All amounts are in NOK million unless otherwise stated
NOTE 1General information
Odfjell Technology Ltd. ('the Company') and its subsidiaries (together 'the Group') provide well services, drilling operations and engineering services.
Odfjell Technology, a limited liability company, is incorporated in Bermuda. The address of its registered office is Clarendon House, 2 Church Street, Hamilton HM11, Bermuda. Odfjell Technology Ltd's head office is at Prime View, Prime Four Business Park, Kingswells, Aberdeen, AB12 3LG, United Kingdom and the Company is tax resident in the United Kingdom.
The consolidated financial statements including notes for Odfjell Technology Ltd. for the year 2023 were approved by the Board of Directors on 17 April 2024.
The consolidated financial statements including notes for Odfjell Technology Ltd. for the year 2023 were approved by the Board of Directors on 17 April 2024.
NOTE 2Basis for preparing the consolidated financial statements
The consolidated financial statements of the Group for the year ended 31 December 2023 comply with IFRS\u00ae Accounting Standards as endorsed by the EU.
The consolidated financial statements ended 31 December 2023 comprise the income statement, statement of comprehensive income, statement of financial position, statement of cash flow, statement of changes in equity and note disclosures.
In the Group\u2019s view, factors that could cause actual results to differ materially from the outlook contained in these financial statements are the following: volatile oil and gas prices, global political changes regarding energy composition and developments in the renewables sector, competition within the oil and gas services industry, changes in clients\u2019 spending budgets and developments in the financial and fiscal markets.
The Group's refinancing risk is low, with a bond loan maturing in February 2026 and a rolling credit facility of USD 25 available until the same quarter.
Taking all relevant risk factors into consideration, the Board has a reasonable expectation that the Group has adequate resources to continue its operational existence for the foreseeable future. Hence, the Group has adopted the going concern basis in preparing its consolidated financial statements.
The consolidated financial statements have been prepared under the historical cost convention, except for derivative financial instruments, debt and equity financial assets, plan assets in defined benefit pension plans and contingent consideration that have been measured at fair value.
The preparation of financial statements in conformity with Accounting Standards requires the use of certain critical accounting estimates. It also requires management to exercise judgement in the process of applying the Group's accounting policies. The areas involving a higher degree of judgement or complexity, or areas where the assumptions and estimates are significant to the consolidated financial statements are disclosed in each relevant note.
The consolidated financial statements comprise the financial statements of the Company and its subsidiaries.
Subsidiaries are all entities over which the Group has control. Subsidiaries are listed in Note 29.
When necessary, adjustments are made to the financial statements of subsidiaries to bring their accounting policies in line with the Group\u2019s accounting policies.
All intra-group assets and liabilities, equity, income, expenses and cash flows relating to transactions between members of the Group are eliminated in full on consolidation. Unrealised losses are also eliminated unless the transaction provides evidence of an impairment of the transferred asset.
Items included in the separate financial statements of each of the Group\u2019s entities are measured using the currency of the primary economic environment in which the entity operates (\u2018the functional currency\u2019). The Consolidated Financial Statements are presented in NOK (in million), which is the Group\u2019s presentation currency.
Foreign currency transactions are translated into the functional currency using the monthly exchange rates for the month the transactions are recognised.
Foreign exchange gains and losses resulting from the settlement of such transactions and from the translation at year end exchange rates of monetary assets and liabilities denominated in foreign currencies are recognised in the income statement.
Foreign exchange gains and losses are presented in the income statement within \u2018other financial items\u2019.
The results and financial position of all the Group's entities that have a functional currency different from the presentation currency (NOK) are translated into the presentation currency as follows:
\u25aaAssets and liabilities for each balance sheet presented are translated at the closing rate at the date of that balance sheet
\u25aaIncome and expenses for each income statement are translated at average exchange rates (unless this average is not a reasonable approximation of the cumulative effect of the rates prevailing on the transaction dates, in which case income and expenses are translated at the rate on the dates of the transactions); and
\u25aaAll resulting exchange differences are recognised in other comprehensive income.
| \n \n | \n\n Average rate | \n\n Average rate | \n\n Closing rate | \n\n Closing rate | \n
| \n \n | \n\n 2023 | \n\n 2022 | \n\n 31.12.2023 | \n\n 31.12.2022 | \n
| \n USD | \n\n 10.5658 | \n\n 9.6197 | \n\n 10.1724 | \n\n 9.8573 | \n
| \n GBP | \n\n 13.1407 | \n\n 11.8610 | \n\n 12.9342 | \n\n 11.8541 | \n
| \n EUR | \n\n 11.4305 | \n\n 10.1128 | \n\n 11.2405 | \n\n 10.5138 | \n
The Group presents assets and liabilities in the statement of financial position based on current/non-current classification.
An asset is current when it is expected to be realised or intended to be sold or consumed in the normal operating cycle, when it is held primarily for the purpose of trading, when it is expected to be realised within twelve months after the reporting period, or when it is cash or cash equivalent unless restricted from being exchanged or used to settle a liability for at least twelve months after the reporting period.
All other assets are classified as non-current.
A liability is current when it is expected to be settled in the normal operating cycle, when it is held primarily for the purpose of trading, when it is due to be settled within twelve months after the reporting period, or when there is no unconditional right to defer the settlement of the liability for at least twelve months after the reporting period.
Contract liabilities are classified as current liabilities as they are expected to be settled in the normal operating cycle.\u00a0
The Group classifies all other liabilities as non-current.
Deferred tax assets and liabilities are classified as non-current assets and liabilities.
The statement of cash flows is prepared under the indirect method. Cash and cash equivalents include cash, bank deposits and other monetary instruments with a maturity of less than three months at the date of purchase.
The consolidated financial statements of the Group for the year ended 31 December 2023 comply with IFRS\u00ae Accounting Standards as endorsed by the EU.
In the Group\u2019s view, factors that could cause actual results to differ materially from the outlook contained in these financial statements are the following: volatile oil and gas prices, global political changes regarding energy composition and developments in the renewables sector, competition within the oil and gas services industry, changes in clients\u2019 spending budgets and developments in the financial and fiscal markets.
The Group's refinancing risk is low, with a bond loan maturing in February 2026 and a rolling credit facility of USD 25 available until the same quarter.
Taking all relevant risk factors into consideration, the Board has a reasonable expectation that the Group has adequate resources to continue its operational existence for the foreseeable future. Hence, the Group has adopted the going concern basis in preparing its consolidated financial statements.
The consolidated financial statements comprise the financial statements of the Company and its subsidiaries.
Subsidiaries are all entities over which the Group has control. Subsidiaries are listed in Note 29.
When necessary, adjustments are made to the financial statements of subsidiaries to bring their accounting policies in line with the Group\u2019s accounting policies.
All intra-group assets and liabilities, equity, income, expenses and cash flows relating to transactions between members of the Group are eliminated in full on consolidation. Unrealised losses are also eliminated unless the transaction provides evidence of an impairment of the transferred asset.
Foreign currency transactions are translated into the functional currency using the monthly exchange rates for the month the transactions are recognised.
Foreign exchange gains and losses resulting from the settlement of such transactions and from the translation at year end exchange rates of monetary assets and liabilities denominated in foreign currencies are recognised in the income statement.
Foreign exchange gains and losses are presented in the income statement within \u2018other financial items\u2019.
The results and financial position of all the Group's entities that have a functional currency different from the presentation currency (NOK) are translated into the presentation currency as follows:
\u25aaAssets and liabilities for each balance sheet presented are translated at the closing rate at the date of that balance sheet
\u25aaIncome and expenses for each income statement are translated at average exchange rates (unless this average is not a reasonable approximation of the cumulative effect of the rates prevailing on the transaction dates, in which case income and expenses are translated at the rate on the dates of the transactions); and
\u25aaAll resulting exchange differences are recognised in other comprehensive income.
| \n \n | \n\n Average rate | \n\n Average rate | \n\n Closing rate | \n\n Closing rate | \n
| \n \n | \n\n 2023 | \n\n 2022 | \n\n 31.12.2023 | \n\n 31.12.2022 | \n
| \n USD | \n\n 10.5658 | \n\n 9.6197 | \n\n 10.1724 | \n\n 9.8573 | \n
| \n GBP | \n\n 13.1407 | \n\n 11.8610 | \n\n 12.9342 | \n\n 11.8541 | \n
| \n EUR | \n\n 11.4305 | \n\n 10.1128 | \n\n 11.2405 | \n\n 10.5138 | \n
The Group presents assets and liabilities in the statement of financial position based on current/non-current classification.
An asset is current when it is expected to be realised or intended to be sold or consumed in the normal operating cycle, when it is held primarily for the purpose of trading, when it is expected to be realised within twelve months after the reporting period, or when it is cash or cash equivalent unless restricted from being exchanged or used to settle a liability for at least twelve months after the reporting period.
All other assets are classified as non-current.
A liability is current when it is expected to be settled in the normal operating cycle, when it is held primarily for the purpose of trading, when it is due to be settled within twelve months after the reporting period, or when there is no unconditional right to defer the settlement of the liability for at least twelve months after the reporting period.
Contract liabilities are classified as current liabilities as they are expected to be settled in the normal operating cycle.\u00a0
The Group classifies all other liabilities as non-current.
Deferred tax assets and liabilities are classified as non-current assets and liabilities.
The statement of cash flows is prepared under the indirect method. Cash and cash equivalents include cash, bank deposits and other monetary instruments with a maturity of less than three months at the date of purchase.
NOTE 4Segment summary
Operating segments are reported in a manner consistent with the internal financial reporting provided to the chief operating decision maker. The chief operating decision maker, who is responsible for allocating resources and assessing performance of the operating segments, has been identified as the board.
Revenue is measured based on the consideration specified in a contract with a customer and excludes amounts collected on behalf of third parties. The Group recognises revenue when it transfers control over rendered services to the customer.
The Group has, as a practical expedient in IFRS 15, recognised the incremental costs of obtaining a contract as an expense when incurred if the amortisation period of the asset that the entity otherwise would have recognised is one year or less.
Leases in which the Group does not transfer substantially all the risks and rewards of ownership of an asset are classified as operating leases. The Group has only operating leases as a lessor. Rental income is accounted for on a straight-line basis over the lease terms and is included in revenue in the statement of profit or loss due to its operating nature. The lease term may vary from contract to contract, and only includes the non-cancellable period of the contract with the addition of optional renewable periods if the lessee is reasonably certain to extend. None of the existing contracts have optional periods included in the lease term. The lease term is reassessed when options to extend are exercised.
There is estimation uncertainty in the Group's revenue recognition related to bonus and other variable considerations. The Group estimate these variable fees using a most likely amount approach on a contract by contract basis. Management makes a detailed assessment of the amount of revenue expected to be received and the probability of success in each case. Variable consideration is included in revenue only to the extent that it is highly probable that the amount will not be subject to significant reversal when the uncertainty is resolved.
The Well Services segment (OWS) provides casing and tubular running services (both automated and conventional), drilling tool and tubular rental services, specialist well intervention products and services for exploration wells and for production purposes.
Revenue for the rental services are recognised according to IFRS 16 Leases and is accounted for on a straight-line basis over the lease terms.
Services related to contracts with customers are provided as a series of distinct services that are substantially the same and have the same pattern of transfer to the customer. Revenue is based on the transaction price in the contracts with customers, which is a combination of fees for equipment used, personnel on board and other pricing elements. Payment of the transaction price is usually due on a monthly basis. The Group generally recognise revenue over time because of the continuous transfer of control to the customer. The period for recognising revenue is generally equal to the contract period.
The Operations segment provides integrated drilling and maintenance services for both fixed production platforms and on floating production platforms with subsea blowout preventers (BOP) along with the management of and performance of the same services on leased Jack-up rigs in the North Sea. Services are provided as a series of distinct services that are substantially the same and have the same pattern of transfer to the customer.
Revenue is based on the transaction price in the contracts with customers. The main part of the transaction price is fixed day rates, which can vary depending on the phase of contract. Payment of the day rate based transaction price is usually due on a monthly basis. Some contracts may contain milestone payments or prepayment for maintenance services not yet performed. Refer to Note 13 - Contract balances.
The Group generally recognise revenue over time because of the continuous transfer of control to the customer. The period for recognising revenue is generally equal to the contract period.
Some of the contracts include fees for variable or conditional service fee arrangements, such as bonuses for meeting or exceeding certain performance targets. The Group estimate these variable fees using a most likely amount approach, see further description above under the \"Significant estimation uncertainty\" paragraph.
The Projects & Engineering segment offers engineering services, including design, project management and operation and support. The transaction prices in the contracts are mainly based on rates per hour, but the Business Area may from time to time have some lump sum projects. The Group generally recognise revenue over time because of the continuous transfer of control to the customer. The period for recognising revenue is generally equal to the contract period.
NOTE 8Income Taxes
The tax expense for the period comprises current and deferred tax. Tax is recognised in the income statement, except to the extent that it relates to items recognised in other comprehensive income or directly in equity. In this case, the tax is also recognised in other comprehensive income or directly in equity, respectively.
The current income tax charge is calculated on the basis of the tax laws enacted or substantively enacted at the balance sheet date in the countries where the company and its subsidiaries operate and generate taxable income. Management periodically evaluates positions taken in tax returns with respect to situations in which applicable tax regulation is subject to interpretation. It establishes provisions where appropriate on the basis of amounts expected to be paid to the tax authorities.
Deferred income tax is recognised, using the liability method, on temporary differences arising between the tax bases of assets and liabilities and their carrying amounts in the consolidated financial statements.
Deferred income tax is determined using tax rates (and laws) that have been enacted or substantially enacted by the balance sheet date and are expected to apply when the related deferred income tax asset is realised or the deferred income tax liability is settled.
Deferred income tax assets are recognised only to the extent that it is probable that future taxable profit will be available against which the temporary differences can be utilised.
Deferred income tax assets and liabilities are offset when there is a legally enforceable right to offset current tax assets against current tax liabilities and when the deferred income taxes assets and liabilities relate to income taxes levied by the same taxation authority on either the same taxable entity or different taxable entities where there is an intention to settle the balances on a net basis.
Property, plant and equipment comprise mainly of, well services equipment and machinery and equipment. Property, plant and equipment is stated at historical cost less depreciation. Historical cost includes purchase price, any directly attributable costs of bringing the asset to working condition and borrowing costs.
Depreciation is calculated on a straight-line basis over the useful life of the asset or component. The depreciable amount equals historical cost less residual value. Items of property, plant and equipment with components that have substantially different useful lives are treated separately for depreciation purposes.
Subsequent costs for day-to-day repairs and maintenance are expensed as incurred.
The cost of modernisation and rebuilding projects is included in the asset\u2019s carrying amount when it is probable that the Group will derive future financial benefits and the cost of the item can be measured reliably. The carrying amount of the replaced part is written off. Modernisation and rebuilding projects are depreciated over the remaining useful life of the related assets.
The useful lives of assets and the depreciation methods are reviewed periodically in order to ensure that the method and period of depreciation are consistent with the expected pattern of financial benefits from the asset, taking into account current and expected climate risk.
When assets are sold or retired, their cost and accumulated depreciation and accumulated impairment loss are eliminated from the accounts and any gain or loss resulting from their disposal is included in the income statement as other gains and losses.
Residual values for property, plant and equipment are estimated to be zero.
All non-financial assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. An impairment loss is recognised for the amount by which the asset\u2019s carrying amount exceeds its recoverable amount.
The recoverable amount is the higher of an asset\u2019s fair value less costs to sell and value in use.
For the purposes of assessing impairment, assets are grouped at the lowest levels for which there are separately identifiable cash flows (CGUs). Value in use represents the present value of estimated future cash flows expected to arise from the continuing use of an asset and from its disposal at the end of its useful life.
Non-financial assets, other than goodwill, that have suffered an impairment, are reviewed for reversal of the impairment whenever events or changes in circumstances indicate that the impairment loss recognised in prior periods may no longer exist or may have decreased.
Research costs are expensed as incurred. Development expenditures on an individual project are recognised as an intangible asset when the Group can demonstrate:
\u25aaThe technical feasibility of completing the intangible asset so that the asset will be available for use or sale
\u25aaIts intention to complete and its ability and intention to use or sell the asset
\u25aaHow the asset will generate future economic benefits
\u25aaThe availability of resources to complete the asset
\u25aaThe ability to measure reliably the expenditure during development
For the purpose of impairment testing, goodwill acquired in a business combination is allocated to each of the cash generating units (CGUs), or groups of CGUs, that are expected to benefit from the synergies of the combination. Each unit or group of units to which the goodwill is allocated represents the lowest level within the entity at which the goodwill is monitored for internal management purposes. Goodwill is monitored at the operating segment level.
A financial instrument is any contract that gives rise to a financial asset of one entity and a financial liability or equity instrument of another entity.
Derivatives are valued at fair value through profit or loss (FVPL) unless designated as hedges.
The Group has applied the practical expedient under IFRS 9 and are measuring the initial recognition of trade receivables at the transaction price determined under IFRS 15.
Financial assets are de-recognised when the contractual rights to the cash flows from the financial assets expire or are transferred. Realised gains and losses arise from financial assets not designated for hedging, are recognised in the income statement as financial item in the period they occur.
The Group\u2019s financial liabilities include trade and other payables, as well as borrowings.
The loans and borrowings category is the most relevant to the Group. After initial recognition, interest-bearing loans and borrowings are subsequently measured at amortised cost using the effective interest (EIR) method. Gains and losses are recognised in profit or loss when the liabilities are de-recognised as well as through the EIR amortisation process. Refer to further information in Note 16 - Interest-bearing borrowings.
The Group measures financial instruments such as derivatives, at fair value at each balance sheet date.
The Group uses valuation techniques that are appropriate in the circumstances and for which sufficient data are available to measure fair value, maximising the use of relevant observable inputs and minimising the use of unobservable inputs.
All assets and liabilities for which fair value is measured or disclosed in the financial statements are categorised within the fair value hierarchy, described below, based on the lowest level input that is significant to the fair value measurement as a whole.
The tables below analyse financial instruments carried at fair value, by valuation method, based on the lowest level input that is significant to the fair value measurement as a whole. The different levels have been defined as follows:
\u25aaLevel 1 - Quoted prices (unadjusted) in active markets for identical assets or liabilities
\u25aaLevel 2 - Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly (that is, as prices) or indirectly (that is, derived from prices) (Level 2)
\u25aaLevel 3 - Inputs for the asset or liability that are not based on observable market data (that is, unobservable inputs). For short term assets and liabilities at level 3, the value is approximately equal to the carrying amount. As the time horizon is due in short term, future cash flows are not discounted.
Level 2 derivatives held at fair value through profit or loss and hedging derivatives comprise interest rate swaps. Interest rate swaps are fair valued using forward rates extracted from observable yield curves. Interest rate swaps are recognised according to mark-to-market reports from external financial institutions.
A contract asset is the right to consideration in exchange for goods or services transferred to the customer. If the Group performs by transferring goods or services to a customer before the customer pays consideration or before payment is due, a contract asset is recognised for the earned consideration that is conditional.
For costs to fulfil contracts where the Group operates as a lessor, the Group has chosen to apply the guidance in IFRS 15 by analogy.
A contract liability is the obligation to transfer goods or services to a customer for which the Group has received consideration (or an amount of consideration is due) from the customer. If a customer pays consideration before the Group transfers goods or services to the customer, a contract liability is recognised when the payment is made or the payment is due (whichever is earlier). Contract liabilities are recognised as revenue when the Group performs under the contract.
Contract liabilities are classified as current liabilities as they are expected to be settled in the normal operating cycle.
A receivable represents the Group\u2019s right to an amount of consideration that is unconditional (i.e., only the passage of time is required before payment of the consideration is due).
| \n NOK million | \n\n 31.12.2023 | \n\n 31.12.2022 | \n
| \n Cash in bank | \n\n 486.0 | \n\n 190.7 | \n
| \n Time deposits | \n\n 101.7 | \n\n 306.7 | \n
| \n Restricted bank deposits * | \n\n 71.0 | \n\n 62.7 | \n
| \n Total cash and cash equivalents | \n\n 658.8 | \n\n 560.1 | \n
| \n\n | \n
Borrowings are financial liabilities recognised initially at fair value, net of transaction costs incurred. Borrowings are subsequently carried at amortised cost; any difference between the proceeds (net of transaction costs) and the redemption value is recognised in the income statement over the period of the borrowings using the effective interest method.
Fees paid on the establishment of loan facilities are recognised as transaction costs of the loan to the extent that it is probable that some or all of the facility will be drawn down. In this case, the fee is deferred until the draw-down occurs. To the extent there is no evidence that it is probable that some or all of the facility will be drawn down, the fee is capitalised as a pre-payment for liquidity services and amortised over the period of the facility to which it relates. Fees related to revolving credit facilities are amortised on a straight-line basis over the period which the credit facility is available.
This note relates to the Group as a lessee only.
The Group leases various offices, workshops and warehouses. Rental contracts are typically made for fixed periods of 6 months to 10 years, but may have extension or termination options. Contracts may contain both lease and non-lease components. The Group allocates the consideration in the contract to the lease and non-lease components based on their relative stand-alone prices.
The lease payments are discounted using the lessee\u2019s incremental borrowing rate. To determine the incremental borrowing rate, the Group uses a build-up approach that starts with a risk-free interest rate adjusted for credit risk for leases held by the Group and makes adjustments specific to the lease, e.g. term, country, currency and security.
The Group is exposed to potential future increases in variable lease payments based on an index or rate, which are not included in the lease liability until they take effect. When adjustments to lease payments based on an index or rate take effect, the lease liability is reassessed and adjusted against the right-of-use asset.
Right-of-use assets are measured at cost comprising the amount of the initial measurement of lease liability, any lease payments made at or before the commencement date less any lease incentives received, any initial direct costs, and any restoration costs.
Right-of-use assets are generally depreciated over the shorter of the asset's useful life and the lease term on a straight-line basis. If the Group is reasonably certain to exercise a purchase option, the right-of-use asset is depreciated over the underlying asset\u2019s useful life.
Payments associated with short-term leases and leases of low-value assets are recognised on a straight-line basis as an expense in profit or loss. Short-term leases are leases with a lease term of 12 months or less. Low-value assets comprise IT-equipment and smaller items of office equipment.
The Group has occupational pension plans in several countries. The pension plans are measured and presented according to IAS 19.
The Group has contractual pension agreement (CPA) schemes in Norway established in multi-employer plans. These multi-employer plans are defined benefit plans, but the Group does not have access to the necessary information for the accounting years 2023 and 2022 required to account for these plans as defined benefit plans, and the plans are therefore accounted for as defined contribution plans.
A number of the Norwegian subsidiaries in the Group are required to have a civil service pension scheme according to the Norwegian Act relating to mandatory occupational pensions. These subsidiaries have pension schemes in accordance with the requirements in this Act.
The Group uses derivative financial instruments, such as forward currency contracts and interest rate swaps, to hedge its foreign currency risks and interest rate risks, respectively.
Derivatives are recognised at fair value on the date a derivative contract is entered into and are subsequently re-measured on a continuous basis at their fair value. The method of recognising the resulting gain or loss depends on whether the derivative is designated as a hedging instrument, and if so, the nature of the item being hedged.
The Group designates certain derivatives as hedges of highly probable forecast transactions (cash-flow hedges). At the date of the hedging transaction, the Group's documentation includes identification of the hedging instrument, the hedged item, the nature of the risk being hedged and how the Group will assess whether the hedging relationship meets the hedge effectiveness requirements (including the analysis of sources of hedge ineffectiveness and how the hedge ratio is determined). A hedging relationship qualifies for hedge accounting if it meets all of the following effectiveness requirements:
\u25aaThere is \u2018an economic relationship\u2019 between the hedged item and the hedging instrument.
\u25aaThe effect of credit risk does not \u2018dominate the value changes\u2019 that result from that economic relationship.
\u25aaThe hedge ratio of the hedging relationship is the same as that resulting from the quantity of the hedged item that the Group actually hedges and the quantity of the hedging instrument that the Group actually uses to hedge that quantity of hedged item.
Hedges that meet all the qualifying criteria for hedge accounting are accounted for, as described below:
\u25aaThe effective portion of the gain or loss on the cash flow hedging instrument is recognised in other comprehensive income in the cash flow hedge reserve, while any ineffective portion is recognised immediately in the income statement. The cash flow hedge reserve is adjusted to the lower of the cumulative gain or loss on the hedging instrument and the cumulative change in fair value of the hedged item.
\u25aaAmounts recognised directly in other comprehensive income are reclassified as income or expense in the income statement in the period when the hedged liability or planned transaction will affect the income statement.
Derivatives are only used for economic hedging purposes and not as speculative investments.
The Group assesses, on a forward looking basis, the expected credit losses associated with its debt instruments carried at amortised cost and FVOCI. The impairment methodology applied depends on whether there has been a significant increase in credit risk.
A provision is recognised when an obligation exists (legal or constructive) as a result of a past event, it is probable that an economic settlement will be required as a consequence of the obligation, and a reliable estimate can be made of the amount of the obligation.
The best estimate of the expenditure required to settle the obligation is recognised as a provision. When the effect is material, the provision is discounted using a market based pre-tax discount rate.
Contingent liabilities and contingent assets are not recognised. Contingent liabilities are disclosed unless the possibility of an economic settlement as a consequence of the obligation is remote. Contingent assets are disclosed where an economic settlement as a consequence of the asset is probable.
The company have a long term equity settled incentive share option programme, in which the employee receives remuneration in the form of share-based payment for services rendered.
The cost of equity-settled transactions is determined by the fair value at the date when the grant is made using an appropriate valuation model, further details below.
The basic earnings per share are calculated as the ratio of the profit for the year that is due to the shareholders of the parent divided by the weighted average number of common shares outstanding.
When calculating the diluted earnings per share, the profit that is attributable to the common shareholders of the parent and the weighted average number of common shares outstanding are adjusted for all the dilution effects relating to share options.
Foreign currency transactions are translated into the functional currency using the monthly exchange rates for the month the transactions are recognised.
Foreign exchange gains and losses resulting from the settlement of such transactions and from the translation at year end exchange rates of monetary assets and liabilities denominated in foreign currencies are recognised in the income statement.
Foreign exchange gains and losses are presented in the income statement within \u2018other financial items\u2019.
The results and financial position of all the Group's entities that have a functional currency different from the presentation currency (NOK) are translated into the presentation currency as follows:
\u25aaAssets and liabilities for each balance sheet presented are translated at the closing rate at the date of that balance sheet
\u25aaIncome and expenses for each income statement are translated at average exchange rates (unless this average is not a reasonable approximation of the cumulative effect of the rates prevailing on the transaction dates, in which case income and expenses are translated at the rate on the dates of the transactions); and
\u25aaAll resulting exchange differences are recognised in other comprehensive income.
| \n \n | \n\n Average rate | \n\n Average rate | \n\n Closing rate | \n\n Closing rate | \n
| \n \n | \n\n 2023 | \n\n 2022 | \n\n 31.12.2023 | \n\n 31.12.2022 | \n
| \n USD | \n\n 10.5658 | \n\n 9.6197 | \n\n 10.1724 | \n\n 9.8573 | \n
| \n GBP | \n\n 13.1407 | \n\n 11.8610 | \n\n 12.9342 | \n\n 11.8541 | \n
| \n EUR | \n\n 11.4305 | \n\n 10.1128 | \n\n 11.2405 | \n\n 10.5138 | \n
| \n NOK million | \n\n 2023 | \n\n 2022 | \n
| \n Net currency gain / (loss) included in finance costs | \n\n (1.0) | \n\n (31.8) | \n
Foreign currency transactions are translated into the functional currency using the monthly exchange rates for the month the transactions are recognised.
Foreign exchange gains and losses resulting from the settlement of such transactions and from the translation at year end exchange rates of monetary assets and liabilities denominated in foreign currencies are recognised in the income statement.
Foreign exchange gains and losses are presented in the income statement within \u2018other financial items\u2019.
The results and financial position of all the Group's entities that have a functional currency different from the presentation currency (NOK) are translated into the presentation currency as follows:
\u25aaAssets and liabilities for each balance sheet presented are translated at the closing rate at the date of that balance sheet
\u25aaIncome and expenses for each income statement are translated at average exchange rates (unless this average is not a reasonable approximation of the cumulative effect of the rates prevailing on the transaction dates, in which case income and expenses are translated at the rate on the dates of the transactions); and
\u25aaAll resulting exchange differences are recognised in other comprehensive income.
| \n \n | \n\n Average rate | \n\n Average rate | \n\n Closing rate | \n\n Closing rate | \n
| \n \n | \n\n 2023 | \n\n 2022 | \n\n 31.12.2023 | \n\n 31.12.2022 | \n
| \n USD | \n\n 10.5658 | \n\n 9.6197 | \n\n 10.1724 | \n\n 9.8573 | \n
| \n GBP | \n\n 13.1407 | \n\n 11.8610 | \n\n 12.9342 | \n\n 11.8541 | \n
| \n EUR | \n\n 11.4305 | \n\n 10.1128 | \n\n 11.2405 | \n\n 10.5138 | \n
The Group presents assets and liabilities in the statement of financial position based on current/non-current classification.
An asset is current when it is expected to be realised or intended to be sold or consumed in the normal operating cycle, when it is held primarily for the purpose of trading, when it is expected to be realised within twelve months after the reporting period, or when it is cash or cash equivalent unless restricted from being exchanged or used to settle a liability for at least twelve months after the reporting period.
All other assets are classified as non-current.
A liability is current when it is expected to be settled in the normal operating cycle, when it is held primarily for the purpose of trading, when it is due to be settled within twelve months after the reporting period, or when there is no unconditional right to defer the settlement of the liability for at least twelve months after the reporting period.
Contract liabilities are classified as current liabilities as they are expected to be settled in the normal operating cycle.\u00a0
The Group classifies all other liabilities as non-current.
A contract asset is the right to consideration in exchange for goods or services transferred to the customer. If the Group performs by transferring goods or services to a customer before the customer pays consideration or before payment is due, a contract asset is recognised for the earned consideration that is conditional.
A contract liability is the obligation to transfer goods or services to a customer for which the Group has received consideration (or an amount of consideration is due) from the customer. If a customer pays consideration before the Group transfers goods or services to the customer, a contract liability is recognised when the payment is made or the payment is due (whichever is earlier). Contract liabilities are recognised as revenue when the Group performs under the contract.
Contract liabilities are classified as current liabilities as they are expected to be settled in the normal operating cycle.
The Group presents assets and liabilities in the statement of financial position based on current/non-current classification.
An asset is current when it is expected to be realised or intended to be sold or consumed in the normal operating cycle, when it is held primarily for the purpose of trading, when it is expected to be realised within twelve months after the reporting period, or when it is cash or cash equivalent unless restricted from being exchanged or used to settle a liability for at least twelve months after the reporting period.
All other assets are classified as non-current.
A liability is current when it is expected to be settled in the normal operating cycle, when it is held primarily for the purpose of trading, when it is due to be settled within twelve months after the reporting period, or when there is no unconditional right to defer the settlement of the liability for at least twelve months after the reporting period.
Contract liabilities are classified as current liabilities as they are expected to be settled in the normal operating cycle.\u00a0
The Group classifies all other liabilities as non-current.
Deferred tax assets and liabilities are classified as non-current assets and liabilities.
The Group presents assets and liabilities in the statement of financial position based on current/non-current classification.
An asset is current when it is expected to be realised or intended to be sold or consumed in the normal operating cycle, when it is held primarily for the purpose of trading, when it is expected to be realised within twelve months after the reporting period, or when it is cash or cash equivalent unless restricted from being exchanged or used to settle a liability for at least twelve months after the reporting period.
All other assets are classified as non-current.
A liability is current when it is expected to be settled in the normal operating cycle, when it is held primarily for the purpose of trading, when it is due to be settled within twelve months after the reporting period, or when there is no unconditional right to defer the settlement of the liability for at least twelve months after the reporting period.
Contract liabilities are classified as current liabilities as they are expected to be settled in the normal operating cycle.\u00a0
The Group classifies all other liabilities as non-current.
Deferred tax assets and liabilities are classified as non-current assets and liabilities.
The Group presents assets and liabilities in the statement of financial position based on current/non-current classification.
An asset is current when it is expected to be realised or intended to be sold or consumed in the normal operating cycle, when it is held primarily for the purpose of trading, when it is expected to be realised within twelve months after the reporting period, or when it is cash or cash equivalent unless restricted from being exchanged or used to settle a liability for at least twelve months after the reporting period.
All other assets are classified as non-current.
A liability is current when it is expected to be settled in the normal operating cycle, when it is held primarily for the purpose of trading, when it is due to be settled within twelve months after the reporting period, or when there is no unconditional right to defer the settlement of the liability for at least twelve months after the reporting period.
Contract liabilities are classified as current liabilities as they are expected to be settled in the normal operating cycle.\u00a0
The Group classifies all other liabilities as non-current.
Deferred tax assets and liabilities are classified as non-current assets and liabilities.
The Group presents assets and liabilities in the statement of financial position based on current/non-current classification.
An asset is current when it is expected to be realised or intended to be sold or consumed in the normal operating cycle, when it is held primarily for the purpose of trading, when it is expected to be realised within twelve months after the reporting period, or when it is cash or cash equivalent unless restricted from being exchanged or used to settle a liability for at least twelve months after the reporting period.
All other assets are classified as non-current.
A liability is current when it is expected to be settled in the normal operating cycle, when it is held primarily for the purpose of trading, when it is due to be settled within twelve months after the reporting period, or when there is no unconditional right to defer the settlement of the liability for at least twelve months after the reporting period.
Contract liabilities are classified as current liabilities as they are expected to be settled in the normal operating cycle.\u00a0
The Group classifies all other liabilities as non-current.
Deferred tax assets and liabilities are classified as non-current assets and liabilities.
The statement of cash flows is prepared under the indirect method. Cash and cash equivalents include cash, bank deposits and other monetary instruments with a maturity of less than three months at the date of purchase.
The statement of cash flows is prepared under the indirect method. Cash and cash equivalents include cash, bank deposits and other monetary instruments with a maturity of less than three months at the date of purchase.
NOTE 3Critical accounting estimates and judgements
Estimates and judgements are continually evaluated and are based on historical experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances.
The Group makes estimates and assumptions concerning the future. These estimates are based on the actual underlying business, its present and forecast profitability over time, and expectations about external factors such as interest rates, foreign exchange rates and other factors which are outside the Group\u2019s control. The resulting estimates will, by definition, seldom equal the related actual results.
The estimates and assumptions that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year are listed below.
\u25aaRevenue recognition (Note 5 - Revenue)
\u25aaDetermination of expected economic life of assets (Note 9 - Tangible fixed assets)
\u25aaEstimation of trade receivable impairment losses (Note 23 - Credit risk)
\u25aaRecognition of deferred tax asset for carried forward tax losses (Note 8 - Income Taxes)
\u25aaProvisions and contingent liabilities (Note 27 - Contingencies)
\u25aaEvaluation of indicators of impairment (Note 9 - Tangible fixed assets)
\u25aaDetermination of lease term (Note 17 - Leases)
There is estimation uncertainty in the Group's revenue recognition related to bonus and other variable considerations. The Group estimate these variable fees using a most likely amount approach on a contract by contract basis. Management makes a detailed assessment of the amount of revenue expected to be received and the probability of success in each case. Variable consideration is included in revenue only to the extent that it is highly probable that the amount will not be subject to significant reversal when the uncertainty is resolved.
Odfjell Offshore Ltd, a subsidiary of Odfjell Technology Ltd., was registered as a Norwegian Registered Foreign Company (NUF) on 08.03.2016 after migration of the company in January 2016, and is taxable for income to Norway. In 2017, the company filed for a tax deduction, of approximately NOK 2.3 billion, on redemption of shares in Deep Sea Metro Ltd. A total of NOK 1.3 billion of this loss has been utilised through group contributions received from other Norwegian entities within the Odfjell Drilling Ltd group in the period 2017 to 2021.
21 December 2022 Odfjell Offshore Ltd received a tax ruling from the Norwegian Tax Authorities where the tax loss of on the realisation of shares in 2017 was denied on the basis of the anti-avoidance rule developed as tax case law. Odfjell Offshore Ltd will appeal the ruling, and the Group is still of the opinion that the most likely outcome of a court case is that the anti-avoidance rule should not be applicable and the denial of the tax loss should be revoked.
The Group made an upfront payment 1 February 2023 of NOK 307 million in taxes and interest for the financial years 2017 through to 2021. The amount was financed and refunded from Odfjell Drilling Ltd., as it is covered by the letter of indemnity issued 1 March 2022 to Odfjell Technology Ltd. Odfjell Drilling Ltd will hold the Company indemnified in respect of any liability that may occur in relation to the ongoing Odfjell Offshore Ltd tax case for the financial years 2017 through to 2021. This includes financing of prepayments to the Norwegian Tax Authorities, and funds for legal proceedings.
As the Group is of the opinion that the most likely outcome is that the taxes will be repaid, a liability of NOK 307 million has been recognised as a non-current payable to Odfjell Drilling Ltd.
For the financial year 2022 income taxes payable for companies taxable in Norway amounts to NOK 36 million. Following the tax ruling in December 2022, the income taxes can no longer be offset by tax losses carried forward, and the Group paid the amount in April 2023. Income taxes payable to Norway in 2024 for the financial year 2023 is calculated to NOK 41 million. However, since the Group is still of the opinion that the most likely outcome of a court case is that the denial of the tax loss should be revoked, the Group has recognised a deferred tax asset equal to expected tax refund of NOK 77 million.
Management exercises judgement in determining the expected economic life of assets in the Well Services segment. Management uses knowledge of the oil industry and the estimated market development, as well as expected technological development as basis for determining useful life. The evaluation includes effects of the climate change and the shift to renewable energy sources.
Management exercises significant judgement in determining whether there are any indicators of impairment. Management evaluates both external and internal sources of information in the indicator assessments. The assessments include estimated effects of the climate change and the shift to renewable energy sources.
The Group has several lease contracts that include extension and termination options. These options are negotiated by management to provide flexibility in managing the leased-asset portfolio and align with the Group's business needs. Management exercises significant judgement in determining whether these extension and termination options are reasonably certain to be exercised.
Management exercises judgement in determining the impairment loss related to the trade receivables.
Included in the Trade receivables as at 31\u00a0December 2023 and 31 December 2022 the Group has an outstanding amount of EUR 4 million (NOK 45 million) towards customers in Iran. The Group's activities in Iran ceased prior to reinforcement of US sanctions early November 2018. No payments have been received after this date, due to no current efficient bank channels out of Iran. The Iranian customers are working on improving the liquidity situation and finding appropriate payment routes. The Group's Iranian customers have previously demonstrated that they prioritise supplier payments, and although delayed, they have historically paid their outstanding.
An impairment loss of EUR 0.7 million (NOK 7.5\u00a0million) have been accrued for related to these trade receivables as at 31 December 2022, an increase of EUR 0.2 million (NOK 2 million) from 31 December 2022.
The estimates and assumptions that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year are listed below.
\u25aaRevenue recognition (Note 5 - Revenue)
\u25aaDetermination of expected economic life of assets (Note 9 - Tangible fixed assets)
\u25aaEstimation of trade receivable impairment losses (Note 23 - Credit risk)
\u25aaRecognition of deferred tax asset for carried forward tax losses (Note 8 - Income Taxes)
\u25aaProvisions and contingent liabilities (Note 27 - Contingencies)
\u25aaEvaluation of indicators of impairment (Note 9 - Tangible fixed assets)
\u25aaDetermination of lease term (Note 17 - Leases)
\u25aaRevenue recognition (Note 5 - Revenue)
\u25aaDetermination of expected economic life of assets (Note 9 - Tangible fixed assets)
\u25aaEstimation of trade receivable impairment losses (Note 23 - Credit risk)
Management exercises judgement in determining the impairment loss related to the trade receivables.
Included in the Trade receivables as at 31\u00a0December 2023 and 31 December 2022 the Group has an outstanding amount of EUR 4 million (NOK 45 million) towards customers in Iran. The Group's activities in Iran ceased prior to reinforcement of US sanctions early November 2018. No payments have been received after this date, due to no current efficient bank channels out of Iran. The Iranian customers are working on improving the liquidity situation and finding appropriate payment routes. The Group's Iranian customers have previously demonstrated that they prioritise supplier payments, and although delayed, they have historically paid their outstanding.
An impairment loss of EUR 0.7 million (NOK 7.5\u00a0million) have been accrued for related to these trade receivables as at 31 December 2022, an increase of EUR 0.2 million (NOK 2 million) from 31 December 2022.
\u25aaRecognition of deferred tax asset for carried forward tax losses (Note 8 - Income Taxes)
\u25aaProvisions and contingent liabilities (Note 27 - Contingencies)
\u25aaEvaluation of indicators of impairment (Note 9 - Tangible fixed assets)
\u25aaDetermination of lease term (Note 17 - Leases)
Odfjell Offshore Ltd, a subsidiary of Odfjell Technology Ltd., was registered as a Norwegian Registered Foreign Company (NUF) on 08.03.2016 after migration of the company in January 2016, and is taxable for income to Norway. In 2017, the company filed for a tax deduction, of approximately NOK 2.3 billion, on redemption of shares in Deep Sea Metro Ltd. A total of NOK 1.3 billion of this loss has been utilised through group contributions received from other Norwegian entities within the Odfjell Drilling Ltd group in the period 2017 to 2021.
21 December 2022 Odfjell Offshore Ltd received a tax ruling from the Norwegian Tax Authorities where the tax loss of on the realisation of shares in 2017 was denied on the basis of the anti-avoidance rule developed as tax case law. Odfjell Offshore Ltd will appeal the ruling, and the Group is still of the opinion that the most likely outcome of a court case is that the anti-avoidance rule should not be applicable and the denial of the tax loss should be revoked.
The Group made an upfront payment 1 February 2023 of NOK 307 million in taxes and interest for the financial years 2017 through to 2021. The amount was financed and refunded from Odfjell Drilling Ltd., as it is covered by the letter of indemnity issued 1 March 2022 to Odfjell Technology Ltd. Odfjell Drilling Ltd will hold the Company indemnified in respect of any liability that may occur in relation to the ongoing Odfjell Offshore Ltd tax case for the financial years 2017 through to 2021. This includes financing of prepayments to the Norwegian Tax Authorities, and funds for legal proceedings.
As the Group is of the opinion that the most likely outcome is that the taxes will be repaid, a liability of NOK 307 million has been recognised as a non-current payable to Odfjell Drilling Ltd.
Management exercises significant judgement in determining whether there are any indicators of impairment. Management evaluates both external and internal sources of information in the indicator assessments. The assessments include estimated effects of the climate change and the shift to renewable energy sources.
The Group may from time to time be subject to various legal proceedings, disputes and claims including regulatory discussions related to the Group\u2019s business, investments etc., of which the outcomes are subject to significant uncertainty. Management applies significant judgement when evaluating the degree of probability of an unfavourable outcome and the ability to make a reasonable estimate of the amount of loss. Unanticipated events or changes in these factors may require the Group to accrue for a matter that has not been previously accrued for because it was not considered probable, or a reasonable estimate could not be made, or increase or decrease an amount accrued for a matter in previous reporting periods.
NOTE 4Segment summary
Operating segments are reported in a manner consistent with the internal financial reporting provided to the chief operating decision maker. The chief operating decision maker, who is responsible for allocating resources and assessing performance of the operating segments, has been identified as the board.
NOTE 4Segment summary
Operating segments are reported in a manner consistent with the internal financial reporting provided to the chief operating decision maker. The chief operating decision maker, who is responsible for allocating resources and assessing performance of the operating segments, has been identified as the board.
Management has determined the operating segments based on the information reviewed by the Board for the purposes of allocating resources and assessing performance. Well Services, Operations and Project & Engineering have been determined as the operating segments.
Odfjell Rig Inspection Services (RIS) Norway is a one stop shop for Installation services, Rope Access services, Inspection/NDT services and Enterprise and competence services. As the activity in RIS Norway has more operational synergies with the segment Operations, it was moved from Projects & Engineering to Operations. As of 1.1.2023 the RIS Norway segment is fully managed and reported as part of the Business Area Operations. Comparable figures have been restated accordingly.
Management has also changed how revenue for each segment is presented. As of January 2023, all revenue generated by a segment is allocated to that said segment, even though the end customer is invoiced though a contract within a different segment. Therefore, there is no inter segment revenue in the segments. Comparable figures have been restated accordingly.
The segment provides casing and tubular running services (both automated and conventional), drilling tool and tubular rental services, specialist well intervention products and services for exploration wells and for production purposes.
The main service offering of the segment is production drilling and well completion on client's rigs. Other types of services offered are slot recovery, plug and abandonment, work-overs and maintenance activities, as well as rig installation services. In this segment, the Group offers platform drilling services on both fixed production platforms and on floating production platforms with subsea blowout preventers (\"BOP\") along with the management of and performance of the same services on leased jack-up rigs.
The segment offers engineering and integrity services, ranging from design and engineering to building supervision, project management and operational support for units in operation, newbuild projects, SPS/RS recertification projects and yard stays. The Group provides well services, drilling operations and engineering services to the offshore oil and gas industry. Management has determined the operating segments based on the information reviewed by the Board for the purposes of allocating resources and assessing performance. Well Services, Operations and Project & Engineering have been determined as the operating segments.
| \n \n | \n\n Well Services | \n\n Operations | \n\n Projects & Engineering | \n\n Corporate / GBS | \n\n Consolidated | \n|||||
| \n NOK million | \n\n 2023 | \n\n 2022* | \n\n 2023 | \n\n 2022* | \n\n 2023 | \n\n 2022* | \n\n 2023 | \n\n 2022* | \n\n 2023 | \n\n 2022 | \n
| \n External segment revenue | \n\n 1,778.6 | \n\n 1,365.4 | \n\n 2,382.3 | \n\n 1,972.1 | \n\n 607.3 | \n\n 356.5 | \n\n 253.2 | \n\n 190.9 | \n\n 5,021.4 | \n\n 3,885.0 | \n
| \n Inter segment revenue | \n\n - | \n\n - | \n\n - | \n\n \n | \n\n - | \n\n - | \n\n - | \n\n - | \n\n - | \n\n - | \n
| \n Total revenue | \n\n 1,778.6 | \n\n 1,365.4 | \n\n 2,382.3 | \n\n 1,972.1 | \n\n 607.3 | \n\n 356.5 | \n\n 253.2 | \n\n 190.9 | \n\n 5,021.4 | \n\n 3,885.0 | \n
| \n EBITDA | \n\n 625.2 | \n\n 485.3 | \n\n 175.6 | \n\n 184.8 | \n\n 94.4 | \n\n 44.5 | \n\n (55.1) | \n\n (42.1) | \n\n 840.1 | \n\n 672.5 | \n
| \n Depreciation and amortisation | \n\n (303.6) | \n\n (259.3) | \n\n (0.0) | \n\n (0.1) | \n\n (1.2) | \n\n (0.6) | \n\n (43.3) | \n\n (28.4) | \n\n (348.0) | \n\n (288.4) | \n
| \n EBIT | \n\n 321.6 | \n\n 226.0 | \n\n 175.6 | \n\n 184.8 | \n\n 93.2 | \n\n 43.9 | \n\n (98.4) | \n\n (70.5) | \n\n 492.1 | \n\n 384.1 | \n
| \n Share of profit (loss) from joint ventures and associates | \n\n \n | \n\n \n | \n\n \n | \n\n \n | \n\n \n | \n\n \n | \n\n \n | \n\n \n | \n\n 5.1 | \n\n (19.9) | \n
| \n Net financial items | \n\n \n | \n\n \n | \n\n \n | \n\n \n | \n\n \n | \n\n \n | \n\n \n | \n\n \n | \n\n (135.7) | \n\n (138.0) | \n
| \n Profit / (loss) before tax - Consolidated Group | \n\n \n | \n\n \n | \n\n \n | \n\n \n | \n\n \n | \n\n \n | \n\n \n | \n\n \n | \n\n 361.5 | \n\n 226.2 | \n
| \n\n | \n
Corporate / GBS covers overhead costs in the Group as well as GBS. The GBS services are provided to segments within the Group as well as to the Odfjell Drilling Group. The Group will continue to provide global business services to the Odfjell Drilling Group going forward.
NOTE 5Revenue
Revenue is measured based on the consideration specified in a contract with a customer and excludes amounts collected on behalf of third parties. The Group recognises revenue when it transfers control over rendered services to the customer.
The Group has, as a practical expedient in IFRS 15, recognised the incremental costs of obtaining a contract as an expense when incurred if the amortisation period of the asset that the entity otherwise would have recognised is one year or less.
Leases in which the Group does not transfer substantially all the risks and rewards of ownership of an asset are classified as operating leases. The Group has only operating leases as a lessor. Rental income is accounted for on a straight-line basis over the lease terms and is included in revenue in the statement of profit or loss due to its operating nature. The lease term may vary from contract to contract, and only includes the non-cancellable period of the contract with the addition of optional renewable periods if the lessee is reasonably certain to extend. None of the existing contracts have optional periods included in the lease term. The lease term is reassessed when options to extend are exercised.
There is estimation uncertainty in the Group's revenue recognition related to bonus and other variable considerations. The Group estimate these variable fees using a most likely amount approach on a contract by contract basis. Management makes a detailed assessment of the amount of revenue expected to be received and the probability of success in each case. Variable consideration is included in revenue only to the extent that it is highly probable that the amount will not be subject to significant reversal when the uncertainty is resolved.
The Well Services segment (OWS) provides casing and tubular running services (both automated and conventional), drilling tool and tubular rental services, specialist well intervention products and services for exploration wells and for production purposes.
Revenue for the rental services are recognised according to IFRS 16 Leases and is accounted for on a straight-line basis over the lease terms.
Services related to contracts with customers are provided as a series of distinct services that are substantially the same and have the same pattern of transfer to the customer. Revenue is based on the transaction price in the contracts with customers, which is a combination of fees for equipment used, personnel on board and other pricing elements. Payment of the transaction price is usually due on a monthly basis. The Group generally recognise revenue over time because of the continuous transfer of control to the customer. The period for recognising revenue is generally equal to the contract period.
The Operations segment provides integrated drilling and maintenance services for both fixed production platforms and on floating production platforms with subsea blowout preventers (BOP) along with the management of and performance of the same services on leased Jack-up rigs in the North Sea. Services are provided as a series of distinct services that are substantially the same and have the same pattern of transfer to the customer.
Revenue is based on the transaction price in the contracts with customers. The main part of the transaction price is fixed day rates, which can vary depending on the phase of contract. Payment of the day rate based transaction price is usually due on a monthly basis. Some contracts may contain milestone payments or prepayment for maintenance services not yet performed. Refer to Note 13 - Contract balances.
The Group generally recognise revenue over time because of the continuous transfer of control to the customer. The period for recognising revenue is generally equal to the contract period.
Some of the contracts include fees for variable or conditional service fee arrangements, such as bonuses for meeting or exceeding certain performance targets. The Group estimate these variable fees using a most likely amount approach, see further description above under the \"Significant estimation uncertainty\" paragraph.
The Projects & Engineering segment offers engineering services, including design, project management and operation and support. The transaction prices in the contracts are mainly based on rates per hour, but the Business Area may from time to time have some lump sum projects. The Group generally recognise revenue over time because of the continuous transfer of control to the customer. The period for recognising revenue is generally equal to the contract period.
| \n NOK million | \n\n 2023 | \n\n 2022 | \n
| \n Revenue from contracts with customers | \n\n 4,521.2 | \n\n 3,430.5 | \n
| \n Lease component in Well Services contracts | \n\n 499.6 | \n\n 454.0 | \n
| \n Other operating revenue | \n\n 0.5 | \n\n 0.4 | \n
| \n Operating revenue | \n\n 5,021.4 | \n\n 3,885.0 | \n
| \n NOK million | \n\n Note | \n\n 2023 | \n\n 2022 | \n
| \n Customer 1 | \n\n\n | \n\n 798.8 | \n\n 816.7 | \n
| \n Customer 2 | \n\n \n | \n\n 572.7 | \n\n 544.7 | \n
| \n Customer 3 | \n\n \n | \n\n 441.0 | \n\n 408.7 | \n
| \n \n | \n\n Well Services | \n\n Operations | \n\n Projects & Engineering | \n\n Corporate / GBS | \n\n Consolidated | \n|||||
| \n NOK million | \n\n 2023 | \n\n 2022 | \n\n 2023 | \n\n 2022* | \n\n 2023 | \n\n 2022* | \n\n 2023 | \n\n 2022* | \n\n 2023 | \n\n 2022 | \n
| \n Norway | \n\n 910.9 | \n\n 759.0 | \n\n 1,585.8 | \n\n 1,305.0 | \n\n 501.9 | \n\n 297.0 | \n\n 248.5 | \n\n 185.4 | \n\n 3,247.1 | \n\n 2,546.5 | \n
| \n UK | \n\n 188.6 | \n\n 117.5 | \n\n 796.5 | \n\n 667.1 | \n\n 105.3 | \n\n 59.5 | \n\n 2.3 | \n\n 3.1 | \n\n 1,092.7 | \n\n 847.3 | \n
| \n Europe - other countries | \n\n 231.4 | \n\n 176.9 | \n\n - | \n\n - | \n\n - | \n\n - | \n\n - | \n\n - | \n\n 231.4 | \n\n 176.9 | \n
| \n Malaysia | \n\n 115.0 | \n\n 78.9 | \n\n - | \n\n - | \n\n - | \n\n - | \n\n - | \n\n - | \n\n 115.0 | \n\n 78.9 | \n
| \n Asia - other countries | \n\n 258.6 | \n\n 224.1 | \n\n - | \n\n - | \n\n - | \n\n - | \n\n 2.5 | \n\n 2.3 | \n\n 261.1 | \n\n 226.4 | \n
| \n Other geographical markets | \n\n 74.1 | \n\n 9.0 | \n\n - | \n\n - | \n\n \n | \n\n - | \n\n - | \n\n - | \n\n 74.1 | \n\n 9.0 | \n
| \n Total operating revenue | \n\n 1,778.6 | \n\n 1,365.4 | \n\n 2,382.3 | \n\n 1,972.1 | \n\n 607.3 | \n\n 356.5 | \n\n 253.2 | \n\n 190.9 | \n\n 5,021.4 | \n\n 3,885.0 | \n
| \n\n | \n
Amounts allocated to performance obligations that are to be completed under existing customer contracts are set out as service elements in the following table.
The firm contract backlog does not include variable consideration which is constrained. The services provided under these contracts will be billed based on time incurred and at day rates according to contract.
Some Well Services contracts are for periods of one year or less and are billed based on time incurred. As permitted under IFRS 15, the transaction price allocated to these unsatisfied contracts is not disclosed.
| \n NOK million | \n\n Future minimum lease payments | \n\n Performance obligations | \n\n Total firm backlog | \n
| \n Within one year | \n\n 165 | \n\n 2,881 | \n\n 3,046 | \n
| \n Between one and two years | \n\n 99 | \n\n 1,301 | \n\n 1,400 | \n
| \n Between two and three years | \n\n 66 | \n\n 668 | \n\n 734 | \n
| \n Between three and four years | \n\n - | \n\n 443 | \n\n 443 | \n
| \n Between four and five years | \n\n - | \n\n 313 | \n\n 313 | \n
| \n After five years | \n\n - | \n\n 50 | \n\n 50 | \n
| \n Total | \n\n 330 | \n\n 5,657 | \n\n 5,987 | \n
NOTE 13Contract balances
A contract asset is the right to consideration in exchange for goods or services transferred to the customer. If the Group performs by transferring goods or services to a customer before the customer pays consideration or before payment is due, a contract asset is recognised for the earned consideration that is conditional.
For costs to fulfil contracts where the Group operates as a lessor, the Group has chosen to apply the guidance in IFRS 15 by analogy.
A contract liability is the obligation to transfer goods or services to a customer for which the Group has received consideration (or an amount of consideration is due) from the customer. If a customer pays consideration before the Group transfers goods or services to the customer, a contract liability is recognised when the payment is made or the payment is due (whichever is earlier). Contract liabilities are recognised as revenue when the Group performs under the contract.
Contract liabilities are classified as current liabilities as they are expected to be settled in the normal operating cycle.
| \n NOK million | \n\n 31.12.2023 | \n\n 31.12.2022 | \n
| \n Contract assets | \n\n - | \n\n 0.9 | \n
| \n Contract liabilities | \n\n 84.3 | \n\n 63.0 | \n
The contract liabilities are mainly related to the Operations segment.
Of the contract liabilities as at 31 December 2023, approximately NOK 10 million is expected to be recognised as revenue during 2024. The remaining relates to Operations contracts and will be recognised as revenue over an estimated period up to 5\u00a0years.
| \n NOK million | \n\n 2023 | \n\n 2022 | \n
| \n Amounts included in contract liabilities at the beginning of the year | \n\n 0.9 | \n\n 2.5 | \n
| \n Performance obligations satisfied in the previous years | \n\n 1.2 | \n\n - | \n
NOTE 5Revenue
Revenue is measured based on the consideration specified in a contract with a customer and excludes amounts collected on behalf of third parties. The Group recognises revenue when it transfers control over rendered services to the customer.
The Group has, as a practical expedient in IFRS 15, recognised the incremental costs of obtaining a contract as an expense when incurred if the amortisation period of the asset that the entity otherwise would have recognised is one year or less.
Leases in which the Group does not transfer substantially all the risks and rewards of ownership of an asset are classified as operating leases. The Group has only operating leases as a lessor. Rental income is accounted for on a straight-line basis over the lease terms and is included in revenue in the statement of profit or loss due to its operating nature. The lease term may vary from contract to contract, and only includes the non-cancellable period of the contract with the addition of optional renewable periods if the lessee is reasonably certain to extend. None of the existing contracts have optional periods included in the lease term. The lease term is reassessed when options to extend are exercised.
There is estimation uncertainty in the Group's revenue recognition related to bonus and other variable considerations. The Group estimate these variable fees using a most likely amount approach on a contract by contract basis. Management makes a detailed assessment of the amount of revenue expected to be received and the probability of success in each case. Variable consideration is included in revenue only to the extent that it is highly probable that the amount will not be subject to significant reversal when the uncertainty is resolved.
The Well Services segment (OWS) provides casing and tubular running services (both automated and conventional), drilling tool and tubular rental services, specialist well intervention products and services for exploration wells and for production purposes.
Revenue for the rental services are recognised according to IFRS 16 Leases and is accounted for on a straight-line basis over the lease terms.
Services related to contracts with customers are provided as a series of distinct services that are substantially the same and have the same pattern of transfer to the customer. Revenue is based on the transaction price in the contracts with customers, which is a combination of fees for equipment used, personnel on board and other pricing elements. Payment of the transaction price is usually due on a monthly basis. The Group generally recognise revenue over time because of the continuous transfer of control to the customer. The period for recognising revenue is generally equal to the contract period.
The Operations segment provides integrated drilling and maintenance services for both fixed production platforms and on floating production platforms with subsea blowout preventers (BOP) along with the management of and performance of the same services on leased Jack-up rigs in the North Sea. Services are provided as a series of distinct services that are substantially the same and have the same pattern of transfer to the customer.
Revenue is based on the transaction price in the contracts with customers. The main part of the transaction price is fixed day rates, which can vary depending on the phase of contract. Payment of the day rate based transaction price is usually due on a monthly basis. Some contracts may contain milestone payments or prepayment for maintenance services not yet performed. Refer to Note 13 - Contract balances.
The Group generally recognise revenue over time because of the continuous transfer of control to the customer. The period for recognising revenue is generally equal to the contract period.
Some of the contracts include fees for variable or conditional service fee arrangements, such as bonuses for meeting or exceeding certain performance targets. The Group estimate these variable fees using a most likely amount approach, see further description above under the \"Significant estimation uncertainty\" paragraph.
The Projects & Engineering segment offers engineering services, including design, project management and operation and support. The transaction prices in the contracts are mainly based on rates per hour, but the Business Area may from time to time have some lump sum projects. The Group generally recognise revenue over time because of the continuous transfer of control to the customer. The period for recognising revenue is generally equal to the contract period.
| \n NOK million | \n\n 2023 | \n\n 2022 | \n
| \n Revenue from contracts with customers | \n\n 4,521.2 | \n\n 3,430.5 | \n
| \n Lease component in Well Services contracts | \n\n 499.6 | \n\n 454.0 | \n
| \n Other operating revenue | \n\n 0.5 | \n\n 0.4 | \n
| \n Operating revenue | \n\n 5,021.4 | \n\n 3,885.0 | \n
| \n NOK million | \n\n Note | \n\n 2023 | \n\n 2022 | \n
| \n Customer 1 | \n\n\n | \n\n 798.8 | \n\n 816.7 | \n
| \n Customer 2 | \n\n \n | \n\n 572.7 | \n\n 544.7 | \n
| \n Customer 3 | \n\n \n | \n\n 441.0 | \n\n 408.7 | \n
| \n \n | \n\n Well Services | \n\n Operations | \n\n Projects & Engineering | \n\n Corporate / GBS | \n\n Consolidated | \n|||||
| \n NOK million | \n\n 2023 | \n\n 2022 | \n\n 2023 | \n\n 2022* | \n\n 2023 | \n\n 2022* | \n\n 2023 | \n\n 2022* | \n\n 2023 | \n\n 2022 | \n
| \n Norway | \n\n 910.9 | \n\n 759.0 | \n\n 1,585.8 | \n\n 1,305.0 | \n\n 501.9 | \n\n 297.0 | \n\n 248.5 | \n\n 185.4 | \n\n 3,247.1 | \n\n 2,546.5 | \n
| \n UK | \n\n 188.6 | \n\n 117.5 | \n\n 796.5 | \n\n 667.1 | \n\n 105.3 | \n\n 59.5 | \n\n 2.3 | \n\n 3.1 | \n\n 1,092.7 | \n\n 847.3 | \n
| \n Europe - other countries | \n\n 231.4 | \n\n 176.9 | \n\n - | \n\n - | \n\n - | \n\n - | \n\n - | \n\n - | \n\n 231.4 | \n\n 176.9 | \n
| \n Malaysia | \n\n 115.0 | \n\n 78.9 | \n\n - | \n\n - | \n\n - | \n\n - | \n\n - | \n\n - | \n\n 115.0 | \n\n 78.9 | \n
| \n Asia - other countries | \n\n 258.6 | \n\n 224.1 | \n\n - | \n\n - | \n\n - | \n\n - | \n\n 2.5 | \n\n 2.3 | \n\n 261.1 | \n\n 226.4 | \n
| \n Other geographical markets | \n\n 74.1 | \n\n 9.0 | \n\n - | \n\n - | \n\n \n | \n\n - | \n\n - | \n\n - | \n\n 74.1 | \n\n 9.0 | \n
| \n Total operating revenue | \n\n 1,778.6 | \n\n 1,365.4 | \n\n 2,382.3 | \n\n 1,972.1 | \n\n 607.3 | \n\n 356.5 | \n\n 253.2 | \n\n 190.9 | \n\n 5,021.4 | \n\n 3,885.0 | \n
| \n\n | \n
Amounts allocated to performance obligations that are to be completed under existing customer contracts are set out as service elements in the following table.
The firm contract backlog does not include variable consideration which is constrained. The services provided under these contracts will be billed based on time incurred and at day rates according to contract.
Some Well Services contracts are for periods of one year or less and are billed based on time incurred. As permitted under IFRS 15, the transaction price allocated to these unsatisfied contracts is not disclosed.
| \n NOK million | \n\n Future minimum lease payments | \n\n Performance obligations | \n\n Total firm backlog | \n
| \n Within one year | \n\n 165 | \n\n 2,881 | \n\n 3,046 | \n
| \n Between one and two years | \n\n 99 | \n\n 1,301 | \n\n 1,400 | \n
| \n Between two and three years | \n\n 66 | \n\n 668 | \n\n 734 | \n
| \n Between three and four years | \n\n - | \n\n 443 | \n\n 443 | \n
| \n Between four and five years | \n\n - | \n\n 313 | \n\n 313 | \n
| \n After five years | \n\n - | \n\n 50 | \n\n 50 | \n
| \n Total | \n\n 330 | \n\n 5,657 | \n\n 5,987 | \n
NOTE 13Contract balances
A contract asset is the right to consideration in exchange for goods or services transferred to the customer. If the Group performs by transferring goods or services to a customer before the customer pays consideration or before payment is due, a contract asset is recognised for the earned consideration that is conditional.
For costs to fulfil contracts where the Group operates as a lessor, the Group has chosen to apply the guidance in IFRS 15 by analogy.
A contract liability is the obligation to transfer goods or services to a customer for which the Group has received consideration (or an amount of consideration is due) from the customer. If a customer pays consideration before the Group transfers goods or services to the customer, a contract liability is recognised when the payment is made or the payment is due (whichever is earlier). Contract liabilities are recognised as revenue when the Group performs under the contract.
Contract liabilities are classified as current liabilities as they are expected to be settled in the normal operating cycle.
| \n NOK million | \n\n 31.12.2023 | \n\n 31.12.2022 | \n
| \n Contract assets | \n\n - | \n\n 0.9 | \n
| \n Contract liabilities | \n\n 84.3 | \n\n 63.0 | \n
The contract liabilities are mainly related to the Operations segment.
Of the contract liabilities as at 31 December 2023, approximately NOK 10 million is expected to be recognised as revenue during 2024. The remaining relates to Operations contracts and will be recognised as revenue over an estimated period up to 5\u00a0years.
| \n NOK million | \n\n 2023 | \n\n 2022 | \n
| \n Amounts included in contract liabilities at the beginning of the year | \n\n 0.9 | \n\n 2.5 | \n
| \n Performance obligations satisfied in the previous years | \n\n 1.2 | \n\n - | \n
Revenue is measured based on the consideration specified in a contract with a customer and excludes amounts collected on behalf of third parties. The Group recognises revenue when it transfers control over rendered services to the customer.
The Group has, as a practical expedient in IFRS 15, recognised the incremental costs of obtaining a contract as an expense when incurred if the amortisation period of the asset that the entity otherwise would have recognised is one year or less.
Leases in which the Group does not transfer substantially all the risks and rewards of ownership of an asset are classified as operating leases. The Group has only operating leases as a lessor. Rental income is accounted for on a straight-line basis over the lease terms and is included in revenue in the statement of profit or loss due to its operating nature. The lease term may vary from contract to contract, and only includes the non-cancellable period of the contract with the addition of optional renewable periods if the lessee is reasonably certain to extend. None of the existing contracts have optional periods included in the lease term. The lease term is reassessed when options to extend are exercised.
There is estimation uncertainty in the Group's revenue recognition related to bonus and other variable considerations. The Group estimate these variable fees using a most likely amount approach on a contract by contract basis. Management makes a detailed assessment of the amount of revenue expected to be received and the probability of success in each case. Variable consideration is included in revenue only to the extent that it is highly probable that the amount will not be subject to significant reversal when the uncertainty is resolved.
The Well Services segment (OWS) provides casing and tubular running services (both automated and conventional), drilling tool and tubular rental services, specialist well intervention products and services for exploration wells and for production purposes.
Revenue for the rental services are recognised according to IFRS 16 Leases and is accounted for on a straight-line basis over the lease terms.
Services related to contracts with customers are provided as a series of distinct services that are substantially the same and have the same pattern of transfer to the customer. Revenue is based on the transaction price in the contracts with customers, which is a combination of fees for equipment used, personnel on board and other pricing elements. Payment of the transaction price is usually due on a monthly basis. The Group generally recognise revenue over time because of the continuous transfer of control to the customer. The period for recognising revenue is generally equal to the contract period.
The Operations segment provides integrated drilling and maintenance services for both fixed production platforms and on floating production platforms with subsea blowout preventers (BOP) along with the management of and performance of the same services on leased Jack-up rigs in the North Sea. Services are provided as a series of distinct services that are substantially the same and have the same pattern of transfer to the customer.
Revenue is based on the transaction price in the contracts with customers. The main part of the transaction price is fixed day rates, which can vary depending on the phase of contract. Payment of the day rate based transaction price is usually due on a monthly basis. Some contracts may contain milestone payments or prepayment for maintenance services not yet performed. Refer to Note 13 - Contract balances.
The Group generally recognise revenue over time because of the continuous transfer of control to the customer. The period for recognising revenue is generally equal to the contract period.
Some of the contracts include fees for variable or conditional service fee arrangements, such as bonuses for meeting or exceeding certain performance targets. The Group estimate these variable fees using a most likely amount approach, see further description above under the \"Significant estimation uncertainty\" paragraph.
The Projects & Engineering segment offers engineering services, including design, project management and operation and support. The transaction prices in the contracts are mainly based on rates per hour, but the Business Area may from time to time have some lump sum projects. The Group generally recognise revenue over time because of the continuous transfer of control to the customer. The period for recognising revenue is generally equal to the contract period.
A contract asset is the right to consideration in exchange for goods or services transferred to the customer. If the Group performs by transferring goods or services to a customer before the customer pays consideration or before payment is due, a contract asset is recognised for the earned consideration that is conditional.
For costs to fulfil contracts where the Group operates as a lessor, the Group has chosen to apply the guidance in IFRS 15 by analogy.
A contract liability is the obligation to transfer goods or services to a customer for which the Group has received consideration (or an amount of consideration is due) from the customer. If a customer pays consideration before the Group transfers goods or services to the customer, a contract liability is recognised when the payment is made or the payment is due (whichever is earlier). Contract liabilities are recognised as revenue when the Group performs under the contract.
Contract liabilities are classified as current liabilities as they are expected to be settled in the normal operating cycle.
NOTE 6Personnel Expenses
| \n NOK million | \n\n Note | \n\n 2023 | \n\n 2022 | \n
| \n Salaries and wages | \n\n \n | \n\n 2,103.9 | \n\n 1,605.5 | \n
| \n Employer's national insurance contributions | \n\n \n | \n\n 312.4 | \n\n 218.2 | \n
| \n Pension expenses | \n\n\n | \n\n 134.4 | \n\n 104.9 | \n
| \n Cost of share-based option plan | \n\n\n | \n\n 6.0 | \n\n 2.8 | \n
| \n Other benefits | \n\n \n | \n\n 137.8 | \n\n 90.0 | \n
| \n Hired personnel | \n\n \n | \n\n 338.4 | \n\n 360.1 | \n
| \n Total personnel expenses | \n\n \n | \n\n 3,032.9 | \n\n 2,381.6 | \n
NOTE 18Post-employment benefits
The Group has occupational pension plans in several countries. The pension plans are measured and presented according to IAS 19.
The Group has funded defined benefit pension schemes in four Norwegian companies covering a total of 24 active members and 21 pensioners as at 31 December 2023 (28 active members and 18 pensioners as at 31 December 2022). The scheme entitles employees to defined future benefits. These are mainly dependent on the number of years of service, the salary level at pensionable age and the size of benefits paid by the national insurance. The liabilities are covered through an insurance company.
Mortality index used in actuarial calculations is K2013.
In addition to the pension obligations that arises from the funded defined benefit plans, the Group\u2019s Norwegian companies have unfunded defined benefit obligations related to pensions and early retirement pensions. The early retirement pensions entitle staff to benefits (about NOK 120,000 a year) from the company from the age of 62 until they are eligible for a national insurance pension when reaching the age of 67, if they retire and meet requirement to receive CPA (see below).
The Group has contractual pension agreement (CPA) schemes in Norway established in multi-employer plans. These multi-employer plans are defined benefit plans, but the Group does not have access to the necessary information for the accounting years 2023 and 2022 required to account for these plans as defined benefit plans, and the plans are therefore accounted for as defined contribution plans.
A number of the Norwegian subsidiaries in the Group are required to have a civil service pension scheme according to the Norwegian Act relating to mandatory occupational pensions. These subsidiaries have pension schemes in accordance with the requirements in this Act.
| \n NOK million | \n\n 31.12.2023 | \n\n 31.12.2022 | \n
| \n Present value of funded obligations | \n\n 146.5 | \n\n 139.2 | \n
| \n Fair value of plan assets | \n\n (123.6) | \n\n (116.9) | \n
| \n Deficit of funded plans | \n\n 22.8 | \n\n 22.3 | \n
| \n Present value of unfunded obligations | \n\n 25.5 | \n\n 24.4 | \n
| \n Total deficit of defined benefit pension plans | \n\n 48.3 | \n\n 46.7 | \n
| \n NOK million | \n\n 2023 | \n\n 2022 | \n
| \n Pension expenses (-net gain) from defined benefit scheme included in personnel expenses | \n\n 8.2 | \n\n 8.4 | \n
| \n Pension expenses from defined contribution schemes | \n\n 98.2 | \n\n 78.5 | \n
| \n Pension expenses from multi-employer plans accounted for as defined contribution schemes | \n\n 28.0 | \n\n 18.0 | \n
| \n Total pension expenses included in personnel expenses | \n\n 134.4 | \n\n 104.9 | \n
| \n \n | \n\n Present value of obligation | \n\n Fair value of plan assets | \n\n Total | \n\n Present value of obligation | \n\n Fair value of plan assets | \n\n Total | \n
| \n NOK million | \n\n 2023 | \n\n 2023 | \n\n 2023 | \n\n 2022 | \n\n 2022 | \n\n 2022 | \n
| \n At 1 January | \n\n 163.6 | \n\n (116.9) | \n\n 46.7 | \n\n 149.5 | \n\n (102.7) | \n\n 46.8 | \n
| \n Current service cost | \n\n 7.9 | \n\n - | \n\n 7.9 | \n\n 8.4 | \n\n - | \n\n 8.4 | \n
| \n Loss on plan amendment, curtailment and settlement | \n\n - | \n\n - | \n\n - | \n\n - | \n\n - | \n\n - | \n
| \n Interest expense/ (income) | \n\n 5.1 | \n\n (3.6) | \n\n 1.5 | \n\n 2.3 | \n\n (1.3) | \n\n 1.0 | \n
| \n Total amount recognised in profit or loss | \n\n 13.1 | \n\n (3.6) | \n\n 9.4 | \n\n 10.6 | \n\n (1.3) | \n\n 9.4 | \n
| \n Re-measurements: | \n\n \n | \n\n \n | \n\n \n | \n\n \n | \n\n \n | \n\n \n | \n
| \n (Gain) from change in discount rate | \n\n (12.3) | \n\n - | \n\n (12.3) | \n\n (44.4) | \n\n - | \n\n (44.4) | \n
| \n (Gain) / loss from change in other financial assumptions | \n\n 11.2 | \n\n (0.6) | \n\n 10.6 | \n\n 33.2 | \n\n (0.2) | \n\n 33.0 | \n
| \n Experience (gain)/loss | \n\n 6.7 | \n\n 5.4 | \n\n 12.1 | \n\n 20.6 | \n\n (8.1) | \n\n 12.5 | \n
| \n Investment management cost | \n\n - | \n\n 1.0 | \n\n 1.0 | \n\n - | \n\n 0.8 | \n\n 0.8 | \n
| \n Total amount recognised in other comprehensive income | \n\n 5.6 | \n\n 5.8 | \n\n 11.4 | \n\n 9.4 | \n\n (7.5) | \n\n 1.9 | \n
| \n Contributions: | \n\n \n | \n\n \n | \n\n \n | \n\n \n | \n\n \n | \n\n \n | \n
| \n Employers | \n\n (1.6) | \n\n (11.5) | \n\n (13.2) | \n\n (1.1) | \n\n (7.5) | \n\n (8.5) | \n
| \n Payments from plans: | \n\n \n | \n\n \n | \n\n - | \n\n \n | \n\n \n | \n\n \n | \n
| \n Benefit payments | \n\n (8.7) | \n\n 2.7 | \n\n (6.0) | \n\n (4.9) | \n\n 2.1 | \n\n (2.8) | \n
| \n At 31 December | \n\n 171.9 | \n\n (123.6) | \n\n 48.3 | \n\n 163.6 | \n\n (116.9) | \n\n 46.7 | \n
Estimated premium payments to funded defined benefit obligations in 2024 amounts to about NOK 17 million.
| \n \n | \n\n 31.12.2023 | \n\n 31.12.2022 | \n
| \n Discount rate | \n\n 3.70% | \n\n 3.20% | \n
| \n Salary growth rate | \n\n 3.75% | \n\n 3.75% | \n
| \n Expected growth in G (base social security amount) | \n\n 3.50% | \n\n 3.50% | \n
| \n Pension growth rate | \n\n 2.4%-3.5% | \n\n 1.7%-3.5% | \n
Refer to Note 6 - Personnel expenses for further information regarding personnel expenses.
| \n \n | \n\n Change in assumption by: | \n\n Impact on Present value of obligation: | \n\n Change in assumption by: | \n\n Impact on Present value of obligation: | \n||
| \n \n | \n\n 31.12.2023 | \n\n 31.12.2022 | \n\n 31.12.2023 | \n\n 31.12.2022 | \n||
| \n Discount rate | \n\n +0.5% | \n\n (10.7) | \n\n (10.5) | \n\n -0.5% | \n\n 11.8 | \n\n 11.6 | \n
| \n Salary growth rate | \n\n +0.5% | \n\n 3.9 | \n\n 4.2 | \n\n -0.5% | \n\n (3.9) | \n\n (4.3) | \n
| \n Pension growth rate | \n\n +0.5% | \n\n 8.0 | \n\n 4.4 | \n\n -0.5% | \n\n (7.4) | \n\n (10.0) | \n
The above sensitivity analyses are based on a change in an assumption while holding all other assumptions constant. In practise, this is unlikely to occur, and changes in some of the assumptions may be correlated.
| \n \n | \n\n 31.12.2023 | \n\n 31.12.2022 | \n
| \n Shares | \n\n 13% | \n\n 11% | \n
| \n Short term bonds | \n\n 5% | \n\n 15% | \n
| \n Money market | \n\n 12% | \n\n 8% | \n
| \n Long term bonds | \n\n 50% | \n\n 32% | \n
| \n Loans & Receivables | \n\n 10% | \n\n 22% | \n
| \n Real estate | \n\n 11% | \n\n 11% | \n
| \n Other | \n\n 0% | \n\n 1% | \n
| \n \n | \n\n 2023 | \n\n 2022 | \n
| \n No. of employees (annual average) | \n\n 2,299 | \n\n 1,966 | \n
NOTE 7Combined items, income statement
| \n NOK million | \n\n 2023 | \n\n 2022 | \n
| \n Net gain on disposal of tangible fixed assets | \n\n 26.9 | \n\n 13.6 | \n
| \n Other gains and losses | \n\n 26.9 | \n\n 13.6 | \n
NOTE 7Combined items, income statement
| \n NOK million | \n\n 2023 | \n\n 2022 | \n
| \n Net gain on disposal of tangible fixed assets | \n\n 26.9 | \n\n 13.6 | \n
| \n Other gains and losses | \n\n 26.9 | \n\n 13.6 | \n
| \n NOK million | \n\n 2023 | \n\n 2022 | \n
| \n Hired services | \n\n 107.0 | \n\n 100.5 | \n
| \n Hired equipment | \n\n 151.8 | \n\n 90.9 | \n
| \n Repair and maintenance, inspection, tools, fixtures and fittings | \n\n 565.9 | \n\n 391.1 | \n
| \n Insurance | \n\n 7.0 | \n\n 5.2 | \n
| \n Freight and transport | \n\n 74.7 | \n\n 48.9 | \n
| \n Premises facility expenses | \n\n 74.4 | \n\n 47.8 | \n
| \n Travel and course expenses | \n\n 119.6 | \n\n 74.8 | \n
| \n Other operating and administrative expenses | \n\n 74.7 | \n\n 85.3 | \n
| \n Total other operating expenses | \n\n 1,175.2 | \n\n 844.5 | \n
NOTE 7Combined items, income statement
| \n NOK million | \n\n 2023 | \n\n 2022 | \n
| \n Net gain on disposal of tangible fixed assets | \n\n 26.9 | \n\n 13.6 | \n
| \n Other gains and losses | \n\n 26.9 | \n\n 13.6 | \n
| \n NOK million | \n\n 2023 | \n\n 2022 | \n
| \n Hired services | \n\n 107.0 | \n\n 100.5 | \n
| \n Hired equipment | \n\n 151.8 | \n\n 90.9 | \n
| \n Repair and maintenance, inspection, tools, fixtures and fittings | \n\n 565.9 | \n\n 391.1 | \n
| \n Insurance | \n\n 7.0 | \n\n 5.2 | \n
| \n Freight and transport | \n\n 74.7 | \n\n 48.9 | \n
| \n Premises facility expenses | \n\n 74.4 | \n\n 47.8 | \n
| \n Travel and course expenses | \n\n 119.6 | \n\n 74.8 | \n
| \n Other operating and administrative expenses | \n\n 74.7 | \n\n 85.3 | \n
| \n Total other operating expenses | \n\n 1,175.2 | \n\n 844.5 | \n
| \n NOK million | \n\n Note | \n\n 2023 | \n\n 2022 | \n
| \n Interest expenses borrowings | \n\n \n | \n\n 138.5 | \n\n 96.6 | \n
| \n Amortised transaction costs borrowings | \n\n \n | \n\n 5.6 | \n\n 4.5 | \n
| \n Interest expenses lease liabilities | \n\n\n | \n\n 11.1 | \n\n 7.8 | \n
| \n Other interest expenses | \n\n \n | \n\n 3.7 | \n\n 1.8 | \n
| \n Total interest expenses | \n\n \n | \n\n 159.0 | \n\n 110.7 | \n
| \n NOK million | \n\n 2023 | \n\n 2022 | \n
| \n Net currency gain / (loss) | \n\n (1.0) | \n\n (31.8) | \n
| \n Other financial income | \n\n - | \n\n 0.1 | \n
| \n Other financial expenses | \n\n (1.5) | \n\n (1.6) | \n
| \n Total other financial items | \n\n (2.5) | \n\n (33.3) | \n
| \n NOK million | \n\n 2023 | \n\n 2022 | \n
| \n Hired services | \n\n 107.0 | \n\n 100.5 | \n
| \n Hired equipment | \n\n 151.8 | \n\n 90.9 | \n
| \n Repair and maintenance, inspection, tools, fixtures and fittings | \n\n 565.9 | \n\n 391.1 | \n
| \n Insurance | \n\n 7.0 | \n\n 5.2 | \n
| \n Freight and transport | \n\n 74.7 | \n\n 48.9 | \n
| \n Premises facility expenses | \n\n 74.4 | \n\n 47.8 | \n
| \n Travel and course expenses | \n\n 119.6 | \n\n 74.8 | \n
| \n Other operating and administrative expenses | \n\n 74.7 | \n\n 85.3 | \n
| \n Total other operating expenses | \n\n 1,175.2 | \n\n 844.5 | \n
| \n NOK million | \n\n Note | \n\n 2023 | \n\n 2022 | \n
| \n Interest expenses borrowings | \n\n \n | \n\n 138.5 | \n\n 96.6 | \n
| \n Amortised transaction costs borrowings | \n\n \n | \n\n 5.6 | \n\n 4.5 | \n
| \n Interest expenses lease liabilities | \n\n\n | \n\n 11.1 | \n\n 7.8 | \n
| \n Other interest expenses | \n\n \n | \n\n 3.7 | \n\n 1.8 | \n
| \n Total interest expenses | \n\n \n | \n\n 159.0 | \n\n 110.7 | \n
| \n NOK million | \n\n Note | \n\n 2023 | \n\n 2022 | \n
| \n Interest expenses borrowings | \n\n \n | \n\n 138.5 | \n\n 96.6 | \n
| \n Amortised transaction costs borrowings | \n\n \n | \n\n 5.6 | \n\n 4.5 | \n
| \n Interest expenses lease liabilities | \n\n\n | \n\n 11.1 | \n\n 7.8 | \n
| \n Other interest expenses | \n\n \n | \n\n 3.7 | \n\n 1.8 | \n
| \n Total interest expenses | \n\n \n | \n\n 159.0 | \n\n 110.7 | \n
| \n NOK million | \n\n 2023 | \n\n 2022 | \n
| \n Net currency gain / (loss) | \n\n (1.0) | \n\n (31.8) | \n
| \n Other financial income | \n\n - | \n\n 0.1 | \n
| \n Other financial expenses | \n\n (1.5) | \n\n (1.6) | \n
| \n Total other financial items | \n\n (2.5) | \n\n (33.3) | \n
| \n NOK million | \n\n 2023 | \n\n 2022 | \n
| \n Net currency gain / (loss) | \n\n (1.0) | \n\n (31.8) | \n
| \n Other financial income | \n\n - | \n\n 0.1 | \n
| \n Other financial expenses | \n\n (1.5) | \n\n (1.6) | \n
| \n Total other financial items | \n\n (2.5) | \n\n (33.3) | \n
| \n NOK million | \n\n 2023 | \n\n 2022 | \n
| \n Net currency gain / (loss) | \n\n (1.0) | \n\n (31.8) | \n
| \n Other financial income | \n\n - | \n\n 0.1 | \n
| \n Other financial expenses | \n\n (1.5) | \n\n (1.6) | \n
| \n Total other financial items | \n\n (2.5) | \n\n (33.3) | \n
NOTE 8Income Taxes
The tax expense for the period comprises current and deferred tax. Tax is recognised in the income statement, except to the extent that it relates to items recognised in other comprehensive income or directly in equity. In this case, the tax is also recognised in other comprehensive income or directly in equity, respectively.
The current income tax charge is calculated on the basis of the tax laws enacted or substantively enacted at the balance sheet date in the countries where the company and its subsidiaries operate and generate taxable income. Management periodically evaluates positions taken in tax returns with respect to situations in which applicable tax regulation is subject to interpretation. It establishes provisions where appropriate on the basis of amounts expected to be paid to the tax authorities.
Deferred income tax is recognised, using the liability method, on temporary differences arising between the tax bases of assets and liabilities and their carrying amounts in the consolidated financial statements.
Deferred income tax is determined using tax rates (and laws) that have been enacted or substantially enacted by the balance sheet date and are expected to apply when the related deferred income tax asset is realised or the deferred income tax liability is settled.
Deferred income tax assets are recognised only to the extent that it is probable that future taxable profit will be available against which the temporary differences can be utilised.
Deferred income tax assets and liabilities are offset when there is a legally enforceable right to offset current tax assets against current tax liabilities and when the deferred income taxes assets and liabilities relate to income taxes levied by the same taxation authority on either the same taxable entity or different taxable entities where there is an intention to settle the balances on a net basis.
NOTE 8Income Taxes
The tax expense for the period comprises current and deferred tax. Tax is recognised in the income statement, except to the extent that it relates to items recognised in other comprehensive income or directly in equity. In this case, the tax is also recognised in other comprehensive income or directly in equity, respectively.
The current income tax charge is calculated on the basis of the tax laws enacted or substantively enacted at the balance sheet date in the countries where the company and its subsidiaries operate and generate taxable income. Management periodically evaluates positions taken in tax returns with respect to situations in which applicable tax regulation is subject to interpretation. It establishes provisions where appropriate on the basis of amounts expected to be paid to the tax authorities.
Deferred income tax is recognised, using the liability method, on temporary differences arising between the tax bases of assets and liabilities and their carrying amounts in the consolidated financial statements.
Deferred income tax is determined using tax rates (and laws) that have been enacted or substantially enacted by the balance sheet date and are expected to apply when the related deferred income tax asset is realised or the deferred income tax liability is settled.
Deferred income tax assets are recognised only to the extent that it is probable that future taxable profit will be available against which the temporary differences can be utilised.
Deferred income tax assets and liabilities are offset when there is a legally enforceable right to offset current tax assets against current tax liabilities and when the deferred income taxes assets and liabilities relate to income taxes levied by the same taxation authority on either the same taxable entity or different taxable entities where there is an intention to settle the balances on a net basis.
Odfjell Offshore Ltd, a subsidiary of Odfjell Technology Ltd., was registered as a Norwegian Registered Foreign Company (NUF) on 08.03.2016 after migration of the company in January 2016, and is taxable for income to Norway. In 2017, the company filed for a tax deduction, of approximately NOK 2.3 billion, on redemption of shares in Deep Sea Metro Ltd. A total of NOK 1.3 billion of this loss has been utilised through group contributions received from other Norwegian entities within the Odfjell Drilling Ltd group in the period 2017 to 2021.
21 December 2022 Odfjell Offshore Ltd received a tax ruling from the Norwegian Tax Authorities where the tax loss of on the realisation of shares in 2017 was denied on the basis of the anti-avoidance rule developed as tax case law. Odfjell Offshore Ltd will appeal the ruling, and the Group is still of the opinion that the most likely outcome of a court case is that the anti-avoidance rule should not be applicable and the denial of the tax loss should be revoked.
The Group made an upfront payment 1 February 2023 of NOK 307 million in taxes and interest for the financial years 2017 through to 2021. The amount was financed and refunded from Odfjell Drilling Ltd., as it is covered by the letter of indemnity issued 1 March 2022 to Odfjell Technology Ltd. Odfjell Drilling Ltd will hold the Company indemnified in respect of any liability that may occur in relation to the ongoing Odfjell Offshore Ltd tax case for the financial years 2017 through to 2021. This includes financing of prepayments to the Norwegian Tax Authorities, and funds for legal proceedings.
As the Group is of the opinion that the most likely outcome is that the taxes will be repaid, a liability of NOK 307 million has been recognised as a non-current payable to Odfjell Drilling Ltd.
For the financial year 2022 income taxes payable for companies taxable in Norway amounts to NOK 36 million. Following the tax ruling in December 2022, the income taxes can no longer be offset by tax losses carried forward, and the Group paid the amount in April 2023. Income taxes payable to Norway in 2024 for the financial year 2023 is calculated to NOK 41 million. However, since the Group is still of the opinion that the most likely outcome of a court case is that the denial of the tax loss should be revoked, the Group has recognised a deferred tax asset equal to expected tax refund of NOK 77 million.
The Group is within the scope of the OECD Pillar Two model rules, however it is not expected to come into effect for the group until 2027 at the earliest due to the revenue thresholds in the rules. Since the Pillar Two legislation was not effective at the reporting date, the Group has no related current tax exposure. The Group applies the exception to recognising and disclosing information about deferred tax assets and liabilities related to Pillar Two income taxes, as provided in the amendments to IAS 12 issued in May 2023. Under the legislation, the Group will be liable to pay a top-up tax for the difference between their GloBE effective tax rate per jurisdiction and the 15% minimum rate.
The Group is in the process of assessing its exposure to the Pillar Two legislation for when it comes into effect. Due to the complexities in applying the legislation and calculating GloBE income, the quantitative impact of the enacted or substantively enacted legislation is not yet reasonably estimable
| \n NOK million | \n\n 2023 | \n\n 2022 | \n
| \n Payable income tax expense | \n\n (57.8) | \n\n (51.5) | \n
| \n Net utilisation of unrecognised tax losses | \n\n 1.6 | \n\n 42.8 | \n
| \n Change in deferred tax assets and liabilities | \n\n 38.9 | \n\n 35.4 | \n
| \n Total income tax expense | \n\n (17.3) | \n\n 26.8 | \n
| \n Effective tax rate | \n\n 4.8 % | \n\n -11.8 % | \n
| \n USD million | \n\n 2023 | \n\n 2022 | \n
| \n Profit before income tax expense | \n\n 361.5 | \n\n 226.2 | \n
| \n Tax calculated at domestic tax rates applicable to profits in respective countries* | \n\n (34.0) | \n\n (38.7) | \n
| \n Utilisation of unrecognised tax losses | \n\n 42.7 | \n\n 78.4 | \n
| \n Effect of changes in tax rates | \n\n 0.0 | \n\n 0.1 | \n
| \n Effect of adjustments recognised related to prior periods | \n\n (2.7) | \n\n 5.3 | \n
| \n Effect of net non-taxable income / (expenses) | \n\n (23.3) | \n\n (18.2) | \n
| \n Income tax expense | \n\n (17.3) | \n\n 26.8 | \n
| \n\n | \n
| \n NOK million | \n\n 31.12.2023 | \n\n 31.12.2022 | \n
| \n Unused tax losses for which no deferred tax asset has been recognised | \n\n 603.7 | \n\n 795.6 | \n
| \n Potential tax benefit (22%) | \n\n 133.2 | \n\n 175.5 | \n
The Group has an unrecognised tax asset of NOK 133 million, which is mainly related to the challenged tax loss incurred by Odfjell Offshore Ltd as explained above.
| \n NOK million | \n\n 2023 | \n\n 2022 | \n
| \n Unrecognised tax asset as at 01.01 | \n\n 175.5 | \n\n 253.8 | \n
| \n Utilisation of unrecognised tax losses | \n\n (42.7) | \n\n (78.4) | \n
| \n Currency translation differences | \n\n 0.3 | \n\n 0.2 | \n
| \n Unrecognised tax asset as at 31.12 | \n\n 133.2 | \n\n 175.5 | \n
| \n NOK million | \n\n 2023 | \n\n 2022 | \n
| \n Net deferred tax assets/(deferred tax liabilities) at 01.01 | \n\n 51.3 | \n\n 15.5 | \n
| \n Income statement charge | \n\n 38.9 | \n\n 35.4 | \n
| \n Change in deferred tax on other comprehensive income | \n\n (0.4) | \n\n 0.4 | \n
| \n Currency translation differences | \n\n 0.1 | \n\n 0.0 | \n
| \n Net deferred tax assets/(deferred tax liabilities) at 31.12 | \n\n 89.9 | \n\n 51.3 | \n
| \n NOK million | \n\n Tax losses | \n\n Current assets | \n\n Net pension | \n\n Fixed assets | \n\n Lease liabilities | \n\n Total | \n\n Deferred tax liabilities offset in deferred tax assets | \n\n Net book value of deferred tax asset | \n
| \n Opening balance 01.01.2022 | \n\n - | \n\n 1.8 | \n\n 10.3 | \n\n 2.8 | \n\n 20.8 | \n\n 35.7 | \n\n \n | \n\n \n | \n
| \n Income statement charge | \n\n 35.6 | \n\n 0.2 | \n\n (0.4) | \n\n (2.2) | \n\n 5.4 | \n\n 38.4 | \n\n \n | \n\n \n | \n
| \n Change in deferred tax on other comprehensive income | \n\n - | \n\n - | \n\n 0.4 | \n\n - | \n\n - | \n\n 0.4 | \n\n \n | \n\n \n | \n
| \n Currency translation differences | \n\n - | \n\n (0.0) | \n\n - | \n\n 0.0 | \n\n 0.2 | \n\n 0.2 | \n\n \n | \n\n \n | \n
| \n Closing balance 31.12.2022 | \n\n 35.6 | \n\n 1.9 | \n\n 10.3 | \n\n 0.6 | \n\n 26.4 | \n\n 74.7 | \n\n (23.4) | \n\n 51.3 | \n
| \n Income statement charge | \n\n 41.1 | \n\n (2.0) | \n\n (2.2) | \n\n (0.1) | \n\n 9.6 | \n\n 46.5 | \n\n \n | \n\n \n | \n
| \n Change in deferred tax on other comprehensive income | \n\n - | \n\n - | \n\n 2.5 | \n\n - | \n\n - | \n\n 2.5 | \n\n \n | \n\n \n | \n
| \n Currency translation differences | \n\n - | \n\n 0.1 | \n\n - | \n\n (0.0) | \n\n 0.4 | \n\n 0.5 | \n\n \n | \n\n \n | \n
| \n Closing balance 31.12.2023 | \n\n 76.6 | \n\n 0.0 | \n\n 10.6 | \n\n 0.5 | \n\n 36.4 | \n\n 124.2 | \n\n (31.0) | \n\n 93.3 | \n
| \n NOK million | \n\n Deferred capital gains | \n\n Current assets | \n\n Right-of-use Assets | \n\n Total | \n\n Deferred tax liabilities offset in deferred tax assets | \n\n Net book value of deferred tax liability | \n
| \n Opening balance 01.01.2022 | \n\n (0.0) | \n\n - | \n\n (20.2) | \n\n (20.2) | \n\n \n | \n\n \n | \n
| \n Income statement charge | \n\n 0.0 | \n\n (0.0) | \n\n (3.1) | \n\n (3.1) | \n\n \n | \n\n \n | \n
| \n Currency translation differences | \n\n - | \n\n (0.0) | \n\n (0.2) | \n\n (0.2) | \n\n \n | \n\n \n | \n
| \n Closing balance 31.12.2022 | \n\n (0.0) | \n\n (0.0) | \n\n (23.4) | \n\n (23.4) | \n\n 23.4 | \n\n - | \n
| \n Income statement charge | \n\n 0.0 | \n\n (1.9) | \n\n (5.7) | \n\n (7.6) | \n\n \n | \n\n \n | \n
| \n Change in deferred tax on other comprehensive income | \n\n - | \n\n (2.9) | \n\n - | \n\n (2.9) | \n\n \n | \n\n \n | \n
| \n Currency translation differences | \n\n - | \n\n (0.0) | \n\n (0.4) | \n\n (0.4) | \n\n \n | \n\n \n | \n
| \n Closing balance 31.12.2023 | \n\n (0.0) | \n\n (4.8) | \n\n (29.5) | \n\n (34.4) | \n\n 31.0 | \n\n (3.4) | \n
| \n \n | \n\n Before tax | \n\n Tax (charge)/ credit | \n\n After tax | \n\n Before tax | \n\n Tax (charge)/ credit | \n\n After tax | \n
| \n NOK million | \n\n 2023 | \n\n 2023 | \n\n 2023 | \n\n 2022 | \n\n 2022 | \n\n 2022 | \n
| \n Actuarial loss on post employment benefit obligations | \n\n (11.4) | \n\n 2.5 | \n\n (8.9) | \n\n (1.9) | \n\n 0.4 | \n\n (1.5) | \n
| \n Deferred tax related to cash flow hedging instruments under hedge accounting | \n\n 0.9 | \n\n (2.9) | \n\n (2.0) | \n\n 10.8 | \n\n - | \n\n 10.8 | \n
| \n Other comprehensive income | \n\n (10.5) | \n\n (0.4) | \n\n (10.9) | \n\n 8.9 | \n\n 0.4 | \n\n 9.3 | \n
| \n Deferred tax | \n\n \n | \n\n (0.4) | \n\n \n | \n\n \n | \n\n 0.4 | \n\n \n | \n
Deferred income tax is recognised, using the liability method, on temporary differences arising between the tax bases of assets and liabilities and their carrying amounts in the consolidated financial statements.
Deferred income tax is determined using tax rates (and laws) that have been enacted or substantially enacted by the balance sheet date and are expected to apply when the related deferred income tax asset is realised or the deferred income tax liability is settled.
Deferred income tax assets are recognised only to the extent that it is probable that future taxable profit will be available against which the temporary differences can be utilised.
Deferred income tax assets and liabilities are offset when there is a legally enforceable right to offset current tax assets against current tax liabilities and when the deferred income taxes assets and liabilities relate to income taxes levied by the same taxation authority on either the same taxable entity or different taxable entities where there is an intention to settle the balances on a net basis.
Deferred income tax is recognised, using the liability method, on temporary differences arising between the tax bases of assets and liabilities and their carrying amounts in the consolidated financial statements.
Deferred income tax is determined using tax rates (and laws) that have been enacted or substantially enacted by the balance sheet date and are expected to apply when the related deferred income tax asset is realised or the deferred income tax liability is settled.
Deferred income tax assets are recognised only to the extent that it is probable that future taxable profit will be available against which the temporary differences can be utilised.
Deferred income tax assets and liabilities are offset when there is a legally enforceable right to offset current tax assets against current tax liabilities and when the deferred income taxes assets and liabilities relate to income taxes levied by the same taxation authority on either the same taxable entity or different taxable entities where there is an intention to settle the balances on a net basis.
| \n NOK million | \n\n 31.12.2023 | \n\n 31.12.2022 | \n
| \n Unused tax losses for which no deferred tax asset has been recognised | \n\n 603.7 | \n\n 795.6 | \n
| \n Potential tax benefit (22%) | \n\n 133.2 | \n\n 175.5 | \n
The Group has an unrecognised tax asset of NOK 133 million, which is mainly related to the challenged tax loss incurred by Odfjell Offshore Ltd as explained above.
| \n NOK million | \n\n 2023 | \n\n 2022 | \n
| \n Unrecognised tax asset as at 01.01 | \n\n 175.5 | \n\n 253.8 | \n
| \n Utilisation of unrecognised tax losses | \n\n (42.7) | \n\n (78.4) | \n
| \n Currency translation differences | \n\n 0.3 | \n\n 0.2 | \n
| \n Unrecognised tax asset as at 31.12 | \n\n 133.2 | \n\n 175.5 | \n
| \n NOK million | \n\n 2023 | \n\n 2022 | \n
| \n Net deferred tax assets/(deferred tax liabilities) at 01.01 | \n\n 51.3 | \n\n 15.5 | \n
| \n Income statement charge | \n\n 38.9 | \n\n 35.4 | \n
| \n Change in deferred tax on other comprehensive income | \n\n (0.4) | \n\n 0.4 | \n
| \n Currency translation differences | \n\n 0.1 | \n\n 0.0 | \n
| \n Net deferred tax assets/(deferred tax liabilities) at 31.12 | \n\n 89.9 | \n\n 51.3 | \n
| \n NOK million | \n\n Tax losses | \n\n Current assets | \n\n Net pension | \n\n Fixed assets | \n\n Lease liabilities | \n\n Total | \n\n Deferred tax liabilities offset in deferred tax assets | \n\n Net book value of deferred tax asset | \n
| \n Opening balance 01.01.2022 | \n\n - | \n\n 1.8 | \n\n 10.3 | \n\n 2.8 | \n\n 20.8 | \n\n 35.7 | \n\n \n | \n\n \n | \n
| \n Income statement charge | \n\n 35.6 | \n\n 0.2 | \n\n (0.4) | \n\n (2.2) | \n\n 5.4 | \n\n 38.4 | \n\n \n | \n\n \n | \n
| \n Change in deferred tax on other comprehensive income | \n\n - | \n\n - | \n\n 0.4 | \n\n - | \n\n - | \n\n 0.4 | \n\n \n | \n\n \n | \n
| \n Currency translation differences | \n\n - | \n\n (0.0) | \n\n - | \n\n 0.0 | \n\n 0.2 | \n\n 0.2 | \n\n \n | \n\n \n | \n
| \n Closing balance 31.12.2022 | \n\n 35.6 | \n\n 1.9 | \n\n 10.3 | \n\n 0.6 | \n\n 26.4 | \n\n 74.7 | \n\n (23.4) | \n\n 51.3 | \n
| \n Income statement charge | \n\n 41.1 | \n\n (2.0) | \n\n (2.2) | \n\n (0.1) | \n\n 9.6 | \n\n 46.5 | \n\n \n | \n\n \n | \n
| \n Change in deferred tax on other comprehensive income | \n\n - | \n\n - | \n\n 2.5 | \n\n - | \n\n - | \n\n 2.5 | \n\n \n | \n\n \n | \n
| \n Currency translation differences | \n\n - | \n\n 0.1 | \n\n - | \n\n (0.0) | \n\n 0.4 | \n\n 0.5 | \n\n \n | \n\n \n | \n
| \n Closing balance 31.12.2023 | \n\n 76.6 | \n\n 0.0 | \n\n 10.6 | \n\n 0.5 | \n\n 36.4 | \n\n 124.2 | \n\n (31.0) | \n\n 93.3 | \n
| \n NOK million | \n\n Deferred capital gains | \n\n Current assets | \n\n Right-of-use Assets | \n\n Total | \n\n Deferred tax liabilities offset in deferred tax assets | \n\n Net book value of deferred tax liability | \n
| \n Opening balance 01.01.2022 | \n\n (0.0) | \n\n - | \n\n (20.2) | \n\n (20.2) | \n\n \n | \n\n \n | \n
| \n Income statement charge | \n\n 0.0 | \n\n (0.0) | \n\n (3.1) | \n\n (3.1) | \n\n \n | \n\n \n | \n
| \n Currency translation differences | \n\n - | \n\n (0.0) | \n\n (0.2) | \n\n (0.2) | \n\n \n | \n\n \n | \n
| \n Closing balance 31.12.2022 | \n\n (0.0) | \n\n (0.0) | \n\n (23.4) | \n\n (23.4) | \n\n 23.4 | \n\n - | \n
| \n Income statement charge | \n\n 0.0 | \n\n (1.9) | \n\n (5.7) | \n\n (7.6) | \n\n \n | \n\n \n | \n
| \n Change in deferred tax on other comprehensive income | \n\n - | \n\n (2.9) | \n\n - | \n\n (2.9) | \n\n \n | \n\n \n | \n
| \n Currency translation differences | \n\n - | \n\n (0.0) | \n\n (0.4) | \n\n (0.4) | \n\n \n | \n\n \n | \n
| \n Closing balance 31.12.2023 | \n\n (0.0) | \n\n (4.8) | \n\n (29.5) | \n\n (34.4) | \n\n 31.0 | \n\n (3.4) | \n
NOTE 9Tangible fixed assets
Property, plant and equipment comprise mainly of, well services equipment and machinery and equipment. Property, plant and equipment is stated at historical cost less depreciation. Historical cost includes purchase price, any directly attributable costs of bringing the asset to working condition and borrowing costs.
Depreciation is calculated on a straight-line basis over the useful life of the asset or component. The depreciable amount equals historical cost less residual value. Items of property, plant and equipment with components that have substantially different useful lives are treated separately for depreciation purposes.
Subsequent costs for day-to-day repairs and maintenance are expensed as incurred.
The cost of modernisation and rebuilding projects is included in the asset\u2019s carrying amount when it is probable that the Group will derive future financial benefits and the cost of the item can be measured reliably. The carrying amount of the replaced part is written off. Modernisation and rebuilding projects are depreciated over the remaining useful life of the related assets.
The useful lives of assets and the depreciation methods are reviewed periodically in order to ensure that the method and period of depreciation are consistent with the expected pattern of financial benefits from the asset, taking into account current and expected climate risk.
When assets are sold or retired, their cost and accumulated depreciation and accumulated impairment loss are eliminated from the accounts and any gain or loss resulting from their disposal is included in the income statement as other gains and losses.
Residual values for property, plant and equipment are estimated to be zero.
All non-financial assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. An impairment loss is recognised for the amount by which the asset\u2019s carrying amount exceeds its recoverable amount.
The recoverable amount is the higher of an asset\u2019s fair value less costs to sell and value in use.
For the purposes of assessing impairment, assets are grouped at the lowest levels for which there are separately identifiable cash flows (CGUs). Value in use represents the present value of estimated future cash flows expected to arise from the continuing use of an asset and from its disposal at the end of its useful life.
Non-financial assets, other than goodwill, that have suffered an impairment, are reviewed for reversal of the impairment whenever events or changes in circumstances indicate that the impairment loss recognised in prior periods may no longer exist or may have decreased.
| \n \n | \n\n 2023 | \n\n 2023 | \n\n 2023 | \n\n 2023 | \n\n 2022 | \n\n 2022 | \n\n 2022 | \n\n 2022 | \n
| \n NOK million | \n\n Well Services equipment | \n\n Other fixed assets | \n\n Right-of-use assets | \n\n Total fixed assets | \n\n Well Services equipment | \n\n Other fixed assets | \n\n Right-of-use assets | \n\n Total fixed assets | \n
| \n Cost | \n\n \n | \n\n \n | \n\n \n | \n\n \n | \n\n \n | \n\n \n | \n\n \n | \n\n \n | \n
| \n At 1 January | \n\n 4,090.4 | \n\n 194.7 | \n\n 186.7 | \n\n 4,471.9 | \n\n 3,595.8 | \n\n 184.1 | \n\n 156.7 | \n\n 3,936.6 | \n
| \n Additions | \n\n 182.2 | \n\n 27.5 | \n\n 65.5 | \n\n 275.2 | \n\n 309.6 | \n\n 16.6 | \n\n 38.5 | \n\n 364.7 | \n
| \n Disposals | \n\n (102.7) | \n\n (10.2) | \n\n (29.7) | \n\n (142.6) | \n\n (198.3) | \n\n (10.0) | \n\n (10.9) | \n\n (219.2) | \n
| \n Currency translation differences | \n\n 116.9 | \n\n 3.1 | \n\n 4.1 | \n\n 124.1 | \n\n 383.4 | \n\n 3.9 | \n\n 2.5 | \n\n 389.7 | \n
| \n Cost as at 31 December | \n\n 4,286.8 | \n\n 215.1 | \n\n 226.7 | \n\n 4,728.6 | \n\n 4,090.4 | \n\n 194.7 | \n\n 186.7 | \n\n 4,471.9 | \n
| \n Accumulated depreciation and impairment | \n\n \n | \n\n \n | \n\n \n | \n\n \n | \n\n \n | \n\n \n | \n\n \n | \n\n \n | \n
| \n At 1 January | \n\n (3,169.5) | \n\n (160.0) | \n\n (73.9) | \n\n (3,403.4) | \n\n (2,839.2) | \n\n (157.5) | \n\n (52.5) | \n\n (3,049.2) | \n
| \n Depreciation | \n\n (283.5) | \n\n (12.9) | \n\n (27.5) | \n\n (323.9) | \n\n (232.4) | \n\n (9.5) | \n\n (22.7) | \n\n (264.6) | \n
| \n Impairment / (reversal of impairment) | \n\n - | \n\n - | \n\n 0.8 | \n\n 0.8 | \n\n - | \n\n - | \n\n (8.5) | \n\n (8.5) | \n
| \n Disposals | \n\n 96.8 | \n\n 10.2 | \n\n 20.5 | \n\n 127.5 | \n\n 195.3 | \n\n 10.0 | \n\n 10.9 | \n\n 216.1 | \n
| \n Currency translation differences | \n\n (83.6) | \n\n (2.7) | \n\n (2.4) | \n\n (88.7) | \n\n (293.2) | \n\n (2.9) | \n\n (1.2) | \n\n (297.3) | \n
| \n As at 31 December | \n\n (3,439.8) | \n\n (165.5) | \n\n (82.4) | \n\n (3,687.7) | \n\n (3,169.5) | \n\n (160.0) | \n\n (73.9) | \n\n (3,403.4) | \n
| \n Net book value at 31 December | \n\n 847.0 | \n\n 49.7 | \n\n 144.2 | \n\n 1,040.9 | \n\n 921.0 | \n\n 34.7 | \n\n 112.8 | \n\n 1,068.4 | \n
| \n\n | \n\n\n | \n\n\n | \n\n\n | \n\n\n | \n\n\n | \n\n\n | \n\n\n | \n\n\n | \n
| \n\n | \n\n\n | \n\n\n | \n\n\n | \n\n\n | \n\n\n | \n\n\n | \n\n\n | \n\n\n | \n
For more information about Right-of-use assets, refer to Note 17 - Leases.
Refer to Note 28 for information about capital commitments.
Management exercises judgement in determining the expected economic life of assets in the Well Services segment. Management uses knowledge of the oil industry and the estimated market development, as well as expected technological development as basis for determining useful life. The evaluation includes effects of the climate change and the shift to renewable energy sources.
Management exercises significant judgement in determining whether there are any indicators of impairment. Management evaluates both external and internal sources of information in the indicator assessments. The assessments include estimated effects of the climate change and the shift to renewable energy sources.
The Group has not identified any impairment indicators, nor any indicators for reversal of impairment as at 31 December 2023.
Property, plant and equipment comprise mainly of, well services equipment and machinery and equipment. Property, plant and equipment is stated at historical cost less depreciation. Historical cost includes purchase price, any directly attributable costs of bringing the asset to working condition and borrowing costs.
Depreciation is calculated on a straight-line basis over the useful life of the asset or component. The depreciable amount equals historical cost less residual value. Items of property, plant and equipment with components that have substantially different useful lives are treated separately for depreciation purposes.
Subsequent costs for day-to-day repairs and maintenance are expensed as incurred.
The cost of modernisation and rebuilding projects is included in the asset\u2019s carrying amount when it is probable that the Group will derive future financial benefits and the cost of the item can be measured reliably. The carrying amount of the replaced part is written off. Modernisation and rebuilding projects are depreciated over the remaining useful life of the related assets.
The useful lives of assets and the depreciation methods are reviewed periodically in order to ensure that the method and period of depreciation are consistent with the expected pattern of financial benefits from the asset, taking into account current and expected climate risk.
When assets are sold or retired, their cost and accumulated depreciation and accumulated impairment loss are eliminated from the accounts and any gain or loss resulting from their disposal is included in the income statement as other gains and losses.
Residual values for property, plant and equipment are estimated to be zero.
All non-financial assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. An impairment loss is recognised for the amount by which the asset\u2019s carrying amount exceeds its recoverable amount.
The recoverable amount is the higher of an asset\u2019s fair value less costs to sell and value in use.
For the purposes of assessing impairment, assets are grouped at the lowest levels for which there are separately identifiable cash flows (CGUs). Value in use represents the present value of estimated future cash flows expected to arise from the continuing use of an asset and from its disposal at the end of its useful life.
Non-financial assets, other than goodwill, that have suffered an impairment, are reviewed for reversal of the impairment whenever events or changes in circumstances indicate that the impairment loss recognised in prior periods may no longer exist or may have decreased.
| \n \n | \n\n 2023 | \n\n 2023 | \n\n 2023 | \n\n 2023 | \n\n 2022 | \n\n 2022 | \n\n 2022 | \n\n 2022 | \n
| \n NOK million | \n\n Well Services equipment | \n\n Other fixed assets | \n\n Right-of-use assets | \n\n Total fixed assets | \n\n Well Services equipment | \n\n Other fixed assets | \n\n Right-of-use assets | \n\n Total fixed assets | \n
| \n Cost | \n\n \n | \n\n \n | \n\n \n | \n\n \n | \n\n \n | \n\n \n | \n\n \n | \n\n \n | \n
| \n At 1 January | \n\n 4,090.4 | \n\n 194.7 | \n\n 186.7 | \n\n 4,471.9 | \n\n 3,595.8 | \n\n 184.1 | \n\n 156.7 | \n\n 3,936.6 | \n
| \n Additions | \n\n 182.2 | \n\n 27.5 | \n\n 65.5 | \n\n 275.2 | \n\n 309.6 | \n\n 16.6 | \n\n 38.5 | \n\n 364.7 | \n
| \n Disposals | \n\n (102.7) | \n\n (10.2) | \n\n (29.7) | \n\n (142.6) | \n\n (198.3) | \n\n (10.0) | \n\n (10.9) | \n\n (219.2) | \n
| \n Currency translation differences | \n\n 116.9 | \n\n 3.1 | \n\n 4.1 | \n\n 124.1 | \n\n 383.4 | \n\n 3.9 | \n\n 2.5 | \n\n 389.7 | \n
| \n Cost as at 31 December | \n\n 4,286.8 | \n\n 215.1 | \n\n 226.7 | \n\n 4,728.6 | \n\n 4,090.4 | \n\n 194.7 | \n\n 186.7 | \n\n 4,471.9 | \n
| \n Accumulated depreciation and impairment | \n\n \n | \n\n \n | \n\n \n | \n\n \n | \n\n \n | \n\n \n | \n\n \n | \n\n \n | \n
| \n At 1 January | \n\n (3,169.5) | \n\n (160.0) | \n\n (73.9) | \n\n (3,403.4) | \n\n (2,839.2) | \n\n (157.5) | \n\n (52.5) | \n\n (3,049.2) | \n
| \n Depreciation | \n\n (283.5) | \n\n (12.9) | \n\n (27.5) | \n\n (323.9) | \n\n (232.4) | \n\n (9.5) | \n\n (22.7) | \n\n (264.6) | \n
| \n Impairment / (reversal of impairment) | \n\n - | \n\n - | \n\n 0.8 | \n\n 0.8 | \n\n - | \n\n - | \n\n (8.5) | \n\n (8.5) | \n
| \n Disposals | \n\n 96.8 | \n\n 10.2 | \n\n 20.5 | \n\n 127.5 | \n\n 195.3 | \n\n 10.0 | \n\n 10.9 | \n\n 216.1 | \n
| \n Currency translation differences | \n\n (83.6) | \n\n (2.7) | \n\n (2.4) | \n\n (88.7) | \n\n (293.2) | \n\n (2.9) | \n\n (1.2) | \n\n (297.3) | \n
| \n As at 31 December | \n\n (3,439.8) | \n\n (165.5) | \n\n (82.4) | \n\n (3,687.7) | \n\n (3,169.5) | \n\n (160.0) | \n\n (73.9) | \n\n (3,403.4) | \n
| \n Net book value at 31 December | \n\n 847.0 | \n\n 49.7 | \n\n 144.2 | \n\n 1,040.9 | \n\n 921.0 | \n\n 34.7 | \n\n 112.8 | \n\n 1,068.4 | \n
| \n\n | \n\n\n | \n\n\n | \n\n\n | \n\n\n | \n\n\n | \n\n\n | \n\n\n | \n\n\n | \n
| \n\n | \n\n\n | \n\n\n | \n\n\n | \n\n\n | \n\n\n | \n\n\n | \n\n\n | \n\n\n | \n
| \n NOK million | \n\n Goodwill | \n\n Software | \n\n Patents and acquired R&D | \n\n Internally developed assets | \n\n Total intangible assets | \n
| \n Cost | \n\n \n | \n\n \n | \n\n \n | \n\n \n | \n\n \n | \n
| \n At 1 January 2023 | \n\n 132.8 | \n\n 282.3 | \n\n 20.9 | \n\n 19.2 | \n\n 455.2 | \n
| \n Additions | \n\n - | \n\n 28.5 | \n\n - | \n\n 0.6 | \n\n 29.1 | \n
| \n Disposals | \n\n - | \n\n (23.6) | \n\n - | \n\n - | \n\n (23.6) | \n
| \n Currency translation differences | \n\n - | \n\n 0.0 | \n\n 0.7 | \n\n 0.6 | \n\n 1.3 | \n
| \n Cost as at 31 December 2023 | \n\n 132.8 | \n\n 287.2 | \n\n 21.5 | \n\n 20.5 | \n\n 461.9 | \n
| \n Accumulated amortisation and impairment | \n\n \n | \n\n \n | \n\n \n | \n\n \n | \n\n \n | \n
| \n At 1 January 2023 | \n\n - | \n\n (189.1) | \n\n (6.4) | \n\n (7.5) | \n\n (203.1) | \n
| \n Amortisation | \n\n - | \n\n (20.2) | \n\n (2.2) | \n\n (2.5) | \n\n (24.9) | \n
| \n Disposals | \n\n - | \n\n 23.6 | \n\n - | \n\n - | \n\n 23.6 | \n
| \n Currency translation differences | \n\n - | \n\n - | \n\n (0.1) | \n\n (0.1) | \n\n (0.3) | \n
| \n As at 31 December 2023 | \n\n - | \n\n (185.6) | \n\n (8.8) | \n\n (10.2) | \n\n (204.6) | \n
| \n Net book value at 31 December 2023 | \n\n 132.8 | \n\n 101.5 | \n\n 12.7 | \n\n 10.3 | \n\n 257.3 | \n
| \n\n | \n\n\n | \n\n\n | \n\n\n | \n\n\n | \n\n\n | \n
| \n\n | \n\n\n | \n\n\n | \n\n\n | \n\n\n | \n\n\n | \n
The carrying amount of internally developed assets include development expenses incurred in connection with developing a new drill-hole cleaning tool. The technology has been patented. The Group have documented that the new technology met the criteria for recognition in the balance sheet. The new tool is part of Well Services product line and is expected to generate future cash flow to support the book value as at 31\u00a0December 2023.
The developed assets are amortised using a straight-line method over an estimated lifetime of 10 years.
| \n NOK million | \n\n Goodwill | \n\n Software | \n\n Patents and acquired R&D | \n\n Internally developed assets | \n\n Total intangible assets | \n
| \n Cost | \n\n \n | \n\n \n | \n\n \n | \n\n \n | \n\n \n | \n
| \n At 1 January 2022 | \n\n 132.8 | \n\n 241.4 | \n\n 18.7 | \n\n 11.7 | \n\n 404.6 | \n
| \n Additions | \n\n - | \n\n 40.9 | \n\n - | \n\n 6.0 | \n\n 46.8 | \n
| \n Currency translation differences | \n\n - | \n\n 0.0 | \n\n 2.2 | \n\n 1.5 | \n\n 3.7 | \n
| \n Cost as at 31 December 2022 | \n\n 132.8 | \n\n 282.3 | \n\n 20.9 | \n\n 19.2 | \n\n 455.2 | \n
| \n Accumulated amortisation and impairment | \n\n \n | \n\n \n | \n\n \n | \n\n \n | \n\n \n | \n
| \n At 1 January 2022 | \n\n - | \n\n (176.8) | \n\n (3.9) | \n\n (5.9) | \n\n (186.5) | \n
| \n Amortisation | \n\n - | \n\n (12.3) | \n\n (2.0) | \n\n (0.9) | \n\n (15.3) | \n
| \n Currency translation differences | \n\n - | \n\n - | \n\n (0.5) | \n\n (0.7) | \n\n (1.2) | \n
| \n As at 31 December 2022 | \n\n - | \n\n (189.1) | \n\n (6.4) | \n\n (7.5) | \n\n (203.1) | \n
| \n Net book value at 31 December 2022 | \n\n 132.8 | \n\n 93.2 | \n\n 14.4 | \n\n 11.7 | \n\n 252.1 | \n
| \n\n | \n\n\n | \n\n\n | \n\n\n | \n\n\n | \n\n\n | \n
| \n\n | \n\n\n | \n\n\n | \n\n\n | \n\n\n | \n\n\n | \n
Subsequent costs for day-to-day repairs and maintenance are expensed as incurred.
The cost of modernisation and rebuilding projects is included in the asset\u2019s carrying amount when it is probable that the Group will derive future financial benefits and the cost of the item can be measured reliably. The carrying amount of the replaced part is written off. Modernisation and rebuilding projects are depreciated over the remaining useful life of the related assets.
All non-financial assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. An impairment loss is recognised for the amount by which the asset\u2019s carrying amount exceeds its recoverable amount.
The recoverable amount is the higher of an asset\u2019s fair value less costs to sell and value in use.
For the purposes of assessing impairment, assets are grouped at the lowest levels for which there are separately identifiable cash flows (CGUs). Value in use represents the present value of estimated future cash flows expected to arise from the continuing use of an asset and from its disposal at the end of its useful life.
| \n \n | \n\n 2023 | \n\n 2023 | \n\n 2023 | \n\n 2023 | \n\n 2022 | \n\n 2022 | \n\n 2022 | \n\n 2022 | \n
| \n NOK million | \n\n Well Services equipment | \n\n Other fixed assets | \n\n Right-of-use assets | \n\n Total fixed assets | \n\n Well Services equipment | \n\n Other fixed assets | \n\n Right-of-use assets | \n\n Total fixed assets | \n
| \n Cost | \n\n \n | \n\n \n | \n\n \n | \n\n \n | \n\n \n | \n\n \n | \n\n \n | \n\n \n | \n
| \n At 1 January | \n\n 4,090.4 | \n\n 194.7 | \n\n 186.7 | \n\n 4,471.9 | \n\n 3,595.8 | \n\n 184.1 | \n\n 156.7 | \n\n 3,936.6 | \n
| \n Additions | \n\n 182.2 | \n\n 27.5 | \n\n 65.5 | \n\n 275.2 | \n\n 309.6 | \n\n 16.6 | \n\n 38.5 | \n\n 364.7 | \n
| \n Disposals | \n\n (102.7) | \n\n (10.2) | \n\n (29.7) | \n\n (142.6) | \n\n (198.3) | \n\n (10.0) | \n\n (10.9) | \n\n (219.2) | \n
| \n Currency translation differences | \n\n 116.9 | \n\n 3.1 | \n\n 4.1 | \n\n 124.1 | \n\n 383.4 | \n\n 3.9 | \n\n 2.5 | \n\n 389.7 | \n
| \n Cost as at 31 December | \n\n 4,286.8 | \n\n 215.1 | \n\n 226.7 | \n\n 4,728.6 | \n\n 4,090.4 | \n\n 194.7 | \n\n 186.7 | \n\n 4,471.9 | \n
| \n Accumulated depreciation and impairment | \n\n \n | \n\n \n | \n\n \n | \n\n \n | \n\n \n | \n\n \n | \n\n \n | \n\n \n | \n
| \n At 1 January | \n\n (3,169.5) | \n\n (160.0) | \n\n (73.9) | \n\n (3,403.4) | \n\n (2,839.2) | \n\n (157.5) | \n\n (52.5) | \n\n (3,049.2) | \n
| \n Depreciation | \n\n (283.5) | \n\n (12.9) | \n\n (27.5) | \n\n (323.9) | \n\n (232.4) | \n\n (9.5) | \n\n (22.7) | \n\n (264.6) | \n
| \n Impairment / (reversal of impairment) | \n\n - | \n\n - | \n\n 0.8 | \n\n 0.8 | \n\n - | \n\n - | \n\n (8.5) | \n\n (8.5) | \n
| \n Disposals | \n\n 96.8 | \n\n 10.2 | \n\n 20.5 | \n\n 127.5 | \n\n 195.3 | \n\n 10.0 | \n\n 10.9 | \n\n 216.1 | \n
| \n Currency translation differences | \n\n (83.6) | \n\n (2.7) | \n\n (2.4) | \n\n (88.7) | \n\n (293.2) | \n\n (2.9) | \n\n (1.2) | \n\n (297.3) | \n
| \n As at 31 December | \n\n (3,439.8) | \n\n (165.5) | \n\n (82.4) | \n\n (3,687.7) | \n\n (3,169.5) | \n\n (160.0) | \n\n (73.9) | \n\n (3,403.4) | \n
| \n Net book value at 31 December | \n\n 847.0 | \n\n 49.7 | \n\n 144.2 | \n\n 1,040.9 | \n\n 921.0 | \n\n 34.7 | \n\n 112.8 | \n\n 1,068.4 | \n
| \n\n | \n\n\n | \n\n\n | \n\n\n | \n\n\n | \n\n\n | \n\n\n | \n\n\n | \n\n\n | \n
| \n\n | \n\n\n | \n\n\n | \n\n\n | \n\n\n | \n\n\n | \n\n\n | \n\n\n | \n\n\n | \n
The Group has not identified any impairment indicators, nor any indicators for reversal of impairment as at 31 December 2023.
All non-financial assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. An impairment loss is recognised for the amount by which the asset\u2019s carrying amount exceeds its recoverable amount.
The recoverable amount is the higher of an asset\u2019s fair value less costs to sell and value in use.
For the purposes of assessing impairment, assets are grouped at the lowest levels for which there are separately identifiable cash flows (CGUs). Value in use represents the present value of estimated future cash flows expected to arise from the continuing use of an asset and from its disposal at the end of its useful life.
All non-financial assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. An impairment loss is recognised for the amount by which the asset\u2019s carrying amount exceeds its recoverable amount.
The recoverable amount is the higher of an asset\u2019s fair value less costs to sell and value in use.
For the purposes of assessing impairment, assets are grouped at the lowest levels for which there are separately identifiable cash flows (CGUs). Value in use represents the present value of estimated future cash flows expected to arise from the continuing use of an asset and from its disposal at the end of its useful life.
Non-financial assets, other than goodwill, that have suffered an impairment, are reviewed for reversal of the impairment whenever events or changes in circumstances indicate that the impairment loss recognised in prior periods may no longer exist or may have decreased.
NOTE 10Intangible assets
| \n NOK million | \n\n Goodwill | \n\n Software | \n\n Patents and acquired R&D | \n\n Internally developed assets | \n\n Total intangible assets | \n
| \n Cost | \n\n \n | \n\n \n | \n\n \n | \n\n \n | \n\n \n | \n
| \n At 1 January 2023 | \n\n 132.8 | \n\n 282.3 | \n\n 20.9 | \n\n 19.2 | \n\n 455.2 | \n
| \n Additions | \n\n - | \n\n 28.5 | \n\n - | \n\n 0.6 | \n\n 29.1 | \n
| \n Disposals | \n\n - | \n\n (23.6) | \n\n - | \n\n - | \n\n (23.6) | \n
| \n Currency translation differences | \n\n - | \n\n 0.0 | \n\n 0.7 | \n\n 0.6 | \n\n 1.3 | \n
| \n Cost as at 31 December 2023 | \n\n 132.8 | \n\n 287.2 | \n\n 21.5 | \n\n 20.5 | \n\n 461.9 | \n
| \n Accumulated amortisation and impairment | \n\n \n | \n\n \n | \n\n \n | \n\n \n | \n\n \n | \n
| \n At 1 January 2023 | \n\n - | \n\n (189.1) | \n\n (6.4) | \n\n (7.5) | \n\n (203.1) | \n
| \n Amortisation | \n\n - | \n\n (20.2) | \n\n (2.2) | \n\n (2.5) | \n\n (24.9) | \n
| \n Disposals | \n\n - | \n\n 23.6 | \n\n - | \n\n - | \n\n 23.6 | \n
| \n Currency translation differences | \n\n - | \n\n - | \n\n (0.1) | \n\n (0.1) | \n\n (0.3) | \n
| \n As at 31 December 2023 | \n\n - | \n\n (185.6) | \n\n (8.8) | \n\n (10.2) | \n\n (204.6) | \n
| \n Net book value at 31 December 2023 | \n\n 132.8 | \n\n 101.5 | \n\n 12.7 | \n\n 10.3 | \n\n 257.3 | \n
| \n\n | \n\n\n | \n\n\n | \n\n\n | \n\n\n | \n\n\n | \n
| \n\n | \n\n\n | \n\n\n | \n\n\n | \n\n\n | \n\n\n | \n
The carrying amount of internally developed assets include development expenses incurred in connection with developing a new drill-hole cleaning tool. The technology has been patented. The Group have documented that the new technology met the criteria for recognition in the balance sheet. The new tool is part of Well Services product line and is expected to generate future cash flow to support the book value as at 31\u00a0December 2023.
The developed assets are amortised using a straight-line method over an estimated lifetime of 10 years.
| \n NOK million | \n\n Goodwill | \n\n Software | \n\n Patents and acquired R&D | \n\n Internally developed assets | \n\n Total intangible assets | \n
| \n Cost | \n\n \n | \n\n \n | \n\n \n | \n\n \n | \n\n \n | \n
| \n At 1 January 2022 | \n\n 132.8 | \n\n 241.4 | \n\n 18.7 | \n\n 11.7 | \n\n 404.6 | \n
| \n Additions | \n\n - | \n\n 40.9 | \n\n - | \n\n 6.0 | \n\n 46.8 | \n
| \n Currency translation differences | \n\n - | \n\n 0.0 | \n\n 2.2 | \n\n 1.5 | \n\n 3.7 | \n
| \n Cost as at 31 December 2022 | \n\n 132.8 | \n\n 282.3 | \n\n 20.9 | \n\n 19.2 | \n\n 455.2 | \n
| \n Accumulated amortisation and impairment | \n\n \n | \n\n \n | \n\n \n | \n\n \n | \n\n \n | \n
| \n At 1 January 2022 | \n\n - | \n\n (176.8) | \n\n (3.9) | \n\n (5.9) | \n\n (186.5) | \n
| \n Amortisation | \n\n - | \n\n (12.3) | \n\n (2.0) | \n\n (0.9) | \n\n (15.3) | \n
| \n Currency translation differences | \n\n - | \n\n - | \n\n (0.5) | \n\n (0.7) | \n\n (1.2) | \n
| \n As at 31 December 2022 | \n\n - | \n\n (189.1) | \n\n (6.4) | \n\n (7.5) | \n\n (203.1) | \n
| \n Net book value at 31 December 2022 | \n\n 132.8 | \n\n 93.2 | \n\n 14.4 | \n\n 11.7 | \n\n 252.1 | \n
| \n\n | \n\n\n | \n\n\n | \n\n\n | \n\n\n | \n\n\n | \n
| \n\n | \n\n\n | \n\n\n | \n\n\n | \n\n\n | \n\n\n | \n
For the purpose of impairment testing, goodwill acquired in a business combination is allocated to each of the cash generating units (CGUs), or groups of CGUs, that are expected to benefit from the synergies of the combination. Each unit or group of units to which the goodwill is allocated represents the lowest level within the entity at which the goodwill is monitored for internal management purposes. Goodwill is monitored at the operating segment level.
| \n \n | \n\n Well Services | \n\n Operations | \n\n Projects & Engineering | \n\n Total | \n||||
| \n NOK million | \n\n 2023 | \n\n 2022 | \n\n 2023 | \n\n 2022 | \n\n 2023 | \n\n 2022 | \n\n 2023 | \n\n 2022 | \n
| \n At 1 January | \n\n 36.4 | \n\n 36.4 | \n\n 86.7 | \n\n 86.7 | \n\n 9.7 | \n\n 9.7 | \n\n 132.8 | \n\n 132.8 | \n
| \n Net book value at 31 December | \n\n 36.4 | \n\n 36.4 | \n\n 86.7 | \n\n 86.7 | \n\n 9.7 | \n\n 9.7 | \n\n 132.8 | \n\n 132.8 | \n
| \n Key assumptions for value-in-use calculations | \n\n \n | \n\n Well Services | \n\n Operations | \n\n Projects & Engineering | \n|||
| \n \n | \n\n \n | \n\n 2023 | \n\n 2022 | \n\n 2023 | \n\n 2022 | \n\n 2023 | \n\n 2022 | \n
| \n EBITDA margin in prognosis period | \n\n \n | \n\n 31%-35% | \n\n 35-37% | \n\n 6.5%-7% | \n\n 8% - 9% | \n\n 13%-14% | \n\n 12% - 13% | \n
| \n Growth rate year 6 and forward | \n\n \n | \n\n 0.0% | \n\n 0.0% | \n\n 0.0% | \n\n 0.0% | \n\n 0.0% | \n\n 0.0% | \n
| \n Weighted Average Cost of Capital, pre-tax | \n\n \n | \n\n 12% | \n\n 12% | \n\n 9% | \n\n 9% | \n\n 10% | \n\n 10% | \n
The Group has performed sensitivity analysis for the goodwill impairment test by reducing operating income by one, five and ten percent and EBITDA margin by one, five and ten percentage points respectively for each of the segments.
Reducing EBITDA margin by ten percentage points indicated an impairment write-down of NOK 87 million in the Operations segment.
For the purpose of impairment testing, goodwill acquired in a business combination is allocated to each of the cash generating units (CGUs), or groups of CGUs, that are expected to benefit from the synergies of the combination. Each unit or group of units to which the goodwill is allocated represents the lowest level within the entity at which the goodwill is monitored for internal management purposes. Goodwill is monitored at the operating segment level.
For the purpose of impairment testing, goodwill acquired in a business combination is allocated to each of the cash generating units (CGUs), or groups of CGUs, that are expected to benefit from the synergies of the combination. Each unit or group of units to which the goodwill is allocated represents the lowest level within the entity at which the goodwill is monitored for internal management purposes. Goodwill is monitored at the operating segment level.
| \n \n | \n\n Well Services | \n\n Operations | \n\n Projects & Engineering | \n\n Total | \n||||
| \n NOK million | \n\n 2023 | \n\n 2022 | \n\n 2023 | \n\n 2022 | \n\n 2023 | \n\n 2022 | \n\n 2023 | \n\n 2022 | \n
| \n At 1 January | \n\n 36.4 | \n\n 36.4 | \n\n 86.7 | \n\n 86.7 | \n\n 9.7 | \n\n 9.7 | \n\n 132.8 | \n\n 132.8 | \n
| \n Net book value at 31 December | \n\n 36.4 | \n\n 36.4 | \n\n 86.7 | \n\n 86.7 | \n\n 9.7 | \n\n 9.7 | \n\n 132.8 | \n\n 132.8 | \n
| \n Key assumptions for value-in-use calculations | \n\n \n | \n\n Well Services | \n\n Operations | \n\n Projects & Engineering | \n|||
| \n \n | \n\n \n | \n\n 2023 | \n\n 2022 | \n\n 2023 | \n\n 2022 | \n\n 2023 | \n\n 2022 | \n
| \n EBITDA margin in prognosis period | \n\n \n | \n\n 31%-35% | \n\n 35-37% | \n\n 6.5%-7% | \n\n 8% - 9% | \n\n 13%-14% | \n\n 12% - 13% | \n
| \n Growth rate year 6 and forward | \n\n \n | \n\n 0.0% | \n\n 0.0% | \n\n 0.0% | \n\n 0.0% | \n\n 0.0% | \n\n 0.0% | \n
| \n Weighted Average Cost of Capital, pre-tax | \n\n \n | \n\n 12% | \n\n 12% | \n\n 9% | \n\n 9% | \n\n 10% | \n\n 10% | \n
The Group has performed sensitivity analysis for the goodwill impairment test by reducing operating income by one, five and ten percent and EBITDA margin by one, five and ten percentage points respectively for each of the segments.
Reducing EBITDA margin by ten percentage points indicated an impairment write-down of NOK 87 million in the Operations segment.
For the purpose of impairment testing, goodwill acquired in a business combination is allocated to each of the cash generating units (CGUs), or groups of CGUs, that are expected to benefit from the synergies of the combination. Each unit or group of units to which the goodwill is allocated represents the lowest level within the entity at which the goodwill is monitored for internal management purposes. Goodwill is monitored at the operating segment level.
| \n NOK million | \n\n Goodwill | \n\n Software | \n\n Patents and acquired R&D | \n\n Internally developed assets | \n\n Total intangible assets | \n
| \n Cost | \n\n \n | \n\n \n | \n\n \n | \n\n \n | \n\n \n | \n
| \n At 1 January 2023 | \n\n 132.8 | \n\n 282.3 | \n\n 20.9 | \n\n 19.2 | \n\n 455.2 | \n
| \n Additions | \n\n - | \n\n 28.5 | \n\n - | \n\n 0.6 | \n\n 29.1 | \n
| \n Disposals | \n\n - | \n\n (23.6) | \n\n - | \n\n - | \n\n (23.6) | \n
| \n Currency translation differences | \n\n - | \n\n 0.0 | \n\n 0.7 | \n\n 0.6 | \n\n 1.3 | \n
| \n Cost as at 31 December 2023 | \n\n 132.8 | \n\n 287.2 | \n\n 21.5 | \n\n 20.5 | \n\n 461.9 | \n
| \n Accumulated amortisation and impairment | \n\n \n | \n\n \n | \n\n \n | \n\n \n | \n\n \n | \n
| \n At 1 January 2023 | \n\n - | \n\n (189.1) | \n\n (6.4) | \n\n (7.5) | \n\n (203.1) | \n
| \n Amortisation | \n\n - | \n\n (20.2) | \n\n (2.2) | \n\n (2.5) | \n\n (24.9) | \n
| \n Disposals | \n\n - | \n\n 23.6 | \n\n - | \n\n - | \n\n 23.6 | \n
| \n Currency translation differences | \n\n - | \n\n - | \n\n (0.1) | \n\n (0.1) | \n\n (0.3) | \n
| \n As at 31 December 2023 | \n\n - | \n\n (185.6) | \n\n (8.8) | \n\n (10.2) | \n\n (204.6) | \n
| \n Net book value at 31 December 2023 | \n\n 132.8 | \n\n 101.5 | \n\n 12.7 | \n\n 10.3 | \n\n 257.3 | \n
| \n\n | \n\n\n | \n\n\n | \n\n\n | \n\n\n | \n\n\n | \n
| \n\n | \n\n\n | \n\n\n | \n\n\n | \n\n\n | \n\n\n | \n
The carrying amount of internally developed assets include development expenses incurred in connection with developing a new drill-hole cleaning tool. The technology has been patented. The Group have documented that the new technology met the criteria for recognition in the balance sheet. The new tool is part of Well Services product line and is expected to generate future cash flow to support the book value as at 31\u00a0December 2023.
The developed assets are amortised using a straight-line method over an estimated lifetime of 10 years.
| \n NOK million | \n\n Goodwill | \n\n Software | \n\n Patents and acquired R&D | \n\n Internally developed assets | \n\n Total intangible assets | \n
| \n Cost | \n\n \n | \n\n \n | \n\n \n | \n\n \n | \n\n \n | \n
| \n At 1 January 2022 | \n\n 132.8 | \n\n 241.4 | \n\n 18.7 | \n\n 11.7 | \n\n 404.6 | \n
| \n Additions | \n\n - | \n\n 40.9 | \n\n - | \n\n 6.0 | \n\n 46.8 | \n
| \n Currency translation differences | \n\n - | \n\n 0.0 | \n\n 2.2 | \n\n 1.5 | \n\n 3.7 | \n
| \n Cost as at 31 December 2022 | \n\n 132.8 | \n\n 282.3 | \n\n 20.9 | \n\n 19.2 | \n\n 455.2 | \n
| \n Accumulated amortisation and impairment | \n\n \n | \n\n \n | \n\n \n | \n\n \n | \n\n \n | \n
| \n At 1 January 2022 | \n\n - | \n\n (176.8) | \n\n (3.9) | \n\n (5.9) | \n\n (186.5) | \n
| \n Amortisation | \n\n - | \n\n (12.3) | \n\n (2.0) | \n\n (0.9) | \n\n (15.3) | \n
| \n Currency translation differences | \n\n - | \n\n - | \n\n (0.5) | \n\n (0.7) | \n\n (1.2) | \n
| \n As at 31 December 2022 | \n\n - | \n\n (189.1) | \n\n (6.4) | \n\n (7.5) | \n\n (203.1) | \n
| \n Net book value at 31 December 2022 | \n\n 132.8 | \n\n 93.2 | \n\n 14.4 | \n\n 11.7 | \n\n 252.1 | \n
| \n\n | \n\n\n | \n\n\n | \n\n\n | \n\n\n | \n\n\n | \n
| \n\n | \n\n\n | \n\n\n | \n\n\n | \n\n\n | \n\n\n | \n
Research costs are expensed as incurred. Development expenditures on an individual project are recognised as an intangible asset when the Group can demonstrate:
\u25aaThe technical feasibility of completing the intangible asset so that the asset will be available for use or sale
\u25aaIts intention to complete and its ability and intention to use or sell the asset
\u25aaHow the asset will generate future economic benefits
\u25aaThe availability of resources to complete the asset
\u25aaThe ability to measure reliably the expenditure during development
Research costs are expensed as incurred. Development expenditures on an individual project are recognised as an intangible asset when the Group can demonstrate:
\u25aaThe technical feasibility of completing the intangible asset so that the asset will be available for use or sale
\u25aaIts intention to complete and its ability and intention to use or sell the asset
\u25aaHow the asset will generate future economic benefits
\u25aaThe availability of resources to complete the asset
\u25aaThe ability to measure reliably the expenditure during development
| \n NOK million | \n\n Goodwill | \n\n Software | \n\n Patents and acquired R&D | \n\n Internally developed assets | \n\n Total intangible assets | \n
| \n Cost | \n\n \n | \n\n \n | \n\n \n | \n\n \n | \n\n \n | \n
| \n At 1 January 2023 | \n\n 132.8 | \n\n 282.3 | \n\n 20.9 | \n\n 19.2 | \n\n 455.2 | \n
| \n Additions | \n\n - | \n\n 28.5 | \n\n - | \n\n 0.6 | \n\n 29.1 | \n
| \n Disposals | \n\n - | \n\n (23.6) | \n\n - | \n\n - | \n\n (23.6) | \n
| \n Currency translation differences | \n\n - | \n\n 0.0 | \n\n 0.7 | \n\n 0.6 | \n\n 1.3 | \n
| \n Cost as at 31 December 2023 | \n\n 132.8 | \n\n 287.2 | \n\n 21.5 | \n\n 20.5 | \n\n 461.9 | \n
| \n Accumulated amortisation and impairment | \n\n \n | \n\n \n | \n\n \n | \n\n \n | \n\n \n | \n
| \n At 1 January 2023 | \n\n - | \n\n (189.1) | \n\n (6.4) | \n\n (7.5) | \n\n (203.1) | \n
| \n Amortisation | \n\n - | \n\n (20.2) | \n\n (2.2) | \n\n (2.5) | \n\n (24.9) | \n
| \n Disposals | \n\n - | \n\n 23.6 | \n\n - | \n\n - | \n\n 23.6 | \n
| \n Currency translation differences | \n\n - | \n\n - | \n\n (0.1) | \n\n (0.1) | \n\n (0.3) | \n
| \n As at 31 December 2023 | \n\n - | \n\n (185.6) | \n\n (8.8) | \n\n (10.2) | \n\n (204.6) | \n
| \n Net book value at 31 December 2023 | \n\n 132.8 | \n\n 101.5 | \n\n 12.7 | \n\n 10.3 | \n\n 257.3 | \n
| \n\n | \n\n\n | \n\n\n | \n\n\n | \n\n\n | \n\n\n | \n
| \n\n | \n\n\n | \n\n\n | \n\n\n | \n\n\n | \n\n\n | \n
The carrying amount of internally developed assets include development expenses incurred in connection with developing a new drill-hole cleaning tool. The technology has been patented. The Group have documented that the new technology met the criteria for recognition in the balance sheet. The new tool is part of Well Services product line and is expected to generate future cash flow to support the book value as at 31\u00a0December 2023.
The developed assets are amortised using a straight-line method over an estimated lifetime of 10 years.
| \n NOK million | \n\n Goodwill | \n\n Software | \n\n Patents and acquired R&D | \n\n Internally developed assets | \n\n Total intangible assets | \n
| \n Cost | \n\n \n | \n\n \n | \n\n \n | \n\n \n | \n\n \n | \n
| \n At 1 January 2022 | \n\n 132.8 | \n\n 241.4 | \n\n 18.7 | \n\n 11.7 | \n\n 404.6 | \n
| \n Additions | \n\n - | \n\n 40.9 | \n\n - | \n\n 6.0 | \n\n 46.8 | \n
| \n Currency translation differences | \n\n - | \n\n 0.0 | \n\n 2.2 | \n\n 1.5 | \n\n 3.7 | \n
| \n Cost as at 31 December 2022 | \n\n 132.8 | \n\n 282.3 | \n\n 20.9 | \n\n 19.2 | \n\n 455.2 | \n
| \n Accumulated amortisation and impairment | \n\n \n | \n\n \n | \n\n \n | \n\n \n | \n\n \n | \n
| \n At 1 January 2022 | \n\n - | \n\n (176.8) | \n\n (3.9) | \n\n (5.9) | \n\n (186.5) | \n
| \n Amortisation | \n\n - | \n\n (12.3) | \n\n (2.0) | \n\n (0.9) | \n\n (15.3) | \n
| \n Currency translation differences | \n\n - | \n\n - | \n\n (0.5) | \n\n (0.7) | \n\n (1.2) | \n
| \n As at 31 December 2022 | \n\n - | \n\n (189.1) | \n\n (6.4) | \n\n (7.5) | \n\n (203.1) | \n
| \n Net book value at 31 December 2022 | \n\n 132.8 | \n\n 93.2 | \n\n 14.4 | \n\n 11.7 | \n\n 252.1 | \n
| \n\n | \n\n\n | \n\n\n | \n\n\n | \n\n\n | \n\n\n | \n
| \n\n | \n\n\n | \n\n\n | \n\n\n | \n\n\n | \n\n\n | \n
NOTE 11Other assets
| \n NOK million | \n\n Note | \n\n 31.12.2023 | \n\n 31.12.2022 | \n
| \n Prepaid expenses | \n\n \n | \n\n 60.2 | \n\n 55.7 | \n
| \n Income tax receivables | \n\n \n | \n\n 17.0 | \n\n 20.7 | \n
| \n VAT receivables | \n\n \n | \n\n 37.9 | \n\n 14.3 | \n
| \n Contract assets | \n\n\n | \n\n - | \n\n 0.9 | \n
| \n Other current receivables | \n\n \n | \n\n 35.0 | \n\n 24.9 | \n
| \n Total other current receivables and assets | \n\n \n | \n\n 150.0 | \n\n 116.4 | \n
NOTE 11Other assets
| \n NOK million | \n\n 31.12.2023 | \n\n 31.12.2022 | \n
| \n Deposits | \n\n 39.3 | \n\n 33.9 | \n
| \n Overfunding pension liabilities | \n\n 1.0 | \n\n - | \n
| \n Other non-current receivables | \n\n 8.7 | \n\n - | \n
| \n Total other non-current assets | \n\n 49.0 | \n\n 33.9 | \n
NOTE 11Other assets
| \n NOK million | \n\n 31.12.2023 | \n\n 31.12.2022 | \n
| \n Deposits | \n\n 39.3 | \n\n 33.9 | \n
| \n Overfunding pension liabilities | \n\n 1.0 | \n\n - | \n
| \n Other non-current receivables | \n\n 8.7 | \n\n - | \n
| \n Total other non-current assets | \n\n 49.0 | \n\n 33.9 | \n
| \n NOK million | \n\n Note | \n\n 31.12.2023 | \n\n 31.12.2022 | \n
| \n Prepaid expenses | \n\n \n | \n\n 60.2 | \n\n 55.7 | \n
| \n Income tax receivables | \n\n \n | \n\n 17.0 | \n\n 20.7 | \n
| \n VAT receivables | \n\n \n | \n\n 37.9 | \n\n 14.3 | \n
| \n Contract assets | \n\n\n | \n\n - | \n\n 0.9 | \n
| \n Other current receivables | \n\n \n | \n\n 35.0 | \n\n 24.9 | \n
| \n Total other current receivables and assets | \n\n \n | \n\n 150.0 | \n\n 116.4 | \n
| \n NOK million | \n\n Note | \n\n 31.12.2023 | \n\n 31.12.2022 | \n
| \n Prepaid expenses | \n\n \n | \n\n 60.2 | \n\n 55.7 | \n
| \n Income tax receivables | \n\n \n | \n\n 17.0 | \n\n 20.7 | \n
| \n VAT receivables | \n\n \n | \n\n 37.9 | \n\n 14.3 | \n
| \n Contract assets | \n\n\n | \n\n - | \n\n 0.9 | \n
| \n Other current receivables | \n\n \n | \n\n 35.0 | \n\n 24.9 | \n
| \n Total other current receivables and assets | \n\n \n | \n\n 150.0 | \n\n 116.4 | \n
NOTE 12Financial assets and liabilities
A financial instrument is any contract that gives rise to a financial asset of one entity and a financial liability or equity instrument of another entity.
Derivatives are valued at fair value through profit or loss (FVPL) unless designated as hedges.
The Group has applied the practical expedient under IFRS 9 and are measuring the initial recognition of trade receivables at the transaction price determined under IFRS 15.
Financial assets are de-recognised when the contractual rights to the cash flows from the financial assets expire or are transferred. Realised gains and losses arise from financial assets not designated for hedging, are recognised in the income statement as financial item in the period they occur.
The Group\u2019s financial liabilities include trade and other payables, as well as borrowings.
The loans and borrowings category is the most relevant to the Group. After initial recognition, interest-bearing loans and borrowings are subsequently measured at amortised cost using the effective interest (EIR) method. Gains and losses are recognised in profit or loss when the liabilities are de-recognised as well as through the EIR amortisation process. Refer to further information in Note 16 - Interest-bearing borrowings.
The Group measures financial instruments such as derivatives, at fair value at each balance sheet date.
The Group uses valuation techniques that are appropriate in the circumstances and for which sufficient data are available to measure fair value, maximising the use of relevant observable inputs and minimising the use of unobservable inputs.
All assets and liabilities for which fair value is measured or disclosed in the financial statements are categorised within the fair value hierarchy, described below, based on the lowest level input that is significant to the fair value measurement as a whole.
The tables below analyse financial instruments carried at fair value, by valuation method, based on the lowest level input that is significant to the fair value measurement as a whole. The different levels have been defined as follows:
\u25aaLevel 1 - Quoted prices (unadjusted) in active markets for identical assets or liabilities
\u25aaLevel 2 - Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly (that is, as prices) or indirectly (that is, derived from prices) (Level 2)
\u25aaLevel 3 - Inputs for the asset or liability that are not based on observable market data (that is, unobservable inputs). For short term assets and liabilities at level 3, the value is approximately equal to the carrying amount. As the time horizon is due in short term, future cash flows are not discounted.
Level 2 derivatives held at fair value through profit or loss and hedging derivatives comprise interest rate swaps. Interest rate swaps are fair valued using forward rates extracted from observable yield curves. Interest rate swaps are recognised according to mark-to-market reports from external financial institutions.
| \n NOK million | \n\n Note | \n\n Level | \n\n 31.12.2023 | \n\n 31.12.2022 | \n
| \n Financial assets at fair value through profit or loss | \n\n \n | \n\n \n | \n\n \n | \n\n \n | \n
| \n Derivatives designated as hedging instruments | \n\n \n | \n\n \n | \n\n \n | \n\n \n | \n
| \n - Interest rate swaps - Other non-current assets | \n\n\n | \n\n 2 | \n\n 11.7 | \n\n 10.8 | \n
| \n Other financial assets | \n\n \n | \n\n \n | \n\n \n | \n\n \n | \n
| \n Other non-current receivables | \n\n\n | \n\n \n | \n\n 48.0 | \n\n 33.9 | \n
| \n Trade receivables | \n\n\n | \n\n \n | \n\n 1,005.6 | \n\n 942.6 | \n
| \n Other current receivables | \n\n\n | \n\n \n | \n\n 35.0 | \n\n 25.8 | \n
| \n Cash and cash equivalents | \n\n\n | \n\n \n | \n\n 658.8 | \n\n 560.1 | \n
| \n Total financial assets | \n\n \n | \n\n \n | \n\n 1,759.0 | \n\n 1,573.0 | \n
| \n NOK million | \n\n Note | \n\n Level | \n\n 31.12.2023 | \n\n 31.12.2022 | \n
| \n Other financial liabilities | \n\n \n | \n\n \n | \n\n \n | \n\n \n | \n
| \n Non-current interest-bearing borrowings | \n\n\n | \n\n \n | \n\n 1,088.6 | \n\n 1,084.2 | \n
| \n Non-current lease liabilities | \n\n\n | \n\n \n | \n\n 132.6 | \n\n 96.8 | \n
| \n Current interest-bearing borrowings | \n\n\n | \n\n \n | \n\n 10.3 | \n\n 255.7 | \n
| \n Current lease liabilities | \n\n\n | \n\n \n | \n\n 37.0 | \n\n 30.6 | \n
| \n Trade payables | \n\n \n | \n\n \n | \n\n 338.9 | \n\n 264.1 | \n
| \n Other current liabilities | \n\n\n | \n\n \n | \n\n 348.9 | \n\n 310.1 | \n
| \n Total financial liabilities | \n\n \n | \n\n \n | \n\n 1,956.3 | \n\n 2,041.5 | \n
NOTE 16Interest-bearing borrowings
Borrowings are financial liabilities recognised initially at fair value, net of transaction costs incurred. Borrowings are subsequently carried at amortised cost; any difference between the proceeds (net of transaction costs) and the redemption value is recognised in the income statement over the period of the borrowings using the effective interest method.
Fees paid on the establishment of loan facilities are recognised as transaction costs of the loan to the extent that it is probable that some or all of the facility will be drawn down. In this case, the fee is deferred until the draw-down occurs. To the extent there is no evidence that it is probable that some or all of the facility will be drawn down, the fee is capitalised as a pre-payment for liquidity services and amortised over the period of the facility to which it relates. Fees related to revolving credit facilities are amortised on a straight-line basis over the period which the credit facility is available.
| \n \n | \n\n Non-current | \n\n Current | \n\n Total | \n\n Non-current | \n\n Current | \n\n Total | \n
| \n NOK million | \n\n 2023 | \n\n 2023 | \n\n 2023 | \n\n 2022 | \n\n 2022 | \n\n 2022 | \n
| \n Bond loan | \n\n 1,100.0 | \n\n - | \n\n 1,100.0 | \n\n 1,100.0 | \n\n - | \n\n 1,100.0 | \n
| \n Bank borrowings | \n\n - | \n\n - | \n\n - | \n\n - | \n\n 246.4 | \n\n 246.4 | \n
| \n Transaction cost, unamortised | \n\n (11.4) | \n\n (2.7) | \n\n (14.0) | \n\n (15.8) | \n\n (3.9) | \n\n (19.7) | \n
| \n Accrued interest expenses | \n\n \n | \n\n 12.9 | \n\n 12.9 | \n\n - | \n\n 13.2 | \n\n 13.2 | \n
| \n Carrying amounts interest-bearing borrowings | \n\n 1,088.6 | \n\n 10.3 | \n\n 1,098.9 | \n\n 1,084.2 | \n\n 255.7 | \n\n 1,340.0 | \n
| \n \n | \n\n Non-current | \n\n Current | \n\n Total | \n\n Non-current | \n\n Current | \n\n Total | \n
| \n NOK million | \n\n 2023 | \n\n 2023 | \n\n 2023 | \n\n 2022 | \n\n 2022 | \n\n 2022 | \n
| \n Carrying amount as at 1 January | \n\n 1,084.2 | \n\n 255.7 | \n\n 1,340.0 | \n\n - | \n\n - | \n\n - | \n
| \n Cash flows: | \n\n \n | \n\n \n | \n\n \n | \n\n \n | \n\n \n | \n\n \n | \n
| \n New borrowings | \n\n - | \n\n - | \n\n - | \n\n 1,100.0 | \n\n 219.7 | \n\n 1,319.7 | \n
| \n Paid transaction costs related to new borrowings | \n\n - | \n\n - | \n\n - | \n\n (19.2) | \n\n (5.0) | \n\n (24.2) | \n
| \n Repayment borrowings | \n\n - | \n\n (268.9) | \n\n (268.9) | \n\n - | \n\n - | \n\n - | \n
| \n Non-cash flows: | \n\n \n | \n\n \n | \n\n - | \n\n \n | \n\n \n | \n\n \n | \n
| \n Change in transaction cost, unamortised | \n\n 4.4 | \n\n 1.2 | \n\n 5.6 | \n\n 3.5 | \n\n 1.0 | \n\n 4.5 | \n
| \n Change in accrued interest cost | \n\n - | \n\n (0.3) | \n\n (0.3) | \n\n - | \n\n 13.2 | \n\n 13.2 | \n
| \n Change due to currency revaluation | \n\n - | \n\n 22.5 | \n\n 22.5 | \n\n - | \n\n 26.7 | \n\n 26.7 | \n
| \n Carrying amount as at 31 December | \n\n 1,088.6 | \n\n 10.3 | \n\n 1,098.9 | \n\n 1,084.2 | \n\n 255.7 | \n\n 1,340.0 | \n
| \n \n | \n\n Non-current | \n\n Current | \n\n Total | \n\n Non-current | \n\n Current | \n\n Total | \n
| \n NOK million | \n\n 2023 | \n\n 2023 | \n\n 2023 | \n\n 2022 | \n\n 2022 | \n\n 2022 | \n
| \n Within 3 months | \n\n - | \n\n - | \n\n - | \n\n - | \n\n - | \n\n - | \n
| \n Between 3 and 6 months | \n\n - | \n\n - | \n\n - | \n\n - | \n\n - | \n\n - | \n
| \n Between 6 and 9 months | \n\n - | \n\n - | \n\n - | \n\n - | \n\n - | \n\n - | \n
| \n Between 9 months and 1 year | \n\n - | \n\n - | \n\n - | \n\n - | \n\n 246.4 | \n\n 246.4 | \n
| \n Between 1 and 2 years | \n\n - | \n\n - | \n\n - | \n\n - | \n\n - | \n\n - | \n
| \n Between 2 and 3 years | \n\n 1,100.0 | \n\n - | \n\n 1,100.0 | \n\n - | \n\n - | \n\n - | \n
| \n Between 3 and 4 years | \n\n - | \n\n - | \n\n - | \n\n 1,100.0 | \n\n - | \n\n 1,100.0 | \n
| \n Between 4 and 5 years | \n\n - | \n\n - | \n\n - | \n\n - | \n\n - | \n\n - | \n
| \n Beyond 5 years | \n\n - | \n\n - | \n\n - | \n\n - | \n\n - | \n\n - | \n
| \n Total contractual amounts | \n\n 1,100.0 | \n\n - | \n\n 1,100.0 | \n\n 1,100.0 | \n\n 246.4 | \n\n 1,346.4 | \n
| \n\n | \n
The Group has NOK 254 million (the USD 25 million revolving credit facility) in available undrawn facilities as per 31 December 2023.
The Odfjell Technology Group is compliant with all financial covenants as at 31 December 2023.
The borrowing facilities in the Group include the following main covenants:
The Group shall maintain minimum liquidity of USD 15 million (including undrawn amounts under the SSRCF), of which minimum USD 5 million in cash and cash equivalents.
Leverage ratio (net interest bearing debt to EBITDA) shall not exceed 4.00:1:00.
The ratio of current assets to current liabilities shall at all times be a minimum 1.00:1.00.
Odfjell Technology Ltd may pay dividends in an amount up to 50% of its consolidated net income in its previous financial year, subject to compliance with the incurrence test on a pro-forma basis. The incurrence test implies that the leverage ratio (net interest bearing debt to EBITDA) shall not exceed 3.00:1:00.
The Group shall maintain minimum liquidity of the higher of USD 15 million and 10% of the interest bearing debt (excluding lease liabilities), in each case of which minimum USD 5 million shall be free and unrestricted cash.
Leverage ratio (net interest bearing debt to EBITDA) shall not exceed 3.75:1:00.
The ratio of current assets to current liabilities shall at all times be a minimum 1.00:1.00.
NOTE 21Liquidity risk
The Group's objective is to maintain a balance between continuity of funding and flexibility through the use of credit facilities and to have sufficient cash or cash equivalents at any time to be able to finance its operations and investments in accordance with the Group's strategic plan.
With regular forecasts and liquidity analysis updates, the Group will ensure sufficient available liquidity to fulfil its duties at loan maturity, without unacceptable loss or risk of damaging the Group\u2019s reputation.
Prudent liquidity risk management implies maintaining sufficient cash, the availability of funding through credit facilities and the ability to close out market positions. Due to the dynamic nature of the underlying businesses, the Group aims to maintain flexibility in funding by keeping committed credit lines available.
The Group\u2019s cash flow forecasting is performed by Group Finance. Group Finance monitors rolling forecasts of the Group\u2019s liquidity requirements to ensure it has sufficient cash to meet operational needs at all times, so that the Group does not breach borrowing limits or covenants on any of its borrowing facilities. Such forecasting takes into consideration the Group\u2019s debt financing plans and covenant compliance.
Surplus cash held by the operating entities over and above the balance required for working capital management is transferred to the Group Treasury. Group treasury invests surplus cash in interest bearing current accounts, time deposits, money market deposits and marketable securities, choosing instruments with appropriate maturities or sufficient liquidity to provide sufficient head-room as determined by the above-mentioned forecasts.
The Group held cash and cash equivalents amounting to NOK 659 million in addition to available drawing facilities of NOK 254 million at the end of 2023. This is deemed to be sufficient funding for the Group\u2019s current activity levels and committed capital expenditures during 2024.
The liquidity risk is connected with the market risk and the re-contracting risk for the segments. The management continuously focuses on securing new profitable contracts to generate sufficient cash flow from operations, hence reducing the liquidity risk going forward.
Operating in more than 20 jurisdictions the Group do from time to time receive enquiries from authorities about compliance related matters. Refer to Note 27 regarding notice of decision received 1 October 2021 from HM Revenue and Customs. The Group has per 31 December 2023 not received any formal material assessment which is not disclosed in the financial statements.
The amounts disclosed in the table are the contractual non-discounted cash flows. The table include estimated interest payments for drawn facilities at the balance sheet date, based on the remaining period at the end of the reporting period to the contractual maturity date. The estimated interest payments include payments based on forward rates for the interest rate swaps.
| \n 31.12.2023 - NOK million | \n\n Less than 6 months | \n\n 6 - 12 months | \n\n Between 1 and 2 years | \n\n Between 2 and 5 years | \n\n Over 5 years | \n\n Total contractual cash flows | \n\n Carrying amount 31.12.2023 | \n
| \n Interest-bearing borrowings | \n\n 60.4 | \n\n 61.8 | \n\n 120.9 | \n\n 1,130.2 | \n\n - | \n\n 1,373.3 | \n\n 1,098.9 | \n
| \n Lease liabilities | \n\n 18.4 | \n\n 18.6 | \n\n 34.1 | \n\n 87.7 | \n\n 53.9 | \n\n 212.6 | \n\n 169.6 | \n
| \n Trade payables | \n\n 338.9 | \n\n - | \n\n - | \n\n - | \n\n - | \n\n 338.9 | \n\n 338.9 | \n
| \n Other current payables | \n\n 342.1 | \n\n 6.8 | \n\n - | \n\n - | \n\n - | \n\n 348.9 | \n\n 348.9 | \n
| \n 31.12.2022 - NOK million | \n\n Less than 6 months | \n\n 6 - 12 months | \n\n Between 1 and 2 years | \n\n Between 2 and 5 years | \n\n Over 5 years | \n\n Total contractual cash flows | \n\n Carrying amount 31.12.2022 | \n
| \n Interest-bearing borrowings | \n\n 306.6 | \n\n 56.1 | \n\n 112.1 | \n\n 1,238.6 | \n\n - | \n\n 1,713.4 | \n\n 1,340.0 | \n
| \n Lease liabilities | \n\n 15.4 | \n\n 15.2 | \n\n 30.0 | \n\n 59.2 | \n\n 30.6 | \n\n 150.4 | \n\n 127.4 | \n
| \n Trade payables | \n\n 264.1 | \n\n - | \n\n - | \n\n - | \n\n - | \n\n 264.1 | \n\n 264.1 | \n
| \n Other current payables | \n\n 305.8 | \n\n 4.3 | \n\n - | \n\n - | \n\n - | \n\n 310.1 | \n\n 310.1 | \n
NOTE 22Market risk
Market risk is the risk of a change in market prices and demand, as well as changes in currency exchange rates and interest levels.
The oil service market has developed positively in recent years due to a strong focus on cost discipline and more efficient operations, combined with a healthier oil price development.
The focus on alternative energy sources and the overall future mix of energy remains strong. The transition into greener energy sources is expected to impact the energy market in the coming decades, however the need for continued exploration and production of oil and gas is viewed as vital, and it has become more apparent recently.
The general situation for the global oil service industry is expected to improve as a result of under investment in the oil and gas sector over the last 8 years. The supply of oil and gas is too low to meet the expected demand. Increase in investments and activity is vital to bridge the increasing energy demand as new energy sources take time to implement.
There is an increased appetite for field development and production spending across the regions we operate in.
Odfjell Technology has been successful in adding more backlog, due to our operational track record and strong client relationships, combined with a healthy balance sheet.
Well Services operates in a competitive market, but the increase in drilling activity and field investments is expected to increase demand for our services.
The market for our Operations services has been stable over the last decade. We have established a strong presence in the North Sea with efficient operations and strong client relationships, which we expect to capitalise on further. In addition, there are opportunities to expand Operations activities to other regions.
The Projects & Engineering market is improving both in existing deliverables and in green initiatives. We are well positioned to grow in existing services and further expand our portfolio of green services.
Following an assessment of climate risks and opportunities, both physical and transitional risks in the short, medium and long term, were prioritised.
The most significant transition risks identified, along with mitigating actions were:
\u25aa Increased resources, skills and tools required to measure, track and report on climate data, leading to increased costs. In house expertise being developed, gap analysis being conducted, and software tools evaluated.
\u25aa Impact on the ability to attract and retain talent, increasing costs. Training programmes to be reviewed and increase focus on communicating our sustainable activities.
\u25aa Changes in consumer behaviours reducing the demand for oil and gas and therefore revenue. To be addressed through diversification of our client portfolio and services to support the energy transition.
\u25aaCost of and access to capital may go up as banks move to low carbon portfolios, leading to increased interest costs. Consider green funding resources for investments and diversify to low carbon portfolio.
The most significant physical risks identified, along with mitigating actions were:
\u25aa Impact of extreme weather offshore on crew and equipment logistics could increase costs and result in downtime. Critical spares analysis and robust planning required, as well as protection in commercial contracts.
\u25aaHeat, floods and tropical storms may increase in certain geographies we operate in, damaging infrastructure and increasing costs. Business continuity plans, remote working and reviews of locations required to address risk.
\u25aa Heat stress will impact employees and equipment working outside in certain locations. Health tracking and storage of equipment to be monitored.
The Group uses derivative financial instruments, such as forward currency contracts and interest rate swaps, to hedge its foreign currency risks and interest rate risks, respectively.
Derivatives are recognised at fair value on the date a derivative contract is entered into and are subsequently re-measured on a continuous basis at their fair value. The method of recognising the resulting gain or loss depends on whether the derivative is designated as a hedging instrument, and if so, the nature of the item being hedged.
The Group designates certain derivatives as hedges of highly probable forecast transactions (cash-flow hedges). At the date of the hedging transaction, the Group's documentation includes identification of the hedging instrument, the hedged item, the nature of the risk being hedged and how the Group will assess whether the hedging relationship meets the hedge effectiveness requirements (including the analysis of sources of hedge ineffectiveness and how the hedge ratio is determined). A hedging relationship qualifies for hedge accounting if it meets all of the following effectiveness requirements:
\u25aaThere is \u2018an economic relationship\u2019 between the hedged item and the hedging instrument.
\u25aaThe effect of credit risk does not \u2018dominate the value changes\u2019 that result from that economic relationship.
\u25aaThe hedge ratio of the hedging relationship is the same as that resulting from the quantity of the hedged item that the Group actually hedges and the quantity of the hedging instrument that the Group actually uses to hedge that quantity of hedged item.
Hedges that meet all the qualifying criteria for hedge accounting are accounted for, as described below:
\u25aaThe effective portion of the gain or loss on the cash flow hedging instrument is recognised in other comprehensive income in the cash flow hedge reserve, while any ineffective portion is recognised immediately in the income statement. The cash flow hedge reserve is adjusted to the lower of the cumulative gain or loss on the hedging instrument and the cumulative change in fair value of the hedged item.
\u25aaAmounts recognised directly in other comprehensive income are reclassified as income or expense in the income statement in the period when the hedged liability or planned transaction will affect the income statement.
Derivatives are only used for economic hedging purposes and not as speculative investments.
Derivatives are presented as current assets or liabilities to the extent they are expected to be settled within 12 months after the end of the reporting period.
| \n NOK million | \n\n 31.12.2023 | \n\n 31.12.2022 | \n
| \n Non-current assets | \n\n \n | \n\n \n | \n
| \n Interest rate swaps - cash flow hedges under hedge accounting | \n\n 11.7 | \n\n 10.8 | \n
| \n Total non-current derivative financial instruments asset | \n\n 11.7 | \n\n 10.8 | \n
The Group's hedging reserves disclosed in Note 25 - Other reserves.
| \n NOK million | \n\n Interest rate swaps | \n\n Total hedge reserves | \n
| \n Opening balance 1 January 2022 | \n\n - | \n\n - | \n
| \n Change in fair value of hedging instruments recognised in OCI | \n\n 11.3 | \n\n 11.3 | \n
| \n Reclassified from OCI to profit or loss | \n\n (0.5) | \n\n (0.5) | \n
| \n Closing balance 31 December 2022 | \n\n 10.8 | \n\n 10.8 | \n
| \n Change in fair value of hedging instruments recognised in OCI | \n\n (5.5) | \n\n (5.5) | \n
| \n Reclassified from OCI to profit or loss | \n\n 6.4 | \n\n 6.4 | \n
| \n Closing balance 31 December 2023 | \n\n 11.7 | \n\n 11.7 | \n
The consolidated material subsidiaries' reporting and functional currencies are NOK, USD, GBP and EUR.
The Group operates internationally and is exposed to foreign exchange risk arising from various currency exposures, primarily with respect to USD and NOK. Foreign exchange risk arises when future commercial transactions or recognised assets or liabilities are denominated in a currency that is not the entity\u2019s functional currency. The Group is exposed to risks due to fluctuations in exchange rates as the customer contracts are denominated in multiple currencies with cost mainly in local currency, while capital expenditure is in USD.
The Group seeks to minimise these risks through natural hedging by balancing the currency in and out flow and will use financial hedging instruments if required.
The foreign exchange contracts are only used for economic hedging purposes and not as speculative investments. However, these derivatives did not meet the hedge accounting criteria, and are accounted for at fair value through profit or loss.
The Group\u2019s exposure to foreign currency risk at the end of the reporting period, expressed in NOK, was as follows:
| \n NOK million | \n\n USD | \n\n NOK | \n\n GBP | \n
| \n Cash and cash equivalents * | \n\n (239.9) | \n\n 212.0 | \n\n (30.6) | \n
| \n Trade receivables | \n\n 92.6 | \n\n 13.7 | \n\n 3.1 | \n
| \n Interest-bearing borrowings | \n\n - | \n\n - | \n\n - | \n
| \n Trade payables | \n\n (37.6) | \n\n (13.0) | \n\n (1.2) | \n
| \n Other current payables | \n\n (1.2) | \n\n (0.1) | \n\n (1.3) | \n
| \n NOK million | \n\n USD | \n\n NOK | \n\n GBP | \n
| \n Cash and cash equivalents | \n\n 132.3 | \n\n - | \n\n - | \n
| \n Trade receivables | \n\n 65.8 | \n\n 8.5 | \n\n - | \n
| \n Interest-bearing borrowings | \n\n (244.1) | \n\n - | \n\n - | \n
| \n Trade payables | \n\n (23.8) | \n\n (5.7) | \n\n (1.2) | \n
| \n Other current payables | \n\n (2.6) | \n\n (10.6) | \n\n (3.8) | \n
| \n NOK million | \n\n 2023 | \n\n 2022 | \n
| \n Net currency gain / (loss) included in finance costs | \n\n (1.0) | \n\n (31.8) | \n
The Group's profit or loss is primarily exposed to changes in USD/NOK exchange rates.
The sensitivity shown in table below is calculated based on USD balances in companies with NOK as functional currency, and NOK balances in companies with USD as functional currency.
| \n Sensitivity to changes in USD/NOK exchange rates | \n\n USD is strengthened by 20 % against NOK | \n\n USD is strengthened by 10 % against NOK | \n\n USD is weakened by 10 % against NOK | \n\n USD is weakened by 20 % against NOK | \n||||
| \n NOK million | \n\n 2023 | \n\n 2022 | \n\n 2023 | \n\n 2022 | \n\n 2023 | \n\n 2022 | \n\n 2023 | \n\n 2022 | \n
| \n Cash and cash equivalents | \n\n (31.6) | \n\n 3.4 | \n\n (19.5) | \n\n 1.7 | \n\n 19.5 | \n\n (1.7) | \n\n 38.9 | \n\n (3.4) | \n
| \n Current receivables | \n\n 12.1 | \n\n 1.3 | \n\n 6.0 | \n\n 0.6 | \n\n (5.9) | \n\n (0.6) | \n\n (11.8) | \n\n (1.3) | \n
| \n Current liabilities | \n\n 0.3 | \n\n (48.8) | \n\n 0.1 | \n\n (24.4) | \n\n (0.1) | \n\n 24.4 | \n\n (0.3) | \n\n 48.8 | \n
| \n Net effect on profit before tax | \n\n (19.2) | \n\n (44.2) | \n\n (13.3) | \n\n (22.1) | \n\n 13.4 | \n\n 22.1 | \n\n 26.9 | \n\n 44.2 | \n
The Group's exposure to the risk of changes in market interest rates relates primarily to the Group's borrowing debt obligations at floating interest rates. The Group evaluates the share of interest rate hedging based on assessment of the Group\u2019s total interest rate risk and currently has a combination of fixed and floating interest rates in order to limit exposure. The Board of Directors is on regular basis considering the interest payment hedging of the external financing and mandate administration to execute necessary changes.
Where all relevant criteria are met, hedge accounting is applied to remove the accounting mismatch between the hedging instrument and the hedged item. This will effectively result in recognising interest expense at a fixed interest rate for the hedged floating rate loans.
The Group had 2 interest rate swap agreements at 31 December 2023. Quoted mark-to-market values from financial institutions have been used to determine the fair value of the swap agreements at the end of the year. The instruments were documented as cash flow hedges and changes in fair value were recognised in other comprehensive income (cash flow hedging).
Including interest rate swaps entered into, the fixed-rate portion of the Group\u2019s interest bearing debt per 31 December 2023 is approximately 35%.
The swap contracts require settlement of net interest receivable or payable. The settlement dates coincide with the dates on which interest is payable on the underlying debt.
Average interest rate at 31 December 2022 was about 10.9% including the effect of interest rate hedging.
Estimated fair value calculations from external financial institutions have been used to determine the fair value of the swap agreement at the end of the year.
The Group monitors its interest rate exposure on a dynamic basis. The Group calculates the impact on profit and loss of a defined interest rate shift.
| \n NOK million | \n\n Interest | \n\n Notional amount | \n\n Maturity date | \n\n Hedge ratio | \n\n Weighted average hedged rate | \n\n Carrying amount 31.12.2023 | \n\n Carrying amount 31.12.2022 | \n
| \n Cash flow hedges under hedge accounting | \n\n NOK Nibor | \n\n 275.0 | \n\n 2026 | \n\n 1:1 | \n\n 2.0700% | \n\n 9.3 | \n\n 9.0 | \n
| \n Cash flow hedges under hedge accounting | \n\n NOK Nibor | \n\n 110.0 | \n\n 2026 | \n\n 1:1 | \n\n 2.6140% | \n\n 2.4 | \n\n 1.7 | \n
| \n NOK million | \n\n 31.12.2023 | \n\n % of total loans | \n\n 31.12.2022 | \n\n % of total loans | \n
| \n Variable rate borrowings - NOK NIBOR | \n\n 715.0 | \n\n 65% | \n\n 715.0 | \n\n 53% | \n
| \n Variable rate borrowings - USD SOFR | \n\n - | \n\n 0% | \n\n 246.4 | \n\n 18% | \n
| \n Fixed rate borrowings - repricing or maturity dates: | \n\n \n | \n\n \n | \n\n \n | \n\n \n | \n
| \n Less than 1 year | \n\n - | \n\n 0% | \n\n - | \n\n 0% | \n
| \n 1-5 years | \n\n 385.0 | \n\n 35% | \n\n 385.0 | \n\n 29% | \n
| \n Later than 5 years | \n\n - | \n\n 0% | \n\n - | \n\n 0% | \n
| \n Total contractual amounts | \n\n 1,100.0 | \n\n 100% | \n\n 1,346.4 | \n\n 100% | \n
The result of the calculation on sensitivities returns the following expected values (incl. interest rate swaps entered into as at 31 December):
If interest rate is increased by 1.0 %, the effect would be an increase in financing costs of NOK 7 million for the next 12 months as at 31 December 2023.
NOTE 23Credit risk
The Group operates in three core Business Areas: Well Services (OWS), Operations and Projects & Engineering. The market for the Group\u2019s services is the offshore oil and gas industry, and the customers consist primarily of major integrated oil companies, independent oil and gas producers and government owned oil companies. The Group performs ongoing credit evaluations of the customers and generally does not request material collateral.
With respect to credit risk arising from other financial assets of the Group, which comprise cash and cash equivalents, other receivables and certain derivatives instruments receivable amount, the Group\u2019s exposure to credit risk arises from default of the counter-party, with a maximum exposure equal to the carrying amount of these instruments. However, the Group believes this risk is limited as the counter-parties mainly have a high credit quality.
During 2023, the Group has continued its focus on credit risk in general related to the uncertain conditions in some geographical markets. The maximum exposure regarding trade receivables is the carrying amount of NOK 1,006 million.
To measure the expected credit losses, trade receivables and contract assets have been grouped based on shared credit risk characteristics and the days past due. The contract assets relate to non-billed work in progress and have substantially the same risk characteristics as the trade receivables for the same types of contracts. The Group has therefore concluded that the expected loss rates for trade receivables are a reasonable approximation of the loss rates for the contract assets.
Management exercises judgement in determining the impairment loss related to the trade receivables.
| \n \n | \n\n Expected loss rate | \n\n Gross amount | \n\n Loss allowance | \n\n Net amount | \n
| \n NOK million | \n\n \n | \n\n 31.12.2023 | \n\n 31.12.2023 | \n\n 31.12.2023 | \n
| \n Not due | \n\n 0.0% | \n\n 850.9 | \n\n - | \n\n 850.9 | \n
| \n 0 to 3 months | \n\n 0.4% | \n\n 89.4 | \n\n (0.3) | \n\n 89.0 | \n
| \n 3 to 6 months | \n\n 14.6% | \n\n 16.9 | \n\n (2.5) | \n\n 14.4 | \n
| \n Over 6 months | \n\n 22.7% | \n\n 66.3 | \n\n (15.0) | \n\n 51.2 | \n
| \n Total | \n\n \n | \n\n 1,023.4 | \n\n (17.8) | \n\n 1,005.6 | \n
| \n \n | \n\n Expected loss rate | \n\n Gross amount | \n\n Loss allowance | \n\n Net amount | \n
| \n NOK million | \n\n \n | \n\n 31.12.2023 | \n\n 31.12.2023 | \n\n 31.12.2023 | \n
| \n Not due | \n\n 0.0% | \n\n - | \n\n - | \n\n - | \n
| \n \n | \n\n Expected loss rate | \n\n Gross amount | \n\n Loss allowance | \n\n Net amount | \n
| \n NOK million | \n\n \n | \n\n 31.12.2022 | \n\n 31.12.2022 | \n\n 31.12.2022 | \n
| \n Not due | \n\n 0.0% | \n\n 781.9 | \n\n - | \n\n 781.9 | \n
| \n 0 to 3 months | \n\n 0.0% | \n\n 105.4 | \n\n - | \n\n 105.4 | \n
| \n 3 to 6 months | \n\n 2.7% | \n\n 9.6 | \n\n (0.3) | \n\n 9.3 | \n
| \n Over 6 months | \n\n 23.6% | \n\n 60.2 | \n\n (14.2) | \n\n 46.0 | \n
| \n Total | \n\n \n | \n\n 957.0 | \n\n (14.5) | \n\n 942.6 | \n
| \n \n | \n\n Expected loss rate | \n\n Gross amount | \n\n Loss allowance | \n\n Net amount | \n
| \n NOK million | \n\n \n | \n\n 31.12.2022 | \n\n 31.12.2022 | \n\n 31.12.2022 | \n
| \n Not due | \n\n 0.0% | \n\n 0.9 | \n\n - | \n\n 0.9 | \n
| \n \n | \n\n Trade receivables | \n\n Contract assets | \n||
| \n NOK million | \n\n 2023 | \n\n 2022 | \n\n 2023 | \n\n 2022 | \n
| \n Loss allowance as at 1 January | \n\n 14.5 | \n\n 12.4 | \n\n - | \n\n - | \n
| \n Utilised | \n\n (1.8) | \n\n (2.6) | \n\n - | \n\n - | \n
| \n Released provision | \n\n (0.6) | \n\n (0.0) | \n\n - | \n\n - | \n
| \n New provisions | \n\n 5.4 | \n\n 3.6 | \n\n - | \n\n - | \n
| \n Translation differences | \n\n 0.4 | \n\n 1.1 | \n\n - | \n\n - | \n
| \n Loss allowance as at 31 December | \n\n 17.8 | \n\n 14.5 | \n\n - | \n\n - | \n
| \n NOK million | \n\n 2023 | \n\n 2022 | \n
| \n Net gain (loss) related to trade receivables | \n\n (4.8) | \n\n (3.7) | \n
NOTE 26Securities and mortgages
| \n NOK million | \n\n 31.12.2023 | \n\n 31.12.2022 | \n
| \n Non current liabilities - contractual amounts | \n\n 1,100.0 | \n\n 1,100.0 | \n
| \n Current liabilities | \n\n 12.9 | \n\n 259.6 | \n
| \n Total | \n\n 1,112.9 | \n\n 1,359.6 | \n
As security for the loans, substantially all of the assets of Odfjell Technology Ltd., and its subsidiaries have been pledged in favour of the lenders.
The company have a long term equity settled incentive share option programme, in which the employee receives remuneration in the form of share-based payment for services rendered.
The cost of equity-settled transactions is determined by the fair value at the date when the grant is made using an appropriate valuation model, further details below.
That cost is recognised in personnel expenses together with a corresponding increase in equity, over the period in which the service and, where applicable, the performance conditions are fulfilled (the vesting period). The cumulative expense recognised for equity-settled transactions at each reporting date until the vesting date reflects the extent to which the vesting period has expired and the Group\u2019s best estimate of the number of equity instruments that will ultimately vest. The expense or credit in the statement of profit or loss for a period represents the movement in cumulative expense recognised as at the beginning and end of that period.
27 June 2022, the Company implemented a long term incentive plan. A total of 1,995,000 options have been awarded to certain of its employees at strike prices ranging from NOK 22.31 to NOK 24.13 per share.
The options can only be exercised in three equal tranches, with vesting periods of one, two and three years. The options may be exercised during the subsequent year. Any options not exercised in the first two tranches can be rolled forward to the next tranches. Any options not exercised by the end of period (Q3 2025) will be terminated.
| \n Overview of outstanding options: | \n\n 2023 | \n\n 2022 | \n
| \n Outstanding options 1.1 | \n\n 1,995,000 | \n\n - | \n
| \n Options granted | \n\n - | \n\n 1,995,000 | \n
| \n Options forfeited | \n\n - | \n\n - | \n
| \n Options exercised | \n\n - | \n\n - | \n
| \n Options expired | \n\n - | \n\n - | \n
| \n Outstanding options 31.12 | \n\n 1,995,000 | \n\n 1,995,000 | \n
| \n Of which exercisable | \n\n 665,000 | \n\n - | \n
The fair value of the options has been calculated using Black & Scholes option-pricing model. The average fair value of the options granted in 2022 is NOK 9.07. The total cost of the share option plan is calculated based on the fair value 1,995,000 options granted. The total cost equals approximately NOK 18 million and is recognised over the period until August 2025.
The calculations are based on the following assumptions:
\u25aaThe share price on the grant dates were set to the stock exchange price on the grant dates (27 June 2022, 15 August 2022 and 1 September 2022).
\u25aaThe strike price per options were a weighted average of NOK 22.75.
\u25aaThe expected price volatility of the company's shares was set to 55% based on historical volatility adjusted for expected changes.
\u25aaThe expiry date was set to 4 July 2025, 22 August 2025 and 8 September 2025.
\u25aaThe expected dividend yield was set to 0%.
\u25aaThe risk-free interest rate was set to 3.67%
A financial instrument is any contract that gives rise to a financial asset of one entity and a financial liability or equity instrument of another entity.
Derivatives are valued at fair value through profit or loss (FVPL) unless designated as hedges.
The Group has applied the practical expedient under IFRS 9 and are measuring the initial recognition of trade receivables at the transaction price determined under IFRS 15.
Financial assets are de-recognised when the contractual rights to the cash flows from the financial assets expire or are transferred. Realised gains and losses arise from financial assets not designated for hedging, are recognised in the income statement as financial item in the period they occur.
The Group\u2019s financial liabilities include trade and other payables, as well as borrowings.
The loans and borrowings category is the most relevant to the Group. After initial recognition, interest-bearing loans and borrowings are subsequently measured at amortised cost using the effective interest (EIR) method. Gains and losses are recognised in profit or loss when the liabilities are de-recognised as well as through the EIR amortisation process. Refer to further information in Note 16 - Interest-bearing borrowings.
The Group measures financial instruments such as derivatives, at fair value at each balance sheet date.
The Group uses valuation techniques that are appropriate in the circumstances and for which sufficient data are available to measure fair value, maximising the use of relevant observable inputs and minimising the use of unobservable inputs.
All assets and liabilities for which fair value is measured or disclosed in the financial statements are categorised within the fair value hierarchy, described below, based on the lowest level input that is significant to the fair value measurement as a whole.
The tables below analyse financial instruments carried at fair value, by valuation method, based on the lowest level input that is significant to the fair value measurement as a whole. The different levels have been defined as follows:
\u25aaLevel 1 - Quoted prices (unadjusted) in active markets for identical assets or liabilities
\u25aaLevel 2 - Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly (that is, as prices) or indirectly (that is, derived from prices) (Level 2)
\u25aaLevel 3 - Inputs for the asset or liability that are not based on observable market data (that is, unobservable inputs). For short term assets and liabilities at level 3, the value is approximately equal to the carrying amount. As the time horizon is due in short term, future cash flows are not discounted.
Level 2 derivatives held at fair value through profit or loss and hedging derivatives comprise interest rate swaps. Interest rate swaps are fair valued using forward rates extracted from observable yield curves. Interest rate swaps are recognised according to mark-to-market reports from external financial institutions.
Borrowings are financial liabilities recognised initially at fair value, net of transaction costs incurred. Borrowings are subsequently carried at amortised cost; any difference between the proceeds (net of transaction costs) and the redemption value is recognised in the income statement over the period of the borrowings using the effective interest method.
Fees paid on the establishment of loan facilities are recognised as transaction costs of the loan to the extent that it is probable that some or all of the facility will be drawn down. In this case, the fee is deferred until the draw-down occurs. To the extent there is no evidence that it is probable that some or all of the facility will be drawn down, the fee is capitalised as a pre-payment for liquidity services and amortised over the period of the facility to which it relates. Fees related to revolving credit facilities are amortised on a straight-line basis over the period which the credit facility is available.
The Group uses derivative financial instruments, such as forward currency contracts and interest rate swaps, to hedge its foreign currency risks and interest rate risks, respectively.
Derivatives are recognised at fair value on the date a derivative contract is entered into and are subsequently re-measured on a continuous basis at their fair value. The method of recognising the resulting gain or loss depends on whether the derivative is designated as a hedging instrument, and if so, the nature of the item being hedged.
The Group designates certain derivatives as hedges of highly probable forecast transactions (cash-flow hedges). At the date of the hedging transaction, the Group's documentation includes identification of the hedging instrument, the hedged item, the nature of the risk being hedged and how the Group will assess whether the hedging relationship meets the hedge effectiveness requirements (including the analysis of sources of hedge ineffectiveness and how the hedge ratio is determined). A hedging relationship qualifies for hedge accounting if it meets all of the following effectiveness requirements:
\u25aaThere is \u2018an economic relationship\u2019 between the hedged item and the hedging instrument.
\u25aaThe effect of credit risk does not \u2018dominate the value changes\u2019 that result from that economic relationship.
\u25aaThe hedge ratio of the hedging relationship is the same as that resulting from the quantity of the hedged item that the Group actually hedges and the quantity of the hedging instrument that the Group actually uses to hedge that quantity of hedged item.
Hedges that meet all the qualifying criteria for hedge accounting are accounted for, as described below:
\u25aaThe effective portion of the gain or loss on the cash flow hedging instrument is recognised in other comprehensive income in the cash flow hedge reserve, while any ineffective portion is recognised immediately in the income statement. The cash flow hedge reserve is adjusted to the lower of the cumulative gain or loss on the hedging instrument and the cumulative change in fair value of the hedged item.
\u25aaAmounts recognised directly in other comprehensive income are reclassified as income or expense in the income statement in the period when the hedged liability or planned transaction will affect the income statement.
Derivatives are only used for economic hedging purposes and not as speculative investments.
Derivatives are valued at fair value through profit or loss (FVPL) unless designated as hedges.
The Group has applied the practical expedient under IFRS 9 and are measuring the initial recognition of trade receivables at the transaction price determined under IFRS 15.
The Group\u2019s financial liabilities include trade and other payables, as well as borrowings.
| \n NOK million | \n\n Note | \n\n Level | \n\n 31.12.2023 | \n\n 31.12.2022 | \n
| \n Financial assets at fair value through profit or loss | \n\n \n | \n\n \n | \n\n \n | \n\n \n | \n
| \n Derivatives designated as hedging instruments | \n\n \n | \n\n \n | \n\n \n | \n\n \n | \n
| \n - Interest rate swaps - Other non-current assets | \n\n\n | \n\n 2 | \n\n 11.7 | \n\n 10.8 | \n
| \n Other financial assets | \n\n \n | \n\n \n | \n\n \n | \n\n \n | \n
| \n Other non-current receivables | \n\n\n | \n\n \n | \n\n 48.0 | \n\n 33.9 | \n
| \n Trade receivables | \n\n\n | \n\n \n | \n\n 1,005.6 | \n\n 942.6 | \n
| \n Other current receivables | \n\n\n | \n\n \n | \n\n 35.0 | \n\n 25.8 | \n
| \n Cash and cash equivalents | \n\n\n | \n\n \n | \n\n 658.8 | \n\n 560.1 | \n
| \n Total financial assets | \n\n \n | \n\n \n | \n\n 1,759.0 | \n\n 1,573.0 | \n
| \n NOK million | \n\n Note | \n\n Level | \n\n 31.12.2023 | \n\n 31.12.2022 | \n
| \n Other financial liabilities | \n\n \n | \n\n \n | \n\n \n | \n\n \n | \n
| \n Non-current interest-bearing borrowings | \n\n\n | \n\n \n | \n\n 1,088.6 | \n\n 1,084.2 | \n
| \n Non-current lease liabilities | \n\n\n | \n\n \n | \n\n 132.6 | \n\n 96.8 | \n
| \n Current interest-bearing borrowings | \n\n\n | \n\n \n | \n\n 10.3 | \n\n 255.7 | \n
| \n Current lease liabilities | \n\n\n | \n\n \n | \n\n 37.0 | \n\n 30.6 | \n
| \n Trade payables | \n\n \n | \n\n \n | \n\n 338.9 | \n\n 264.1 | \n
| \n Other current liabilities | \n\n\n | \n\n \n | \n\n 348.9 | \n\n 310.1 | \n
| \n Total financial liabilities | \n\n \n | \n\n \n | \n\n 1,956.3 | \n\n 2,041.5 | \n
Derivatives are valued at fair value through profit or loss (FVPL) unless designated as hedges.
The Group has applied the practical expedient under IFRS 9 and are measuring the initial recognition of trade receivables at the transaction price determined under IFRS 15.
The Group\u2019s financial liabilities include trade and other payables, as well as borrowings.
Derivatives are valued at fair value through profit or loss (FVPL) unless designated as hedges.
The Group has applied the practical expedient under IFRS 9 and are measuring the initial recognition of trade receivables at the transaction price determined under IFRS 15.
Financial assets are de-recognised when the contractual rights to the cash flows from the financial assets expire or are transferred. Realised gains and losses arise from financial assets not designated for hedging, are recognised in the income statement as financial item in the period they occur.
The Group uses derivative financial instruments, such as forward currency contracts and interest rate swaps, to hedge its foreign currency risks and interest rate risks, respectively.
Derivatives are recognised at fair value on the date a derivative contract is entered into and are subsequently re-measured on a continuous basis at their fair value. The method of recognising the resulting gain or loss depends on whether the derivative is designated as a hedging instrument, and if so, the nature of the item being hedged.
The Group designates certain derivatives as hedges of highly probable forecast transactions (cash-flow hedges). At the date of the hedging transaction, the Group's documentation includes identification of the hedging instrument, the hedged item, the nature of the risk being hedged and how the Group will assess whether the hedging relationship meets the hedge effectiveness requirements (including the analysis of sources of hedge ineffectiveness and how the hedge ratio is determined). A hedging relationship qualifies for hedge accounting if it meets all of the following effectiveness requirements:
\u25aaThere is \u2018an economic relationship\u2019 between the hedged item and the hedging instrument.
\u25aaThe effect of credit risk does not \u2018dominate the value changes\u2019 that result from that economic relationship.
\u25aaThe hedge ratio of the hedging relationship is the same as that resulting from the quantity of the hedged item that the Group actually hedges and the quantity of the hedging instrument that the Group actually uses to hedge that quantity of hedged item.
Hedges that meet all the qualifying criteria for hedge accounting are accounted for, as described below:
\u25aaThe effective portion of the gain or loss on the cash flow hedging instrument is recognised in other comprehensive income in the cash flow hedge reserve, while any ineffective portion is recognised immediately in the income statement. The cash flow hedge reserve is adjusted to the lower of the cumulative gain or loss on the hedging instrument and the cumulative change in fair value of the hedged item.
\u25aaAmounts recognised directly in other comprehensive income are reclassified as income or expense in the income statement in the period when the hedged liability or planned transaction will affect the income statement.
Derivatives are only used for economic hedging purposes and not as speculative investments.
| \n NOK million | \n\n 31.12.2023 | \n\n 31.12.2022 | \n
| \n Non-current assets | \n\n \n | \n\n \n | \n
| \n Interest rate swaps - cash flow hedges under hedge accounting | \n\n 11.7 | \n\n 10.8 | \n
| \n Total non-current derivative financial instruments asset | \n\n 11.7 | \n\n 10.8 | \n
The Group's hedging reserves disclosed in Note 25 - Other reserves.
| \n NOK million | \n\n Interest rate swaps | \n\n Total hedge reserves | \n
| \n Opening balance 1 January 2022 | \n\n - | \n\n - | \n
| \n Change in fair value of hedging instruments recognised in OCI | \n\n 11.3 | \n\n 11.3 | \n
| \n Reclassified from OCI to profit or loss | \n\n (0.5) | \n\n (0.5) | \n
| \n Closing balance 31 December 2022 | \n\n 10.8 | \n\n 10.8 | \n
| \n Change in fair value of hedging instruments recognised in OCI | \n\n (5.5) | \n\n (5.5) | \n
| \n Reclassified from OCI to profit or loss | \n\n 6.4 | \n\n 6.4 | \n
| \n Closing balance 31 December 2023 | \n\n 11.7 | \n\n 11.7 | \n
| \n NOK million | \n\n Interest | \n\n Notional amount | \n\n Maturity date | \n\n Hedge ratio | \n\n Weighted average hedged rate | \n\n Carrying amount 31.12.2023 | \n\n Carrying amount 31.12.2022 | \n
| \n Cash flow hedges under hedge accounting | \n\n NOK Nibor | \n\n 275.0 | \n\n 2026 | \n\n 1:1 | \n\n 2.0700% | \n\n 9.3 | \n\n 9.0 | \n
| \n Cash flow hedges under hedge accounting | \n\n NOK Nibor | \n\n 110.0 | \n\n 2026 | \n\n 1:1 | \n\n 2.6140% | \n\n 2.4 | \n\n 1.7 | \n
The Group\u2019s financial liabilities include trade and other payables, as well as borrowings.
The loans and borrowings category is the most relevant to the Group. After initial recognition, interest-bearing loans and borrowings are subsequently measured at amortised cost using the effective interest (EIR) method. Gains and losses are recognised in profit or loss when the liabilities are de-recognised as well as through the EIR amortisation process. Refer to further information in Note 16 - Interest-bearing borrowings.
Borrowings are financial liabilities recognised initially at fair value, net of transaction costs incurred. Borrowings are subsequently carried at amortised cost; any difference between the proceeds (net of transaction costs) and the redemption value is recognised in the income statement over the period of the borrowings using the effective interest method.
Fees paid on the establishment of loan facilities are recognised as transaction costs of the loan to the extent that it is probable that some or all of the facility will be drawn down. In this case, the fee is deferred until the draw-down occurs. To the extent there is no evidence that it is probable that some or all of the facility will be drawn down, the fee is capitalised as a pre-payment for liquidity services and amortised over the period of the facility to which it relates. Fees related to revolving credit facilities are amortised on a straight-line basis over the period which the credit facility is available.
NOTE 16Interest-bearing borrowings
Borrowings are financial liabilities recognised initially at fair value, net of transaction costs incurred. Borrowings are subsequently carried at amortised cost; any difference between the proceeds (net of transaction costs) and the redemption value is recognised in the income statement over the period of the borrowings using the effective interest method.
Fees paid on the establishment of loan facilities are recognised as transaction costs of the loan to the extent that it is probable that some or all of the facility will be drawn down. In this case, the fee is deferred until the draw-down occurs. To the extent there is no evidence that it is probable that some or all of the facility will be drawn down, the fee is capitalised as a pre-payment for liquidity services and amortised over the period of the facility to which it relates. Fees related to revolving credit facilities are amortised on a straight-line basis over the period which the credit facility is available.
| \n \n | \n\n Non-current | \n\n Current | \n\n Total | \n\n Non-current | \n\n Current | \n\n Total | \n
| \n NOK million | \n\n 2023 | \n\n 2023 | \n\n 2023 | \n\n 2022 | \n\n 2022 | \n\n 2022 | \n
| \n Bond loan | \n\n 1,100.0 | \n\n - | \n\n 1,100.0 | \n\n 1,100.0 | \n\n - | \n\n 1,100.0 | \n
| \n Bank borrowings | \n\n - | \n\n - | \n\n - | \n\n - | \n\n 246.4 | \n\n 246.4 | \n
| \n Transaction cost, unamortised | \n\n (11.4) | \n\n (2.7) | \n\n (14.0) | \n\n (15.8) | \n\n (3.9) | \n\n (19.7) | \n
| \n Accrued interest expenses | \n\n \n | \n\n 12.9 | \n\n 12.9 | \n\n - | \n\n 13.2 | \n\n 13.2 | \n
| \n Carrying amounts interest-bearing borrowings | \n\n 1,088.6 | \n\n 10.3 | \n\n 1,098.9 | \n\n 1,084.2 | \n\n 255.7 | \n\n 1,340.0 | \n
| \n \n | \n\n Non-current | \n\n Current | \n\n Total | \n\n Non-current | \n\n Current | \n\n Total | \n
| \n NOK million | \n\n 2023 | \n\n 2023 | \n\n 2023 | \n\n 2022 | \n\n 2022 | \n\n 2022 | \n
| \n Carrying amount as at 1 January | \n\n 1,084.2 | \n\n 255.7 | \n\n 1,340.0 | \n\n - | \n\n - | \n\n - | \n
| \n Cash flows: | \n\n \n | \n\n \n | \n\n \n | \n\n \n | \n\n \n | \n\n \n | \n
| \n New borrowings | \n\n - | \n\n - | \n\n - | \n\n 1,100.0 | \n\n 219.7 | \n\n 1,319.7 | \n
| \n Paid transaction costs related to new borrowings | \n\n - | \n\n - | \n\n - | \n\n (19.2) | \n\n (5.0) | \n\n (24.2) | \n
| \n Repayment borrowings | \n\n - | \n\n (268.9) | \n\n (268.9) | \n\n - | \n\n - | \n\n - | \n
| \n Non-cash flows: | \n\n \n | \n\n \n | \n\n - | \n\n \n | \n\n \n | \n\n \n | \n
| \n Change in transaction cost, unamortised | \n\n 4.4 | \n\n 1.2 | \n\n 5.6 | \n\n 3.5 | \n\n 1.0 | \n\n 4.5 | \n
| \n Change in accrued interest cost | \n\n - | \n\n (0.3) | \n\n (0.3) | \n\n - | \n\n 13.2 | \n\n 13.2 | \n
| \n Change due to currency revaluation | \n\n - | \n\n 22.5 | \n\n 22.5 | \n\n - | \n\n 26.7 | \n\n 26.7 | \n
| \n Carrying amount as at 31 December | \n\n 1,088.6 | \n\n 10.3 | \n\n 1,098.9 | \n\n 1,084.2 | \n\n 255.7 | \n\n 1,340.0 | \n
| \n \n | \n\n Non-current | \n\n Current | \n\n Total | \n\n Non-current | \n\n Current | \n\n Total | \n
| \n NOK million | \n\n 2023 | \n\n 2023 | \n\n 2023 | \n\n 2022 | \n\n 2022 | \n\n 2022 | \n
| \n Within 3 months | \n\n - | \n\n - | \n\n - | \n\n - | \n\n - | \n\n - | \n
| \n Between 3 and 6 months | \n\n - | \n\n - | \n\n - | \n\n - | \n\n - | \n\n - | \n
| \n Between 6 and 9 months | \n\n - | \n\n - | \n\n - | \n\n - | \n\n - | \n\n - | \n
| \n Between 9 months and 1 year | \n\n - | \n\n - | \n\n - | \n\n - | \n\n 246.4 | \n\n 246.4 | \n
| \n Between 1 and 2 years | \n\n - | \n\n - | \n\n - | \n\n - | \n\n - | \n\n - | \n
| \n Between 2 and 3 years | \n\n 1,100.0 | \n\n - | \n\n 1,100.0 | \n\n - | \n\n - | \n\n - | \n
| \n Between 3 and 4 years | \n\n - | \n\n - | \n\n - | \n\n 1,100.0 | \n\n - | \n\n 1,100.0 | \n
| \n Between 4 and 5 years | \n\n - | \n\n - | \n\n - | \n\n - | \n\n - | \n\n - | \n
| \n Beyond 5 years | \n\n - | \n\n - | \n\n - | \n\n - | \n\n - | \n\n - | \n
| \n Total contractual amounts | \n\n 1,100.0 | \n\n - | \n\n 1,100.0 | \n\n 1,100.0 | \n\n 246.4 | \n\n 1,346.4 | \n
| \n\n | \n
The Group has NOK 254 million (the USD 25 million revolving credit facility) in available undrawn facilities as per 31 December 2023.
The Odfjell Technology Group is compliant with all financial covenants as at 31 December 2023.
The borrowing facilities in the Group include the following main covenants:
The Group shall maintain minimum liquidity of USD 15 million (including undrawn amounts under the SSRCF), of which minimum USD 5 million in cash and cash equivalents.
Leverage ratio (net interest bearing debt to EBITDA) shall not exceed 4.00:1:00.
The ratio of current assets to current liabilities shall at all times be a minimum 1.00:1.00.
Odfjell Technology Ltd may pay dividends in an amount up to 50% of its consolidated net income in its previous financial year, subject to compliance with the incurrence test on a pro-forma basis. The incurrence test implies that the leverage ratio (net interest bearing debt to EBITDA) shall not exceed 3.00:1:00.
The Group shall maintain minimum liquidity of the higher of USD 15 million and 10% of the interest bearing debt (excluding lease liabilities), in each case of which minimum USD 5 million shall be free and unrestricted cash.
Leverage ratio (net interest bearing debt to EBITDA) shall not exceed 3.75:1:00.
The ratio of current assets to current liabilities shall at all times be a minimum 1.00:1.00.
Borrowings are financial liabilities recognised initially at fair value, net of transaction costs incurred. Borrowings are subsequently carried at amortised cost; any difference between the proceeds (net of transaction costs) and the redemption value is recognised in the income statement over the period of the borrowings using the effective interest method.
Fees paid on the establishment of loan facilities are recognised as transaction costs of the loan to the extent that it is probable that some or all of the facility will be drawn down. In this case, the fee is deferred until the draw-down occurs. To the extent there is no evidence that it is probable that some or all of the facility will be drawn down, the fee is capitalised as a pre-payment for liquidity services and amortised over the period of the facility to which it relates. Fees related to revolving credit facilities are amortised on a straight-line basis over the period which the credit facility is available.
The Group measures financial instruments such as derivatives, at fair value at each balance sheet date.
The Group uses valuation techniques that are appropriate in the circumstances and for which sufficient data are available to measure fair value, maximising the use of relevant observable inputs and minimising the use of unobservable inputs.
All assets and liabilities for which fair value is measured or disclosed in the financial statements are categorised within the fair value hierarchy, described below, based on the lowest level input that is significant to the fair value measurement as a whole.
Level 2 derivatives held at fair value through profit or loss and hedging derivatives comprise interest rate swaps. Interest rate swaps are fair valued using forward rates extracted from observable yield curves. Interest rate swaps are recognised according to mark-to-market reports from external financial institutions.
| \n NOK million | \n\n Note | \n\n Level | \n\n 31.12.2023 | \n\n 31.12.2022 | \n
| \n Financial assets at fair value through profit or loss | \n\n \n | \n\n \n | \n\n \n | \n\n \n | \n
| \n Derivatives designated as hedging instruments | \n\n \n | \n\n \n | \n\n \n | \n\n \n | \n
| \n - Interest rate swaps - Other non-current assets | \n\n\n | \n\n 2 | \n\n 11.7 | \n\n 10.8 | \n
| \n Other financial assets | \n\n \n | \n\n \n | \n\n \n | \n\n \n | \n
| \n Other non-current receivables | \n\n\n | \n\n \n | \n\n 48.0 | \n\n 33.9 | \n
| \n Trade receivables | \n\n\n | \n\n \n | \n\n 1,005.6 | \n\n 942.6 | \n
| \n Other current receivables | \n\n\n | \n\n \n | \n\n 35.0 | \n\n 25.8 | \n
| \n Cash and cash equivalents | \n\n\n | \n\n \n | \n\n 658.8 | \n\n 560.1 | \n
| \n Total financial assets | \n\n \n | \n\n \n | \n\n 1,759.0 | \n\n 1,573.0 | \n
| \n NOK million | \n\n Note | \n\n Level | \n\n 31.12.2023 | \n\n 31.12.2022 | \n
| \n Other financial liabilities | \n\n \n | \n\n \n | \n\n \n | \n\n \n | \n
| \n Non-current interest-bearing borrowings | \n\n\n | \n\n \n | \n\n 1,088.6 | \n\n 1,084.2 | \n
| \n Non-current lease liabilities | \n\n\n | \n\n \n | \n\n 132.6 | \n\n 96.8 | \n
| \n Current interest-bearing borrowings | \n\n\n | \n\n \n | \n\n 10.3 | \n\n 255.7 | \n
| \n Current lease liabilities | \n\n\n | \n\n \n | \n\n 37.0 | \n\n 30.6 | \n
| \n Trade payables | \n\n \n | \n\n \n | \n\n 338.9 | \n\n 264.1 | \n
| \n Other current liabilities | \n\n\n | \n\n \n | \n\n 348.9 | \n\n 310.1 | \n
| \n Total financial liabilities | \n\n \n | \n\n \n | \n\n 1,956.3 | \n\n 2,041.5 | \n
The company have a long term equity settled incentive share option programme, in which the employee receives remuneration in the form of share-based payment for services rendered.
The cost of equity-settled transactions is determined by the fair value at the date when the grant is made using an appropriate valuation model, further details below.
That cost is recognised in personnel expenses together with a corresponding increase in equity, over the period in which the service and, where applicable, the performance conditions are fulfilled (the vesting period). The cumulative expense recognised for equity-settled transactions at each reporting date until the vesting date reflects the extent to which the vesting period has expired and the Group\u2019s best estimate of the number of equity instruments that will ultimately vest. The expense or credit in the statement of profit or loss for a period represents the movement in cumulative expense recognised as at the beginning and end of that period.
27 June 2022, the Company implemented a long term incentive plan. A total of 1,995,000 options have been awarded to certain of its employees at strike prices ranging from NOK 22.31 to NOK 24.13 per share.
The options can only be exercised in three equal tranches, with vesting periods of one, two and three years. The options may be exercised during the subsequent year. Any options not exercised in the first two tranches can be rolled forward to the next tranches. Any options not exercised by the end of period (Q3 2025) will be terminated.
| \n Overview of outstanding options: | \n\n 2023 | \n\n 2022 | \n
| \n Outstanding options 1.1 | \n\n 1,995,000 | \n\n - | \n
| \n Options granted | \n\n - | \n\n 1,995,000 | \n
| \n Options forfeited | \n\n - | \n\n - | \n
| \n Options exercised | \n\n - | \n\n - | \n
| \n Options expired | \n\n - | \n\n - | \n
| \n Outstanding options 31.12 | \n\n 1,995,000 | \n\n 1,995,000 | \n
| \n Of which exercisable | \n\n 665,000 | \n\n - | \n
The fair value of the options has been calculated using Black & Scholes option-pricing model. The average fair value of the options granted in 2022 is NOK 9.07. The total cost of the share option plan is calculated based on the fair value 1,995,000 options granted. The total cost equals approximately NOK 18 million and is recognised over the period until August 2025.
The calculations are based on the following assumptions:
\u25aaThe share price on the grant dates were set to the stock exchange price on the grant dates (27 June 2022, 15 August 2022 and 1 September 2022).
\u25aaThe strike price per options were a weighted average of NOK 22.75.
\u25aaThe expected price volatility of the company's shares was set to 55% based on historical volatility adjusted for expected changes.
\u25aaThe expiry date was set to 4 July 2025, 22 August 2025 and 8 September 2025.
\u25aaThe expected dividend yield was set to 0%.
\u25aaThe risk-free interest rate was set to 3.67%
The Group measures financial instruments such as derivatives, at fair value at each balance sheet date.
The Group uses valuation techniques that are appropriate in the circumstances and for which sufficient data are available to measure fair value, maximising the use of relevant observable inputs and minimising the use of unobservable inputs.
All assets and liabilities for which fair value is measured or disclosed in the financial statements are categorised within the fair value hierarchy, described below, based on the lowest level input that is significant to the fair value measurement as a whole.
| \n NOK million | \n\n Note | \n\n Level | \n\n 31.12.2023 | \n\n 31.12.2022 | \n
| \n Financial assets at fair value through profit or loss | \n\n \n | \n\n \n | \n\n \n | \n\n \n | \n
| \n Derivatives designated as hedging instruments | \n\n \n | \n\n \n | \n\n \n | \n\n \n | \n
| \n - Interest rate swaps - Other non-current assets | \n\n\n | \n\n 2 | \n\n 11.7 | \n\n 10.8 | \n
| \n Other financial assets | \n\n \n | \n\n \n | \n\n \n | \n\n \n | \n
| \n Other non-current receivables | \n\n\n | \n\n \n | \n\n 48.0 | \n\n 33.9 | \n
| \n Trade receivables | \n\n\n | \n\n \n | \n\n 1,005.6 | \n\n 942.6 | \n
| \n Other current receivables | \n\n\n | \n\n \n | \n\n 35.0 | \n\n 25.8 | \n
| \n Cash and cash equivalents | \n\n\n | \n\n \n | \n\n 658.8 | \n\n 560.1 | \n
| \n Total financial assets | \n\n \n | \n\n \n | \n\n 1,759.0 | \n\n 1,573.0 | \n
| \n NOK million | \n\n Note | \n\n Level | \n\n 31.12.2023 | \n\n 31.12.2022 | \n
| \n Other financial liabilities | \n\n \n | \n\n \n | \n\n \n | \n\n \n | \n
| \n Non-current interest-bearing borrowings | \n\n\n | \n\n \n | \n\n 1,088.6 | \n\n 1,084.2 | \n
| \n Non-current lease liabilities | \n\n\n | \n\n \n | \n\n 132.6 | \n\n 96.8 | \n
| \n Current interest-bearing borrowings | \n\n\n | \n\n \n | \n\n 10.3 | \n\n 255.7 | \n
| \n Current lease liabilities | \n\n\n | \n\n \n | \n\n 37.0 | \n\n 30.6 | \n
| \n Trade payables | \n\n \n | \n\n \n | \n\n 338.9 | \n\n 264.1 | \n
| \n Other current liabilities | \n\n\n | \n\n \n | \n\n 348.9 | \n\n 310.1 | \n
| \n Total financial liabilities | \n\n \n | \n\n \n | \n\n 1,956.3 | \n\n 2,041.5 | \n
| \n NOK million | \n\n Note | \n\n Level | \n\n 31.12.2023 | \n\n 31.12.2022 | \n
| \n Financial assets at fair value through profit or loss | \n\n \n | \n\n \n | \n\n \n | \n\n \n | \n
| \n Derivatives designated as hedging instruments | \n\n \n | \n\n \n | \n\n \n | \n\n \n | \n
| \n - Interest rate swaps - Other non-current assets | \n\n\n | \n\n 2 | \n\n 11.7 | \n\n 10.8 | \n
| \n Other financial assets | \n\n \n | \n\n \n | \n\n \n | \n\n \n | \n
| \n Other non-current receivables | \n\n\n | \n\n \n | \n\n 48.0 | \n\n 33.9 | \n
| \n Trade receivables | \n\n\n | \n\n \n | \n\n 1,005.6 | \n\n 942.6 | \n
| \n Other current receivables | \n\n\n | \n\n \n | \n\n 35.0 | \n\n 25.8 | \n
| \n Cash and cash equivalents | \n\n\n | \n\n \n | \n\n 658.8 | \n\n 560.1 | \n
| \n Total financial assets | \n\n \n | \n\n \n | \n\n 1,759.0 | \n\n 1,573.0 | \n
| \n NOK million | \n\n Note | \n\n Level | \n\n 31.12.2023 | \n\n 31.12.2022 | \n
| \n Other financial liabilities | \n\n \n | \n\n \n | \n\n \n | \n\n \n | \n
| \n Non-current interest-bearing borrowings | \n\n\n | \n\n \n | \n\n 1,088.6 | \n\n 1,084.2 | \n
| \n Non-current lease liabilities | \n\n\n | \n\n \n | \n\n 132.6 | \n\n 96.8 | \n
| \n Current interest-bearing borrowings | \n\n\n | \n\n \n | \n\n 10.3 | \n\n 255.7 | \n
| \n Current lease liabilities | \n\n\n | \n\n \n | \n\n 37.0 | \n\n 30.6 | \n
| \n Trade payables | \n\n \n | \n\n \n | \n\n 338.9 | \n\n 264.1 | \n
| \n Other current liabilities | \n\n\n | \n\n \n | \n\n 348.9 | \n\n 310.1 | \n
| \n Total financial liabilities | \n\n \n | \n\n \n | \n\n 1,956.3 | \n\n 2,041.5 | \n
The company have a long term equity settled incentive share option programme, in which the employee receives remuneration in the form of share-based payment for services rendered.
The cost of equity-settled transactions is determined by the fair value at the date when the grant is made using an appropriate valuation model, further details below.
That cost is recognised in personnel expenses together with a corresponding increase in equity, over the period in which the service and, where applicable, the performance conditions are fulfilled (the vesting period). The cumulative expense recognised for equity-settled transactions at each reporting date until the vesting date reflects the extent to which the vesting period has expired and the Group\u2019s best estimate of the number of equity instruments that will ultimately vest. The expense or credit in the statement of profit or loss for a period represents the movement in cumulative expense recognised as at the beginning and end of that period.
27 June 2022, the Company implemented a long term incentive plan. A total of 1,995,000 options have been awarded to certain of its employees at strike prices ranging from NOK 22.31 to NOK 24.13 per share.
The options can only be exercised in three equal tranches, with vesting periods of one, two and three years. The options may be exercised during the subsequent year. Any options not exercised in the first two tranches can be rolled forward to the next tranches. Any options not exercised by the end of period (Q3 2025) will be terminated.
| \n Overview of outstanding options: | \n\n 2023 | \n\n 2022 | \n
| \n Outstanding options 1.1 | \n\n 1,995,000 | \n\n - | \n
| \n Options granted | \n\n - | \n\n 1,995,000 | \n
| \n Options forfeited | \n\n - | \n\n - | \n
| \n Options exercised | \n\n - | \n\n - | \n
| \n Options expired | \n\n - | \n\n - | \n
| \n Outstanding options 31.12 | \n\n 1,995,000 | \n\n 1,995,000 | \n
| \n Of which exercisable | \n\n 665,000 | \n\n - | \n
The fair value of the options has been calculated using Black & Scholes option-pricing model. The average fair value of the options granted in 2022 is NOK 9.07. The total cost of the share option plan is calculated based on the fair value 1,995,000 options granted. The total cost equals approximately NOK 18 million and is recognised over the period until August 2025.
The calculations are based on the following assumptions:
\u25aaThe share price on the grant dates were set to the stock exchange price on the grant dates (27 June 2022, 15 August 2022 and 1 September 2022).
\u25aaThe strike price per options were a weighted average of NOK 22.75.
\u25aaThe expected price volatility of the company's shares was set to 55% based on historical volatility adjusted for expected changes.
\u25aaThe expiry date was set to 4 July 2025, 22 August 2025 and 8 September 2025.
\u25aaThe expected dividend yield was set to 0%.
\u25aaThe risk-free interest rate was set to 3.67%
NOTE 13Contract balances
A contract asset is the right to consideration in exchange for goods or services transferred to the customer. If the Group performs by transferring goods or services to a customer before the customer pays consideration or before payment is due, a contract asset is recognised for the earned consideration that is conditional.
For costs to fulfil contracts where the Group operates as a lessor, the Group has chosen to apply the guidance in IFRS 15 by analogy.
A contract liability is the obligation to transfer goods or services to a customer for which the Group has received consideration (or an amount of consideration is due) from the customer. If a customer pays consideration before the Group transfers goods or services to the customer, a contract liability is recognised when the payment is made or the payment is due (whichever is earlier). Contract liabilities are recognised as revenue when the Group performs under the contract.
Contract liabilities are classified as current liabilities as they are expected to be settled in the normal operating cycle.
| \n NOK million | \n\n 31.12.2023 | \n\n 31.12.2022 | \n
| \n Contract assets | \n\n - | \n\n 0.9 | \n
| \n Contract liabilities | \n\n 84.3 | \n\n 63.0 | \n
The contract liabilities are mainly related to the Operations segment.
Of the contract liabilities as at 31 December 2023, approximately NOK 10 million is expected to be recognised as revenue during 2024. The remaining relates to Operations contracts and will be recognised as revenue over an estimated period up to 5\u00a0years.
| \n NOK million | \n\n 2023 | \n\n 2022 | \n
| \n Amounts included in contract liabilities at the beginning of the year | \n\n 0.9 | \n\n 2.5 | \n
| \n Performance obligations satisfied in the previous years | \n\n 1.2 | \n\n - | \n
NOTE 14Trade receivables
A receivable represents the Group\u2019s right to an amount of consideration that is unconditional (i.e., only the passage of time is required before payment of the consideration is due).
| \n NOK million | \n\n Note | \n\n 31.12.2023 | \n\n 31.12.2022 | \n
| \n Trade receivables | \n\n \n | \n\n 641.0 | \n\n 504.3 | \n
| \n Earned, not yet invoiced operating revenues | \n\n \n | \n\n 382.4 | \n\n 452.7 | \n
| \n Loss allowance | \n\n 23 | \n\n (17.8) | \n\n (14.5) | \n
| \n Trade receivables - net | \n\n \n | \n\n 1,005.6 | \n\n 942.6 | \n
For information about currencies, ageing and loss allowance, refer to Note 23 - Credit risk.
The Group assesses, on a forward looking basis, the expected credit losses associated with its debt instruments carried at amortised cost and FVOCI. The impairment methodology applied depends on whether there has been a significant increase in credit risk.
A receivable represents the Group\u2019s right to an amount of consideration that is unconditional (i.e., only the passage of time is required before payment of the consideration is due).
The Group assesses, on a forward looking basis, the expected credit losses associated with its debt instruments carried at amortised cost and FVOCI. The impairment methodology applied depends on whether there has been a significant increase in credit risk.
NOTE 15Cash and cash equivalents
| \n NOK million | \n\n 31.12.2023 | \n\n 31.12.2022 | \n
| \n Cash in bank | \n\n 486.0 | \n\n 190.7 | \n
| \n Time deposits | \n\n 101.7 | \n\n 306.7 | \n
| \n Restricted bank deposits * | \n\n 71.0 | \n\n 62.7 | \n
| \n Total cash and cash equivalents | \n\n 658.8 | \n\n 560.1 | \n
| \n\n | \n
| \n NOK million | \n\n 31.12.2023 | \n\n 31.12.2022 | \n
| \n Cash in bank | \n\n 486.0 | \n\n 190.7 | \n
| \n Time deposits | \n\n 101.7 | \n\n 306.7 | \n
| \n Restricted bank deposits * | \n\n 71.0 | \n\n 62.7 | \n
| \n Total cash and cash equivalents | \n\n 658.8 | \n\n 560.1 | \n
| \n\n | \n
| \n NOK million | \n\n 31.12.2023 | \n\n 31.12.2022 | \n
| \n Cash in bank | \n\n 486.0 | \n\n 190.7 | \n
| \n Time deposits | \n\n 101.7 | \n\n 306.7 | \n
| \n Restricted bank deposits * | \n\n 71.0 | \n\n 62.7 | \n
| \n Total cash and cash equivalents | \n\n 658.8 | \n\n 560.1 | \n
| \n\n | \n
NOTE 17Leases
This note relates to the Group as a lessee only.
The Group leases various offices, workshops and warehouses. Rental contracts are typically made for fixed periods of 6 months to 10 years, but may have extension or termination options. Contracts may contain both lease and non-lease components. The Group allocates the consideration in the contract to the lease and non-lease components based on their relative stand-alone prices.
The lease payments are discounted using the lessee\u2019s incremental borrowing rate. To determine the incremental borrowing rate, the Group uses a build-up approach that starts with a risk-free interest rate adjusted for credit risk for leases held by the Group and makes adjustments specific to the lease, e.g. term, country, currency and security.
The Group is exposed to potential future increases in variable lease payments based on an index or rate, which are not included in the lease liability until they take effect. When adjustments to lease payments based on an index or rate take effect, the lease liability is reassessed and adjusted against the right-of-use asset.
Right-of-use assets are measured at cost comprising the amount of the initial measurement of lease liability, any lease payments made at or before the commencement date less any lease incentives received, any initial direct costs, and any restoration costs.
Right-of-use assets are generally depreciated over the shorter of the asset's useful life and the lease term on a straight-line basis. If the Group is reasonably certain to exercise a purchase option, the right-of-use asset is depreciated over the underlying asset\u2019s useful life.
Payments associated with short-term leases and leases of low-value assets are recognised on a straight-line basis as an expense in profit or loss. Short-term leases are leases with a lease term of 12 months or less. Low-value assets comprise IT-equipment and smaller items of office equipment.
The Group has several lease contracts that include extension and termination options. These options are negotiated by management to provide flexibility in managing the leased-asset portfolio and align with the Group's business needs. Management exercises significant judgement in determining whether these extension and termination options are reasonably certain to be exercised.
| \n NOK million | \n\n 31.12.2023 | \n\n 31.12.2022 | \n
| \n Non-current | \n\n 132.6 | \n\n 96.8 | \n
| \n Current | \n\n 37.0 | \n\n 30.6 | \n
| \n Total | \n\n 169.6 | \n\n 127.4 | \n
| \n \n | \n\n Non-current | \n\n Current | \n\n Total | \n\n Non-current | \n\n Current | \n\n Total | \n
| \n NOK million | \n\n 2023 | \n\n 2023 | \n\n 2023 | \n\n 2022 | \n\n 2022 | \n\n 2022 | \n
| \n Carrying amount as at 1 January | \n\n 96.8 | \n\n 30.6 | \n\n 127.4 | \n\n 83.1 | \n\n 24.5 | \n\n 107.6 | \n
| \n Cash flows: | \n\n \n | \n\n \n | \n\n \n | \n\n \n | \n\n \n | \n\n \n | \n
| \n Payments for the principal portion of the lease liability | \n\n - | \n\n (26.2) | \n\n (26.2) | \n\n - | \n\n (20.5) | \n\n (20.5) | \n
| \n Payments for the interest portion of the lease liability | \n\n - | \n\n (10.1) | \n\n (10.1) | \n\n - | \n\n (7.4) | \n\n (7.4) | \n
| \n Non-cash flows: | \n\n \n | \n\n \n | \n\n \n | \n\n \n | \n\n \n | \n\n \n | \n
| \n New lease liabilities recognised in the year | \n\n 65.5 | \n\n - | \n\n 65.5 | \n\n 38.5 | \n\n - | \n\n 38.5 | \n
| \n Interest expense on lease liabilities | \n\n 11.1 | \n\n - | \n\n 11.1 | \n\n 7.8 | \n\n - | \n\n 7.8 | \n
| \n Reclassified | \n\n (41.8) | \n\n 41.8 | \n\n - | \n\n (33.5) | \n\n 33.5 | \n\n - | \n
| \n Currency exchange differences | \n\n 0.9 | \n\n 0.9 | \n\n 1.8 | \n\n 0.9 | \n\n 0.5 | \n\n 1.4 | \n
| \n Carrying amount as at 31 December | \n\n 132.6 | \n\n 37.0 | \n\n 169.6 | \n\n 96.8 | \n\n 30.6 | \n\n 127.4 | \n
| \n NOK million | \n\n 2023 | \n\n 2022 | \n
| \n Expenses relating to short-term leases | \n\n 145.0 | \n\n 90.9 | \n
| \n Expenses relating to low value items | \n\n 6.9 | \n\n 6.6 | \n
Extension and termination options are included in a number of property and equipment leases across the Group. These are used to maximise operational flexibility in terms of managing the assets used in the Group's operations.
In determining the lease term, management considers all facts and circumstances that create an economic incentive to exercise an extension option, or not to exercise a termination option. Extension options (or periods after termination options) are only included in the lease term if the lease is reasonably certain to be extended (or not terminated).
Most extension options have not been included in the lease liability, because the Group could replace the asset without significant cost of business disruption, or because the Group is not certain it would need the asset in the option period.
This note relates to the Group as a lessee only.
The Group leases various offices, workshops and warehouses. Rental contracts are typically made for fixed periods of 6 months to 10 years, but may have extension or termination options. Contracts may contain both lease and non-lease components. The Group allocates the consideration in the contract to the lease and non-lease components based on their relative stand-alone prices.
The lease payments are discounted using the lessee\u2019s incremental borrowing rate. To determine the incremental borrowing rate, the Group uses a build-up approach that starts with a risk-free interest rate adjusted for credit risk for leases held by the Group and makes adjustments specific to the lease, e.g. term, country, currency and security.
The Group is exposed to potential future increases in variable lease payments based on an index or rate, which are not included in the lease liability until they take effect. When adjustments to lease payments based on an index or rate take effect, the lease liability is reassessed and adjusted against the right-of-use asset.
Right-of-use assets are measured at cost comprising the amount of the initial measurement of lease liability, any lease payments made at or before the commencement date less any lease incentives received, any initial direct costs, and any restoration costs.
Right-of-use assets are generally depreciated over the shorter of the asset's useful life and the lease term on a straight-line basis. If the Group is reasonably certain to exercise a purchase option, the right-of-use asset is depreciated over the underlying asset\u2019s useful life.
Payments associated with short-term leases and leases of low-value assets are recognised on a straight-line basis as an expense in profit or loss. Short-term leases are leases with a lease term of 12 months or less. Low-value assets comprise IT-equipment and smaller items of office equipment.
| \n \n | \n\n Non-current | \n\n Current | \n\n Total | \n\n Non-current | \n\n Current | \n\n Total | \n
| \n NOK million | \n\n 2023 | \n\n 2023 | \n\n 2023 | \n\n 2022 | \n\n 2022 | \n\n 2022 | \n
| \n Carrying amount as at 1 January | \n\n 96.8 | \n\n 30.6 | \n\n 127.4 | \n\n 83.1 | \n\n 24.5 | \n\n 107.6 | \n
| \n Cash flows: | \n\n \n | \n\n \n | \n\n \n | \n\n \n | \n\n \n | \n\n \n | \n
| \n Payments for the principal portion of the lease liability | \n\n - | \n\n (26.2) | \n\n (26.2) | \n\n - | \n\n (20.5) | \n\n (20.5) | \n
| \n Payments for the interest portion of the lease liability | \n\n - | \n\n (10.1) | \n\n (10.1) | \n\n - | \n\n (7.4) | \n\n (7.4) | \n
| \n Non-cash flows: | \n\n \n | \n\n \n | \n\n \n | \n\n \n | \n\n \n | \n\n \n | \n
| \n New lease liabilities recognised in the year | \n\n 65.5 | \n\n - | \n\n 65.5 | \n\n 38.5 | \n\n - | \n\n 38.5 | \n
| \n Interest expense on lease liabilities | \n\n 11.1 | \n\n - | \n\n 11.1 | \n\n 7.8 | \n\n - | \n\n 7.8 | \n
| \n Reclassified | \n\n (41.8) | \n\n 41.8 | \n\n - | \n\n (33.5) | \n\n 33.5 | \n\n - | \n
| \n Currency exchange differences | \n\n 0.9 | \n\n 0.9 | \n\n 1.8 | \n\n 0.9 | \n\n 0.5 | \n\n 1.4 | \n
| \n Carrying amount as at 31 December | \n\n 132.6 | \n\n 37.0 | \n\n 169.6 | \n\n 96.8 | \n\n 30.6 | \n\n 127.4 | \n
The Group has occupational pension plans in several countries. The pension plans are measured and presented according to IAS 19.
The Group has contractual pension agreement (CPA) schemes in Norway established in multi-employer plans. These multi-employer plans are defined benefit plans, but the Group does not have access to the necessary information for the accounting years 2023 and 2022 required to account for these plans as defined benefit plans, and the plans are therefore accounted for as defined contribution plans.
A number of the Norwegian subsidiaries in the Group are required to have a civil service pension scheme according to the Norwegian Act relating to mandatory occupational pensions. These subsidiaries have pension schemes in accordance with the requirements in this Act.
NOTE 19Other liabilities
| \n NOK million | \n\n Note | \n\n 31.12.2023 | \n\n 31.12.2022 | \n
| \n Contract liabilities | \n\n\n | \n\n 84.3 | \n\n 25.1 | \n
| \n Social security and other taxes | \n\n \n | \n\n 162.4 | \n\n 129.4 | \n
| \n Accrued salaries, holiday pay and employee bonus provisions | \n\n \n | \n\n 244.2 | \n\n 212.3 | \n
| \n Other payables and financial liabilities | \n\n \n | \n\n 17.8 | \n\n 2.4 | \n
| \n Other accrued expenses | \n\n \n | \n\n 86.9 | \n\n 95.5 | \n
| \n Total other current liabilities | \n\n \n | \n\n 595.6 | \n\n 464.6 | \n
Refer to Note 27 - Contingencies for further information about accounting policy for provisions and accruals, as well as significant judgement applied and estimation uncertainty.
NOTE 19Other liabilities
| \n NOK million | \n\n Note | \n\n 31.12.2023 | \n\n 31.12.2022 | \n
| \n Contract liabilities | \n\n\n | \n\n 84.3 | \n\n 25.1 | \n
| \n Social security and other taxes | \n\n \n | \n\n 162.4 | \n\n 129.4 | \n
| \n Accrued salaries, holiday pay and employee bonus provisions | \n\n \n | \n\n 244.2 | \n\n 212.3 | \n
| \n Other payables and financial liabilities | \n\n \n | \n\n 17.8 | \n\n 2.4 | \n
| \n Other accrued expenses | \n\n \n | \n\n 86.9 | \n\n 95.5 | \n
| \n Total other current liabilities | \n\n \n | \n\n 595.6 | \n\n 464.6 | \n
Refer to Note 27 - Contingencies for further information about accounting policy for provisions and accruals, as well as significant judgement applied and estimation uncertainty.
| \n NOK million | \n\n Note | \n\n 31.12.2023 | \n\n 31.12.2022 | \n
| \n Contract liabilities | \n\n\n | \n\n 84.3 | \n\n 25.1 | \n
| \n Social security and other taxes | \n\n \n | \n\n 162.4 | \n\n 129.4 | \n
| \n Accrued salaries, holiday pay and employee bonus provisions | \n\n \n | \n\n 244.2 | \n\n 212.3 | \n
| \n Other payables and financial liabilities | \n\n \n | \n\n 17.8 | \n\n 2.4 | \n
| \n Other accrued expenses | \n\n \n | \n\n 86.9 | \n\n 95.5 | \n
| \n Total other current liabilities | \n\n \n | \n\n 595.6 | \n\n 464.6 | \n
NOTE 20Financial risk management
The primary objective of the Group's capital management is to ensure that it maintains required capital ratios and liquidity available to support the Business Areas. Capital management should be such that the capital structure is sufficiently robust to withstand prolonged adverse conditions in significant risk factors, such as long-term down-cycles in our markets and unfavourable conditions in financial markets. Capital management also comprise securing the company to be in compliance with covenants on interest bearing debt. Reference is made to Note 16 - Interest-bearing borrowings which disclose information about covenants on long term interest bearing liabilities.
The Group will manage the capital structure and make adjustments to it, to maintain an optimal structure adapted to current economic conditions. In order to maintain or adjust the capital structure, the Group may adjust dividend payments, buy treasury shares, return capital to shareholders or issue new shares.
| \n \n | \n\n 31.12.2023 | \n\n 31.12.2022 | \n
| \n Equity | \n\n 1,076.6 | \n\n 778.8 | \n
| \n Total assets | \n\n 3,694.6 | \n\n 3,114.9 | \n
| \n Equity ratio | \n\n 29% | \n\n 25% | \n
| \n Cash and cash equivalents excl. restricted capital | \n\n 587.7 | \n\n 497.4 | \n
| \n Available drawing facilities | \n\n 254.3 | \n\n - | \n
| \n Total available liquidity | \n\n 842.0 | \n\n 497.4 | \n
The liquidity management has four main objectives:
\u25aaMatching of surplus funds against borrowing requirements.
\u25aaSecure a high level of liquidity (a targeted minimum of two months operating expenses) in order to meet future plans of the Group.
\u25aaLimitation of credit risks.
\u25aaMaximise return on liquid assets.
Accordingly, investments may only be made in securities with a rating of Investment grade, BAA (Moodys) , BBB- (Standard and Poors and Fitch IBCA) or better.
A list of counter-party exposure limits is reported to the Board of Odfjell Drilling on a yearly basis.
The following instruments are allowed for short term placements;
\u25aaDeposits in banks
\u25aaLoans to companies/institutions/funds (like fixed or floating rate bonds, senior or subordinated debt)
\u25aaCertificates
\u25aaMoney-market funds
The company's policy is to have a positive working capital.
The Group is exposed to a range of financial risks: liquidity risk, market risk (including currency risk, interest rate risk, and price risk), and credit risk.
The financial risk management focuses on the unpredictability of financial markets and seeks to minimise potential adverse effects on the Group\u2019s financial performance. To some extent, the Group uses derivative financial instruments to reduce certain risk exposures.
Risk management is carried out on a Group level. The Group identifies, evaluates and hedges financial risks in close co-operation with the Group's operational units. The board of Odfjell Technology Ltd. has established principles for risk management of foreign exchange risk, interest rate risk and use of derivative financial instruments.
The primary objective of the Group's capital management is to ensure that it maintains required capital ratios and liquidity available to support the Business Areas. Capital management should be such that the capital structure is sufficiently robust to withstand prolonged adverse conditions in significant risk factors, such as long-term down-cycles in our markets and unfavourable conditions in financial markets. Capital management also comprise securing the company to be in compliance with covenants on interest bearing debt. Reference is made to Note 16 - Interest-bearing borrowings which disclose information about covenants on long term interest bearing liabilities.
| \n \n | \n\n 31.12.2023 | \n\n 31.12.2022 | \n
| \n Equity | \n\n 1,076.6 | \n\n 778.8 | \n
| \n Total assets | \n\n 3,694.6 | \n\n 3,114.9 | \n
| \n Equity ratio | \n\n 29% | \n\n 25% | \n
| \n Cash and cash equivalents excl. restricted capital | \n\n 587.7 | \n\n 497.4 | \n
| \n Available drawing facilities | \n\n 254.3 | \n\n - | \n
| \n Total available liquidity | \n\n 842.0 | \n\n 497.4 | \n
The liquidity management has four main objectives:
\u25aaMatching of surplus funds against borrowing requirements.
\u25aaSecure a high level of liquidity (a targeted minimum of two months operating expenses) in order to meet future plans of the Group.
\u25aaLimitation of credit risks.
\u25aaMaximise return on liquid assets.
Accordingly, investments may only be made in securities with a rating of Investment grade, BAA (Moodys) , BBB- (Standard and Poors and Fitch IBCA) or better.
A list of counter-party exposure limits is reported to the Board of Odfjell Drilling on a yearly basis.
The following instruments are allowed for short term placements;
\u25aaDeposits in banks
\u25aaLoans to companies/institutions/funds (like fixed or floating rate bonds, senior or subordinated debt)
\u25aaCertificates
\u25aaMoney-market funds
The company's policy is to have a positive working capital.
NOTE 21Liquidity risk
The Group's objective is to maintain a balance between continuity of funding and flexibility through the use of credit facilities and to have sufficient cash or cash equivalents at any time to be able to finance its operations and investments in accordance with the Group's strategic plan.
With regular forecasts and liquidity analysis updates, the Group will ensure sufficient available liquidity to fulfil its duties at loan maturity, without unacceptable loss or risk of damaging the Group\u2019s reputation.
Prudent liquidity risk management implies maintaining sufficient cash, the availability of funding through credit facilities and the ability to close out market positions. Due to the dynamic nature of the underlying businesses, the Group aims to maintain flexibility in funding by keeping committed credit lines available.
The Group\u2019s cash flow forecasting is performed by Group Finance. Group Finance monitors rolling forecasts of the Group\u2019s liquidity requirements to ensure it has sufficient cash to meet operational needs at all times, so that the Group does not breach borrowing limits or covenants on any of its borrowing facilities. Such forecasting takes into consideration the Group\u2019s debt financing plans and covenant compliance.
Surplus cash held by the operating entities over and above the balance required for working capital management is transferred to the Group Treasury. Group treasury invests surplus cash in interest bearing current accounts, time deposits, money market deposits and marketable securities, choosing instruments with appropriate maturities or sufficient liquidity to provide sufficient head-room as determined by the above-mentioned forecasts.
The Group held cash and cash equivalents amounting to NOK 659 million in addition to available drawing facilities of NOK 254 million at the end of 2023. This is deemed to be sufficient funding for the Group\u2019s current activity levels and committed capital expenditures during 2024.
The liquidity risk is connected with the market risk and the re-contracting risk for the segments. The management continuously focuses on securing new profitable contracts to generate sufficient cash flow from operations, hence reducing the liquidity risk going forward.
Operating in more than 20 jurisdictions the Group do from time to time receive enquiries from authorities about compliance related matters. Refer to Note 27 regarding notice of decision received 1 October 2021 from HM Revenue and Customs. The Group has per 31 December 2023 not received any formal material assessment which is not disclosed in the financial statements.
The amounts disclosed in the table are the contractual non-discounted cash flows. The table include estimated interest payments for drawn facilities at the balance sheet date, based on the remaining period at the end of the reporting period to the contractual maturity date. The estimated interest payments include payments based on forward rates for the interest rate swaps.
| \n 31.12.2023 - NOK million | \n\n Less than 6 months | \n\n 6 - 12 months | \n\n Between 1 and 2 years | \n\n Between 2 and 5 years | \n\n Over 5 years | \n\n Total contractual cash flows | \n\n Carrying amount 31.12.2023 | \n
| \n Interest-bearing borrowings | \n\n 60.4 | \n\n 61.8 | \n\n 120.9 | \n\n 1,130.2 | \n\n - | \n\n 1,373.3 | \n\n 1,098.9 | \n
| \n Lease liabilities | \n\n 18.4 | \n\n 18.6 | \n\n 34.1 | \n\n 87.7 | \n\n 53.9 | \n\n 212.6 | \n\n 169.6 | \n
| \n Trade payables | \n\n 338.9 | \n\n - | \n\n - | \n\n - | \n\n - | \n\n 338.9 | \n\n 338.9 | \n
| \n Other current payables | \n\n 342.1 | \n\n 6.8 | \n\n - | \n\n - | \n\n - | \n\n 348.9 | \n\n 348.9 | \n
| \n 31.12.2022 - NOK million | \n\n Less than 6 months | \n\n 6 - 12 months | \n\n Between 1 and 2 years | \n\n Between 2 and 5 years | \n\n Over 5 years | \n\n Total contractual cash flows | \n\n Carrying amount 31.12.2022 | \n
| \n Interest-bearing borrowings | \n\n 306.6 | \n\n 56.1 | \n\n 112.1 | \n\n 1,238.6 | \n\n - | \n\n 1,713.4 | \n\n 1,340.0 | \n
| \n Lease liabilities | \n\n 15.4 | \n\n 15.2 | \n\n 30.0 | \n\n 59.2 | \n\n 30.6 | \n\n 150.4 | \n\n 127.4 | \n
| \n Trade payables | \n\n 264.1 | \n\n - | \n\n - | \n\n - | \n\n - | \n\n 264.1 | \n\n 264.1 | \n
| \n Other current payables | \n\n 305.8 | \n\n 4.3 | \n\n - | \n\n - | \n\n - | \n\n 310.1 | \n\n 310.1 | \n
NOTE 22Market risk
Market risk is the risk of a change in market prices and demand, as well as changes in currency exchange rates and interest levels.
The oil service market has developed positively in recent years due to a strong focus on cost discipline and more efficient operations, combined with a healthier oil price development.
The focus on alternative energy sources and the overall future mix of energy remains strong. The transition into greener energy sources is expected to impact the energy market in the coming decades, however the need for continued exploration and production of oil and gas is viewed as vital, and it has become more apparent recently.
The general situation for the global oil service industry is expected to improve as a result of under investment in the oil and gas sector over the last 8 years. The supply of oil and gas is too low to meet the expected demand. Increase in investments and activity is vital to bridge the increasing energy demand as new energy sources take time to implement.
There is an increased appetite for field development and production spending across the regions we operate in.
Odfjell Technology has been successful in adding more backlog, due to our operational track record and strong client relationships, combined with a healthy balance sheet.
Well Services operates in a competitive market, but the increase in drilling activity and field investments is expected to increase demand for our services.
The market for our Operations services has been stable over the last decade. We have established a strong presence in the North Sea with efficient operations and strong client relationships, which we expect to capitalise on further. In addition, there are opportunities to expand Operations activities to other regions.
The Projects & Engineering market is improving both in existing deliverables and in green initiatives. We are well positioned to grow in existing services and further expand our portfolio of green services.
Following an assessment of climate risks and opportunities, both physical and transitional risks in the short, medium and long term, were prioritised.
The most significant transition risks identified, along with mitigating actions were:
\u25aa Increased resources, skills and tools required to measure, track and report on climate data, leading to increased costs. In house expertise being developed, gap analysis being conducted, and software tools evaluated.
\u25aa Impact on the ability to attract and retain talent, increasing costs. Training programmes to be reviewed and increase focus on communicating our sustainable activities.
\u25aa Changes in consumer behaviours reducing the demand for oil and gas and therefore revenue. To be addressed through diversification of our client portfolio and services to support the energy transition.
\u25aaCost of and access to capital may go up as banks move to low carbon portfolios, leading to increased interest costs. Consider green funding resources for investments and diversify to low carbon portfolio.
The most significant physical risks identified, along with mitigating actions were:
\u25aa Impact of extreme weather offshore on crew and equipment logistics could increase costs and result in downtime. Critical spares analysis and robust planning required, as well as protection in commercial contracts.
\u25aaHeat, floods and tropical storms may increase in certain geographies we operate in, damaging infrastructure and increasing costs. Business continuity plans, remote working and reviews of locations required to address risk.
\u25aa Heat stress will impact employees and equipment working outside in certain locations. Health tracking and storage of equipment to be monitored.
The Group uses derivative financial instruments, such as forward currency contracts and interest rate swaps, to hedge its foreign currency risks and interest rate risks, respectively.
Derivatives are recognised at fair value on the date a derivative contract is entered into and are subsequently re-measured on a continuous basis at their fair value. The method of recognising the resulting gain or loss depends on whether the derivative is designated as a hedging instrument, and if so, the nature of the item being hedged.
The Group designates certain derivatives as hedges of highly probable forecast transactions (cash-flow hedges). At the date of the hedging transaction, the Group's documentation includes identification of the hedging instrument, the hedged item, the nature of the risk being hedged and how the Group will assess whether the hedging relationship meets the hedge effectiveness requirements (including the analysis of sources of hedge ineffectiveness and how the hedge ratio is determined). A hedging relationship qualifies for hedge accounting if it meets all of the following effectiveness requirements:
\u25aaThere is \u2018an economic relationship\u2019 between the hedged item and the hedging instrument.
\u25aaThe effect of credit risk does not \u2018dominate the value changes\u2019 that result from that economic relationship.
\u25aaThe hedge ratio of the hedging relationship is the same as that resulting from the quantity of the hedged item that the Group actually hedges and the quantity of the hedging instrument that the Group actually uses to hedge that quantity of hedged item.
Hedges that meet all the qualifying criteria for hedge accounting are accounted for, as described below:
\u25aaThe effective portion of the gain or loss on the cash flow hedging instrument is recognised in other comprehensive income in the cash flow hedge reserve, while any ineffective portion is recognised immediately in the income statement. The cash flow hedge reserve is adjusted to the lower of the cumulative gain or loss on the hedging instrument and the cumulative change in fair value of the hedged item.
\u25aaAmounts recognised directly in other comprehensive income are reclassified as income or expense in the income statement in the period when the hedged liability or planned transaction will affect the income statement.
Derivatives are only used for economic hedging purposes and not as speculative investments.
Derivatives are presented as current assets or liabilities to the extent they are expected to be settled within 12 months after the end of the reporting period.
| \n NOK million | \n\n 31.12.2023 | \n\n 31.12.2022 | \n
| \n Non-current assets | \n\n \n | \n\n \n | \n
| \n Interest rate swaps - cash flow hedges under hedge accounting | \n\n 11.7 | \n\n 10.8 | \n
| \n Total non-current derivative financial instruments asset | \n\n 11.7 | \n\n 10.8 | \n
The Group's hedging reserves disclosed in Note 25 - Other reserves.
| \n NOK million | \n\n Interest rate swaps | \n\n Total hedge reserves | \n
| \n Opening balance 1 January 2022 | \n\n - | \n\n - | \n
| \n Change in fair value of hedging instruments recognised in OCI | \n\n 11.3 | \n\n 11.3 | \n
| \n Reclassified from OCI to profit or loss | \n\n (0.5) | \n\n (0.5) | \n
| \n Closing balance 31 December 2022 | \n\n 10.8 | \n\n 10.8 | \n
| \n Change in fair value of hedging instruments recognised in OCI | \n\n (5.5) | \n\n (5.5) | \n
| \n Reclassified from OCI to profit or loss | \n\n 6.4 | \n\n 6.4 | \n
| \n Closing balance 31 December 2023 | \n\n 11.7 | \n\n 11.7 | \n
The consolidated material subsidiaries' reporting and functional currencies are NOK, USD, GBP and EUR.
The Group operates internationally and is exposed to foreign exchange risk arising from various currency exposures, primarily with respect to USD and NOK. Foreign exchange risk arises when future commercial transactions or recognised assets or liabilities are denominated in a currency that is not the entity\u2019s functional currency. The Group is exposed to risks due to fluctuations in exchange rates as the customer contracts are denominated in multiple currencies with cost mainly in local currency, while capital expenditure is in USD.
The Group seeks to minimise these risks through natural hedging by balancing the currency in and out flow and will use financial hedging instruments if required.
The foreign exchange contracts are only used for economic hedging purposes and not as speculative investments. However, these derivatives did not meet the hedge accounting criteria, and are accounted for at fair value through profit or loss.
The Group\u2019s exposure to foreign currency risk at the end of the reporting period, expressed in NOK, was as follows:
| \n NOK million | \n\n USD | \n\n NOK | \n\n GBP | \n
| \n Cash and cash equivalents * | \n\n (239.9) | \n\n 212.0 | \n\n (30.6) | \n
| \n Trade receivables | \n\n 92.6 | \n\n 13.7 | \n\n 3.1 | \n
| \n Interest-bearing borrowings | \n\n - | \n\n - | \n\n - | \n
| \n Trade payables | \n\n (37.6) | \n\n (13.0) | \n\n (1.2) | \n
| \n Other current payables | \n\n (1.2) | \n\n (0.1) | \n\n (1.3) | \n
| \n NOK million | \n\n USD | \n\n NOK | \n\n GBP | \n
| \n Cash and cash equivalents | \n\n 132.3 | \n\n - | \n\n - | \n
| \n Trade receivables | \n\n 65.8 | \n\n 8.5 | \n\n - | \n
| \n Interest-bearing borrowings | \n\n (244.1) | \n\n - | \n\n - | \n
| \n Trade payables | \n\n (23.8) | \n\n (5.7) | \n\n (1.2) | \n
| \n Other current payables | \n\n (2.6) | \n\n (10.6) | \n\n (3.8) | \n
| \n NOK million | \n\n 2023 | \n\n 2022 | \n
| \n Net currency gain / (loss) included in finance costs | \n\n (1.0) | \n\n (31.8) | \n
The Group's profit or loss is primarily exposed to changes in USD/NOK exchange rates.
The sensitivity shown in table below is calculated based on USD balances in companies with NOK as functional currency, and NOK balances in companies with USD as functional currency.
| \n Sensitivity to changes in USD/NOK exchange rates | \n\n USD is strengthened by 20 % against NOK | \n\n USD is strengthened by 10 % against NOK | \n\n USD is weakened by 10 % against NOK | \n\n USD is weakened by 20 % against NOK | \n||||
| \n NOK million | \n\n 2023 | \n\n 2022 | \n\n 2023 | \n\n 2022 | \n\n 2023 | \n\n 2022 | \n\n 2023 | \n\n 2022 | \n
| \n Cash and cash equivalents | \n\n (31.6) | \n\n 3.4 | \n\n (19.5) | \n\n 1.7 | \n\n 19.5 | \n\n (1.7) | \n\n 38.9 | \n\n (3.4) | \n
| \n Current receivables | \n\n 12.1 | \n\n 1.3 | \n\n 6.0 | \n\n 0.6 | \n\n (5.9) | \n\n (0.6) | \n\n (11.8) | \n\n (1.3) | \n
| \n Current liabilities | \n\n 0.3 | \n\n (48.8) | \n\n 0.1 | \n\n (24.4) | \n\n (0.1) | \n\n 24.4 | \n\n (0.3) | \n\n 48.8 | \n
| \n Net effect on profit before tax | \n\n (19.2) | \n\n (44.2) | \n\n (13.3) | \n\n (22.1) | \n\n 13.4 | \n\n 22.1 | \n\n 26.9 | \n\n 44.2 | \n
The Group's exposure to the risk of changes in market interest rates relates primarily to the Group's borrowing debt obligations at floating interest rates. The Group evaluates the share of interest rate hedging based on assessment of the Group\u2019s total interest rate risk and currently has a combination of fixed and floating interest rates in order to limit exposure. The Board of Directors is on regular basis considering the interest payment hedging of the external financing and mandate administration to execute necessary changes.
Where all relevant criteria are met, hedge accounting is applied to remove the accounting mismatch between the hedging instrument and the hedged item. This will effectively result in recognising interest expense at a fixed interest rate for the hedged floating rate loans.
The Group had 2 interest rate swap agreements at 31 December 2023. Quoted mark-to-market values from financial institutions have been used to determine the fair value of the swap agreements at the end of the year. The instruments were documented as cash flow hedges and changes in fair value were recognised in other comprehensive income (cash flow hedging).
Including interest rate swaps entered into, the fixed-rate portion of the Group\u2019s interest bearing debt per 31 December 2023 is approximately 35%.
The swap contracts require settlement of net interest receivable or payable. The settlement dates coincide with the dates on which interest is payable on the underlying debt.
Average interest rate at 31 December 2022 was about 10.9% including the effect of interest rate hedging.
Estimated fair value calculations from external financial institutions have been used to determine the fair value of the swap agreement at the end of the year.
The Group monitors its interest rate exposure on a dynamic basis. The Group calculates the impact on profit and loss of a defined interest rate shift.
| \n NOK million | \n\n Interest | \n\n Notional amount | \n\n Maturity date | \n\n Hedge ratio | \n\n Weighted average hedged rate | \n\n Carrying amount 31.12.2023 | \n\n Carrying amount 31.12.2022 | \n
| \n Cash flow hedges under hedge accounting | \n\n NOK Nibor | \n\n 275.0 | \n\n 2026 | \n\n 1:1 | \n\n 2.0700% | \n\n 9.3 | \n\n 9.0 | \n
| \n Cash flow hedges under hedge accounting | \n\n NOK Nibor | \n\n 110.0 | \n\n 2026 | \n\n 1:1 | \n\n 2.6140% | \n\n 2.4 | \n\n 1.7 | \n
| \n NOK million | \n\n 31.12.2023 | \n\n % of total loans | \n\n 31.12.2022 | \n\n % of total loans | \n
| \n Variable rate borrowings - NOK NIBOR | \n\n 715.0 | \n\n 65% | \n\n 715.0 | \n\n 53% | \n
| \n Variable rate borrowings - USD SOFR | \n\n - | \n\n 0% | \n\n 246.4 | \n\n 18% | \n
| \n Fixed rate borrowings - repricing or maturity dates: | \n\n \n | \n\n \n | \n\n \n | \n\n \n | \n
| \n Less than 1 year | \n\n - | \n\n 0% | \n\n - | \n\n 0% | \n
| \n 1-5 years | \n\n 385.0 | \n\n 35% | \n\n 385.0 | \n\n 29% | \n
| \n Later than 5 years | \n\n - | \n\n 0% | \n\n - | \n\n 0% | \n
| \n Total contractual amounts | \n\n 1,100.0 | \n\n 100% | \n\n 1,346.4 | \n\n 100% | \n
The result of the calculation on sensitivities returns the following expected values (incl. interest rate swaps entered into as at 31 December):
If interest rate is increased by 1.0 %, the effect would be an increase in financing costs of NOK 7 million for the next 12 months as at 31 December 2023.
The Group uses derivative financial instruments, such as forward currency contracts and interest rate swaps, to hedge its foreign currency risks and interest rate risks, respectively.
Derivatives are recognised at fair value on the date a derivative contract is entered into and are subsequently re-measured on a continuous basis at their fair value. The method of recognising the resulting gain or loss depends on whether the derivative is designated as a hedging instrument, and if so, the nature of the item being hedged.
The Group designates certain derivatives as hedges of highly probable forecast transactions (cash-flow hedges). At the date of the hedging transaction, the Group's documentation includes identification of the hedging instrument, the hedged item, the nature of the risk being hedged and how the Group will assess whether the hedging relationship meets the hedge effectiveness requirements (including the analysis of sources of hedge ineffectiveness and how the hedge ratio is determined). A hedging relationship qualifies for hedge accounting if it meets all of the following effectiveness requirements:
\u25aaThere is \u2018an economic relationship\u2019 between the hedged item and the hedging instrument.
\u25aaThe effect of credit risk does not \u2018dominate the value changes\u2019 that result from that economic relationship.
\u25aaThe hedge ratio of the hedging relationship is the same as that resulting from the quantity of the hedged item that the Group actually hedges and the quantity of the hedging instrument that the Group actually uses to hedge that quantity of hedged item.
Hedges that meet all the qualifying criteria for hedge accounting are accounted for, as described below:
\u25aaThe effective portion of the gain or loss on the cash flow hedging instrument is recognised in other comprehensive income in the cash flow hedge reserve, while any ineffective portion is recognised immediately in the income statement. The cash flow hedge reserve is adjusted to the lower of the cumulative gain or loss on the hedging instrument and the cumulative change in fair value of the hedged item.
\u25aaAmounts recognised directly in other comprehensive income are reclassified as income or expense in the income statement in the period when the hedged liability or planned transaction will affect the income statement.
Derivatives are only used for economic hedging purposes and not as speculative investments.
The Group uses derivative financial instruments, such as forward currency contracts and interest rate swaps, to hedge its foreign currency risks and interest rate risks, respectively.
Derivatives are recognised at fair value on the date a derivative contract is entered into and are subsequently re-measured on a continuous basis at their fair value. The method of recognising the resulting gain or loss depends on whether the derivative is designated as a hedging instrument, and if so, the nature of the item being hedged.
The Group designates certain derivatives as hedges of highly probable forecast transactions (cash-flow hedges). At the date of the hedging transaction, the Group's documentation includes identification of the hedging instrument, the hedged item, the nature of the risk being hedged and how the Group will assess whether the hedging relationship meets the hedge effectiveness requirements (including the analysis of sources of hedge ineffectiveness and how the hedge ratio is determined). A hedging relationship qualifies for hedge accounting if it meets all of the following effectiveness requirements:
\u25aaThere is \u2018an economic relationship\u2019 between the hedged item and the hedging instrument.
\u25aaThe effect of credit risk does not \u2018dominate the value changes\u2019 that result from that economic relationship.
\u25aaThe hedge ratio of the hedging relationship is the same as that resulting from the quantity of the hedged item that the Group actually hedges and the quantity of the hedging instrument that the Group actually uses to hedge that quantity of hedged item.
Hedges that meet all the qualifying criteria for hedge accounting are accounted for, as described below:
\u25aaThe effective portion of the gain or loss on the cash flow hedging instrument is recognised in other comprehensive income in the cash flow hedge reserve, while any ineffective portion is recognised immediately in the income statement. The cash flow hedge reserve is adjusted to the lower of the cumulative gain or loss on the hedging instrument and the cumulative change in fair value of the hedged item.
\u25aaAmounts recognised directly in other comprehensive income are reclassified as income or expense in the income statement in the period when the hedged liability or planned transaction will affect the income statement.
Derivatives are only used for economic hedging purposes and not as speculative investments.
NOTE 23Credit risk
The Group operates in three core Business Areas: Well Services (OWS), Operations and Projects & Engineering. The market for the Group\u2019s services is the offshore oil and gas industry, and the customers consist primarily of major integrated oil companies, independent oil and gas producers and government owned oil companies. The Group performs ongoing credit evaluations of the customers and generally does not request material collateral.
With respect to credit risk arising from other financial assets of the Group, which comprise cash and cash equivalents, other receivables and certain derivatives instruments receivable amount, the Group\u2019s exposure to credit risk arises from default of the counter-party, with a maximum exposure equal to the carrying amount of these instruments. However, the Group believes this risk is limited as the counter-parties mainly have a high credit quality.
During 2023, the Group has continued its focus on credit risk in general related to the uncertain conditions in some geographical markets. The maximum exposure regarding trade receivables is the carrying amount of NOK 1,006 million.
To measure the expected credit losses, trade receivables and contract assets have been grouped based on shared credit risk characteristics and the days past due. The contract assets relate to non-billed work in progress and have substantially the same risk characteristics as the trade receivables for the same types of contracts. The Group has therefore concluded that the expected loss rates for trade receivables are a reasonable approximation of the loss rates for the contract assets.
Management exercises judgement in determining the impairment loss related to the trade receivables.
| \n \n | \n\n Expected loss rate | \n\n Gross amount | \n\n Loss allowance | \n\n Net amount | \n
| \n NOK million | \n\n \n | \n\n 31.12.2023 | \n\n 31.12.2023 | \n\n 31.12.2023 | \n
| \n Not due | \n\n 0.0% | \n\n 850.9 | \n\n - | \n\n 850.9 | \n
| \n 0 to 3 months | \n\n 0.4% | \n\n 89.4 | \n\n (0.3) | \n\n 89.0 | \n
| \n 3 to 6 months | \n\n 14.6% | \n\n 16.9 | \n\n (2.5) | \n\n 14.4 | \n
| \n Over 6 months | \n\n 22.7% | \n\n 66.3 | \n\n (15.0) | \n\n 51.2 | \n
| \n Total | \n\n \n | \n\n 1,023.4 | \n\n (17.8) | \n\n 1,005.6 | \n
| \n \n | \n\n Expected loss rate | \n\n Gross amount | \n\n Loss allowance | \n\n Net amount | \n
| \n NOK million | \n\n \n | \n\n 31.12.2023 | \n\n 31.12.2023 | \n\n 31.12.2023 | \n
| \n Not due | \n\n 0.0% | \n\n - | \n\n - | \n\n - | \n
| \n \n | \n\n Expected loss rate | \n\n Gross amount | \n\n Loss allowance | \n\n Net amount | \n
| \n NOK million | \n\n \n | \n\n 31.12.2022 | \n\n 31.12.2022 | \n\n 31.12.2022 | \n
| \n Not due | \n\n 0.0% | \n\n 781.9 | \n\n - | \n\n 781.9 | \n
| \n 0 to 3 months | \n\n 0.0% | \n\n 105.4 | \n\n - | \n\n 105.4 | \n
| \n 3 to 6 months | \n\n 2.7% | \n\n 9.6 | \n\n (0.3) | \n\n 9.3 | \n
| \n Over 6 months | \n\n 23.6% | \n\n 60.2 | \n\n (14.2) | \n\n 46.0 | \n
| \n Total | \n\n \n | \n\n 957.0 | \n\n (14.5) | \n\n 942.6 | \n
| \n \n | \n\n Expected loss rate | \n\n Gross amount | \n\n Loss allowance | \n\n Net amount | \n
| \n NOK million | \n\n \n | \n\n 31.12.2022 | \n\n 31.12.2022 | \n\n 31.12.2022 | \n
| \n Not due | \n\n 0.0% | \n\n 0.9 | \n\n - | \n\n 0.9 | \n
| \n \n | \n\n Trade receivables | \n\n Contract assets | \n||
| \n NOK million | \n\n 2023 | \n\n 2022 | \n\n 2023 | \n\n 2022 | \n
| \n Loss allowance as at 1 January | \n\n 14.5 | \n\n 12.4 | \n\n - | \n\n - | \n
| \n Utilised | \n\n (1.8) | \n\n (2.6) | \n\n - | \n\n - | \n
| \n Released provision | \n\n (0.6) | \n\n (0.0) | \n\n - | \n\n - | \n
| \n New provisions | \n\n 5.4 | \n\n 3.6 | \n\n - | \n\n - | \n
| \n Translation differences | \n\n 0.4 | \n\n 1.1 | \n\n - | \n\n - | \n
| \n Loss allowance as at 31 December | \n\n 17.8 | \n\n 14.5 | \n\n - | \n\n - | \n
| \n NOK million | \n\n 2023 | \n\n 2022 | \n
| \n Net gain (loss) related to trade receivables | \n\n (4.8) | \n\n (3.7) | \n
| \n \n | \n\n Trade receivables | \n\n Contract assets | \n||
| \n NOK million | \n\n 2023 | \n\n 2022 | \n\n 2023 | \n\n 2022 | \n
| \n Loss allowance as at 1 January | \n\n 14.5 | \n\n 12.4 | \n\n - | \n\n - | \n
| \n Utilised | \n\n (1.8) | \n\n (2.6) | \n\n - | \n\n - | \n
| \n Released provision | \n\n (0.6) | \n\n (0.0) | \n\n - | \n\n - | \n
| \n New provisions | \n\n 5.4 | \n\n 3.6 | \n\n - | \n\n - | \n
| \n Translation differences | \n\n 0.4 | \n\n 1.1 | \n\n - | \n\n - | \n
| \n Loss allowance as at 31 December | \n\n 17.8 | \n\n 14.5 | \n\n - | \n\n - | \n
NOTE 24Share capital and shareholder information
| \n \n | \n\n No.of shares | \n\n Nominal value | \n\n Share capital - USD thousands | \n
| \n Common shares issued as at 31 December 2023 | \n\n 39,463,867 | \n\n USD 0.01 | \n\n 394.6 | \n
Authorised, not issued shares was 5,536,133 as at 31 December 2023. All issued shares are fully paid. No shares are held by entities in the Group.
| \n Largest common shareholders at 31 December 2023 | \n\n Account type | \n\n Holding | \n\n % of shares | \n
| \n Odfjell Technology Holding Ltd. | \n\n Ordinary | \n\n 23,825,396 | \n\n 60.37% | \n
| \n SPACE AS | \n\n Ordinary | \n\n 1,025,262 | \n\n 2.60% | \n
| \n BNP Paribas | \n\n Nominee | \n\n 727,213 | \n\n 1.84% | \n
| \n Avanza Bank AB | \n\n Nominee | \n\n 599,589 | \n\n 1.52% | \n
| \n Citibank, N.A. | \n\n Nominee | \n\n 587,712 | \n\n 1.49% | \n
| \n State Street Bank and Trust Comp | \n\n Nominee | \n\n 545,897 | \n\n 1.38% | \n
| \n KONTRARI AS | \n\n Ordinary | \n\n 500,000 | \n\n 1.27% | \n
| \n DNB BANK ASA | \n\n Nominee | \n\n 428,077 | \n\n 1.08% | \n
| \n Goldman Sachs International | \n\n Nominee | \n\n 425,376 | \n\n 1.08% | \n
| \n State Street Bank and Trust Comp | \n\n Nominee | \n\n 393,221 | \n\n 1.00% | \n
| \n Goldman Sachs & Co. LLC | \n\n Nominee | \n\n 333,443 | \n\n 0.84% | \n
| \n Nordnet Bank AB | \n\n Nominee | \n\n 324,350 | \n\n 0.82% | \n
| \n NORDNET LIVSFORSIKRING AS | \n\n Ordinary | \n\n 312,937 | \n\n 0.79% | \n
| \n TOLUMA NORDEN AS | \n\n Ordinary | \n\n 303,244 | \n\n 0.77% | \n
| \n Pershing LLC | \n\n Nominee | \n\n 269,423 | \n\n 0.68% | \n
| \n VERDIPAPIRFONDET DNB SMB | \n\n Ordinary | \n\n 260,414 | \n\n 0.66% | \n
| \n SONGA CAPITAL AS | \n\n Ordinary | \n\n 257,644 | \n\n 0.65% | \n
| \n AS CLIPPER | \n\n Ordinary | \n\n 249,758 | \n\n 0.63% | \n
| \n SKANDINAVISKA ENSKILDA BANKEN AB | \n\n Ordinary | \n\n 215,957 | \n\n 0.55% | \n
| \n KARSTEN ELLINGSEN AS | \n\n Ordinary | \n\n 205,000 | \n\n 0.52% | \n
| \n Total 20 largest common shareholders | \n\n \n | \n\n 31,789,913 | \n\n 80.55% | \n
| \n Other common shareholders | \n\n \n | \n\n 7,673,954 | \n\n 19.45% | \n
| \n Total common shareholders | \n\n \n | \n\n 39,463,867 | \n\n 100.00% | \n
The Company has only one class of ordinary shares. Each common share in the Company carries one vote, and all common shares carry equal rights, including the right to participate in General Meetings. All shareholders are treated on an equal basis.
The Company\u2019s common shares are freely transferable in Norway, provided\u00a0however, that the Bye-laws\u00a0include a right for the Board to decline to register a transfer of any share in the register of members, (or if\u00a0required, refuse to direct any registrar appointed by the Company to transfer any interest in a share) where such transfer would result in 50% or more of the Company's shares or votes being held, controlled or owned directly or indirectly by individuals or legal persons resident for tax purposes in Norway (or, alternatively, such shares or votes being effectively connected to a Norwegian business activity).
11 May 2023, the Board of Directors approved a dividend distribution of 1.267 NOK per share, equal to approximately NOK 50 million. The dividend was paid 1 June 2023.
23 August 2023, the Board of Directors approved a dividend distribution of 0.633 NOK per share, equal to approximately NOK 25 million. The dividend was paid 14 September 2023.
2 November 2023, the Board of Directors approved a dividend distribution of 0.633 NOK per share, equal to approximately NOK 25 million. The dividend was paid 23 November 2023.
In total Odfjell Technology Ltd Group paid cash dividend of 1.899 NOK per share, equal to approximately NOK 100 million.
NOTE 24Share capital and shareholder information
| \n \n | \n\n No.of shares | \n\n Nominal value | \n\n Share capital - USD thousands | \n
| \n Common shares issued as at 31 December 2023 | \n\n 39,463,867 | \n\n USD 0.01 | \n\n 394.6 | \n
Authorised, not issued shares was 5,536,133 as at 31 December 2023. All issued shares are fully paid. No shares are held by entities in the Group.
| \n Largest common shareholders at 31 December 2023 | \n\n Account type | \n\n Holding | \n\n % of shares | \n
| \n Odfjell Technology Holding Ltd. | \n\n Ordinary | \n\n 23,825,396 | \n\n 60.37% | \n
| \n SPACE AS | \n\n Ordinary | \n\n 1,025,262 | \n\n 2.60% | \n
| \n BNP Paribas | \n\n Nominee | \n\n 727,213 | \n\n 1.84% | \n
| \n Avanza Bank AB | \n\n Nominee | \n\n 599,589 | \n\n 1.52% | \n
| \n Citibank, N.A. | \n\n Nominee | \n\n 587,712 | \n\n 1.49% | \n
| \n State Street Bank and Trust Comp | \n\n Nominee | \n\n 545,897 | \n\n 1.38% | \n
| \n KONTRARI AS | \n\n Ordinary | \n\n 500,000 | \n\n 1.27% | \n
| \n DNB BANK ASA | \n\n Nominee | \n\n 428,077 | \n\n 1.08% | \n
| \n Goldman Sachs International | \n\n Nominee | \n\n 425,376 | \n\n 1.08% | \n
| \n State Street Bank and Trust Comp | \n\n Nominee | \n\n 393,221 | \n\n 1.00% | \n
| \n Goldman Sachs & Co. LLC | \n\n Nominee | \n\n 333,443 | \n\n 0.84% | \n
| \n Nordnet Bank AB | \n\n Nominee | \n\n 324,350 | \n\n 0.82% | \n
| \n NORDNET LIVSFORSIKRING AS | \n\n Ordinary | \n\n 312,937 | \n\n 0.79% | \n
| \n TOLUMA NORDEN AS | \n\n Ordinary | \n\n 303,244 | \n\n 0.77% | \n
| \n Pershing LLC | \n\n Nominee | \n\n 269,423 | \n\n 0.68% | \n
| \n VERDIPAPIRFONDET DNB SMB | \n\n Ordinary | \n\n 260,414 | \n\n 0.66% | \n
| \n SONGA CAPITAL AS | \n\n Ordinary | \n\n 257,644 | \n\n 0.65% | \n
| \n AS CLIPPER | \n\n Ordinary | \n\n 249,758 | \n\n 0.63% | \n
| \n SKANDINAVISKA ENSKILDA BANKEN AB | \n\n Ordinary | \n\n 215,957 | \n\n 0.55% | \n
| \n KARSTEN ELLINGSEN AS | \n\n Ordinary | \n\n 205,000 | \n\n 0.52% | \n
| \n Total 20 largest common shareholders | \n\n \n | \n\n 31,789,913 | \n\n 80.55% | \n
| \n Other common shareholders | \n\n \n | \n\n 7,673,954 | \n\n 19.45% | \n
| \n Total common shareholders | \n\n \n | \n\n 39,463,867 | \n\n 100.00% | \n
The Company has only one class of ordinary shares. Each common share in the Company carries one vote, and all common shares carry equal rights, including the right to participate in General Meetings. All shareholders are treated on an equal basis.
The Company\u2019s common shares are freely transferable in Norway, provided\u00a0however, that the Bye-laws\u00a0include a right for the Board to decline to register a transfer of any share in the register of members, (or if\u00a0required, refuse to direct any registrar appointed by the Company to transfer any interest in a share) where such transfer would result in 50% or more of the Company's shares or votes being held, controlled or owned directly or indirectly by individuals or legal persons resident for tax purposes in Norway (or, alternatively, such shares or votes being effectively connected to a Norwegian business activity).
11 May 2023, the Board of Directors approved a dividend distribution of 1.267 NOK per share, equal to approximately NOK 50 million. The dividend was paid 1 June 2023.
23 August 2023, the Board of Directors approved a dividend distribution of 0.633 NOK per share, equal to approximately NOK 25 million. The dividend was paid 14 September 2023.
2 November 2023, the Board of Directors approved a dividend distribution of 0.633 NOK per share, equal to approximately NOK 25 million. The dividend was paid 23 November 2023.
In total Odfjell Technology Ltd Group paid cash dividend of 1.899 NOK per share, equal to approximately NOK 100 million.
NOTE 25Other reserves
| \n NOK million | \n\n Note | \n\n Cash flow hedges | \n\n Translation differences | \n\n Share-Option plan | \n\n Total | \n
| \n At 1 January 2022 | \n\n \n | \n\n - | \n\n 645.4 | \n\n - | \n\n 645.4 | \n
| \n Change in fair value of hedging instruments recognised in OCI | \n\n\n | \n\n 11.3 | \n\n - | \n\n - | \n\n 11.3 | \n
| \n Reclassified from OCI to profit or loss | \n\n\n | \n\n (0.5) | \n\n - | \n\n - | \n\n (0.5) | \n
| \n Currency translation difference | \n\n \n | \n\n - | \n\n 140.6 | \n\n - | \n\n 140.6 | \n
| \n Cost of share-based option plan | \n\n\n | \n\n - | \n\n - | \n\n 2.8 | \n\n 2.8 | \n
| \n At 31 December 2022 | \n\n \n | \n\n 10.8 | \n\n 786.0 | \n\n 2.8 | \n\n 799.7 | \n
| \n Change in fair value of hedging instruments recognised in OCI | \n\n\n | \n\n (5.5) | \n\n - | \n\n - | \n\n (5.5) | \n
| \n Reclassified from OCI to profit or loss | \n\n\n | \n\n 6.4 | \n\n - | \n\n - | \n\n 6.4 | \n
| \n Deferred tax related to hedging instruments | \n\n\n | \n\n (2.9) | \n\n - | \n\n - | \n\n (2.9) | \n
| \n Currency translation difference | \n\n \n | \n\n - | \n\n 58.4 | \n\n - | \n\n 58.4 | \n
| \n Cost of share-based option plan | \n\n\n | \n\n - | \n\n - | \n\n 6.0 | \n\n 6.0 | \n
| \n At 31 December 2023 | \n\n \n | \n\n 8.8 | \n\n 844.4 | \n\n 8.9 | \n\n 862.1 | \n
11 May 2023, the Board of Directors approved a dividend distribution of 1.267 NOK per share, equal to approximately NOK 50 million. The dividend was paid 1 June 2023.
23 August 2023, the Board of Directors approved a dividend distribution of 0.633 NOK per share, equal to approximately NOK 25 million. The dividend was paid 14 September 2023.
2 November 2023, the Board of Directors approved a dividend distribution of 0.633 NOK per share, equal to approximately NOK 25 million. The dividend was paid 23 November 2023.
NOTE 25Other reserves
| \n NOK million | \n\n Note | \n\n Cash flow hedges | \n\n Translation differences | \n\n Share-Option plan | \n\n Total | \n
| \n At 1 January 2022 | \n\n \n | \n\n - | \n\n 645.4 | \n\n - | \n\n 645.4 | \n
| \n Change in fair value of hedging instruments recognised in OCI | \n\n\n | \n\n 11.3 | \n\n - | \n\n - | \n\n 11.3 | \n
| \n Reclassified from OCI to profit or loss | \n\n\n | \n\n (0.5) | \n\n - | \n\n - | \n\n (0.5) | \n
| \n Currency translation difference | \n\n \n | \n\n - | \n\n 140.6 | \n\n - | \n\n 140.6 | \n
| \n Cost of share-based option plan | \n\n\n | \n\n - | \n\n - | \n\n 2.8 | \n\n 2.8 | \n
| \n At 31 December 2022 | \n\n \n | \n\n 10.8 | \n\n 786.0 | \n\n 2.8 | \n\n 799.7 | \n
| \n Change in fair value of hedging instruments recognised in OCI | \n\n\n | \n\n (5.5) | \n\n - | \n\n - | \n\n (5.5) | \n
| \n Reclassified from OCI to profit or loss | \n\n\n | \n\n 6.4 | \n\n - | \n\n - | \n\n 6.4 | \n
| \n Deferred tax related to hedging instruments | \n\n\n | \n\n (2.9) | \n\n - | \n\n - | \n\n (2.9) | \n
| \n Currency translation difference | \n\n \n | \n\n - | \n\n 58.4 | \n\n - | \n\n 58.4 | \n
| \n Cost of share-based option plan | \n\n\n | \n\n - | \n\n - | \n\n 6.0 | \n\n 6.0 | \n
| \n At 31 December 2023 | \n\n \n | \n\n 8.8 | \n\n 844.4 | \n\n 8.9 | \n\n 862.1 | \n
NOTE 26Securities and mortgages
| \n NOK million | \n\n 31.12.2023 | \n\n 31.12.2022 | \n
| \n Non current liabilities - contractual amounts | \n\n 1,100.0 | \n\n 1,100.0 | \n
| \n Current liabilities | \n\n 12.9 | \n\n 259.6 | \n
| \n Total | \n\n 1,112.9 | \n\n 1,359.6 | \n
As security for the loans, substantially all of the assets of Odfjell Technology Ltd., and its subsidiaries have been pledged in favour of the lenders.
| \n NOK million | \n\n 31.12.2023 | \n\n 31.12.2022 | \n
| \n Property, plant and equipment | \n\n 1,040.9 | \n\n 1,068.4 | \n
| \n Spare parts | \n\n 45.9 | \n\n 29.3 | \n
| \n Receivables and contract assets | \n\n 1,155.6 | \n\n 1,059.0 | \n
| \n Bank deposits | \n\n 658.8 | \n\n 560.1 | \n
| \n Total | \n\n 2,901.2 | \n\n 2,716.9 | \n
NOTE 27Contingencies
The Group may from time to time be subject to various legal proceedings, disputes and claims including regulatory discussions related to the Group\u2019s business, investments etc., of which the outcomes are subject to significant uncertainty. Management applies significant judgement when evaluating the degree of probability of an unfavourable outcome and the ability to make a reasonable estimate of the amount of loss. Unanticipated events or changes in these factors may require the Group to accrue for a matter that has not been previously accrued for because it was not considered probable, or a reasonable estimate could not be made, or increase or decrease an amount accrued for a matter in previous reporting periods.
A Group subsidiary is subject to challenges by HM Revenue and Customs (\u201cHMRC\u201d) on the historical application of National Insurance Contributions (\u201cNICs\u201d) to workers in the UK Continental Shelf. 1 October 2021, a decision was issued by HMRC against Odfjell Technology (UK) Ltd \"OT UK\u201d (Previously Odfjell Drilling (UK) Ltd) in respect of the historic application of NICs. OT UK has appealed against the decision and no payment has been made to HMRC pending the outcome of the first level appeal. This appeal has now been listed to take place towards the end of 2024. Management, taking into consideration advice from independent legal and tax specialists, believes that the most probable outcome is that no outflow of resources embodying economic benefits will be required to settle the obligation, and accordingly, no provision has been recognised. The potential exposure to OT UK in relation to NICs and interest should it be unsuccessful in defending its position is approximately NOK 327\u00a0million.
Refer to Note 8 Income Taxes for information about the Odfjell Offshore Ltd tax case.
NOTE 27Contingencies
The Group may from time to time be subject to various legal proceedings, disputes and claims including regulatory discussions related to the Group\u2019s business, investments etc., of which the outcomes are subject to significant uncertainty. Management applies significant judgement when evaluating the degree of probability of an unfavourable outcome and the ability to make a reasonable estimate of the amount of loss. Unanticipated events or changes in these factors may require the Group to accrue for a matter that has not been previously accrued for because it was not considered probable, or a reasonable estimate could not be made, or increase or decrease an amount accrued for a matter in previous reporting periods.
A Group subsidiary is subject to challenges by HM Revenue and Customs (\u201cHMRC\u201d) on the historical application of National Insurance Contributions (\u201cNICs\u201d) to workers in the UK Continental Shelf. 1 October 2021, a decision was issued by HMRC against Odfjell Technology (UK) Ltd \"OT UK\u201d (Previously Odfjell Drilling (UK) Ltd) in respect of the historic application of NICs. OT UK has appealed against the decision and no payment has been made to HMRC pending the outcome of the first level appeal. This appeal has now been listed to take place towards the end of 2024. Management, taking into consideration advice from independent legal and tax specialists, believes that the most probable outcome is that no outflow of resources embodying economic benefits will be required to settle the obligation, and accordingly, no provision has been recognised. The potential exposure to OT UK in relation to NICs and interest should it be unsuccessful in defending its position is approximately NOK 327\u00a0million.
Refer to Note 8 Income Taxes for information about the Odfjell Offshore Ltd tax case.
NOTE 28Commitments
Capital expenditure contracted for at the end of the reporting period but not yet incurred is as follows:
| \n NOK million | \n\n 31.12.2023 | \n\n 31.12.2022 | \n
| \n Well Service equipment | \n\n 146.5 | \n\n 88.3 | \n
| \n Total | \n\n 146.5 | \n\n 88.3 | \n
NOTE 27Contingencies
The Group may from time to time be subject to various legal proceedings, disputes and claims including regulatory discussions related to the Group\u2019s business, investments etc., of which the outcomes are subject to significant uncertainty. Management applies significant judgement when evaluating the degree of probability of an unfavourable outcome and the ability to make a reasonable estimate of the amount of loss. Unanticipated events or changes in these factors may require the Group to accrue for a matter that has not been previously accrued for because it was not considered probable, or a reasonable estimate could not be made, or increase or decrease an amount accrued for a matter in previous reporting periods.
A Group subsidiary is subject to challenges by HM Revenue and Customs (\u201cHMRC\u201d) on the historical application of National Insurance Contributions (\u201cNICs\u201d) to workers in the UK Continental Shelf. 1 October 2021, a decision was issued by HMRC against Odfjell Technology (UK) Ltd \"OT UK\u201d (Previously Odfjell Drilling (UK) Ltd) in respect of the historic application of NICs. OT UK has appealed against the decision and no payment has been made to HMRC pending the outcome of the first level appeal. This appeal has now been listed to take place towards the end of 2024. Management, taking into consideration advice from independent legal and tax specialists, believes that the most probable outcome is that no outflow of resources embodying economic benefits will be required to settle the obligation, and accordingly, no provision has been recognised. The potential exposure to OT UK in relation to NICs and interest should it be unsuccessful in defending its position is approximately NOK 327\u00a0million.
Refer to Note 8 Income Taxes for information about the Odfjell Offshore Ltd tax case.
A provision is recognised when an obligation exists (legal or constructive) as a result of a past event, it is probable that an economic settlement will be required as a consequence of the obligation, and a reliable estimate can be made of the amount of the obligation.
The best estimate of the expenditure required to settle the obligation is recognised as a provision. When the effect is material, the provision is discounted using a market based pre-tax discount rate.
Contingent liabilities and contingent assets are not recognised. Contingent liabilities are disclosed unless the possibility of an economic settlement as a consequence of the obligation is remote. Contingent assets are disclosed where an economic settlement as a consequence of the asset is probable.
The Group may from time to time be subject to various legal proceedings, disputes and claims including regulatory discussions related to the Group\u2019s business, investments etc., of which the outcomes are subject to significant uncertainty. Management applies significant judgement when evaluating the degree of probability of an unfavourable outcome and the ability to make a reasonable estimate of the amount of loss. Unanticipated events or changes in these factors may require the Group to accrue for a matter that has not been previously accrued for because it was not considered probable, or a reasonable estimate could not be made, or increase or decrease an amount accrued for a matter in previous reporting periods.
A provision is recognised when an obligation exists (legal or constructive) as a result of a past event, it is probable that an economic settlement will be required as a consequence of the obligation, and a reliable estimate can be made of the amount of the obligation.
The best estimate of the expenditure required to settle the obligation is recognised as a provision. When the effect is material, the provision is discounted using a market based pre-tax discount rate.
Contingent liabilities and contingent assets are not recognised. Contingent liabilities are disclosed unless the possibility of an economic settlement as a consequence of the obligation is remote. Contingent assets are disclosed where an economic settlement as a consequence of the asset is probable.
NOTE 28Commitments
Capital expenditure contracted for at the end of the reporting period but not yet incurred is as follows:
| \n NOK million | \n\n 31.12.2023 | \n\n 31.12.2022 | \n
| \n Well Service equipment | \n\n 146.5 | \n\n 88.3 | \n
| \n Total | \n\n 146.5 | \n\n 88.3 | \n
NOTE 29Subsidiaries
| \n Name of entity | \n\n Country of incorporation | \n\n Principal place of business | \n\n Functional currency | \n\n Ownership 2023 | \n\n Ownership 2022 | \n\n Principal activities | \n
| \n Odfjell Technology Invest Ltd. | \n\n Bermuda | \n\n United Arab Emirates | \n\n USD | \n\n 100 | \n\n 100 | \n\n Holding company / Well services equipment owner | \n
| \n Odfjell Well Services II Ltd. | \n\n Bermuda | \n\n Kurdistan | \n\n USD | \n\n 100 | \n\n 100 | \n\n Well services | \n
| \n Odfjell Services (Thailand) FLC | \n\n Thailand | \n\n Thailand | \n\n THB | \n\n 100 | \n\n 100 | \n\n Well services | \n
| \n Odfjell Well Services Cooperatief U.A. | \n\n Netherlands | \n\n Europe | \n\n EUR | \n\n 100 | \n\n 100 | \n\n Well services | \n
| \n Odfjell Well Services SRL | \n\n Romania | \n\n Europe | \n\n RON | \n\n 100 | \n\n 100 | \n\n Well services | \n
| \n Odfjell Arabia Drilling Services LLC | \n\n Saudi Arabia | \n\n Saudi Arabia | \n\n USD | \n\n 100 | \n\n 100 | \n\n Well services | \n
| \n Odfjell Well Service (UK) Ltd. | \n\n Scotland | \n\n UK | \n\n GBP | \n\n 100 | \n\n 100 | \n\n Well services | \n
| \n Odfjell Well Services Norway AS | \n\n Norway | \n\n Norway | \n\n NOK | \n\n 100 | \n\n 100 | \n\n Well services | \n
| \n Odfjell Well Services AS | \n\n Norway | \n\n Norway | \n\n NOK | \n\n 100 | \n\n 100 | \n\n Well services | \n
| \n Odfjell Energy (Malaysia) SDN BHD | \n\n Malaysia | \n\n Malaysia | \n\n MYR | \n\n 100 | \n\n 100 | \n\n Well services | \n
| \n Odfjell Well Services (Malaysia) SDN BHD | \n\n Malaysia | \n\n Malaysia | \n\n MYR | \n\n 100 | \n\n 100 | \n\n Well services | \n
| \n Odfjell Well Services (Namibia) (Pty) Ltd | \n\n Namibia | \n\n Namibia | \n\n USD | \n\n 100 | \n\n n/a | \n\n Well services | \n
| \n Odfjell Well Services Ltd. | \n\n British Virgin Islands | \n\n United Arab Emirates | \n\n USD | \n\n 100 | \n\n 100 | \n\n Well services | \n
| \n Odfjell Platform Drilling AS | \n\n Norway | \n\n Norway | \n\n NOK | \n\n 100 | \n\n 100 | \n\n Holding company / Operations, Projects & Engineering | \n
| \n Odfjell Operations AS | \n\n Norway | \n\n Norway | \n\n NOK | \n\n 100 | \n\n 100 | \n\n Operations | \n
| \n Odfjell Technology (UK) Ltd. | \n\n Scotland | \n\n UK | \n\n GBP | \n\n 100 | \n\n 100 | \n\n Operations | \n
| \n Odfjell Offshore Ltd. | \n\n Bermuda | \n\n Norway | \n\n NOK | \n\n 100 | \n\n 100 | \n\n Operations | \n
| \n Odfjell Engineering AS | \n\n Norway | \n\n Norway | \n\n NOK | \n\n 100 | \n\n 100 | \n\n Projects & Engineering | \n
| \n Odfjell Energy Crewing AS | \n\n Norway | \n\n Norway | \n\n NOK | \n\n 100 | \n\n 100 | \n\n Offshore crewing rig inspection and installation services | \n
| \n Odfjell Technology AS | \n\n Norway | \n\n Norway | \n\n NOK | \n\n 100 | \n\n 100 | \n\n Group Business Services | \n
| \n Odfjell Drilling Philippines Corporation | \n\n Philippines | \n\n Philippines | \n\n PHP | \n\n 100 | \n\n 100 | \n\n Group Business Services | \n
| \n Name of entity | \n\n Country of incorporation | \n\n Principal place of business | \n\n Functional currency | \n\n Ownership 2023 | \n\n Ownership 2022 | \n\n Principal activities | \n
| \n Odfjell Well Services Ltda | \n\n Brazil | \n\n Brazil | \n\n BRL | \n\n 100 | \n\n 100 | \n\n No activity | \n
| \n Odfjell Drilling Brasil Ltda. | \n\n Brazil | \n\n Brazil | \n\n BRL | \n\n 100 | \n\n 100 | \n\n No activity | \n
| \n Odfjell Gestao de Perfurancoes do Brasil Ltda. | \n\n Brazil | \n\n Brazil | \n\n BRL | \n\n 100 | \n\n 100 | \n\n No activity | \n
NOTE 29Subsidiaries
| \n Name of entity | \n\n Country of incorporation | \n\n Principal place of business | \n\n Functional currency | \n\n Ownership 2023 | \n\n Ownership 2022 | \n\n Principal activities | \n
| \n Odfjell Technology Invest Ltd. | \n\n Bermuda | \n\n United Arab Emirates | \n\n USD | \n\n 100 | \n\n 100 | \n\n Holding company / Well services equipment owner | \n
| \n Odfjell Well Services II Ltd. | \n\n Bermuda | \n\n Kurdistan | \n\n USD | \n\n 100 | \n\n 100 | \n\n Well services | \n
| \n Odfjell Services (Thailand) FLC | \n\n Thailand | \n\n Thailand | \n\n THB | \n\n 100 | \n\n 100 | \n\n Well services | \n
| \n Odfjell Well Services Cooperatief U.A. | \n\n Netherlands | \n\n Europe | \n\n EUR | \n\n 100 | \n\n 100 | \n\n Well services | \n
| \n Odfjell Well Services SRL | \n\n Romania | \n\n Europe | \n\n RON | \n\n 100 | \n\n 100 | \n\n Well services | \n
| \n Odfjell Arabia Drilling Services LLC | \n\n Saudi Arabia | \n\n Saudi Arabia | \n\n USD | \n\n 100 | \n\n 100 | \n\n Well services | \n
| \n Odfjell Well Service (UK) Ltd. | \n\n Scotland | \n\n UK | \n\n GBP | \n\n 100 | \n\n 100 | \n\n Well services | \n
| \n Odfjell Well Services Norway AS | \n\n Norway | \n\n Norway | \n\n NOK | \n\n 100 | \n\n 100 | \n\n Well services | \n
| \n Odfjell Well Services AS | \n\n Norway | \n\n Norway | \n\n NOK | \n\n 100 | \n\n 100 | \n\n Well services | \n
| \n Odfjell Energy (Malaysia) SDN BHD | \n\n Malaysia | \n\n Malaysia | \n\n MYR | \n\n 100 | \n\n 100 | \n\n Well services | \n
| \n Odfjell Well Services (Malaysia) SDN BHD | \n\n Malaysia | \n\n Malaysia | \n\n MYR | \n\n 100 | \n\n 100 | \n\n Well services | \n
| \n Odfjell Well Services (Namibia) (Pty) Ltd | \n\n Namibia | \n\n Namibia | \n\n USD | \n\n 100 | \n\n n/a | \n\n Well services | \n
| \n Odfjell Well Services Ltd. | \n\n British Virgin Islands | \n\n United Arab Emirates | \n\n USD | \n\n 100 | \n\n 100 | \n\n Well services | \n
| \n Odfjell Platform Drilling AS | \n\n Norway | \n\n Norway | \n\n NOK | \n\n 100 | \n\n 100 | \n\n Holding company / Operations, Projects & Engineering | \n
| \n Odfjell Operations AS | \n\n Norway | \n\n Norway | \n\n NOK | \n\n 100 | \n\n 100 | \n\n Operations | \n
| \n Odfjell Technology (UK) Ltd. | \n\n Scotland | \n\n UK | \n\n GBP | \n\n 100 | \n\n 100 | \n\n Operations | \n
| \n Odfjell Offshore Ltd. | \n\n Bermuda | \n\n Norway | \n\n NOK | \n\n 100 | \n\n 100 | \n\n Operations | \n
| \n Odfjell Engineering AS | \n\n Norway | \n\n Norway | \n\n NOK | \n\n 100 | \n\n 100 | \n\n Projects & Engineering | \n
| \n Odfjell Energy Crewing AS | \n\n Norway | \n\n Norway | \n\n NOK | \n\n 100 | \n\n 100 | \n\n Offshore crewing rig inspection and installation services | \n
| \n Odfjell Technology AS | \n\n Norway | \n\n Norway | \n\n NOK | \n\n 100 | \n\n 100 | \n\n Group Business Services | \n
| \n Odfjell Drilling Philippines Corporation | \n\n Philippines | \n\n Philippines | \n\n PHP | \n\n 100 | \n\n 100 | \n\n Group Business Services | \n
The Group's principal subsidiaries are set out in table above. Unless otherwise stated, they have share capital consisting solely of ordinary shares that are held directly by the Group, and the proportion of ownership interests held equals the voting rights held by the Group.
| \n Name of entity | \n\n Country of incorporation | \n\n Principal place of business | \n\n Functional currency | \n\n Ownership 2023 | \n\n Ownership 2022 | \n\n Principal activities | \n
| \n Odfjell Well Services Ltda | \n\n Brazil | \n\n Brazil | \n\n BRL | \n\n 100 | \n\n 100 | \n\n No activity | \n
| \n Odfjell Drilling Brasil Ltda. | \n\n Brazil | \n\n Brazil | \n\n BRL | \n\n 100 | \n\n 100 | \n\n No activity | \n
| \n Odfjell Gestao de Perfurancoes do Brasil Ltda. | \n\n Brazil | \n\n Brazil | \n\n BRL | \n\n 100 | \n\n 100 | \n\n No activity | \n
NOTE 30Investments in joint ventures and associates
Joint ventures are accounted for using the equity method. Under the equity method, the investment is initially recognised at cost, and the carrying amount is increased or decreased to recognise the investor's share of the profit or loss of the investee after the date of acquisition.
| \n Company | \n\n Acquisition/ formation date | \n\n Registered office | \n\n Principal place of business | \n\n Voting and owning interest 31.12.2023 | \n\n Voting and owning interest 31.12.2022 | \n
| \n Odfjell Oceanwind AS | \n\n 2020 | \n\n Oslo, Norway | \n\n Bergen, Norway | \n\n 21.2% | \n\n 21.1% | \n
| \n NOK million | \n\n 2023 | \n\n 2022 | \n
| \n Book value as at 1.1. | \n\n 50.0 | \n\n 4.3 | \n
| \n Share of profit after tax | \n\n 5.1 | \n\n (19.9) | \n
| \n Capital contributions * | \n\n 55.5 | \n\n 30.0 | \n
| \n Mandatory convertible loan * | \n\n (35.6) | \n\n 35.6 | \n
| \n Book value as at 31.12 | \n\n 75.0 | \n\n 50.0 | \n
| \n\n | \n||
| \n\n | \n
| \n NOK million | \n\n 2023 | \n\n 2022 | \n
| \n The company's share of equity | \n\n 61.7 | \n\n 1.0 | \n
| \n Goodwill | \n\n 13.4 | \n\n 13.4 | \n
| \n Mandatory convertible loan | \n\n - | \n\n 35.6 | \n
| \n Eliminations | \n\n (0.1) | \n\n - | \n
| \n Book value as at 31.12 | \n\n 75.0 | \n\n 50.0 | \n
Odfjell Oceanwind AS does not have observable market values in form of market price or similar.
Odfjell Oceanwind\u00a0is a provider of\u00a0designs,\u00a0technologies and solutions\u00a0for\u00a0floating offshore wind projects, develops projects based on these products and provides services to own and third party owned projects.\u00a0
| \n NOK million | \n\n 2023 | \n\n 2022 | \n
| \n Total revenue | \n\n 121.0 | \n\n 16.7 | \n
| \n Other gains and losses | \n\n 8.3 | \n\n - | \n
| \n Total operating expenses | \n\n (96.9) | \n\n (124.7) | \n
| \n Share of profit or loss from joint ventures | \n\n (22.1) | \n\n - | \n
| \n Net financial items | \n\n (0.1) | \n\n (0.3) | \n
| \n Net profit/(loss) | \n\n 10.3 | \n\n (108.3) | \n
| \n \n | \n\n \n | \n\n \n | \n
| \n Current assets | \n\n 258.8 | \n\n 70.4 | \n
| \n -whereof cash and cash equivalents | \n\n 248.1 | \n\n 65.5 | \n
| \n Non-current assets | \n\n 69.8 | \n\n - | \n
| \n Current liabilities | \n\n 37.8 | \n\n 65.7 | \n
| \n -whereof current financial liabilities | \n\n - | \n\n - | \n
| \n Non-current liabilities | \n\n - | \n\n - | \n
| \n Equity | \n\n 290.8 | \n\n 4.7 | \n
NOTE 30Investments in joint ventures and associates
Joint ventures are accounted for using the equity method. Under the equity method, the investment is initially recognised at cost, and the carrying amount is increased or decreased to recognise the investor's share of the profit or loss of the investee after the date of acquisition.
| \n Company | \n\n Acquisition/ formation date | \n\n Registered office | \n\n Principal place of business | \n\n Voting and owning interest 31.12.2023 | \n\n Voting and owning interest 31.12.2022 | \n
| \n Odfjell Oceanwind AS | \n\n 2020 | \n\n Oslo, Norway | \n\n Bergen, Norway | \n\n 21.2% | \n\n 21.1% | \n
| \n NOK million | \n\n 2023 | \n\n 2022 | \n
| \n Book value as at 1.1. | \n\n 50.0 | \n\n 4.3 | \n
| \n Share of profit after tax | \n\n 5.1 | \n\n (19.9) | \n
| \n Capital contributions * | \n\n 55.5 | \n\n 30.0 | \n
| \n Mandatory convertible loan * | \n\n (35.6) | \n\n 35.6 | \n
| \n Book value as at 31.12 | \n\n 75.0 | \n\n 50.0 | \n
| \n\n | \n||
| \n\n | \n
| \n NOK million | \n\n 2023 | \n\n 2022 | \n
| \n The company's share of equity | \n\n 61.7 | \n\n 1.0 | \n
| \n Goodwill | \n\n 13.4 | \n\n 13.4 | \n
| \n Mandatory convertible loan | \n\n - | \n\n 35.6 | \n
| \n Eliminations | \n\n (0.1) | \n\n - | \n
| \n Book value as at 31.12 | \n\n 75.0 | \n\n 50.0 | \n
Odfjell Oceanwind AS does not have observable market values in form of market price or similar.
Odfjell Oceanwind\u00a0is a provider of\u00a0designs,\u00a0technologies and solutions\u00a0for\u00a0floating offshore wind projects, develops projects based on these products and provides services to own and third party owned projects.\u00a0
| \n NOK million | \n\n 2023 | \n\n 2022 | \n
| \n Total revenue | \n\n 121.0 | \n\n 16.7 | \n
| \n Other gains and losses | \n\n 8.3 | \n\n - | \n
| \n Total operating expenses | \n\n (96.9) | \n\n (124.7) | \n
| \n Share of profit or loss from joint ventures | \n\n (22.1) | \n\n - | \n
| \n Net financial items | \n\n (0.1) | \n\n (0.3) | \n
| \n Net profit/(loss) | \n\n 10.3 | \n\n (108.3) | \n
| \n \n | \n\n \n | \n\n \n | \n
| \n Current assets | \n\n 258.8 | \n\n 70.4 | \n
| \n -whereof cash and cash equivalents | \n\n 248.1 | \n\n 65.5 | \n
| \n Non-current assets | \n\n 69.8 | \n\n - | \n
| \n Current liabilities | \n\n 37.8 | \n\n 65.7 | \n
| \n -whereof current financial liabilities | \n\n - | \n\n - | \n
| \n Non-current liabilities | \n\n - | \n\n - | \n
| \n Equity | \n\n 290.8 | \n\n 4.7 | \n
NOTE 30Investments in joint ventures and associates
| \n Company | \n\n Acquisition/ formation date | \n\n Registered office | \n\n Principal place of business | \n\n Voting and owning interest 31.12.2023 | \n\n Voting and owning interest 31.12.2022 | \n
| \n Odfjell Oceanwind AS | \n\n 2020 | \n\n Oslo, Norway | \n\n Bergen, Norway | \n\n 21.2% | \n\n 21.1% | \n
| \n NOK million | \n\n 2023 | \n\n 2022 | \n
| \n Book value as at 1.1. | \n\n 50.0 | \n\n 4.3 | \n
| \n Share of profit after tax | \n\n 5.1 | \n\n (19.9) | \n
| \n Capital contributions * | \n\n 55.5 | \n\n 30.0 | \n
| \n Mandatory convertible loan * | \n\n (35.6) | \n\n 35.6 | \n
| \n Book value as at 31.12 | \n\n 75.0 | \n\n 50.0 | \n
| \n\n | \n||
| \n\n | \n
| \n NOK million | \n\n 2023 | \n\n 2022 | \n
| \n The company's share of equity | \n\n 61.7 | \n\n 1.0 | \n
| \n Goodwill | \n\n 13.4 | \n\n 13.4 | \n
| \n Mandatory convertible loan | \n\n - | \n\n 35.6 | \n
| \n Eliminations | \n\n (0.1) | \n\n - | \n
| \n Book value as at 31.12 | \n\n 75.0 | \n\n 50.0 | \n
Odfjell Oceanwind AS does not have observable market values in form of market price or similar.
Odfjell Oceanwind\u00a0is a provider of\u00a0designs,\u00a0technologies and solutions\u00a0for\u00a0floating offshore wind projects, develops projects based on these products and provides services to own and third party owned projects.\u00a0
| \n NOK million | \n\n 2023 | \n\n 2022 | \n
| \n Total revenue | \n\n 121.0 | \n\n 16.7 | \n
| \n Other gains and losses | \n\n 8.3 | \n\n - | \n
| \n Total operating expenses | \n\n (96.9) | \n\n (124.7) | \n
| \n Share of profit or loss from joint ventures | \n\n (22.1) | \n\n - | \n
| \n Net financial items | \n\n (0.1) | \n\n (0.3) | \n
| \n Net profit/(loss) | \n\n 10.3 | \n\n (108.3) | \n
| \n \n | \n\n \n | \n\n \n | \n
| \n Current assets | \n\n 258.8 | \n\n 70.4 | \n
| \n -whereof cash and cash equivalents | \n\n 248.1 | \n\n 65.5 | \n
| \n Non-current assets | \n\n 69.8 | \n\n - | \n
| \n Current liabilities | \n\n 37.8 | \n\n 65.7 | \n
| \n -whereof current financial liabilities | \n\n - | \n\n - | \n
| \n Non-current liabilities | \n\n - | \n\n - | \n
| \n Equity | \n\n 290.8 | \n\n 4.7 | \n
NOTE 31Related parties - transactions, receivables, liabilities and commitments
| \n NOK million | \n\n Relation | \n\n 2023 | \n\n 2022 | \n
| \n Odfjell Oceanwind AS | \n\n Joint-venture | \n\n 31.9 | \n\n 30.5 | \n
| \n Companies within the Odfjell Drilling Ltd. Group | \n\n Related to main shareholder | \n\n 798.8 | \n\n 816.7 | \n
| \n Total sales of services to related parties | \n\n \n | \n\n 830.6 | \n\n 847.2 | \n
Sales of services include casing and rental services, engineering services, personnel hire, administration services and business support.
| \n NOK million | \n\n 2023 | \n\n 2022 | \n
| \n Well Services | \n\n 391.7 | \n\n 374.7 | \n
| \n Operations | \n\n 57.5 | \n\n 148.8 | \n
| \n Projects & Engineering | \n\n 128.2 | \n\n 133.2 | \n
| \n Corporate / GBS | \n\n 253.2 | \n\n 190.5 | \n
| \n Total operating revenue to related parties | \n\n 830.6 | \n\n 847.2 | \n
| \n NOK million | \n\n Relation | \n\n 2023 | \n\n 2022 | \n
| \n Odfjell Oceanwind AS | \n\n Joint-venture | \n\n 1.5 | \n\n - | \n
| \n Companies within the Odfjell Drilling Ltd. Group | \n\n Related to main shareholder | \n\n 21.3 | \n\n 35.0 | \n
| \n Total operating expenses to related parties | \n\n \n | \n\n 22.8 | \n\n 35.0 | \n
| \n NOK million | \n\n Relation | \n\n 2023 | \n\n 2022 | \n
| \n Odfjell Drilling Ltd. | \n\n Related to main shareholder | \n\n - | \n\n 0.8 | \n
| \n Odfjell Oceanwind AS | \n\n Joint-venture | \n\n 1.9 | \n\n 0.2 | \n
| \n Total interest income from related parties | \n\n \n | \n\n 1.9 | \n\n 1.0 | \n
| \n NOK million | \n\n Related party | \n\n Relation | \n\n 31.12.2023 | \n\n 31.12.2022 | \n
| \n Trade receivables | \n\n Companies in Odfjell Drilling Ltd Group | \n\n Related to main shareholder | \n\n 84.2 | \n\n 119.2 | \n
| \n Other current receivables | \n\n Companies in Odfjell Drilling Ltd Group | \n\n Related to main shareholder | \n\n 21.6 | \n\n 9.4 | \n
| \n Trade payables | \n\n Companies in Odfjell Drilling Ltd Group | \n\n Related to main shareholder | \n\n (1.5) | \n\n (3.8) | \n
| \n Other current payables | \n\n Companies in Odfjell Drilling Ltd Group | \n\n Related to main shareholder | \n\n (0.8) | \n\n (5.8) | \n
| \n Net current payables related parties | \n\n 103.6 | \n\n 119.1 | \n
Refer to Note 8 Income taxes for information about the non-current liability repayment to Odfjell Drilling Ltd.
Chair of the Board, Helene Odfjell, controls Odfjell Technology Holding Ltd., which owns 60.37% of the common shares.
Victor Vadaneaux (Director) controls 16,563 (0.04%) of the common shares, and Susanne Munch Thore (Director) controls 500 (0.00%) of the common shares in the company as per 31 December 2022
NOTE 32Remuneration to the Board of Directors, key executive management and auditor
| \n NOK thousands | \n\n \n | \n\n Salary | \n\n Bonus | \n\n Other | \n\n Pension premium | \n\n Expense | \n\n Total | \n
| \n Simen Lieungh | \n\n CEO - Odfjell Technology AS | \n\n 6,344 | \n\n 5,000 | \n\n 288 | \n\n 127 | \n\n 2,668 | \n\n 14,426 | \n
| \n Jone Torstensen | \n\n CFO - Odfjell Technology AS | \n\n 3,076 | \n\n 2,400 | \n\n 238 | \n\n 140 | \n\n 889 | \n\n 6,743 | \n
| \n Diane Stephen | \n\n General Manager - Odfjell Technology Ltd. | \n\n 1,093 | \n\n 260 | \n\n 59 | \n\n 53 | \n\n - | \n\n 1,465 | \n
| \n Total | \n\n \n | \n\n 10,513 | \n\n 7,660 | \n\n 585 | \n\n 320 | \n\n 3,557 | \n\n 22,634 | \n
The amounts listed as Salary, Bonus, and Other remuneration in the table above represent cash payments in 2023. Refer to the Executive Remuneration Report for bonuses earned in 2023.
Amounts listed as Pension premium and Expense share-based payments relates to the expense accounted for as personnel expenses in the respective year.
For details regarding incentive share option programme, refer to the Executive Remuneration Report and Note 33 - Share-based payments
| \n NOK thousands | \n\n \n | \n\n Salary | \n\n Bonus | \n\n Pension | \n\n Other | \n\n Expense | \n\n Total | \n
| \n Simen Lieungh | \n\n CEO from 29 March 2022 - Odfjell Technology AS | \n\n 4,018 | \n\n - | \n\n 99 | \n\n 175 | \n\n 1,367 | \n\n 5,659 | \n
| \n Jone Torstensen | \n\n CFO from 29 March 2022 - Odfjell Technology AS | \n\n 2,009 | \n\n - | \n\n 100 | \n\n 174 | \n\n 456 | \n\n 2,738 | \n
| \n Diane Stephen | \n\n General Manager - Odfjell Technology Ltd. | \n\n 689 | \n\n 119 | \n\n 36 | \n\n 40 | \n\n - | \n\n 883 | \n
| \n Total | \n\n \n | \n\n 6,715 | \n\n 119 | \n\n 235 | \n\n 389 | \n\n 1,822 | \n\n 9,280 | \n
| \n NOK thousands | \n\n 2023 | \n\n 2022 | \n
| \n Helene Odfjell | \n\n 800 | \n\n 206 | \n
| \n Susanne Munch Thore | \n\n 475 | \n\n 122 | \n
| \n Alasdair Shiach | \n\n 425 | \n\n 109 | \n
| \n Victor Vadaneaux | \n\n 375 | \n\n 97 | \n
| \n Total remuneration paid to Board of | \n\n 2,075 | \n\n 534 | \n
NOTE 32Remuneration to the Board of Directors, key executive management and auditor
| \n NOK thousands | \n\n \n | \n\n Salary | \n\n Bonus | \n\n Other | \n\n Pension premium | \n\n Expense | \n\n Total | \n
| \n Simen Lieungh | \n\n CEO - Odfjell Technology AS | \n\n 6,344 | \n\n 5,000 | \n\n 288 | \n\n 127 | \n\n 2,668 | \n\n 14,426 | \n
| \n Jone Torstensen | \n\n CFO - Odfjell Technology AS | \n\n 3,076 | \n\n 2,400 | \n\n 238 | \n\n 140 | \n\n 889 | \n\n 6,743 | \n
| \n Diane Stephen | \n\n General Manager - Odfjell Technology Ltd. | \n\n 1,093 | \n\n 260 | \n\n 59 | \n\n 53 | \n\n - | \n\n 1,465 | \n
| \n Total | \n\n \n | \n\n 10,513 | \n\n 7,660 | \n\n 585 | \n\n 320 | \n\n 3,557 | \n\n 22,634 | \n
The amounts listed as Salary, Bonus, and Other remuneration in the table above represent cash payments in 2023. Refer to the Executive Remuneration Report for bonuses earned in 2023.
Amounts listed as Pension premium and Expense share-based payments relates to the expense accounted for as personnel expenses in the respective year.
For details regarding incentive share option programme, refer to the Executive Remuneration Report and Note 33 - Share-based payments
| \n NOK thousands | \n\n \n | \n\n Salary | \n\n Bonus | \n\n Pension | \n\n Other | \n\n Expense | \n\n Total | \n
| \n Simen Lieungh | \n\n CEO from 29 March 2022 - Odfjell Technology AS | \n\n 4,018 | \n\n - | \n\n 99 | \n\n 175 | \n\n 1,367 | \n\n 5,659 | \n
| \n Jone Torstensen | \n\n CFO from 29 March 2022 - Odfjell Technology AS | \n\n 2,009 | \n\n - | \n\n 100 | \n\n 174 | \n\n 456 | \n\n 2,738 | \n
| \n Diane Stephen | \n\n General Manager - Odfjell Technology Ltd. | \n\n 689 | \n\n 119 | \n\n 36 | \n\n 40 | \n\n - | \n\n 883 | \n
| \n Total | \n\n \n | \n\n 6,715 | \n\n 119 | \n\n 235 | \n\n 389 | \n\n 1,822 | \n\n 9,280 | \n
| \n NOK thousands | \n\n 2023 | \n\n 2022 | \n
| \n Helene Odfjell | \n\n 800 | \n\n 206 | \n
| \n Susanne Munch Thore | \n\n 475 | \n\n 122 | \n
| \n Alasdair Shiach | \n\n 425 | \n\n 109 | \n
| \n Victor Vadaneaux | \n\n 375 | \n\n 97 | \n
| \n Total remuneration paid to Board of | \n\n 2,075 | \n\n 534 | \n
| \n NOK thousands | \n\n 2023 | \n\n 2022 | \n
| \n Audit | \n\n 2,546 | \n\n 1,794 | \n
| \n Other assurance services | \n\n - | \n\n - | \n
| \n Tax advisory fee | \n\n - | \n\n - | \n
| \n Fees for other services | \n\n 186 | \n\n 185 | \n
| \n Total remuneration to the Group's auditor | \n\n 2,732 | \n\n 1,978 | \n
NOTE 33Share-based payments
The company have a long term equity settled incentive share option programme, in which the employee receives remuneration in the form of share-based payment for services rendered.
The cost of equity-settled transactions is determined by the fair value at the date when the grant is made using an appropriate valuation model, further details below.
27 June 2022, the Company implemented a long term incentive plan. A total of 1,995,000 options have been awarded to certain of its employees at strike prices ranging from NOK 22.31 to NOK 24.13 per share.
| \n Overview of outstanding options: | \n\n 2023 | \n\n 2022 | \n
| \n Outstanding options 1.1 | \n\n 1,995,000 | \n\n - | \n
| \n Options granted | \n\n - | \n\n 1,995,000 | \n
| \n Options forfeited | \n\n - | \n\n - | \n
| \n Options exercised | \n\n - | \n\n - | \n
| \n Options expired | \n\n - | \n\n - | \n
| \n Outstanding options 31.12 | \n\n 1,995,000 | \n\n 1,995,000 | \n
| \n Of which exercisable | \n\n 665,000 | \n\n - | \n
The fair value of the options has been calculated using Black & Scholes option-pricing model. The average fair value of the options granted in 2022 is NOK 9.07. The total cost of the share option plan is calculated based on the fair value 1,995,000 options granted. The total cost equals approximately NOK 18 million and is recognised over the period until August 2025.
The calculations are based on the following assumptions:
\u25aaThe share price on the grant dates were set to the stock exchange price on the grant dates (27 June 2022, 15 August 2022 and 1 September 2022).
\u25aaThe strike price per options were a weighted average of NOK 22.75.
\u25aaThe expected price volatility of the company's shares was set to 55% based on historical volatility adjusted for expected changes.
\u25aaThe expiry date was set to 4 July 2025, 22 August 2025 and 8 September 2025.
\u25aaThe expected dividend yield was set to 0%.
\u25aaThe risk-free interest rate was set to 3.67%
The company have a long term equity settled incentive share option programme, in which the employee receives remuneration in the form of share-based payment for services rendered.
The cost of equity-settled transactions is determined by the fair value at the date when the grant is made using an appropriate valuation model, further details below.
NOTE 34Earnings per share
The basic earnings per share are calculated as the ratio of the profit for the year that is due to the shareholders of the parent divided by the weighted average number of common shares outstanding.
When calculating the diluted earnings per share, the profit that is attributable to the common shareholders of the parent and the weighted average number of common shares outstanding are adjusted for all the dilution effects relating to share options.
The Company has a share option plan for 1,995,000 common shares, see further description in Note 33 - Share-based payments.
| \n NOK million | \n\n 2023 | \n\n 2022 | \n
| \n Profit/(loss) due to owners of the parent | \n\n 344.2 | \n\n 253.0 | \n
| \n Diluted profit/(loss) for the period due to the holders of common shares | \n\n 344.2 | \n\n 253.0 | \n
| \n \n | \n\n 2023 | \n\n 2022 * | \n
| \n Weighted average number of common shares in issue | \n\n 39,463,867 | \n\n 39,463,867 | \n
| \n Effects of dilutive potential common shares: | \n\n \n | \n\n \n | \n
| \n Share option plan | \n\n 879,705 | \n\n - | \n
| \n Diluted average number of shares outstanding | \n\n 40,343,572 | \n\n 39,463,867 | \n
| \n\n | \n
| \n \n | \n\n 2023 | \n\n 2022 | \n
| \n Basic earnings per share (NOK) | \n\n 8.722 | \n\n 6.410 | \n
| \n Diluted earnings per share (NOK) | \n\n 8.532 | \n\n 6.410 | \n
The basic earnings per share are calculated as the ratio of the profit for the year that is due to the shareholders of the parent divided by the weighted average number of common shares outstanding.
When calculating the diluted earnings per share, the profit that is attributable to the common shareholders of the parent and the weighted average number of common shares outstanding are adjusted for all the dilution effects relating to share options.
NOTE 35Events after the reporting period