ANNUAL REPORT 2022
SAFETY &
SUPPORT AT SEA
CVR no. 60 69 88 13
OUR BUSINESS 4
MANAGEMENT REVIEW
CEO statement 6
Highlights 2022 8
Business performance 9
Key figures for the consolidated group 13
SIGNATURES
Management’s statement 15
Independent auditor’s report 16
FINANCIAL STATEMENTS
Statement of profit and loss 19
Statement of comprehensive income 19
Balance sheet 20
Statement of changes in equity – Group 21
Statement of changes in equity – Parent 22
Cash flow statement 23
Notes 24
COMPANY INFORMATION 48
CONTENTS
ESVAGT ANNUAL REPORT 2022
3
SOV / Total Fleet
Revenue growth 2022
Offshore Employees
LTI’s 2022
Onshore Employees
Rescued peopleBoat transfers
Walk-to-Work gangway transfers
9/43
+26%
+1, 20 0
0
+90
149247,271
337,975
OUR BUSINESS
ESVAGT was established in 1981 and today is a leading provider of
safety and support at sea for the offshore wind and oil & gas industries.
ESVAGT’s fleet comprises of 43 modern offshore
support vessels built to the best standards and oper-
ated by more than 1,200 professional crew members
all trained for safe and efficient operations in harsh
weather conditions.
The services ESVAGT offers comprise of Service
Operation Vessels (SOVs) supporting offshore wind
farm operators, and Emergency Response and Rescue
Vessels (ERRVs) working as stand by and service
vessels for offshore oil & gas companies.
CONTRIBUTION
IN 2022
Offshore Oil & Gas
50%
Offshore Wind
50%
4
ESVAGT ANNUAL REPORT 2022
CEO statement
2022 was an excellent year for ESVAGT. With 26%
revenue growth, we demonstrated the growth
potential of our business model. Future growth was
secured by signing the world’s first emission free
vessel with Ørsted as well as successfully entering
the US market in our joint venture with Crowley.
We also successfully re-financed the company at
attractive terms securing funding for further growth
within the offshore wind segment.
ESVAGT’s revenue
increased by 26%
year-on-year.
26%
CONTINUING GROWTH
-
IN TURBULENT CONDITIONS
During 2022 the geopolitical climate continued to be
unstable fueled by the ongoing war between Russia
and Ukraine and the threatening trade war between
US and China. Sanctions against Russia were leading
to shortage of oil and gas in Europe and energy prices
increased significantly across the world. Also, the
inflation and interest rates increased during second
half of 2022 impacting most of the world economies
negatively. ESVAGT managed however in these turbulent
conditions to deliver a very satisfying result and secure
a new seven-year loan at attractive terms. The loan was
secured through a consortium of leading international
banks and will allow ESVAGT to both re-financed its
existing debt and further grow the SOV business within
the renewable offshore wind segment.
Peter Lytzen
CEO, ESVAGT A/S
ESVAGT ANNUAL REPORT 2022
6
From an operational perspective 2022 was also a posi-
tive year without any serious incidents and with good
operational performance across the fleet. In the ERRV
segment the positive development seen in second half
of 2021 continued with high utilization and improving
day-rates. Consequently, it was decided to take advan-
tage of the market and re-activate ESVAGT CONNECTOR
having been in lay-up in Grenå, Denmark for the last
two years. The re-activation was executed as planned
and ESVAGT CONNECTOR is now actively trading within
the offshore spot market.
The ERRV vessels on long contracts were all extended
for the next couple of years providing a high degree of
visibility, both operationally and financially. This Includes
an extension of ESVAGT BERGEN, ESVAGT STAVANGER,
ESVAGT AURORA, ESVAGT SERVER and ESVAGT
OBSERVER.
The SOV fleet performed well during 2022 and all
SOV’s were deployed on long contracts, except ESVAGT
FROUDE which we instead managed to secure good
coverage for in the busy SOV spot market with very
limited idle time in between the contracts.
In the US our joint effort with Crowley entering the
Jones Act regulated SOV market paid-off and a 15-year
firm contract with SiemensGamesa was success-
fully secured for a state-of-the-art SOV servicing the
Dominion operated Energy’s Coastal Offshore Wind
Park, situated off the coast of Virginia. With a solid
long-term contract the partnership has created an ideal
platform for further growth in the US and jointly we will
in the future bid for more SOV projects.
The journey towards zero CO
2
emission by 2050
continued with construction of the first e-methanol
fueled SOV in the world. The SOV will service Ørsted’s
Hornsea Wind Park project in the UK and start opera-
tions end of 2024.
Tests onboard existing vessels using biofuel as an
alternative to conventional marine fuel were successfully
carried out during 2022 and a framework agreement has
been made with a key supplier of co-processed marine
fuel which can be offered ESVAGT’s customers as an
environmentally friendly alternative to the conventional
marine fuel.
In the US our joint effort with Crowley entering the Jones Act regulated SOV market
paid-off and a 15-year firm contract with SiemensGamesa was successfully secured
for a state-of-the-art SOV servicing the Dominion operated Energy’s Coastal Offshore
Wind Park, situated off the coast of Virginia. With a solid long-term contract the part-
nership has created an ideal platform for further growth in the US and jointly we are
expecting to bid for more SOV projects in the near-term future.”
In Esbjerg, an agreement has been made with the
harbor authorities to conduct tests in 2023 using
mobile hydrogen fuel cells skids for the supply of shore
power to the vessels during port call. If successful, the
new technology can be used as an alternative to the
domestic power grid and thereby eliminate all CO
2
emis-
sions when the vessels are at port.
Looking ahead our predictions for 2023 continue to
be positive with expected high activity levels in the oil
and gas segment (ERRV’s) and continued growth in the
offshore wind segment (SOV’s). Both activities driven by
a short term need for replacing the oil and gas supplies
from Russia with alternative sources – like the North
Sea - and longer term, by replacing fossil fuels with
renewable alternatives, like offshore wind.
Peter Lytzen
CEO, ESVAGT A/S
“
ESVAGT ANNUAL REPORT 2022
7
ESVAGT CORNELIA rescues an exhausted
Norwegian sailor
The crew at ‘ESVAGT Cornelia’ responded a
distress call from SOLA to check on a Norwegian
sailor in the Balder field in the Norwegian
Sector. Great work from the crew, who reacted
on the emergency call. Good training in rapid
response, strong communication on board, FRB
evacuation, hospital examination of distressed
and mental first aid, towing and subsequent
helicopter evacuation. Really good collaboration
and accurate reporting ended a great effort.
Bravo Zulu, ‘ESVAGT Cornelia’!
Vestas appoints ESVAGT best offshore partner
ESVAGT is delighted and honored to be
presented with the ‘Best Partner for Offshore’
by Vestas Northern and Central Europe at the
VESTAS - NCE Regional Supplier Day 2023 in
Hamburg.
‘Best Partner for Offshore’ awards achievement
related to ‘Quality, Safety, Performance and
Competitiveness’, all parameters very close to the
ESVAGT heart and DNA.
New ESVAGT vessel provides fewer
emissions and more streamlined logistics for
TotalEnergies’ North Sea activities
The agreement, which is commercially histori-
cally large for ESVAGT, rethinks the operational
and logistical infrastructure in the North Sea.
Specifically, this means that compared to before,
more functions and tasks are concentrated on
fewer vessels. That part of the new infrastruc-
ture alone will lead to fewer emissions from the
logistical part of the North Sea operation.
ESVAGT’s US Joint Venture, CREST, awarded
first major offshore contract in the US for
Coastal Virginia Offshore Wind.
Crowley, a privately held, U.S.-owned and
-operated maritime, energy and logistics
solutions company and ESVAGT, will jointly
build and operate a Service Operation Vessel
(SOV) under a long-term charter with Siemens
Gamesa Renewable Energy. The SOV will
feature state-of the art technologies to support
the U.S. clean wind energy market.
Søren Karas, CSCO of ESVAGT:
“We are excited to bring our decades
of offshore wind experience to bear in
a new market through our CREST JV
with the premier Jones Act operator,
Crowley. Together, we can offer an
unparalleled solution to the wind
industry and are delighted that
Siemens Gamesa have recognized this.”
ESVAGT part of the consortium behind project Greensand where
CO
2
is stored in the underground of the North Sea
With ESVAGT’s 40 years of experience operating at the North Sea, we can provide our high
level of Support and Safety at sea in the Project Greensand. ESVAGT furthermore providing
the platform for the seismic measurements of the CO
2
storage possibilities together with the consor-
tium partners, before injection and storage of the CO
2
can be made in the Danish underground. Project
Greensand is the most mature project for storage of CO
2
in the North Sea with the possibility of storing up
to 1.5 million tonnes of CO
2
per year in 2025/2026 and up to 8 million tonnes of CO
2
per year in 2030.
HIGHLIGHTS 2022
See more
See more
See more
See more
See more
8
ESVAGT ANNUAL REPORT 2022
BUSINESS PERFORMANCE
ESVAGT delivers safety and support at sea making the sea
a safe place to work. This is being carried out with our
efficient fleet of Service Operation Vessels (SOVs) which
provides services for the Offshore Wind industry and with our
Emergency Response and Rescue Vessels (ERRVs) which is
servicing the drilling rigs and production platforms of the Oil
and Gas production.
EXPECTATIONS FOR 2023
ESVAGT look into a positive and continuing growth within
the offshore market which leads to a fully utilized fleet
and good market conditions. The human and political
will to develop more renewable energy and secure more
alternative energy and gas supply from non-belligerent
or oppressive regimes drives the demand for ESVAGTS
two core businesses.
Despite the exceptional high inflation and interest levels
and without any planned fleet expansion, ESVAGT still
expects to deliver a solid result in 2023. ESVAGT can
thereby focus on optimizing the operational and financial
setup and prepare for the growth plans already initiated
and partly secured.
Wind
The existing SOV fleet is primarily on long-term contracts
and operates with stable and safe services for all our
clients. This gives ESVAGT a well-established position in
the European offshore wind sector, which again gives a
good foundation for future expansion of the SOV activi-
ties in Europe and emerging markets. This already proven
by the two contracted SOV’s under construction and
several ongoing tender-processes throughout the year.
Especially having secured the first long term contract
in the US with our highly reputed joint venture partner
Crowley, gives ESVAGT a good position to expand with
the fast-growing offshore wind business in US.
Oil and Gas
The geopolitical conditions have increased the demand
for Oil and Gas from other sources than Russia, which
have intensified and sustained the activity levels in the
ESVAGT ANNUAL REPORT 2022
9
However, ESVAGT’s proved to be quite resistant and
well-structured to maneuver in these conditions and
managed to achieve a highly satisficing result for 2022.
The refinancing process came of course with a cost, but was
negotiated and executed in due time and gives ESVAGT
good conditions for the continuing growth. A journey which
already manifested by to new pioneering contracts signed
in 2022. One will be the first e-methanol fueled SOV to
servicing Orsted on a 15-year contract and one will be the
first SOV in our newly established joint venture with Crowley
in the US, servicing SiemensGamesa on a 15-year contract.
North Sea. This provides good market conditions for
our existing and efficient ERRV fleet, which serves a
wide range of clients and services. The fleet operates
with many years of experience and several clients have
renewed or extended the contracts, this together with a
positive outlook in the spot market secures the business
and margins for the coming years.
ACTIVITY FOR 2022
Result for the year
The Revenue for ESVAGT in 2022 was MDKK 1,364 against
MDKK 1,081 in 2021. This generated a net result for the
year of MDKK -16 compared to a net result of MDKK 151 in
2021. Revenue increased especially due to full year impact
from new vessels, re-activation, modification and fast recov-
ering market rates in the ERRV segment. Net result highly
impacted by the extraordinary cost from the refinancing of
the loan package complaint to the future growth plans.
Even though operating in very turbulent markets, highly
impacted by macro and political changes the EBITDA is still
in line with the predictions given for the year. The Covid-19
still impacted the operation at sea and the inflation and high
interest rates push the cost levels to extraordinary heights.
Strong operational
performance
0.55% Unplanned
breakdown – against KPI
of 0.90%
0.55%
ESVAGT ANNUAL REPORT 2022
1010
Market and activities
The whole fleet have been positively utilized and especially
the ERRV market have recovered well and benefited from
the radical changes in the geopolitical situations in Europe
which have had derivative impacts on the increasing and
changing demand for energy.
Wind
The wind market continuously evolves in a positive
trend as several offshore wind projects is ongoing and
more is announced to be developed the coming years.
The existing SOV fleet is more or less all on long-term
contracts with steady performance and a minor delayed
escalation impact from the high inflation.
Oil and Gas
The North Sea ERRV market continuously improving and
especially spot markets are highly attractive given the
renewed focus on oil and gas supply. This have resulted
in several contract renewals, re-activation of a vessel
in lay-up and chartered in tonnage to meet the high
demands in the market.
Development activities
During 2022 ESVAGT held expenses of MDKK 4.0 (2021:
MDKK 2.9) mainly relating to IT projects.
Financial risks
A consolidated overview of the ESVAGT Groups financial
risks is included in note 25.
Sustainability
ESVAGT’s constant strive for more sustainable solutions
strengthen by contract signing of the first ever CO
2
neutral SOV new build to be delivered in 2024.
Saved lives since
early 1980s
149
ESVAGT ANNUAL REPORT 2022
11
Statutory statement regarding environment,
social issues and governance in accordance
with section 99a of the Danish Financial
Statements Act
For our statutory statement regarding environment, social
issues and governance, we refer to our 2022 Sustainability
& ESG Report.
Statutory statement regarding the
underrepresented gender in accordance
with section 99b of the Danish Financial
Statements Act
For our statutory statement regarding the underrepresented
gender, we refer to our 2022 Sustainability & ESG Report.
Statutory statement regarding policy on
data ethics in accordance with section 99d of
the Danish Financial Statements Act
For our statutory statement regarding the policy on data
ethics policy can be found here.
SUSTAINABILITY
& ESG REPORT
2022
Read our report here
SUSTAINABILITY & ESG REPORT 2022
DECARBONISING
OFFSHORE
SUPPORT
COMPAN Y NO. / CVR NO. 60698813
ESVAGT ANNUAL REPORT 2022
12
KEY FIGURES FOR THE
CONSOLIDATED GROUP
5 YEARS KEY FIGURES
TDKK 2022 2021 2020 2019* 2018
Profit and loss accounts
Net revenue 1,364,473 1,080,683 976,788 1,028,568 985,695
Profit before financial items 190,311 239,219 -161,390 89,964 95,011
Net financials -205,993 -87,669 -84,112 -81,748 -93,745
Profit for the year -16,159 150,709 -246,140 14,353 1,012
Balance sheet
Total assets 5,514,795 5,009,039 4,199,245 4,190,808 4,153,013
Equity 2,277,111 2,150,584 1,752,137 1,762,940 1,740,471
Investment in property, plant and
equipment 502,402 670,122 405,926 403,263 607,285
Key ratios
Profit margin % 14% 22% -17% 9% 10%
Return on equity % -1% 8% -14% 1% 0%
Equity ratio % 41% 43% 42% 42% 42%
* The company has adopted IFRS 16 as per 1.1.2019, the comparative figures for 2018 have not been adjusted.
The key figures and financial ratios have been prepared on a consolidated basis. The financial ratios have been calculated in accordance
with the recommendations of the Association of Danish Financial Analysts.
ESVAGT Njord
ESVAGT Schelde
ESVAGT HavelokESVAGT Alba
ESVAGT Mercator ESVAGT Innovator
ESVAGT Dana
New build (US) Hull-793
ESVAGT Albert Betz
New build (EU) Hull-1094
NEW BUILD VESSELS FROM 2016 TO 2022
NEW BUILD VESSELS UNDER CONSTRUCTION
ESVAGT DANA
OPTIONAL RESCUE ZONE
ESVAGT DANA
ESBJERG
ESVAGT MERCATOR
ESVAGT MERCATOR
ESBEJRG
ESVAGT INNOVATOR
ESBJERG
ESVAGT INNOVATOR
ESVAGT NJORD
ESBJRG
ESVAGT NJORD
ESVAGT SCHELDE
ESVAGT SCHELDE
ESBJERG
ESVAGT HAVELOK
ESVAGT HAVELOK
ESBJERG
ESVAGT ALBA
ESVAGT ALBA
ESBJERG
ESVAGT ALBERT BETZ
ESVAGT ALBERT BETZ
ESBJERG
13
ESVAGT ANNUAL REPORT 2022
Executive Management
Board of Directors
ESVAGT ANNUAL REPORT 2022
15
INDEPENDENT AUDITOR’S REPORT
ESVAGT ANNUAL REPORT 2022
16
CVR No 33 77 12 31
mne30141 mne32115
ESVAGT ANNUAL REPORT 2022
17
GROUP PARENT
TDKK Note 2022 2021 2022 2021
Net revenue 3 1,364,473 1,080,683 1,361,219 1,077,894
Other income 4,593 724 4,593 724
Other operating expenses -460,539 -332,046 -460,090 -331,764
Gross profit 908,527 749,360 905,722 746,854
Staff expenses 4 -435,044 -384,578 -433,385 -382,946
Share of profit/loss in subsidiaries 0 0 975 684
Share of profit/loss in joint ventures 22 -8 -6 -8 -6
Profit before special items, depreciation,
amortization and financial items etc. 473,475 364,776 473,304 364,586
Special items 5 -67 -45,566 -67 -45,566
Profit before depreciation, amorti-
sation and financial items etc. 473,408 319,210 473,237 319,021
Amortisation, depreciation and impair-
ment losses 6 -283,096 -79,992 -283,096 -79,992
Profit/loss before financial items 190,311 239,219 190,140 239,029
Financial income 7 46,269 7,704 46,216 7,782
Financial expenses 8 -252,263 -95,372 -252,290 -95,403
Profit/loss before income tax -15,682 151,550 -15,934 151,409
Tax 9 -477 -841 -220 -694
Profit/loss for the year -16,159 150,709 -16,154 150,715
Profit is attributable to:
Non-controlling interests -6 -6 0 0
Owners of ESVAGT A/S -16,154 150,715 -16,154 150,715
GROUP PARENT
TDKK Note 2022 2021 2022 2021
Profit for the year -16,159 150,709 -16,154 150,715
Other comprehensive income
Items that may be subsequently
reclassified to profit or loss
Exchange diff. on translation of subsidiaries -792 919 -792 919
Cash flow hedges:
Value adjustment of hedges for the year 5,136 -6,891 5,136 -6,891
Interest rate swaps 127,818 0 127,818 0
Reclassified to income statement
- revenue 12,240 1,072 12,240 1,072
- financial expenses -1,729 3,683 -1,729 3,683
Reclassified to non-current assets 0 14,210 0 14,210
Other comprehensive income for the year,
net of tax 142,672 12,994 142,672 12,994
Total comprehensive income for the year 126,513 163,702 126,518 163,708
Profit is attributable to:
Non-controlling interests -6 -6 0 0
Owners of ESVAGT A/S 126,518 163,708 126,518 163,708
STATEMENT OF COMPREHENSIVE INCOME
Consolidated and parent company financial statements
STATEMENT OF PROFIT AND LOSS
19
ESVAGT ANNUAL REPORT 2022
GROUP PARENT
TDKK Note 2022 2021 2022 2021
Development projects 5,754 8,887 5,754 8,887
Intangible assets 10 5,754 8,887 5,754 8,887
Vessels 11 4,311,979 4,187,745 4,311,979 4,187,745
Other operating equipment and
fixtures 11 11,984 995 11,984 995
Buildings on leased land 11 35,114 37,651 35,114 37,651
Prepayments for tangible assets 11 199,396 89,071 199,396 89,071
Right-of-use assets 18 247,399 255,178 247,399 255,178
Tangible assets 4,805,872 4,570,641 4,805,872 4,570,641
Investment in subsidiaries 0 0 14,642 14,430
Investment in joint ventures 22 0 0 0 0
Investments in other entities 0 0 14,642 14,430
Total non-current assets 4,811,626 4,579,529 4,826,267 4,593,959
Bunker oil and other consumables 13 24,457 16,199 24,457 16,199
Inventories 24,457 16,199 24,457 16,199
Trade receivables 14 198,367 157,825 153,158 129,462
Receivables from parent company 5,874 5,148 5,874 5,148
Receivables from Group companies 29 0 117,957 40,816
Derivatives and interest rate swaps 132,540 0 132,540 0
Other receivables 12,761 9,712 12,749 9,679
Prepayments 11,196 11,267 11,166 11,262
Receivables 360,767 183,952 433,446 196,367
Cash and cash equivalents 317,945 229,359 231,935 204,397
Total current assets 703,169 429,511 689,838 416,961
Total assets 5,514,795 5,009,039 5,516,105 5,010,920
GROUP PARENT
TDKK Note 2022 2021 2022 2021
Share capital 15 2,200 2,200 2,200 2,200
Other reserves 130,724 -11,948 136,478 -3,061
Retained earnings 2,143,928 2,160,068 2,138,174 2,151,180
Equity attributable to owners of ESVAGT 2,276,852 2,150,320 2,276,852 2,150,320
Non-controlling interests 259 265 0 0
Total equity 2,277,111 2,150,584 2,276,852 2,150,320
Deferred tax liabilities 16 0 8 0 0
Bank and credit institutions, non current 17 2,829,283 1,737,750 2,829,283 1,737,750
Lease liabilities, non current 18 180,118 220,720 180,118 220,720
Other non current liabilities 1,937 2,690 1,937 2,690
Derivatives, non current 20 0 1,255 0 1,255
Total non-current liabilities 3,011,338 1,962,423 3,011,338 1,962,415
Bank and credit institutions, current 17 0 711,450 0 711,450
Lease liabilities, current 18 43,714 37,008 43,714 37,008
Received prepayments 11,164 11,682 11,164 11,682
Trade payables 87,078 73,419 87,029 73,380
Payables to Group companies 0 0 1,675 2,012
Income tax liabilities 764 494 693 675
Other payables 83,626 51,802 83,641 51,803
Derivatives, current 20 0 10,177 0 10,177
Total current liabilities 226,346 896,032 227,915 898,187
Total liabilities 3,237,684 2,858,454 3,239,253 2,860,602
Total equity and liabilities 5,514,795 5,009,039 5,516,105 5,010,920
LIABILITIES
Consolidated and parent company financial statements
BALANCE SHEET
-
ASSETS
20
ESVAGT ANNUAL REPORT 2022
GROUP
TDKK Share Capital
Reserve for
Foreign Currency
Translation
Cash Flow
Hedges
Retained
Earnings Total
Non-Controlling
Interests Total Equity
Equity at 01.01.2021 2,100 -1.477 -23,465 1,774,708 1,751,866 271 1,752,137
Profit for the year 0 0 0 150,715 150,715 -6 150,709
Other comprehensive income 0 919 12,075 0 12,993 0 12,993
Total comprehensive income for the year 0 919 12,075 150,715 163,708 -6 163,702
Transactions with owners in their capacity as owners
Dividends provided for or paid
Capital increase 100 0 0 199,900 200,000 0 200,000
Long term incentive scheme 0 0 0 34,745 34,745 0 34,745
Equity at 31.12.2021 2,200 -558 -11,390 2,160,068 2,150,320 265 2,150,584
Profit for the year 0 0 0 -16,154 -16,154 -6 -16,159
Exchange diff. on translation of subsidiaries 0 -792 0 0 -792 0 -792
Interest rate swaps 0 0 127,818 0 127,818 0 127,818
Value adjustment of hedges for the year 0 0 5,136 0 5,136 0 5,136
Reclassified to income statement
- revenue 0 0 12,240 0 12,240 0 12,240
- financial expenses 0 0 -1,729 0 -1,729 0 -1,729
Reclassified to non-current assets 0 0 0 0 0 0 0
Total comprehensive income for the year 0 -792 143,464 -16,154 126,518 -6 126,513
Transactions with owners in their capacity as owners
Group subsidy 0 0 0 14 14 0 14
Equity at 31.12.2022 2,200 -1,350 132,074 2,143,928 2,276,852 259 2,277,111
Consolidated and parent company financial statements
STATEMENT OF CHANGES IN EQUITY
21
ESVAGT ANNUAL REPORT 2022
PARENT
TDKK Share Capital
Reserve for
Foreign Currency
Translation
Cash Flow
Hedges
Development
Cost Reserve
Retained
Earnings Total Equity
Equity at 01.01.2021 2,100 -1,476 -23,464 9,671 1,765,036 1,751,866
Profit for the year 0 0 0 -784 151,499 150,715
Other comprehensive income 0 919 12,074 0 0 12,994
Total comprehensive income for the year 0 919 12,074 -784 151,499 163,708
Transactions with owners in their capacity as owners
Capital increase 100 0 0 0 199,900 200,000
Long term incentive schemes 0 0 0 0 34,745 34,745
Equity at 31.12.2021 2,200 -558 -11,390 8,887 2,151,180 2,150,320
Profit for the year 0 0 0 -3,133 -13,020 -16,154
Exchange diff. on translation of subsidiaries 0 -792 0 0 0 -792
Interest rate swaps 0 0 127,818 0 0 127,818
Value adjustment of hedges for the year 0 0 5,136 0 0 5,136
Reclassified to income statement 0
- revenue 0 0 12,240 0 0 12,240
- financial expenses 0 0 -1,729 0 0 -1,729
Reclassified to non-current assets 0 0 0 0 0 0
Total comprehensive income for the year 0 -792 143,464 -3,133 -13,020 126,518
Transactions with owners in their capacity as owners
Group subsidy 0 0 0 0 14 14
Equity at 31.12.2022 2,200 -1,351 132,075 5,754 2,138,175 2,276,852
Consolidated and parent company financial statements
STATEMENT OF CHANGES IN EQUITY
22
ESVAGT ANNUAL REPORT 2022
GROUP PARENT
TDKK Note 2022 2021 2022 2021
Profit before depreciation, amortisa-
tion and financial items etc. 473,408 319,210 473,237 319,021
Other expenses -4,151 -2 -4,151 -2
Long Term Incentive Scheme 0 34,745 0 34,745
Adjustment for non-cash transactions 0 59 0 59
Change in working capital 24 -26,276 -26,563 -87,274 -30,348
Share of profit/loss in subsidiaries 0 0 -975 -684
Share of profit/loss in joint ventures 8 6 8 6
Cash flows from operating activities
before financial income and expenses 442,989 327,455 380,845 322,797
Financial income received 1,323 102 1,354 102
Financial expenses paid -285,495 -98,350 -285,519 -98,380
Income taxes paid -224 -697 -202 -269
Net cash flow from operating
activities 158,592 228,510 96,478 224,250
GROUP PARENT
TDKK Note 2022 2021 2022 2021
Payments for intangible assets and
property, plant and equipment -501,423 -662,884 -501,423 -662,883
Sale of intangible assets and property,
plant and equipment 4,402 2 4,402 2
Net cash flow from investing activities -497,021 -662,882 -497,021 -662,881
Proceeds from loans from credit
institutions 479,269 150,000 479,269 150,000
Principle element of lease payments -43,817 -17,966 -43,817 -17,966
Working capital contribution 0 6,695 0 6,695
Share Capital and Share Premium paid 14 200,000 0 200,000
Cash flow from financing activities 435,466 338,729 435,452 338,729
Net cash flow for the year 97,037 -95,643 34,909 -99,904
Effects of exchange rate changes on
cash and cash equivalents -8,451 8,986 -7,370 8,003
Cash and cash equivalents, beginning
of the year 229,359 316,016 204,397 296,298
Cash and cash equivalents, end of
the year 317,946 229,359 231,935 204,397
Consolidated and parent company financial statements
CASH FLOW STATEMENT
23
ESVAGT ANNUAL REPORT 2022
1. Accounting policies
2. Critical accounting estimates and judgements
3. Revenue
4. Staff expenses
5. Special items
6. Amortization, depreciation and impairment losses
7. Financial income
8. Financial expenses
9. Tax
10. Intangible assets
11. Property, plant and equipment
12. Financial assets and liabilities
13. Inventories
14. Trade receivables
15. Share capital
16. Deferred tax
INDEX OF NOTES
17. Bank and credit institutions
18. Leasing
19. Fee to the statutory auditors
20. Derivative financial instruments
21. Related parties
22. Investment in joint ventures
23. Contingent liabilities
24. Cash flow statement
25. Financial risk management
26. Events after the balance sheet date
27. Composition of the group
24
ESVAGT ANNUAL REPORT 2022
The Annual Report for the period 1 January - 31 December 2022 comprise the consolidated financial state-
ment of the parent company ESVAGT A/S and subsidiaries controlled by the parent company (the group)
and the separate financial statements of the parent company and have been prepared in accordance with
the International Financial Reporting Standards (IFRS) as adopted by the EU and further requirements in
the Danish Financial Statements Act. The annual report has been approved by the Board of Directors at its
meeting on 26 April 2023.
The annual report will be presented to the shareholders of ESVAGT A/S for approval at the annual General
Meeting.
Measurement basis
The consolidated and separate financial statements have been prepared on the historical cost basis except
for derivative financial instruments which are measured at fair value.
New and amended standards adopted by the group
The group has applied the following standards and amendments for the first time for their annual reporting
period commencing 1 January 2022:
• Property, Plant and Equipment: Proceeds before Intended Use – Amendments to IAS 16
• Onerous Contracts – Cost of Fulfilling a Contract – Amendments to IAS 37
• Annual Improvements to IFRS Standards 2018-2020, and
• Reference to the Conceptual Framework – Amendments to IFRS 3.
The amendments listed above did not have any material impact on the amounts recognized in prior periods
and are not expected to significantly affect the current or future periods.
New standards and interpretations not yet adopted
Certain new accounting standard and interpretations have been published that are not mandatory for 31
December 2022 reporting periods and have not been early adopted by the group. These standards are
not expected to have a material impact on the group in the current or future periods and on foreseeable
transactions.
Basis of consolidation
Subsidiaries are all entities over which the group has control. The group controls an entity when the group is
exposed to, or has rights to, variable returns from its involvement with the entity and has the ability to affect
those returns through its power to direct the activities of the entity. Subsidiaries are fully consolidated from
the date on which control is transferred to the group. They are deconsolidated from the date that control
ceases.
Consolidation is performed by summarizing the financial statements of the parent company and its subsid-
iaries which have been prepared in accordance with ESVAGT A/S accounting policies. On consolidation,
elimination is made of intra-group income and costs, shareholdings, intra-group balances and dividend and
realized and unrealized profits or losses on transactions between the consolidated companies.
Non-controlling interests’ share of profit/loss for the year and of equity in subsidiaries are included as part of
ESVAGT A/S profit and equity respectively but shown as separate items.
Foreign currency translation
Functional and presentation currency
Items in the financial statements of each of the reporting companies of the Group are measured in the
currency of the primary economic environment in which the company operates (the functional currency).
The functional currency of the Parent company, ESVAGT A/S is DKK.
The financial statements are presented in Danish Kroner (DKK). The financial statements have been rounded
to the nearest thousand.
Transactions and balances
Foreign currency transactions are translated into the functional currency using the exchange rates at the
dates of the transactions. Foreign exchange gains and losses resulting from the settlement of such transac-
tions and from the translation of monetary assets and liabilities denominated in foreign currencies at year
end exchange rates are generally recognized in profit or loss.
Foreign exchange gains and losses that relate to borrowings are presented in the statement of profit or loss,
within finance costs. All other foreign exchange gains and losses are presented in the statement of profit or
loss on a net basis within other income or other expenses.
Group companies
The results and financial position of all the group entities that have a functional currency different from the
presentation currency are translated into the presentation currency as follows:
a. Assets and liabilities for each balance sheet presented are translated at the closing rate at the date of that
balance sheet.
b. Income and expenses for each income statement are translated at average exchange rates; and
c. All resulting exchange differences are recognized in other comprehensive income.
Goodwill and fair value adjustments arising on the acquisition of a foreign entity are treated as assets and
liabilities of the foreign entity and translated at the closing rate. Exchange differences arising are recognized
in other comprehensive income.
Note 1
ACCOUNTING POLICIES
25
ESVAGT ANNUAL REPORT 2022
Derivatives
Derivatives are initially recognized at fair value on the date a derivative contract is entered and are subse-
quently re-measured at their fair value. The method of recognizing 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.
Foreign exchange forwards are used to hedge the currency risk related to recognized and unrecognized
transactions.
The effective portion of changes in the value of derivative financial instruments designated to hedge future
transactions is recognized under equity until the hedged transactions are realized. At that time, the cumu-
lated gains/losses are transferred to the items under which the hedged transactions are recognized. The
effective portion of changes in the value of derivative financial instruments used to hedge the value of the
recognized financial assets and liabilities is recognized in the income statement together with changes in the
fair value of the hedged assets or liabilities which can be attributed to the hedging relationship. The ineffec-
tive portion of hedge transaction are recognized in the income statement as financial income or expenses for
interest and currency-based instruments.
Revenue recognition
ESVAGT provides support and services (ERRV and SOV) to the offshore industry comprising standby and
emergency response and rescue, oil spill contingency, tanker assist, rig move and supply duties. Revenue
from providing services is recognized in the accounting period in which the services are rendered. Revenue
is recognized based on the actual service provided to the end of the reporting period as a proportion of the
total services to be provided because the customer receives and uses the benefits simultaneously. This is
determined based on the days spent relative to the total number of days the contract covers. Furthermore,
the group recognizes revenue for it’s long-term contracts in a amount to which the group has a right to
invoice.
Support and service contracts include multiple deliverables, such as charter, crew, fuel and services. Except
for fuel, the deliverables are integrated in the services and cannot be provided separately. The services in
a charter excluding fuel are therefore accounted for as one performance obligation. A part of the contract
price is allocated to a separate performance obligation for fuel based on its stand-alone selling price, which is
directly observable.
The contracts do not contain any variable elements.
Other income
Other income comprises of other activities, e.g. property rent and gains/losses of sales of fixed assets. Other
income is recognized when the agreed service or asset is delivered, and the control has been transferred to
the purchaser.
External expenses
External expenses comprise repair and maintenance, stores, vessel fuel, training and travel costs, expenses
related to marketing, administration, office expenses, bad debt etc.
Staff expenses including pensions and similar liabilities
Staff expenses comprise wages and salaries, pensions, social security costs and other staff costs to the
company’s employees.
ESVAGT A/S has entered into pension and similar agreements with most employees. Obligations relating to
defined contribution plans are recognized in the income statement in the period in which they are earned.
Special items
Special items comprise non-recurring income and expenses that are not considered to be part of ordinary
operations such as Long Term Incentive Program, liquidated damages, strategic market investigations.
Amortization, depreciation and impairment
Amortization, depreciation and impairment comprise amortization, depreciation and impairment of intan-
gible assets, property, plant and equipment and right-of-use assets.
Financial income and expenses
Financial income and expenses comprise interest income and expenses based on the effective interest rate
method, realized and non-realized capital gains/losses on transactions in foreign currency, amortization of
financial assets and liabilities etc.
Income tax and deferred tax
The income tax expense or credit for the period is the tax payable on the current period’s taxable income
adjusted by changes in deferred tax assets and liabilities attributable to temporary differences and to unused
tax losses.
The current income tax charge is calculated based on 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, based on
amounts expected to be paid to the tax authorities.
ESVAGT’s vessels activities are subject to the tonnage taxation scheme under which the computation of
taxable income includes an amount, calculated based on the fleet’s tonnage.
Deferred income tax is recognized on temporary differences arising between the tax bases of assets and
liabilities and their carrying amounts in the Consolidated Financial Statements. However, deferred tax
Note 1 – continued
ACCOUNTING POLICIES
26
ESVAGT ANNUAL REPORT 2022
liabilities are not recognized if they arise from the initial recognition of goodwill; deferred income tax is
not accounted for if it arises from the initial recognition of an asset or liability in a transaction other than a
business combination that, at the time of the transaction, affects neither accounting nor taxable profit or
loss. Deferred income tax is determined using tax rates (and laws) that have been enacted or substantively
enacted by the balance sheet date and are expected to apply when the related deferred income tax asset is
realized, or the deferred income tax liability is settled.
Deferred income tax assets are recognized only to the extent that it is probable that future taxable profit will
be available, against which the temporary differences can be utilized.
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 tax assets and liabilities relate to
income taxes levied by the same taxation authority on either the same taxable entity or different taxable enti-
ties where there is an intention to settle the balances on a net basis.
Intangible assets
Development projects
Development projects comprise costs related to specific development projects. Development projects are
capitalized when development projects imply a technical and/or operational advantage for ESVAGT and
where the financial net present value of these projects exceeds the development expenses.
Intangible assets are measured at cost less of accumulated amortization and impairment losses.
Amortization is recognized in the income statement on a straight-line basis over the useful life, which is:
• Development projects: 3 years
Tangible assets
Premises on leased land, vessels, docking costs and other operating equipment and fixtures are measured at
cost less accumulated depreciation and accumulated impairment losses.
Cost comprise the cost of acquisition and expenses directly related to the acquisition up until the time when
the asset is ready for use. Borrowing costs from specific as well as general borrowing directly related to assets
with a long production period are attributed to costs during the period of construction.
Depreciation based on cost reduced by any residual value is calculated on a straight-line basis over the
expected useful lives of the assets, which are:
• Premises on leased land: 20-30 years
• Vessels: Up to 35 years
• Docking costs: 2.5-5 years
• Other fixtures and fittings: 3-5 years
New build vessels are depreciated over 25-35 years. Used vessels are depreciated over a shorter period
based on the vessel age upon time of purchase. Charter contracts related upgrades and other improvements
are depreciated over expected useful life of 3-5 years.
Expenses for docking of vessels are recognized when incurred in the carrying amount of vessels and depreci-
ated over the period until next docking.
The assets’ residual values and useful lives are reviewed, and adjusted if appropriate, at the end of each
reporting period.
Gains and losses arising from disposal of tangible assets are calculated as the difference between the sales
price less sales costs and the carrying amount at the time of sale. Gains and losses are recognized in the
profit and loss account as other operating income or other operating costs.
Impairment of non-financial assets
An asset’s carrying amount is written down immediately to its recoverable amount if the asset’s carrying
amount is greater than its estimated recoverable amount. An impairment loss is recognized in the income
statement when the impairment is identified.
Intangible assets that have an indefinite useful life and intangible assets not yet available for use are not
subject to amortization and are tested annually for impairment. Tangible and intangible assets that are
subject to amortization are reviewed whenever events or changes in circumstances indicate that the carrying
amount may not be recoverable. An impairment loss is recognized for the amount by which the asset’s
carrying amount exceeds its recoverable amount. The recoverable amount is the higher of an asset’s fair
value less cost of disposal and value in use. For the purposes of assessing impairment, assets are grouped at
the lowest levels for which there are largely independent cash inflows (cash-generating units). Prior impair-
ment of non-financial assets (other than goodwill) are reviewed for possible reversal at each reporting date.
Leases
Leases are recognized as a right-of-use asset and a corresponding liability at the date which the leased asset
is available for use by the group.
Note 1 – continued
ACCOUNTING POLICIES
27
ESVAGT ANNUAL REPORT 2022
Assets and liabilities arising from a lease are initially measured at present value of the lease payments. The
lease payments include among other fixed payments and variable lease payments that are based on an index
or a rate. Lease payments to be made under reasonably certain extension options are also included in the
measurement of the liability.
Contracts may contain both lease and non-lease components. For all leases, the group has elected not to
separate the lease and non-lease components and instead accounts for these as a single component.
The lease payments are discounted using the interest rate implicit in the lease. If that rate is not readily deter-
minable, the incremental borrowing rate is used.
Lease payments are allocated between principal and finance cost. The finance cost is charged to the income
statement over the lease period to produce a constant periodic rate of interest on the remaining balance of
the liability for each period.
Right-of-use assets are measured at cost comprising the amount of the initial measurement of the lease
liability, any lease payments made at or before the commencement date, any initial direct costs and resto-
ration costs.
Right-of-use assets are depreciated over the shorter of the asset’s useful life and the lease term on a straight-
line basis.
Variable lease payments that do not depend on an index or a rate and payments associated with leases with
a lease term of 12 months or less and low-value assets are recognized as an expense in the income state-
ment, included in other operating expenses.
As a practical expedient, a lessee may elect not to assess whether a Covid-19 pandemic-related rent conces-
sion from a lessor is a lease modification. ESVAGT applies the IASB amendments to IFRS 16 in regard to rent
concessions that simplify how lessee accounts for rent concessions that are direct consequence of Covid-19
and where all conditions of the practical expedient are met.
Investment in subsidiaries and joint ventures
Investments in subsidiaries
Investments in subsidiaries are in the separate financial statements of the parent company recognized
according to the equity method (see below) after initially being measured at cost.
Investment in joint ventures
IFRS requires investments in joint arrangements to be classified as either joint operations or joint ventures.
The classification depends on the contractual rights and obligations of each investor, rather than the legal
structure of the joint arrangement. All investments over which the group has joint control are classified as
joint ventures.
Interests in joint ventures are accounted for using the equity method (see below), after initially being recog-
nized at cost.
Applying the equity method
Under the equity method, the investments are initially recognized at cost and adjusted thereafter to recog-
nize the group’s share of the post-acquisition profits or losses of the investee in profit or loss, and the
group’s share of movements in other comprehensive income of the investee. Dividends received or receiv-
able from subsidiaries (separate financial statements of ESVAGT A/S only) and joint ventures are recognized
as a reduction in the carrying amount of the investment.
Where the group’s share of losses in an equity-accounted investment equals or exceeds its interest in the
entity, including any other unsecured long-term receivables, the group does not recognize further losses,
unless it has incurred obligations or made payments on behalf of the other entity.
Unrealized gains on transactions with joint ventures are eliminated to the extent of the group’s interest in
these entities. Unrealized losses are also eliminated unless the transaction provides evidence of an impair-
ment of the asset transferred. Accounting policies of equity-accounted investees have been changed where
necessary to ensure consistency with the policies adopted by the group.
The carrying amount of equity-accounted investments is tested for impairment in accordance with the policy
described above.
Inventories
Inventories comprise of bunkers and other consumables. Inventories are measured at cost according to the
FIFO-method. Write-down is made to a possibly lower net realizable value.
Receivables
Receivables are initially recognized at fair value adjusted for any transaction costs. Subsequently, receivables
are measured at amortized cost, which usually corresponds to the nominal value.
The group applies the IFRS 9 simplified approach to measuring expected credit losses which uses a lifetime
expected loss allowance for all trade receivables and contract assets.
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 unbilled 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 reason-
able approximation of the loss rates for the contract assets.
Note 1 – continued
ACCOUNTING POLICIES
28
ESVAGT ANNUAL REPORT 2022
The expected loss rates are based on the payment profiles of historic sales and the corresponding historical
credit losses. The historical loss rates are adjusted to reflect current and forward-looking information on
macroeconomic factors affecting the ability of the customers to settle the receivables. The group has identi-
fied the GBP and the oil and energy prices to be the most relevant factors, and accordingly adjusts the histor-
ical loss rates based on expected changes in these factors.
Prepayments
Prepayments comprise various prepaid expenses such as prepaid insurance, subscriptions etc. Prepayments
are measured at cost.
Cash and cash equivalents
Cash and cash equivalents comprise “Cash at bank and in hand”.
Equity
Reserve for foreign currency translation
The reserve for exchange adjustments consists of exchange rate differences that occur when translating
the foreign subsidiaries financial statements from their functional currency into the Group’s presentation
currency. On disposal of the net investment, the reserve for exchange adjustments of that foreign subsidiary
is recognized in the income statement. Reduction of a net investment in a foreign operation which does not
result in loss of control is not treated as a disposal.
Cash flow hedges
The effective portion of changes in the value of derivative financial instruments designated to hedge future
transactions is recognized under equity until the hedged transactions are realized.
Dividend distribution
Dividends are recognized as a liability in the period in which they are adopted at the Annual General
Meeting.
Development cost reserve
An amount equal to the total capitalized development costs after tax is recognized in equity in the
Development cost reserve.
Bank and Credit institutions
Borrowings from credit institutions are initially recognized at fair value, net of transaction expenses incurred.
Borrowings from credit institutions are subsequently measured at amortized cost. Any differences between
the proceeds and the redemption value are recognized in the income statement over the period of the
borrowings using the effective interest method.
Prepayments received from customers
Prepayments received from customers comprise amounts received from customers prior to delivery of the
goods agreed or completion of the service agreed.
Other liabilities
Other debt or liabilities covering trade payables and other debt are recognized at amortized cost, which is
usually equivalent to the nominal value.
Statement of cash flow
The cash flow statement shows the Group’s cash flows during the year distributed on operating, investing
and financing activities, changes in cash and cash equivalents at the beginning and at the end of the year.
Cash flows from operating activities are calculated by the indirect method using the profit before deprecia-
tion adjusted for changes in working capital and non-cash operating items such as depreciation, amortiza-
tion and impairment losses, and provisions. Working capital comprises current assets less short-term debt
excluding items included in cash and cash equivalents.
Cash flows from investing activities comprise cash flows from acquisitions and disposals of intangible assets,
property, plant and equipment as well as fixed asset investments.
Cash flows from financing activities comprise cash flows from the raising and repayment of long-term debt,
payment of principal element of leases as well as payments to and from shareholders.
Consolidated Key Figures
The key figures and financial ratios have been prepared on a consolidated basis. The financial ratios have
been calculated in accordance with the recommendations of the Association of Danish Financial Analysts
(2015).
Parent company’s policy to account for mergers
Mergers between the parent company and its subsidiaries are accounted for by applying predecessor
accounting. Hereby the parent company recognizes the assets and liabilities received at their values as
included in the consolidated financial statements of the Group. Comparative figures are restated accordingly.
The full-year results and cash flows of the merged subsidiaries (including comparative figures) are included in
the parent company’s income statement and cash flow statement.
Note 1 – continued
ACCOUNTING POLICIES
29
ESVAGT ANNUAL REPORT 2022
The group performs certain judgements and estimates concerning the future.
The estimates are performed based on historical experience and other factors that Management considers
to be reliable, but which by their very nature are associated with uncertainty and unpredictability. These
assumptions may prove incomplete or incorrect, and unexpected events or circumstances may arise. The
Group is also subject to risks and uncertainties that may lead to actual results differing from these estimates,
both positively and negatively.
The judgement and estimates that have a significant risk of causing a material adjustment to the carrying
amounts of assets and liabilities within the next financial year are addressed below.
Judgements
Determination of cash generating units
Judgement is applied in determining the cash generating units (CGU’s). Management has based on the
specific capabilities of the vessels, split these into three CGU’s;
• Group 1: multi-role ERRV vessels are flexible and support the offshore oil & gas industry with a number of
highly specialized services as a supplement to the ERRV functions: Anchor handling; Rig moves; Emergency
towing; Cargo runs; ROV inspections and surveys; Barge work; Oil spill response and Fire-Fighting.
• Group 2/3: high-end fleet of ERRV vessels in Group 2 are all designed to operate worldwide and in harsh
environments. They comply with all stand-by regulations in DK, UK, NL and N. The vessels are optimized on
fuel consumption, capacity and size. Group 3 vessels are the pioneers of the ESVAGT fleet. They are partic-
ularly seaworthy and completely solid. Some of the vessels have already been upgraded with a number of
welfare and technical improvements. They are approved to stand-by / ERRV duties in the Danish sector.
• Wind: Service Operation Vessels (SOV) are the cost-efficient choice for windfarms far from shore. The SOV
offers onboard workshop, spare parts storage, crane and office facilities. Advanced transfer of technicians and
spare parts to WTGs by ESVAGT Safe Transfer Boat or W2W gangway solutions.
This also reflect how Management monitors the operations.
Management furthermore applies its judgement in allocating assets that do not generate independent cash
flows to appropriate CGU’s.
Estimates
Useful life and residual values
The vessels are estimated to operate up to 35 years before they are taken out of the fleet. Some vessels
operate longer than that, and the depreciations are calculated individually when the useful lives and residual
values are reviewed and adjusted if appropriate, at the end of each year.
Impairment testing
Impairment testing is performed for each cash-generating unit as defined by our operational structure as
described under judgement, if indicators of impairment exists.
For the impairment testing, a number of estimates are made regarding the expected development in day
rates, utilization of vessels, future capital expenditures, discount rates, which are all included in the projected
cash flows applied for the impairment testing.
These estimates are based on an assessment of current and future developments in the three cash-gener-
ating units and on historical data and future assumptions. Assessment of market trends as regards to day
rates is supported by independent 3rd party reports from 2021.
The assumptions included in the value-in-use calculation are based on financial budgets and business plans
approved by management.
Despite the high inflation, increasing interest rates and falling GBP and NOK rates, ESVAGT are in a favorable
business position with high markets rates and long-term contracts with incorporated escalation principles,
which means no impairment seen in the different CGU’s. The result of the impairment testing is further
disclosed in note 11 about Property, Plant and Equipment.
Note 2
CRITICAL ACCOUNTING ESTIMATES AND JUDGEMENTS
30
ESVAGT ANNUAL REPORT 2022
GROUP PARENT
TDKK 2022 2021 2022 2021
Support and safety activities, offshore
oil & gas (over time) 760,934 622,833 757,700 620,052
Support and safety activities, offshore wind
(over time) 491,294 401,475 491,294 401,475
Sale of fuel, offshore oil & gas (point in time) 79,242 37,331 79,222 37,324
Sale of fuel, offshore wind (point in time) 33,003 19,044 33,003 19,044
1,364,473 1,080,683 1,361,219 1,077,894
The group has recognized the following assets and liabilities related to contracts with customers:
TDKK
31 Dec
2022
31 Dec
2021
1 Jan
2021
Group
Current contract assets relating to charters 280 1,187 480
Current contract liabilities relating to charters -11,164 -11,682 -7,529
Parent
Current contract assets relating to charters 280 1,187 480
Current contract liabilities relating to charters -11,164 -11,682 -7,529
The increase in contract liabilities in 2021 relates to mobilization costs received from customers prior to
specific charters, which will be recognized as revenue during the secured contract length.
GROUP PARENT
TDKK 2022 2021 2022 2021
Revenue recognised that was included in the
contract liability at the beginning of the period 3,138 5,141 3,138 5,141
The group has taken the practical expedient in IFRS 15 not to disclose information about the aggregate
amount of the transaction price allocated to its remaining performance obligations, as the group’s contracts
either has an original expected duration of one year or less; or as the group for its long-term contracts
recognizes revenue in an amount to which the group has a right to invoice.
The invoicing is done a monthly basis reflecting the contracted day rate and the actuals days per month.
Normal payment terms are running month +30 days or 45 days.
Note 3
REVENUE
31
ESVAGT ANNUAL REPORT 2022
GROUP PARENT
TDKK 2022 2021 2022 2021
Wages and salaries 417,324 367,907 415,665 366,275
Pensions, defined contribution plans 8,633 8,200 8,633 8,200
Other staff costs 9,087 8,472 9,087 8,472
Long term incentive schemes 0 0 0 0
Staff Expenses 435,044 384,578 433,385 382,946
Average number of full-time employees 937 911 935 909
Key Management Compensation
Key Management includes Board of Directors and Executive Management in ESVAGT A/S, in total 8 persons by
end 2022 (8 in 2021).
Long term incentive schemes 2021
The Executive Management and other senior employees of ESVAGT have been granted 2 Long Term Incentive
Schemes (the LTIP programs), which are structured according to the same principles, but depend on different
triggering events. The participants will therefore only get payment from one of the LTIP programs when
vested.
Both programs depended on the fair value development of ESVAGT A/S and an exit of the current owners.
One of the two granted Long Term Incentive Schemes has been executed during 2021 triggered by the sales
process in Q4 2021 and recognized under Special items MDKK 34.7, and the second has been cancelled. Based
on the publicized sales price the value of the program has been calculated and the paid out to the relevant
parties after closing February 1st, 2022.
The compensation paid or payables to key management for employee services is shown below:
TDKK
Executive
Management
Board of
Directors Total
2022 Group
Wages and salaries 8,668 2,540 11,208
Pensions, defined contribution plans 243 0 243
Long term incentive schemes 0 0 0
Compensation to the Board of Directors
and Executive Management 8,911 2,540 11,451
2022 Parent
Wages and salaries 8,668 2,540 11,208
Pensions, defined contribution plans 243 0 243
Long term incentive schemes 0 0 0
Compensation to the Board of Directors
and Executive Management 8,911 2,540 11,451
TDKK
Executive
Management
Board of
Directors Total
2021 Group
Wages and salaries 7,531 1,205 8,736
Pensions, defined contribution plans 237 0 237
Long term incentive schemes 17,404 930 18,334
Compensation to the Board of Directors
and Executive Management 25,172 2,135 27,307
2021 Parent
Wages and salaries 7,531 1,205 8,736
Pensions, defined contribution plans 237 0 237
Long term incentive schemes 17,404 930 18,334
Compensation to the Board of Directors
and Executive Management 25,172 2,135 27,307
Note 4
STAFF EXPENSES
32
ESVAGT ANNUAL REPORT 2022
GROUP PARENT
TDKK 2022 2021 2022 2021
Interest income from parent 204 99 204 99
Interest income from subsidiaries 1 3 59 3
Interest income, bank 1,118 0 1,092 0
Exchange rate adjustments 44,919 7,573 44,835 7,652
Other financial Income 27 29 27 29
46,269 7,704 46,216 7,782
Total interest income on financial assets that are measured at amortized cost for the year was TDKK 1,350
(2021: TDKK 131) for the Group and TDKK 1,381 (2021: TDKK 131) for the parent company.
Note 8
FINANCIAL EXPENSES
GROUP PARENT
TDKK 2022 2021 2022 2021
Interest expenses to parent 0 3 41 48
Interest expenses, credit institutions 232,670 98,357 232,670 98,352
Interest expenses, bank 1,221 1,082 1,222 1,082
Interest expenses, leases 21,535 5,196 21,535 5,196
Exchange rate adjustments 197 0 197 0
Other financial expenses, including bank fees 740 837 726 828
Capitalized interests -4,100 -10,103 -4,100 -10,103
252,263 95,372 252,290 95,403
Total interest expenses on financial liabilities not measured at fair value through profit or loss for the year
was TDKK 255,623 (2021: TDKK 104,638) for the group and TDKK 255,665 (2021: TDKK 104,678) for the parent
company. The realized refinancing costs amount up to TDKK 99,340 in 2022.
GROUP PARENT
TDKK 2022 2021 2022 2021
Strategic market investigations 67 6,001 67 6,001
Long term incentive schemes 0 34,745 0 34,745
Compensation to customers for late deliveries of
Newbuilds 0 4,820 0 4,820
67 45,566 67 45,566
Special items comprise non-recurring expenses that are not considered to be part of ESVAGT’s ordinary oper-
ations such as liquidated damages, strategic market investigations such as M&A, listings, and sales prospects.
Special items of 2022 comprise of final costs related to the sales prospects concluded in 2022.
In the classification of Special items, judgment is applied in ensuring that only exceptional items not associ-
ated with the ordinary operations of ESVAGT are included.
Note 6
AMORTIZATION, DEPRECIATION
AND IMPAIRMENT LOSSES
GROUP PARENT
TDKK 2022 2021 2022 2021
Amortisation of intangible assets 7,155 3,650 7,155 3,650
Depreciation of tangible assets 258,241 251,028 258,241 251,028
Impairment of tangible assets 0 0 0 0
Impairment reversal of tangible assets 0 -188,000 0 -188,000
Depreciation of right-of-use assets 17,700 13,313 17,700 13,313
283,096 79,992 283,096 79,992
Note 5
SPECIAL ITEMS
Note 7
FINANCIAL INCOME
33
ESVAGT ANNUAL REPORT 2022
GROUP PARENT
TDKK 2022 2021 2022 2021
Income tax:
Tax on profit/loss for the year -216 166 -473 19
Total income tax -216 166 -473 19
Tonnage tax 693 675 693 675
Total tax for the year 477 841 220 694
Tax on profit/loss for the year can be broken down
as follows:
Current tax 256 147 0 0
Deferred tax 0 0 0 0
Adjustments for current tax of prior periods -473 19 -473 19
Tax on profit/loss for the year -216 166 -473 19
Income tax is specified as follows:
Calculated 22% tax on "Profit for the year
before income tax" 3,451 30,019 3,505 30,050
Tax effects of:
Income tax under tonnage taxation -3,194 -29,872 -3,506 -30,050
Adjustments in respect of prior years -473 19 -473 19
-216 166 -473 19
Effective tax rate -1.4% -0.1% -3.0% 0.0%
The majority of the Group’s taxable income is located in Denmark, and therefore the majority of the tax
base is subject to Danish tax legislation. As such, the ESVAGT Group has elected to participate in the Danish
Tonnage Tax scheme; the participation is binding until 31 December 2031.
Deferred tax relates to tangible fixed assets not covered by tonnage taxation activities.
GROUP PARENT
TDKK
Development
Projects
Development
Projects
Cost:
At 01.01.2021 14,308 14,308
Additions during the year 2,865 2,865
At 31.12.2021 17,173 17,173
Amortisation and impairment:
At 01.01.2021 4,637 4,637
Amortisation charge 3,649 3,649
At 31.12.2021 8,286 8,286
Carrying amount 31.12.2021 8,887 8,887
Cost:
At 01.01.2022 17,173 17,173
Additions during the year 4,022 4,022
At 31.12.2022 21,195 21,195
Amortisation and impairment:
At 01.01.2022 8,286 8,286
Amortisation charge 7,155 7,155
At 31.12.2022 15,441 15,441
Carrying amount 31.12.2022 5,754 5,754
During 2022 ESVAGT held expenses of MDKK 4,0 (2021: MDKK 2,9) mainly relating to IT projects.
Note 9
TAX
Note 10
INTANGIBLE ASSETS
34
ESVAGT ANNUAL REPORT 2022
GROUP
TDKK Vessels
Operating
Equipment
& Fixtures Buildings
Prepay-
ments Total
Cost:
At 01.01.2021 5,737,472 34,135 61,858 163,274 5,996,739
Adjustment to prior year -61 0 0 0 -61
Additions during the year 584,820 0 0 85,303 670,122
Disposals 0 -222 0 0 -222
Reclasssifications 159,505 0 0 -159,505 0
Transferred to right-of-use asset 0 0 0 0 0
At 31.12.2021 6,481,736 33,913 61,858 89,071 6,666,578
Amortisation and impairment:
At 01.01.2021 2,235,081 32,116 21,112 0 2,288,309
Adjustment to prior year 0 0 0 0 0
Disposals 0 0 0 0 0
Amortisation charge 246,910 802 3,095 0 250,807
Impairment losses -188,000 0 0 0 -188,000
Transferred to assets held for sale 0 0 0 0 0
At 31.12.2021 2,293,991 32,918 24,207 0 2,351,116
Carrying amount 31.12.2021 4,187,745 995 37,651 89,071 4,315,462
The amount of borrowing costs capitalized during 2021 was TDKK 10,103. The rate used to determine the
amount of borrowing cost eligible for capitalization was 3.52%.
GROUP
TDKK Vessels
Operating
Equipment
& Fixtures Buildings
Prepay-
ments Total
Cost:
At 01.01.2022 6,481,736 33,913 61,858 89,071 6,666,578
Additions during the year 292,437 11,553 821 197,590 502,402
Disposals -96,016 -251 0 0 -96,267
Reclasssifications 87,266 0 0 -87,266 0
Transferred to right-of-use asset 0 0 0 0 0
At 31.12.2022 6,765,423 45,215 62,679 199,396 7,072,713
Amortisation and impairment:
At 01.01.2022 2,293,991 32,918 24,207 0 2,351,116
Disposals -94,865 -251 0 0 -95,116
Amortisation charge 254,319 564 3,358 0 258,241
Transferred to assets held for sale 0 0 0 0 0
At 31.12.2022 2,453,444 33,231 27,565 0 2,514,240
Carrying amount 31.12.2022 4,311,979 11,984 35,114 199,396 4,558,473
The amount of borrowing costs capitalized during 2022 was TDKK 4,100. The rate used to determine the
amount of borrowing cost eligible for capitalization was 3.52%.
Commitments for tangible assets
ESVAGT have one vessel under production for delivery in 2024.
GROUP PARENT
TDKK 2022 2021 2022 2021
Remaining Commitments, new building program 420,000 0 420,000 0
420,000 0 420,000 0
Note 11
PROPERTY, PLANT AND EQUIPMENT
35
ESVAGT ANNUAL REPORT 2022
PARENT
TDKK Vessels
Operating
Equipment
& Fixtures Buildings
Prepay-
ments Total
Cost:
At 01.01.2021 5,737,472 34,135 61,858 163,274 5,996,739
Adjustment to prior year -61 0 0 0 -61
Additions during the year 584,820 0 0 85,303 670,122
Disposals 0 -222 0 0 -222
Reclasssifications 159,505 0 0 -159,505 0
Transferred to right-of-use asset 0 0 0 0 0
At 31.12.2021 6,481,736 33,913 61,858 89,071 6,666,578
Amortisation and impairment:
At 01.01.2021 2,235,081 32,116 21,112 0 2,288,309
Adjustment to prior year 0 0 0 0 0
Disposals 0 0 0 0 0
Amortisation charge 246,910 802 3,095 0 250,807
Impairment losses -188,000 0 0 0 -188,000
Transferred to assets held for sale 0 0 0 0 0
At 31.12.2021 2,293,991 32,918 24,207 0 2,351,116
Carrying amount 31.12.2021 4,187,745 995 37,651 89,071 4,315,462
The amount of borrowing costs capitalized during 2021 was TDKK 10,103. The rate used to determine the
amount of borrowing cost eligible for capitalization was 3.52%.
PARENT
TDKK Vessels
Operating
Equipment
& Fixtures Buildings
Prepay-
ments Total
Cost:
At 01.01.2022 6,481,736 33,913 61,858 89,071 6,666,578
Additions during the year 292,437 11,553 821 197,590 502,402
Disposals -96,016 -251 0 0 -96,267
Reclasssifications 87,266 0 0 -87,266 0
Transferred to right-of-use asset 0 0 0 0 0
At 31.12.2022 6,765,423 45,215 62,679 199,396 7,072,713
Amortisation and impairment:
At 01.01.2022 2,293,991 32,918 24,207 0 2,351,116
Disposals -94,865 -251 0 0 -95,116
Amortisation charge 254,319 564 3,358 0 258,241
Transferred to assets held for sale 0 0 0 0 0
At 31.12.2022 2,453,444 33,231 27,565 0 2,514,240
Carrying amount 31.12.2022 4,311,979 11,984 35,114 199,396 4,558,473
The amount of borrowing costs capitalized during 2022 was TDKK 4,100. The rate used to determine the
amount of borrowing cost eligible for capitalization was 3.52%.
Note 11 - continued
PROPERTY, PLANT AND EQUIPMENT
36
ESVAGT ANNUAL REPORT 2022
Impairment Analysis
The radical changes of the geopolitical situations in Europe with derivative impacts on the energy supply,
financing and inflation levels, challenging the main cost levels in ESVAGT business. However, ESVAGT’s shows
to be quite resistant and well-structured to maneuver in these conditions and managed to deliver above
budget for 2022.
The markets within ERRV and Wind given higher focus through political incentives and persistent demands
for alternative energy supply’s, all help covering the price increases ESVAGT is facing. The market improves
and recovers faster than expected and current indication shows improved utilization and market rates for
most of ESVAGT fleet going forward.
Outcome of the impairment test
The combination of the high inflation and interest rates, lower FX rates on GBP and NOK, reversal of impair-
ment loss last year, will all challenge the headroom in this year impairment test. However with the improved
market conditions, ESVAGT’s strong position and resistant business model we still have a acceptable head-
room in all CGU’s. Thereby no impairment loss to be recognized for the year.
Basis for impairment test
ESVAGT considers vessels with similar functionality as cash generating units (CGU) due to largely interde-
pendent cash flows. The recoverable amount for each CGU is determined as the present value of future net
cash flow from each or fair value less cost to sell if higher. ESVAGT applies value-in-use calculations in the
Impairment Analysis.
The value-in-use is calculated based on cash flow projections in financial budgets and key assumptions for
the coming 5 years period as approved by management. For the period after the 5-year period an expected
inflation rate of 2.5% (2021: 2.0%) p.a. is applied, and specific day-rate assumptions post-contract. These cash
flow projections are subject to judgement and estimates that are uncertain, though based on experience and
external sources where available. Below different sensitivity analysis for certain key assumptions applied in
the expected future cash flows.
The discount rate applied in the value-in-use calculation is 7.05% for ERRV segment and 6.54% for WIND
segment (2021: 5.71% for ERRV & WIND) p.a. after tax. The discount rate applied reflect the specific risks
relating to the relevant CGU’s.
The FX rates applied is based on the FX rate level on 31 December 2022:
• GBP: 838.45 (2021: 886.04)
• NOK: 70.73 (2021: 74.59)
• EUR: 743.65 (2021: 743.65)
Sensitivity analysis
The value-in-use calculations for the individual CGU’s are particularly sensitive to the day rates expected
post-contract and to utilization on ERRV spot activities. In addition, discount rate, inflation rate and changes
in FX rates are critical assumptions. Especially the headroom in CGU ERRV G2/G3 being challenged last
couple of years and result of sensitivity test listed below for the CGU.
The headroom between the recoverable amount and the carrying amount for the CGU ERRV G2/G3 is DKK 58
million in 2022 and the sensitivity analysis for the unit shows that the headroom would have been:
• DKK 27 million and DKK 90 million with a +/- 0.5 percentage point change in the discount rate, keeping all
other assumptions unchanged.
• DKK -85 million and DKK 202 million with a -/+ 5 percentage point change in the Market spot rate,
keeping all other assumptions unchanged.
• DKK 26 million and DKK 91 million with a -/+ 0.5 percentage point change in the long-term inflation rate,
keeping all other assumptions unchanged.
• DKK 64 million with FX Rates (except EUR) from 13th of February, keeping all other assumptions
unchanged.
The above sensitivity test only shows a potential risk for negative headroom in a -5 percentage point change
in the market spot rates. The probability hereof doesn’t seem high as we already seen spot rates quite higher
than the base assumption in the impairment.
Note 11 - continued
PROPERTY, PLANT AND EQUIPMENT
37
ESVAGT ANNUAL REPORT 2022
GROUP PARENT
TDKK 2022 2021 2022 2021
Carrying Amount
Financial assets:
Financial assets at fair value
Interest rate swap 127,520 0 127,520 0
Foreign currency forwards 5,020 0 5,020 0
Total financial assets at fair value 132,540 0 132,540 0
Financial assets at amortised cost:
Trade receivables 198,367 157,825 153,158 129,462
Receivables from parent company 5,874 5,148 5,874 5,148
Receivables from Group companies 29 0 117,957 40,816
Other Receivables 12,761 9,712 12,749 9,679
Cash and cash equivalents 317,945 229,359 231,935 204,397
Total Financial assets at amortised cost 534,977 402,043 521,675 389,502
Financial liabilities:
Financial liabilities at fair value
Foreign currency forwards (used for hedging) 0 11,432 0 11,432
Total financial liabilities at fair value 0 11,432 0 11,432
Financial liabilities at amortised cost:
Borrowings 2,829,283 2,449,200 2,829,283 2,449,200
Trade payables 87,078 73,419 87,029 73,380
Payables to Group companies 0 0 1,675 2,012
Lease liabilities 223,832 257,728 223,832 257,728
Other Payables 83,611 51,803 83,611 51,803
Total Financial liabilities at amortised cost 3,223,804 2,832,150 3,225,430 2,834,123
Total Financial liabilities 3,223,804 2,843,582 3,225,430 2,845,555
Fair value is approximately the same as the carrying amounts.
GROUP PARENT
TDKK 2022 2021 2022 2021
Bunker oil 24,457 16,199 24,457 16,199
24,457 16,199 24,457 16,199
During 2022 TDKK 142,267 (2021: TDKK 74,603) was recognized as an expense for the group, and TDKK
142,267 (2021: TDKK 74,603) for the parent company.
Note 14
TRADE RECEIVABLES
GROUP PARENT
TDKK 2022 2021 2022 2021
Trade receivables at 31 December 198,467 157,925 153,258 129,562
Expected credit loss -100 -100 -100 -100
Trade receivables net 198,367 157,825 153,158 129,462
The maturity of the trade receivables
is specified as follows:
Not overdue 143,785 133,660 105,916 113,054
Up to 30 days 49,660 17,630 42,320 9,873
Between 31 and 90 days 4,884 6,153 4,884 6,153
Between 91 and 365 days 38 382 38 382
Total 198,367 157,825 153,158 129,462
The group applies the IFRS 9 simplified approach to measuring expected credit losses which uses a lifetime
expected loss allowance for all trade receivables and contract assets.
Note 12
FINANCIAL ASSETS AND LIABILITIES
Note 13
INVENTORIES
38
ESVAGT ANNUAL REPORT 2022
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 unbilled 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 reason-
able approximation of the loss rates for the contract assets.
The expected loss rates are based on the payment profiles of sales over a period of 36 month before 31
December 2022 or 31 December 2022 respectively and the corresponding historical credit losses experienced
within this period. The historical loss rates are adjusted to reflect current and forward-looking information
on macroeconomic factors affecting the ability of the customers to settle the receivables. The group has
identified the GBP and the oil and energy prices to be the most relevant factors, and accordingly adjusts
the historical loss rates based on expected changes in these factors. The expected credit losses for all trade
receivables and contract assets, 97.5% less than 30 days overdue, 2.5% 30-90 days overdue and 0.0% over
90 days overdue, are immaterial and therefore not recognized. During the year no losses has been realized,
similar to 2021.
As further described in note 21, the receivables from Group companies are primarily arising from ordinary
sales transactions and are in general repaid in full on a monthly basis. Consequently, the 12-month expected
credit losses related to those receivables are immaterial.
The share capital comprise of:
No. shares
Nominal value
per share 2022 TDKK 2021 TDKK
2,200,000 1 2,200 2,200
2,200,000 1 2,200 2,200
No shares carry any special rights. There are no restrictions connected to the transferability or voting rights of
the shares. All shares have been fully paid in.
All shares in ESVAGT A/S are owned by ERRV ApS.
Capital management
The group’s objectives when managing capital are to safeguard the group’s ability to continue as a going
concern in order to provide returns for shareholders and benefits for other stakeholders and to maintain
an optimal capital structure to reduce cost of capital. Normal covenant demands applies such as “Leverage
Ratio”, “ICR Ratio” etc. which we have been compliant with during the year.
The Group has not adopted a specific key ratio, but Management and Board of Directors monitor the share
and capital structure to ensure that the group’s capital resources support the strategic goals. The overall
target is to have secured long term financing with fixed interest rates at competitive rates.
The Company’s policy for managing capital is unchanged from last year.
Note 14 - continued
TRADE RECEIVABLES
Note 15
SHARE CAPITAL
39
ESVAGT ANNUAL REPORT 2022
The group has entered leases on land, properties, cars, equipment and two Multipurpose ERRV’s. The
remaining lease period for land is 20 years + 5 months. ESVAGT can terminate the contract of the leased
land with a 6 months’ notice. The non-cancellable lease period for cars is typically 36 months. In general car
leases do not include any extension options. The two Multipurpose ERRV’s are leased on a bareboat charter
for 6 years. Lease terms are negotiated on an individual basis and contain a wide range of different terms and
conditions. The lease agreements in general do not impose any covenants but leased assets may not be used
as security for borrowing purposes. Exception for main rule is the two Multipurpose ERRV’s as they comply
with the covenant requirements in force at any time towards the external lenders.
The Group recognized the following amounts relating to leases:
GROUP PARENT
TDKK 2022 2021 2022 2021
Lease liabilities
Current 43,714 37,008 43,714 37,008
Non-current 180,118 220,720 180,118 220,720
223,832 257,728 223,832 257,728
Right-of-use assets
Land 6,890 7,228 6,890 7,228
Cars 925 297 925 297
Equipment 7,716 7,429 7,716 7,429
Vessels 231,869 240,225 231,869 240,225
247,399 255,178 247,399 255,178
Additions to the right-of-use assets during the 2022 financial year were TDKK 9,921 (2021: TDKK 243,322) for
the Group and TDKK 9,921 (2021: TDKK 243,322) for the parent company, respectively.
GROUP PARENT
TDKK 2022 2021 2022 2021
At 1 January 8 4 0 0
Deferred tax recognized in the income statement 0 0 0 0
Exchange Rate Adjustment -8 3
At 31 December 0 8 0 0
Deferred tax relates to:
Loss carried forward 0 8 0 0
0 8 0 0
Note 17
BANK AND CREDIT INSTITUTIONS
The borrowings comprise of vessel financing related loans as well as revolving facilities to fund the ongoing
operations. There are covenants attached to the loan facilities.
Currency Maturity 2022 TDKK 2021 TDKK
Group
Floating rate loans EUR 2022 0 318,282
Floating rate loans DKK 2022 0 393,168
Fixed-rate loans EUR 2027-2029 1,797,445 1,747,578
Fixed-rate loans DKK 2027-2029 413,000 0
Fixed-rate loans GBP 2027-2029 691,288 0
Parent
Floating rate loans EUR 2022 0 318,282
Floating rate loans DKK 2022 0 393,168
Fixed-rate loans EUR 2027-2029 1,797,445 1,747,578
Fixed-rate loans DKK 2027-2029 413,000 0
Fixed-rate loans GBP 2027-2029 691,288 0
All loans are considered as fixed-rate until 2027 due to rate swaps. Hereafter TDKK 1,674,459 will be floating
until 2029.
Note 16
DEFERRED TAX
Note 18
LEASING
40
ESVAGT ANNUAL REPORT 2022
The statement of profit or loss show the following amounts relating to leases:
GROUP PARENT
TDKK 2022 2021 2022 2021
Depreciation charge of right-of-use assets
Land 337 337 337 337
Cars 328 425 328 425
Equipment 8,678 10,693 8,678 10,693
Vessels 8,357 1,857 8,357 1,857
17,700 13,313 17,700 13,313
The total cash outflow for leases in 2022 was TDKK 43,817 (2021: TDKK 11,271) for the Group and TDKK
43,817 (2021: TDKK 11,271) for the parent company.
GROUP PARENT
TDKK 2022 2021 2022 2021
Interest expense (included in finance expenses) 21,535 5,196 21,535 5,196
Expense relating to short-term leases (included in
other operating expenses) 1,918 9,141 1,918 9,141
23,454 14,337 23,454 14,337
Note 19
FEE TO THE STATUTORY AUDITORS
GROUP PARENT
TDKK 2022 2021 2022 2021
Statutory audit 946 772 946 772
Other assurance services 0 0 0 0
Tax and VAT advisory services 631 1,140 631 1,140
Other services 776 1,421 776 1,421
Total fees to PwC 2,353 3,333 2,353 3,333
As part of its asset and liability management, the Group uses derivatives for hedging purposes in order to
reduce its exposure to market risks.
The group has entered foreign exchange contracts to hedge currency risk on contracted long-term revenue
and fuel consumption.
Further Interest Rate Swap is used to exchange the floating rate interest payments to fixed-rate interest
payments.
Information about the group’s exposure to financial risk is provided in note 25.
GROUP PARENT
TDKK 2022 2021 2022 2021
Reclassified from other comprehensive income
Gains/losses arising on currency forward contracts
(cash flow hedges) reclassified to revenue/other
operating expenses during the year -3,513 -10,456 -3,513 -10,456
Interest rate swaps 127,818 0 127,818 0
124,305 -10,456 124,305 -10,456
Note 21
RELATED PARTIES
The Company and its parent company ERRV ApS are included in the consolidated financial statements for
ERRV Holdings ApS, Hammerengsgade 1, 2nd floor, 1267 Copenhagen K, Denmark.
Interest in subsidiaries and joint ventures are set out in note 22.
The ultimate controlling party is 3i Infrastructure plc, United Kingdom.
The following transactions were carried through with related parties:
PARENT
TDKK 2022 2021
Transactions with subsidiaries
Sales of services 244,844 222,822
Transactions with joint ventures
Sales of services 0 0
244,844 222,822
Note 18 - continued
LEASING
Note 20
DERIVATIVE FINANCIAL INSTRUMENTS
41
ESVAGT ANNUAL REPORT 2022
The group has interest in a number of individually immaterial joint ventures that are accounted for using the
equity method.
GROUP PARENT
TDKK 2022 2021 2022 2021
Summarised balance sheet
Aggregated carrying amount of individually
immaterial associates 0 0 0 0
Aggregate amounts of the group's share of
Loss from continuing operations 8 6 8 6
Total comprehensive income 8 6 8 6
No further information is disclosed due to the materiality of the investment.
Note 23
CONTINGENT LIABILITIES
Litigation
None
GROUP PARENT
TDKK 2022 2021 2022 2021
Bank loans secured in vessels
Bank and other credit institutions - amount secured 2,901,733 2,459,028 2,901,733 2,459,028
Carrying amount of vessels provided as security 4,311,979 4,187,745 4,311,979 4,187,745
Other contingent liabilities
Since 17 September 2015 ESVAGT A/S is part of national joint taxation in Denmark with ERRV Holding ApS
and is jointly liable with other Danish companies owned by ERRV Holding ApS.
The following balances arising from sales/purchases of goods and services are outstanding at the end of the
period in relation to transactions with related parties:
GROUP PARENT
TDKK 2022 2021 2022 2021
Receivables from subsidiaries 0 0 48,736 40,634
Loans to related parties
Loans to ERRV ApS and ERRV Holding ApS (parent
company)
Beginning of the period 5,148 4,453 5,148 4,453
Loans advanced 523 596 523 596
Loans repayments received 0 0 0 0
Interest charged 204 99 204 99
End of year 5,874 5,148 5,874 5,148
Loans to subsidiaries
Beginning of the period 0 0 165 160
Loans advanced 0 0 109 2
Loans repayments received 0 0 0 0
Interest charged 0 0 6 3
End of year 0 0 280 165
Loans from subsidiaries
Beginning of the period 0 0 2,012 2,079
Loans advanced 0 0 0 0
Loans repayments 0 0 373 109
Interest charged 0 0 36 42
End of year 0 0 1,675 2,012
Terms and conditions
Receivables from the Group companies primarily arises from ordinary operations and are in general repaid
in full on a monthly basis. The receivables do not thus carry any interest. Loans to the parent company and
to and from subsidiaries carry an interest of 3.75% (2021: 2.00%) and the loans are expected to be settled in
cash.
Note 21 - continued
RELATED PARTIES
Note 22
INVESTMENTS IN JOINT VENTURES
42
ESVAGT ANNUAL REPORT 2022
Note 24
CASH FLOW STATEMENT
GROUP PARENT
TDKK 2022 2021 2022 2021
Change in working capital
Change in inventories -8,258 -6,738 -8,258 -6,738
Change in trade receivables and receiv. from parent -40,499 -48,916 -31,090 -52,600
Change in other receivables and prepayments -3,225 -4,851 -73,450 -4,858
Change in trade payables, excl. payables related to
fixed assets -2,430 35,159 -2,430 35,159
Change in other payables 20,958 -5,114 20,950 -4,961
Change in received prepayments -518 4,152 -518 4,152
Exchange gains and losses on working capital 7,695 -256 7,522 -502
-26,276 -26,563 -87,274 -30,348
Changes in liabilities arising
from financing activities
Bank and credit institutions at 1 January 2,449,200 2,291,875 2,449,200 2,291,875
Proceeds from loans from credit institutions 479,269 150,000 479,269 150,000
Amortized loan cost -62,622 8,103 -62,622 8,103
Foreign currency -36,564 -778 -36,564 -778
Bank and credit institutions at 31 December 2,829,283 2,449,200 2,829,283 2,449,200
Lease liabilities at 1 January 257,729 25,678 257,729 25,678
Repayment of leases -43,817 -17,966 -43,817 -17,966
New leases 9,921 250,017 9,921 250,017
Lease liabilities at 31 December 223,832 257,729 223,832 257,729
Financing liabilities at 31 December 3,053,116 2,706,928 3,053,116 2,706,928
Note 25
FINANCIAL RISK MANAGEMENT
Financial risk factors
The Financial risks of the group are managed centrally. The overall risk management guidelines and policies
have been approved by the Board of Directors. Group Finance/Treasury department identifies and evaluates
exposures in close co-operation with the group’s operating units. The board provides written principles for
overall risk management.
Market Risk
Foreign exchange risk
The revenue is denominated in other currencies than DKK, mainly EUR, GBP and NOK. Part of these transac-
tions is hedged according to the Group policy. Increases or decreases in the exchange rate of GBP and NOK
against the functional currency, can affect the group’s results and cash position negatively or positively.
The cost of goods sold, and operating expenses are mainly incurred in DKK. The Group has transactions in
other currencies, mainly EUR, but the foreign exchange risks related to this are not considered material, due
to fixed change rate policy in Denmark against EUR. Fuel expenses are however paid in USD and are likewise
hedge according to the Group policy. Increases or decreases in the exchange rate of such foreign against the
functional currency, can affect the group’s results and cash position negatively or positively.
Exposure
The group’s exposure to foreign currency risk at the end of the reporting period, in the different currency
units converted to TDKK, was as follows:
GROUP
Currency amounts converted to TDKK EUR GBP NOK USD
2022
Trade receivables 79,337 48,756 17,744 716
Cash and cash equivalents 67,241 82,756 30,987 86,595
Bank loans -1,797,445 -691,288 0 0
Trade payables -12,564 -3,113 -2,163 -22,800
-1,663,431 -562,890 46,568 64,511
2021
Trade receivables 50,320 33,533 17,981 674
Cash and cash equivalents 128,138 25,879 14,982 7,378
Bank loans -2,065,860 0 0 0
Trade payables -10,035 -1,056 -13,150 -16,230
-1,897,437 58,356 19,813 -8,178
43
ESVAGT ANNUAL REPORT 2022
PARENT
Currency amounts converted to TDKK EUR GBP NOK USD
2022
Trade receivables 77,752 5,133 17,744 0
Cash and cash equivalents 65,536 69,885 30,392 16,326
Bank loans -1,797,445 -691,288 0 0
Trade payables -12,564 -3,113 -2,163 -22,800
-1,666,722 -619,383 45,973 -6,475
2021
Trade receivables 48,637 7,527 17,981 0
Cash and cash equivalents 115,367 14,712 14,583 7,335
Bank loans -2,065,860 0 0 0
Trade payables -10,035 -1,056 -13,150 -16,230
-1,911,891 21,182 19,414 -8,895
Interest rate risk
The group’s interest rate risk arises from long-term borrowings. Borrowings issued at variable rates expose
the group to cash flow interest rate risk. Borrowings issued at fixed rates expose the group to fair value
interest risk. Group policy is always to ensure that a minimum of 70 percent of total outstanding debt is fixed
rate or effectively bears a fixed rate pursuant to a hedging agreement. The group is compliant with the policy
at 31 December 2022.
Sensitivity analysis
Profit or loss is sensitive to higher/lower interest from borrowings and fair value changes of interest rate
derivatives as a result of changes in interest rates. The sensitivity analysis is based on financial instruments
recognized at the balance sheet date. Effects from hedging is not included in these calculations and sensi-
tivity figures.
Note 25 – continued
FINANCIAL RISK MANAGEMENT
2022 2021
TDKK
Impact on
Post Tax
Profit
Impact on
Other
Components
of Equity
Impact on
Post Tax
Profit
Impact on
Other
Components
of Equity
Group
GBP/DKK exchange rate - increase 10% -56,289 -56,289 5,836 5,836
NOK/DKK exchange rate - increase 10% 4,657 4,657 1,981 1,981
USD/DKK exchange rate - increase 10% 6,451 6,451 -818 -818
Parent
GBP/DKK exchange rate - increase 10% -61,938 -61,938 2,118 2,118
NOK/DKK exchange rate - increase 10% 4,597 4,597 1,941 1,941
USD/DKK exchange rate - increase 10% -647 -647 -890 -890
2022 2021
TDKK
Impact on
Post Tax
Profit
Impact on
Other
Components
of Equity
Impact on
Post Tax
Profit
Impact on
Other
Components
of Equity
Group
Interest rates – increase by 100 basis points 0 0 -7,115 0
Interest rates – decrease by 100 basis points 0 0 7,115 0
Parent
Interest rates – increase by 100 basis points 0 0 -7,115 0
Interest rates – decrease by 100 basis points 0 0 7,115 0
The calculation is based on an increase in both short- and long-term interest. All other variables are held
constant. Loans are in floating interest rate duration 7 years. Interest rate is swapped to fixed rate for 5 years.
44
ESVAGT ANNUAL REPORT 2022
Credit risk
Credit risk is managed on group basis, except for credit risk relating to account receivable balances. Each
local entity is responsible for managing and analyzing the credit risk for each of their new clients before stan-
dard payment and delivery terms and conditions are offered.
Credit risk arises from cash and cash equivalents and deposits with banks and financial institutions, as well as
credit exposures to customers, including outstanding receivables. For banks and financial institutions, only
independently rated parties with a minimum rating of ‘BBB-‘ are accepted, For customers individual risk limits
are set based on internal or external ratings in accordance with limits set by the board. No significant risk
related to intercompany accounts due to monthly settlements as further described in note 21. The utilization
of credit limits is regularly monitored.
The maximum exposure corresponds to the carrying amount of receivables and cash.
Liquidity Risk
Cash flow forecasting is performed by group finance. Group finance monitors rolling forecasts of the group’s
liquidity requirements to ensure it has sufficient cash to meet operational needs. Such forecasting takes into
consideration the group’s debt financing plans and compliance with loan documentation. The group has
undrawn borrowing facilities of TDKK 1,315,910 hereof TDKK 130,910 that may be available for future oper-
ating activities and TDKK 1,185,000 for Capex investments. The borrowing facilities is part of the current bank
facilities attached to the same covenants as mentioned in note 17.
The tables below analyses the group’s derivatives and non-derivative financial liabilities into relevant maturity
groupings based on the remaining period at the balance sheet date to the contractual maturity date. The
amounts disclosed in the table are the contractual undiscounted cash flows.
Note 25 – continued
FINANCIAL RISK MANAGEMENT
GROUP
TDKK
Less than
1 year 1-5 years > 5 years Total
Non-derivatives
At 31.12.2021
Credit institutions 804,051 1,561,665 185,913 2,551,629
Lease liabilities (Finance lease) 58,169 220,720 0 278,890
Trade payables 73,419 0 0 73,419
Other payables 51,803 0 0 51,803
987,443 1,782,385 185,913 2,955,741
At 31.12.2022
Credit institutions 124,458 0 2,901,733 3,026,191
Lease liabilities 18,055 223,832 0 241,887
Trade payables 87,078 0 0 87,078
Other payables 83,618 0 0 83,618
313,209 223,832 2,901,733 3,438,775
Derivatives
At 31.12.2021
Foreign exchange options / forwards used to hedge
currency risk 10,177 1,255 0 11,432
10,177 1,255 0 11,432
At 31.12.2022
Foreign exchange options / forwards used to hedge
currency risk -5,110 298 0 -4,812
-5,110 298 0 -4,812
45
ESVAGT ANNUAL REPORT 2022
Fair value
Financial instruments measured at fair value can be divided into three levels:
Level 1 - Quoted prices in active markets for identical assets or liabilities
Level 2 – Inputs other than quoted prices included in level 1 that are observable for the asset or liability
Level 3 – Input for the asset or liability that are not based on observable market data.
The fair value of bank borrowings does not differ significantly from the carrying amount. The fair value of
derivatives is calculated on level 2 in the fair value hierarchy using direct quotes.
Fair value measurements at 31 December 2022
GROUP PARENT
TDKK 2022 2021 2022 2021
Significant other observable inputs (Level 2)
Forwards used to hedge currency risk -4,812 11,432 -4,812 11,432
-4,812 11,432 -4,812 11,432
Measurement of derivatives
The valuation techniques used to measure derivatives include:
• the fair value of forward foreign exchange contracts is determined using forward exchange rates at the
balance sheet date
Derivatives are only used for economic hedging purposes and not as speculative investments. However,
where derivatives do not meet the hedge accounting criteria, they are classified are accounted for at fair
value through profit or loss. They 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. Interest rate derivates entered with a
value of TDKK 127,817 on a 5-year term.
Hedge effectiveness is determined at the inception of the hedge relationship, and through periodic prospec-
tive effectiveness assessments to ensure that an economic relationship exists between the hedged item and
hedging instrument.
For hedges of foreign currency purchases, the group enters hedge relationships where the critical terms of
the hedging instrument match exactly with the terms of the hedged item. The group therefore performs a
qualitative assessment of effectiveness.
In hedges of foreign currency purchases, ineffectiveness may arise if the timing of the forecast transaction
changes from what was originally estimated, or if there are changes in the credit risk of ESVAGT or the deriva-
tive counterparty and as differences between the spot rate and the forward rate of a contract.
Note 25 – continued
FINANCIAL RISK MANAGEMENT
The group uses foreign currency forwards to hedge its exposure to foreign currency risk. Under the group’s
policy the critical terms of the forwards must align with the hedged items.
The group designates the forward rate of foreign currency forwards in hedge relationships. The intrinsic value
of foreign currency is determined with reference to the relevant spot market exchange rate.
The group operates internationally and is exposed to foreign exchange risk, primarily the NOK, GBP and USD.
Foreign exchange risk arises from future commercial transactions denominated in currencies that are not DKK
or EUR. The risk is measured through forecasts of highly probable expenditures in NOK, GBP and USD. The
risk is hedged with the objective of minimizing the volatility of currency cost of highly probable revenue and
purchases of property, plant and equipment.
The group treasury’s risk management policy is to hedge up to 80% of forecast income and expenses in
currencies other than DKK and EUR up to two years in advance.
The effects of the foreign currency related hedging instruments on the group’s financial position and perfor-
mance are as follows:
GROUP
NOK GBP USD
Foreign currency forwards as at 31 December 2021
Carrying amount in TDKK -5,494 -9,433 2,205
Notional amount 60,612 164,275 126,215
Maturity date Jan/2022 Jan/2022 Jan/2022
Jun/2023 Dec/2023 Dec/2023
Weighted average hedged rate for the year (incl. forward points) 67.58 829.67 637.45
Foreign currency forwards as at 31 December 2022
Carrying amount in TDKK -164 2,609 2,366
Notional amount 16,125 131,930 231,681
Maturity date Jan/2023 Jan/2023 Jan/2023
Jun/2023 Dec/2024 Dec/2024
Weighted average hedged rate for the year (incl. forward points) 69.81 845.71 677.43
46
ESVAGT ANNUAL REPORT 2022
Note 26
EVENTS AFTER THE BALANCE SHEET DATE
No events occurred after the balance sheet date.
Note 27
COMPOSITION OF THE GROUP
Name of Entity:
Ownership and
Voting Rights
held by ESVAGT
Place of Business/
Incorporation
Investments in subsidiaries
ESVAGT Holdings Limited 100% Great Britain
ESVAGT UK Limited 100% Great Britain
ESVAGT Norge AS 100% Norway
ESVAGT Holdings Inc 100% United States
P/F ESVAGT-THOR 51% Faroe Islands
Investments in Joint Ventures
EWPL Ocean ApS 50% Denmark
47
ESVAGT ANNUAL REPORT 2022
COMPANY
INFORMATION
Company
Company No. / CVR No. 60 69 88 13
Municipality of reg. office Esbjerg
Phone No. +45 78 73 07 30
Internet www.ESV A GT.com
E-mail mail@ESV AGT.com
Board of Directors
Jakob Bo Thomasen, Chairman
Scott B. M. Moseley
Lars Oscar Tylegård
Søren Poulsgaard Jensen
Jess Høeg
Henrik Gorzelak Pedersen
Executive Management
Peter Lytzen
Kristian Ole Jakobsen
Audit
ESVAGT ANNUAL REPORT 2022
48
ESVAGT A/S
Dokvej 4
6700 Esbjerg
Denmark
esvagt.com
CVR no. 60 69 88 13
ESVAGT’s mission is making the sea a safe place to work for
both our customers and our crew. Safety always comes first
and as the saying goes at ESVAGT: Do it safely or not at all.