting in a margin of
10.7%, up from 0.4%. This was
driven by an increased focus on
execution and greater selectivity in
project bidding to ensure a favourable
balance of risk and reward.
The net operating loss was
$74 million, mainly due to impairment
charges relating to i) a contractual
dispute relating to the monopile
installation equipment of Seaway Alfa
Lift and ii) an impairment of Seaway
Yudin, prior to sale of the vessel.
Backlog
In 2023, notable new awards included
the East Anglia THREE project in the
UK and our Renewables backlog
increased 152% to $2.0 billion.
Tendering activity remains high and,
despite the disruption to the wind
industry discussed on page 9, we are
confident in the long-term potential for
backlog growth.
Reinvestment
In 2023, capital expenditure in
Renewables was elevated at
$400 million, mainly reflecting
final payments related to the two
newbuild vessels, Seaway Alfa Lift
and Seaway Ventus. In 2024, capital
expenditure is expected to return
toalower level.
Acquisition of Seaway7
During 2023, Subsea7 S.A. acquired
all of the minority shareholdings of
Seaway 7 ASA and de-listed itfrom
the Oslo Stock Exchange. This was
achieved through the purchase
of 187.9 million shares (21.52%)
from three strategic investors.
Asconsideration, Songa Capital AS,
West Coast Invest AS and Lotus
Marine AS received one new share
in Subsea 7 S.A. for every 22 shares
in Seaway 7 ASA. An additional
offer was made to the remaining
minority holders. The purchase
reaffirms Subsea7’s commitment
to the offshore wind market and
its confidence in Seaway7’s ability
tocreate value for shareholders.
Adjusted EBITDA
Backlog by year of execution
Beyond
Year ahead
2023
2022
EBITDA
2023: $103m
2022: $5m
Backlog
2023: $2.0bn
2022: $0.8bn
19
Subsea 7 S.A. Annual Report 2023
Strategic Report Governance Consolidated Financial Statements Subsea 7 S.A. Financial Statements Glossary
Subsea7 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 2023
across all sustainability dimensions.
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.
Lost-time injury
frequency
0.03
rate per 200,000 hours worked
(2022: 0.01; target ≤0.03)
Percentage of suppliers with
a contract that included
human rights clauses
83%
(2022: 81%)
Number of employees
completing compliance and
ethics e-learning including
anti-corruption
8,349
98% of target population
(2022: 6,691, 96% of target
population)
Cumulative power
capacity of renewables
projects supported to end
of 2023
11.9GW
(2022: 10.5GW)
Scope 1 greenhouse
gas emissions
656,624
tonnes of CO
2
e emissions
(2022: 617,309)
% of waste recycled
onshore
91%
(2022: 85%)
Environmental incident
frequency
1.18
rate per 200,000 hours worked
(2022: 1.06; target: <0.70)
Environmental
spill
23
litres per 200,000 hours worked
(2022: 16; target: <25 litres)
Committed to operating in
asafe and ethical manner
Sustainability
Subsea 7 S.A. Annual Report 2023
20
Our sustainability priorities
Energy transition
As global demand for energy
continues to grow so too does the
drive to address climate change
and deliver lower-carbon sources
ofenergy. Subsea7 plays a leading
role in the construction of sustainable
offshore energy developments
aroundthe world.
Offshore fixed wind has become a
significant part of our business and
in 2023 our Renewables business
generated 16% of Subsea7’s
revenue. Floating wind offers the
possibility tofurther support the
energy transition by allowing a greater
number of offshore wind farms
to be developed in deeper water.
Subsea7 has invested in floating wind
technology and we continue to grow
our technical capability and expertise
in this area to develop cost effective,
innovative solutions.
The decarbonisation of oil and gas
developments also has a role in the
transition. Our proprietary technology
and engineering capability support
our clients in developing their fields
cost effectively and efficiently.
Progress in 2023
Despite volatility in the offshore
wind market, made challenging by
economic and policy conditions,
we remain focused on our long-
term fundamentals; and within fixed
offshore wind, we contributed to
1.4GW of renewable power capacity
by installing over 198 offshore wind
turbine foundations. In 2023 and early
2024, we also took delivery of two
new wind installation vessels, capable
of installing larger wind developments.
Our focus within offshore floating
wind was on maturing technologies
and solutions to support lower-cost
developments.
In carbon capture and storage we
delivered the first 55 kilometres of
CO
2
injection pipeline for the Northern
Lights development in Norway.
Our strategic partnerships and
collaborations support our proactive
participation in the energy transition.
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 regularly
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.
Subsea7’s Business Management
System (BMS) underpins the
way in which we conduct safety
training, reporting, procedures
and assessments. Subsea7’s
line managers are responsible for
implementation and compliance
with the system, and for ensuring
that all employees and contractors
are aware of their responsibilities.
We record all incidents and near
misses in detail and investigate every
event. Subsea7 checks activities
against our internal standards and
processes as well as regulatory
and legislative requirements.
Supporting the wellbeing of our
people both for their own health
and for the Group as a whole is very
important. Allour employees have
access to aconfidential Employee
Assistanceprogramme.
Progress in 2023
Our safety performance continued
to be good in 2023, supported by
our teams across the business who
remained focused on upholding our
‘work safe, home safe’ commitment.
This included our Leading Safety
refresher programme and continuing
our sponsor programme across
allofour vessels and work sites.
During the year, we developed human
and organisational performance
(HOP) principles to focus on
understanding and improving
performance. We also increased
thelevel of assessment across
someof our suppliers to support
improved performance.
We integrated our approach to
wellbeing within our employee value
proposition to further represent what
itmeans to be part of Subsea7.
Labour practices and human rights
Putting in place fair and lawful
employment practices, and providing
aworking environment in which no-one
is abused or exploited by us or anyone
we work with, makes us astronger
and more reliable company.
We maintain a human rights
programme designed in accordance
with regulatory and stakeholder
requirements to help ensure we
identify and manage any human rights
risks arising from our own activities
and across our supply chain. We have
a Human Rights Policy Statement
and a Slavery and Human Trafficking
Statement that summarise Subsea7’s
commitment and efforts to improve our
management of the potential human
rights impacts of our business activities
and, more specifically, to respond
tothe UK Modern Slavery Act.
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. We are a signatory to the
UN Global Compact and a board
member of the Building Responsibly
organisation.
Progress in 2023
We continued to work towards
effective implementation of our human
rights programme and we reached
100% completion of human rights
risk assessments across our own
workforce. This enables us to identify
where we may face risks, and where
we may have gaps in our own policies
and procedures. We strengthened our
governance around labour practices
and human rights at Board level.
Within our supply chain, we enhanced
our risk assessment process for
identifying suppliers that might present
a medium or high human rights risk. We
also sharpened our human rights due
diligence questionnaires with a focus
on the risks of child labour, slavery
and trafficking, and other forms of
forced or involuntary labour. We
successfully trained 98% of relevant
employees on human rights and we
added human rights to the agenda
forour Supplier Integrity events.
21
Subsea 7 S.A. Annual Report 2023
Strategic Report Governance Consolidated Financial Statements Subsea 7 S.A. Financial Statements Glossary
Our sustainability priorities continued
Business ethics
We are committed to complying
with applicable laws and upholding
the highest ethical standards, 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 compliance
andethics programme is designed
toembed our Code of Conduct and
help manage compliance and ethics
risks (including corruption) in our
own operations, our supply chain
and within third-party organisations.
Our Code of Conduct for Suppliers
sets out the key principles of ethical
conduct that our suppliers are required
to uphold. Our Speak Up policy
establishes a mechanism foranyone
to raise concerns 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 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 2023
We held our annual Global Integrity
Day, provided compliance and
ethics training for our employees and
organised Suppliers’ Integrity Days.
We continued to embed our procedure
for engaging with suppliers to ensure
they are appropriately assessed for
compliance and ethics risks.
We continued to engage an external
expert firm to provide independent
assurance that our compliance and
ethics programme is well embedded
across Subsea7; 100% of our business
is covered by such assessments. We
also received ISO 37001 accreditation
for our programme in the UK.
Operational eco-efficiency
Subsea7 recognises the risks and
opportunities of climate change and
its potential effect on our business
and stakeholders. We seek to be
more efficient in the way that we work
and invest in solutions that lower our
greenhouse gas emissions within our
operations and throughout our supply
chain. Over 90% of our emissions
come from our vessels, meaning
that our emissions correlate strongly
with our offshore activity levels and
we must seek to reduce these in
line with our targets. The emissions
arising within our supply chain are
also fundamental to address together
with our clients if we are to collectively
target a lower-carbon industry.
We have a risk management system
with procedures and tools that
identify, analyse, report and manage
business risks related to environmental
exposure, including climate impacts.
We also measure key environmental
data against internal targets, including
fuel and energy consumption and
carbon emissions reduction.
Progress in 2023
Our Scope 1 GHG emissions
increased to 656,624 CO
2
e tonnes
(2022: 617,309 CO
2
e tonnes) due
to increased operational activity
and two additional vessels joining
the Renewables fleet. However the
(Scope 1) emissions intensity of our
fleet improved.
In 2023 we continued to implement
digital technology to measure and
ultimately allow us to improve the
efficiency of our vessels.
We prepared for the hybridisation
of the next one of our vessels and
advanced the focus on our supply
chain and Scope 3.
A significant factor in achieving
our goals remains the availability,
at scale and around the globe, of
commercially viable alternative fuels
for the global shipping industry.
Ecological impacts
We are committed to ensuring
that our activities minimise harm
to the environment, as outlined in
our Code of Conduct. Subsea7’s
Environmental Management System
(EMS) is certified to ISO 14001:2015,
verifying the effective implementation
of all mandatory requirements of
the standard. We acknowledge the
significance of safeguarding and
conserving biodiversity. Through
our EMS and in line with regulatory
compliance, we strive to control
the environmental impacts of our
operations on a region’s biodiversity.
Our HSEQ policy also focuses on
ensuring regulatory compliance
and improving our environmental
performance. Subsea7’s line managers
are responsible for implementation
and compliance with this policy and
for ensuring that all employees
and contractors are aware of their
responsibilities. We also take
responsibility for our own end-of-
life assets, with all vessels recycled
in accordance with the Hong Kong
Accord.
Progress in 2023
We performed waste contractor health
checks throughout 2023 in many of
our regions, including internal site and
vessel visits. This year, we recycled
91% of total onshore waste generated
and segregated 71% of total offshore
waste generated for recycling. Across
our regions, we continued to use
the Group-wide single-use plastic
dashboard to discover where we need
to reduce our consumption. We also
trialled a single-use plastic observation
card in three locations offshore and
onshore to help identify incoming
single-use plastics from suppliers.
We continued to raise awareness
of the work and impact of BORA
Blue Ocean Research Alliance
®
in collaboration with the National
Oceanography Centre. We completed
habitat mapping of the Gray Triggerfish
(red-listed by the International Union
for Conservation of Nature) in Brazil
and initiated a marine sediment
sampling initiative.
22
Subsea 7 S.A. Annual Report 2023
A focus on our people
Our people are our greatest
asset, the heart of our business
and everything we do. Being7
is our employer brand and the
backbone of our culture. It’s what
we offer our people, it’s what our
people bring to Subsea7 and it’s
what it feels like to work here.
In 2023 we relaunched Being7 to
all our people around the world. At
Subsea7 we offer our people a career
they can be proud of, an incredible
journey and an environment where
they can thrive. Our Being7 offer is
supported through our learning and
development, diversity and inclusion,
and health and wellbeing strategies,
including a regular survey that enables
us to understand where we need
to focus our efforts to continually
improve Subsea7. In 2023 over 2,500
of our offshore and onshore people
were nominated for Being7 Stars by
fellow colleagues, recognising them
for supporting their incredible journey.
Learning and development
Our focus and investment in learning
and development continued in
2023 with the addition of Women in
Business, Commercial Awareness,
Early Talent and Core Career Skills
programmes to our Academy suite.
We continued our Project Manager
Diploma, Management Development,
Leadership and Safety Leadership
programmes.
In 2023, our workforce undertook
4,372 days of health, safety and
wellbeing training. We also continued
to encourage a culture of learning
through our annual Festival of
Learning, with the 2023 theme being
‘Incredible Journey’. We had record-
breaking attendance with over 7,000
of our onshore and offshore people
taking part across 90 sessions.
Diversity and inclusion
Following the launch of the Subsea7
Diversity and Inclusion framework
in 2022, we continued to focus on
our four pillars: inclusive culture,
gender balance, nationality balance
and the recruitment pipeline. In 2023
welaunched our Women in Business
programme and held two offshore
women’s forums. We enhanced our
approach to talent management to
ensure clearer visibility of our onshore
top talent and launched our offshore
talent review. A significant effort
was placed on attracting and hiring
women to join our offshore crews,
resulting in a 27% increase in female
hires during the 2022/23 recruitment
period compared with 2021/22. Our
2023 graduate class was our largest
to date, numbering 244, spanning 40
nationalities and being 41% female.
Health and wellbeing
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 2023 our focus was to support our
managers to increase their awareness
around mental wellbeing. Around the
world, we supported our people with
a variety of offerings and activities. For
example, in our Africa, Mediterranean
and Caspian region, wellbeing
workshops were held for managers,
in parallel to mental health awareness
leader training. In our Paris office a
wellbeing committee was set up, while
in Brazil there was a monthly calendar
of wellbeing activity for our employees.
Nationality mix
Europe
Asia/Pacific
Americas
Africa
53%
21%
23%
3%
Age mix
Under 30
30-50
Over 50
14%
64%
22%
Gender mix
Onshore male
Offshore male
Onshore female
Offshore female
41%
40%
18%
1%
Gender Mix
Onshore male 41%
Offshore male 40%
Onshore female
18%
Offshore female
1%
Executive Management
Male
Female
75%
25%
23
Subsea 7 S.A. Annual Report 2023
Strategic Report Governance Consolidated Financial Statements Subsea 7 S.A. Financial Statements Glossary
Revenue (turnover)
The primary source of revenue
contributing to the numerator of the
taxonomy revenue key performance
indicators (KPIs) was generated from
the installation of offshore wind farm
facilities. The proportion of the Group’s
total revenue which was taxonomy-
eligible in 2023 was 15%, compared
to 22% in 2022; the decrease
reflected lower revenue in the Group’s
Renewables business unit, mainly
due to phasing on the Seagreen
project, UK, which was substantially
completed at the end of 2022. The
proportion of the Group’s total revenue
that was taxonomy-aligned in 2023
was 14%, compared to 21% in 2022.
Capex
All capex contributing to taxonomy
KPIs, which included additions of
vessels to the Group’s fleet and
right-of-use assets, was in support
of the Group’s activities related to the
offshore wind business. The capex was
invested in line with the Group’s long-
term strategy and planning objectives.
The Group’s taxonomy-eligible and
taxonomy-aligned capex in 2023
represented 45% of the total capex of
the Group compared to 33% in 2022.
The year-on-year increase in taxonomy-
eligible and taxonomy-aligned capex
was primarily due to the investment in
two newbuild vessels, Seaway Ventus
and Seaway Alfa Lift which will work
primarily on offshore wind activities.
KPIs for climate change
mitigation objective as of
31 December 2023
Revenue
$m
Capex
$m
Opex
$m
2023 2022 Var 2023 2022 Var 2023 2022 Var
Numerator for aligned 860 1,061 (201) 424 122 302 20 17 3
Numerator for eligible 876 1,106 (230) 424 122 302 21 18 3
Numerator for non-eligible 5,094 4,030 1,064 516 252 264 88 87 1
Denominator 5,974 5,136 838 940 374 566 109 105 4
Aligned proportion 14% 21% (70bp) 45% 33% 120bp 18% 16% 20bp
Eligible proportion 15% 22% (70bp) 45% 33% 120bp 19% 17% 20bp
Non-eligible proportion 85% 78% 70bp 55% 67% (120bp) 81% 83% (20bp)
Ref. to financial statements Notes 3,5 Notes 13-15 -
Note: full tables showing taxonomy-eligible and aligned activities are disclosed on pages 152 to 154 within the Additional Information section.
EU Taxonomy Disclosure
EU Taxonomy Disclosure
2023
2022
Opex
Opex contributing to taxonomy KPIs
included maintenance and repair costs
directly related to vessels operating
exclusively on offshore wind activities
and research and development (R&D)
costs with a direct link to expected
future revenue within the offshore wind
sector. The proportion of the Group’s
opex which was taxonomy-eligible in
2023 was 19% compared to 17% in
2022. The proportion of the Group’s
total opex that was taxonomy-aligned
in 2023 was 18% compared to 16%
in 2022. A portion of the taxonomy-
eligible R&D opex related to subsea
hydrogen storage, however due to
the early stages of this activity, the
Group is not yet in a position to state
whether alignment criteria were met.
Management will continue to review
this for reporting in future periods.
EU regulation
On 18 June 2020, the European
Union (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 2023 financial year, eligibility and
alignment indicators highlighting the
proportion of its revenue, capital
expenditure (‘capex’) and operating
expenditure (‘opex ’) – collectively,
Taxonomy-
eligible capex
45%
33%
Taxonomy-
eligible opex
19%
17%
Taxonomy-
eligible revenue
15%
22%
24
Subsea 7 S.A. Annual Report 2023
key performance indicators (‘KPIs’)
– resulting from economic activities
considered as sustainable as defined
by the EU Taxonomy.
The EU Taxonomy defines an
economic activity as sustainable
if it shows Significant Contribution
(SC) to reaching one or more of
six environmental objectives, Does
NoSignificant Harm (DNSH) to any
of the environmental objectives, and
is carried out in compliance with
the Minimum Safeguards (MS). In
2023 the Alignment reporting criteria
have been assessed for climate
change mitigation and climate
change adaptation objectives. The
eligibility criteria assessment has been
carried out on the four new objectives;
Water and marine resources, Circular
economy, Pollution and Biodiversity
and ecosystems.
The assessment of eligibility and the
degree of alignment was performed
based on a detailed analysis by
management of all the Group's
economic activities undertaken
in the year, measured against:
• Delegated Regulation (EU) 2021/2139
of 4 June 2021 and its annexes
supplementing Regulation (EU)
2020/852 specifying the technical
criteria for determining under which
conditions an economic activity
may be considered to contribute to
climate change mitigation or climate
change adaptation
• Delegated Regulation (EU) 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
• Amendments to Objectives 1 and
2 amending Delegated Regulation
(EU) No. 2021/2139 establishing
additional technical selection criteria
for determining the conditions under
which certain economic activities
may be considered to contribute
substantially to climate change
mitigation or adaptation, and for
determining whether such activities
do not adversely affect any of the
other environmental objectives
• Clarification of the Taxonomy's other
environmental objectives relating to
the protection and sustainable use
of water and marine resources, the
transition to a circular economy, the
prevention and control of pollution
and the protection and restoration
of biodiversity and ecosystems
via the Commission's delegated
regulation (EU) of 27 June 2023
supplementing delegated
regulation (EU) 2020 /2139
Management performed an exercise
to identify each economic activity
which contributed to the Group’s
Consolidated Financial Statements,
which include Subsea 7 S.A. (the
‘Company’) and all entities controlled
by the Company (its ‘subsidiaries’).
Management applied an analytical
methodology which involved
definitions, assumptions and
estimates, the main elements of
which are described in the following
sections. The Group will continue
todevelop its analytical methodology
as the EU Taxonomy evolves.
Eligible economic activities
under the EU Taxonomy
The first step of the alignment
assessment in accordance with
theEU Taxonomy requires the
Groupto identify all eligible economic
activities for each of the published
environmental objectives. The
economic activities identified resulted
from a comprehensive review of the
Group's activities in 2023.
Management engaged with
stakeholders within the Group
toanalyse all third-party revenue-
generating activities, as well as any
activities for which there was capex
that may generate revenue in future
periods, and opex such as research
and development (R&D) spend.
The Group's activities that were
assessed to be Taxonomy-eligible
for the six environmental objectives,
with only climate change mitigation
being relevant, are shown in the
table on page 27.
The classification of activities in
2023 is consistent with that reported
in 2022, with revenue-generating
activities falling under 4.3 ‘Electricity
generation from wind power’ and
5.11 ‘Transport of CO
2
’.
Eligible capex and opex are also
included primarily in activity 4.3
‘Electricity generation from wind
power’ with a small amount of opex
linked to activity 9.1 ‘Close to market
research, development and innovation’
which considers expenses linked to
R&D, in this case R&D surrounding
green hydrogen storage.
The review of eligibility indicators
covered all of the Group’s economic
activities included in the Group’s
Consolidated Financial Statements
for the year ended 31 December
2023. In the year, 93% of the eligible
revenue related to the construction
of electricity generation facilities that
produce electricity from wind power,
with the balance consisting of the
Group’s participation in carbon capture
projects in Norway and within the
Xodusbusiness.
For clarity, the oil-and-gas-related
economic activities of the Group’s
Subsea and Conventional and
Corporate business units were
assessed as non-eligible under
the EU Taxonomy. All oil-and-gas-
related activities were deemed
non-eligible due to the exclusion
offossil fuel extraction activities
fromthe EU Taxonomy target scope.
Notwithstanding this, the Group’s
non-eligible activities included activities
contributing to reducing the carbon
intensity of the energy transition such
as carbon footprint optimisation,
studies related to carbon capture
systems in the oil and gas sector, a
project for the electrification of an
offshore platform using floating wind
technology, and other less significant
carbon footprint reducing activities.
It is possible that some of these
activities may fall into eligible scope in
the future and this will continue to be
monitored.
Alignment assessment for
revenue-generating activities
For the year ended 31 December
2023, the EU Taxonomy Regulation
requires eligible activities to be
analysed regarding their compliance
with the ‘alignment’ criteria for
activities under climate change
mitigation and climate change
adaptation objectives, which includes
considerations related to Substantial
Contribution, Do No Significant Harm
and Minimum Safeguards.
Substantial Contribution
Activity 4.3 Electricity generation
from wind power
After reviewing the technical screening
criteria related to this activity,
management concluded that all
eligible activities met the Substantial
Contribution criteria as the activities
ultimately resulted in the generation
of electricity from wind farms.
25
Subsea 7 S.A. Annual Report 2023
Strategic Report Governance Consolidated Financial Statements Subsea 7 S.A. Financial Statements Glossary
Activity 5.11 ‘Transport of CO
2
’
The following Substantial
Contribution criteria were assessed
in order to demonstrate the
alignment of the Group’s carbon
capture project in Norway:
• CO
2
was transported from the
installation where it was captured
to the injection point with less
than 0.5% CO
2
leakages; and
• CO
2
was delivered to a
permanent CO
2
storage site
meeting criteria for underground
geological storage of CO
2
.
Activity 9.1 ‘Close to market
research, development and
innovation’
The Substantial Contribution criteria
were met, as the opex under this
activity relates to the construction
ofsubsea hydrogen storage facilities.
However, this project remains
in its early stages, with activities
relating to R&D spend, and as such
management concluded that it
wasnot yet in a position to classify
the activity as taxonomy-aligned.
Do No Significant Harm (DNSH)
When analysing the DNSH criteria
management relied on the
environmental management plans
for each project and the Group’s
sustainability strategy and Compliance
and Ethics policies. The following
DNSH criteria were considered:
Protection of biodiversity and
ecosystems (4.3/5.11)
For all of the Group’s eligible
activities, ISO 14001 certified
environmental management plans
are implemented. These plans
provide a framework to allow
management to monitor and
mitigate the environmental impacts
of the Group’s business operations
and meet the requirements of all
applicable regulations. Within the
plans a number of standards and
procedures are maintained in order
to meet the DNSH assessment
EU Taxonomy Disclosure continued
criteria for EU Taxonomy
requirements. These plans
incorporate inputs from the Group’s
clients. All issues identified and
requirements defined in the original
environmental impact assessments
are considered to establish the
consent requirements for the
activity; these are then incorporated
into the client environmental
management plans, and finally
into the Group’s environmental
management plans.
Regarding protection of biodiversity
and ecosystems, the Group ensures
that the eligible activities do not
hamper the achievement of good
environmental status as set out in
Directive 2008/56/EC. This requires
that the appropriate measures
are taken to prevent or mitigate
impacts in relation to that Directive’s
Descriptors 1 (biodiversity) and
6 (seabed integrity), laid down in
Annex I to that Directive, and as
set out in Commission Decision
(EU) 2017/848 in relation to the
relevant criteria and methodological
standards for those descriptors.
Transition to a circular
economy(4.3)
The environmental management
plans include assessments related
to the circular economy, ensuring
where feasible that equipment
and components used are of
high durability and recyclability
and are easy to dismantle and
refurbish. In most of the Group’s
eligible activities, steel is the major
component used, which in most
cases can be recycled.
Sustainable use and protection
of water and marine resources
(4.3/5.11)
Sustainable use and protection of
water and marine resources is also
considered by management. In the
case of the construction of offshore
wind infrastructure, management
assessed that the activities did not
hamper the achievement of good
environmental status as set out in
Directive 2008/56/EC. This required
that appropriate measures be taken
toprevent or mitigate impacts in
relation to that Directive’s Descriptor
11 (noise/energy), laid down in Annex
I to that Directive, and as set out in
Commission Decision (EU) 2017/848
in relation to the relevant criteria and
methodological standards for that
descriptor. An example of where
steps were taken to minimise potential
noise impacts was the successful
use of near-field noise mitigation
systems, including bubble curtains,
on wind farm projects, to protect
the environment from the sound
and vibration caused by pile-driving
foundation structures into the seabed.
Adaptation to climate change
(4.3/5.11)
As part of the process of alignment
with Task Force on Climate-related
Financial Disclosures (TCFD)
requirements, management has
identified climate-related risks
and opportunities that may have
a strategic or financial impact on
the Group. An independent third-
party analysis of short-term risks
was performed and a risk analysis
process is being developed by
management to help identify the
longer-term impacts for the Group of
both transitional and physical climate
risk. Climate risk and vulnerability
assessments were also performed
by the Group’s clients to meet
alignment expectations.
Minimum Safeguards
The EU Taxonomy sets out a
set ofMinimum Safeguards in
accordance with Article 18 of the
Regulation. TheMinimum Safeguards
are a set of defined UN, EU and
other international human rights and
code of ethics guidelines against
which businesses must assess their
procedures. Four themes are covered
under the Minimum Safeguards
criteria: human rights, corruption,
taxation and fair competition.
26
Subsea 7 S.A. Annual Report 2023
In order to meet the requirements,
the Group has established a
process for mapping its policies
and procedures against the
following guidelines and standards,
as set out by the EU Taxonomy:
• the OECD Guidelines for
Multinational Enterprises;
• the UN Guiding Principles on
Business and Human Rights;
• the principles and rights set out in
the eight fundamental conventions
identified in the International Labour
Organization Declaration on
Fundamental Principles and Rights
at Work; and
• the International Charter
ofHuman Rights.
Having performed a review of the
Group’s policies and procedures,
management concluded that the
Group complies with the alignment
criteria of the EU Taxonomy’s
Minimum Safeguards. Further
information is available in the
Group’s Business Ethics, Human
Rights and Tax policies section at
www.subsea7.com and within our
Sustainability Report.
Methodology for calculating KPIs
The financial information used for
the EU Taxonomy report is based
on the Group’s Consolidated
Financial Statements for the year
ended 31 December 2023 and was
sourced from the Group's financial
information systems. It was subject to
internal review and assurance by the
Group’s finance function to ensure
consistency of approach with the
revenue, opex and capex information
reported in the Group’s Consolidated
Financial Statements.
The Group’s Taxonomy-eligible/
aligned revenue KPIs are determined
by dividing the sum of the revenue
related to eligible and aligned
activities by the total revenue of all
activities as reported in the Group’s
Consolidated Financial Statements.
The Group’s revenue relates mainly
to engineering, procurement,
construction and installation
contracts recognised in accordance
with Note 3 ‘Material accounting
policies’ to the Group’s Consolidated
Financial Statements for the year
ended 31 December 2023.
The Group's Taxonomy-eligible/
aligned capex KPIs are determined
by dividing the sum of the capex
of eligible and aligned capex
activities by the total of: additions
to intangible assets; property, plant
and equipment; and addition and
remeasurement of right-of-use
assets as reported in the Group’s
Consolidated Financial Statements.
For further details refer to Notes 13, 14
and 15 to the Group’s Consolidated
Financial Statements for the year
ended 31 December 2023.
The Group's Taxonomy-eligible/
aligned opex KPIs are determined
by dividing the sum of the opex
related to eligible and aligned
activities by the total opex for all
activities for the Group during the
year ended 31 December 2023.
The only operating expenses
reported under the numerator and
denominator for the Group were
• expenses that relate to the
maintenance and repair of
property, plant and equipment; and
• research and development
expenses, including direct
personnel costs.
To avoid double-counting,
management only included as eligible
those operating expenditures allocated
in full to supporting the execution of
eligible activities. The expenses already
included under the capex taxonomy-
aligned KPIs have been excluded from
the opex taxonomy-aligned KPIs
numerator and denominator.
Future developments
The Group’s strategy is to create
sustainable value by delivering the
offshore energy transition solutions
the world needs while remaining
focused on the delivery of offshore
energy across subsea oil and gas,
carbon capture, offshore wind and
emerging energy projects. In line
with this strategy management
intends to continue to develop
theGroup’s Taxonomy-eligible
andaligned KPIs and to continue
to evaluate the Group’s operations
and identify any new activities
which may be eligible under the
sixenvironmental objectives within
the sustainability Taxonomy.
Environmental
objective
Activity covered by
the EU Taxonomy Code
Associated
NACE code
Definition
of the activity
Corresponding
Group activity
Climate
change
mitigation
4.3
Electricity generation
from wind power
D35.11
F42.22
Construction
or operation of
electricity generation
facilities that
produce electricity
from wind power.
Activities related to the delivery of fixed and
floating 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
of renewables structures.
Climate
change
mitigation
5.11
Transport
of CO
2
F42.21
H49.50
CO
2
is delivered to
a permanent CO
2
storage site that
meets the criteria
for underground
geological storage
of CO
2
.
The Group participates in a carbon capture
project leading to permanent storage of CO
2
from an industrial source, offshore Norway.
This scope includes engineering, fabrication
and installation of approximately 100
kilometres of pipeline that will connect the
CO
2
collection facility to the CO
2
storage site.
Climate
change
mitigation
9.1
Close to market research,
development and innovation,
which considers expenses
linked to R&D
R&D in relation to
green hydrogen
storage.
The Group is currently involved in R&D
activities relating to the construction of green
hydrogen storage facilities.
27
Subsea 7 S.A. Annual Report 2023
Strategic Report Governance Consolidated Financial Statements Subsea 7 S.A. Financial Statements Glossary
lower-carbon intensity solutions for
its clients. These solutions can be
provided as an integrated solution
through alliance partnerships and
collaborations. Through the Group’s
life-of-field services, it provides fully
integrated solutions, services and
products that protect the integrity
and optimise the performance of
clients’ field infrastructure as well
as supporting digital solutions
for the purpose of asset integrity
management, condition monitoring
and remote operations. The
Group’s experience in offshore
project execution positions
itwell tosupport the offshore
electrification of facilities, which
will enable transformative solutions
tosubsea developments.
Our Renewables business has over
10 years of experience in delivering
offshore wind projects. It offers
services including the installation
of foundations, inner-array cables,
substations and, more recently, an
asset to support the installation of
wind turbines. Seaway7 is one of
only a few contractors that can
provide EPCI expertise and can
therefore offer a variety of contracting
models ranging from single-scope
transportation and installation, to
integrated multi-scope and full
EPCI contracts. It also has a fleet
of six heavy transportation vessels,
enabling us to transport components
andinfrastructure to support the
wind industry.
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 and its
strategy for oil and gas, renewables
and emerging energies sources
are driven by three business units.
The Subsea and Conventional
business unit focuses on subsea
developments, electrification and
life of field and carbon capture and
storage. The Corporate business
unit focuses on early-stage
activities in the subsea hydrogen
and emerging energies markets,
while Renewables – through the
Seaway7 brand – is focused on
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 for the
energy industry, in all water depths,
under the Subsea7 brand. Delivering
a full range of early concept and
design, engineering, procurement,
construction and installation
(EPCI) services utilising pioneering
products as well as digital and
Risk Management
Principal risks
and uncertainties
28
Subsea 7 S.A. Annual Report 2023
As each country presses forward
to meet its Net Zero targets
and transition to cleaner energy
sources, the world is also challenged
by geopolitical uncertainty and a
need for energy security. Subsea7’s
focus on subsea oil and gas, carbon
capture, offshore wind and new
energies places the Group at
theheart of the energy transition
and ready to meet the needs
ofourclients.
Offshore operations are required
for both Subsea and Conventional
as well as Renewables 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
inspection, repair and maintenance
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 increases in the supply
chain, as well as general inflation, is
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.
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 or 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
30 to 46.
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.
Roles and responsibilities
The Board of Directors has
oversight of the Group’s risk
management activities and internal
control processes. The Executive
Risk Committee meets to review
and discuss the Group’s principal
risks and its risk management
procedures and reports to the
Chief Executive Officer. 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.
29
Subsea 7 S.A. Annual Report 2023
Strategic Report Governance Consolidated Financial Statements Subsea 7 S.A. Financial Statements Glossary
Strategic
The Group recognises that technology, engineering
capabilities and providing the right solutions to meet
clients’ demands are market differentiators and
are key to delivering on its strategy. The Group’s
strategy is to create sustainable value bydelivering
the offshore energy transition solutions the world
needs. By continuing to improve our solutions
and the way we deliver them we can continue
the evolution towards oil and gasdecarbonisation,
as well as enabling the growth of renewables and
emerging energy.
The role the Group takes in the continuous
evolution of oil and gas towards decarbonisation
is based on three pillars: subsea and conventional
developments, life-of-field services, and
electrification of offshore facilities where new
products and solutions are required to make this
possible. This brings with it the risk that 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 continue to be an attractive
contracting model across both new subsea
developments and life-of-field work scopes,
and are offered through Subsea Integration
Alliance. This is a preferred option for many
clients, particularly for large greenfield projects,
and is animportant component of the Group
delivering on its strategy. The risks associated
with this contracting model include either party
encountering an interruption in work activities
because 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 standalone 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.
The Group continues to advance its strategy
inboth the established renewables market and
emerging energies sectors. Finding the correct
solutions and delivering on these is key, as is
achieving a balanced risk profile across these
evolving sectors and with new clients. A balanced
allocation of risk remains central to profitability
in the wind market and with a healthy backlog of
work, the Group can be selective in its tendering
approach to ensure future work maintains an
acceptable risk profile. Seaway7 is well-positioned
to capture an enhanced share of the fixed offshore
wind market in future years.
As the fixed wind sector continues to grow and
emerging energies advance there is a risk that an
increase in the size and complexity of renewables
or emerging energy projects could exceed our
current asset base.
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 potentially incorrect assessments
of the target market, new and inherited legal and
contractual liabilities, as well as operational and
financial risks. 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.
Risk Management continued
Market risk
Risk
30
Subsea 7 S.A. Annual Report 2023
Technology-related risks are mitigated by employing
qualified personnel, as well as working to industry
and professional 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 and emerging
energies sectors, 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 as well as striving for and promoting an
industry-leading balanced contractual risk profile.
The Group has internal resources and external advisers
to carry out 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 various phases of the transaction as
well as the integration process immediately after a
corporate transaction to ensure successful execution.
Mitigation
Market risk continued
31
Subsea 7 S.A. Annual Report 2023
Strategic Report Governance Consolidated Financial Statements Subsea 7 S.A. Financial Statements Glossary
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, and as the
world considers the energy trilemma of affordable
and secure energy there is a requirement 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
contribute to the decarbonisation of oil and gas
developments. This involves setting and continuing
to focus on our own lower-carbon targets as well
as supporting our clients in their lower-carbon
targets through working with the supply chain,
investing in our own fleet and looking for new
technology to reduce our own carbon footprint.
Legislative changes and society pressures, led
by environmental, social and governance (ESG)
desires for cleaner energy, could impact the
Group’s longer-term partnering with stakeholders
such as investors, insurers and other key suppliers,
if they reduce their involvement or move away
completely from offering 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 supply chain is impacted by world
events and rising inflation as well as increased
demand. There is a risk that price increases and
availability issues could prevent the Group from
meeting client demands. Any default by the supply
chain 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 considerations. These, as well as other variable
factors, are outside the Group’s control but can
have a direct impact on the operational and financial
performance of the Group.
Risk Management continued
Risk Mitigation
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 projects as
they progress towards construction. Following
contract award, the Group can 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 Group has trialled alternative fuels on various
vessels across the fleet and is positioned to make
a change once a globally available alternative is
determined. One vessel in the fleet has undergone
hybridisation conversion with three other hybrid
vessels joining the operational fleet in 2024. As well
as this the Group utilises its carbon estimator tool
in all client FEED and study work scopes to enable
its clients to reduce the impact of the fleet during
the project installation phase.
The financial strength and solvency of our clients
and suppliers is a specific area of focus before
entering into contracts. The Group has successfully
managed its cost base and continues to look
for ways to improve efficiency and delivery
through the implementation of digitalisation and
standardisation. A potential increase in demand
is managed through supplementing the fleet with
the use of third-party vessels. Beyond the fleet,
theGroup engages with key stakeholders to explain
the Group’s approach and initiatives on energy
transition, climate change and ESG to maintain
long-term alignment on economic activities. We
also work with our clients and suppliers to ensure
that risk on pricing and availability is addressed
through contractual measures.
The Group seeks to diversify selectively into
newmarkets, including emerging energy markets,
and has a diverse portfolio of projects which allows
an element of mitigation across its global markets.
Market risk continued
32
Subsea 7 S.A. Annual Report 2023
Competition
The Group faces competition from time to time
to win contracts 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. Depending
on the market cycle, less favourable 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 could
include 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 promote and maintain industry-
recognised balanced contracting forms.
The Group continues to partner with key clients
and form 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.
Achieving a balanced allocation of risk remains
central to profitability in the offshore wind sector
and Seaway7 remains disciplined in this area
and has the necessary expertise and capabilities
to deliver complex projects and market its EPCI
track record. Its versatile fleet and track record
are differentiators in relation to smaller contractors
or new entrants, and position the Group well to
continue working with clients across the sectors
and to maintain contractual discipline to achieve
abalanced, manageable risk profile.
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:
• economic instability
• legal, fiscal and regulatory uncertainty and
change, including individual countries’
commitments, targets and measures to address
climate change
• onerous local content obligations
• sanction and export controls
• civil or political unrest, including war
• regime change.
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.
Market risk continued
33
Subsea 7 S.A. Annual Report 2023
Strategic Report Governance Consolidated Financial Statements Subsea 7 S.A. Financial Statements Glossary
Risk Management continued
Business environmental risks
Risk Mitigation
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 create sustainable value by delivering
offshore energy transition solutions. To make this
possible the Group differentiates itself by focusing
on early engagement and system innovation,
collaboration and partnerships, integrated
services, sustainable delivery, digital solutions,
and enabling products. 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
or achieve its targets and objectives of making
possible the delivery of offshore energy for today
andtomorrow.
The Group’s ambition for proactive participation
in the energy transition is focused through two
key areas: the continuous evolution of oil and
gas, and renewables and emerging energies.
Technology advancements are key to progressing
in these areas, where the risks include investing
in or developing technology for one or multiple
areas identified which becomes superseded
orimmediately obsolete.
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 adherence to industry
engineering standards and codes, technical
readiness levels and contractual gate controls
operated by knowledgeable and experienced
Subsea7 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.
34
Subsea 7 S.A. Annual Report 2023
Business environmental risks continued
Organisation and management risks
Risk Mitigation
Environmental sustainability
The Group is committed to delivering onshore
and 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 are moving at a pace that will
require very timely and effective change which the
Group will need to deliver at pace and integrated
with operational delivery commitments to its clients.
External stakeholders such as the financial markets,
insurers, investors and suppliers may have their
own ESG commitments that include reducing their
involvement with oil-and-gas-related companies in
favour of other 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, innovative
programmes and industry sector diversification
that reduce both the Group’s and its clients’
carbon emissions. Furthermore, the Group has
an Environmental Management System that will
underpin and consolidate its efforts to meet its
targets and expectations.
Throughout 2023 the Group continued to prepare
for reporting in compliance with the EU Corporate
Sustainability Reporting Directive and currently
participates in the CDP, the UN Global Compact
and the Building Responsibly frameworks. More
information on the Group’s efforts and initiatives can
be found in the Group’s 2023 Sustainability Report.
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 the energy
transition, demonstrating commitment to a more
sustainable business environment both internally
and also to support its clients’ objectives. The Group
recognises the impacts of climate change and the
potential effect on its business, 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 change, for example cost increases
associated with alternative onsite fuel sources,
or the introduction of carbon taxes
• regulation and supervision of climate-related
risk inthe financial sector, which could lead
tochallenges in accessing financial capital
• 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
• the availability of sufficient volumes of alternative
fuels that are commercially viable and which
can be sourced globally to support our goal
ofreducingScope 1 and 2 emissions.
The Group is committed to finding more efficient
ways of working and investing in solutions that
lower the Group’s greenhouse gas emissions. Most
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. The Group has
continued with its vessel hybridisation programme
and has trialled alternative fuels, which confirmed
compatibility once such fuels become available
on a commercial scale. 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 both traditional and emerging
energies where there continues to be a requirement
for a subsea infrastructure.
35
Subsea 7 S.A. Annual Report 2023
Strategic Report Governance Consolidated Financial Statements Subsea 7 S.A. Financial Statements Glossary
People
The Group, like many businesses, carries the
risk of failing to attract and retain suitably skilled
and capable personnel across all business units
at a time when societal preferences, particularly
in the younger demographic, are towards
opportunities inenergy transition rather than oil
and gas. Failure to attract or retain talent or to
maintain acollaborative working environment 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 from the
Group’s 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
subcontractors 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 child labour, slavery and
human trafficking, and other types of forced labour.
The Group’s commitment to lowering its own
emissions but also finding solutions to support
a lower-carbon energy transition, and its strong
presence across all offshore energy types
including renewables and emerging energies,
isa differentiator. Having the ability to offer
career opportunities across both business units,
as well as offering modern and flexible working
arrangements, continues 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 has a human rights programme
designed to identify and manage human rights risks,
with a particular focus on child labour, slavery and
human trafficking, and other types of forced labour,
consistent with the UN Global Compact and the
Building Responsibly Worker Welfare Principles.
With the support of external experts, it has designed
in-person training for delivery to a target audience
of employees across the Group who have a role to
play in identifying and managing the relevant risks.
The Group conducts risk assessments to identify
and understand where we might find risks and
supports the creation of action plans to address
high-risk areas and any gaps in our policies and
procedures. The Group reinforces the importance
of compliance with the Group’s Code of Conduct
and its Code of Conduct for Suppliers by internal
personnel and its supply chain respectively as
well as its Human Rights Policy Statement. All
three documents include clear guidance and
expectations regarding human rights standards.
Risk Management continued
Organisation and management risks continued
Risk Mitigation
36
Subsea 7 S.A. Annual Report 2023
Organisation and management risks continued
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 bribery or corruption.
The Group assesses such risks, which vary
across its 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
interests in local partners or suppliers that local
content laws require us to use
• bribery to win work
• bribery to get variation orders approved
• bribery to get work certified or paid.
The above risks may increase when working with
partners or third parties. These risks are inherent
in our sector, in particular in countries where local
content requirements are significant.
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
for it (including suppliers and other third parties).
Thesepolicies are periodically updated to ensure
they remain current.
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, and an annual Integrity Day for
employees, raise awareness, highlight the potential
consequences and empower and embed a culture
of integrity. Employees are encouraged to raise
concerns about possible non-compliance through
an externally administered whistleblowing line.
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 the members of the
Executive Management Team sets objectives
forthe implementation and continual improvement
of the 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.
Risk Mitigation
37
Subsea 7 S.A. Annual Report 2023
Strategic Report Governance Consolidated Financial Statements Subsea 7 S.A. Financial Statements Glossary
Information and operational technology
cyberrisks
The Group’s operations depend on the availability
and security of a number of key information
technology (IT) and operational technology (OT)
systems. In 2024 the Group will be upgrading its
ERP system, SAP, to SAP S4. The ERP system
is an essential operating system for our business.
The risks of not managing the upgrade of this
critical system effectively could result in pro-longed
outages leading to significant business interruption,
loss of data, unplanned additional time and expense
and reputational damage. 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. Such risks include but are not limited to:
• unauthorised access to key operational,
financialor corporate systems
• malware
• theft and misappropriation of sensitive information
• 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
• emerging threats, including advanced attacker
tactics and techniques, and the use of social
media and Artificial Intelligence.
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, potential physical harm,
loss of client and shareholder confidence and
regulatory fines.
The Group has highly skilled teams managing
its critical systems and processes, utilising both
in-house capabilities and external specialists
torespond to system outages and to ensure the
smooth transition and delivery of any upgrades
such as SAP S4. 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
keeps 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 and 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 the
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 combat attempted fraud.
These policies are regularly reviewed to ensure
they continue to address existing and emerging
information security, cyber maritime and cyber
crime 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 Group’s Executive Vice President of Projects
& Operations has responsibility for ensuring
the setting and implementation of the Group’s
cyber security strategy. This is reported through
the Executive Risk Committee which reports
tothe Group’s CEO on all matters of risk, and
tothe Board of Directors on a six-monthly basis.
NielsKirk is nominated as the Board’s focal point
for cyber security.
Organisation and management risks continued
Risk Mitigation
Risk Management continued
38
Subsea 7 S.A. Annual Report 2023
Delivery and operational risks
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; risks include
theinability to maintain price validity from our
supply chain if there is commodity price fluctuation,
rapid price escalation, delay in project award, 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.
Our client’s financial strength and the economic
viability of their projects can be impacted by
multiple factors which are outside the control of the
Group, and in some instances clients may request
specific payment terms or payment deferrals which
can have a negative impact on the financial position
of the Group.
Realisation and renewal of backlog
Delays (including those related to clients’ final
investment decisions), suspensions, cancellations,
re-phasing or changes to scope or content of
awarded projects recorded in backlog could
materially impact the financial performance and
position of the Group in current and future years.
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,
contract terms and financial milestones are based
on the Group’s commercial contracting standards
and market conditions and where appropriate
the financial due diligence of the parties involved.
Where possible key supply chain or subcontractor
terms and conditions are negotiated alongside the
main client contract to reduce the risk of non-
alignment of contracting terms or the absence of
price certainty. Volatility in commodity prices can
be mitigated by including contractual adjustment
mechanisms with both clients and suppliers.
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.
The Group works to mitigate these risks
through its contractual terms, including, where
possible, provision for cancellation fees or early
termination payments.
Risk Mitigation
39
Subsea 7 S.A. Annual Report 2023
Strategic Report Governance Consolidated Financial Statements Subsea 7 S.A. Financial Statements Glossary
Project execution
The Group executes complex projects and a failure
to have the best people, assets and technological
solutions and engineering procedures to deliver
these could result in failure and be damaging to the
Group both reputationally and financially. As well
as project execution, 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 expose the Group to operational and
financial losses that are material to the Group’s
overall performance, position and reputation.
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 also continue to innovate and
develop products and solutions that allow it to
deliver lower-carbon developments as well as
enabling the growth of renewables and emerging
energies. Errors or defects in product design and
production could 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 continues to promote a balanced
approach to risk allocation and has supported the
International Maritime Contractors Association in
producing a set of contractual principles for the
renewables industry. The Group is selective of
which projects it undertakes, ensuring that those
ittakes on have a balanced risk profile where the
risks retained are understood and can be managed.
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 industry-recognised technical readiness
level reviews.
Risk Management continued
Delivery and operational risks continued
Risk Mitigation
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 Subsea7 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
(HSSEQ) standards and its Code of Conduct
obligations. The Group has established appropriate
governance and oversight mechanisms to monitor
the performance of its joint ventures and joint
venture partners with regard to such matters.
40
Subsea 7 S.A. Annual Report 2023
Delivery and operational risks continued
Supply chain
In the current period 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
hence insufficient capacity causes a deterioration
inthe quality of the product or service, extended
lead times or the inability to secure products. The
Group is also at risk of reduced choice as suppliers
adapt their own business strategies towards
sustainable and alternative energies. A severely
diminished pool of suppliers would affect the
Group’s operational and financial performance.
Failure of a key supplier to perform predictably
could result in disruption to the Group’s ability
tocomplete a project in a timely manner. Suppliers
could also run into financial difficulty affecting their
ability to perform, and in more severe scenarios
this could result in suppliers being made insolvent.
Other factors such as pandemics, extreme
weather, financial uncertainty, civil unrest, political
uncertainty, war or other unforeseen external
factors could cause significant interruption affecting
elements of the supply chain, affecting our ability to
deliver our clients’ projects, causing disruption to
ongoing Group capital expenditure initiatives such
as vessel construction, dry-dockings and upgrades.
The war in Ukraine and consequent sanctions on
Russia and other geopolitical challenges continue to
impact on energy shortage and more recently have
been disrupting international maritime traffic. These
are factors contributing to rising general inflation
globally, resulting in increased costs as well as more
cost volatility within our direct and indirect supply
chain. 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 would be borne by the Group.
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.
Long-term contractual arrangements and the use
of collaboration models (as appropriate) allow us
to secure supplier commitment and access in the
current market as well as into the future, especially
with our key category suppliers. We are developing
supplier strategies, and partnerships with key
suppliers, to service our energy transition clients.
We are diversifying our supply chain by finding new
suppliers, in some cases in different industries and
new regions, which helps the Group to mitigate the
risk of key suppliers exiting the sector.
Our supplier sourcing, qualification, screening,
monitoring and assurance processes and
procedures are designed to identify potential risks
in our supply chain. Regular engagement with
our key suppliers and ensuring the relevant topics
are on the agenda help to reinforce our shared
commitment to building long-term value through
sustainable supply chain management.
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
entering into project-related commitments. We
are leveraging digital tools such as SAP Ariba
throughout the entire supplier lifecycle, to improve
productivity and maintain reasonable levels of
assurance that we can continue working with such
suppliers. 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 any interruptions through appropriate
contractual terms and conditions. These may
include back-to-back supplier pricing, index linked
pricing and a balanced cost escalation mechanism
where appropriate.
Risk Mitigation
41
Subsea 7 S.A. Annual Report 2023
Strategic Report Governance Consolidated Financial Statements Subsea 7 S.A. Financial Statements Glossary
Communicable or infectious diseases
includingpandemics
Communicable or infectious diseases can
expose the Group to operational disruption and
increased costs as a result of unexpected business
interruptions or measures required to ensure the
safe continuation of the business. The risks to the
Group include additional costs to continue normal
operational activities, revised arrangements to work
safely in accordance with changes made in the law,
quarantining or isolating 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 also
at risk of interruption caused to the supply chain,
which is also likely to be impacted in the event of a
pandemic or disease outbreak.
The Group first and foremost adheres to the laws,
guidelines, and protection, health and mitigation
measures set out by each country in which the
Group operates and in accordance with a vessel’s
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 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 could be
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 can be
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.
Risk Management continued
Delivery and operational risks continued
Risk Mitigation
Supply chain continued
Increasing legislative requirements in relation to
ESG topics imposed on the supply chain, coupled
with the potential failure of suppliers to accurately
measure and provide reliable information on
their ESG performance, puts the Group at risk
of working with suppliers who are not wholly
compliant with the applicable legislation and could
limit the Group’s ability to accurately report its
ownperformance.
If necessary, appropriate guarantees or
performance-related bonds are requested from
our key suppliers. As part of the supplier selection
process the Group engages qualified quality
assurance and quality control specialists and
there is close collaboration between supply chain
management and engineering. Both quality and
engineering functions also play an active role
throughout the duration of a project, with teams on
the ground at key supplier locations to ensure quality
standards are met and assurance policies followed
as well as the timelines for delivery.
We are engaging with our key suppliers to better
understand their ESG commitments and where they
are on their journey towards meeting their objectives.
This allows us to prioritise and focus on ensuring
thatwe work with a sustainable supply chain, in line
with the Group’s own priorities and focus areas.
42
Subsea 7 S.A. Annual Report 2023
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 transit routes, the location of work,
project specification and installation methods – 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 also 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 working in the affected country.
The worldwide nature of the Group’s 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,
wellbeing 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.
Delivery and operational risks continued
Risk Mitigation
43
Subsea 7 S.A. Annual Report 2023
Strategic Report Governance Consolidated Financial Statements Subsea 7 S.A. Financial Statements Glossary
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.
Risks also include 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 or 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 its 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 also divests assets from time to time,
either by sale for onward use or in some cases
for decommissioning. It is important that assets
are divested responsibly and that the Group takes
reasonable measures to ensure it mitigates any
future liabilities and in the case of decommissioning
activities that it engages with responsible
third parties who comply with the appropriate
regulations including the Hong Kong International
Convention for the Safe and Environmentally Sound
Recycling of Ships.
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 or has to navigate, 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 the 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 when it anticipates acceptable financial returns
on its investment.
The Group mitigates the risks associated with
future liabilities of divested assets through a know
your client or supplier due diligence process and
ensuring the contractual agreements contain
detailed provisions associated with the onward
utilisation or the minimum requirements to be met
for any near-term decommissioning activities.
Risk Management continued
Delivery and operational risks continued
Risk Mitigation
44
Subsea 7 S.A. Annual Report 2023
Financial risks
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 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 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.
Risk Mitigation
45
Subsea 7 S.A. Annual Report 2023
Strategic Report Governance Consolidated Financial Statements Subsea 7 S.A. Financial Statements Glossary
Financial risks continued
Cash flow and liquidity
The Group’s working capital position will be
affected by the timing of contract cash flows,
because 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 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 important to help meet the Group’s
financial obligations as they fall due. In the event
that such financing were 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.
Risk Management continued
Risk Mitigation
46
Subsea 7 S.A. Annual Report 2023
Risk management and
internal control
The Board of Directors is
responsible for oversight of
the Group’s system of risk
management and internal control
and for reviewing its effectiveness.
TheBoard of Directors recognises
that any system of internal control
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
control 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 bi-annually
to review the risks identified as
impacting or having the potential
toimpact the Group’s operations
and strategic objectives, and
todiscuss emerging risks.
47
Subsea 7 S.A. Annual Report 2023
Strategic Report Governance Consolidated Financial Statements Subsea 7 S.A. Financial Statements Glossary
Theoverriding objective continues
to be to ensure an inclusive and
diverse Board of Directors with
a balance of skills, expertise and
experience to guide Subsea7.
It was recognised in 2022 that
gender diversity was an area for
improvement, and with this in
mind, during 2023 the Corporate
Governance and Nominations
Committee continued to actively
seek female candidates with the
range of skills needed to enhance
the Board. This culminated in
the successful appointment of a
second female Director with the
requisite skill set at the 2023 AGM.
The Board of Directors’ objective
is now to have at least 30% female
representation on the Board, with
acommitment to have a minimum
of one female Director.
Board appointments
Following the retirement of Dod
Fraser from the Board at the AGM
in 2023, Elisabeth Proust Van
Heeswijk re-joined the Board as an
Independent Director. In light of her
past experience on the Diversity
Council and the Ethics Committee
of Total S.A., which oversaw
human rights matters, Elisabeth’s
appointment provides the Board
with expertise on labour practices
and human rights. In addition,
inrecognition of the impacts our
operations may have on marine
biodiversity and the Board’s wish
to expand its knowledge in this
area, Louisa Siem agreed to work
with management to enhance her
understanding of the subject and
serve as the Board’s focal point for
biodiversity owing to her particular
interest in the topic.
As Chairman of the Corporate
Governance and Nominations
Committee and Senior
Independent Director my goal
is to provide independent
oversight and constructive
challenge in order to
ensure that the Company
has responsible corporate
governance in place to meet
the challenge of the energy
transition.
The work of the Board
during 2023
During 2023 the Board oversaw
a number of strategic projects
that were key to the Company’s
long-term goals. On the Subsea
and Conventional side, the Board
oversaw the closing of the joint
venture transaction with SLB
and Aker Solutions, which has
adopted the OneSubsea name and
comprises the subsea businesses
of SLB and Aker Solutions, with
Subsea7 holding a 10% stake.
OneSubsea aims to drive innovation
and efficiency in subsea production
and is an exciting development for
Subsea7, as we work to optimise
value creation and deliver lower-
carbon energy. On the Renewables
side, emphasising the Board
of Directors’ confidence in the
outlook for the fixed offshore wind
market, Subsea7 acquired all of the
shares in Seaway 7 ASA, thereby
fully integrating Seaway7 into the
Subsea7 Group with no remaining
minority interests.
Board diversity
Since the implementation of the
Board Diversity Policy in 2021,
Board diversity has been a focus
area for the Board of Directors.
David Mullen Chairman of the Corporate
Governance and Nominations Committee
Governance
Fostering sustainable corporate
behaviour and responsible
corporate governance
48
Subsea 7 S.A. Annual Report 2023
With the previous appointment
ofEldar Sætre, who has expertise
in sustainability including climate-
related matters, and Niels Kirk, who
provides the Board with expertise
in risk including cyber security,
this year’s developments provide
us with confidence that we have
a strong Board with the skills,
expertise and experience necessary
to guide Subsea7. Together with
the existing Board Committees, we
have the right corporate governance
structure and sustainable corporate
behaviours in place to drive the
energy transition, keep pace with
the evolving regulatory landscape
and balance the expectations
ofourstakeholders.
Transparency of reporting
Throughout 2023 we monitored
the rapid developments in ESG
legislation with great interest and
in particular we began to prepare
for the additional reporting that will
be required to comply with the EU
Corporate Sustainability Reporting
Directive, which will build upon and
extend the disclosures we have
been making pursuant to the EU
Non-Financial Reporting Directive
and the EU Taxonomy Regulation.
In addition, during 2023 the EU
Shareholders’ Rights Directive
II (SRD II) became applicable to
Subsea 7 S.A. for the first time, and
as such the 2024 AGM will be held
in compliance with SRD II. During
2024 we will continue to monitor
and prepare for legislative changes.
2023 was a productive year and, as
a Board, we focused on responsible
corporate governance that supports
the strategic goals of the Company,
meets the expectations of our
stakeholders and will make the
energy transition possible.
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.
Governance
Implementation and reporting
oncorporategovernance 62
Business 55
Equity and dividends 62
Equal treatment of shareholders and
transactions with close associates 63
Shares and negotiability 63
General meetings 62
Corporate Governance and Nominations
Committee 58
Board of Directors: composition
andindependence 55
Work of the Board of Directors 56
Risk management and internal control 57
Remuneration of the Board of Directors 70
Remuneration of executive personnel 69
Information and communications 64
Take-overs 64
Auditor 63
49
Subsea 7 S.A. Annual Report 2023
Strategic Report Governance Consolidated Financial Statements Subsea 7 S.A. Financial Statements Glossary
Director
Role
Kristian Siem*
Chairman
David Mullen
Senior Independent Director**
Eldar Sætre
Independent Director**
Niels Kirk
Independent Director**
Jean Cahuzac
Director
Louisa Siem
Director
Elisabeth Proust
VanHeeswijk
Independent Director**
Committee
membership
C T G G A A T
C G C T
A
Skills and
experience
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 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., NKT and
Norwegian Cruise Line. Heholds
a degree inBusiness Economics.
Mr Mullen brings over 40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.
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 of the company and creating
a more resilient global business.
Prior to becoming CEO, Mr Sætre
held several senior management
positions in the company, mainly
in the fields of accounting, finance
and performance management
as well as marketing and trading.
Mr Sætre has an MA in Business
Economics from the Norwegian
School of Economics and Business
Administration (NHH) in Bergen.
During his time at Equinor Mr Sætre
transitioned Equinor into a company
focused on lower-carbon strategies
and new energy solutions, and he
also holds an advisory role at Nysnø
Climate Investments, making him
ideally suited to provide the Board
with expertise on sustainability,
including climate-related matters.
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
holds an MBA in Finance
andInternational Business
from the Stern School at
NewYork University.
Mr Kirk’s extensive experience
of the energy sector overlaid
with his international corporate
and structured financial risk
management experience,
makes him well placed
to provide the Board with
expertise on risk including
cyber security.
Mr Cahuzac has wide
multicountry 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.
Ms Siem brings youth and
a different perspective to
the Board as an artist who
holds a Bachelor of Fine Arts
degree from the Ruskin School
of Art at Oxford University.
She has exhibited her work
internationally, working as a
multidisciplinary artist. She
focuses predominantly on video
and sculpture. 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 has a particular
interest in biodiversity and
has agreed to work with
Subsea7 management to
enhance her understanding
of the subject as the Board’s
focal point for biodiversity.
Ms Proust Van Heeswijk has
extensive multi-country experience
in the oil and gas sector at an
executive level after spending
more than 40 years at Total.
Withabackground in engineering,
she began her career as a drilling
engineer at ELF, becoming a
development engineering and
project management specialist,
which led to her appointment
asthe first female vice president
for development engineering for
Total worldwide. Her experience
at Total included senior leadership
positions as managing director
of Total’s affiliates in Indonesia,
Nigeria and the UK. Ms Proust Van
Heeswijk holds a Master’s degree
in Engineering/Hydrodynamics
from École Centrale de Nantes
and is a graduate of the French
Petroleum Institute in Paris.
While at Total, Ms Proust Van
Heeswijk was a member of the
Diversity Council and Ethics
Committee, which oversaw
human rights matters, and as
such she is well placed to provide
the Board with expertise on labour
practices and human rights.
Date of
appointment
Appointed Director and Chairman
of Subsea 7 S.A. from January
2011, upon the merger of Acergy
S.A. and Subsea 7 Inc. Mr Siem
was Chairman of Subsea 7 Inc.
from January 2002.
Appointed a Non-Executive
Independent Director from April
2018 and Senior Independent
Director from January 2021.
Appointed a Non-Executive
Independent Director from
June2021.
Appointed a Non-Executive
Independent Director from
April2018.
Appointed a Director from
May2008 (then named
AcergyS.A.).
Appointed a Non-Executive
Director from June 2021.
Appointed a Non-Executive
Independent Director on 18 April
2023. Ms Proust Van Heeswijk
previously served on the Board
ofDirectors between April 2019
andApril 2021.
Key external
appointments
Chairman of Siem Industries S.A.,
Director of Treveri S.à r.l., Siem
Offshore Inc., Siem Shipping Inc.
and Frupor S.A.
CEO and Director of Shelf Drilling
Limited. Chairman and Director
ofShelf Drilling North Sea Limited.
Director of Fjord Base Holding AS and
Trucknor AS. Chairman of the boards
of Strømberg Gruppen AS, Vartdal
Holding AS and Vartdal Plastindustri
AS. Chairman of the Advisory Board
of Vard Group AS and advisory role
atNysnø Climate Investments.
Co-founder and CEO
ofKirk,Lovegrove and
Company Ltd.
Member of the Supervisory
Board of Société Phocéenne
de Participations. Member
of the Board of Directors,
SeadrillLimited
Director of Siem Industries S.A.
Nationality and
date of birth
1949
1958
1956 1962 1954 1992 1957
Tenure
Elected by shareholders on
18 April 2023 until the 2025 AGM.
Re-elected by shareholders on 12 April
2022 until the 2024 AGM.
Re-elected by shareholders on 18 April
2023 until the 2025 AGM.
Re-elected by shareholders on
12 April 2022 until the 2024 AGM.
Re-elected by shareholders on
12 April 2022 until the 2024 AGM.
Re-elected by shareholders on
18 April 2023 until the 2025 AGM.
Re-elected by shareholders on
18 April 2023 until the 2025 AGM.
Governance continued
Board of Directors
* Kristian Siem is the permanent representative of Treveri S.à r.l. on the Board of Directors. Treveri S.à r.l. – a Luxembourg-incorporated company
wholly owned by Kristian Siem – was appointed Director and Chairman on 18 April 2023.
50
Subsea 7 S.A. Annual Report 2023
Director
Role
Kristian Siem*
Chairman
David Mullen
Senior Independent Director**
Eldar Sætre
Independent Director**
Niels Kirk
Independent Director**
Jean Cahuzac
Director
Louisa Siem
Director
Elisabeth Proust
VanHeeswijk
Independent Director**
Committee
membership
C T G G A A T
C G C T
A
Skills and
experience
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 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., NKT and
Norwegian Cruise Line. Heholds
a degree inBusiness Economics.
Mr Mullen brings over 40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.
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 of the company and creating
a more resilient global business.
Prior to becoming CEO, Mr Sætre
held several senior management
positions in the company, mainly
in the fields of accounting, finance
and performance management
as well as marketing and trading.
Mr Sætre has an MA in Business
Economics from the Norwegian
School of Economics and Business
Administration (NHH) in Bergen.
During his time at Equinor Mr Sætre
transitioned Equinor into a company
focused on lower-carbon strategies
and new energy solutions, and he
also holds an advisory role at Nysnø
Climate Investments, making him
ideally suited to provide the Board
with expertise on sustainability,
including climate-related matters.
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
holds an MBA in Finance
andInternational Business
from the Stern School at
NewYork University.
Mr Kirk’s extensive experience
of the energy sector overlaid
with his international corporate
and structured financial risk
management experience,
makes him well placed
to provide the Board with
expertise on risk including
cyber security.
Mr Cahuzac has wide
multicountry 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.
Ms Siem brings youth and
a different perspective to
the Board as an artist who
holds a Bachelor of Fine Arts
degree from the Ruskin School
of Art at Oxford University.
She has exhibited her work
internationally, working as a
multidisciplinary artist. She
focuses predominantly on video
and sculpture. 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 has a particular
interest in biodiversity and
has agreed to work with
Subsea7 management to
enhance her understanding
of the subject as the Board’s
focal point for biodiversity.
Ms Proust Van Heeswijk has
extensive multi-country experience
in the oil and gas sector at an
executive level after spending
more than 40 years at Total.
Withabackground in engineering,
she began her career as a drilling
engineer at ELF, becoming a
development engineering and
project management specialist,
which led to her appointment
asthe first female vice president
for development engineering for
Total worldwide. Her experience
at Total included senior leadership
positions as managing director
of Total’s affiliates in Indonesia,
Nigeria and the UK. Ms Proust Van
Heeswijk holds a Master’s degree
in Engineering/Hydrodynamics
from École Centrale de Nantes
and is a graduate of the French
Petroleum Institute in Paris.
While at Total, Ms Proust Van
Heeswijk was a member of the
Diversity Council and Ethics
Committee, which oversaw
human rights matters, and as
such she is well placed to provide
the Board with expertise on labour
practices and human rights.
Date of
appointment
Appointed Director and Chairman
of Subsea 7 S.A. from January
2011, upon the merger of Acergy
S.A. and Subsea 7 Inc. Mr Siem
was Chairman of Subsea 7 Inc.
from January 2002.
Appointed a Non-Executive
Independent Director from April
2018 and Senior Independent
Director from January 2021.
Appointed a Non-Executive
Independent Director from
June2021.
Appointed a Non-Executive
Independent Director from
April2018.
Appointed a Director from
May2008 (then named
AcergyS.A.).
Appointed a Non-Executive
Director from June 2021.
Appointed a Non-Executive
Independent Director on 18 April
2023. Ms Proust Van Heeswijk
previously served on the Board
ofDirectors between April 2019
andApril 2021.
Key external
appointments
Chairman of Siem Industries S.A.,
Director of Treveri S.à r.l., Siem
Offshore Inc., Siem Shipping Inc.
and Frupor S.A.
CEO and Director of Shelf Drilling
Limited. Chairman and Director
ofShelf Drilling North Sea Limited.
Director of Fjord Base Holding AS and
Trucknor AS. Chairman of the boards
of Strømberg Gruppen AS, Vartdal
Holding AS and Vartdal Plastindustri
AS. Chairman of the Advisory Board
of Vard Group AS and advisory role
atNysnø Climate Investments.
Co-founder and CEO
ofKirk,Lovegrove and
Company Ltd.
Member of the Supervisory
Board of Société Phocéenne
de Participations. Member
of the Board of Directors,
SeadrillLimited
Director of Siem Industries S.A.
Nationality and
date of birth
1949
1958
1956 1962 1954 1992 1957
Tenure
Elected by shareholders on
18 April 2023 until the 2025 AGM.
Re-elected by shareholders on 12 April
2022 until the 2024 AGM.
Re-elected by shareholders on 18 April
2023 until the 2025 AGM.
Re-elected by shareholders on
12 April 2022 until the 2024 AGM.
Re-elected by shareholders on
12 April 2022 until the 2024 AGM.
Re-elected by shareholders on
18 April 2023 until the 2025 AGM.
Re-elected by shareholders on
18 April 2023 until the 2025 AGM.
Chairman
C
Compensation Committee
G
Corporate Governance
and Nominations
Committee
A
Audit Committee
T
Tender Committee
Committee key
** ‘Independent’ is defined by the rules and codes of corporate governance of the Oslo Børs Stock Exchange 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.
51
Subsea 7 S.A. Annual Report 2023
Strategic Report Governance Consolidated Financial Statements Subsea 7 S.A. Financial Statements Glossary
Name
Role
John Evans
Chief Executive
Officer
Mark Foley
Chief Financial
Officer
Olivier Blaringhem
Executive Vice
President –Subsea
and Conventional
Phillip Simons
Executive Vice
President –Projects
and Operations
Nathalie Louys
General Counsel
Katherine Lyne
Executive Vice
President – Human
Resources
Marcelo Xavier
Executive Vice
President – Strategy
and Sustainability
Stuart Fitzgerald
Chief Executive Officer
– Seaway7
Skills and
experience
John has over 35 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 both
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Subsea7.
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 started his
career in 1996 with
the UK Government’s
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
Subsea7. In October
2021, he returned to
Subsea7 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 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 Subsea7
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 – Subsea
and Conventional
in January 2020.
Olivier has a degree
in Mechanical and
Electrical Engineering
from the École Spéciale
des Travaux Publics
inParis.
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 Subsea7
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 for 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.
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
Subsea7 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.
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
Subsea7 as Vice
President Group
Human Resources,
a role 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.
Marcelo began his
career in Subsea7 in
2001 as a pipeline
engineer and over the
last 20 years has held a
number of operational
and commercial roles
within the Subsea7
Group.
In 2017, Marcelo
was appointed Vice
President for Brazil after
three years working
for the Africa region. In
2021, he was appointed
Group Vice President
for Sales and Marketing
based in the UK.
Marcelo holds a
Master’s degree in
Subsea Engineering from
the Universidade Federal
do Rio de Janeiro. He
also holds a graduate
degree in Mechanical
Engineering from the
Universidade Federal
Fluminense in Brazil.
Stuart began his career
with a specialist marine
engineering consultancy,
progressing to Worley
Engineering in Australia
and Brunei. Stuart
joined Subsea7 in 1998
and held operating and
leadership positions
within engineering,
project management
and sales at a Norway
regional level until 2009,
when he was appointed
Vice President for
Norway. From 2014
to 2018 he held the
roles of Vice President
Sales and Marketing
and subsequently Vice
President Strategy and
Technology.
From 2018 Stuart
held executive level
positions in Subsea7
and was appointed
Chief Executive
Officer of Seaway7
inOctober2021.
Stuart has a Bachelor
ofEngineering degree in
Mechanical Engineering
and a Bachelor of
Science degree in
Applied Mathematics
from Monash University
in Melbourne, Australia.
Date of
appointment
John has been Chief
Executive Officer since
January2020.
Mark has been Chief
Financial Officer since
January2022.
Olivier has been
Executive Vice
President – Subsea
and Conventional since
January 2020.
Phil has been Executive
Vice President –
Projects and Operations
since January 2020.
Nathalie has been
General Counsel
since April2012.
Kate has been
Executive Vice
President – Human
Resources since
September 2019.
Marcelo has been
Executive Vice
President – Strategy
and Sustainability since
April 2022.
Stuart has been Chief
Executive Officer
of Seaway7 since
October2021, and
re-joined the Executive
Management Team in
July 2023.
Nationality
and date
of birth
1963 1973 1970 1966
1963
1969
1980 1969
Governance continued
Executive Management Team
52
Subsea 7 S.A. Annual Report 2023
Name
Role
John Evans
Chief Executive
Officer
Mark Foley
Chief Financial
Officer
Olivier Blaringhem
Executive Vice
President –Subsea
and Conventional
Phillip Simons
Executive Vice
President –Projects
and Operations
Nathalie Louys
General Counsel
Katherine Lyne
Executive Vice
President – Human
Resources
Marcelo Xavier
Executive Vice
President – Strategy
and Sustainability
Stuart Fitzgerald
Chief Executive Officer
– Seaway7
Skills and
experience
John has over 35 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 both
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Subsea7.
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 started his
career in 1996 with
the UK Government’s
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
Subsea7. In October
2021, he returned to
Subsea7 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 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 Subsea7
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 – Subsea
and Conventional
in January 2020.
Olivier has a degree
in Mechanical and
Electrical Engineering
from the École Spéciale
des Travaux Publics
inParis.
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 Subsea7
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 for 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.
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
Subsea7 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.
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
Subsea7 as Vice
President Group
Human Resources,
a role 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.
Marcelo began his
career in Subsea7 in
2001 as a pipeline
engineer and over the
last 20 years has held a
number of operational
and commercial roles
within the Subsea7
Group.
In 2017, Marcelo
was appointed Vice
President for Brazil after
three years working
for the Africa region. In
2021, he was appointed
Group Vice President
for Sales and Marketing
based in the UK.
Marcelo holds a
Master’s degree in
Subsea Engineering from
the Universidade Federal
do Rio de Janeiro. He
also holds a graduate
degree in Mechanical
Engineering from the
Universidade Federal
Fluminense in Brazil.
Stuart began his career
with a specialist marine
engineering consultancy,
progressing to Worley
Engineering in Australia
and Brunei. Stuart
joined Subsea7 in 1998
and held operating and
leadership positions
within engineering,
project management
and sales at a Norway
regional level until 2009,
when he was appointed
Vice President for
Norway. From 2014
to 2018 he held the
roles of Vice President
Sales and Marketing
and subsequently Vice
President Strategy and
Technology.
From 2018 Stuart
held executive level
positions in Subsea7
and was appointed
Chief Executive
Officer of Seaway7
inOctober2021.
Stuart has a Bachelor
ofEngineering degree in
Mechanical Engineering
and a Bachelor of
Science degree in
Applied Mathematics
from Monash University
in Melbourne, Australia.
Date of
appointment
John has been Chief
Executive Officer since
January2020.
Mark has been Chief
Financial Officer since
January2022.
Olivier has been
Executive Vice
President – Subsea
and Conventional since
January 2020.
Phil has been Executive
Vice President –
Projects and Operations
since January 2020.
Nathalie has been
General Counsel
since April2012.
Kate has been
Executive Vice
President – Human
Resources since
September 2019.
Marcelo has been
Executive Vice
President – Strategy
and Sustainability since
April 2022.
Stuart has been Chief
Executive Officer
of Seaway7 since
October2021, and
re-joined the Executive
Management Team in
July 2023.
Nationality
and date
of birth
1963 1973 1970 1966
1963
1969
1980
1969
53
Subsea 7 S.A. Annual Report 2023
Strategic Report Governance Consolidated Financial Statements Subsea 7 S.A. Financial Statements Glossary
Governance continued
2023 Corporate Governance Report
Regulatory compliance
Board of Directors
Kristian Siem
(representative of Treveri
S.à r.l.)
Chairman
David Mullen
Senior Independent Director
Eldar Sætre
Independent Director
Elisabeth Proust Van
Heeswijk
Independent Director
Niels Kirk
Independent Director
Jean Cahuzac
Director
Louisa Siem
Director
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.
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
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-1471 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.
54
Subsea 7 S.A. Annual Report 2023
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Subsea7’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
Subsea7 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 Seaway7 brand.
Further details of the Group’s
business units are outlined in the
‘Our Strategy’ and ‘Business Unit
Review’ sections on pages 10 to19.
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
2023, considered independent in
accordance with both 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 50 to 51.
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.
The Board of Directors has 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.
The Board Diversity Policy,
as referenced on page 48, 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 23.
The Board of Directors’ objective
is to have at least 30% female
representation on the Board, with
acommitment to have a minimum
of one female Director.
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.
Directors are elected by a
general meeting for a term not
exceeding two years and may be
re-elected. Directors need not be
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,
which 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 70.
55
Subsea 7 S.A. Annual Report 2023
Strategic Report Governance Consolidated Financial Statements Subsea 7 S.A. Financial Statements Glossary
The Board of Directors adheres
to the 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
and climate-related matters
into the Group’s business
processes.
Governance continued
Work of the Board of Directors
2023 Meeting attendance
Board
Audit
Committee*
Corporate
Governance and
Nominations
Committee*
Compensation
Committee
Kristian Siem** 9/9 4/4 4/4
David Mullen 8/9 6/6 4/4
Dod Fraser*** 2/2 1/1
Jean Cahuzac 9/9 4/4
Niels Kirk 9/9 4/4 4/4
Eldar Sætre 9/9 6/6
Louisa Siem 9/9
Elisabeth Proust Van Heeswijk*** 7/7 5/5
Total meetings in 2023*** 9 6 4 4
* A joint session of the Audit Committee and the Corporate Governance and Nominations Committee was held on 28 February 2023 at which all
members of both committees were present.
** Following the appointment of Treveri S.à r.l. at the AGM on 18 April 2023, Kristian Siem attended meetings in his capacity as the permanent
representative of Treveri S.à r.l.
*** Each Director’s attendance is shown as a proportion of the total number of meetings they were eligible to attend.
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. Setting the Remuneration Policy
for the Directors, including
the Non-Executive Directors’
fees, as well as the CEO’s
remuneration, and approving
the Remuneration Report as
proposed by the Compensation
Committee.
12. Setting and approving policies.
The Board of Directors’ Charter
isavailable on the Subsea7 website.
56
Subsea 7 S.A. Annual Report 2023
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 2024,
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
daily management and operations
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 52 to 53.
The Executive Management Team
has the collective duty to deliver
Subsea7’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 Committee,
a Compensation Committee, a
Tender 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 is
monitored and reviewed annually,
including an evaluation of its
composition 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. During 2023,
theevaluation of the performance
of the Board of Directors was
conducted internally and the results
of the evaluation were shared with
the Corporate Governance and
Nominations Committee. Themost
recent external review was
conducted in respect of the year
2021; accordingly, the next external
review is due at the end of 2024.
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
this system. 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, 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 risks 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
28 to 47. 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 bi-annually 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
and climate-related matters,
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 strategy in relation to
sustainability and climate-related
matters, and when defining the
objectives, strategies and risk
profiles for the Company’s business
activities, sustainability risks and
opportunities are considered.
Sustainability and climate-related
matters represent a permanent
feature on every routine 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.
57
Subsea 7 S.A. Annual Report 2023
Strategic Report Governance Consolidated Financial Statements Subsea 7 S.A. Financial Statements Glossary
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 the Non-
Executive 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 it believes
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 interest).
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.
Governance continued
Corporate Governance
and Nominations Committee
– 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
Subsea7’s compliance and
ethics programme. This includes
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 Subsea7 website.
Committee members
David Mullen
Committee Chairman
Kristian Siem
Niels Kirk
58
Subsea 7 S.A. Annual Report 2023
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 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 recommendations
with respect to the selection
and appointment of the
externalauditor.
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.
Audit Committee
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 Subsea7 website.
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 Eldar Sætre, whose
biography can be found on page
50. The Board of Directors has
determined that Mr Sætre 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.
Committee members
Eldar Sætre
Committee Chairman
David Mullen
Elisabeth Proust
VanHeeswjik
59
Subsea 7 S.A. Annual Report 2023
Strategic Report Governance Consolidated Financial Statements Subsea 7 S.A. Financial Statements Glossary
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. Reviewing the CEO’s
performance against objectives
and making a proposal to
the Board of Directors for the
CEO’s compensation based
onitsevaluation.
3. Overseeing the Company’s
remuneration plans in
accordance with the objectives
of the Company and making
recommendations to the
Boardof Directors.
4. Reviewing remuneration plans
and programmes and making
recommendations to the
Board of Directors regarding
existing executive officer’s
compensation plans, and
regarding the adoption of new
plans or programmes relating
toexecutive officers.
The Compensation Committee
is a committee of the Board
ofDirectors which has been
established to assist in
developing a fair compensation
programme for executive officers
and to ensure compliance
withlegal requirements as
tothe compensation of
executive officers.
Governance continued
Compensation Committee
5. Recommending to the Board
of Directors the terms of any
contractual agreements and
other similar arrangements
that may be entered into
with executive officers of the
Company and its subsidiaries.
6. Approving appointments of the
CEO, the CEO’s direct reports
and certain other roles.
7. Approving the Remuneration
Report to be included in
the Company’s Annual
Report and Consolidated
FinancialStatements.
8. Annually reviewing the
Compensation Committee’s
own performance.
The Compensation Committee
Charter is available on the
Subsea7website.
Committee members
Kristian Siem
Committee Chairman
Jean Cahuzac
Niels Kirk
60
Subsea 7 S.A. Annual Report 2023
Tender Committee
The Tender Committee’s main
responsibilities are:
1. Assessing tenders meeting
specific financial and risk criteria
as set by the Board.
2. Determining on behalf of the
Board of Directors whether
or not to authorise the CEO/
management to proceed
withsuch tenders, based
on asummary of the tender
provided by management
addressing key items including
margin, contingency, risk
assessment and cash flow.
The Tender Committee has
been established by the
Board to review tenders.
Dependent on the tender
value and complexity (such as
technology and partnering),
the Company has escalating
levels of approval requirements.
Tendersmeeting specific
financial and risk criteria must
be reviewed and approved by
the Tender Committee.
3. Calling for any further
information that it may require
from management in arriving at
a decision on proposed tenders.
4. Communicating the outcome
of each tender review
tomanagement as soon
asreasonably possible.
The Tender Committee Charter is
available on the Subsea7 website.
Committee members
Kristian Siem
Committee Chairman
Jean Cahuzac
Eldar Sætre
61
Subsea 7 S.A. Annual Report 2023
Strategic Report Governance Consolidated Financial Statements Subsea 7 S.A. Financial Statements Glossary
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 make
possible the global delivery
ofoffshore energy for today
andtomorrow.
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, 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 2024 it will
beheld on 2 May.
The notice of meeting and agenda
documents for the AGM are posted
on the Group’s website (and
published in such media as selected
by the Board of Directors and in the
Luxembourg official gazette (RESA))
at least 30 days prior to the meeting.
Documentation from previous AGMs
is available on the Subsea7 website.
All shareholders that are registered
with the Norwegian Central Securities
Depository System receive a written
notice of the AGM. The record date
for common shareholders will be 14
days before the AGM at midnight
(Luxembourg time), with a differing
deadline for American Depositary
Receipt (ADR) holders. Subject to the
procedures described in the Articles
of Incorporation, all shareholders
holding individually or collectively at
least 5% of the issued shares have
the right to add items to the agenda
of the AGM and draft resolutions for
items included or to be included in
the AGM. 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;
the forms 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
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 a majority
of the votes of those shareholders
who 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,
approve the Group’s Annual
Report and Consolidated Financial
Statements, discharge the Directors
from their duties for the financial
year, approve (by an advisory vote)
the Company’s Remuneration
Report and the Company’s
Remuneration Policy, 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.
Equity and dividends
Shareholders’ equity
Total shareholders’ equity on
31 December 2023 was $4.4 billion
(2022: $4.5 billion) which the Board
of Directors believes is satisfactory
given the Group’s strategy,
objectives and risk profile.
Dividend policy
It is Subsea7’s objective to give its
shareholders an attractive return on
their invested capital. The Group’s
commitment to returning capital
to shareholders is confirmed in
its formal Dividend policy to pay a
regular dividend of NOK 6.00 per
share each year. Dividends will
normally be paid in two instalments
in the month following the AGM,
and six months thereafter.
62
Subsea 7 S.A. Annual Report 2023
At the AGM on 2 May 2024
shareholders will be asked to
approve the payment of a dividend
of NOK 6.00 per share.
Equity mandates
At the extraordinary general
meeting held on 18 April 2023,
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 approximately
10% of the issued common shares
as of 17 March 2023) was granted
until 18 April 2025. 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 18 October
2025 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 5 May 2025. 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
approximately 10% of the issued
common shares as of 17 March
2023). These authorisations were
granted for a period of two years,
expiring on 5 May 2025, to reduce
inter alia the administrative burden
of convening an extraordinary
general meeting annually.
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 out 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 Charter of the Board of
Directors contains provisions on
how the Board of Directors and
executive management will handle
agreements between the Company
and related parties, and the Board
of Directors will, from time to
time, determine the necessity of
obtaining third-party valuations on
transactions between the Company
and related parties. Any material
transaction between the Company
and a related party shall be subject
to the prior approval of the Board
of Directors, unless entered into in
the ordinary course of business and
concluded on normal market terms,
in which case the Board of Directors
shall establish an internal procedure
to periodically assess whether
theseconditions are fulfilled.
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. Under Luxembourg
law, Directors may not vote on
transactions in which they have
a direct or indirect financial
interest conflicting with that
oftheCompany.
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.
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 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.
63
Subsea 7 S.A. Annual Report 2023
Strategic Report Governance Consolidated Financial Statements Subsea 7 S.A. Financial Statements Glossary
In 2022, a formal tender for a
five-year engagement for the role
of the Company’s external auditor
was conducted, and a contract
awarded. The external auditor’s
appointment will be approved
annually at the AGM.
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
(i.e.totalshares excluding shares
held in Treasury) of theCompany:
%
(a)
Siem Industries S.A. 23.6
Folketrygdfondet 8.2
a. Information is correct as of 31 December
2023.
Additionally, based upon
notifications submitted to the
Company, pursuant to Articles 8,
9, 12 or 12a of the Luxembourg
Transparency Law the following
shareholders hold more than 5%
ofthe voting rights in the Company:
%
Elliott Investment
Management L.P. 10.0
Société Générale S.A. 5.1
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 operational
and financial information available
onSubsea7’s website.
Governance continued
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 2023 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 2023 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.
Communication with stakeholders continued
Kristian Siem
Chairman
John Evans
Chief Executive Officer
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 Subsea7 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
Børs Code of Practicefor IR’, which
is available atwww.oslobors.no.
64
Subsea 7 S.A. Annual Report 2023
Letter from the Chairman of the
Compensation Committee
As Chairman of the Compensation
Committee, I am pleased to present
the Board’s report on Subsea7’s
Executive Officers’ remuneration,
as well as that of the Non-Executive
Directors of Subsea 7 S.A. for the
year ended 31 December 2023
(the 2023 Remuneration Report),
which will be submitted for advisory
vote to shareholders at the 2024
AGM. During 2023, in addition to
the remuneration report for the
financial year ended 31 December
2022, the Board approved Subsea
7 S.A. Directors’ remuneration
policy (the Remuneration Policy)
applicable to Executive Officers
and Non-Executive Directors of the
Company. At the 2023 AGM, the
Company’s shareholders approved
by an advisory vote both the 2022
Remuneration Report and the
Remuneration Policy. The intention
is for the Remuneration Policy
tobe effective for the years 2023,
2024, 2025 and 2026, if no material
changes are contemplated.
2023 Overview
2023 has seen continued high
levels of global recruitment, to
support the delivery of our strong
backlog, the significant increase
in tendering, and the securing of
specialist skills needed to diversify
into emerging energies. This is
made more challenging in the
current competitive employment
market, as the industry fights for
talent to deliver the opportunities
presented by the improving
subsea market and to support
global ambitions to achieve energy
transition goals.
The Annual Salary Review
conducted in 2023 recognised
inflation levels, ensured alignment
with the market and recognised
our people for their contributions
toSubsea7’s goals.
Remuneration Report
The Short Term Incentive Plan
2023 (STIP 2023) triggers for
payment were met with an Adjusted
EBITDA exceeding the threshold
of$700 million. A payout will be
made to all participants in 2024,
taking into account the achievement
of plan measures and individual
performance and contribution
tobusiness goals.
The Long Term Incentive Plan 2020
award (LTIP 2020) measured Total
Shareholder Return (TSR) against a
peer group, and Return on Average
Invested Capital (ROAIC) over a
performance period of three years
from 1 July 2020 to 30 June 2023.
The performance criteria of the
two measures were not met and,
asaresult, vesting did not occur.
In 2023, to continue to retain and
incentivise Subsea7’s leaders and
key employees, awards (LTIP 2023
Awards) were made under the
2022 Long Term Incentive Plan
(2022 LTIP Plan). LTIP 2023 Awards
were made to approximately 150
leaders and key employees to
incentivise and reward participants
over the long term for sustained
performance, delivery of the
business strategy and shareholder
value. The performance conditions
included those within the existing
plan: TSR, ROAIC and Cash
Conversion. LTIP 2023 Awards
were effective 1 October 2023 with
a three-year performance period
from 1 July 2023 to 30 June 2026
for all performance measures.
To attract and retain talent across
Subsea7, we continue to focus
on our employer brand of Being7,
which is the foundation of our
culture. In 2023 we refreshed
and relaunched Being7 around
the world both for our long-
serving talent, and to support
our new talent’s understanding
of our culture, of which we are
very proud. At Subsea7, we offer
our people a career they can be
proud of, an incredible journey
and an environment where they
can thrive. Our Being7 offer is
supported through our learning
and development, diversity and
inclusion (D&I) and health and
wellbeing strategies, with a regular
employee survey, allowing us to
understand where we need to focus
our efforts to improve Subsea7
asan employer.
In 2023, to support new talent
joining the Company, we focused
on our induction and onboarding
programmes, introducing a
new buddy system in many of
our countries. We continued to
encourage a culture of learning
through our annual Festival of
Learning which took place during
the month of October, with the 2023
theme being ‘Incredible Journey’.
We had record-breaking attendance
with 7,000 of our onshore and
offshore people taking part across
90 sessions.
In Q4 2023 we received the third
set of results from our employee
survey, which provided great insight
into what’s important to our people
and how we can continue to make
Subsea7 a great place to work.
Overall results for engagement,
diversity and inclusion and
wellbeing for onshore teams were
in line with or an improvement upon
our previous results. For offshore
teams our results had improved
across all three dimensions,
demonstrating the positive impact
of actions we’ve taken to respond
to the feedback received.
Remuneration arrangements for 2024
In relation to 2024, the structure
of remuneration arrangements will
be in line with that of 2023 and as
detailed in the Remuneration Policy.
As the market continues to grow
in 2024 and beyond, we expect
competition for talent to continue
and this will be taken into account
when considering the Annual Salary
Review in 2024.
65
Subsea 7 S.A. Annual Report 2023
Strategic Report Governance Consolidated Financial Statements Subsea 7 S.A. Financial Statements Glossary
Governance continued
Remuneration Report continued
The Company will continue
tooperate its annual Short Term
Incentive Plan with targets set
bythe Compensation Committee.
The current performance conditions
for Executive Officers will continue
to be based upon thefollowing
metrics and weightings: Financial
performance (45%), Project
performance (20%), Safety
performance (10%) and Personal
objectives (25%).
The Company will continue
tooperate its 2022 LTIP Plan
asapproved at the AGM in 2022.
The current performance conditions
for Executive Officers will continue
to be based upon the following
metrics: Total Shareholder Return,
Cash Conversion Ratio and Return
on Average Invested Capital.
The full details of 2023 remuneration
can be read in thebelow report.
On behalf of the Compensation
Committee and the Board of
Directors, we hope you find this
report clear andinformative.
2023 Remuneration
The Group’s Remuneration
Policyis set by the Compensation
Committee and is designed to
provide remuneration packages
which will help to attract, retain
and motivate our people 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 Officers’
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.
Remuneration is composed of
base salary, benefits, pension,
and short-term and long-term
incentives, further details of which
can be found in the Remuneration
Policy at www.subsea7.com.
Annual Salary Review
The Annual Salary Review is a key
annual process that allows the
Group to recognise our employees’
performance through an increase
to base salary in line with Group
performance and individual
contribution, with an understanding
of local market rates.
In the third quarter, we applied
a salary increase that reflected
general inflation, market conditions
and recognised our people for
their contributions to Subsea7’s
goals. As a result of the continued
competitive labour market, we
recognised increases in some
external local markets and
specialist functions, and performed
adjustments where appropriate.
The global offshore market
remainsvery competitive, with
offshore operational activity
increasing pressure on salaries.
This was recognised in the Annual
Salary Review applied to our
offshore populations.
In line with the Annual Salary
Review process, outlined in the
Remuneration Policy, along with
the approach taken in the wider
organisation, the CEO and CFO
received an increase to base salary
effective 1 July 2023. The base
salary adjustments were reviewed
and approved by the Compensation
Committee taking into account:
• the individual’s role, performance
and experience
• business performance, and
theexternal environment
• base salary increases across
theGroup
• base salary levels for comparable
roles at relevant, comparable
businesses.
The CEO was awarded a 4%
increase to base salary, resulting
ina new annual salary of $721,847.
The CFO was awarded a 4%
increase to base salary, resulting
ina new annual salary of $478,224.
Note: payments are made in GBP. The amounts
have been translated into USD using an average
exchange rate of 0.806819 for the year.
Benefits and pension
Benefits and pension awarded to
theCEO and CFO during 2023
were in accordance with the
Remuneration Policy. Benefits
included private healthcare,
lifeinsurance, personal accident
insurance and a car allowance,
along with the opportunity to
purchase additional flexible benefits.
66
Subsea 7 S.A. Annual Report 2023
The CEO received a cash allowance
in lieu of a pension contribution, in line
with the Company policy in the UK
on lifetime allowances, which is paid
less applicable employer national
insurance contributions. The CFO
received a cash allowance in lieu of
pension contributions, less applicable
employer national insurance
contributions, for four months during
2023. For the remaining eight months
the CFO participated in the UK
defined contribution pension plan.
Short Term Incentive Plan
The Group operates a Short Term
Incentive Plan (STIP), an annual
bonus scheme, with targets set
by the Compensation Committee.
Thecurrent performance objectives
for the CEO and CFO are based upon
the following metrics and weightings:
• Financial performance (45%)
• Project performance (20%)
• Safety performance (10%)
• Personal objectives (25%).
For the CEO and CFO, the
maximum bonus opportunity
inrespect of 2023 was 150% and
100% of base salary, respectively.
For the performance period from
1 January 2023 to 31 December
2023, the financial targets
were achieved whilst the safety
performance targets were not
achieved. The Compensation
Committee evaluated the Group’s
performance compared to STIP
2023 targets and recommended
approval of payment of the STIP 2023
bonuses, to the Board of Directors.
Based on the performance
outcome against STIP 2023
targets, the bonus for the CEO
was 81.0% of salary, resulting in a
payment of$561,960. For the CFO,
the bonus was 54.0% of salary,
resulting in a payment of $248,259.
Note: payments are made in GBP. The
amounts have been translated into USD using
an average exchange rate of 0.806819 for
the year.
Long Term Incentive Plan
The Group currently operates
aLong Term Incentive Plan (LTIP).
TheLTIP provides for conditional
share awards based upon
performance conditions over a
three-year performance period.
The 2018 Long Term Incentive Plan
(2018 LTIP Plan) was approved by
the Company’s shareholders at the
Annual General Meeting on 17 April
2018 and was valid for a period
up tofive years until 2023. Awards
under the 2018 LTIP Plan were made
in 2018, 2019, 2020 and 2021.
The 2022 LTIP Plan was approved
bythe Company’s shareholders at the
Annual General Meeting on 12 April
2022, superseding the 2018 LTIP Plan,
and is valid for a period of five years
until 2027. The principles of the plan
remained as previous years whereby
a conditional award of shares is made
that provides for share awards which
vest over a three- to five-year period
subject to performance measures.
A new measure of Cash Conversion
Ratio (CCR) has been added to the
plan and the percentage weighting of
each measure adjusted to reflect this.
The 2022 LTIP Plan has a five-year
term with awards being made
annually in October. The aggregate
number of shares which may be
granted in any calendar year is limited
to 0.5% of issued 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.
The total number of share awards
and shares granted to the CEO
and CFO are recommended by
the Compensation Committee for
approval by the Board of Directors.
The 2022 LTIP Plan is an essential
component of the Company’s reward
strategy and is designed to align the
interests of participants with those
of Subsea7’s shareholders; it also
enables participants to share in the
success of the Company.
The 2022 LTIP Plan provides for
conditional awards of shares based
upon performance conditions
measured over a performance
period of three years. Performance
conditions are based upon three
measures and weightings as
determined by the Compensation
Committee:
• Total Shareholder Return (65%)
• Cash Conversion Ratio (20%)
• Return on Average Invested
Capital (15%).
All three performance conditions
are determined over a three-year
period from 1 July in the year of
award to 30 June three years later.
Subject to the achievement of the
performance conditions, awards will
vest in equal tranches after three,
four and five years from award date.
Under the terms of the LTIP,
participants are not entitled
toreceive dividend-equivalent
payments during the performance
and holding periods. On
31 December 2023, there were
approximately 150 participants in
the active LTIP schemes (2018 LTIP
and 2022 LTIP Plans). Individual
award caps are in place such that
no participant may be granted
shares under the 2022 LTIP Plan
in a single calendar year that have
an aggregate fair market value
inexcess of 150%, in the case of
the CEO, CFO and other members
of the Executive Management
Team, and 100%, in the case of
other employees, of their annual
base salary at the date of the
award. Additionally, a holding
requirement for the CEO, CFO
andother members of the Executive
Management Team applies under
which they must hold 50% of all
awards that vest until they have built
up a shareholding with a market
value of 150% of their annual base
salary, and this must be maintained
throughout their tenure.
67
Subsea 7 S.A. Annual Report 2023
Strategic Report Governance Consolidated Financial Statements Subsea 7 S.A. Financial Statements Glossary
Governance continued
Remuneration Report continued
Total Shareholder Return based awards
The Company will have to achieve a Total Shareholder
Return (TSR) ranking above the median for any awards
to vest. If the ranked TSR position of Subsea7 during
the three-year performance period, as converted to
apercentage, is equal to 50%, 20% of the share award
will vest. If the ranked TSR position of the Company
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
vest if the Company achieved a ranked TSR position
equal to or greater than 90%.
The table below summarises the TSR performance
condition applicable to the 2022 LTIP Plan:
Performance
Vesting level
(% of total award)
<50% Below median 0%
=50% Median 20%
>50%
<90%
Between median
and upper decile
Linear interpolation
between 20% and
65%
≥90% Upper decile 65%
TSR will be measured relative to the following
peergroup:
• Aker Solutions ASA
• Baker Hughes Company
• Fugro N.V.
• Halliburton Company
• Oceaneering International Inc.
• Petrofac Limited
• Saipem S.p.A.
• Sapura Energy Berhad
• SBM Offshore N.V.
• Schlumberger Limited
• TechnipFMC plc
• Transocean Ltd.
• John Wood Group PLC
• Worley Limited
Cash Conversion Ratio based awards
The Cash Conversion Ratio (CCR) measures the
conversion of Adjusted EBITDA into a form of cash.
TheBoard believes this measure is an important
addition to the LTIP as it aligns with shareholder
interests in making sure the business converts
profitability into cash generated from our operations
in atimely manner. The Group can exert significant
influence in achieving this goal. Furthermore, it is clear
and predictable, and, as with the other two measures,
the elements of the calculation are readily identifiable
from the Group’s Financial Statements.
CCR is calculated for each of the three years of the
performance period on a quarterly basis and the table
below summarises the CCR performance condition
applicable to the 2022 LTIP Plan.
Performance
Vesting level
(% of total award)
Below 0.7 0%
0.7 5%
0.9 10%
1.1 or above 20%
Vesting will be calculated on a linear interpolation basis
between 0.7 and 0.9 and between 0.9 and 1.1.
Return on Average Invested Capital based awards
Return on Average Invested Capital (ROAIC)
is calculated for each of the three years of the
performance period on a quarterly basis. The table
below summarises the ROAIC performance condition
applicable to the 2022 LTIP Plan:
Performance
Vesting level
(% of total award)
Below 9% 0%
9% 2.167%
11% 6.5%
14% or above 15%
Vesting will be calculated on a linear interpolation basis
between 9% and 11% and between 11% and 14%.
Vesting of LTIP 2020 award
The performance conditions applicable to the share
awards granted in 2020 under the 2018 LTIP Plan
that were due to vest during 2023 were based upon
two measures: Total Shareholder Return and Return
on Average Invested Capital, with a weighting of 65%
and 35%, respectively. Subject to these performance
conditions the vested shares are transferred
toparticipants in equal tranches on the third, fourth
andfifth anniversaries of the award date.
68
Subsea 7 S.A. Annual Report 2023
The performance conditions for the vesting of the share
awards granted in 2020 under the 2018 LTIP Plan are
set out below. For LTIP 2020 awards, both performance
conditions were assessed over the three-year period,
and neither met the required threshold for vesting under
the plan rules, therefore did not vest.
LTIP
metric
% of
share
awards
under each
metric Range Result
% of
shares
under
metric
to vest
Shares
to vest
(max over
3 years)
TSR 65% 50%-100% 38.4%
(a)
– –
ROAIC 35%
9%-14%
(average %) (2.1)%
(b)
– –
Total 100% –
a. Subsea7 ranked 9
th
out of the 14 companies within the selected
peer group (below the median). This resulted in 0% vesting
fortheTSR portion.
b. The average over the three-year performance period was (2.1)%.
This resulted in 0% vesting for the ROAIC portion.
During 2023, in accordance with the terms of the 2018
LTIP Plan, shares totalling 272,496 were transferred
toparticipants.
The table below shows the number of vested share
awards transferred to the CEO and CFO during 2023:
John Evans
Chief Executive
Officer
Mark Foley
Chief Financial
Officer
Award year 2023 2022 2023 2022
2017 (2013
LTIP Plan) – 3,360 – –
2018 (2018
LTIP Plan) 9,568 9,287 – –
2019 (2018
LTIP Plan) 4,695 4,695 – –
2020 (2018
LTIP Plan) – – – –
Total 14,263 17, 342 – –
The numbers of vested share awards in the above table are gross,
andexclude the impact of income taxes and social security costs
borne by the employee.
Long Term Incentive Plan awards in 2023
Conditional share awards were made to approximately
150 leaders and key employees on 1 October 2023,
comprising 1,448,900 (2022: 1,391,000) shares under
the terms of the 2022 LTIP Plan.
60,000 shares were awarded to the CEO, equivalent
to117% of base salary.
38,000 shares were awarded to the CFO, equivalent
to112% of base salary.
Summary of 2023 Executive Officer remuneration
Total remuneration for the CEO and CFO in 2022 and
2023 was as follows:
John Evans
Chief Executive
Officer
Mark Foley
Chief Financial
Officer
For the year ended
(in $ thousands)
2023
31Dec
(a)(b)
2022
31Dec
(a)(b)
2023
31Dec
(a)(b)
2022
31Dec
(a)(b)
Base salary 708.0 656.1 469.0 446.3
Short-term
incentive
bonus
(c)
562.0 532.3 248.3 225.2
Other
short-term
remuneration
(d)
– – – 133.7
Taxable
benefits
(e)
20.0 19.9 15.5 15.5
Share-based
payments
(f)
189.2 159.7 – –
Cash in lieu of
pension
(g)
62.3 57. 3 13.7 23.1
Pension
contributions
made by
employer
(h)
– – 31.8 12.8
Total 1,541.5 1,425.3 778.3 856.6
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 2023 amounts have been translated
to USD using an average exchange rate of 0.806819 forthe year.
Theamount represents the cash paid in respect of the year.
c. Short-term incentive bonus in respect of performance during the year.
d. Other short-term remuneration represents amounts paid after
12 months’ service for forfeiture of award from previous employer.
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2018 Long Term Incentive Plan. The shares were transferred
whenthe participant met the service criteria associated with thePlan.
g. The CEO and CFO each 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.
69
Subsea 7 S.A. Annual Report 2023
Strategic Report Governance Consolidated Financial Statements Subsea 7 S.A. Financial Statements Glossary
Non-Executive Director fees
Details of fees payable to Non-Executive Directors
are set out below.
In 2023, following a review of the fees payable
to Non-Executive Directors, the fee structure was
amended in order to better align with market practice.
Name
Annual
fee ($)
Member
of Audit
Committee
(a)
Member
of other
committees
(b)
2023
31 Dec $
2022
31 Dec $
Kristian
Siem 200,000 – 15,000 215,000 200,000
Jean
Cahuzac 105,000 – 10,000 115,000 107,382
Dod
Fraser
(c)
30,450 4,060 – 34,510 119,000
Niels
Kirk 105,000 – 10,000 115,000 105,000
David
Mullen 125,000 6,000 5,000 136,000 111,000
Elisabeth
Proust
(c)
74,550 4,260 – 78,810 –
Eldar
Sætre 105,000 11,680 5,000 121,680 108,618
Louisa
Siem 105,000 – – 105,000 105,000
a. The Chair of the Audit Committee receives $14,000 per annum
andthe members receive $6,000 per annum.
b. Members of the Corporate Governance and Nominations
Committee, Compensation Committee and Tender Committee
receive $5,000 per annum, per committee. For details on the
members of the committees please refer to pages 50 and 51.
c. Dod Fraser’s mandate expired on 18 April 2023. Elisabeth Proust
Van Heeswijk was appointed as a Director with effect from
18 April 2023.
Share ownership of the Executive Management
Team and Non-Executive Directors
Details of total performance shares and shares held
inthe Company by the Executive Management Team
asat 31 December 2023 are shown in the table below.
Name
Total performance
shares
(a)
Total owned
shares
John Evans 174,836 108,937
Mark Foley 110,000 –
Olivier Blaringhem 110,822 27,019
Stuart Fitzgerald 110,822 36,119
Nathalie Louys 96,258 41,350
Kate Lyne 92,015 13,244
Phil Simons 110,419 16,968
Marcelo Xavier 79,451 5,592
a. Total performance shares held represent the maximum future
entitlement assuming all vesting conditions are met.
Details of shares held in the Company by the
Non-Executive Directors as at 31 December 2023
areshown in the table below.
Name
Total
owned shares
Kristian Siem
(a)
–
Jean Cahuzac 198,131
Niels Kirk –
David Mullen 15,000
Elisabeth Proust Van Heeswijk 830
Eldar Sætre 7,000
Louisa Siem –
a. At 31 December 2023, Siem Industries S.A., which is a company
controlled by Mr Siem, owned 70,829,916 shares, representing
23.3% of the total common shares of the Company.
The Directors are encouraged to own shares in the
Company but no longer participate in any incentive
orshare option schemes.
Governance continued
Remuneration Report continued
70
Subsea 7 S.A. Annual Report 2023
Financial Review
Management Report for Subsea7
Group (the Group) 72
Management Report for Subsea 7 S.A.
(the Company) 78
Financial Review
71
Subsea 7 S.A. Annual Report 2023
Strategic Report Subsea 7 S.A. Financial Statements GlossaryGovernance Consolidated Financial Statements
72
Financial Review continued
Subsea 7 S.A. Annual Report 2023
Management Report for Subsea7 Group (the Group)
Financial highlights
At a glance
• At least $1 billion of shareholder returns over four years through a combination of dividends and share repurchases
• Adjusted EBITDA of $714 million, up 28% year-on-year, equating to a margin of 12%
• Order intake of $7.4 billion resulted in a book-to-bill of 1.2 times and continued backlog growth to $10.6 billion
• Full year 2024 guidance: Adjusted EBITDA expected to be within a range from $950 million to $1.0 billion
(a) For explanations and reconciliations of Adjusted EBITDA, Adjusted EBITDA margin, Backlog, Book-to-bill ratio and Net (debt)/cash refer to the ‘Alternative Performance Measures’ section on
page 148.
(b) For the explanation and a reconciliation of diluted earnings per share refer to Note 11 ‘Earnings per share’ to the Consolidated Financial Statements.
2023 Summary
The Group delivered solid results as the upcycles in the subsea and offshore wind industries gathered pace. Revenue and Adjusted
EBITDA in the Subsea and Conventional business unit increased significantly driven by the shift in mix towards projects awarded in a
more favourable commercial environment. Revenue in the Renewables business unit reduced year-on-year due to the phasing of a
major project in the UK, however improved contractual risk allocation and a further, stronger focus on project execution resulted in
the business delivering a double-digit Adjusted EBITDA margin.
The Group recorded order intake of over $7 billion, which equated to a book-to-bill of 1.2 times. Order intake was the highest since
2013, resulting in a backlog of over $10 billion at year end.
In 2023, revenue was $6 billion, net operating income was $105 million and Adjusted EBITDA was $714 million, driven by higher
revenues and margin expansion within the Subsea and Conventional business unit, and an improvement in margins to a double-digit
level in the Renewables business unit. After taxation of $70 million, equating to an effective tax rate of 88%, net income was $10 million
in 2023.
Net cash generated from operating activities was $660 million and free cash flow was $79 million after capital expenditure of
$581 million, mainly related to the newbuild Renewables vessels. At 31 December 2023, the Group held cash and cash equivalents
of $751 million and net debt including lease liabilities was $552 million. At year end the Group had liquidity of around $1.6 billion with
approximately $860 million of undrawn borrowing facilities.
In October, the Group acquired a 10% share in OneSubsea, one of the world’s leading subsea technology and solutions providers, for a
consideration of $307 million with 50% due to be settled in 2024. OneSubsea and Subsea7 are partners in Subsea Integration Alliance,
which executes fully integrated subsea projects.
During the year the Company paid dividends of $112 million, equivalent to NOK 4.00 per share.
Net impairment charges recognised were $71 million, mainly relating to i) Seaway Alfa Lift monopile installation equipment, owing to a
contractual dispute in relation to which Subsea7 intends to use all legal resources available to reach a satisfactory outcome, and ii) loss
on vessels prior to disposal. These were partly offset by impairment reversals of $26 million.
Commitment to shareholder returns
Reflecting its confidence in the outlook and the expected financial performance of Subsea7, the Board of Directors proposes that the
Company returns at least $1 billion to shareholders over four years, from 2024 to 2027. At the Annual General Meeting on 2 May 2024,
the Board of Directors will propose that shareholders approve a cash dividend of NOK 6.00 per share, equating to approximately $170
million, payable in two equal instalments in May and November 2024. The Company’s dividend policy will be revised to reflect an
increase in the regular dividend to NOK 6.00 from NOK 1.00 per share to be paid in two equal instalments.
The Company has also committed to repurchase approximately $80 million of its own shares in 2024, resulting in shareholder returns of
approximately $250 million.
In $ millions, except Adjusted EBITDA margin and per share data
2023
31 Dec
2022
31 Dec
Revenue 5,974 5,136
A
djusted EBITDA
(a)
714 559
A
djusted EBITDA margin
(a)
12% 11%
Net operating income 105 149
Net income 10 36
Earnings per share – in $ per share
Basic 0.05 0.20
Diluted
(b)
0.05 0.19
A
t (in $ millions)
2023
31 Dec
2022
31 Dec
Backlog
(a)
10,587 9,008
Book-to-bill ratio
(a)
1.2x 1.4x
Cash and cash equivalents 751 646
Borrowings (845) (356)
Net (debt)/cash excluding lease liabilities
(a)
(94) 290
Net (debt)/cash including lease liabilities
(a)
(552) 33
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Subsea 7 S.A. Annual Report 2023
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Subsea 7 S.A. Annual Report 2023
Outlook
Management anticipates that revenue in 2024 will be between $6.0 billion and $6.5 billion, while Adjusted EBITDA is expected to be
within a range from $950 million to $1.0 billion. Management’s expectation for capital expenditure in 2024 is $300-320 million. As the
mix of activity continues to shift to projects won in a favourable environment, the Adjusted EBITDA margin is expected to be within an
18-20% range in full year 2025.
Longer term, management continue to see a positive outlook for demand for the Subsea and Conventional business, supported by
a tender pipeline of $21 billion. As a source of reliable energy, the hydrocarbon industry is likely to remain a key contributor to global
production under plausible ranges of energy transition scenarios. Management is confident that a focus on the deepwater subsea
market, with attractive economics, will enable the Group to maximise the return on the significant historical investments made in
the Group’s modern subsea fleet.
In Renewables, project delays and cancellations in 2023 put many countries’ clean energy ambitions under pressure and prompted a
swift response in countries such as the UK and US, with positive indications for the Group’s tender pipeline in 2024. While the growth
trajectory for the offshore wind market may not be smooth it is certainly clear that long-term demand is set to significantly exceed the
current fleet capacity of the industry. With a strong focus on achieving an equitable risk-return balance, management believes the
Group’s offshore wind business will deliver sustainable value creation for shareholders.
Income statement
Revenue
Revenue for the year ended 31 December 2023 was $6.0 billion, an increase of $838 million or 16% compared to the prior year. The
increase was due to significantly increased activity in the Subsea and Conventional business unit which reflected increased demand for
the Group’s services in the offshore oil and gas sector, partly offset by lower revenue in the Renewables business unit due to the
phasing of a large fixed-price project in the UK.
Adjusted EBITDA
Adjusted EBITDA was $714 million resulting in an Adjusted EBITDA margin of 12%, an increase of $155 million or 28% compared to the
year ended 31 December 2022. The increase was driven by higher Adjusted EBITDA in both the Subsea and Conventional business
unit, with the execution of projects awarded at improved margins, and double-digit Adjusted EBITDA margin in the Renewables
business unit where the prior year was adversely impacted by additional costs incurred on certain projects.
Net operating income
Net operating income was $105 million for the year ended 31 December 2023 compared to $149 million in 2022.
Net operating income was driven by:
• net operating income of $196 million in the Subsea and Conventional business unit, compared to $229 million in the prior year, which
benefitted from a $54 million non-cash net impairment reversal
partly offset by:
• net operating loss of $74 million in the Renewables business unit, which included a non-cash impairment charge of $73 million
mainly related to Seaway Alfa Lift’s monopile installation equipment, owing to a contractual dispute, and a non-core vessel which
was disposed in early 2024, compared to net operating loss of $85 million in 2022, with the prior year being impacted by costs
incurred on certain projects; and
• net operating loss of $18 million in the Corporate business unit compared to net operating income of $5 million in the prior year.
Net income
Net income was $10 million for the year ended 31 December 2023, compared to net income of $36 million in 2022.
The movement was primarily due to:
• an decrease of $44 million in net operating income;
• finance costs of $71 million in 2023 compared to $23 million in the prior year. The year-on-year increase was driven by expected
higher borrowings and higher interest rates in 2023 compared to 2022
partly offset by:
• finance income of $25 million compared to finance income of $9 million in the prior year driven by higher interest rates; and
• a net gain of $20 million driven by foreign exchange gains, within other gains and losses, compared to a net loss of $7 million in the
prior year.
Taxation was $70 million, representing an effective tax rate of 88%, compared to $100 million in 2022, equivalent to an effective tax rate
of 73%.
Earnings per share
Diluted earnings per share was $0.05 compared to $0.19 in 2022, calculated using a weighted average number of shares of 299 and
293 million, respectively.
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Subsea 7 S.A. Annual Report 2023
Business unit highlights
For the year ended 31 December 2023
(in $ millions)
Subsea and
Conventional
Renewables Corporate Total
Revenue
Fixed-price contracts 4,171.1 951.6 16.7 5,139.4
Day-rate contracts 748.0 3.5 82.8 834.3
4,919.1 955.1 99.5 5,973.7
Net operating income/(loss) 196.2 (73.9) (17.6) 104.7
Finance income 25.2
Other gains and losses 21.3
Finance costs (71.2)
Income before taxes 80.0
A
djusted EBITDA
(a)
612.4 102.5 (0.5) 714.4
A
djusted EBITDA margin
(a)
12.4% 10.7% (0.5%) 12.0%
(a) Adjusted EBITDA and Adjusted EBITDA margin are non-IFRS measures. For explanations and reconciliations of Adjusted EBITDA and Adjusted EBITDA margin refer to the ‘Alternative
Performance Measures’ section on page 148.
For the year ended 31 December 2022
(in $ millions)
Subsea and
Conventional Renewables Corporate Total
Revenue
Fixed-price contracts 3,210.3 1,093.0 38.7 4,342.0
Day-rate contracts 693.0 23.9 76.9 793.8
3,903.3 1,116.9 115.6 5,135.8
Net operating income/(loss) 229.2 (85.3) 4.9 148.8
Finance income 9.0
Other gains and losses 1.9
Finance costs (23.4)
Income before taxes 136.3
A
djusted EBITDA
(a)
531.6 4.8 23.0 559.4
A
djusted EBITDA margin
(a)
13.6% 0.4% 19.9% 10.9%
(a) Adjusted EBITDA and Adjusted EBITDA margin are non-IFRS measures. For explanations and reconciliations of Adjusted EBITDA and Adjusted EBITDA margin refer to the ‘Alternative
Performance Measures’ section on page 148.
Subsea and Conventional
Revenue in the year ended 31 December 2023 was $4.9 billion, an increase of $1.0 billion or 26% compared to the prior year.
The year-on-year increase reflected a strong demand for the Group’s services within the offshore oil and gas sector with high
activity levels in Brazil in particular.
During the year Sakarya Phase 1 (Türkiye) was substantially completed. Work progressed on Sangomar (Senegal); Sanha Lean Gas
and CLOV 3 (Angola); Marjan 2 (Saudi Arabia); and Skarv Satellites and Yggdrasil (Norway).
In Brazil, there were high levels of utilisation of the PLSVs and work progressed on Bacalhau, Mero 3&4 and Búzios 8. Net operating
income was $196 million compared to $229 million in the prior year which benefitted from a $54 million non-cash net impairment
reversal.
Renewables
Revenue was $955 million compared to $1.1 billion in the prior year. During the year, Hollandse Kust Zuid and Seagreen, in the
Netherlands and UK respectively, were completed. Work progressed on Dogger Bank A&B (UK).
Net operating loss was $74 million compared to net operating loss of $85 million in the prior year, which reflected costs incurred on
certain projects. In 2023, non-cash impairment charges of $73 million were recognised mainly related to Seaway Alfa Lift’s monopile
installation equipment, owing to a contractual dispute, and a non-core vessel which was disposed in early 2024.
Corporate
Revenue, which was mainly driven by the Group’s autonomous wholly-owned subsidiaries Xodus and 4Subsea and the Group’s floating
wind activities, was $100 million, a decrease of $16 million compared to the prior year.
Net operating loss was $18 million compared to net operating income of $5 million in the prior year.
Vessel utilisation and fleet
Vessel utilisation in 2023 was 77% compared with 78% in 2022.
At 31 December 2023 there were 38 vessels in the Group’s fleet, including ten chartered vessels, with 37 active vessels and one vessel
under construction.
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Subsea 7 S.A. Annual Report 2023
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Subsea 7 S.A. Annual Report 2023
Backlog
At 31 December 2023 backlog was $10.6 billion compared to $9.0 billion at 31 December 2022. Order intake was $7.4 billion
representing a book-to-bill ratio of 1.2 times. Order intake included new awards of $4.8 billion, escalations of $2.6 billion and a
favourable foreign exchange impact of approximately $100 million.
$8.6 billion of the backlog at 31 December 2023 related to the Subsea and Conventional business unit (which included $0.3 billion
related to long-term day-rate contracts for PLSVs in Brazil) and $2.0 billion related to the Renewables business unit. $5.7 billion of the
backlog is expected to be executed in 2024, $3.8 billion in 2025 and $1.1 billion in 2026 and thereafter. Backlog related to associates
and joint ventures is excluded from these amounts.
Cash flow
Cash flow statement
Cash and cash equivalents were $751 million at 31 December 2023, an increase of $105 million in the year. The increase was mainly
attributable to:
• net cash generated from operating activities of $660 million, which included a favourable movement in net working capital of $4
million; and
• net cash generated from financing activities of $151 million, which included:
• $300 million drawn under the 2021 UK Export Finance facility and $292 million drawn under the 2023 UK Export Finance facility,
partly offset by;
• scheduled repayments of borrowings of $100 million, related to the 2021 UK Export Finance facility and South Korean Export
Credit Agency (ECA) facility;
• payments related to lease liabilities of $165 million; and
• dividends paid to shareholders of $112 million
partly offset by:
• net cash used in investing activities of $710 million, which included the first instalment of the Group’s 10% investment in OneSubsea
of $153 million and purchases of property, plant and equipment and intangible assets of $581 million, mainly related to the newbuild
vessels Seaway Alfa Lift and Seaway Ventus.
Free cash flow
During the year, the Group generated free cash flow of $79 million (2022: $255 million) which is defined as cash generated from
operating activities of $660 million (2022: $486 million) less purchases of property, plant and equipment and intangible assets of
$581 million (2022: $231 million).
Balance sheet
Non-current assets
At 31 December 2023, non-current assets were $5.2 billion (31 December 2022: $4.5 billion). The movement of $708 million was
largely driven by an increase in interests in associates and joint ventures of $317 million, mainly related to the Group’s acquisition of a
10% ownership interest in OneSubsea, an increase in right-of-use assets of $177 million, mainly related to four long-term vessel leases
with associated options, and an increase in property, plant and equipment of $148 million.
Non-current liabilities
At 31 December 2023, total non-current liabilities were $1.1 billion (31 December 2022: $609 million). The increase of $513 million was
largely driven by:
• drawdowns of $300 million under the 2021 UK Export Finance facility and $292 million under the 2023 UK Export Finance facility, of
which $532 million was recognised as non-current liabilities;
• increase of $129 million in lease liabilities
partly offset by:
• $110 million reclassified to current borrowings in line with repayment schedules.
Net current assets
At 31 December 2023, current assets were $2.9 billion (31 December 2022: $2.4 billion) and current liabilities were $2.6 billion
(31 December 2022: $1.9 billion), resulting in net current assets of $249 million (31 December 2022: $537 million). The decrease of
$288 million in the year was largely driven by:
• increase in trade and other liabilities of $414 million;
• increase in borrowings of $70 million mainly driven by the drawdown of $300 million under the 2021 UK Export Finance facility,
of which $60 million was recognised as current liabilities;
• increase in construction contracts liabilities of $105 million; and
• decrease in construction contracts assets of $116 million
partly offset by:
• increase in trade and other receivables of $336 million; and
• increase in cash and cash equivalents of $105 million.
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Subsea 7 S.A. Annual Report 2023
Equity
At 31 December 2023, total equity was $4.4 billion (31 December 2022: $4.5 billion). The decrease of $94 million in the year was driven
by dividends paid of $112 million partly offset by net foreign currency translation gains of $22 million and net income of $10 million.
Borrowings, lease liabilities, net cash/(debt) and liquidity
Borrowings
At 31 December 2023, total borrowings were $845 million (31 December 2022: $356 million). The increase of $489 million was mainly
driven by drawdowns of $300 million under the 2021 UK Export Finance facility and $292 million under the 2023 UK Export Finance
facility. During the year, the Group borrowed and fully repaid $469 million from the multi-currency revolving credit and guarantee facility.
The increase in the Group’s total borrowings was partly offset by scheduled repayments.
A summary of the borrowing facilities available at 31 December 2023 is as follows:
(in $ millions) Total facility Drawn
(a)
Undrawn Maturity date
Multi-currency revolving credit and guarantee facility 700.0 – 700.0 June 2028
(b)
2021 UK Export Finance (UKEF 2021) facility 425.0 (425.0) – February 2028
2023 UK Export Finance (UKEF 2023) facility 450.0 (292.4) 157.6 July 2030
South Korean Export Credit Agency (ECA) facility 135.2 (135.2) – January 2027
(c)
Total 1,710.2 (852.6) 857.6
(a) Borrowings presented in the Consolidated Balance Sheet are shown net of capitalised fees of $8.0 million, which are amortised over the period of the facility.
(b) The Group’s multi-currency revolving credit and guarantee facility will mature in June 2028. The facility size will reduce from $700 million to $600 million in June 2027 until maturity in
June 2028.
(c) 90% of the facility is provided by an Export Credit Agency (ECA) and 10% by commercial banks. The maturity of the ECA tranche is January 2029 and the maturity of the commercial tranche
is January 2027.
Lease liabilities
At 31 December 2023, lease liabilities were $458 million, an increase of $201 million compared with 31 December 2022. The increase
was mainly driven by leases, including options, related to vessels on long-term charters.
Net cash/(debt)
At 31 December 2023:
• net debt (excluding lease liabilities) was $94 million compared to net cash of $290 million at 31 December 2022; and
• net debt (including lease liabilities) was $552 million, compared to net cash of $33 million at 31 December 2022.
Gearing
At 31 December 2023, gross gearing (borrowings divided by total equity) was 19.4% (31 December 2022: 8.0%).
Liquidity
At 31 December 2023, the Group’s liquidity, represented by cash and cash equivalents and undrawn borrowing facilities, was $1.6 billion
(31 December 2022: $1.6 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 Adjusted EBITDA. During the year, all financial covenants were met. The Group expects to be able to comply with all
financial covenants during 2024.
Shareholder distributions
Share repurchase programme
During the year ended 31 December 2023, there were no shares repurchased under the Group’s $200 million share repurchase
programme authorised by the Board of Directors on 24 July 2019 (2022: 5.6 million shares for a total consideration of $46.0 million).
On 19 April 2023, the Board of Directors authorised a 24-month extension to this programme, which will now expire on 18 April 2025.
At 31 December 2023, the Group had cumulatively repurchased 10.0 million shares for a total consideration of $76.8 million under
this programme.
During 2023, the Group cancelled 5.7 million shares in accordance with the authority granted to the Board on 14 April 2021.
At 31 December 2023, the Group directly held 3.8 million shares (31 December 2022: 9.8 million) as treasury shares, representing
1.26% (31 December 2022: 3.26%) of the total number of issued shares.
Dividends
A dividend of NOK 4.00 per share was approved by the shareholders of Subsea 7 S.A. at the Annual General Meeting on 18 April 2023
and recognised in shareholders’ equity in April 2023. The dividend, equivalent to a total of $112 million, was paid on 28 April 2023 to
shareholders of Subsea 7 S.A. at date of record of 21 April 2023.
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Subsea 7 S.A. Annual Report 2023
Shareholders
The 20 largest shareholders of the Company, and their beneficial ownership
(a)
as a percentage of the total fully paid and issued common
shares, at 31 December were:
2023 2022
A
t % %
Siem Industries S.A. 23.3 23.4
Folketrygdfondet 8.1 7.7
Elliott Management Corporation 4.5 –
BlackRock Institutional Trust Company, N.A. 3.7 4.0
Storebrand Kapitalforvaltning AS 2.5 2.3
DNB Asset Management AS 2.5 2.2
The Vanguard Group, Inc. 2.2 2.1
KLP Fondsforvaltning AS 2.1 1.9
Pareto Asset Management AS 2.1 1.8
Songa Capital AS 1.9 –
SAFE Investment Company Limited 1.9 1.9
A
lfred Berg Kapitalforvaltning AS 1.7 1.3
ODIN Forvaltning AS 1.6 1.6
Robotti & Company Advisors, LLC 1.2 1.6
A
rtisan Partners Limited Partnership 1.2 1.3
Lupus alpha Asset Management AG 1.1 –
Key Group Holdings (Cayman), Ltd. 1.1 0.4
Capital Research Global Investors 1.0 1.5
A
mundi Asset Management, SAS 0.9 0.6
Metzler Asset Management GmbH 0.9 0.5
Total 65.5 56.1
(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 Subsea7 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 Subsea7 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 Group’s forecast cash flows, the committed borrowing facilities in place, and the
backlog position at 31 December 2023.
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
28 to 70. Financial risk management is as described in Note 33 ‘Financial instruments’.
Events after the reporting period
Dividends and share repurchases
At the Annual General Meeting on 2 May 2024, the Board of Directors will propose that shareholders approve a cash dividend of
NOK 6.00 per share, equating to approximately $170 million, payable in two equal instalments in May and November 2024. The
Company has also committed to repurchase approximately $80 million of its own shares in 2024, resulting in shareholder returns
of approximately $250 million.
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Financial Review continued
Subsea 7 S.A. Annual Report 2023
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
pages 160 to 167. These were prepared in accordance with Luxembourg’s legal and regulatory requirements and using the going
concern basis of accounting.
The profit for the year ended 31 December 2023 was $361.0 million (2022: profit of $7.7 million). The profit was mainly driven by
income derived from participating interests in affiliated undertakings of $400.0 million and the reversal of a value adjustment of
$8.7 million, mainly related to investments in affiliated undertakings, partly offset by operating expenses of $52.7 million and interest
costs of $7.0 million. It is proposed that the profit of $361.0 million for the year ended 31 December 2023 be allocated to profit and
loss brought forward at 1 January 2024 resulting in a profit to be brought forward amounting to $459.4 million.
Own shares held
During 2023, the Company cancelled 5.7 million shares in accordance with the authority granted to the Board on 14 April 2021.
At 31 December 2023, the Company directly held 3.8 million (2022: 9.8 million) own shares at a carrying amount of $31.1 million
(2022: $75.0 million).
Distributable amounts
At 31 December 2023, the Company had distributable amounts, as defined by Luxembourg law, totalling $1,156.5 million
(2022: $787.8 million). Distributable amounts include share premium account, profit and loss account brought forward and profit or
loss for the year. The year-on-year increase was mainly due to income from participating interests related to affiliated undertakings of
$400.0 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 Subsea7 Group and is detailed in the Risk Management and Governance sections on pages 28 to 70. Financial risk management
is described in Note 33 ‘Financial instruments’. Non-financial information required by regulation is provided on pages 1 to 70.
By order of the Board of Directors of Subsea 7 S.A.
Kristian Siem
Chairman
John Evans
Chief Executive Officer
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Subsea 7 S.A.
Consolidated
Financial
Statements
for year ended
31 December 2023
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Subsea 7 S.A. Annual Report 2023
Page
Report of the Réviseur d’Entreprises Agréé 81
Consolidated Income Statement 87
Consolidated Statement of Comprehensive Income 88
Consolidated Balance Sheet 89
Consolidated Statement of Changes in Equity 90
Consolidated Cash Flow Statement
92
Notes to the Consolidated Financial Statements
Page
1. General information 93
2. Adoption of new accounting standards 94
3. Material accounting policies 95
4. Critical accounting judgements and key sources
of estimation uncertainty
102
5. Segment information 103
6. Net operating income 106
7. Other gains and losses 107
8. Finance income and finance costs 107
9. Taxation 108
10. Dividends 111
11. Earnings per share 111
12. Goodwill 112
13. Intangible assets 114
14. Property, plant and equipment 115
15. Right-of-use assets 116
16. Interests in associates and joint arrangements 117
17. Advances and receivables 119
18. Inventories 119
19. Trade and other receivables 119
20. Assets classified as held for sale 120
21. Other accrued income and prepaid expenses 120
22. Construction contracts 120
23. Cash and cash equivalents 122
24. Issued share capital 122
25. Treasury shares 122
26. Non-controlling interests 123
27. Borrowings 123
28. Lease liabilities 124
29. Other non-current liabilities 125
30. Trade and other liabilities 125
31. Provisions 125
32. Commitments and contingent liabilities 126
33. Financial instruments 127
34. Related party transactions 141
35. Share-based payments 142
36. Retirement benefit obligations 142
37. Deferred revenue 144
38. Events after the reporting period 144
39. Wholly-owned subsidiaries 145
A
dditional information – APMs 148
A
dditional information – EU Taxonomy Disclosure 152
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Report of the Réviseur d’Entreprises Agréé
Subsea 7 S.A. Annual Report 2023
To the Shareholders of Subsea 7 S.A.
412F, route d’Esch
L-1471 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 pages
87 to 147, which comprise the Consolidated Balance Sheet as at 31 December 2023, 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 material
accounting policies.
In our opinion, the accompanying Consolidated Financial Statements give a true and fair view of the consolidated financial position of
the Group as at 31 December 2023, 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 (“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 as adopted
for Luxembourg by the CSSF 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 International
Code of Ethics for Professional Accountants, including 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 year. 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 S.A. Annual Report 2023
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 is derived from long-term contracts. As detailed in
Note 3 ‘Material 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 variable consideration, to recognise in line with
contract completion;
• assess whether contract modifications should be accounted for as a new contract or as part of the
existing contract;
• 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 risks of material misstatement are that the accounting for the Group’s significant contracts does not
accurately reflect the progress made or consider all commercial and technical risks associated with the
contract due to inaccurate estimation, inappropriate recognition of unagreed income, or management
override of results. Consequent to this the contract revenue and margin at the reporting date would be
materially incorrect.
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, 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 contracts and those which are subject to estimation uncertainty, we:
• obtained the PMSR and gained an understanding of the performance and project status;
• corroborated management’s positions through the examination of externally generated evidence, such as
customer correspondence and correspondence with legal advisors;
• discussed and understood management’s estimates for total contract costs and forecast costs-to-
complete, considering the impact of cost inflation, and taking into account the historical accuracy
of such estimates;
• discussed and understood management’s estimates in recognising actual or potential variation
orders/unagreed income, taking into account the historical accuracy of such estimates;
• audited management’s assessment of and accounting treatment for contract modifications;
• tested the reconciliation of cost models to the PMSR and to the accounting records;
• re-performed the percentage of completion calculation;
• considered whether provisions for onerous contracts reflect the contractual position and the requirements of
IAS 37 ‘Provisions, Contingent Liabilities and Contingent Assets’; and
• for day rate/reimbursable contracts tested for appropriate cut off.
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 ‘Material accounting policies’ and Note 5 ‘Segment
information’ to the Consolidated Financial Statements in relation to revenue.
82
Subsea 7 S.A. Annual Report 2023
83
Subsea 7 S.A. Annual Report 2023
Key audit matter: Vessel fleet impairment assessments
Description of
key audit
matter:
The Subsea7 vessel fleet comprises owned and leased vessels.
At 31 December 2023, 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 $339.2 million as detailed in Note 14 ‘Property, plant and
equipment’ and Note 15 ‘Right-of-use assets’ to the Consolidated Financial Statements respectively. During
the year impairment charges of $95.9 million were recognised, mainly relating to vessel related equipment and
impairments on vessels prior to being recognised as assets classified as held for sale, and an impairment
reversal of $25.9 million was recognised related to one of the Group’s owned vessels.
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.
If there is an indication that an impairment loss no longer exists or has decreased, the entity is required to
calculate the recoverable amount of the asset and reverse the impairment loss up to the lower of the
recoverable amount or historical cost, if appropriate.
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 risks of material misstatement are 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 or understated.
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 obtained an understanding of management’s rationale for the impairment reversal and assessed it for
appropriateness against the reversal criteria as per IAS 36, and critically assessed if any further impairment
reversal triggers of the vessel fleet existed.
We assessed the completeness and the accuracy of the impairments and impairment reversal identified by
management to the accounting records.
We evaluated the adequacy of the Group’s disclosures in Note 14 ‘Property, plant and equipment’ and Note 15
‘Right-of-use assets’ regarding the impairments and impairment reversal of owned vessels and right-of-use
assets related to leased vessels in the Consolidated Financial Statements.
83
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Strategic Report Subsea 7 S.A. Financial Statements GlossaryGovernance Consolidated Financial Statements
84
Report of the Réviseur d’Entreprises Agréé continued
Subsea 7 S.A. Annual Report 2023
Key audit matter: Goodwill impairment assessments
Description of
key audit
matter:
As detailed in Note 12 ‘Goodwill’, the Consolidated Financial Statements include $192.2 million of goodwill at
31 December 2023.
Goodwill is subject to an annual review for impairment or when indicators of impairment exist.
An estimate of the recoverable amount of the cash-generating units (CGU) to which goodwill is allocated is
prepared. The estimated recoverable amount is determined based on the calculation of the value-in-use of
the CGUs. The outcome of the impairment review could vary significantly if different assumptions were applied
in the models.
The estimated recoverable amount is subjective due to the inherent uncertainty involved in forecasting and
discounting future cash flows with many of the key underlying assumptions being impacted by political and
economic factors. The key assumptions include:
• the future Adjusted EBITDA assumptions taken from the Group’s most recent budgets and plans for the
next five years approved by management (“the Plan”); the sustainable Adjusted EBITDA and long-term
growth rate used beyond the period covered by the Plan considering the significance of the terminal
value cash flows to the total value-in-use; also considering the expected impact of climate change;
• the pre-tax discount rate applied to future cash flows; and
• the forecast capital expenditure necessary to maintain the function of the assets in the CGU.
The risk of material misstatement is that the carrying amount of goodwill could be overstated.
Our response:
We understood the internal controls for the goodwill impairment process including the determination of
assumptions used within the models to assess the recoverable amount of goodwill and evaluated the
appropriateness of management’s identification of the Group’s CGUs.
We assessed management’s impairment testing by obtaining the supporting model and assessing the
methodology and key assumptions made:
• the future Adjusted EBITDA forecasts – we evaluated these 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;
• sustainable Adjusted EBITDA – we evaluated these against market expectations and historical levels;
• long-term growth rate – we compared the rates applied by management to available externally
developed rates;
• we evaluated sustainable Adjusted EBITDA and long-term growth in consideration of the expected impact of
climate change;
• we assessed the level of forecast capital expenditure necessary to maintain the function of the assets
in the CGUs;
• 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
• we tested the arithmetical accuracy of the models.
We re-performed sensitivity analysis around the key assumptions for all CGUs in order to ascertain the extent
of change in those assumptions required individually or collectively to result in an impairment of goodwill. For
those CGUs which were most sensitive, we discussed the basis for these cash flows with management and
the Group’s Audit Committee.
We examined the sensitivity disclosures presented in the Consolidated Financial Statements to consider
whether reasonably possible changes to assumptions that could lead to a material impairment had
been disclosed.
We assessed the adequacy of the disclosures, including those related to the expected impact of climate
change, in Note 12 ‘Goodwill’ to the Consolidated Financial Statements.
84
Subsea 7 S.A. Annual Report 2023
85
Subsea 7 S.A. Annual Report 2023
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 72 to 77, the Corporate Governance Statement from pages 48 to 70 and the Additional
Information from pages 148 to 154 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.
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 with them all relationships and other matters that may reasonably be thought to bear on our
independence, and where applicable, related safeguards.
From the matters communicated with 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.
85
Subsea 7 S.A. Annual Report 2023
Strategic Report Subsea 7 S.A. Financial Statements GlossaryGovernance Consolidated Financial Statements
86
Report of the Réviseur d’Entreprises Agréé continued
Subsea 7 S.A. Annual Report 2023
Report on other legal and regulatory requirements
We have been appointed as “réviseur d’entreprises agréé” by the General Meeting of the Shareholders on 18 April 2023 and the
duration of our uninterrupted engagement, including previous renewals and reappointments, is ten years.
The Consolidated Management Report is consistent with the Consolidated Financial Statements and has been prepared in accordance
with applicable legal requirements.
The accompanying corporate governance statement on pages 48 to 70 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 2023 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; and
• 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 2023, identified as 222100AIF0CBCY80AH62-
2023-12-31, 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
Alban Aubrée
Luxembourg, 28 February 2024
86
Subsea 7 S.A. Annual Report 2023
87
Consolidated Income Statement
Subsea 7 S.A. Annual Report 2023
For the year ended (in $ millions, except per share data) Notes
2023 2022
31 Dec 31 Dec
Revenue
5
5,973.7
5,135.8
Operating expenses
6
(5,610.9)
(4,738.8)
Gross profit
362.8
397.0
A
dministrative expenses
6
(266.3)
(245.2)
Share of net income/(loss) of associates and joint ventures
16
8.2
(3.0)
Net operating income
104.7
148.8
Finance income
8
25.2
9.0
Other gains and losses
7
21.3
1.9
Finance costs
8
(71.2)
(23.4)
Income before taxes
80.0
136.3
Taxation
9
(70.0)
(99.9)
Net income
10.0
36.4
Net income attributable to:
Shareholders of the parent company
15.4
57.1
Non-controlling interests
26
(5.4)
(20.7)
10.0
36.4
$$
Earnings per share
Notes
per shareper share
Basic
11
0.05
0.20
Diluted
11
0.05
0.19
(a)
(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.
87
Subsea 7 S.A. Annual Report 2023
Strategic Report Subsea 7 S.A. Financial Statements GlossaryGovernance Consolidated Financial Statements
88
Consolidated Statement of
Comprehensive Income
Subsea 7 S.A. Annual Report 2023
For the year ended (in $ millions) Notes
2023 2022
31 Dec 31 Dec
Net income
10.0
36.4
Items that may be reclassified to the income statement in subsequent periods:
Net foreign currency translation gains/(losses)
21.7
(50.9)
Net commodity cash flow hedge losses
(4.6)
(9.0)
Share of other comprehensive income of associates and joint ventures
16
2.5
–
Tax relating to components of other comprehensive income
9
(0.7)
5.1
Items that will not be reclassified to the income statement in subsequent periods:
Remeasurement (loss)/gain on defined benefit pension schemes
36
(1.0)
3.1
Tax relating to remeasurement (loss)/gain on defined benefit pension schemes
9
0.3
(0.7)
Other comprehensive income/(loss)
18.2
(52.4)
Total comprehensive income/(loss)
28.2
(16.0)
Total comprehensive income/(loss) attributable to:
Shareholders of the parent company
33.4
7.4
Non-controlling interests
(5.2)
(23.4)
28.2
(16.0)
88
Subsea 7 S.A. Annual Report 2023
89
Consolidated Balance Sheet
Subsea 7 S.A. Annual Report 2023
A
t (in $ millions) Notes
2023 2022
31 Dec31 Dec
A
ssets
Non-current assets
Goodwill
12
192.2
191.3
Intangible assets
13
58.5
31.1
Property, plant and equipment
14
4,070.0
3,922.0
Right-of-use assets
15
419.4
242.0
Interest in associates and joint ventures
16
342.0
25.5
A
dvances and receivables
17
67.0
65.9
Derivative financial instruments
33
29.5
5.3
Other financial assets
33
1.1
1.1
Deferred tax assets
9
50.9
38.7
5,230.6
4,522.9
Current assets
Inventories
18
60.1
49.5
Trade and other receivables
19
921.8
586.2
Current tax assets
100.5
61.1
Derivative financial instruments
33
31.4
16.7
A
ssets classified as held for sale
20
57.0
45.5
Construction contracts – assets
22
691.8
807.7
Other accrued income and prepaid expenses
21
244.0
204.6
Restricted cash
7.4
4.4
Cash and cash equivalents
23
750.9
645.6
2,864.9
2,421.3
Total assets
8,095.5
6,944.2
Equity
Issued share capital
24
608.6
600.0
Treasury shares
25
(31.1)
(75.0)
Paid in surplus
2,579.7
2,503.2
Translation reserve
(607.2)
(628.0)
Other reserves
(7.3)
(18.4)
Retained earnings
1,780.3
1,739.8
Equity attributable to shareholders of the parent company
4,323.0
4,121.6
Non-controlling interests
26
34.1
329.1
Total equity
4,357.1
4,450.7
Liabilities
Non-current liabilities
Borrowings
27
721.4
302.2
Lease liabilities
28
290.5
161.2
Retirement benefit obligations
36
8.4
9.2
Deferred tax liabilities
9
43.2
54.4
Provisions
31
24.6
47.7
Contingent liabilities recognised
32
0.5
0.4
Derivative financial instruments
33
32.6
28.7
Other non-current liabilities
29
1.1
5.3
1,122.3
609.1
Current liabilities
Trade and other liabilities
30
1,683.9
1,270.4
Derivative financial instruments
33
35.3
7.2
Current tax liabilities
76.4
49.3
Borrowings
27
123.5
53.8
Lease liabilities
28
167.8
95.8
Provisions
31
100.5
87.0
Construction contracts – liabilities
22
424.8
319.4
Deferred revenue
37
3.9
1.5
2,616.1
1,884.4
Total liabilities
3,738.4
2,493.5
Total e
q
uit
y
and liabilities
8,095.56,944.2
89
Subsea 7 S.A. Annual Report 2023
Strategic Report Subsea 7 S.A. Financial Statements GlossaryGovernance Consolidated Financial Statements
90
Consolidated Statement of Changes in Equity
For the year ended 31 December 2023
Subsea 7 S.A. Annual Report 2023
(in $ millions)
Issued Non-
share Treasury Paid in Translation Other Retained controlling Total
capitalsharessurplusreservereservesearnings Total interestsequity
Balance at 1 January 2023
600.0
(75.0)
2,503.2
(628.0)
(18.4)
1,739.8
4,121.6
329.1
4,450.7
Comprehensive income/(loss)
Net income/(loss)
–
–
–
–
–
15.4
15.4
(5.4)
10.0
Net foreign currency translation gains
–
–
–
21.5
–
–
21.5
0.2
21.7
Commodity cash flow hedges
–
–
–
–
(4.6)
–
(4.6)
–
(4.6)
Remeasurement loss on defined
benefit pension schemes
–
–
–
–
(1.0)
–
(1.0)
–
(1.0)
Share of other comprehensive income of
associates and joint ventures
–
–
–
–
2.5
–
2.5
–
2.5
Tax relating to components of other
comprehensive income
–
–
–
(0.7)
0.3
–
(0.4)
–
(0.4)
Total comprehensive income/(loss)
–
–
–
20.8
(2.8)
15.4
33.4
(5.2)
28.2
Transactions with owners
Dividends paid
–
–
–
–
–
(112.1)
(112.1)
–
(112.1)
Share issuance
20.0
–
107.0
–
–
–
127.0
(127.0)
–
Transaction costs
–
–
(0.5)
–
–
–
(0.5)
–
(0.5)
Share cancellation
(11.4)
41.6
(30.2)
–
–
–
–
–
–
Share-based payments
–
–
4.9
–
–
–
4.9
–
4.9
V
esting of share-based payments
–
–
(4.8)
–
–
4.8
–
–
–
Tax effects on share-based payments
–
–
0.1
–
–
–
0.1
–
0.1
Shares reallocated relating to share-based
payments
–
2.3
–
–
–
(2.3)
–
–
–
Reclassification adjustment relating
to ownership interests
–
–
–
–
–
150.2
150.2
(150.2)
–
Reclassification of remeasurement loss on defined
benefit pension scheme
–
–
–
–
13.9
(13.9)
–
–
–
A
cquisition of non-controlling interest
–
–
–
–
–
(1.6)
(1.6)
(12.6)
(14.2)
Total transactions with owners
8.6
43.9
76.5
–
13.9
25.1
168.0
(289.8)
(121.8)
Balance at 31 December 2023
608.6
(31.1)
2,579.7
(607.2)
(7.3)
1,780.3
4,323.0
34.1
4,357.1
90
Subsea 7 S.A. Annual Report 2023
91
Consolidated Statement of Changes in Equity
For the year ended 31 December 2022
Subsea 7 S.A. Annual Report 2023
(in $ millions)
Issued Non-
share Treasury Paid in Translation Other Retained controlling Total
capitalsharessurplusreservereservesearnings Total interestsequity
Balance at 1 January 2022
600.0
(32.9)
2,503.9
(582.5)
(14.2)
1,709.5
4,183.8
304.5
4,488.3
Comprehensive income/(loss)
Net income/(loss)
–
–
–
–
–
57.1
57.1
(20.7)
36.4
Net foreign currency translation losses
–
–
–
(48.2)
–
–
(48.2)
(2.7)
(50.9)
Commodity cash flow hedges
–
–
–
–
(9.0)
–
(9.0)
–
(9.0)
Remeasurement gains on defined
benefit pension schemes
–
–
–
–
3.1
–
3.1
–
3.1
Tax relating to components of other
comprehensive income
–
–
–
2.7
1.7
–
4.4
–
4.4
Total comprehensive (loss)/income
–
–
–
(45.5)
(4.2)
57.1
7.4
(23.4)
(16.0)
Transactions with owners
Shares repurchased
–
(46.0)
–
–
–
–
(46.0)
–
(46.0)
Dividends paid
–
–
–
–
–
(33.6)
(33.6)
–
(33.6)
Share-based payments
–
–
3.5
–
–
–
3.5
–
3.5
V
esting of share-based payments
–
–
(4.4)
–
–
4.4
–
–
–
Tax effects on share-based payments
–
–
0.2
–
–
–
0.2
–
0.2
Shares reallocated relating to share-based
payments
–
3.9
–
–
–
(3.9)
–
–
–
Reclassification adjustment relating
to ownership interests
–
–
–
–
–
6.3
6.3
(6.3)
–
Non-controlling interest share issuance
–
–
–
–
–
–
–
54.3
54.3
Total transactions with owners
–
(42.1)
(0.7)
–
–
(26.8)
(69.6)
48.0
(21.6)
Balance at 31 December 2022
600.0
(75.0)
2,503.2
(628.0)
(18.4)
1,739.8
4,121.6
329.1
4,450.7
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92
Consolidated Cash Flow Statement
Subsea 7 S.A. Annual Report 2023
(in $ millions) Notes
2023
2022
31 Dec 31 Dec
Operating activities
Income before taxes
80.0
136.3
A
djustments for non-cash items:
Impairment of property, plant and equipment, intangible assets and assets classified as
held for sale
13,14,20
96.8
2.3
Reversal of impairment of property, plant and equipment and right-of-use assets
14,15
(25.9)
(59.3)
Depreciation and amortisation charges
6
538.0
467.6
Credit impairment
19.0
–
(Increase)/decrease in foreign exchange embedded derivatives
(11.8)
35.6
A
djustments for investing and financing items:
Share of net (income)/loss of associates and joint ventures
16
(8.2)
3.0
Net loss/(gain) on disposal of property, plant and equipment
6
2.0
(0.3)
Net gain on maturity of lease liabilities
6
(1.2)
(2.2)
Release of contingent consideration post measurement period
33
(0.5)
(3.8)
Finance income
8
(25.2)
(9.0)
Finance costs
8
71.2
23.4
A
djustments for equity items:
Share-based payments
35
4.9
3.5
739.1
597.1
Changes in working capital:
Increase in inventories
(10.0)
(9.7)
Increase in trade and other receivables
(367.8)
(20.7)
Decrease/(increase) in construction contract – assets
152.4
(14.5)
Increase in other working capital assets
(43.8)
(22.7)
Increase/(decrease) in trade and other liabilities
221.3
(26.3)
Increase in construction contract – liabilities
69.2
144.6
Decrease in other working capital liabilities
(16.9)
(58.8)
Net movement in working capital
4.4
(8.1)
Income taxes paid
(83.5)
(103.2)
Net cash generated from operating activities
660.0
485.8
Cash flows used in investing activities
(Cost)/proceeds from disposal of property, plant and equipment
(0.6)
0.8
Purchases of property, plant and equipment and intangible assets
(581.2)
(231.0)
Investments in associates and joint ventures
(154.6)
–
Interest received
8
25.2
9.0
Repayment of loan to joint venture
1.0
1.1
Net cash used in investing activities
(710.2)
(220.1)
Cash flows generated from/(used in) financing activities
Interest paid
(52.1)
(15.8)
Repayment of borrowings
(568.1)
(61.6)
Proceeds from borrowings
1,060.9
–
Proceeds from rights issue in non-wholly-owned subsidiary
–
54.6
A
cquisition of shares in non-wholly-owned subsidiary
(12.6)
–
Cost of share repurchases
25
–
(46.0)
Paymen
ts related to lease liabilities – principal
28
(134.8)
(99.4)
Payments related to lease liabilities – interest
8,28
(30.1)
(11.3)
Dividends paid to shareholders of the parent company
10
(112.1)
(31.7)
Net cash generated from/(used in) financing activities
33
151.1
(211.2)
Net increase in cash and cash equivalents
100.9
54.5
Cash and cash equivalents at beginning of year
23
645.6
597.6
(Increase)/decrease in restricted cash
(3.0)
1.3
Effect of foreign exchange rate movements on cash and cash equivalents
7.4
(7.8)
Cash and cash equivalents at end of year
23
750.9
645.6
(a) Re-presented to remove embedded foreign currency derivative movements from net working capital.
(a)
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93
Notes to the Consolidated Fiancial Statements
Subsea 7 S.A. Annual Report 2023
1. General information
By virtue of its incorporation in Luxembourg, Subsea 7 S.A. is a company domiciled in Luxembourg whose common shares trade on
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-1471 Luxembourg.
Subsea 7 S.A. is the holding company of the Subsea7 Group. Subsea 7 S.A.’s principal place of business is Luxembourg. The Subsea7
Group is a global leader in the delivery of offshore projects and services for the evolving energy industry.
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 and floating 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 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 28 February 2024.
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 ‘Material 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 2022, 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. Management has concluded 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.
At 31 December 2023, the Group retained a strong cash position with cash and cash equivalents of $750.9 million. Total borrowings
at 31 December 2023 were $844.9 million, in relation to the Group’s South Korean Export Credit Agency and both UK Export Finance
facilities. The Group’s $700 million multi-currency revolving credit and guarantee facility remained unutilised. The Group’s borrowings
and guarantee facilities contain financial covenants, including a maximum level of net debt to earnings before interest, tax, depreciation
and amortisation. During the year ended 31 December 2023, all financial covenants were met and the Group expects to be able to
comply with all financial covenants during 2024. The Group ended the year with order backlog of $10.6 billion, an increase of $1.6
billion compared to 31 December 2022, reflecting improving market conditions.
Management considers that the Group will generate sufficient cash flow and have access to adequate liquidity 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 severe but plausible downside scenarios. These include scenarios which reflect extended periods of low energy
prices and potential operational-related issues which could adversely impact the Group. In all scenarios management identified no
forecast breaches of banking covenants and demonstrated sufficient liquidity for the Group.
Macroeconomic environment
During the year ended 31 December 2023, the Group’s interest and fees on financial liabilities measured at amortised cost were $58.7
million (2022: $20.2 million), as disclosed within Note 8 ‘Finance income and finance costs’. The year-on-year increase reflects both the
impact of interest rate rises and the level of the Group’s borrowings mainly due to a significant investment in newbuild vessels related to
the Renewables business unit. Management has prepared an interest rate sensitivity analysis disclosed within the liquidity risk section of
Note 33 ‘Financial instruments’. At 31 December 2023, the Group’s liquidity, represented by cash and cash equivalents and undrawn
borrowing facilities, was $1.6 billion (31 December 2022: $1.6 billion).
Measurement and disclosure of climate-related matters
Management has evaluated and provided relevant information to permit users of the financial statements to assess how material
climate-related matters were considered in preparing the Group’s Consolidated Financial Statements. In addition, the Group’s
Sustainability Reports provide information to users of the report on climate-related risks and opportunities, based on the Task Force
on Climate-related Financial Disclosures (TCFD).
From 1 January 2024, the Group is included within the scope of the European Union (EU) Corporate Sustainability Reporting Directive
(CSRD), with the applicable European Sustainability Reporting Standards (ESRS) expected to be effective from 1 January 2024,
once transposed into Luxembourg law. Management has prepared plans related to the implementation of CSRD reporting and
has performed a gap analysis and double materiality assessment in anticipation of the directive’s requirements.
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Notes to the Consolidated Financial Statements continued
Subsea 7 S.A. Annual Report 2023
1. General information continued
The Group’s current assessment of the range of economic and climate-related conditions that could exist in transitioning to a lower-
carbon economy are reflected in the Group’s medium and long-term plans. These considerations may affect certain significant
judgements and key estimates impacting the financial statements. The primary matters considered were:
Non-current assets
At 31 December 2023, the Group’s owned vessels represented in excess of 90% of the total carrying amount of property, plant and
equipment. Management considers that judgements and estimates impacted by climate-related considerations are most relevant to
the matters below:
• carrying amount of assets
• impairment testing and value-in-use calculations
• remaining useful economic life of assets and residual values
The majority of the Group’s vessels are deployed on oil and gas activities, and it is expected that oil and gas will continue to represent a
significant, although declining component of the global energy mix until at least 2050 during the transition to sustainable lower-carbon
energy. Management considers that the Group is in a position to continue to utilise its vessels for oil and gas development and adapt
certain vessels, where required, to perform non-oil and gas projects. Typically newbuild vessels are depreciated over 25 years, but a
vessel can continue to be utilised beyond this period with appropriate levels of capital expenditure, the useful economic life and residual
values of vessels are reviewed annually. No amendments were made to useful lives and no indicators of impairment were identified as
a direct result of climate-related matters for the year ended 31 December 2023 (2022: none).
Cash flow forecasts
Estimating future global energy demand and supply and the pace of future technological change is challenging and customer and
competitor behaviour, political developments and government actions may impact the Group’s operations. Cash flow projections used
for impairment testing include climate-related risks and opportunities which may impact the Group’s revenue, costs, including research
and development costs, and capital expenditure. Management considers that costs related to the physical impacts of climate change,
such as rising temperatures or the severity of weather events will not significantly impact the Group. The impacts of the enactment of
future government or legislative policies are not currently factored into the cash flow projections utilised for impairment testing.
Terminal value cash flows within impairment modelling are calculated using an estimated sustainable cash flow level, reflecting climate-
related aspects. International Financial Reporting Standards require the application of a steady or declining growth rate unless an
increasing rate can be justified. Growth rates applied to the Group’s Subsea and Conventional business unit are 2%, in line with the
prior year, to align with expected demand for the Group’s assets and resources in the medium to long-term, which covers a five-year
period and beyond. Third party projections indicate that offshore oil and gas will continue to be a significant source of energy through
to 2050 and beyond. The discount rate utilised for these modelling calculations has not been adjusted for climate-related risk as these
risks are adequately captured in the Group’s medium and long-term plans and terminal value cash flows calculations.
Capital expenditure
Management has considered whether transitioning to a lower-carbon economy may lead to higher capital expenditure costs to develop
or acquire technology to comply with environmental requirements and the Group’s sustainability ambitions. Management has applied
judgement when determining whether climate-related capital expenditure necessary to meet emission reduction targets is considered
maintenance or enhancement. In compliance with International Financial Reporting Standards, cash flow projections utilised for
impairment testing include maintenance capital expenditure only. Management continues to consider the development of lower-carbon
emission technologies which may be utilised by the vessel fleet in particular. Decarbonisation measures through the use of efficient,
clean fuels, mainly related to the Group’s vessel fleet, form a key part in the transition to lower carbon emissions, but are dependent
upon the development of suitable alternative fuels being available globally at scale and commercially viable.
Access to financial products
The Group utilises funding and financial products from financial institutions, such as banks and insurance companies. Certain
institutions may reduce or stop providing funding and financial products to the Group based on climate-related considerations, this
could result in higher costs for the Group. Management takes climate-related factors into consideration to ensure the Group’s capacity
and diversity of financial products is appropriate.
Emission trading schemes
With effect from 1 January 2024, activities related to the Group’s heavy transport vessels will incur costs related to the EU Emissions
Trading Scheme. The Group expects to purchase emissions allowances which will be held for the Group’s own use. Emissions
allowances will be recognised as a cost within operating expenses in the Group’s Consolidated Income Statement, in line with the
associated activity. Emissions allowances purchased exceeding emissions incurred to date will be carried at cost within other current
receivables on the Group’s Consolidated Balance Sheet. No allowances are expected to be purchased and held for trading purposes.
Amounts received from clients related to emissions allowances are recognised in accordance with IFRS 15, ‘Revenue from Contracts
with Customers’, as one combined performance obligation.
2. Adoption of new accounting standards
Effective new accounting standards
The Group adopted IFRS 17 ‘Insurance Contracts’ for the year beginning 1 January 2023. Several amendments to existing IFRS were
also applied for the first time in 2023. There was no material impact on the Consolidated Financial Statements of the Group as a result.
The Group has not early adopted any standards, interpretations or amendments that have been issued but are not yet effective.
There are no IFRS standards or amendments that have been issued but not yet adopted that are expected to have a material impact
on the Group.
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Subsea 7 S.A. Annual Report 2023
3. Material 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.
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.
Note 39 ‘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.
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.
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 2023, the
exchange rates of the main currencies used throughout the Group, compared to the US Dollar, were as follows:
GBP 0.791
EUR 0.914
NOK 10.354
BRL 4.865
CNY 7.139
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’).
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96
Notes to the Consolidated Financial Statements continued
Subsea 7 S.A. Annual Report 2023
3. Material accounting policies continued
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.
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 which results in the costs associated
with inefficiencies being excluded from the total forecast cost at completion to estimate percentage-of-completion. 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 conditional 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 contractual 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 cont
ract
liabilities arise when progress billings to date exceed contract revenues recognised. Construction contract asset and liability balances
at 31 December 2023 and 2022 are disclosed within Note 22 ‘Construction contracts’. Assurance type warranty periods commence
at the completion of the contractual obligations and typically have a duration of between one to three years.
The Group’s Pipelay Support Vessel (PLSV) contracts, offshore Brazil, are also included within Subsea and Conventional. 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 for the customer, is included within Note 21 ‘Other accrued income and prepaid expenses’.
Certain Brazilian contracts contain escalation clauses which allow for inflationary adjustments on an annual basis to both revenue and
costs denominated in Brazilian Real. These are recognised as variable consideration and 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.
Front-end engineering studies (FEED) undertaken by the Group are also included within Subsea and Conventional 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 Subsea7’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
completed, which has not been billed to clients, is included within Note 21 ‘Other accrued income and prepaid expenses’.
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
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Subsea 7 S.A. Annual Report 2023
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 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 contractual 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 2023
and 2022 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, including
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. Effective from 1 October 2023, revenue from the Group’s non-wholly-owned subsidiary, Nautilus Floating
Solutions, was recognised within the Renewables business unit. 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 and Renewables business units. 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 2023 and 2022 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.
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.
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3. Material accounting policies continued
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.
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 Group’s current tax liabilities are those that are enacted or substantively enacted at the
balance sheet date.
In accordance with IFRIC 23 ‘Uncertainty over Income Tax Treatments’, a liability is recognised for those matters for which the tax
determination is uncertain but it is considered probable that there will be a future outflow of funds to a tax authority. The liabilities are
measured at the most likely amount expected to become payable. The assessment is based on the judgement of tax professionals
within the Group supported by previous experience in respect of such activities and in certain cases based on specialist independent
tax advice.
Current tax assets or liabilities are representative of taxes being owed by, or owing to, local tax authorities, and include the impact of
any provisions required for uncertain tax treatments.
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.
Significant tax estimates and judgements
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 tax assets and liabilities, the Group assesses the probability of treatment being accepted and, where this
is not probable and a reasonable estimate can be made, the Group recognises a provision for the adjustment it considers probable
to be required.
OECD Pillar Two
The Group adopted the amendments to IAS 12 ‘Income Taxes’ for the first time in 2023. The IASB amended the scope of IAS 12 to
clarify that it applied to income taxes arising from tax law enacted or substantively enacted to implement the Pillar Two model rules
published by the OECD, including tax law that implements qualified domestic minimum top-up taxes described in those rules. The
amendments introduce a temporary exception to the accounting requirements for deferred taxes in IAS 12, so that an entity would
neither recognise nor disclose information about deferred tax assets and liabilities related to Pillar Two income taxes. Following the
amendments, the Group is required to disclose that it has applied the exception and to disclose separately its current tax expense
or income related to Pillar Two income taxes.
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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.
Intangible assets other than goodwill
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.
Depreciation is calculated on a straight-line basis over the useful life of the asset as follows:
V
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. It is expected that oil and gas will continue to contribute a significant, although
declining, part in the transition to sustainable lower-carbon energy until at least 2050. The Group is in a position to utilise its vessels
and to adapt vessels, where required, for initiatives such as offshore carbon capture and storage. The Group, through Seaway7, also
operates within the offshore renewable sector including fixed offshore wind, and it is expected that demand for the Group’s services will
increase due to climate-related opportunities. The Group continues to address the carbon emissions impact from vessel operations and
invest in its fleet by assessing the viability of lower-carbon fuels and converting vessels to hybrid power where practical. The former is
dependent upon the development of suitable alternative fuels being available globally at scale and commercially viable. The Group has
launched and installed a digital data analytic system across its vessel fleet to establish and define robust operating baselines from which
efficiencies can be implemented and measured. In addition, the Group has installed digital fuel flowmeters across its fleet to enable
automated tracking and reporting of fuel use and scope 1 emissions. These climate resilient strategies, including hybridisation of
selected vessels in the existing fleet, offer potentially lower-carbon options to the Group’s customers. Management does not consider
there to be 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
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3. Material accounting policies continued
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 Group 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.
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.
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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.
The cost of fulfilling a contract includes both the incremental costs of fulfilling the contract and an allocation of other costs which relate
directly to fulfilling the contract.
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.
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.
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3. Material accounting policies continued
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.
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 ‘Material 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
Group revenue for the year ended 31 December 2023 was $6.0 billion (2022: $5.1 billion). The Group’s accounting policies under IFRS
15 ‘Revenue from Contracts with Customers’ are detailed in Note 3 ‘Material accounting policies’. The Group accounts for long-term
construction contracts for 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.
Goodwill carrying amount
At 31 December 2023, goodwill of $192.2 million was recognised on the Group’s Consolidated Balance Sheet (2022: $191.3 million).
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 3 ‘Material accounting policies’ and
Note 12 ‘Goodwill’.
Property, plant and equipment
At 31 December 2023, property, plant and equipment with a carrying amount of $4.1 billion was recognised on the Group’s
Consolidated Balance Sheet (2022: $3.9 billion). 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 12 ‘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.
Recognition of provisions and disclosure of contingent liabilities
At 31 December 2023, provisions with a carrying amount of $125.1 million were recognised on the Group’s Consolidated Balance
Sheet (2022: $134.7 million). 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
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made. The final outcomes of these contract disputes are subject to uncertainties as to whether or not they develop into 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’.
Taxation
At 31 December 2023, non-current deferred tax assets were $50.9 million (2022: $38.7 million), current tax assets were $100.5 million
(2022: $61.1 million), non-current deferred tax liabilities were $43.2 million (2022: 54.4 million) and current tax liabilities were $76.4 million
(2022: $49.3 million). The Group is subject to corporate income tax 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 internal assessments, experience and appropriate external advice, including in respect of
the recognition of assets relating to the future recoverability of tax losses and other attributes.
Each year a detailed review of the Group’s uncertain tax treatments and provisions is undertaken in accordance with IFRIC 23. Where
the outcome of these reviews differs from the amounts previously recorded, the difference will impact the tax 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’.
5. Segment information
The Group operates with an 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;
• Activities associated with heavy lifting operations and decommissioning of redundant offshore structures;
• Activities associated with carbon capture, utilisation and storage (CCUS); and
• Share of net income of the Group’s associate, OneSubsea.
This segment includes costs, including depreciation, amortisation, impairment charges and impairment reversals, related to owned and
long-term leased vessels, equipment and offshore personnel deployed in Subsea and Conventional activities.
Renewables
The Renewables business unit comprises activities primarily related to the delivery of fixed offshore wind farm projects. 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.
Effective from 1 October 2023, the Renewables business unit includes activities related to the Group’s floating wind activities, including
its non-wholly-owned subsidiary Nautilus Floating Solutions. No prior period restatement was required of the summarised segmental
financial information as a result of this amendment.
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 activities in emerging energies such as hydrogen. The
Corporate business unit provides specific services to the Renewables business unit on an arm’s length basis.
For the period to 30 September 2023, activities related to the Group’s floating wind activities, including its non-wholly-owned subsidiary
Nautilus Floating Solutions, were recognised within the Corporate business unit.
The accounting policies of the business units are the same as the Group’s accounting policies, which are described in Note 3 ‘Material
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.
103
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104
Notes to the Consolidated Financial Statements continued
Subsea 7 S.A. Annual Report 2023
5. Segment information continued
Summarised financial information, including the disaggregation of the Group’s revenue from contracts with customers, concerning each
operating segment is as follows:
For the year ended 31 December 2023
Subsea and
(in $ millions)
Conventional
Renewables
Corporate
Total
Selected financial information:
Revenue
Fixed-price contracts
4,171.1
951.6
16.7
5,139.4
Day-rate contracts
748.0
3.5
82.8
834.3
4,919.1
955.1
99.5
5,973.7
Operating expenses
(4,583.0)
(991.9)
(36.0)
(5,610.9)
Reversal of impairment of property, plant and equipment
25.9
–
–
25.9
Share of net income of associates and joint ventures
7.9
–
0.3
8.2
Depreciation, mobilisation and amortisation charges
(419.2)
(102.4)
(16.4)
(538.0)
Impairment of property, plant and equipment, intangible assets and assets
classified as held for sale
(23.2)
(72.7)
(0.9)
(96.8)
Reconciliation of net operating income/(loss) to income before taxes:
Net operating income/(loss)
196.2
(73.9)
(17.6)
104.7
Finance income 25.2
Other gains and losses 21.3
Finance costs (71.2)
Income before taxes 80.0
A
djusted EBITDA
(d)
612.4
102.5
(0.5)
714.4
A
djusted EBITDA margin
(d)
12.4%
10.7%
(0.5%)
12.0%
(a)/(b)/(c)
(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 (2022: three 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 $834.0 million
(2022: $832.6 million) and Client B $603.6 million (2022: $541.0 million).
(c) Revenue from contracts with customers recognised over time as defined by IFRS 15.
(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 – APMs’ on pages 148 to 151.
For the year ended 31 December 2022
Subsea and
(in $ millions)
Conventional
Renewables
Corporate
Total
Selected financial information:
Revenue
Fixed-price contracts
3,210.3
1,093.0
38.7
4,342.0
Day-rate contracts
693.0
23.9
76.9
793.8
3,903.3
1,116.9
115.6
5,135.8
Operating expenses
(3,545.8)
(1,164.4)
(28.6)
(4,738.8)
Reversal of impairment of property, plant and equipment and right-of-use
assets
59.3
–
–
59.3
Share of net loss of associates and joint ventures
(2.4)
–
(0.6)
(3.0)
Depreciation, mobilisation and amortisation charges
(359.3)
(90.2)
(18.1)
(467.6)
Impairment of property, plant and equipment
(2.3)
–
–
(2.3)
Reconciliation of net operating income/(loss) to income before taxes:
Net operating income/(loss)
229.2
(85.3)
4.9
148.8
Finance income 9.0
Other gains and losses 1.9
Finance costs (23.4)
Income before taxes 136.3
A
djusted EBITDA
(c)
531.6
4.8
23.0
559.4
A
djusted EBITDA margin
(c)
13.6%
0.4%
19.9%
10.9%
(a)/(b)
(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) Revenue from contracts with customers recognised over time as defined by IFRS 15.
(c) 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 – APMs’ on pages 148 to 151.
104
Subsea 7 S.A. Annual Report 2023
105
Subsea 7 S.A. Annual Report 2023
Geographic information
Revenue from external clients
Based on the Group’s subsidiaries’ or branches’ country of registered office holding the customer contract, revenue is split as follows:
2023 2022
For the year ended (in $ millions) 31 Dec 31 Dec
Norway
1,312.8
1,045.1
Brazil
1,125.1
475.0
United Kingdom
997.5
1,190.9
USA
632.9
644.4
Taiwan
352.4
177.1
A
ustralia
246.3
146.7
Saudi Arabia
229.3
190.1
Türkiye
209.5
337.2
A
zerbaijan
156.9
108.3
Singapore
132.4
45.7
A
ngola
104.8
84.6
Senegal
96.5
94.2
Trinidad & Tobago
90.7
111.0
Netherlands
90.2
265.6
Qatar
76.8
26.9
Germany
73.2
36.1
Guyana
19.4
5.8
Other countries
27.0
151.1
5,973.7
5,135.8
(a)
(a) Comparative information for the year ended 31 December 2022 includes external revenue of $79.7 million from the Group’s subsidiaries or branches with a registered office in Canada and
$55.2 million in Ghana.
Non-current assets
Based on the country of registered office of the Group’s subsidiaries or branches, non-current assets for this purpose consist of
intangible assets, property, plant and equipment, right-of-use assets and interest in associates and joint ventures, are located in the
following countries:
A
t (in $ millions)
2023 2022
31 Dec 31 Dec
United Kingdom
2,396.1
2,034.9
Norway
1,029.7
737.8
Isle of Man
687.9
732.1
Netherlands
394.3
449.8
USA
214.3
74.0
Brazil
59.2
45.3
Germany
42.3
63.9
A
ngola
23.3
15.4
France
10.3
14.7
Gibraltar
9.7
9.4
Other countries
22.8
43.3
4,889.9
4,220.6
(a)
(a) Comparative information for the year ended 31 December 2022 includes non-current assets of $22.7 million from the Group’s subsidiaries or branches with a registered office in Azerbaijan.
105
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Notes to the Consolidated Financial Statements continued
Subsea 7 S.A. Annual Report 2023
6. Net operating income
Net operating income includes:
For the year ended (in $ millions)
2023 2022
31 Dec 31 Dec
Employee benefits
1,406.8
1,221.0
Lease expense for short-term leased assets
582.5
600.7
Lease expense for low-value leased assets
0.3
0.8
V
ariable lease amounts not included within lease liabilities
(1.4)
–
Depreciation of property, plant and equipment (Note 14)
350.9
345.6
A
mortisation of right-of-use assets (Note 15)
161.4
98.8
A
mortisation of intangible assets (Note 13)
13.1
12.3
A
mortisation of mobilisation costs
12.6
10.9
Impairment of property, plant and equipment (Note 14)
75.4
2.3
Impairment of assets held for sale (Note 20)
20.5
–
Impairment of intangible assets (Note 13)
0.9
–
Impairment reversal of right-of-use assets (Note 15)
–
(3.7)
Impairment reversal of property, plant and equipment (Note 14)
(25.9)
(55.6)
Net loss on disposal of property, plant and equipment
2.0
–
Net gain on maturity of lease liabilities
(1.2)
–
Research and development costs
13.1
12.3
A
uditor’s remuneration
3.6
3.3
Net credit impairment loss for financial assets (Note 33)
20.0
2.3
Net decrease in allowances for expected credit losses for financial assets
(0.9)
(0.2)
Net decrease in allowances for expected credit losses for construction contract assets (Note 22)
(1.4)
(1.4)
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)
2023 2022
31 Dec 31 Dec
A
udit fees
3.5
3.2
Tax fees
0.1
0.1
3.6
3.3
Audit fees constitute charges incurred for the audit of the Consolidated Financial Statements and statutory financial statements of
Subsea 7 S.A. and certain subsidiaries. Fees were primarily incurred in connection with the year ended 31 December 2023 but include
final settlement of charges associated with the year ended 31 December 2022.
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 2023.
Fees were primarily incurred in connection with the year ended 31 December 2023.
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 2023.
106
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107
Subsea 7 S.A. Annual Report 2023
Reconciliation of operating expenses and administrative expenses by nature
31 Dec 2023
31 Dec 2022
Operating Administrative Operating Administrative
For the year ended (in $ millions) expenses
expenses
Total expenses
expenses
expenses
Total expenses
Direct project-related costs, including procurement
2,800.4
–
2,800.4
2,372.3
–
2,372.3
Employee benefits
1,251.5
155.3
1,406.8
1,079.5
141.5
1,221.0
Lease expense for short-term leased assets
581.5
1.0
582.5
599.8
0.9
600.7
Lease expense for low-value leased assets
0.3
–
0.3
0.8
–
0.8
V
ariable lease amounts not included within
lease liabilities
(1.4)
–
(1.4)
–
–
–
Depreciation, amortisation and mobilisation
501.3
36.7
538.0
433.2
34.4
467.6
Impairment of property, plant and equipment
75.4
–
75.4
2.3
–
2.3
Impairment of assets held for sale
20.5
–
20.5
–
–
–
Impairment of intangible assets
0.9
–
0.9
–
–
–
Impairment reversal of property, plant and
equipment
(25.9)
– (25.9)
(55.6)
–
(55.6)
Impairment reversal of right-of-use assets
–
–
–
–
(3.7)
(3.7)
Net loss on disposal of property, plant and
equipment
2.0
–
2.0
–
–
–
(Gain)/loss on maturity of lease liabilities
(1.4)
0.2
(1.2)
–
–
–
Net credit impairment loss for financial assets
20.0
–
20.0
2.2
0.1
2.3
Net decrease in allowances for expected credit
losses for financial assets
(0.9)
–
(0.9)
(0.2)
–
(0.2)
Net decrease in allowances for expected credit
losses for construction contract assets
(1.4)
–
(1.4)
(1.4)
–
(1.4)
Other expenses
388.1
73.1
461.2
305.9
72.0
377.9
Total
5,610.9
266.3
5,877.2
4,738.8
245.2
4,984.0
7. Other gains and losses
2023 2022
For the year ended (in $ millions) 31 Dec 31 Dec
Gain on disposal of property, plant and equipment
–
0.3
Gain on maturity of lease liabilities
(a)
–
2.2
Fair value gains on derivative financial instruments mandatorily measured at fair value through profit or loss
0.4
3.0
Net gains on business combinations post measurement periods
0.5
3.8
Net foreign currency exchange gains/(losses)
20.4
(7.4)
Total
21.3
1.9
(a)
(b)
(a) Gains/(losses) on disposal of property, plant and equipment and on maturity of lease liabilities are included within operating expenses from 1 January 2023.
(b) Net foreign currency exchange gains/(losses) include fair value gains/(losses) on embedded derivatives.
8. Finance income and finance costs
2023 2022
For the year ended (in $ millions) 31 Dec 31 Dec
Interest on financial assets measured at amortised cost
25.2
9.0
Total finance income
25.2
9.0
For the year ended (in $ millions)
2023 2022
31 Dec 31 Dec
Interest and fees on financial liabilities measured at amortised cost
58.7
20.2
Total borrowing costs
58.7
20.2
Less: amounts capitalised and included in the cost of qualifying assets
(17.9)
(7.2)
40.8
13.0
Interest on lease liabilities
30.1
11.3
Interest on tax liabilities
0.3
(0.9)
Total finance costs
71.2
23.4
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 6.8% reflecting the cost of finance, dependent on the funding source (2022: 5.6%).
107
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108
Notes to the Consolidated Financial Statements continued
Subsea 7 S.A. Annual Report 2023
9. Taxation
Tax recognised in the Consolidated Income Statement
For the year ended (in $ millions)
2023 2022
31 Dec 31 Dec
Tax charged in the Consolidated Income Statement
Current tax:
Corporation tax on income for the year
97.7
67.3
A
djustments in respect of prior years
(2.5)
4.3
Total current tax
95.2
71.6
Deferred tax (credit)/charge for the year
(24.3)
24.2
A
djustments in respect of prior years
(0.9)
4.1
Total deferred tax (credit)/charge
(25.2)
28.3
Total
70.0
99.9
Tax recognised in the Consolidated Statement of Comprehensive Income
For the year ended (in $ millions)
2023 2022
31 Dec 31 Dec
Tax charge/(credit) relating to items recognised directly in comprehensive income
Current tax on:
Exchange differences
0.7
(2.7)
Income tax recognised directly in comprehensive income
0.7
(2.7)
Deferred tax on:
Commodity cash flow hedges
–
(2.4)
Remeasurement (losses)/gains on defined benefit pension schemes
(0.3)
0.7
Deferred tax recognised directly in comprehensive income
(0.3)
(1.7)
Total
0.4
(4.4)
Deferred tax recognised in the Consolidated Statement of Changes in Equity
For the year ended (in $ millions)
2023 2022
31 Dec 31 Dec
Share-based payments
(0.1)
(0.2)
Total
(0.1)
(0.2)
Reconciliation of taxation
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% (2022: 24.94%) which represents the blended tax rate applicable to
Luxembourg entities.
For the year ended (in $ millions)
2023 2022
31 Dec 31 Dec
Income before taxes
80.0
136.3
Tax at the blended tax rate of 24.94% (2022: 24.94%)
20.0
34.0
Effects of:
Different tax rates of subsidiaries operating in other jurisdictions
(4.4)
(6.6)
Impact of tax rate changes
(3.3)
(1.8)
Non-qualifying depreciation
0.7
0.8
Net cost/(benefit) of tonnage tax regimes
3.9
(6.2)
Withholding taxes and unrelieved overseas taxes
37.4
27.0
Non-deductible expenses and non-taxable income
1.4
3.1
Tax effect of share of net income/(loss) of associates and joint ventures
(2.2)
0.7
Movement in unprovided deferred tax
25.5
48.2
Revisions to uncertain tax treatments
(5.6)
(7.7)
A
djustments related to prior years
(3.4)
8.4
Taxation in the Consolidated Income Statement
70.0
99.9
108
Subsea 7 S.A. Annual Report 2023
109
Subsea 7 S.A. Annual Report 2023
Deferred tax
Movements in the net deferred tax balance were:
(in $ millions)
Accrued
expenses
Property, and Share-
plant and deferred based Tax
equipment income payments losses
Other
Total
Balance at 31 December 2021
(43.4)
14.1
0.7
39.9
1.4
12.7
(Charged)/credited to:
Consolidated Income statement
(21.8)
(35.0)
(0.1)
26.8
1.8
(28.3)
Other comprehensive income
–
(0.7)
–
–
2.4
1.7
Changes in equity
–
–
0.2
–
–
0.2
Balance sheet reclassifications
(0.4)
0.7
–
0.1
(0.2)
0.2
Exchange differences
1.4
(1.5)
–
(1.8)
(0.3)
(2.2)
Balance at 31 December 2022
(64.2)
(22.4)
0.8
65.0
5.1
(15.7)
(Charged)/credited to:
Consolidated Income statement
20.6
(15.2)
(0.6)
27.6
(7.2)
25.2
Other comprehensive income
–
0.3
–
–
–
0.3
Changes in equity
–
–
0.1
–
–
0.1
Balance sheet reclassifications
(0.3)
–
–
–
0.4
0.1
Exchange differences
(1.6)
3.2
0.2
(1.0)
(3.1)
(2.3)
Balance at 31 December 2023
(45.5)
(34.1)
0.5
91.6
(4.8)
7.7
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 2023
(in $ millions)
Net recognised
Deferred tax Deferred tax deferred tax
asset liability asset/(liability)
Property, plant and equipment
6.3
(51.8)
(45.5)
A
ccrued expenses and deferred income
9.1
(43.2)
(34.1)
Share-based payments
0.5
–
0.5
Tax losses
91.6
–
91.6
Other
7.3
(12.1)
(4.8)
Total
114.8
(107.1)
7.7
At 31 December 2022
(in $ millions)
Net recognised
Deferred tax Deferred deferred tax
asset tax liability asset/(liability)
Property, plant and equipment
6.1
(70.3)
(64.2)
A
ccrued expenses and deferred income
8.5
(30.9)
(22.4)
Share-based payments
0.8
–
0.8
Tax losses
65.0
–
65.0
Other
6.7
(1.6)
5.1
Total
87.1
(102.8)
(15.7)
Deferred tax is analysed in the Consolidated Balance Sheet, after offset of balances within countries, as:
A
t (in $ millions)
2023 2022
31 Dec 31 Dec
Deferred tax assets
50.9
38.7
Deferred tax liabilities
(43.2)
(54.4)
Total
7.7
(15.7)
109
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110
Notes to the Consolidated Financial Statements continued
Subsea 7 S.A. Annual Report 2023
9. Taxation continued
At 31 December 2023, the gross amount and expiry dates of losses available for carry forward were as follows:
A
t (in $ millions)
Expiring Expiring in Expiring in
within 5 6 to 10 11 to 20
years years
years
Without limit
Total
Losses for which a deferred tax asset is recognised
4.1
4.4
31.8
335.8
376.1
Losses for which no deferred tax asset is recognised
169.8
49.6
113.0
2,204.9
2,537.3
Total
173.9
54.0
144.8
2,540.7
2,913.4
At 31 December 2022, the gross amount and expiry dates of losses available for carry forward were as follows:
A
t (in $ millions)
Expiring Expiring in 6 Expiring in 11
within 5 years to 10 years
to 20 years
Without limit
Total
Losses for which a deferred tax asset is recognised
8.7
1.6
48.4
214.7
273.4
Losses for which no deferred tax asset is recognised
135.9
57.0
99.1
2,152.8
2,444.8
Total
144.6
58.6
147.5
2,367.5
2,718.2
The increase in deferred tax asset recognition on losses is a result of current year losses incurred by UK entities on certain projects.
The Group has also recorded significant deferred tax liabilities in the UK, primarily in respect of its vessel fleet, which can be offset
against this asset, resulting in a net asset of $4.2 million. The Group has a strong history of profitability in the UK and this asset is
expected to reverse against near-term profitability.
The Group has also recognised a deferred tax asset in respect of a further $50.8 million of losses in the US (2022: $48.6 million) based
on its strong current, and prior year, performance, and continued forecast profitability; and has utilised a net $60.0 million of previously
recognised losses in Norway.
Included in the above losses for which no asset is recognised were $1.5 billion (2022: $1.4 billion) of losses in Luxembourg, which could
be subject to further claw-back if certain transactions were entered into. Other jurisdictions with significant accumulated unrecognised
losses include Saudi Arabia ($201.9 million), Brazil ($177.2 million), and Singapore ($139.9 million), the former two as a result of
uncertainty over the timing of future profitability, the last being restricted in their utilisation against a vessel chartering trade.
In addition, the Group has other unrecognised deferred tax assets of $58.0 million (2022: $66.5 million) in respect of other temporary
differences. These primarily relate to provision for expenses and loss on contracts in Brazil and unclaimed capital allowances in Nigeria.
No deferred tax has been recognised in respect of taxable temporary differences related to the unremitted earnings of the Group’s
subsidiaries, branches, associates and joint ventures 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 2023 was $212.4 million (2022: $195.6 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. The Group has re-elected into tonnage tax in the UK until 2030.
In 2023, the Group’s elections resulted in a negative impact on the Group’s tax charge of $3.9 million (2022: positive impact of
$6.2 million) primarily driven by impairments of vessels and vessel equipment.
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 result in uncertainty as to the ultimate acceptability of the treatment of tax matters.
This often results in the Group’s filing positions being subject to audit, enquiry and possible re-assessment. During 2023, the Group was
subject to audits and disputes in, among others, Brazil, Germany, Ghana, Mexico, Nigeria and Saudi Arabia. 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
positions across the Group, and makes provisions based on the probability of a liability arising. It is possible that the ultimate resolution
of these uncertainties could result in tax charges that are materially higher or lower than the amounts provided for.
In the year ended 31 December 2023, the Group recorded a net decrease in the financial impact of uncertain tax treatments of
$6.1 million (2022: $9.2 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.
OECD Pillar Two
The Group has applied the temporary exception issued by the IASB in May 2023 from the accounting requirements for deferred tax in
IAS 12. Accordingly, the Group neither recognises nor discloses information about deferred tax assets and liabilities related to Pillar Two
income taxes.
110
Subsea 7 S.A. Annual Report 2023
111
Subsea 7 S.A. Annual Report 2023
On 20 December 2023, Luxembourg, where the Group’s parent is incorporated, enacted the Pillar Two income tax legislation. This
legislation is applicable for the Subsea7 Group from 1 January 2024. Under the legislation, the Group will be required to pay top-up tax
on profits of its subsidiaries that are taxed at an effective tax rate of less than 15%. There are three transitional safe harbours which will
apply through 2026, being a de minimis test, the routine profits test and the ability to undertake a simplified effective tax rate calculation.
Particularly applying these safe harbours, the Group does not believe it has substantial exposure to the legislation as it does not
leverage off low tax jurisdictions, where it does not have relevant substance.
However, the Group has elected to be taxed under three European tonnage tax regimes and the activities of the Group’s fleet extends
beyond the definition of international shipping (being the transportation of passengers or cargo by ships in international traffic) set out in
the OECD model rules. As such, exposure to this tax may exist in the UK, Netherlands and Norway, as well as Isle of Man, where the
Group’s captive insurance company is incorporated, but the level of other, non-tonnage tax, activity in each of the UK, Netherlands
and Norway, together with the level of substance maintained in those jurisdictions, means that no top-up tax is anticipated to arise
in respect of those jurisdictions.
The Group has undertaken a review of its potential exposure to Pillar Two based on the profits and tax expense included in its
Consolidated Financial Statements at 31 December 2023, and also considering its 2024 budget. Any potential impact on the Group’s
tax charge as a result of Pillar Two would not be expected to exceed $5.0 million. However not all adjustments that may ultimately be
required by legislation have been considered in coming to this estimate, including domestic top-up provisions, and the application of
a detailed substance-based income exclusion calculation. As a result the actual impact that Pillar Two may have had on the Group’s
results if it had been in effect for the year ending 31 December 2023 may have been significantly different. The Group is continuing to
assess the impact of the Pillar Two legislation on its future financial performance.
10. Dividends
A dividend of NOK 4.00 per share was approved by the shareholders of Subsea 7 S.A. at the Annual General Meeting on 18 April 2023
and recognised in shareholders’ equity in April 2023. The dividend of $112.1 million was paid on 28 April 2023 to shareholders
of Subsea 7 S.A. at date of record of 21 April 2023.
11. Earnings per share
Basic and diluted earnings per share
Basic earnings per share is calculated by dividing the net income 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 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)
2023 2022
31 Dec 31 Dec
Net income attributable to shareholders of the parent company
15.4
57.1
Earnings used in the calculation of diluted earnings per share
15.4
57.1
For the year ended
2023 2022
31 Dec 31 Dec
Number of Number of
shares shares
Weighted average number of common shares used in the calculation of basic earnings per share
298,159,734
291,955,196
Performance shares
997,942
1,037,990
Weighted average number of common shares used in the calculation of diluted earnings
per share
299,157,676
292,993,186
For the year ended (in $ per share)
2023 2022
31 Dec 31 Dec
Basic earnings per share
0.05
0.20
Diluted earnings per share
0.05
0.19
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
2023 2022
31 Dec 31 Dec
Number of Number of
shares shares
Performance shares
674,688
609,004
111
Subsea 7 S.A. Annual Report 2023
Strategic Report Subsea 7 S.A. Financial Statements GlossaryGovernance Consolidated Financial Statements
112
Notes to the Consolidated Financial Statements continued
Subsea 7 S.A. Annual Report 2023
12. Goodwill
(in $ millions)
Total
Cost
A
t 1 January 2022
2,545.8
Exchange differences
(141.5)
A
t 31 December 2022
2,404.3
Exchange differences
57.7
A
t 31 December 2023
2,462.0
A
ccumulated impairment
A
t 1 January 2022
2,348.6
Exchange differences
(135.6)
A
t 31 December 2022
2,213.0
Exchange differences
56.8
A
t 31 December 2023
2,269.8
Carrying amount
A
t 31 December 2022
191.3
A
t 31 December 2023
192.2
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 2023 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;
• Floating Wind CGU (formerly Nautilus) 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.
The Group performed its annual goodwill impairment review at 31 December 2023. Subsequent to this review the carrying amounts of
the goodwill were allocated to the following CGUs:
2023 2022
A
t (in $ millions)
31 Dec 31 Dec
4Subsea
16.2
17.1
Floating Wind
6.5
6.3
Norway
9.3
9.5
Renewables
105.3
105.3
UK GIRM
39.2
37.6
X
odus
15.7
15.5
Total
192.2
191.3
At 31 December 2023 there was no goodwill associated with the Africa Middle East and Caspian, Asia Pacific, Brazil and Gulf of
Mexico CGUs.
112
Subsea 7 S.A. Annual Report 2023
113
Subsea 7 S.A. Annual Report 2023
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 2024 to 2028. These projections included
certain considerations for climate change-related risks and opportunities. Future uncertainty around climate-related risks continue to be
monitored including policy, regulatory, legal, technological, market and societal considerations. The present value of future cash flows is
most sensitive to the terminal value assumptions; management considers these represent an appropriate balance between the oil and
gas-related business and the growing renewables sector within the transition to a lower-carbon economy. Cash flows beyond the five-
year period were extrapolated in perpetuity using a 2.0% (2022: 2.0%) growth rate for the Subsea and Conventional business unit and
a 4.0% (2022: 4.0%) growth rate for the Renewables business unit to determine the terminal value.
The pre-tax discount rate applied to the risk adjusted cash flow projections was 13.6% (2022: 13.3%). Further information is included in
Note 1 ‘General information’ within the Measurement and disclosure of climate-related matters section.
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:
• Adjusted EBITDA forecasts;
• capital expenditure forecasts;
• the pre-tax discount rate; and
• the growth rate used to extrapolate cash flows.
Adjusted EBITDA forecasts – the Adjusted 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.
Replacement capital expenditure forecasts – the capital expenditure forecast for the Group is dependent on a combination of factors
including market size, asset utilisation and asset age. Assumptions are based on a combination of internal and external studies,
management judgements and historical information, adjusted for any foreseen changes in market conditions. Replacement capital
expenditure represents the amounts estimated to maintain the function of the assets in the CGU.
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 reflected in the discount rate applied to individual
CGUs as the CGU cash flow projections were risk adjusted.
Growth rate estimates – the 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:
• forecast Adjusted EBITDA – a 10% increase and decrease in the assumptions during the five-year period from 2024 to 2028, and the
Adjusted EBITDA upon which terminal values have been calculated;
• replacement capital expenditure forecast – a 25% increase and decrease in the forecast replacement capital expenditure
assumptions during the five-year period from 2024 to 2028, and the capital expenditure upon which terminal values have been
calculated;
• pre-tax discount rate – an increase and decrease by 2 percentage points; and
• growth rate – an increase and decrease by 2 percentage points.
The impact on goodwill as a result of changes to the key assumptions used in the sensitivity analysis is as follows:
Adjusted EBITDA
Discount rate
Capital expenditure
Long-term growth rate
(in $ millions)
10% decrease
10% increase
2% decrease
2% increase
25% decrease
25% increase
2% decrease
2% increase
Renewables
(24.7)
–
–
(87.3)
–
–
(3.1)
–
4Subsea
(2.1)
–
–
(3.5)
–
(1.7)
(2.0)
–
X
odus
(2.8)
–
–
(5.2)
–
–
(2.3)
–
CGUs not impaired and not sensitive to impairment
Changes to the key assumptions used in the sensitivity analysis would not, in isolation, cause the recoverable amount of the Norway,
Floating Wind or UK GIRM 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.
113
Subsea 7 S.A. Annual Report 2023
Strategic Report Subsea 7 S.A. Financial Statements GlossaryGovernance Consolidated Financial Statements
114
Notes to the Consolidated Financial Statements continued
Subsea 7 S.A. Annual Report 2023
13. Intangible assets
Other
(in $ millions) Software
intangibles
Total
Cost
A
t 1 January 2022
43.9
75.8
119.7
A
dditions
3.0
8.0
11.0
Disposals
(0.1)
–
(0.1)
Exchange differences
(4.1)
(6.5)
(10.6)
A
t 31 December 2022
42.7
77.3
120.0
A
dditions
19.1
8.0
27.1
Reclassifications
4.6
7.8
12.4
Exchange differences
2.0
3.6
5.6
A
t 31 December 2023
68.4
96.7
165.1
A
ccumulated amortisation and impairment
A
t 1 January 2022
23.9
60.8
84.7
Charge for the year
3.6
8.7
12.3
Eliminated on disposal
(0.1)
–
(0.1)
Exchange differences
(2.3)
(5.7)
(8.0)
A
t 31 December 2022
25.1
63.8
88.9
Charge for the year
3.7
9.4
13.1
Impairment
–
0.9
0.9
Exchange differences
1.4
2.3
3.7
A
t 31 December 2023
30.2
76.4
106.6
Carrying amount:
A
t 31 December 2022
17.6
13.5
31.1
A
t 31 December 2023
38.2
20.3
58.5
(a)
(a) Amounts reclassified from property, plant and equipment.
The table above includes assets under construction of $29.3 million (2022: $8.9 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 2023 and impairment charges of $0.9 million (2022: $nil)
were recognised.
114
Subsea 7 S.A. Annual Report 2023
115
Subsea 7 S.A. Annual Report 2023
14. Property, plant and equipment
Operating Land and Other
(in $ millions) Vessels equipment buildings
assets
Total
Cost
A
t 1 January 2022
5,998.0
1,017.3
523.1
58.0
7,596.4
A
dditions
176.9
19.5
8.5
17.7
222.6
Exchange differences
(52.3)
(43.7)
(14.4)
(7.0)
(117.4)
Transfers
(20.6)
24.3
–
(3.7)
–
A
ssets held for sale (Note 20)
(222.3)
–
–
–
(222.3)
Disposals
(23.6)
(7.8)
–
(2.1)
(33.5)
A
t 31 December 2022
5,856.1
1,009.6
517.2
62.9
7,445.8
A
dditions
495.2
61.6
11.2
9.7
577.7
Exchange differences
21.9
17.9
5.9
1.8
47.5
Transfers
(8.0)
13.5
(2.9)
(2.6)
–
Reclassifications
–
(11.9)
–
(0.5)
(12.4)
A
ssets held for sale (Note 20)
(125.3)
(1.0)
–
–
(126.3)
Disposals
(47.3)
(25.9)
(35.0)
(4.2)
(112.4)
A
t 31 December 2023
6,192.6
1,063.8
496.4
67.1
7,819.9
A
ccumulated depreciation and impairment
A
t 1 January 2022
2,329.7
821.3
314.4
50.0
3,515.4
Charge for the year
253.8
66.9
18.4
6.5
345.6
Impairments
–
2.3
–
–
2.3
Impairment reversals
(55.6)
–
–
–
(55.6)
Exchange differences
(28.1)
(36.9)
(6.1)
(3.1)
(74.2)
A
ssets held for sale (Note 20)
(176.8)
–
–
–
(176.8)
Eliminated on disposals
(23.5)
(7.3)
–
(2.1)
(32.9)
A
t 31 December 2022
2,299.5
846.3
326.7
51.3
3,523.8
Charge for the year
291.8
36.5
16.2
6.4
350.9
Impairments
75.4
–
–
–
75.4
Impairment reversals
(25.9)
–
–
–
(25.9)
Exchange differences
12.5
15.1
2.6
0.7
30.9
A
ssets held for sale (Note 20)
(94.3)
–
–
–
(94.3)
Eliminated on disposals
(46.1)
(25.8)
(35.0)
(4.0)
(110.9)
A
t 31 December 2023
2,512.9
872.1
310.5
54.4
3,749.9
Carrying amount:
A
t 31 December 2022
3,556.6
163.3
190.5
11.6
3,922.0
A
t 31 December 2023
3,679.7
191.7
185.9
12.7
4,070.0
(a)
(a) Amounts reclassified to intangible assets.
The table above includes assets under construction of $475.1 million at 31 December 2023 (2022: $431.1 million).
An impairment test was performed on the balances of property, plant and equipment at 31 December 2023 and impairments
totalling $75.4 million (2022: $2.3 million) were recognised where the future recoverable amounts were reassessed and reduced.
The impairment charges relate primarily to vessel-related equipment and impairments on vessels prior to being recognised as assets
classified as held for sale. Impairment reversals totalling $25.9 million (2022: $55.6 million) were recognised in relation to a vessel driven
by an upward revision in forecast utilisation. The impairments and impairment reversal 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.
115
Subsea 7 S.A. Annual Report 2023
Strategic Report Subsea 7 S.A. Financial Statements GlossaryGovernance Consolidated Financial Statements
116
Notes to the Consolidated Financial Statements continued
Subsea 7 S.A. Annual Report 2023
15. Right-of-use assets
Operating Land and Other
(in $ millions) Vessels equipment buildings
assets
Total
Cost
A
t 1 January 2022
283.8
9.2
138.6
3.0
434.6
A
dditions
62.4
1.1
5.4
–
68.9
Exchange differences
(12.8)
(0.2)
(7.0)
–
(20.0)
Remeasurement
65.9
5.5
(0.3)
(0.2)
70.9
Disposals
(26.4)
(0.9)
(7.8)
(0.1)
(35.2)
A
t 31 December 2022
372.9
14.7
128.9
2.7
519.2
A
dditions
225.0
0.3
24.3
0.3
249.9
Exchange differences
(2.6)
0.1
2.1
0.5
0.1
Remeasurement
73.3
–
12.4
–
85.7
Disposals
(70.5)
(0.3)
(18.6)
(1.3)
(90.7)
A
t 31 December 2023
598.1
14.8
149.1
2.2
764.2
A
ccumulated amortisation and impairment
A
t 1 January 2022
157.4
4.9
64.2
1.7
228.2
Charge for the year
74.3
4.2
19.6
0.7
98.8
Impairment reversals
–
–
(3.7)
–
(3.7)
Exchange differences
(8.0)
(0.1)
(3.1)
(0.1)
(11.3)
Eliminated on disposals
(26.4)
(0.8)
(7.5)
(0.1)
(34.8)
A
t 31 December 2022
197.3
8.2
69.5
2.2
277.2
Charge for the year
134.1
4.3
22.5
0.5
161.4
Exchange differences
(2.0)
0.2
(1.4)
0.1
(3.1)
Eliminated on disposals
(70.5)
(0.3)
(18.6)
(1.3)
(90.7)
A
t 31 December 2023
258.9
12.4
72.0
1.5
344.8
Carrying amount:
A
t 31 December 2022
175.6
6.5
59.4
0.5
242.0
A
t 31 December 2023
339.2
2.4
77.1
0.7
419.4
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 and 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 2023 with no impairment or impairment reversals being recognised
(2022: impairment reversals $3.7 million).
116
Subsea 7 S.A. Annual Report 2023
117
Subsea 7 S.A. Annual Report 2023
16. Interests in associates and joint arrangements
Interests in associates and joint ventures
At 31 December 2023 the Group had interests in ten joint ventures and one associate. The Group’s ownership interests were as
follows:
Subsea7
Year end Country of registration
Operating segment
Classification
ownership %
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
OneSubsea
31 December
Various
Subsea and Conventional
Associate
10
SapuraAcergy Assets Pte Ltd
(b)
31 January
Malaysia
Subsea and Conventional
Joint Venture
51
SapuraAcergy Sdn Bhd
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)
(b)
(a) The OneSubsea associate comprises three entities: OneSubsea Processing AS, OneSubsea Investments UK Limited and OneSubsea LLC.
(b) The Group has 50% equity ownership in 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 the 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 and associates are accounted for using the equity method. Financial information, using consistent
accounting policies, for the year ended 31 December 2023 is used for all entities. The movement in the balance of investments in joint
ventures and associates was as follows:
(in $ millions) 2023
2022
A
t year beginning
25.5
28.6
Share of net income/(loss) of associates and joint ventures
8.2
(3.0)
Share of other comprehensive income of associates and joint ventures
2.5
–
Net reclassification of investment balances
(0.9)
1.7
Recognition of investment in associate
307.8
–
Exchange differences
(1.1)
(1.8)
A
t year end
342.0
25.5
Net reclassification of investment balances
This amount relates primarily to reclassification within the Group’s balance sheet of the movement of negative investment balances to
other non-current liabilities.
Recognition of investment in associate
On 2 October 2023, the Group acquired a 10% ownership interest in OneSubsea, a group of companies comprising the subsea
businesses of SLB and Aker Solutions. OneSubsea is 70% owned by SLB, 20% by Aker Solutions and 10% by Subsea7. The Group’s
consideration for its 10% investment was $306.5 million with 50% paid on 2 October 2023 and the remainder payable on or before 30
June 2024. OneSubsea operates within Subsea Integration Alliance.
When determining significant influence management considered legal documentation, such as the Shareholders’ Agreement
detailing reserved matters which require unanimous approval, as well as the commercial substance underlying the transaction. IAS 28,
‘Investments in Associates and Joint Ventures’, provides guidance to determine the existence of significant influence. This guidance
includes evidence such as representation on the Board of Directors or equivalent governing body, participation in the policy-making
process including decisions about dividends or other distributions and the provision of essential technical information. Applying this
guidance, management concluded it was appropriate to recognise OneSubsea as an associate of the Group.
Derecognition of investment in joint ventures
On 14 March 2023, the Group acquired the remaining shares in Astori Sp. z.o.o. and effective from that date the joint venture became a
wholly-owned subsidiary of the Group.
117
Subsea 7 S.A. Annual Report 2023
Strategic Report Subsea 7 S.A. Financial Statements GlossaryGovernance Consolidated Financial Statements
118
Notes to the Consolidated Financial Statements continued
Subsea 7 S.A. Annual Report 2023
16. Interests in associates and joint arrangements continued
Summarised financial information
At 31 December 2023, none of the Group’s investments in joint ventures were individually material to the Group therefore summarised
financial information has not been provided.
On 2 October 2023, the Group acquired a 10% share in OneSubsea for a consideration of $306.5 million. The financial results
of the OneSubsea associate are significant to the Group and summary financial information, including a reconciliation between the
summarised financial information presented and the carrying amount of the Group’s investment, is shown below. Amounts presented
represent an IFRS conversion of OneSubsea’s US Generally Accepted Accounting Principles (US GAAP) Consolidated Income
Statement and Consolidated Balance Sheet. The amounts presented are inclusive of adjustments recognised by management when
applying the equity method in addition to provisional fair value adjustments applied at the date of the transaction. Management expects
that the fair value assessment of the acquired identifiable assets and assumed liabilities of OneSubsea will be concluded during 2024.
At 31 December 2023, the results of the fair value assessment are provisional.
For the period 2 October 2023 to 31 December 2023 (in $ millions)
2023
31 Dec
Revenue
1,021.0
Net income
80.0
Other comprehensive income
25.0
Total comprehensive income
105.0
2023
A
t (in $ millions)
31 Dec
Non-current assets
3,274.9
Current assets
2,812.0
Current liabilities
(2,574.0)
Non-current liabilities
(342.0)
Net assets
3,170.9
Total equity
(3,170.9)
Subsea7 Group share of equity (10%)
317.0
A
t (in $ millions)
2023
31 Dec
Carrying amount of associate at 2 October 2023
306.5
Net income attributable to the Group
8.0
Other comprehensive income attributable to the Group
2.5
Subsea7 Group’s share of equity
317.0
Stamp duty and professional fees
1.3
Carrying amount of associate at year end
318.3
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 Subsea7
and OneSubsea. As part of the alliance, Subsea7 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
Subsea7 and OneSubsea groups.
Saudi Arabian Oil Company awarded a long-term frame agreement to a consortium consisting of Subsea7 and L&T Hydrocarbon
Engineering. This unincorporated consortium is governed by a consortium agreement, and Subsea7 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.
118
Subsea 7 S.A. Annual Report 2023
119
Subsea 7 S.A. Annual Report 2023
17. Advances and receivables
A
t (in $ millions)
2023 2022
31 Dec 31 Dec
Non-current amounts due from associates and joint ventures
36.5
37.4
A
llowance for credit impairment
(1.6)
(1.6)
34.9
35.8
Capitalised fees for long-term loan facilities
1.9
1.8
Deposits held by third parties
0.9
1.1
Other receivables
29.3
27.2
Total
67.0
65.9
18. Inventories
A
t (in $ millions)
2023 2022
31 Dec 31 Dec
Materials and non-critical spares
10.5
8.8
Consumables
49.6
40.7
Total
60.1
49.5
For the year ended (in $ millions)
2023 2022
31 Dec 31 Dec
Total cost of inventory charged to the Consolidated Income Statement
183.1
163.7
Write-down of inventories charged to the Consolidated Income Statement
1.8
1.4
Provision for obsolescence charged to the Consolidated Income Statement
0.7
0.3
At 31 December 2023 inventories included a provision for obsolescence of $5.1 million (2022: $5.2 million). There were no inventories
pledged as security.
19. Trade and other receivables
A
t (in $ millions)
2023 2022
31 Dec 31 Dec
Trade receivables
719.7
431.5
A
llowance for expected credit losses
(1.3)
(2.0)
A
llowance for credit impairment
(23.0)
(4.4)
695.4
425.1
Current amounts due from associates and joint ventures
8.1
3.7
A
llowance for credit impairment
(2.1)
(2.1)
6.0
1.6
Other receivables
24.1
32.5
A
dvances to suppliers
74.5
28.5
Other taxes receivable
121.8
98.5
Total
921.8
586.2
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.
119
Subsea 7 S.A. Annual Report 2023
Strategic Report Subsea 7 S.A. Financial Statements GlossaryGovernance Consolidated Financial Statements
120
Notes to the Consolidated Financial Statements continued
Subsea 7 S.A. Annual Report 2023
20. Assets classified as held for sale
During the second quarter of 2023, the Group entered into an agreement to dispose of two vessels, Seven Antares and Seven Inagha,
which had been classified as held for sale at December 2022. An impairment charge of $20.5 million was recognised within the Subsea
and Conventional business unit to reduce the carrying amount to fair value less cost of disposal. The disposal of the vessels and
associated equipment was completed in early 2024.
During the fourth quarter of 2023, the Group classified the heavy-lift renewables vessel Seaway Yudin within assets classified as held for
sale. At 31 December 2023, the Group had an agreement to dispose of the vessel and the disposal was completed in early 2024.
21. Other accrued income and prepaid expenses
A
t (in $ millions)
2023 2022
31 Dec 31 Dec
Unbilled revenue
91.8
93.4
A
llowance for expected credit losses
(0.2)
(0.4)
91.6
93.0
Prepaid expenses
152.4
111.6
Total
244.0
204.6
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 $10.9 million (2022: $6.6 million)
was recognised in the year relating to performance obligations satisfied in previous periods. The increase in the balance during the year
was mainly due to increased activity in the UK.
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)
2023 2022
31 Dec 31 Dec
A
llowance for expected credit losses
A
t year beginning
(0.4)
(0.4)
Decrease in allowance recognised in profit or loss
0.2
–
A
t year end
(0.2)
(0.4)
Details of how the Group manages its credit risk are shown in Note 33 ‘Financial instruments’.
At 31 December 2023, the allowance for credit impairment in respect of unbilled revenue was $nil (2022: $nil).
22. Construction contracts
(in $ millions)
Construction Construction
contracts – contracts –
assets liabilities
A
t 31 December 2023
Current
692.2
(424.8)
A
llowance for expected credit losses
(0.4)
–
Total
691.8
(424.8)
(in $ millions)
Construction Construction
contracts – contracts –
assets liabilities
A
t 31 December 2022
Current
809.5
(319.4)
A
llowance for expected credit losses
(1.8)
–
Total
807.7
(319.4)
(in $ millions)
2023 2022
31 Dec 31 Dec
Revenue recognised which was included in construction contract liabilities at beginning of year
313.8
195.0
Revenue recognised from performance obligations satisfied in previous periods
16.9
78.0
120
Subsea 7 S.A. Annual Report 2023
121
Subsea 7 S.A. Annual Report 2023
Revenue recognised which was included in construction contract liabilities at the beginning of the year of $313.8 million
(2022: $195.0 million) represents amounts included within the construction contract liabilities balance at 1 January 2023 which were
recognised as revenue during the year. Revenue recognised from performance obligations satisfied in previous periods of $16.9 million
(2022: $78.0 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
‘Material 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 $115.9 million decrease in construction contract assets and the $105.4 million increase in construction contract liabilities during
2023 was driven by the phasing of the execution of work and associated billing on fixed-price contracts executed by the Group.
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)
2023 2022
31 Dec 31 Dec
A
llowance for expected credit losses
A
t year beginning
(1.8)
(3.2)
Decrease in allowance recognised in profit or loss
1.4
1.4
A
t year end
(0.4)
(1.8)
The allowance for expected credit losses decreased during the year due to fluctuations in the mix of customers, the size of amounts
due and the default probability.
At 31 December 2023, the allowance for credit impairment recognised in connection with construction contract assets was $nil
(2022: $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 2023
Expected year of execution
2027
(in $ millions)
2024
2025
2026
and beyond
Total
Subsea and Conventional
4,710.5
2,893.2
861.6
78.4
8,543.7
Renewables
966.4
871.0
168.7
11.2
2,017.3
Corporate
25.8
–
–
–
25.8
Total
5,702.7
3,764.2
1,030.3
89.6
10,586.8
A
t 31 December 2022
Expected year of execution
2026
(in $ millions)
2023
2024
2025
and beyond
Total
Subsea and Conventional
3,815.8
2,565.6
1,178.9
581.0
8,141.3
Renewables
367.3
392.6
83.9
0.3
844.1
Corporate
20.9
1.3
–
–
22.2
Total
4,204.0
2,959.5
1,262.8
581.3
9,007.6
The estimate of the transaction price does not include any amounts of variable consideration which are constrained.
121
Subsea 7 S.A. Annual Report 2023
Strategic Report Subsea 7 S.A. Financial Statements GlossaryGovernance Consolidated Financial Statements
122
Notes to the Consolidated Financial Statements continued
Subsea 7 S.A. Annual Report 2023
23. Cash and cash equivalents
A
t (in $ millions)
2023 2022
31 Dec 31 Dec
Cash and cash equivalents
750.9
645.6
Cash and cash equivalents included amounts totalling $24.7 million (2022: $35.2 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.
24. Issued share capital
Authorised shares
2023
31 Dec 2023 2022 2022
Number of 31 Dec 31 Dec 31 Dec
shares in $ millions Number of shares in $ millions
A
uthorised common shares, $2.00 par value
450,000,000
900.0
450,000,000
900.0
Issued shares
2023
31 Dec 2023 2022 2022
Number of 31 Dec 31 Dec 31 Dec
shares in $ millions Number of shares in $ millions
Fully paid and issued common shares
304,294,272
608.6
300,000,000
600.0
The issued common shares consist of:
Common shares outstanding
300,454,468
600.9
290,205,733
580.4
Treasury shares at par value (Note 25)
3,839,804
7.7
9,794,267
19.6
Total
304,294,272
608.6
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. The programme was initially
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 30,000,000 common shares of Subsea 7 S.A. On 19 April 2023, the Board of Directors authorised
a 24-month extension to this programme, which will now expire on 18 April 2025, in accordance with the authority granted to the Board
of Directors at the Extraordinary General Meeting held on 18 April 2023.
During 2023, no shares were repurchased (2022: 5,648,072 repurchased for consideration of $46.0 million). At 31 December 2023,
the cumulative number of shares repurchased under this programme was 10,000,212 for a total consideration of $76.8 million.
All repurchases were made in the open market on the Oslo Børs, pursuant to certain conditions, and were in conformity with Article
430-15 of Luxembourg Company Law. At 31 December 2023, the remaining repurchased shares, which had not been reallocated
relating to share-based payments, were held as treasury shares.
Summary
At 31 December 2023, Subsea 7 S.A. held 3,839,804 treasury shares (2022: 9,794,267), which amounted to 1.26% (2022: 3.26%)
of the total number of issued shares.
2023 2022
Number of 2023 Number of 2022
shares in $ millions shares in $ millions
A
t year beginning
9,794,267
75.0
4,534,107
32.9
Shares repurchased
–
–
5,648,072
46.0
Shares reallocated relating to share-based payments
(272,496)
(2.3)
(387,912)
(3.9)
Shares cancelled
(5,681,967)
(41.6)
–
–
Balance at year end
3,839,804
31.1
9,794,267
75.0
122
Subsea 7 S.A. Annual Report 2023
123
Subsea 7 S.A. Annual Report 2023
26. Non-controlling interests
At 31 December 2023, the Group’s respective ownership interests in subsidiaries which are non-wholly-owned were as follows:
Subsea7
Year end
Country of registration
 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
PT Subsea 7 Indonesia
31 December
Indonesia
94.9
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 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 2023 has been used for all entities.
The movement in the equity attributable to non-controlling interests was as follows:
(in $ millions) 2023
2022
A
t year beginning
329.1
304.5
Share of net loss for the year
(5.4)
(20.7)
Seaway 7 ASA – equity share issuance
–
54.3
Seaway 7 ASA – Subsea 7 S.A. shares issued in consideration
(127.0)
–
Seaway 7 ASA – cash consideration
(12.6)
–
Reclassification of non-controlling interests to equity attributable to shareholders of Subsea 7 S.A.
(150.2)
(6.3)
Exchange differences
0.2
(2.7)
A
t year end
34.1
329.1
Seaway 7 AS
During the year, Seaway 7 AS (formerly Seaway 7 ASA) became a wholly-owned subsidiary of the Group. On 2 March 2023, the Group
announced it had entered into agreements to acquire 187,889,551 shares in Seaway 7 ASA. The transaction completed on 14 March
2023, with 8,540,433 Subsea 7 S.A. common shares being issued in consideration, and the Group’s respective ownership interest in
Seaway 7 ASA thereafter increasing from 72.42% to 93.94%. Following the expiry of a voluntary offer period on 14 April 2023, Subsea
7 S.A. issued 1,435,806 common shares in consideration for 3.62% of the issued shares of Seaway 7 ASA and at that date the
Group’s ownership interest in Seaway 7 ASA increased to 97.56%. Subsequent to the voluntary offer, the Group increased its
ownership interest in Seaway 7 ASA to 99.48% at 26 April 2023 with the additional shares acquired settled in cash. During May,
following the completion of the voluntary offer and subsequent compulsory acquisition, Seaway 7 ASA became a wholly-owned
subsidiary of the Group, was de-listed from Euronext Growth Oslo and renamed Seaway 7 AS.
Nigerstar 7 FZE and Nigerstar 7 Limited
On 18 October 2023, Nigerstar 7 FZE and Nigerstar 7 Limited became wholly-owned subsidiaries of the Group.
27. Borrowings
A
t (in $ millions)
2023 2022
31 Dec 31 Dec
South Korean Export Credit Agency (ECA) facility
135.2
159.8
2021
UK Export Finance (UKEF 2021) facility
420.5
195.8
2023
UK Export Finance (UKEF 2023) facility
288.9
–
Other
0.3
0.4
Total
(a)
844.9
356.0
Consisting of:
Non-current portion of borrowings
721.4
302.2
Current portion of borrowings
123.5
53.8
Total
(a)
844.9
356.0
(a) Borrowings presented in the Consolidated Balance Sheet are shown net of capitalised fees of $8.0 million, which are amortised over the period of the facility.
Commitment fees expensed during the year in respect of unused lines of credit totalled $3.0 million (2022: $4.2 million).
123
Subsea 7 S.A. Annual Report 2023
Strategic Report Subsea 7 S.A. Financial Statements GlossaryGovernance Consolidated Financial Statements
124
Notes to the Consolidated Financial Statements continued
Subsea 7 S.A. Annual Report 2023
27. Borrowings continued
Facilities
The $700 million multi-currency revolving credit and guarantee facility
On 15 June 2022, the Group entered into a $700 million multi-currency revolving credit and guarantee facility with a five-year tenor, with
two one-year extension options. 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. During the year, the Group requested a one-year extension to the multi-currency revolving credit and guarantee facility which
will now mature in June 2028. The facility size will reduce from $700 million to $600 million in June 2027 until maturity in June 2028.
The facility was unutilised at 31 December 2023.
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. At 31 December 2023, the
amount outstanding under the facility was $135.2 million (2022: $159.8 million).
2021 UK Export Finance (UKEF 2021) 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 facility has a five-year tenor which commenced when the facility was fully drawn. 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 2023, the amount outstanding under the facility, net of facility fees, was
$420.5 million (2022: $195.8 million).
2023 UK Export Finance (UKEF 2023) facility
On 27 July 2023, the Group entered into a $450 million five-year amortising loan facility backed by a $360 million guarantee from UK
Export Finance. The Group has a two-year availability period during which to draw on the facility, and the facility has a five-year tenor
which commences the earlier of availability period expiry or when the facility is fully drawn. The lenders have classified the facility as a
green loan as the funds are for use within the Group’s Renewables business unit. The facility is guaranteed by Subsea 7 S.A. and
Subsea 7 Finance (UK) PLC, a wholly-owned subsidiary of the Group. At 31 December 2023, the amount outstanding under the facility,
net of facility fees, was $288.9 million.
Utilisation of facilities
A
t (in $ millions)
2023 2023 2023 2022 2022 2022
31 Dec 31 Dec 31 Dec 31 Dec 31 Dec 31 Dec
Utilised Unutilised Total Utilised Unutilised Total
Committed borrowing facilities
852.6
857.6
1,710.2
359.8
1,000.0
1,359.8
Other facilities
In addition to the above there are a number of uncommitted, unsecured bi-lateral arrangements in place in order to provide specific
geographical coverage. The utilisation of these facilities at 31 December 2023 was $2.2 billion (2022: $1.6 billion).
28. Lease liabilities
A
t (in $ millions)
2023 2022
31 Dec 31 Dec
Maturity analysis – contractual undiscounted cash flows
Within one year
194.8
107.8
Years two to five inclusive
317.4
165.7
A
fter five years
9.9
10.2
Total undiscounted lease liabilities
522.1
283.7
Effect of discounting
(63.8)
(26.7)
Discounted lease liabilities
458.3
257.0
Consisting of:
Non-current
290.5
161.2
Current
167.8
95.8
Total discounted lease liabilities
458.3
257.0
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 2023 were $164.9 million (2022: $110.7 million).
124
Subsea 7 S.A. Annual Report 2023
125
Subsea 7 S.A. Annual Report 2023
29. Other non-current liabilities
A
t (in $ millions)
2023 2022
31 Dec 31 Dec
Other
1.1
5.3
Total
1.1
5.3
30. Trade and other liabilities
A
t (in $ millions)
2023 2022
31 Dec 31 Dec
A
ccruals
885.6
720.1
Trade payables
348.0
317.5
Current amounts due to associates and joint ventures
7.4
7.3
A
ccrued salaries and benefits
132.2
118.9
Withholding taxes
23.3
23.8
Other taxes payable
88.8
68.9
Other current liabilities
198.6
13.9
Total
1,683.9
1,270.4
Included within other current liabilities is $153.3 million payable in relation to the Group’s 10% investment in OneSubsea, an associate
of the Group.
31. Provisions
Onerous
fixed-price
(in $ millions) Claims
Decommissioning
Restructuring
contracts
Other
Total
A
t 1 January 2022
13.7
10.0
2.8
124.6
30.6
181.7
A
dditional provision in the year
6.5
1.2
0.6
97.5
7.3
113.1
Utilisation of provision
(0.6)
(0.6)
(2.3)
(102.9)
(4.6)
(111.0)
Unused amounts released during the year
(1.0)
(4.1)
(0.6)
(32.1)
(9.7)
(47.5)
Unwinding of discount rate
–
–
–
(0.1)
–
(0.1)
Exchange differences
0.9
(0.4)
0.1
(1.3)
(0.8)
(1.5)
A
t 31 December 2022
19.5
6.1
0.6
85.7
22.8
134.7
A
dditional provision in the year
4.6
2.3
–
169.7
5.9
182.5
Utilisation of provision
(2.1)
(1.9)
–
(170.8)
(6.1)
(180.9)
Unused amounts released during the year
(4.1)
–
(0.3)
(2.4)
(7.0)
(13.8)
Exchange differences
0.5
0.1
–
1.7
0.3
2.6
A
t 31 December 2023
18.4
6.6
0.3
83.9
15.9
125.1
A
t (in $ millions)
2023 2022
31 Dec 31 Dec
Consisting of:
Non-current provisions
24.6
47.7
Current provisions
100.5
87.0
Total
125.1
134.7
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
2024 to 2026.
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 2024 and 2025.
Other provisions mainly related to onerous day-rate contracts and contingent consideration.
125
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126
Notes to the Consolidated Financial Statements continued
Subsea 7 S.A. Annual Report 2023
32. Commitments and contingent liabilities
Commitments
The Group’s commitments at 31 December 2023 consisted of:
• commitments to purchase property, plant and equipment from external suppliers of $204.4 million (2022: $402.4 million);
• contractual lease commitments, relating to vessel charters which had not commenced at 31 December 2023, totalling $211.6 million;
and
• short-term lease commitments totalling $297.0 million (2022: $22.4 million).
Contingent liabilities
A summary of the contingent liabilities is as follows:
Contingent liability Contingent liability
recognised not recognised
(in $ millions)
2023
2022
2023
2022
A
t year beginning
0.4
5.5
201.3
176.4
Movement in contingent liabilities
–
(5.4)
9.2
9.4
Exchange differences
0.1
0.3
14.3
15.5
A
t year end
0.5
0.4
224.8
201.3
Contingent liabilities recognised in the Consolidated Balance Sheet
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
2023 was $0.5 million (2022: $0.4 million).
Contingent liabilities not recognised in the Consolidated Balance Sheet
Between 2009 and 2023, 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 2023 amounted to BRL 956.3 million, equivalent to $196.6 million (2022:
BRL 908.8 million, equivalent to $174.7 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. The amounts claimed or assessed
at 31 December 2023 totalled BRL 191.8 million, equivalent to $39.4 million (2022: BRL 205.1 million, equivalent to $39.4 million).
The Group has challenged these claims. A contingent liability has been disclosed for BRL 137.2 million, equivalent to $28.2 million
(2022: BRL 138.6 million, equivalent to $26.6 million) as the disclosure criteria have been met however management believes that the
likelihood of payment is not probable. A provision of BRL 54.6 million, equivalent to $11.2 million (2022: BRL 66.5 million, equivalent to
$12.8 million) was recognised within the Consolidated Balance Sheet at 31 December 2023 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.
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.
126
Subsea 7 S.A. Annual Report 2023
127
Subsea 7 S.A. Annual Report 2023
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 ‘Material
accounting policies’.
Classification of financial instruments
Financial instruments are classified as follows:
A
t (in $ millions)
2023 2022
31 Dec 31 Dec
Carrying Carrying
amount amount
Financial assets
Restricted cash
7.4
4.4
Cash and cash equivalents (Note 23)
750.9
645.6
Financial assets mandatorily measured at fair value through profit or loss:
Foreign exchange forward contracts
0.8
1.1
Embedded derivatives
58.5
16.7
Financial assets elected to be measured at fair value through other comprehensive income:
Commodity derivatives
1.6
4.2
Other financial assets – financial investments
1.1
1.1
Financial assets measured at amortised cost:
Net trade receivables (Note 19)
695.4
425.1
Net non-current amounts due from associates and joint ventures (Note 17)
34.9
35.8
Net current amounts due from associates and joint ventures (Note 19)
6.0
1.6
Other financial receivables
23.5
22.1
Financial liabilities
Financial liabilities mandatorily measured at fair value through profit or loss:
Foreign exchange forward contracts
(1.2)
(1.1)
Embedded derivatives
(64.2)
(34.3)
Commodity derivatives
(0.1)
(0.2)
Contingent consideration
(1.2)
(1.6)
Financial liabilities elected to be measured at fair value through other comprehensive income:
Commodity derivatives
(2.4)
(0.3)
Financial liabilities measured at amortised cost:
Trade payables (Note 30)
(348.0)
(317.5)
Lease liabilities (Note 28)
(458.3)
(257.0)
Current amounts due to associates and joint ventures (Note 30)
(7.4)
(7.3)
Borrowings (Note 27)
(844.9)
(356.0)
Other financial payables
(160.9)
(15.4)
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)
2023 2022
31 Dec 31 Dec
Interest income from financial assets measured at amortised cost
25.2
9.0
Interest cost and fees from financial liabilities measured at amortised cost
(58.7)
(20.2)
Net fair value gains/(losses) on financial assets measured at fair value through profit or loss
41.5
(29.9)
Net fair value losses on financial liabilities measured at fair value through profit or loss
(29.5)
(6.2)
127
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128
Notes to the Consolidated Financial Statements continued
Subsea 7 S.A. Annual Report 2023
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 $5.2 million
(2022: $7.5 million).
Cash and cash equivalents
At 31 December 2023, the Group held cash and cash equivalents of $750.9 million (2022: $645.6 million) which included cash and
cash equivalents available on demand of $216.5 million (2022: $170.0 million) and time deposits with financial institutions of
$534.4 million (2022: $475.6 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.
A
t (in $ millions)
2023 2022
31 Dec 31 Dec
Deposits:
Counterparties rated prime grade
50.0
115.0
Counterparties rated high grade
65.0
100.0
Counterparties rated upper-medium grade
269.9
175.0
Counterparties rated lower-medium grade
146.6
84.2
Counterparties rated non-investment grade
2.9
1.4
Total
534.4
475.6
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;
• equity investments for which the entity has not elected to recognise fair value gains and losses through other comprehensive
income; or
• derivative financial instruments.
Derivative financial instruments recognised in the Consolidated Balance Sheet were as follows:
A
t (in $ millions)
31 Dec 31 Dec 31 Dec 31 Dec 31 Dec 31 Dec
2023 2023 2023 2022 2022 2022
Assets Liabilities Total Assets Liabilities Total
Non-current
Embedded derivatives
29.5
(30.7)
(1.2)
3.6
(28.2)
(24.6)
Commodity derivatives
–
(1.9)
(1.9)
1.7
(0.5)
1.2
Total
29.5
(32.6)
(3.1)
5.3
(28.7)
(23.4)
Current
Forward foreign exchange contracts
0.8
(1.2)
(0.4)
1.1
(1.1)
–
Embedded derivatives
29.0
(33.5)
(4.5)
13.1
(6.1)
7.0
Commodity derivatives
1.6
(0.6)
1.0
2.5
–
2.5
Total
31.4
(35.3)
(3.9)
16.7
(7.2)
9.5
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 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.
128
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129
Subsea 7 S.A. Annual Report 2023
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 2023, 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, Azerbaijan Manat, Brazilian Real, Canadian Dollar, Central African CFA Franc, Chinese Yuan, Danish Krone,
Egyptian Pound, Ghanaian Cedi, Korean Won, Malaysian Ringgit, Mexican Peso, Nigerian Naira, Norwegian Krone, Qatar Rial, Saudi
Arabian Riyal, Singaporean Dollar, Taiwan Dollar, Turkish Lira, UAE Dirham and West African CFA Franc.
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 2023, 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 on 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 losses reported in other gains and losses by $11.9 million for the year ended 31 December 2023
(2022: $20.8 million). The impact would be a decrease in reported equity of $21.1 million (2022: $30.5 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.
129
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Notes to the Consolidated Financial Statements continued
Subsea 7 S.A. Annual Report 2023
33. Financial instruments continued
The following table details the external forward foreign exchange contracts outstanding:
At 31 December 2023
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
45.5
–
(46.8)
–
(0.2)
–
Danish Krone
20.8
–
(20.3)
–
0.3
–
Euro
114.9
–
(24.1)
–
(0.3)
–
Norwegian Krone
11.6
–
(212.5)
–
(0.2)
–
Singapore Dollar
30.8
–
(1.5)
–
–
–
A
ustralian Dollar
32.3
–
–
–
–
–
Total
255.9
–
(305.2)
–
(0.4)
–
At 31 December 2022
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
120.3
–
129.3
–
0.1
–
Euro
64.7
–
50.4
–
(0.1)
–
Total
185.0
–
179.7
–
–
–
Hedge accounting
The hedging reserve, included within other reserves in the Consolidated Balance Sheet, represents hedging (losses)/gains recognised
on the effective portion of commodity cash flow hedges. The movement in the hedging reserve was as follows:
(in $ millions)
2023 2022
31 Dec 31 Dec
A
t year beginning
3.8
10.4
(Losses)/gains on the effective portion of derivative financial
instruments deferred to equity:
Cash flow on commodity hedges
(6.4)
3.8
Tax recognised in other comprehensive income
–
2.4
Amounts reclassified to the Consolidated Income Statement
1.8
(12.8)
A
t year end
(0.8)
3.8
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 $0.5 million (2022: $2.7 million). 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 is 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 2023 and at 31 December 2022, none of the Group’s outstanding external forward foreign exchange contracts had
been designated as hedging instruments.
130
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131
Subsea 7 S.A. Annual Report 2023
Commodity hedging
The Group enters into commodity hedging to manage risk on specific exposures, swapping floating price to fixed. At 31 December
2023, the fair values of commodity trades amounted to $1.6 million within financial assets (2022: $4.2 million) and $2.5 million within
financial liabilities (2022: $0.5 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 2023 amounted to $58.5 million related to financial assets
(2022: $16.7 million) and $64.2 million related to financial liabilities (2022: $34.3 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
The Group’s facilities, as disclosed in Note 27 ‘Borrowings’, utilise the Secured Overnight Financing Rate (SOFR) as the reference rate
for borrowings.
At 31 December 2023, the Group performed a sensitivity analysis on borrowings to indicate the extent to which a change in the SOFR
would affect net income/(loss) and equity. The analysis is based on a movement in the SOFR of 1%, with all other variables held
constant. A movement of 1% reflects a reasonably possible sensitivity when compared to historical movements.
A 1% movement in the SOFR would impact interest on financial liabilities measured at amortised cost reported in finance costs
by $6.8 million for the year ended 31 December 2023 (2022: $3.8 million). Reported equity would be impacted by $5.8 million
(2022: $3.3 million).
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 127.
131
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132
Notes to the Consolidated Financial Statements continued
Subsea 7 S.A. Annual Report 2023
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 ‘Financial Instruments’ 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 energy companies, international energy companies or independent 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 customers 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.
132
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133
Subsea 7 S.A. Annual Report 2023
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
An allowance for lifetime ECLs is recognised where the
aged greater than 30 days past due. impact is determined to be material.
Monitored
The counterparty has a low risk of default. Balances aged
The allowance for lifetime ECLs is increased where the
greater than 30 days past due have arisen due to ongoing impact is determined to be material.
commercial discussions associated with the close-out of
contractual requirements and are not considered to be
indicative of an increased risk of default.
In default
Balances are greater than 90 days past due with the ageing
The asset is considered to be credit impaired and an
not being as a result of ongoing commercial discussions allowance for the estimated incurred loss is recognised
associated with the close-out of contractual commitments, where material.
or there is evidence indicating that the counterparty is in
severe financial difficulty and collection of amounts due
is improbable.
Written off
There is evidence that the counterparty is in severe financial
The gross receivable and associated allowance are
difficulty and the Group has no realistic prospect of recovery both derecognised.
of balances due.
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:
A
t (in $ millions)
2023 2022
31 Dec 31 Dec
Performing
672.2
412.5
Monitored
24.5
14.6
In default
23.0
4.4
Gross carrying amount
719.7
431.5
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
A
t (in $ millions)
2023 2022
31 Dec 31 Dec
Gross carrying amount
719.7
431.5
A
llowance for expected credit losses
(1.3)
(2.0)
A
llowance for incurred credit impairments
(23.0)
(4.4)
Net carrying amount
695.4
425.1
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 2023
More than 30 More than 60 More than 90
(in $ millions) Current days past due days past due
days past due
Total
Gross carrying amount
672.2
16.7
3.0
27.8
719.7
A
llowance for expected credit losses
(1.3)
–
–
–
(1.3)
A
llowance for incurred credit impairments
–
–
–
(23.0)
(23.0)
Net carrying amount
670.9
16.7
3.0
4.8
695.4
133
Subsea 7 S.A. Annual Report 2023
Strategic Report Subsea 7 S.A. Financial Statements GlossaryGovernance Consolidated Financial Statements
134
Notes to the Consolidated Financial Statements continued
Subsea 7 S.A. Annual Report 2023
33. Financial instruments continued
At 31 December 2022
More than 30 More than 60 More than 90
(in $ millions) Current days past due days past due days past due Total
Gross carrying amount
412.7
6.5
3.5
8.8
431.5
A
llowance for expected credit losses
(2.0)
–
–
–
(2.0)
A
llowance for incurred credit impairments
(0.3)
–
–
(4.1)
(4.4)
Net carrying amount
410.4
6.5
3.5
4.7
425.1
The movement in the allowance for expected credit losses in respect of trade receivables during the year was as follows:
(in $ millions)
2023 2022
31 Dec 31 Dec
A
llowance for expected credit losses
A
t year beginning
(2.0)
(2.2)
Decrease in allowance recognised in profit or loss
0.7
0.2
A
t year end
(1.3)
(2.0)
The movement in the allowance for credit impairment in respect of trade receivables during the year was as follows:
(in $ millions)
2023 2022
31 Dec 31 Dec
A
llowance for credit impairment
A
t year beginning
(4.4)
(3.9)
Increase in allowance recognised in profit or loss
(20.1)
(2.5)
Utilisation of allowance
1.4
1.8
Unused amounts released during the year
0.1
0.2
A
t year end
(23.0)
(4.4)
During the year ended 31 December 2023, the Group collected $0.1 million trade receivables which had been credit impaired in the
prior year (2022: $0.2 million).
Amounts due from associates and joint ventures
A
t (in $ millions)
2023 2022
31 Dec 31 Dec
Gross carrying amount
44.6
41.1
A
llowance for incurred credit impairments
(3.7)
(3.7)
Net carrying amount
40.9
37.4
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 2023
More than 30 More than 60 More than 90
(in $ millions) Current days past due days past due
days past due
Total
Gross carrying amount
33.2
–
0.2
11.2
44.6
A
llowance for incurred credit impairments
(0.2)
–
–
(3.5)
(3.7)
Net carrying amount
33.0
–
0.2
7.7
40.9
At 31 December 2022
More than 30 More than 60 More than 90
(in $ millions) Current days past due days past due
days past due
Total
Gross carrying amount
30.4
–
–
10.7
41.1
A
llowance for incurred credit impairments
(0.2)
–
–
(3.5)
(3.7)
Net carrying amount
30.2
–
–
7.2
37.4
134
Subsea 7 S.A. Annual Report 2023
135
Subsea 7 S.A. Annual Report 2023
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)
2023 2022
31 Dec 31 Dec
A
llowance for credit impairments
A
t year beginning
(3.7)
(3.5)
Exchange differences
–
(0.2)
A
t year end
(3.7)
(3.7)
At 31 December 2023, the allowance for expected credit losses recognised in connection with amounts due from associates and joint
ventures was $nil (2022: $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 2023, the allowances for expected credit losses and credit impairment recognised in connection with other financial
assets at amortised cost were $nil (2022: $nil).
Concentration of credit risk
Credit risk is primarily associated with trade receivables. Net trade receivables (Note 19 ‘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:
A
t
2023 2022
31 Dec 31 Dec
Category Category
percentage percentage
National energy companies
30%
18%
International energy companies
29%
30%
Independent energy companies
41%
52%
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 2023, two clients (2022: three clients) contributed individually to 10% or more of the Group’s
revenue. The revenue from these clients was $1,437.6 million or 24% of total Group revenue (2022: $1,873.6 million or 36%).
The five largest receivables balances by client are shown below:
A
t (in $ millions)
31 Dec
2023
Client A
121.6
Client B
73.4
Client C
67.4
Client D
45.6
Client E
44.9
A
t (in $ millions)
31 Dec
2022
Client A
63.1
Client B
49.8
Client C
38.9
Client D
28.7
Client E
21.8
The client mix for outstanding accounts receivable balances at 31 December 2023 is not the same as at 31 December 2022.
The Group did not have any significant credit exposure to any single counterparty at 31 December 2023 or 31 December 2022.
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 2023, 47% (2022: 38%) of cash was held
at counterparties with a credit rating lower than ‘upper-medium grade’ classification .
135
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Strategic Report Subsea 7 S.A. Financial Statements GlossaryGovernance Consolidated Financial Statements
136
Notes to the Consolidated Financial Statements continued
Subsea 7 S.A. Annual Report 2023
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 2023.
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 2023
(in $ millions)
Less than 3 months
1 month 1-3 months to 1 year
1-5 years
Total
Borrowings
8.5
41.5
127.8
840.5
1,018.3
Trade payables
271.9
58.7
17.4
–
348.0
A
mounts due to associates and joint ventures
7.4
–
–
–
7.4
Lease liabilities
16.4
31.0
147.4
327.3
522.1
Total
304.2
131.2
292.6
1,167.8
1,895.8
(a)
(a) Amounts totalling $134.3 million included within the category 1-5 years represent amounts with a maturity date of greater than 5 years.
At 31 December 2022
(in $ millions)
Less than 3 months
1 month 1-3 months to 1 year
1-5 years
Total
Borrowings
6.7
19.2
45.6
342.9
414.4
Trade payables
239.9
63.7
13.5
0.4
317.5
A
mounts due to associates and joint ventures
7.3
–
–
–
7.3
Lease liabilities
9.2
19.5
79.1
175.9
283.7
Total
263.1
102.4
138.2
519.2
1,022.9
The following table details the Group’s liquidity profile for its derivative financial liabilities. 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 2023
(in $ millions)
Less than 3 months
1 month
1-3 months
to 1 year
1-5 years
Total
Net settled:
Embedded derivatives
–
10.2
21.8
36.2
68.2
Commodity hedging
–
–
0.6
1.9
2.5
Gross settled:
Foreign exchange forward contract payments
377.6
–
–
–
377.6
Foreign exchange forward contract receipts
(376.4)
–
–
–
(376.4)
Total
1.2
10.2
22.4
38.1
71.9
At 31 December 2022
(in $ millions)
Less than 3 months
1 month 1-3 months to 1 year
1-5 years
Total
Net settled:
Embedded derivatives
–
0.5
5.8
30.8
37.1
Commodity hedging
–
–
–
0.5
0.5
Gross settled:
Foreign exchange forward contract payments
186.1
–
–
–
186.1
Foreign exchange forward contract receipts
(185.0)
–
–
–
(185.0)
Total
1.1
0.5
5.8
31.3
38.7
136
Subsea 7 S.A. Annual Report 2023
137
Subsea 7 S.A. Annual Report 2023
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
Dividends
Lease payable to Treasury Other
(in $ millions)
Borrowings
liabilities shareholders shares equity
Balance at 1 January 2023
356.0
257.0
–
(75.0)
38.8
(4.5)
572.3
Financing cash flows
Interest paid
(52.1)
(30.1)
–
–
–
–
(82.2)
Repayment of borrowings
(568.1)
–
–
–
–
–
(568.1)
Proceeds from borrowings
1,060.9
–
–
–
–
–
1,060.9
Payments related to lease liabilities
–
(134.8)
–
–
–
–
(134.8)
Dividends paid to shareholders of
the parent company
–
–
(112.1)
–
–
–
(112.1)
Acquisition of shares in non-wholly-
owned subsidiary
–
–
–
–
(12.6)
–
(12.6)
Total financing cash flows
440.7
(164.9)
(112.1)
–
(12.6)
–
151.1
Non-cash changes
Dividends declared
–
–
112.1
–
–
–
112.1
Addition of lease liabilities
–
249.9
–
–
–
–
249.9
Remeasurement of lease liabilities
–
85.7
–
–
–
–
85.7
Shares reallocated relating to
share-based payments
–
–
–
2.3
(2.3)
–
–
Share cancellation
–
–
–
41.6
(41.6)
–
–
Interest charges
48.2
30.1
–
–
–
(7.1)
71.2
Exchange differences
–
0.5
–
–
–
–
0.5
Total non-cash changes
48.2
366.2
112.1
43.9
(43.9)
(7.1)
519.4
Balance at 31 December 2023
844.9
458.3
–
(31.1)
(17.7)
(11.6)
1,242.8
137
Subsea 7 S.A. Annual Report 2023
Strategic Report Subsea 7 S.A. Financial Statements GlossaryGovernance Consolidated Financial Statements
138
Notes to the Consolidated Financial Statements continued
Subsea 7 S.A. Annual Report 2023
33. Financial instruments continued
Liabilities
Equity
Other
Total
Dividends
Lease payable to Treasury Other
(in $ millions) Borrowings liabilities shareholders shares equity
Balance at 1 January 2022
421.9
230.9
–
(32.9)
(11.9)
(5.1)
602.9
Financing cash flows
Interest paid
(15.8)
(11.3)
–
–
–
–
(27.1)
Repayment of borrowings
(61.6)
–
–
–
–
–
(61.6)
Cost of share repurchases
–
–
–
(46.0)
–
–
(46.0)
Proceeds from rights issue of non-
wholly-owned subsidiary
–
–
–
–
54.6
–
54.6
Payments related to lease liabilities
–
(99.4)
–
–
–
–
(99.4)
Dividends paid to shareholders of
the parent company
–
–
(31.7)
–
–
–
(31.7)
Total financing cash flows
(77.4)
(110.7)
(31.7)
(46.0)
54.6
–
(211.2)
Non-cash changes
Dividends declared
–
–
33.6
–
–
–
33.6
Addition of lease liabilities
–
77.4
–
–
–
–
77.4
Remeasurement of lease liabilities
–
62.4
–
–
–
–
62.4
Shares reallocated relating to
share-based payments
–
–
–
3.9
(3.9)
–
–
Interest charges
11.5
11.3
–
–
–
0.6
23.4
Exchange differences
–
(14.3)
(1.9)
–
–
–
(16.2)
Total non-cash changes
11.5
136.8
31.7
3.9
(3.9)
0.6
180.6
Balance at 31 December 2022
356.0
257.0
–
(75.0)
38.8
(4.5)
572.3
138
Subsea 7 S.A. Annual Report 2023
139
Subsea 7 S.A. Annual Report 2023
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 2023 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 140.
A
t (in $ millions)
2023 2023 2023 2022 2022 2022
31 Dec 31 Dec 31 Dec 31 Dec 31 Dec 31 Dec
Level 1 Level 2 Level 3 Level 1 Level 2 Level 3
Recurring fair value measurements
Financial assets:
Financial assets at fair value through profit or loss –
derivative instruments
–
0.8
–
–
1.1
–
Financial assets at fair value through profit or loss –
embedded derivatives
–
58.5
–
–
16.7
–
Financial assets at fair value through other comprehensive
income – commodity derivatives
–
1.6
–
–
4.2
–
Financial liabilities:
Financial liabilities at fair value through profit or loss –
derivative instruments
–
(1.2)
–
–
(1.1)
–
Financial liabilities at fair value through profit or loss –
embedded derivatives
–
(64.2)
–
–
(34.3)
–
Financial liabilities at fair value through profit or loss – commodity
derivatives
–
(0.1)
–
–
(0.2)
–
Financial liabilities at fair value through other comprehensive
income – commodity derivatives
–
(2.4)
–
–
(0.3)
–
Contingent consideration
–
–
(1.2)
–
–
(1.6)
(a)
139
Subsea 7 S.A. Annual Report 2023
Strategic Report Subsea 7 S.A. Financial Statements GlossaryGovernance Consolidated Financial Statements
140
Notes to the Consolidated Financial Statements continued
Subsea 7 S.A. Annual Report 2023
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 amount 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
reviews investments 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.
In accordance with IFRS 5 ‘Non-current Assets Held for Sale and Discontinued Operations’, an impairment charge of $43.7 million was
recognised to reduce the carrying amount of assets classified as held for sale and assets within property, plant and equipment to fair
value less costs to sell. The assets were measured within Level 3 of the fair value hierarchy.
(in $ millions)
Balance at Balance at
1 January Fair value Exchange 31 December
2023 Utilisation adjustments differences 2023
Contingent consideration
1.6
(0.2)
(0.5)
0.3
1.2
140
Subsea 7 S.A. Annual Report 2023
141
Subsea 7 S.A. Annual Report 2023
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 2023 included 15 individuals (2022: 14 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 payable to and shares held by Non-Executive Directors for the year ended 31 December 2023 are disclosed in the
Remuneration Report on pages 65 to 70.
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)
2023 2022
31 Dec 31 Dec
Salaries and other short-term employee benefits
6.3
5.2
Share-based payments
0.7
0.5
Post-employment benefits
0.2
0.2
Total
7.2
5.9
(a)
(a)
(b)
(c)
(d)
(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 remuneration, 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
2018 Long Term Incentive Plan and which participants are now entitled to receive. Refer to the Remuneration Report on pages 65 to 70 for details of the plan.
(d) Post-employment benefits represent the cash value of defined pension contribution payments made by the Group during the year.
Remuneration for the Chief Executive Officer and Chief Financial Officer
Total remuneration for the Chief Executive Officer and Chief Financial Officer is disclosed in the Remuneration Report on pages 65 to 70.
Shares and performance shares
Performance shares outstanding and shareholdings held at 31 December 2023 are disclosed in the Remuneration Report on pages
65 to 70.
Transactions with key management personnel
During the year, the Executive Management Team were awarded the rights to 304,000 performance shares under the Group’s 2022
Long Term Incentive Plan. Refer to the Remuneration Report on pages 65 to 70 for details of the plan.
Transactions with associates and joint ventures
The Consolidated Balance Sheet includes:
A
t (in $ millions)
2023 2022
31 Dec 31 Dec
Net non-current receivables due from associates and joint ventures (Note 17)
34.9
35.8
Net trade receivables due from associates and joint ventures (Note 19)
6.0
1.6
Trade payables due to associates and joint ventures (Note 30)
(7.4)
(7.3)
Net receivables due from associates and joint ventures
33.5
30.1
During the year the Group provided services to associates and joint ventures amounting to $6.1 million (2022: $1.2 million) and
purchased goods and services from associates and joint ventures amounting to $14.8 million (2022: $14.8 million). During 2021, the
Group advanced a loan of $33.0 million to Eidesvik Seven AS, of which $29.1 million remained outstanding at 31 December 2023.
The loan is repayable in instalments with the final amount due on 31 December 2025, subject to a one-year extension option.
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.
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 $24.9 million (2022: $32.6 million) were made during the year.
Revenue generated by the Group from companies ultimately controlled by Siem Industries S.A. in relation to property rental totalling
$0.3 million (2022: $0.3 million) was recognised during the year.
At 31 December 2023, the Group had outstanding balances payable to companies ultimately controlled by Siem Industries S.A. of
$0.1 million (2022: $1.4 million).
At 31 December 2023, the Group had outstanding balances receivable from companies ultimately controlled by Siem Industries S.A.
of $0.1 million (2022: less than $0.1 million).
Transactions with Treveri S.à r.l., a company controlled by Mr Siem, in relation to services provided totalled $0.1 million
(2022: $0.1 million).
Transactions with Kirk Lovegrove & Co. Limited, a company controlled by Mr Kirk, in relation to services provided totalled $0.1 million
(2022: $nil).
141
Subsea 7 S.A. Annual Report 2023
Strategic Report Subsea 7 S.A. Financial Statements GlossaryGovernance Consolidated Financial Statements
142
Notes to the Consolidated Financial Statements continued
Subsea 7 S.A. Annual Report 2023
35. Share-based payments
The Group operated two equity-settled share-based payment schemes during 2023.
The following table summarises the compensation expense recognised in the Consolidated Income Statement during the year:
For the year ended (in $ millions)
2023 2022
31 Dec 31 Dec
Expense arising from equity-settled share-based payment transactions:
2013
Long Term Incentive Plan
–
0.2
2018
Long Term Incentive Plan
2.4
3.0
2022
Long Term Incentive Plan
2.5
0.3
Total
4.9
3.5
Equity-settled share-based payment schemes
Details regarding the 2018 Long Term Incentive Plan (2018 LTIP Plan) and the 2022 Long Term Incentive Plan (2022 LTIP Plan),
including number of shares transferred to participants, are disclosed within the Remuneration Report on pages 65 to 70.
The IFRS 2 ‘Share-based Payments’ fair value of each performance share granted under the 2018 and 2022 LTIP Plans is estimated as
of the grant date using a Monte Carlo simulation model with weighted average assumptions as follows:
For the year ended
2023 2022
31 Dec 31 Dec
Weighted average share price at grant date (in $)
13.62
7.99
TSR performance – Weighted average fair value at grant date (in $)
7.49
4.92
ROAIC performance – Weighted average fair value at grant date (in $)
12.25
7.62
CCR performance – Weighted average fair value at grant date (in $)
12.25
7.62
Expected volatility
44%
58%
Risk free rate
4.00%
3.08%
Dividend yield
2.70%
1.30%
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.
Both non-market Return on Average Invested Capital (ROAIC) and Cash Conversion Ratio (CCR) performance conditions are not
incorporated into the grant date fair value. 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 and CCR performance conditions.
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 2023, three awards vested in total under the 2018
scheme. The total estimated withholding tax transferred to the relevant tax authorities was $2.0 million (2022: $2.2 million). Of this
total, $0.5 million was in relation to employee social security contributions and $1.5 million was in relation to income tax.
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 employees’
pensionable salaries. The expense relating to these plans for the year was $54.0 million (2022: $51.1 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
Effective from 1 April 2023, the office (onshore) defined benefit scheme was terminated. The Group no longer has any obligations
related to the defined benefit plan and all assets and liabilities related to the plan were derecognised.
142
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143
Subsea 7 S.A. Annual Report 2023
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)
2023
2022
2023
2022
2023
2022
Defined benefit obligation
A
t year beginning
(7.7)
(8.6)
(7.3)
(9.7)
(15.0)
(18.3)
A
mounts (charged)/credited to the Consolidated Income
Statement:
Service costs
–
–
(0.7)
(0.8)
(0.7)
(0.8)
Past service credit
6.2
–
0.9
–
7.1
–
Interest costs
–
(0.1)
(0.3)
(0.1)
(0.3)
(0.2)
Sub-total
6.2
(0.1)
(0.1)
(0.9)
6.1
(1.0)
Remeasurement gains/(losses) recognised
in other comprehensive income:
A
ctuarial changes arising from changes in financial
assumptions
–
–
(0.5)
3.2
(0.5)
3.2
Experience adjustments
(0.2)
0.5
(0.1)
(0.6)
(0.3)
(0.1)
Sub-total
(0.2)
0.5
(0.6)
2.6
(0.8)
3.1
Benefits paid
0.1
0.3
–
–
0.1
0.3
Exchange differences
1.6
0.2
(0.4)
0.7
1.2
0.9
A
t year end
–
(7.7)
(8.4)
(7.3)
(8.4)
(15.0)
Fair value of plan assets
A
t year beginning
5.8
6.0
–
–
5.8
6.0
A
mounts (charged)/credited to the Consolidated Income
Statement:
Past service credit
(4.6)
–
–
–
(4.6)
–
Interest income
–
0.1
–
–
–
0.1
Sub-total
(4.6)
0.1
–
–
(4.6)
0.1
Remeasurement gains/(losses) recognised in other
comprehensive income:
Return on plan assets (excluding amounts in interest
income)
(0.2)
0.1
–
–
(0.2)
0.1
A
dministrative expenses
–
(0.1)
–
–
–
(0.1)
Sub-total
(0.2)
–
–
–
(0.2)
–
Benefits paid
–
(0.3)
–
–
–
(0.3)
Exchange differences
(1.0)
–
–
–
(1.0)
–
A
t year end
–
5.8
–
–
–
5.8
Net defined benefit obligation
–
(1.9)
(8.4)
(7.3)
(8.4)
(9.2)
Presented as:
Retirement benefit obligations
–
(1.9)
(8.4)
(7.3)
(8.4)
(9.2)
Total
–
(1.9)
(8.4)
(7.3)
(8.4)
(9.2)
The retirement benefit obligation of $8.4 million for the pension scheme which is in deficit in France (2022: $9.2 million France and
Norway) is recognised as a non-current liability on the Consolidated Balance Sheet. The French plan is unfunded.
143
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Strategic Report Subsea 7 S.A. Financial Statements GlossaryGovernance Consolidated Financial Statements
144
Notes to the Consolidated Financial Statements continued
Subsea 7 S.A. Annual Report 2023
36. Retirement benefit obligations continued
Future cash flows
The estimated contributions expected to be paid into the French plan during 2024 are $0.3 million (2023: $0.3 million).
Significant actuarial assumptions
The principal assumptions used to determine the present value of the defined benefit obligation were as follows:
Year ended 31 December 2023
(in %) France
Discount rate
3.3
Year ended 31 December 2022
(in %) France
Discount rate
3.8
Future salary increase
0.2
Sensitivity analysis
A quantitative sensitivity analysis for significant assumptions at 31 December 2023 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.
France
(in $ millions) Discount rate
Sensitivity level
0.25% increase
0.25% decrease
Impact on the net defined benefit obligation
(0.2)
0.3
37. Deferred revenue
A
t (in $ millions)
2023 2022
31 Dec 31 Dec
A
dvances received from clients
3.9
1.5
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.
38. Events after the reporting period
Dividends and share repurchases
At the Annual General Meeting on 2 May 2024, the Board of Directors will propose that shareholders approve a cash dividend of
NOK 6.00 per share, equating to approximately $170 million, payable in two equal instalments in May and November 2024. The
Company has also committed to repurchase approximately $80 million of its own shares in 2024, resulting in shareholder returns
of approximately $250 million.
144
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145
Subsea 7 S.A. Annual Report 2023
39. Wholly-owned subsidiaries
Subsea 7 S.A. had the following wholly-owned subsidiaries at 31 December 2023.
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
A
cergy B.V.
Netherlands
Holding
A
cergy France S.A.S.
France
General Trading
A
cergy Holdings (Gibraltar) Limited
(a)
Gibraltar
Special Purpose
A
quarius Solutions Inc.
Canada
General Trading
A
stori Sp. z.o.o
Poland
General Trading
A
urora Environmental Limited
United Kingdom
General Trading
Nigerstar 7 FZE
Nigeria
General Trading
Nigerstar 7 Limited
Nigeria
General Trading
Ocean Geo Solutions, Inc.
US
General Trading
OHT Alfa Lift AS
Norway
V
essel Owning
OHT USA LLC
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 7 AS
Norway
Holding
Seaway 7 Chartering AS
Norway
General Trading
Seaway 7 Denmark A/S
Denmark
General Trading
Seaway 7 Engineering B.V.
Netherlands
General Trading
Seaway 7 Heavy Transport AS
Norway
General Trading
Seaway 7 Holding NL B.V.
Netherlands
Holding
Seaway 7 Management AS
Norway
General Trading
Seaway 7 Norway AS
Norway
General Trading
Seaway 7 Offshore Contractors B.V.
Netherlands
General Trading
Seaway 7 Offshore Crew B.V.
Netherlands
General Trading
Seaway 7 Offshore Installation AS
Norway
V
essel Owning
Seaway 7 Renewables UK Limited (formerly OHT Renewables UK Limited)
United Kingdom
General Trading
Seaway 7 Treasury Limited
United Kingdom
Special Purpose
Seaway 7 UK Limited
United Kingdom
General Trading
Seaway 7 Vessels B.V.
Netherlands
V
essel Owning
Seaway Aimery AS
Norway
V
essel Owning
Seaway Albatross AS
Norway
V
essel Owning
Seaway Eagle AS
Norway
V
essel Owning
Seaway Falcon AS
Norway
V
essel Owning
Seaway Hawk AS
Norway
V
essel Owning
Seaway Heavy Lifting Contracting Limited
Cyprus
General Trading
Seaway Heavy Lifting Holding Limited
Cyprus
Holding
Seaway Heavy Lifting Limited
Cyprus
General Trading
Seaway Heavy Lifting Shipping Limited
Cyprus
V
essel Owning
Seaway Moxie AS
Norway
V
essel Owning
Seaway Offshore Cables GmbH
Germany
General Trading
Seaway Offshore Cables Limited
United Kingdom
General Trading
Seaway Osprey AS
Norway
V
essel Owning
Seaway Phoenix AS
Norway
V
essel Owning
Seaway Swan AS (formerly VOI Management AS)
Norway
Special Purpose
Seaway Ventus AS (formerly VOI Vessel 1 AS)
Norway
Special Purpose
Sevenseas Contractors S. de R.L. de C.V.
Mexico
General Trading
SHL Contracting Germany GmbH
Germany
General Trading
145
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146
Notes to the Consolidated Financial Statements continued
Subsea 7 S.A. Annual Report 2023
39. Wholly-owned subsidiaries continued
Name
Registered in
Nature of business
SHL Contracting US Inc.
US
General Trading
SHL Stanislav Yudin Limited
Cyprus
V
essel Owning
SO France S.A.
France
Special Purpose
Subsea 7 (Guyana) Incorporated
Guyana
General Trading
Subsea 7 (ME) Pte Limited
Singapore
General Trading
Subsea 7 (Singapore) Pte Limited
Singapore
General Trading
Subsea 7 (UK Service Company) Limited
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
A
ustralia
General Trading
Subsea 7 Canada Inc.
Canada
General Trading
Subsea 7 Chartering (UK) Limited
United Kingdom
General Trading
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
United Kingdom
Holding
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 US Inc.
US
General Trading
Subsea 7 Korea Co., Ltd
South Korea
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 Middle East FZ-LLC
United Arab Emirates
Special Purpose
Subsea 7 Moçambique, Limitada
Mozambique
General Trading
Subsea 7 Navica AS
Norway
V
essel Owning
Subsea 7 Nigeria Limited
Nigeria
General Trading
Subsea 7 Nile Delta Limited
Egypt
General Trading
Subsea 7 NL B.V. (formerly SHL Contracting B.V.)
Netherlands
General Trading
Subsea 7 Norway AS
Norway
General Trading
Subsea 7 Offshore Resources (UK) Limited
United Kingdom
V
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 Saudi Arabia Limited
Saudi Arabia
General Trading
Subsea 7 Sénégal SAS
Senegal
General Trading
Subsea 7 Servicos Offshore S.A.
Brazil
Holding
Subsea 7 Services (Singapore) Pte Limited
Singapore
General Trading
Subsea 7 Shipping Limited Isle of Man
V
essel Owning
Subsea 7 Singapore Contracting Pte Limited
Singapore
General Trading
(a)
(a)
(b)
(b)
146
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147
Subsea 7 S.A. Annual Report 2023
Name
Registered in
Nature of business
Subsea 7 Treasury (UK) Limited
United Kingdom
Special Purpose
Subsea 7 Vessel Owner AS
Norway
V
essel Owning
Subsea 7 West Africa Contracting Limited
United Kingdom
General Trading
Subsea 7 Engineering France S.A.S. (formerly Subsea 7 West
France
General Trading
A
frica S.A.S.)
Subsea Seven Doha Oil & Gas Services and Trading LLC
Qatar
General Trading
Swagelining Limited
United Kingdom
General Trading
Tartaruga Insurance Limited
Isle of Man
Special Purpose
Thames International Enterprise Limited
United Kingdom
Special Purpose
V
OI Option 1 AS
Norway
Special Purpose
V
OI Option 2 AS
Norway
Special Purpose
V
OI Option 3 AS
Norway
Special Purpose
V
OI Option 4 AS
Norway
Special Purpose
V
OI Vessel 2 AS
Norway
Special Purpose
X
odus Academy Limited
United Kingdom
General Trading
X
odus DMCC
United Arab Emirates
General Trading
X
odus Greenfuel Development Company Pty Ltd
A
ustralia
Special Purpose
X
odus Green Light Pty Limited (formerly Green Light Environment Pty
A
ustralia
General Trading
Limited)
X
odus Group (Holdings) Limited
United Kingdom
Holding
X
odus Group A/S
Norway
Dormant
X
odus Group Japan
Japan
General Trading
X
odus Oil and Gas Consultants (Pty) Limited
South Africa
General Trading
X
odus Group B.V.
Netherlands
General Trading
X
odus Group Consultants Sdn. Bhd
Malaysia
General Trading
X
odus Group Inc
US
General Trading
X
odus Group Limited
United Kingdom
General Trading
X
odus Group Pty Limited
A
ustralia
General Trading
ZNM Nigeria Limited
Nigeria
Dormant
(a) Wholly-owned subsidiaries directly owned by the parent company, Subsea 7 S.A.
(b) UK tax resident.
For all entities, except for those identified in sub-note (b), 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 does 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-1471 Luxembourg.
147
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148
Additional information – APMs
Subsea 7 S.A. Annual Report 2023
The Group utilise Alternative Performance Measures (APMs) when evaluating financial performance, financial position and cash flows
which are not defined or specified under International Financial Reporting Standards (IFRS), as adopted by the EU. Management
consider these non-IFRS measures, which are not a substitute for nor superior to IFRS measures, provide stakeholders with additional
information to further understand the Group’s financial performance, financial position and cash flows.
A
PM Description
Closest equivalent
IFRS measure
A
djustments to reconcile to
primary financial statements Rationale for utilising APM
Income Statement APMs
A
djusted
EBITDA and
A
djusted
EBITDA
margin
A
djusted earnings before
interest, taxation, depreciation
and amortisation represents
net income/(loss) before
additional specific items
that are considered to impact
the comparison of the Group’s
performance either period-on-
period or with other
businesses.
A
djusted EBITDA margin is
defined as Adjusted EBITDA
divided by revenue, expressed
as a percentage.
Net income/(loss) Net income/(loss) adjusted
to exclude depreciation and
amortisation costs, including
amortisation of prepaid mobilisation
expenses and amortisation of
intangible assets, impairment
charges or impairment reversals,
gains and losses on disposal of
property, plant and equipment and
maturity of lease liabilities, 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.
A
djusted EBITDA and Adjusted
EBITDA margin are important
indicators of the operational
strength and the performance
of the Group and provide a
meaningful comparative for
its business units. The presentation
of Adjusted EBITDA is also useful
as it is similar to measures used by
companies within Subsea7’s peer
group. Adjusted EBITDA margin
may also be a useful ratio to
compare performance to the
Group’s competitors and is widely
used by shareholders and analysts.
Notwithstanding the foregoing,
A
djusted EBITDA and Adjusted
EBITDA margin as presented by
the Group may not be comparable
to similarly titled measures reported
by other companies.
Effective tax
rate (ETR)
The effective tax rate is
expressed as a percentage,
calculated as the taxation
expense/(credit) divided
by the income/(loss)
before taxes.
Taxation n/a Provides a useful and relevant
measure of the effectiveness of
the Group’s tax strategy and
tax planning.
Balance Sheet APM
Net
cash/(debt)
excluding
lease
liabilities
and net
cash/(debt)
including
lease
liabilities
Net cash/(debt) is defined as
cash and cash equivalents less
borrowings. The Group utilises
both net cash/(debt) excluding
lease liabilities and net
cash/(debt) including lease
liabilities as financial
position measures.
No direct equivalent Calculated as cash and cash
equivalent less borrowings (current
and non-current). The measure may
exclude lease liabilities (current and
non-current) or include them.
Net cash/(debt) provides a
meaningful and reliable basis
to evaluate financial strength
and liquidity of the Group.
Cash flow APMs
Cash
conversion
Cash conversion is defined as
net cash generated from/(used
in) operating activities, add back
income taxes paid, divided by
A
djusted EBITDA, expressed
as a percentage.
No direct equivalent Calculated as net cash generated
from/(used in) operating activities
in the Group’s Consolidated Cash
Flow Statement, add back income
taxes paid and divide by
A
djusted EBITDA.
Cash conversion is a financial
management tool to determine
the efficiency of the Group’s
ability to generate cash from
its operating activities.
Free cash
flow
Free cash flow is defined
as net cash generated
from/(used in) operating
activities less purchases of
property, plant and equipment
and intangible assets.
No direct equivalent Calculated as net cash generated
from/(used in) operating activities
from the Group’s Consolidated
Cash Flow Statement less
purchases of property, plant and
equipment and intangible assets.
Free cash flow is a relevant metric
for shareholders and analysts when
determining cash available to the
Group to invest or potentially
distribute.
148
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149
Subsea 7 S.A. Annual Report 2023
Other APMs
Backlog
Backlog represents expected
future revenue from projects.
A
wards to associates and joint
ventures are excluded from
backlog figures, unless
otherwise stated. Despite
being a non-IFRS term, the
Group recognises backlog
in accordance with the
requirements of IFRS 15,
‘Revenue from Contracts with
Customers’, which represents
revenue expected to be
recognised in the future related
to performance obligations
which are unsatisfied, or
partially unsatisfied, at
the reporting date.
Transaction price
allocated to
the remaining
performance
obligations
n/a Utilising the term backlog is
in accordance with expected
industry-wide terminology. It is
similarly used by companies within
Subsea7’s peer group and is a
helpful term for those evaluating
companies within Subsea7’s
industry. Backlog may also be
useful to compare performance
with competitors and is widely
used by shareholders and analysts.
Notwithstanding this, backlog
presented by the Group may not
be comparable to similarly titled
measures reported by other
companies.
Book-to-bill
ratio
Book-to-bill ratio represents
total order intake divided
by revenue for the
reporting period.
No direct equivalent n/a The book-to-bill metric is widely
used in the energy sector by
shareholders and analysts and is
a helpful term for those evaluating
companies within Subsea7’s
industry. Notwithstanding this, the
book-to-bill ratio presented by the
Group may not be comparable to
similarly titled measures reported
by other companies.
Order intake
Order intake represents new
project awards plus variation
orders on existing projects.
No direct equivalent n/a Order intake is in accordance
with expected industry-wide
terminology and primarily
enables the book-to-bill APM
to be calculated.
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150
Additional information – APMs continued
Subsea 7 S.A. Annual Report 2023
APM calculations
Reconciliation of net operating income to Adjusted EBITDA and Adjusted EBITDA margin
For the year ended (in $ millions)
2023
31 Dec
(Unaudited)
2022
31 Dec
(Unaudited)
Net operating income 104.7 148.8
Depreciation, amortisation and mobilisation 538.0 467.6
Impairment of property, plant and equipment, intangible assets and assets
classified as held for sale 96.8 2.3
Impairment reversal of property, plant and equipment (25.9) (55.6)
Impairment reversal of right-of-use assets – (3.7)
Net loss on disposal of property, plant and equipment and maturity of lease
liabilities 0.8 –
A
djusted EBITDA 714.4 559.4
Revenue 5,973.7 5,135.8
A
djusted EBITDA margin 12.0% 10.9%
Reconciliation of net income to Adjusted EBITDA and Adjusted EBITDA margin
For the year ended (in $ millions)
2023
31 Dec
(Unaudited)
2022
31 Dec
(Unaudited)
Net income 10.0 36.4
Depreciation, amortisation and mobilisation 538.0 467.6
Impairment of property, plant and equipment, intangible assets and assets
classified as held for sale 96.8 2.3
Impairment reversal of property, plant and equipment (25.9) (55.6)
Impairment reversal of right-of-use assets – (3.7)
Net loss on disposal of property, plant and equipment and maturity of lease
liabilities 0.8 –
Finance income (25.2) (9.0)
Other gains and losses (21.3) (1.9)
Finance costs 71.2 23.4
Taxation 70.0 99.9
A
djusted EBITDA 714.4 559.4
Revenue 5,973.7 5,135.8
A
djusted EBITDA margin 12.0% 10.9%
Effective tax rate
For the year ended (in $ millions)
2023
31 Dec
(Unaudited)
2022
31 Dec
(Unaudited)
Taxation (70.0) (99.9)
Income before taxation 80.0 136.3
Effective tax rate (percentage) 87.5% 73.3%
Net cash/(debt) excluding lease liabilities and net cash/(debt) including lease liabilities
A
t (in $ millions)
2023
31 Dec
(Unaudited)
2022
31 Dec
(Unaudited)
Cash and cash equivalents 750.9 645.6
Total borrowings (844.9) (356.0)
Net (debt)/cash excluding lease liabilities (94.0) 289.6
Total lease liabilities (458.3) (257.0)
Net (debt)/cash including lease liabilities (552.3) 32.6
150
Subsea 7 S.A. Annual Report 2023
151
Subsea 7 S.A. Annual Report 2023
Free cash flow
For the year ended (in $ millions)
2023
31 Dec
(Unaudited)
2022
31 Dec
(Unaudited)
Cash generated from operating activities 660.0 485.8
Purchases of property, plant and equipment and intangible assets (581.2) (231.0)
Free cash flow 78.8 254.8
Cash conversion ratio
For the year ended (in $ millions)
2023
31 Dec
(Unaudited)
2022
31 Dec
(Unaudited)
Cash generated from operating activities 660.0 485.8
Taxes paid 83.5 103.2
743.5 589.0
A
djusted EBITDA 714.4 559.4
Cash conversion ratio 1.0x 1.1x
Backlog
The IFRS 15 ‘Revenue from Contracts with Customers’ disclosure in relation to remaining performance obligations is contained in
Note 22 ‘Construction contracts’. Unless otherwise stated, backlog and remaining performance obligations, as required by IFRS 15,
will be the same number. Backlog by year of execution is as follows:
A
t (in $ millions)
2023
31 Dec
(Unaudited)
2022
31 Dec
(Unaudited)
Total backlog 10,586.8 9,007.6
Expected year of utilisation:
2023 – 4,204.0
2024 5,702.7 2,959.5
2025 3,764.2 1,262.8
2026 1,030.3 581.3
2027 and thereafter 89.6 –
Book-to-bill ratio
For the year ended (in $ millions)
2023
31 Dec
(Unaudited)
2022
31 Dec
(Unaudited)
Order intake 7,443.7 7,096.1
Revenue 5,973.7 5,135.8
Book-to-bill ratio 1.2x 1.4x
Order intake
For the year ended (in $ millions)
2023
31 Dec
(Unaudited)
2022
31 Dec
(Unaudited)
New project awards 4,824.6 5,251.5
Escalations on existing projects 2,619.1 1,844.6
Order intake 7,443.7 7,096.1
151
Subsea 7 S.A. Annual Report 2023
Strategic Report Subsea 7 S.A. Financial Statements GlossaryGovernance Consolidated Financial Statements
Additional Information – EU Taxonomy Disclosure
Revenue (turnover)
Proportion of turnover from products or services associated with Taxonomy-aligned economic activities – disclosure covering year 2023
Financial year 2023 Year Substantial Contribution Criteria DNSH criteria ('Does Not Signifi cantly Harm') (h)
Economic Activities (1)
Code (a)
(2)
Turnover
(3)
Proportion
of Turnover,
year N
(4)
Climate
Change
Mitigation
(5)
Climate
Change
Adaptation
(6)
Water
(7)
Pollution
(8)
Circular
Economy
(9)
Biodiversity
(10)
Climate
Change
Mitigation
(11)
Climate
Change
Adaptation
(12)
Water
(13)
Pollution
(14)
Circular
Economy
(15)
Biodiversity
(16)
Minimum
safeguards
(17)
Proportion
of Taxonomy
aligned (A.1.)
or eligible
(A.2.)
turnover,
year 2022
(18)
Category
enabling
activity
(19)
Category
transitional
activity
(20)
A. TAXONOMY-ELIGIBLE ACTIVITIES
A.1. Environmentally sustainable activities (Taxonomy-aligned)
Electricity generation
from wind power CCM 4.3 817.1 14% Y N N/EL N/EL N/EL N/EL n/a Y Y n/a Y Y Y 20%
Transport of CO
2
CCM 5.11 43.1 1% Y N N/EL N/EL N/EL N/EL n/a Y Y n/a n/a Y Y 1%
Turnover of environmentally
sustainable activities
(Taxonomy-aligned) (A.1) 860.1 14% 14% 0% 0% 0% 0% 0% n/a Y Y n/a Y Y Y 21%
Of which Enabling 860.1 14% 14% 0% 0% 0% 0% 0% Y Y Y n/a Y Y Y 21% E
Of which Transitional 0 0% 0% T
A.2 Taxonomy-Eligible but not environmentally sustainable activities (not Taxonomy-aligned activities) (g)
Electricity generation from
wind power CCM 4.3 10.8 0% EL N/EL N/EL N/EL N/EL N/EL 1%
Transport of CO
2
CCM 5.11 5.1 0% EL N/EL N/EL N/EL N/EL N/EL 0%
Turnover of Taxonomy-eligible but
not environmentally sustainable
activities (not Taxonomy-aligned
activities) (A.2) 15.9 0% 0% 0% 0% 0% 0% 0% 1%
A. Turnover of Taxonomy
eligible activities (A.1+A.2) 876.1 15% 15% 0% 0% 0% 0% 0% 22%
B. TAXONOMY-NON-ELIGIBLE ACTIVITIES
Turnover of Taxonomy-non-eligible
activities 5,097.7 85%
TOTAL 5,973.7 100%
Proportion of turnover from products or services associated with Taxonomy-aligned economic activities per environmental objective – disclosure covering year 2023
Proportion of turnover/Total turnover
Taxonomy-aligned
per objective
Taxonomy-eligible
per objective
CCM 14% 15%
CCA 0% 0%
WTR 0% 0%
CE 0% 0%
PPC 0% 0%
BIO 0% 0%
152
Subsea 7 S.A. Annual Report 2023
152
Subsea 7 S.A. Annual Report 2023
Capex
Proportion of Capex from products or services associated with Taxonomy-aligned economic activities – disclosure covering year 2023
Financial year 2023 Year Substantial Contribution Criteria DNSH criteria ('Does Not Signifi cantly Harm') (h)
Economic Activities (1)
Code (a)
(2)
Turnover
(3)
Proportion
of Turnover,
year N
(4)
Climate
Change
Mitigation
(5)
Climate
Change
Adaptation
(6)
Water
(7)
Pollution
(8)
Circular
Economy
(9)
Biodiversity
(10)
Climate
Change
Mitigation
(11)
Climate
Change
Adaptation
(12)
Water
(13)
Pollution
(14)
Circular
Economy
(15)
Biodiversity
(16)
Minimum
safeguards
(17)
Proportion
of Taxonomy
aligned (A.1.)
or eligible
(A.2.)
turnover,
year 2022
(18)
Category
enabling
activity
(19)
Category
transitional
activity
(20)
A. TAXONOMY-ELIGIBLE ACTIVITIES
A.1. Environmentally sustainable activities (Taxonomy-aligned)
Electricity generation
from wind power CCM 4.3 424.5 45% Y N N/EL N/EL N/EL N/EL n/a Y Y n/a Y Y Y 33%
Capex of environmentally sustainable
activities
(Taxonomy-aligned) (A.1) 424.5 45% 100% 0% 0% 0% 0% 0% n/a Y Y n/a Y Y Y 33%
Of which Enabling 424.5 45% 100% 0% 0% 0% 0% 0% n/a Y Y n/a Y Y Y 33% E
Of which Transitional 0% n/a n/a n/a n/a n/a n/a n/a 0% T
A.2 Taxonomy-eligible but not environmentally sustainable activities (not Taxonomy-aligned activities) (g)
Electricity generation
from wind power CCM 4.3 0 0 EL N/EL N/EL N/EL N/EL N/EL 0%
Capex of Taxonomy-eligible but not
environmentally sustainable activities
(not Taxonomy-aligned activities) (A.2) 0 0 0% 0% 0% 0% 0% 0% 0%
A. Capex of Taxonomy
eligible activities (A.1+A.2) 424.5 45% 100% 0% 0% 0% 0% 0% 33%
B. TAXONOMY-NON-ELIGIBLE ACTIVITIES
Capex of Taxonomy-
non-eligible activities 516.0 55%
TOTAL 940.5 100%
Proportion of Capex from products or services associated with Taxonomy-aligned economic activities per environmental objective – disclosure covering year 2023
Proportion of Capex/Total Capex
Taxonomy-aligned
per objective
Taxonomy-eligible
per objective
CCM 45% 45%
CCA 0% 0%
WTR 0% 0%
CE 0% 0%
PPC 0% 0%
BIO 0% 0%
Additional Information – EU Taxonomy Disclosure continued
Subsea 7 S.A. Annual Report 2023
153
Strategic Report GlossarySubsea 7 S.A. Financial StatementsGovernance Consolidated Financial Statements
153
Subsea 7 S.A. Annual Report 2023
Strategic Report Subsea 7 S.A. Financial Statements GlossaryGovernance Consolidated Financial Statements
Opex
Proportion of Opex from products or services associated with Taxonomy-aligned economic activities – disclosure covering year 2023
Financial year 2023 Year Substantial Contribution Criteria DNSH criteria ('Does Not Signifi cantly Harm') (h)
Economic Activities (1)
Code (a)
(2)
Turnover
(3)
Proportion
of Turnover,
year N
(4)
Climate
Change
Mitigation
(5)
Climate
Change
Adaptation
(6)
Water
(7)
Pollution
(8)
Circular
Economy
(9)
Biodiversity
(10)
Climate
Change
Mitigation
(11)
Climate
Change
Adaptation
(12)
Water
(13)
Pollution
(14)
Circular
Economy
(15)
Biodiversity
(16)
Minimum
safeguards
(17)
Proportion
of Taxonomy
aligned (A.1.)
or eligible
(A.2.)
turnover,
year 2022
(18)
Category
enabling
activity
(19)
Category
transitional
activity
(20)
A. TAXONOMY-ELIGIBLE ACTIVITIES
A.1. Environmentally sustainable activities (Taxonomy-aligned)
Electricity generation
from wind power CCM 4.3 19.9 18% Y N N/EL N/EL N/EL N/EL n/a Y Y n/a Y Y Y 16%
Opex of environmentally sustainable
activities
(Taxonomy-aligned) (A.1) 19.9 18% 18% % 0% 0% 0% 0% n/a Y Y n/a Y Y Y 16%
Of which Enabling 19.9 18% 18% % 0% 0% 0% 0% n/a Y Y n/a Y Y Y 16% E
Of which Transitional 0 0% 0% n/a n/a n/a n/a n/a n/a n/a 0% T
A.2. Taxonomy-eligible but not environmentally sustainable activities (not Taxonomy-aligned activities) (g)
Close to market research,
development and
innovation CCM 9.1 0.8 1% EL N/EL N/EL N/EL N/EL N/EL 0%
Opex of Taxonomy-eligible but
not environmentally sustainable
activities (not Taxonomy-aligned
activities) (A.2) 0.8 1% % % 0% 0% 0% 0% 0%
A. Opex of Taxonomy
eligible activities (A.1+A.2) 20.8 19% % % 0% 0% 0% 0% 17%
B. TAXONOMY-NON-ELIGIBLE ACTIVITIES
Opex of Taxonomy-non-eligible
activities 88.4 81%
TOTAL 109.2 100%
Proportion of Opex from products or services associated with Taxonomy-aligned economic activities per environmental objective – disclosure covering year 2023
Proportion of Opex/Total Opex
Taxonomy-aligned
per objective
Taxonomy-eligible
per objective
CCM 18% 19%
CCA 0% 0%
WTR 0% 0%
CE 0% 0%
PPC 0% 0%
BIO 0% 0%
Additional Information – EU Taxonomy Disclosure continued
154
Subsea 7 S.A. Annual Report 2023
154
Subsea 7 S.A. Annual Report 2023
Opex
Proportion of Opex from products or services associated with Taxonomy-aligned economic activities – disclosure covering year 2023
Financial year 2023 Year Substantial Contribution Criteria DNSH criteria ('Does Not Signifi cantly Harm') (h)
Economic Activities (1)
Code (a)
(2)
Turnover
(3)
Proportion
of Turnover,
year N
(4)
Climate
Change
Mitigation
(5)
Climate
Change
Adaptation
(6)
Water
(7)
Pollution
(8)
Circular
Economy
(9)
Biodiversity
(10)
Climate
Change
Mitigation
(11)
Climate
Change
Adaptation
(12)
Water
(13)
Pollution
(14)
Circular
Economy
(15)
Biodiversity
(16)
Minimum
safeguards
(17)
Proportion
of Taxonomy
aligned (A.1.)
or eligible
(A.2.)
turnover,
year 2022
(18)
Category
enabling
activity
(19)
Category
transitional
activity
(20)
A. TAXONOMY-ELIGIBLE ACTIVITIES
A.1. Environmentally sustainable activities (Taxonomy-aligned)
Electricity generation
from wind power CCM 4.3 19.9 18% Y N N/EL N/EL N/EL N/EL n/a Y Y n/a Y Y Y 16%
Opex of environmentally sustainable
activities
(Taxonomy-aligned) (A.1) 19.9 18% 18% % 0% 0% 0% 0% n/a Y Y n/a Y Y Y 16%
Of which Enabling 19.9 18% 18% % 0% 0% 0% 0% n/a Y Y n/a Y Y Y 16% E
Of which Transitional 0 0% 0% n/a n/a n/a n/a n/a n/a n/a 0% T
A.2. Taxonomy-eligible but not environmentally sustainable activities (not Taxonomy-aligned activities) (g)
Close to market research,
development and
innovation CCM 9.1 0.8 1% EL N/EL N/EL N/EL N/EL N/EL 0%
Opex of Taxonomy-eligible but
not environmentally sustainable
activities (not Taxonomy-aligned
activities) (A.2) 0.8 1% % % 0% 0% 0% 0% 0%
A. Opex of Taxonomy
eligible activities (A.1+A.2) 20.8 19% % % 0% 0% 0% 0% 17%
B. TAXONOMY-NON-ELIGIBLE ACTIVITIES
Opex of Taxonomy-non-eligible
activities 88.4 81%
TOTAL 109.2 100%
Proportion of Opex from products or services associated with Taxonomy-aligned economic activities per environmental objective – disclosure covering year 2023
Proportion of Opex/Total Opex
Taxonomy-aligned
per objective
Taxonomy-eligible
per objective
CCM 18% 19%
CCA 0% 0%
WTR 0% 0%
CE 0% 0%
PPC 0% 0%
BIO 0% 0%
Additional Information – EU Taxonomy Disclosure continued
154
Subsea 7 S.A. Annual Report 2023
155
Subsea 7 S.A. Annual Report 2023
Subsea 7 S.A. Financial
Statements and Report
of the Réviseur
D’entreprises Agréé
for year ended
31 December 2023
412F, route d’Esch
L-1471
Luxembourg
R.C.S. Luxembourg No. B43172
Page
Report of the Réviseur d’Entreprises Agréé 156
Balance Sheet 160
Profit and Loss Account 161
Notes to the Financial Statements 162
155
Subsea 7 S.A. Annual Report 2023
Strategic Report Subsea 7 S.A. Financial Statements GlossaryGovernance Consolidated Financial Statements
156
Report of the Réviseur d’Entreprises Agréé
Subsea 7 S.A. Annual Report 2023
To the Shareholders of
Subsea 7 S.A.
412F, route d’Esch
L-1471 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 pages 160 to 167, which comprise the
Balance Sheet as at 31 December 2023, the Profit and Loss account, and the notes to the financial statements for the year then ended,
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 as at
31 December 2023, 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 (“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 as adopted
for Luxembourg by the CSSF 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 International Code of
Ethics for Professional Accountants, including 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.
156
Subsea 7 S.A. Annual Report 2023
157
Subsea 7 S.A. Annual Report 2023
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, Subsea 7 (UK Service Company) Limited
and Seaway 7 AS amounting to an aggregate of $1,852.7 million at 31 December 2023 as disclosed in
Note 3 to the Annual Accounts, inclusive of a reversal of a value adjustment thereon of $11.0 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 or impairment reversals 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 EBITDA assumptions taken from the Group’s most recent budgets and plans for the next five years
(the “Plan”);
• the sustainable EBITDA and long-term growth rate used beyond the period covered by the Plan given
the significance of the terminal value cash flows to the total value-in-use, also considering the expected
impact of climate change;
• 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.
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 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 78 and the accompanying Corporate Governance Statement from pages 48 to 70 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.
157
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Strategic Report Subsea 7 S.A. Financial Statements GlossaryGovernance Consolidated Financial Statements
158
Report of the Réviseur d’Entreprises Agréé continued
Subsea 7 S.A. Annual Report 2023
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 and marking up 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, related safeguards.
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.
158
Subsea 7 S.A. Annual Report 2023
159
Subsea 7 S.A. Annual Report 2023
Report on other legal and regulatory requirements
We have been appointed as “réviseur d’entreprises agréé” by the General Meeting of the Shareholders on 18 April 2023 and the
duration of our uninterrupted engagement, including previous renewals and reappointments, is ten years.
The Management Report on page 78 is consistent with the Financial Statements and has been prepared in accordance with applicable
legal requirements.
The accompanying corporate governance statement on pages 48 to 70 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 2023 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;
• 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 Financial Statements of the Company as at 31 December 2023, identified as 222100AIF0CBCY80AH62-2023-12-31,
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
Alban Aubrée
Luxembourg, 28 February 2024
159
Subsea 7 S.A. Annual Report 2023
Strategic Report Subsea 7 S.A. Financial Statements GlossaryGovernance Consolidated Financial Statements
160
Subsea 7 S.A. Balance Sheet
Subsea 7 S.A. Annual Report 2023
A
t
(
$ in millions) Notes
2023
31 Dec
2022
31 Dec
A
ssets
Fixed assets
Financial assets
Shares in affiliated undertakings 3 1,852.7 1,702.1
Current assets
Other debtors
becoming due and payable within one year
0.3 0.3
Investments
Own shares 6 31.1 75.0
Cash at bank and in hand – –
Prepayments 0.4 0.3
Total assets 1,884.5 1,777.7
Capital, reserves and liabilities
Capital and reserves
Subscribed capital 4 608.6 600.0
Share premium account 4 697.1 688.5
Reserves
Legal reserve 4, 5 60.9 60.0
Reserve for own shares 4, 6 31.1 75.0
Profit brought forward 4 98.4 91.6
Profit for the financial year 4 361.0 7.7
Total capital and reserves 1,857.1 1,522.8
Provisions
Provisions for pensions and similar obligations
7 5.0 –
Creditors
A
mounts owed to affiliated undertakings
becoming due and payable within one year 8 22.0 254.0
Other creditors
Tax authorities 0.2 –
Other creditors
becoming due and payable within one year 0.2 0.9
Total liabilities 27.4 254.9
Total capital, reserves and liabilities 1,884.5 1,777.7
The accompanying notes on pages 162 to 167 form an integral part of the Financial Statements for Subsea 7 S.A.
160
Subsea 7 S.A. Annual Report 2023
161
Subsea 7 S.A. Profit and Loss Account
Subsea 7 S.A. Annual Report 2023
For the year ended ($ in millions) Notes
2023
31 Dec
2022
31 Dec
Other operating income 9 14.5 41.3
Raw materials and consumables and other external expenses
Other external expenses 11 (2.8) (1.3)
Staff costs
Wages and salaries (0.1) (0.1)
Other operating expenses 12 (52.7) (33.6)
Income from participating interests
derived from affiliated undertakings 13 400.0 –
Other interest receivable and similar income
derived from affiliated undertakings 14 0.5 0.1
other interest and similar income – 1.9
V
alue adjustments
in respect of financial assets and of investments held as current assets 3, 6 8.7 10.9
Interest payable and similar expenses
concerning affiliated undertakings 8 (7.0) (11.7)
Other taxes (0.1) 0.2
Profit for the financial year 361.0 7.7
The accompanying notes on pages 162 to 167 form an integral part of the Financial Statements for Subsea 7 S.A.
161
Subsea 7 S.A. Annual Report 2023
Strategic Report Subsea 7 S.A. Financial Statements GlossaryGovernance Consolidated Financial Statements
162
Notes to the Financial Statements
Subsea 7 S.A. Annual Report 2023
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 2023.
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 87 to 147 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.
At 31 December 2023, a provision for awards vesting in future periods has been recorded.
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.
162
Subsea 7 S.A. Annual Report 2023
163
Subsea 7 S.A. Annual Report 2023
3. Financial assets
($ in millions)
Shares in affiliated
undertakings
Cost
A
t 31 December 2022 3,386.9
A
dditions 139.6
A
t 31 December 2023
3,526.5
A
ccumulated value adjustments
A
t 31 December 2022 (1,684.8)
Reversal of value adjustments for the year 11.0
A
t 31 December 2023
(1,673.8)
Carrying amount
A
t 31 December 2022 1,702.1
A
t 31 December 2023 1,852.7
During the year ended 31 December 2023, the Company purchased 240,784,866 shares in Seaway 7 ASA for a consideration of
$139.6 million. The Company issued a total of 9,976,239 new shares and paid $12.6 million cash. During May 2023, Seaway 7 ASA
became a wholly-owned subsidiary of the Group, was de-listed from Euronext Growth Oslo and renamed Seaway 7 AS.
A review of the carrying amount of the financial assets was performed at 31 December 2023 which resulted in a reversal of value
adjustments of $11.0 million being recognised in the Company’s shares held in Acergy Holdings (Gibraltar) Limited (2022: $11.8 million
reversal of value adjustments).
Shares in affiliated undertakings
Percentage held Carrying amount ($ in millions)
Name of company Registered in 2023 2022 2023 2022
A
cergy Holdings (Gibraltar) Limited Gibraltar 100% 100% 131.7 120.7
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
Seaway 7 AS Norway 28% – 139.6 –
Total shares in affiliated undertakings 1,852.7 1,702.1
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 pages 145 to 147, 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
shares
Profit brought
forward
Profit for the
financial year Total
Balance at 1 January 2022 600.0 733.6 60.0 29.9 108.8 16.3 1,548.6
A
llocation of the result – – – – 16.3 (16.3) –
Dividends declared – – – – (33.5) – (33.5)
Net movement of own shares – (45.1) – 45.1 – – –
Profit for the financial year – – – – – 7.7 7.7
Balance at 31 December 2022 600.0 688.5 60.0 75.0 91.6 7.7 1,522.8
A
llocation of the result – – – – 7.7 (7.7) –
Share cancellation (11.4) (30.2) – – – – (41.6)
Share issuance 20.0 107.0 – – – – 127.0
Increase of legal reserve – – 0.9 – (0.9) – –
Dividends declared – (112.1) – – – – (112.1)
Net movement of own shares – 43.9 – (43.9) – – –
Profit for the financial year – – – – – 361.0 361.0
Balance at 31 December 2023 608.6 697.1 60.9 31.1 98.4 361.0 1,857.1
At 31 December 2023, the authorised share capital comprised 450,000,000 $2.00 common shares (2022: 450,000,000 $2.00
common shares) and the subscribed capital comprised 304,294,272 $2.00 common shares (2022: 300,000,000 $2.00
common shares).
163
Subsea 7 S.A. Annual Report 2023
Strategic Report Subsea 7 S.A. Financial Statements GlossaryGovernance Consolidated Financial Statements
164
Notes to the Financial Statements continued
Subsea 7 S.A. Annual Report 2023
4. Capital and reserves continued
A dividend of NOK 4.00 per share was approved by the shareholders of the Company at the Annual General Meeting on 18 April 2023,
which was paid from the distributable reserves on 28 April 2023.
On 14 March 2023 and 14 April 2023, the Company issued a total of 9,979,239 new common shares for a nominal amount of
$20.0 million.
During the year ended 31 December 2023, the reduction of the reserve for own shares of $43.9 million was represented by shares
cancelled of $41.6 million and reallocations relating to share-based payments of $2.3 million.
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 required allocation to
the legal reserve, following the increase of common shares, has been satisfied and will be ratified at the next Annual General Meeting.
6. Reserve for own shares
2023
Number of
shares
2023
in $ millions
2022
Number of
shares
2022
in $ millions
A
t year beginning 9,794,267 75.0 4,534,107 29.9
Shares cancelled (5,681,967) (41.6) – –
Shares reallocated relating to share-based payments (272,496) (2.3) (387,912) (3.9)
Shares repurchased – – 5,648,072 46.0
Reversal in year – – – 3.0
Balance at year end 3,839,804 31.1 9,794,267 75.0
At 31 December 2023, the Company directly held 3,839,804 (2022: 9,794,267) own shares with a total nominal value of $31.1 million
(2022: $75.0 million), representing 1.26% (2022: 3.26%) of the total number of issued shares.
During the year ended 31 December 2023, 5,681,967 shares representing 1.87% of the total number of issued shares were cancelled.
In addition, 272,496 (2022: 387,912) shares representing 0.09% (2022: 0.13%) of the total number of issued shares were reallocated
for nil consideration to employees of the Subsea7 Group to satisfy share awards under the 2018 Long Term Incentive Plan.
During the year ended 31 December 2023, the Company recognised a loss of $2.3 million (2022: $3.9 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 2023; and no value adjustment was deemed necessary
(2022: $3.0 million reversal of value).
7. Provisions
Provision for pensions and similar obligations
A
t ($ in millions)
2023
31 Dec
2022
31 Dec
Provision for share-based payments vesting in future period 5.0 –
A provision was recorded at year end to reflect the Company’s expectation of the number of performance shares which will vest under
the 2018 and 2022 Long Term Incentive Plans.
8. Amounts owed to affiliated undertakings
Becoming due and payable within one year
A
t ($ in millions)
2023
31 Dec
2022
31 Dec
A
mounts owed to affiliated undertakings 22.0 254.0
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 2023, interest costs of $7.0 million were recognised by the Company
(2022: $11.7 million).
9. Other operating income
A
t ($ in millions)
2023
31 Dec
2022
31 Dec
Parent company guarantee income 14.5 41.3
164
Subsea 7 S.A. Annual Report 2023
165
Subsea 7 S.A. Annual Report 2023
10. 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 $700 multi-currency revolving credit and guarantee facility
On 15 June 2022, the Group entered into a $700.0 million multi-currency revolving credit and guarantee facility with a five-year tenor,
with two one-year extension options. The facility is available in a combination of guarantees, up to a limit of $200.0 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. During the year, the Group requested a one year extension to the multi-currency revolving credit and guarantee
facility which will now mature in June 2028. The facility size will reduce from $700 million to $600 million in June 2027 until maturity in
June 2028. The facility was unutilised at 31 December 2023.
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. At 31 December 2023, the
amount outstanding under the facility was $135.2 million (2022: $159.8 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 facility has a five-year tenor which commenced when the facility was fully drawn. 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. At 31 December 2023, the amount outstanding under the facility, net of facility fees, was
$420.5 million (2022: $195.8 million).
2023 UK Export Finance (UKEF 2023) facility
On 27 July 2023, the Group entered into a $450 million five-year amortising loan facility backed by a $360 million guarantee from UK
Export Finance. The Group has a two-year availability period during which to draw on the facility, and the facility has a five-year tenor
which commences the earlier of availability period expiry or when the facility is fully drawn. The lenders have classified the facility as
a green loan as the funds are for use within the Group’s Renewables business unit. The facility is guaranteed by the Company and
Subsea 7 Finance (UK) PLC, a wholly-owned subsidiary of the Group. At 31 December 2023, the amount outstanding under the facility,
net of facility fees, was $288.9 million.
Utilisation of facilities
A
t (in $ millions)
2023
31 Dec
Utilised
2023
31 Dec
Unutilised
2023
31 Dec
Total
2022
31 Dec
Utilised
2022
31 Dec
Unutilised
2022
31 Dec
Total
Committed borrowing facilities 852.6 857.6 1,710.2 359.8 1,000.0 1,359.8
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 2023 was $2.2 billion (2022: $1.6 billion).
11. Other external expenses
For the year ended ($ in millions)
2023
31 Dec
2022
31 Dec
A
dministrative expenses 2.5 1.1
Statutory audit fees 0.3 0.2
Total 2.8 1.3
12. Other operating expenses
For the year ended ($ in millions)
2023
31 Dec
2022
31 Dec
Corporate allocation and shareholders’ costs 46.8 32.7
Provision for share-based payments vesting in future period 5.0 –
Other operating expenses 0.9 0.9
Total 52.7 33.6
13. Income from participating interests derived from affiliated undertakings
On 12 May 2023, the Company received a $400.0 million interim dividend from Subsea 7 International Holdings (UK) Limited
(2022: $nil). Consideration for this transaction was settled under, and in line with the terms of, the Group’s internal working
capital agreement.
165
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Strategic Report Subsea 7 S.A. Financial Statements GlossaryGovernance Consolidated Financial Statements
166
Notes to the Financial Statements continued
Subsea 7 S.A. Annual Report 2023
14. Other interest receivable and similar income derived from affiliated undertakings
For the year ended ($ in millions)
2023
31 Dec
2022
31 Dec
Guarantee fee commission receivable from Eidesvik Seven AS
0.1 0.1
Interest receivable on short-term working capital facility 0.4 –
Total 0.5 0.1
15. Tax on profit or loss
For the year ended 31 December 2023, the Company was fully taxable at an effective rate of 24.94% (2022: 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.
16. 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 $2.3 million (2022: $3.9 million) was recognised as adjustments in respect
of investments held as current assets in relation to the settlement of share-based compensation.
The share-based schemes operated by the Group are:
2018 Long Term Incentive Plan
The 2018 Long Term Incentive Plan (2018 LTIP Plan) was approved by the Company’s shareholders at the Annual General Meeting on
17 April 2018 and was valid for a period up to five years until 2023. Awards under the 2018 LTIP Plan have been made in 2018, 2019,
2020 and 2021.
2022 Long Term Incentive Plan
The 2022 Long Term Incentive Plan (2022 LTIP Plan) was approved by the Company’s shareholders at the Annual General Meeting on
12 April 2022, superseding the 2018 LTIP Plan, and is valid for a period of five years until 2027. The principles of the plan remained as
previous years whereby a conditional award of shares is made that provides for share awards which vest over a three to five-year period
subject to performance measures. A new measure of Cash Conversion Ratio (CCR) has been added to the plan and the percentage
weighting of each measure adjusted to reflect this.
The 2022 LTIP Plan has a five-year term with awards being made annually in October. The aggregate number of shares which may be
granted in any calendar year is limited to 0.5% of issued 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. The total number of share awards and shares
granted to the CEO and CFO are recommended by the Compensation Committee for the approval by the Board of Subsea7. The 2022
LTIP Plan is an essential component of the Company’s reward strategy and is designed to align the interests of participants with
those of Subsea7’s shareholders and enables participants to share in the success of the Company. The 2022 LTIP Plan provides for
conditional awards of shares based upon performance conditions measured over a performance period of three years. Performance
conditions are based upon three measures and weightings:
• Total Shareholder Return (65%)
• Cash Conversion Ratio (20%)
• Return on Average Invested Capital (15%).
All three performance conditions are determined over a three-year period from 1 July in the year of award to 30 June three years later.
Subject to the achievement of the performance conditions, awards will vest in equal tranches after three, four and five years from
award date.
Under the terms of the LTIP, participants are not entitled to receive dividend equivalent payments during the performance and holding
periods. On 31 December 2023, there were approximately 150 participants in the active LTIP schemes (2018 LTIP and 2022 LTIP
Plans). Individual award caps are in place such that no participant may be granted shares under the 2022 LTIP Plan in a single calendar
year that have an aggregate fair market value in excess of 150%, in the case of the CEO, CFO and other members of the Executive
Management Team, and 100%, in the case of other employees, of their annual base salary at the date of the award. Additionally, a
holding requirement for the CEO, CFO and other members of the Executive Management Team applies where they must hold 50%
of all awards that vest until they have built up a shareholding with a market value of 150% of their annual base salary which must be
maintained throughout their tenure.
Total Shareholder Return based awards
The Company will have to achieve a Total Shareholder Return (TSR) ranking above the median for any awards to vest. If the ranked TSR
position of Subsea7 during the three-year performance period, as converted to a percentage, is equal to 50%, 20% of the share award
will vest. If the ranked TSR position of the Company 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 vest if the Company achieved a ranked TSR position
of equal to or greater than 90%.
Cash Conversion Ratio based awards
The CCR measures the conversion of Adjusted EBITDA into a form of cash. The Board believes this measure is an important addition to
the LTIP as it aligns with shareholder interests in making sure the business converts profitability into cash generated from its operations
in a timely manner. The Group can exert significant influence in achieving this goal. Furthermore it is clear and predictable, and as with
the other two measures, the elements of the calculation are readily identifiable from the Group Financial Statements.
CCR is calculated for each of the three years of the performance period on a quarterly basis.
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Subsea 7 S.A. Annual Report 2023
167
Subsea 7 S.A. Annual Report 2023
Return on Average Invested Capital based awards
Return on Average Invested Capital (ROAIC) is calculated for each of the three years of the performance period on a quarterly basis.
Details of the TSR, ROAIC and CCR calculations, including further details of each Long Term Incentive Plan, are disclosed within the
Remuneration Report on pages 65 to 70.
Vesting of LTIP 2020 award
The performance conditions applicable to the share awards granted in 2020 under the 2018 LTIP Plan that vested during 2023 were
based upon two measures: TSR and ROAIC, with a weighting of 65% and 35%, respectively. Subject to these performance conditions
the vested shares are transferred to participants in equal tranches on the third, fourth and fifth anniversary of the award date.
The performance conditions for the vesting of the share awards granted in 2020 under the 2018 LTIP Plan are set out below. For LTIP
2020 awards, both performance conditions were assessed over the three-year period and neither met the threshold for vesting under
the plan rules, therefore did not vest.
Metric
Percentage of
share awards under
each metric Range Result
Percentage of
shares to vest
under each metric Shares to vest
TSR 65% 50%-100% 38.4% – –
ROAIC 35% 9%-14% (2.1)% – –
Total 100% –
(a) Subsea7 ranked 9th out of the 14 companies within the selected peer group (below the median). This resulted in 0% vesting for the TSR portion.
(b) The average over the three-year performance period was (2.1)%. This resulted in 0% vesting for the ROAIC portion.
During 2023, in accordance with the terms of the 2018 LTIP Plan, shares totalling 272,496 were transferred to participants.
Long Term Incentive Plan awards in 2023
Conditional share awards were made to approximately 150 leaders and key employees on 1 October 2023 comprising 1,448,900
(2022: 1,391,000) shares under the terms of the 2022 LTIP Plan.
17. Staff
The average full-time equivalent number of employees of the Company for the year ended 31 December 2023 was one (2022: one).
18. Related party transactions
The Company has taken advantage of the exemption under the law of 19 December 2002, Article 65 which does not require the
disclosure of transactions with wholly-owned members of the Group.
The Company is an associate of Siem Industries S.A. and is equity accounted for within Siem Industries S.A.’s Consolidated
Financial Statements.
During 2023 the Company rented office accommodation from Siem Europe Properties S.à.r.l. a Company ultimately controlled by Siem
Industries S.A. Total rental cost was less than $0.1 million (2022: less than $0.1 million).
Transactions with Treveri S.à r.l, a company controlled by Mr Siem, in relation to services provided totalled $0.1 million (2022: $0.1 million).
In addition, the Company received guarantee commission for an amount of $0.5 million (2022: $0.1 million) from Eidesvik Seven AS
related to the 100% guarantee provided on the NOK 600 million ($57.9 million) loan facility by Subsea 7 International Holdings
(UK) Limited.
19. Board of Directors’ expenses
Fees paid to Directors for the year ended 31 December 2023 amounted to $0.9 million (2022: $0.9 million).
20. Events after the reporting period
Dividends and share repurchases
At the Annual General Meeting on 2 May 2024, the Board of Directors will propose that shareholders approve a cash dividend of
NOK 6.00 per share, equating to approximately $170 million, payable in two equal instalments in May and November 2024. The
Company has also committed to repurchase approximately $80 million of its own shares in 2024, resulting in shareholder returns
of approximately $250 million.
167
Subsea 7 S.A. Annual Report 2023
Strategic Report Subsea 7 S.A. Financial Statements GlossaryGovernance Consolidated Financial Statements
Glossary
4Subsea 4Subsea is a leading provider of technology and services that help operators optimise energy
production from subsea oil and gas fields and offshore wind farms. 4Subsea is a wholly-owned
autonomous subsidiary of Subsea7.
Adjusted EBITDA Adjusted EBITDA is defined on page 148 in the Consolidated Financial Statements.
AGM Annual General Meeting
Backlog Expected future revenue from in-hand projects only where an award has been formally
signed. Awards to associates and joint ventures are excluded from backlog figures, unless
otherwisestated.
BORAbox
®
BORAbox is a suite of sensors fitted to our ROVs or other offshore infrastructure to collect ocean
data. BORA Blue Ocean Research Alliance
®
is one of the first Industry and Science Alliances
tobe endorsed by the UN Ocean Decade.
Carbon intensity The carbon intensity of oil and gas developments can be measured in CO
2
e per barrel
ofoilequivalent, including production and transportation but excluding end-use combustion.
CCS Carbon capture and storage
Clean Operation A Clean Operation is any measure beyond a normal operating practice that will save energy.
Company Subsea 7 S.A.
Conventional Conventional services include the fabrication, installation, extension, hook-up and refurbishment
of fixed and floating energy infrastructure in shallow water.
Decommissioning The taking out of service of production facilities at the end of their economic lives and their
removal orpartial removal from offshore for recycling and/or disposal onshore.
DNV DNV AS is a leading classification society for the maritime industry.
Dry-dock A facility for the construction, maintenance and repair of vessels.
EPCI/EPIC Engineering, procurement, construction and installation or engineering, procurement, installation
andcommissioning, typically on a fixed-price basis.
Executive Officers For the purpose of the Remuneration Report, Executive Officers refers to the Executive Directors of
Subsea 7 S.A. as well as the roles of Chief Executive Officer (CEO) and the Chief Financial Officer (CFO).
FEED Front-end engineering and design
FID Final investment decision
Flex-lay A pipelay method for installing flexible pipelines, umbilicals and risers by spooling them from areel,
carousel or basket onto the seabed.
Flowline A pipeline carrying oil, gas or water that connects the subsea wellhead to a manifold or to surface
production facilities.
Global enabler Any of Subsea7’s most capable vessels that are frequently key to winning and executing large
EPCI contracts.
Group Subsea 7 S.A. and its subsidiaries
Heavy lift vessel An offshore vessel or barge designed to lift objects greater than 1,000 tonnes such as offshore
wind foundations and turbines.
Inner-array cables Cables that run between the individual wind turbine foundations and substations.
Integrity management A risk-based service supporting operators of subsea assets in the maintenance of their facilities.
168
Subsea 7 S.A. Annual Report 2023
IRM Inspection, repair and maintenance of subsea infrastructure.
Jacket A steel structure, typically comprised of an x-braced configuration between four steel legs.
Jackets are one design of foundation for wind turbine generators.
Monopile foundation A single, cylindrical, steel structure that can be used as a foundation for a wind turbine generator
or offshore substation.
OneSubsea
®
A joint venture between SLB, Aker Solutions and Subsea7. Focused on accelerating innovation
to create a step change in subsea production economics and reduce emissions in subsea
operations. The joint venture brings together deep reservoir domain expertise, broad front-end
and system design knowledge. It has an extensive field-proven subsea production and
processing technology portfolio, world-class manufacturing scale and capacity, and unique
pore-to-process integration capabilities.
Performance share Performance shares are awarded under the Long Term Incentive Plan and cover approximately
150 senior employees. These shares vest after at least three years, subject to performance
conditions.
PLSV Pipelay support vessel
Riser/riser systems A pipe through which oil and/or gas travels upward from the seabed to a surface production facility.
ROAIC Return on Average Invested Capital. A key performance indicator for the Group which is used
asa non-market performance measure in the Long Term Incentive Plans.
Seaway7 Subsea7’s Renewables business unit.
Subsea7 Subsea 7 S.A. and its subsidiaries
Subsea Integration
Alliance
Subsea Integration Alliance is a strategic global alliance between OneSubsea and Subsea7,
bringing together field development planning, project delivery, innovative contracting models
andtotal lifecycle solutions under the world’s leading subsea technology and services portfolio.
SPS Subsea production system. Equipment placed on the seabed that is connected to subsea
pipeline networks and riser systems to produce the reservoir to a host facility.
SURF Subsea umbilicals, risers and flowlines
T&I Transport and installation of wind or subsea infrastructure
TCFD Task Force on Climate-related Financial Disclosures
TTF gas price Title Transfer Facility is a virtual gas trading hub in the Netherlands. TTF is the main benchmark
for European gas prices.
Tie-back A connection between a new satellite oil and/or gas discovery and an existing production facility,
improving theeconomics of marginal fields into profitable assets.
Total Shareholder
Return
Total Shareholder Return combines share price appreciation and dividends paid to show the total
return to the shareholder expressed as an annualised percentage.
Umbilical An assembly of hydraulic hoses, which can also include electrical cables or optic fibres, used
tocontrol subsea structures from an offshore platform or a floating vessel.
Variation order 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.
Xodus Group Client-led engineering consultancy that provides engineering and advisory services to clients
in the oiland gas, LNG, renewables and utilities industries worldwide. Xodus is a wholly-owned
autonomous subsidiary of Subsea7.
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Subsea 7 S.A. Annual Report 2023
Strategic Report Subsea 7 S.A. Financial Statements GlossaryGovernance Consolidated Financial Statements
Additional Information
Additional Information
Special note regarding forward-looking
statements
Certain statements made in this report may include
‘forward-looking statements’. These statements relate
to our expectations, beliefs, intentions or strategies
regarding the future. These statements may be
identified by the use of words such as ‘anticipate’,
‘believe’, ‘estimate’, ‘expect’, ‘intend’, ‘may’, ‘plan’,
‘project’, ‘should’, ‘will’, ‘seek’, and similar expressions.
The forward-looking statements that we make reflect
our current views and assumptions with respect to future
events and are subjectto risks and uncertainties. Actual
and future results and trends could differ materially from
those set forth in such statements due to various factors,
including those discussed in this report under ‘Risk
Management’, ‘Financial Review’ andthe quantitative
andqualitative information disclosures about market
risk contained in Note 33 ‘Financial instruments’ to the
Consolidated FinancialStatements.
Factors that may cause actual and future results and
trends to differ materially from our forward-looking
statements include (but are not limited to): (i) our ability
to deliver fixed price projects in accordance with client
expectations and within the parameters of our bids, and
to avoid cost overruns; (ii) our ability to collect receivables,
negotiate variation orders and collect the related revenue;
(iii) our ability to recover costs on significant projects; (iv)
capital expenditure by oil and gas companies, which
is affected by fluctuations in the price of, and demand
for, crude oil and natural gas; (v)unanticipated delays
or cancellation of projects included in our backlog; (vi)
competition and price fluctuations in the markets and
businesses in which we operate; (vii) the loss of, or
deterioration in our relationship with, any significant
clients; (viii) the outcome of legal proceedings or
governmental inquiries; (ix) uncertainties inherent in
operating internationally, including economic, political
and social instability, boycotts or embargoes, labour
unrest, changes in foreign governmental regulations,
corruption and currency fluctuations;
(x) the effects of a pandemic or epidemic or a natural
disaster; (xi) liability to third parties for the failure ofour
joint venture partners to fulfil their obligations; (xii)changes
in, or our failure to comply with, applicable laws and
regulations (including regulatory measures addressing
climate change); (xiii) operating hazards, including spills,
environmental damage, personal or property damage
and business interruptions caused by adverse weather;
(xiv) equipment or mechanical failures, which could
increase costs, impair revenue and result in penalties
for failure to meet project completion requirements;
(xv) the timely delivery ofvessels on order and the
timely completion of ship conversion programmes; (xvi)
our ability to keep pace with technological changes
and the impact ofpotentialinformation technology,
cyber security ordata security breaches; (xvii) global
availability at scale andcommercially viability of suitable
alternative vessel fuels; and (xviii) the effectiveness of
our disclosure controls and procedures and internal
controlover financial reporting.
Many of these factors are beyond our ability tocontrol
orpredict. Given these uncertainties, youshould not place
undue reliance on the forward-looking statements. We
undertake no obligation to update publicly or revise any
forward-looking statements, whether asaresult of new
information, future events orotherwise.
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Subsea 7 S.A. Annual Report 2023
Investor relations
Shareholders, equity analysts, portfolio managers
andrepresentatives of financial institutions may contact:
Email: ir@subsea7.com
Telephone: +44 20 8210 5568
Press enquiries
Representatives of the press may contact:
Email: subsea7corporate.communications@subsea7.com
Financial information
Copies of stock exchange announcements, including
the Group’s quarterly and semi-annual results
announcements and the Group’s Annual Report
andConsolidated Financial Statements, are available
ontheGroup’s website www.subsea7.com.
Any shareholder requiring a printed copy of the Group’s
Annual Report and Consolidated Financial Statements
or the Company’s Financial Statements can request
these via the website www.subsea7.com.
Stock listings
Common shares – Traded on the Oslo Stock Exchange
under the symbol SUBC – www.oslobors.no.
ISIN: LU0075646355
LEI: 222100AIF0CBCY80AH62
Registrar – common shares
Registrar for the shares of Subsea 7 S.A., recorded
in the Norwegian Central Securities Depository,
Verdipapirsentralen ASA (Euronext Securities Oslo):
DNB Bank ASA
Postboks 1600 Sentrum
0021 Oslo, Norway
Telephone: +47 23 26 80 16
Email: sten.sundby@dnb.no
Depositary Bank – ADRs
Subsea 7 S.A. has a sponsored Level 1 ADR facility,
forwhich Deutsche Bank Trust Company Americas acts
as depositary. Each ADR represents one common share
of the Company. The ADRs are quoted over-the-counter
(OTC) in the US under the ticker symbol SUBCY.
For enquiries, beneficial ADR holders may contact:
Deutsche Bank Trust Company Americas
c/o Equiniti Trust Company, LLC, Peck Slip Station
PO Box 2050, New York NY10272-2050, USA
US toll free: +1 866 249 2593
International: +1 718 921 8137
Email: adr@equiniti.com
Further information is available at: www.equiniti.com.
Financial calendar
Subsea 7 S.A. intends to publish its quarterly financial
results for 2024 on the following dates:
Q1 2024 results
Q2 and H1 2024 results
Q3 2024 results
Q4 and FY 2024 results
25 April 2024
25 July 2024
21 November 2024
27 February 2025
2024 Annual General Meeting and Extraordinary
General Meeting
2 May 2024 at 15:00 CET
412F, route d’Esch
L-1471 Luxembourg
Registered office
412F, route d’Esch
L-1471 Luxembourg
Website
www.subsea7.com
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Subsea 7 S.A. Annual Report 2023
Strategic Report Subsea 7 S.A. Financial Statements GlossaryGovernance Consolidated Financial Statements
This report is printed on paper certified in accordance with the FSC
®
(Forest Stewardship Council
®
) and is recyclable and acid-free. Principal
Colour Ltd is FSC certified and ISO 14001 certified showing that it is
committed to all round excellence and improving environmental
performance is an important part of this strategy. Principal Colour Ltd
aims to reduce at source the effect its operations have on the
environment and is committed to continual improvement, prevention of
pollution and compliance with any legislation or industry standards.
Consultancy and design by Black Sun Global.
www.blacksun-global.com
Printed by Principal Colour Ltd.
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Subsea 7 S.A. Annual Report 2023
Subsea7 is a global leader in the delivery of offshore
projects and services for the energy industry.
Subsea7 makes offshore energy transition possible
through the continuous evolution of lower-carbon oil
and gas and by enabling the growth of renewables and
emerging energies.
Subsea 7 S.A. is listed on the Oslo Stock Exchange (SUBC),
ISIN LU0075646355, LEI 222100AIF0CBCY80AH62
Registered office: 412F route d’Esch, L-1471 Luxembourg
subsea7.com
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