ANNUAL REPORT 2023
SAFETY &
SUPPORT AT SEA
CVR no. 60 69 88 13
OUR BUSINESS 4
MANAGEMENT REVIEW
CEO statement 6
Highlights 2023 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 2023
3
CONTRIBUTION
IN 2023
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.
Revenue growth
last 5 years
Revenue 2023
Vessels on order
Total Vessels
Safety Transfers of
Personnel by SOV’s
Rescued peopleTotal employees
Uptime
40%
1,438
mDKK
4
43
699,838
149+1, 30 0
99.7%
Offshore Oil & Gas
50%
Offshore Wind
50%
4
ESVAGT ANNUAL REPORT 2023
Peter Lytzen
CEO, ESVAGT A/S
CEO statement
ESVAGT’s 2023 revenue increased by more than 5% achieved
by a strong energy market and high technical uptime of
99.7%. We consolidated our leading position in the offshore
wind segment with two long term SOV contracts with Ørsted
and Vestas despite short term headwinds in the offshore wind
industry. Access to new markets were secured through a new
partnership with KMC Line in Korea, targeting the promising
emerging Asian Offshore Wind market.
ESVAGT’s revenue
increased by 40%
the last 5 years.
40%
THE GROWTH JOURNEY
CONTINUE
During 2023 we continued our growth journey within
the renewables securing two new SOV contracts, one
for Ørsted for a 10-year charter and one for Vestas for
a 15-year charter. Together with the existing fleet of 11
SOV’s, also working on long contracts, our fleet today
comprises of 13 SOV’s, reinforcing our position as the
largest provider of contract backed SOVs globally.
Our ERRV business also performed satisfactorily during
2023 due to an increased focus in Europe on energy
security and independence of oil and gas from Russia,
leading to more production and drilling activities in the
North Sea and consequently an increased demand for
our ERRV services.
In total this resulted in an all-time high Revenue of
1.438m DKK and EBITDA of 497m DKK. The net result
was 38m DKK.
ESVAGT ANNUAL REPORT 2023
6
Due to continued high inflation and interest rates, the
economics for several planned offshore wind projects
were under pressure in 2023 causing the developers
to slow down or cancel their projects. Fortunately, the
situation has lately improved, and several developers
have also successfully managed to renegotiate or re-bid
their planned projects, leading to healthier economics.
Consequently, we expect the current slowdown in the
industry to be a temporary “speed bump” and the
growth rates for new SOV’s to service the wind parks
to return to, and exceed, past high numbers. During
the year, most governments have in fact increased their
2030 targets for Offshore Wind, most notably EU almost
doubling the combined country targets.
Our safety performance in 2023 was very good and we
managed to avoid serious accidents causing harm to
our people. During the year we were involved in several
support and rescue operations with our ERRV’s where
especially the assistance to a passenger ship - MS
Maud – in serious trouble during a severe storm in the
North Sea, demonstrated the importance of ESVAGT’s
continued presence as a provider of safety and support
at sea.
The most important asset in ESVAGT is our people and
in 2023 we had the satisfaction to achieve a very high
engagement score amongst our employees. This was
also expressed in a cultural safety assessment carried
out by an independent consultant, where the conclusion
was that the safety culture in ESVAGT is among the best
in the industry.
The journey towards replacing fossil fuels with renew-
able energy continue at full speed and in 2023 we
signed a 2nd contract with Ørsted for the delivery
of a SOV based on e-methanol as fuel. In parallel we
are in the process of securing class notations for the
remaining fleet so biofuel can be used as an alter-
native to conventional marine diesel in the future. In
2023 we implemented “Starlink” on all our vessels and,
besides improving the general welfare for our crew, the
improved connectivity “Starlink” can offer, will allow
us to fully implement our newly developed digitalized
route planning tool “SMARTScheduler” onboard our
SOV’s - to the benefit of the customers.
During 2023 the technical utilization of both the ERRV
fleet and SOV fleet was very good with few unplanned
breakdowns securing a combined technical uptime of
99.7 %.
The journey towards replacing fossil fuels with renewable energy continue at full
speed and in 2023 we signed a 2nd contract with Ørsted for the delivery of a SOV
based on e-methanol as fuel. In parallel we are in the process of securing class nota-
tions for the remaining fleet so biofuel can be used as an alternative to conventional
marine diesel in the future.
”
Looking ahead we expect the activities in the North
Sea will remain healthy with high utilization of our
ERRV fleet and continued expansion of our SOV fleet.
However, as we also expect a continued pressure on
cost the results in 2024 will undoubtedly be challenged
and will require managements continued full attention.
In the US our joint venture with Crowley – Crest –
develops as planned with continued focus on delivering
the first Jones Act built SOV to Siemens and bidding for
new SOV contracts, pending the actual recovery speed
for offshore wind in the US.
After having established our joint venture with Crowley
in the US successfully, we have decided to expand
our activities outside Europe and US and late 2023 we
signed a Heads of Agreement with the Korean shipping
company – KMC Line- to form a joint venture offering
SOV services to the emerging Asian Offshore Wind
market.
Peter Lytzen
CEO, ESVAGT A/S
“
ESVAGT ANNUAL REPORT 2023
7
ESVAGT will build a new SOV to service
Vestas at Ecowende’s Hollandse Kust West
offshore wind farm in the Netherlands
ESVAGT has secured the contract to service
Vestas at Ecowende’s Hollandse Kust West
offshore wind farm. ESVAGT will for this service
build a new SOV and it will be the 6th purpose-
built SOV for Vestas. The new wind farm in
Netherlands will be commissioned in 2026. The
partners have agreed a 15-year contract with
extension options, which is aligned with Vestas’
service contract for Ecowende.
Ørsted and ESVAGT sign second contract for
methanol-powered vessel
Ørsted and ESVAGT have signed an agreement
for a sister vessel to the world’s first methanol-
powered service operation vessel (SOV). The SOV
will be ready for launch in 2026, where it will
operate out of Ørsted’s UK East Coast Hub on a
10-year contract. The new SOV will be powered
by dual fuel engines, capable of sailing on
renewable e-methanol produced from renewable
energy and biogenic carbon, which will lead to
a yearly carbon emissions reduction of approx.
4,500 tonnes.
ESVAGT awarded Vestas’ ‘Sustainability
Supplier of the Year’ 2023
ESVAGT has been awarded ‘Sustainability
Supplier of the Year’ by Vestas at the annual
Vestas Supplier Forum. ESVAGT has been recog-
nized, because ESVAGT’s continued support
for Vestas’ climate ambitions and its genuine
engagement in turning ambitions into action
that makes a difference.
ESVAGT and KMC Line sign a Memorandum
of Understanding (MoU) for offshore wind
cooperation in Korea
ESVAGT supports its customers globally to
enable the green transition. Now, ESVAGT is
entering the Korean offshore wind market
through a strategic partnership with a highly
regarded and experienced Korean shipping
company, KMC Line.
Peter Lytzen, CEO of ESVAGT:
“We have no doubt that ESVAGT
and KMC Line present a compelling
offering. By combining KMC Line, a
reputable shipping company with
a strong presence in Korea, and
ESVAGT’s expertise in Europe as a
leading SOV operator, we can offer
the growing Korean offshore wind
industry a first-class service.”
ESVAGT and Hvide Sande Shipyard collaborate on
innovative transfer boat for the wind industry
The transfer boat for the wind sector of the future will be bigger and stronger, with room for more tech-
nicians and more cargo. ESVAGT and Hvide Sande Shipyard are raising the bar together. The boats met a
demand in the market. Today the STB concept with experienced seamen and specially developed boats
is a very important contribution to flexibility and efficiency in the operation of offshore wind farms across
Europe. ESVAGT and Hvide Sande Shipyard is taking the next step and developing a bigger boat, which will
be able to transfer more technicians and load more cargo.
HIGHLIGHTS 2023
See more
See more
See more
See more
See more
8
ESVAGT ANNUAL REPORT 2023
BUSINESS PERFORMANCE
ESVAGT has more than 40 years of experience as a high-
quality provider of safety and support at sea and making the
sea a safe place to work. ESVAGT conduct our operations
using our efficient Service Operation Vessels (SOVs), serving
the Offshore Wind industry, and our Emergency Response
and Rescue Vessels (ERRVs), which is servicing the drilling rigs
and production platforms in the Oil and Gas sector.
EXPECTATIONS FOR 2024
ESVAGT expects continued growth in 2024, driven by
positive developments in key markets, which results in
robust demand and improving day-rates for the existing
fleet. Furthermore, delivery of a newbuild SOV for a long-
term contract with Ørsted is in the latter end of the year.
Wind
ESVAGT’s existing SOV fleet is primarily on long-term
contracts providing essential services to customers for
the operations and maintenance of windfarms. One SOV
is available for short/medium-term employment in 2024
and is experiencing significant demand and increasing
day-rates, as there is a shortage of quality tonnage for
required walk-to-work services.
While the windfarm developers have experienced specific
project challenges in recent years leading to some
delays and cancellations, there is strong political resolve
to progress on the much-needed energy transition. As
a result, the long-term outlook for Wind continues to
improve with e.g. EU countries recently doubling their
2030 Offshore Wind Energy targets. Similarly, outside
of Europe emerging markets like USA and several Asian
countries are maturing plans to build up Offshore Wind
at scale that will require SOVs. ESVAGT has already
secured 3 contract-backed SOVs for delivery in Europe
and 1 for delivery in USA in the coming years.
Oil and Gas
The broader Oil and Gas industry has fundamentally
changed, with an uptake in activity in particular as
Europe’s focus has been directed towards energy security
and a rapid reduction in dependency on Russian oil and
gas. This has led to an acceleration of existing Oil and Gas
projects, new exploration lease rounds in markets that
otherwise had no plans to issue new licenses as well as
various work to maximize the output of existing fields.
ESVAGT ANNUAL REPORT 2023
9
operational performance with a record EBITDA of 497m
DKK, an increase of 5.0% from 2022.
The refinancing in 2022 helped to cap the effect of
increased interest rates but on the other hand the volatile
exchange rates had a negative impact on the financial
expenses.
The net result 2023 of 38m DKK is below the expectations
for 2023, primarily due to the volatile exchange rates.
Nevertheless, ESVAGT demonstrated resilience and a
well-structured approach to successfully attaining a satis-
factory result for 2023.
Market and activities
In 2023 both the ERRV and SOV fleet experienced higher
utilization, with the ERRV market in particular showing
recovery. This was largely due to the continued shift in
The activity has resulted in higher demand for ERRV
services, which combined with no new vessel additions
to the market, has caused a tightened supply/demand
balance leading to higher day-rates both in the “spot
market” and for fixed contracts. In 2024 ESVAGT expects
to continue with the same high utilisation seen in 2023,
while also increasing day-rates.
For 2024 ESVAGT expects to increase the revenue due to
the continued growth of the SOV business and continued
high utilization on the ERRV’s. The net result for 2024 is
expected to be in line with 2023, as both cost pressure
and costs for growing the business will continue in 2024.
ACTIVITY FOR 2023
Result for the year
ESVAGT had a revenue of 1,438m DKK, an EBITDA of
497m DKK and a net result of 38m DKK ending the year
with a total equity of 2,261m DKK.
The revenue and EBITDA in 2023 were historic for
ESVAGT. The revenue increased by 5.4 % from 2022
where both the Oil and Gas sector and the Offshore Wind
sector had positive developments in revenue despite
volatile exchange rates. The geopolitical uncertainties
for securing the Oil and Gas supply in Europe impacted
both the demand for ERRV’s and increased the day-rates.
Our short-term SOV business delivered a high utilization
in 2023 driven by the shortage of quality tonnage for
required walk-to-work services.
The high inflation continued into 2023 and put the
costs under pressure. However, ESVAGT decreased the
operating expenses excl. staff cost with 5,5 % from 2022
due to the drop in fuel prices and reallocation of costs as
external crew was hired as new staff.
Despite the cost pressure and the impact of macroeco-
nomics and political changes, ESVAGT achieved a high
Strong operational
performance
0.35% Unplanned
breakdown – against KPI
of 0.90%
0.35%
ESVAGT ANNUAL REPORT 2023
1010
European geopolitical situations, which indirectly influ-
enced an increase and transformation in energy demand.
Wind
The wind activities continued the positive trend as
numerous offshore wind projects are currently in prog-
ress and with additional developments announced for the
upcoming years. The existing SOV fleet was more or less
all on long-term contracts with steady high performance
and the short-term SOV was in high demand to fill the
gap in the market.
Oil and Gas
The North Sea ERRV market continued to improve in
2023. ESVAGT managed to increase the contracted days
on the ERRV fleet giving a high utilization. Given the
focus on securing the energy supply, there was high
demand for ERRV’s in the spot market. In addition,
ESVAGT was able to renew and extend existing contracts
at higher rates.
Development activities
In 2023 ESVAGT signed 2 new contracts for newbuild
SOV’s. One of the newbuilds will be operating for
Ørsted’s UK East Coast Hub on a 10-year contract
and will be a sister vessel to the world’s first metha-
nol-powered service operation vessel (SOV). The other
of the newbuilds will be servicing Vestas at Ecowende’s
Hollandse Kust West offshore wind farm in the
Netherlands on a 15-year contract.
During 2023 ESVAGT has also held expenses of 2,3m DKK
(2022: 4,0m DKK) mainly relating to IT and digitalization
projects.
Financial risks
A consolidated overview of the ESVAGT Groups financial
risks is included in note 25.
Saved lives since
early 1980s
149
ESVAGT ANNUAL REPORT 2023
11
Sustainability
ESVAGT’s constant strive for more sustainable solutions
strengthen by delivering the first CO
2
neutral new build
SOV in 2024 and one additional contract signed for a CO
2
neutral new build SOV to be delivered in 2026.
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 2023 Sustainability
& ESG Report.
Statutory statement regarding the
underrepresented gender in accordance
with section 99b of the Danish Financial
Statements Act
Statutory statement regarding the underrepresented
gender in the management levels in 2023 shown below
with the respective target numbers for 2025.
Management
level
Number of
members
Share of
underrep-
resented
gender
Target
Board of directors 6 (of which
0 is females)
0% 33 %
Management and
middle management
level with personnel
responsibility
5 is females)
For more information about the Statutory statement
regarding the underrepresented gender we refer to our
2023 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 2023
SUSTAINABILITY & ESG REPORT 2023
DECARBONISING
OFFSHORE
SUPPORT
CVR no. 60 69 88 13
Read our
report here
ESVAGT ANNUAL REPORT 2023
12
KEY FIGURES FOR THE
CONSOLIDATED GROUP
5 YEARS KEY FIGURES
TDKK 2023 2022 2021 2020 2019
Profit and loss accounts
Net revenue 1,438,176 1,364,473 1,080,683 976,788 1,028,568
Profit before special items, deprecia-
tion, amortization and financial items 497,109 473,475 364,776 328,026 356,482
Profit for the year 38,470 -16,159 150,709 -246,140 14,353
Balance sheet
Total assets 5,692,387 5,514,795 5,009,039 4,199,245 4,190,808
Equity 2,261,117 2,277,111 2,150,584 1,752,137 1,762,940
Investment in property, plant and
equipment 500,452 502,402 670,122 405,926 403,263
Key ratios
Profit margin % 14% 14% 22% -17% 9%
Return on equity % 2% -1% 8% -14% 1%
Equity ratio % 40% 41% 43% 42% 42%
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.
New build (US) Hull-793New build (EU) Hull-1094
New build (EU) Hull-1097 New build (EU) Hull-1102
NEW BUILD VESSELS UNDER CONSTRUCTION
13
ESVAGT ANNUAL REPORT 2023
Executive Management
Board of Directors
ESVAGT ANNUAL REPORT 2023
15
ESVAGT ANNUAL REPORT 2023
16
CVR No 33 77 12 31
ESVAGT ANNUAL REPORT 2023
17
GROUP PARENT
TDKK Note 2023 2022 2023 2022
Net revenue 3 1,438,176 1,364,473 1,434,458 1,361,219
Other income 1,973 4,593 1,973 4,593
Other operating expenses -435,006 -460,539 -431,873 -460,090
Gross profit 1,005,143 908,527 1,004,558 905,722
Staff expenses 4 -507,950 -435,044 -505,996 -433,385
Share of profit/loss in subsidiaries 0 0 -8,235 975
Share of profit/loss in joint ventures 22 -84 -8 0 -8
Profit before special items, depreciation,
amortization and financial items etc. 497,109 473,475 490,327 473,304
Special items 5 0 -67 0 -67
Profit before depreciation, amorti-
sation and financial items etc. 497,109 473,408 490,327 473,237
Amortisation, depreciation and
impairment losses 6 -296,935 -283,096 -296,935 -283,096
Profit/loss before financial items 200,175 190,311 193,393 190,140
Financial income 7 4,976 46,269 11,831 46,216
Financial expenses 8 -167,001 -252,263 -166,716 -252,290
Profit/loss before income tax 38,149 -15,682 38,507 -15,934
Tax 9 321 -477 -31 -220
Profit/loss for the year 38,470 -16,159 38,476 -16,154
Profit is attributable to:
Non-controlling interests -5 -6 0 0
Owners of ESVAGT A/S 38,476 -16,154 38,476 -16,154
GROUP PARENT
TDKK Note 2023 2022 2023 2022
Profit for the year 38,470 -16,159 38,476 -16,154
Other comprehensive income
Items that may be subsequently
reclassified to profit or loss
Exchange diff. on translation of subsidiaries 287 -792 287 -792
Cash flow hedges:
Interest rate swaps -50,826 127,818 -50,826 127,818
Value adjustment of hedges for the year -3,288 5,136 -3,288 5,136
Reclassified to income statement
- revenue -1,756 12,240 -1,756 12,240
- financial expenses -3,264 -1,729 -3,264 -1,729
Other comprehensive income for the year,
net of tax -58,848 142,672 -58,848 142,672
Total comprehensive income for the year -20,378 126,514 -20,373 126,519
Profit is attributable to:
Non-controlling interests -5 -6 0 0
Owners of ESVAGT A/S -20,373 126,519 -20,373 126,518
STATEMENT OF COMPREHENSIVE INCOME
Consolidated and parent company financial statements
STATEMENT OF PROFIT AND LOSS
19
ESVAGT ANNUAL REPORT 2023
GROUP PARENT
TDKK Note 2023 2022 2023 2022
Development projects 3,287 5,754 3,287 5,754
Intangible assets 10 3,287 5,754 3,287 5,754
Vessels 11 4,138,722 4,311,979 4,138,722 4,311,979
Other operating equipment and fixtures 11 5,387 11,984 5,387 11,984
Buildings on leased land 11 32,748 35,114 32,748 35,114
Prepayments for tangible assets 11 609,495 199,396 609,495 199,396
Right-of-use assets 18 243,801 247,399 243,801 247,399
Tangible assets 5,030,153 4,805,872 5,030,153 4,805,872
Investment in subsidiaries 0 0 13,718 14,642
Investment in joint ventures 22 64,215 0 0 0
Receivables from joint ventures 127,825 0 0 0
Investments in other entities 192,040 0 13,718 14,642
Total non-current assets 5,225,480 4,811,626 5,047,158 4,826,267
Bunker oil and other consumables 13 18,260 24,457 18,260 24,457
Inventories 18,260 24,457 18,260 24,457
Trade receivables 14 218,654 198,367 159,490 153,158
Receivables from parent company 7,032 5,874 7,032 5,874
Receivables from Group companies 0 29 261,326 117,957
Derivatives and interest rate swaps 72,940 132,540 72,940 132,540
Other receivables 11,287 12,761 11,195 12,749
Prepayments 12,972 11,196 12,943 11,166
Deferred tax 16 349 0 0 0
Receivables 323,235 360,767 524,925 433,446
Cash and cash equivalents 125,412 317,945 103,114 231,935
Total current assets 466,907 703,169 646,299 689,838
Total assets 5,692,387 5,514,795 5,693,457 5,516,105
GROUP PARENT
TDKK Note 2023 2022 2023 2022
Share capital 15 2,200 2,200 2,200 2,200
Other reserves 71,876 130,724 75,164 136,478
Retained earnings 2,187,041 2,143,928 2,183,753 2,138,174
Equity attributable to owners of ESVAGT 2,261,117 2,276,852 2,261,117 2,276,852
Non-controlling interests 254 259 0 0
Total equity 2,261,371 2,277,111 2,261,117 2,276,852
Bank and credit institutions, non current 17 3,059,428 2,829,283 3,059,428 2,829,283
Lease liabilities, non current 18 136,139 180,118 136,139 180,118
Other non current liabilities 1,660 1,937 1,660 1,937
Total non-current liabilities 3,197,227 3,011,338 3,197,227 3,011,338
Bank and credit institutions, current 17 0 0 0 0
Lease liabilities, current 18 54,255 43,714 54,255 43,714
Received prepayments 8,587 11,164 8,587 11,164
Trade payables 77,370 87,078 77,248 87,029
Payables to Group companies 0 0 1,259 1,675
Income tax liabilities 454 764 724 693
Other payables 93,123 83,626 93,041 83,641
Total current liabilities 233,789 226,346 235,113 227,915
Total liabilities 3,431,016 3,237,684 3,432,340 3,239,253
Total equity and liabilities 5,692,387 5,514,795 5,693,457 5,516,105
LIABILITIES
Consolidated and parent company financial statements
BALANCE SHEET
-
ASSETS
20
ESVAGT ANNUAL REPORT 2023
GROUP
TDKK Share Capital
Reserve for
Foreign Currency
Translation
Cash Flow
Hedges
Retained
Earnings Total
Non-Controlling
Interests Total Equity
Equity at 01.01.2022 2,200 -558 -11,390 2,160,068 2,150,320 265 2,150,585
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
Total comprehensive income for the year 0 -792 143,464 -16,154 126,519 -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 2,276,853 259 2,277,111
Profit for the year 0 0 0 38,476 38,476 -5 38,470
Exchange diff. on translation of subsidiaries 0 287 0 0 287 0 287
Interest rate swaps 0 0 -50,826 0 -50,826 0 -50,826
Value adjustment of hedges for the year 0 0 -3,288 0 -3,288 0 -3,288
Reclassified to income statement
- revenue 0 0 -1,756 0 -1,756 0 -1,756
- financial expenses 0 0 -3,264 0 -3,264 0 -3,264
Total comprehensive income for the year 0 287 -59,135 38,476 -20,371 -5 -20,378
Transactions with owners in their capacity as owners
Long term incentive schemes 0 0 0 4,637 4,637 0 4,637
Equity at 31.12.2023 2,200 -1,064 72,939 2,187,041 2,261,117 254 2,261,370
Consolidated and parent company financial statements
STATEMENT OF CHANGES IN EQUITY
21
ESVAGT ANNUAL REPORT 2023
PARENT
TDKK Share Capital
Reserve for
Foreign Currency
Translation
Cash Flow
Hedges
Development
Cost Reserve
Retained
Earnings Total Equity
Equity at 01.01.2022 2,200 -558 -11,390 8,887 2,151,180 2,150,320
Profit for the year 0 0 0 -3,133 -13,020 -16,153
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
- revenue 0 0 12,240 0 0 12,240
- financial expenses 0 0 -1,729 0 0 -1,729
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 2,138,174 2,276,852
Profit for the year 0 0 0 -2,466 40,942 38,476
Exchange diff. on translation of subsidiaries 0 287 0 0 0 287
Interest rate swaps 0 0 -50,826 0 0 -50,826
Value adjustment of hedges for the year 0 0 -3,288 0 0 -3,288
Reclassified to income statement
- revenue 0 0 -1,756 0 0 -1,756
- financial expenses 0 0 -3,264 0 0 -3,264
Total comprehensive income for the year 0 287 -59,135 -2,466 40,942 -20,373
Transactions with owners in their capacity as owners
Long term incentive schemes 0 0 0 0 4,637 4,637
Equity at 31.12.2023 2,200 -1,064 72,940 3,287 2,183,753 2,261,117
Consolidated and parent company financial statements
STATEMENT OF CHANGES IN EQUITY
22
ESVAGT ANNUAL REPORT 2023
GROUP PARENT
TDKK Note 2023 2022 2023 2022
Profit before depreciation,
amortisation and financial items etc. 497,109 473,408 490,327 473,237
Other expenses 2,380 -4,151 5,503 -4,151
Longterm incentive schemes 4,637 0 4,637 0
Change in working capital 24 -14,662 -26,276 -154,945 -87,274
Share of profit/loss in subsidiaries 0 0 8,235 -975
Share of profit/loss in joint ventures 84 8 0 8
Cash flows from operating activities
before financial income and expenses 489,548 442,989 353,757 380,845
Financial income received 4,969 1,323 11,825 1,354
Financial expenses paid -143,140 -285,496 -143,446 -285,519
Income taxes paid -344 -224 0 -202
Net cash flow from operating
activities 351,032 158,592 222,136 96,478
GROUP PARENT
TDKK Note 2023 2022 2023 2022
Payments for intangible assets and
property, plant and equipment -493,343 -501,423 -493,343 -501,423
Sale of intangible assets and property,
plant and equipment 0 4,402 0 4,402
Share capital in joint ventures -64,215 0 -26 0
Loan to joint ventures -127,825 0 0 0
Net cash flow from investing activities -685,383 -497,021 -493,369 -497,021
Proceeds from loans from credit
institutions 200,038 479,269 200,038 479,269
Principle element of lease payments -51,169 -43,817 -51,169 -43,817
Share Capital and Share Premium paid 0 14 0 0
Cash flow from financing activities 148,870 435,466 148,869 435,452
Net cash flow for the year -185,481 97,038 -122,365 34,908
Effects of exchange rate changes on
cash and cash equivalents -7,052 -8,451 -6,456 -7,370
Cash and cash equivalents, beginning
of the year 317,946 229,359 231,935 204,397
Cash and cash equivalents, end of
the year 125,412 317,946 103,114 231,935
Consolidated and parent company financial statements
CASH FLOW STATEMENT
23
ESVAGT ANNUAL REPORT 2023
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 2023
The Annual Report for the period 1 January - 31 December 2023 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 IFRS Accounting Standards 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 30 April
2024.
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 2023:
• Presentation of Financial Statements and Practice Statements – Amendments to IAS 1
• Accounting Policies, Changes in Accounting Estimates and Errors – Amendments to IAS 8
• Income Taxes - Amendments to IAS 12
• Income Taxes, International Tax Reform - Pillar II Model Rules – Amendments to IAS 12
• Insurance Contracts- Amendments to IFRS 17
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 2023 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 2023
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.
Long-term incentive schemes granted to the Executive Management and other senior employees are
recognised as staff expenses and offset directly against equity.
Special items
Special items comprise non-recurring income and expenses that are not considered to be part of ordinary
operations such as 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.
Note 1 – continued
ACCOUNTING POLICIES
26
ESVAGT ANNUAL REPORT 2023
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
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 2023
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 2023
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 2023
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 volatile macroeconomic effects and market conditions, with high inflation and falling NOK rates,
ESVAGT are in a favorable business position with high markets rates and long-term contracts with incorpo-
rated escalation principles, which means no impairment seen in the different CGU’s. The result of the impair-
ment testing is further disclosed in note 11 about Property, Plant and Equipment.
Note 2
CRITICAL ACCOUNTING ESTIMATES AND JUDGEMENTS
30
ESVAGT ANNUAL REPORT 2023
GROUP PARENT
TDKK 2023 2022 2023 2022
Support and safety activities, offshore
oil & gas (over time) 824,045 760,934 820,335 757,700
Support and safety activities, offshore wind
(over time) 538,618 491,294 538,618 491,294
Sale of fuel, offshore oil & gas (point in time) 46,024 79,242 46,017 79,222
Sale of fuel, offshore wind (point in time) 29,488 33,003 29,488 33,003
1,438,176 1,364,473 1,434,458 1,361,219
The group has recognized the following assets and liabilities related to contracts with customers:
TDKK
31 Dec
2023
31 Dec
2022
1 Jan
2022
Group
Current contract assets relating to charters 329 280 1,187
Current contract liabilities relating to charters -8,587 -11,164 -11,682
Parent
Current contract assets relating to charters 329 280 1,187
Current contract liabilities relating to charters -8,587 -11,164 -11,682
GROUP PARENT
TDKK 2023 2022 2023 2022
Revenue recognised that was included in the
contract liability at the beginning of the period 2,577 3,138 2,577 3,138
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 2023
GROUP PARENT
TDKK 2023 2022 2023 2022
Wages and salaries 484,247 417,324 482,390 415,665
Pensions, defined contribution plans 9,602 8,633 9,520 8,633
Other staff costs 9,463 9,087 9,448 9,087
Long term incentive schemes 4,637 0 4,637 0
Staff Expenses 507,950 435,044 505,996 433,385
Average number of full-time employees 995 937 993 935
Key Management Compensation
Key Management includes Board of Directors and Executive Management in ESVAGT A/S, in total 8 persons by
end 2023 (8 in 2022).
Long term incentive schemes
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 depend on the fair value development of ESVAGT A/S and an exit of the current owners. The
maximum value of the programs amounts to DKK 112 million (EUR 15 million), however as of 31st December
2023 the value is calculated to DKK 42 million corresponding to the estimated value at grant date.
The program vests over the period until an exit of the current owners. In 2023 DKK 4,6 million has been recog-
nized as an expense in the P&L.
The exercise price of the awards is 0.
The compensation paid or payables to key management for employee services is shown below:
TDKK
Executive
Management
Board of
Directors Total
2023 Group
Wages and salaries 10,606 2,070 12,676
Pensions, defined contribution plans 251 0 251
Long term incentive schemes 1,716 0 1,716
Compensation to the Board of Directors
and Executive Management 12,573 2,070 14,643
2023 Parent
Wages and salaries 10,606 2,070 12,676
Pensions, defined contribution plans 251 0 251
Long term incentive schemes 1,716 0 1,716
Compensation to the Board of Directors
and Executive Management 12,573 2,070 14,643
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
Note 4
STAFF EXPENSES
32
ESVAGT ANNUAL REPORT 2023
GROUP PARENT
TDKK 2023 2022 2023 2022
Interest income from parent 348 204 348 204
Interest income from subsidiaries 0 1 7,765 59
Interest income, bank 4,620 1,118 3,711 1,092
Exchange rate adjustments 0 44,919 0 44,835
Other financial Income 6 27 6 27
4,976 46,269 11,831 46,216
Total interest income on financial assets that are measured at amortized cost for the year was TDKK 4,975
(2022: TDKK 1,350) for the Group and TDKK 11,831 (2022: TDKK 1,381) for the parent company.
Note 8
FINANCIAL EXPENSES
GROUP PARENT
TDKK 2023 2022 2023 2022
Interest expenses to subsidaires 0 0 105 41
Interest expenses, credit institutions 137,909 232,670 137,909 232,670
Interest expenses, bank 0 1,221 0 1,222
Interest expenses, leases 18,205 21,535 18,205 21,535
Exchange rate adjustments 23,576 197 23,318 197
Other financial expenses, including bank fees 492 740 359 726
Capitalized interests -13,180 -4,100 -13,180 -4,100
167,001 252,263 166,716 252,290
Total interest expenses on financial liabilities not measured at fair value through profit or loss for the year
was TDKK 156,114 (2022: TDKK 255,426) for the group and TDKK 156,219 (2022: TDKK 255,468) for the parent
company. The realized refinancing costs amount up to TDKK 0 (2022: TDKK 99,340)
GROUP PARENT
TDKK 2023 2022 2023 2022
Strategic market investigations 0 67 0 67
0 67 0 67
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 AND DEPRECIATION
GROUP PARENT
TDKK 2023 2022 2023 2022
Amortisation of intangible assets 3,304 7,155 3,304 7,155
Depreciation of tangible assets 271,898 258,241 271,898 258,241
Depreciation of right-of-use assets 21,733 17,700 21,733 17,700
296,935 283,096 296,935 283,096
Note 5
SPECIAL ITEMS
Note 7
FINANCIAL INCOME
33
ESVAGT ANNUAL REPORT 2023
GROUP PARENT
TDKK 2023 2022 2023 2022
Income tax:
Tax on profit/loss for the year -1,045 -216 -693 -473
Total income tax -1,045 -216 -693 -473
Tonnage tax 724 693 724 693
Total tax for the year -321 477 31 220
Tax on profit/loss for the year can be broken down
as follows:
Current tax 0 256 0 0
Deferred tax -352 0 0 0
Adjustments for current tax of prior periods -693 -473 -693 -473
Tax on profit/loss for the year -1,045 -216 -693 -473
Income tax is specified as follows:
Calculated 22% tax on "Profit for the year
before income tax" -9,519 3,451 -9,492 3,505
Tax effects of:
Income tax under tonnage taxation 9,167 -3,194 9,492 -3,506
Adjustments in respect of prior years -693 -473 -693 -473
-1,045 -216 -693 -473
Effective tax rate 2.4% -1.4% 1.6% -3.0%
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 01.01.2022 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
Cost:
At 01.01.2023 21,195 21,195
Additions during the year 2,334 2,334
Reclassifications -1,497 -1,497
At 31.12.2023 22,032 22,032
Amortisation and impairment:
At 01.01.2023 15,441 15,441
Amortisation charge 3,304 3,304
At 31.12.2023 18,745 18,745
Carrying amount 31.12.2023 3,287 3,287
During 2023 ESVAGT held expenses of MDKK 2.3 (2022: MDKK 4.0) mainly relating to IT projects.
Note 9
TAX
Note 10
INTANGIBLE ASSETS
34
ESVAGT ANNUAL REPORT 2023
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
At 31.12.2022 6,765,423 45,215 62,679 199,396 7,072,713
Depreciation 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
Depreciation 254,319 564 3,358 0 258,241
Reclassifications 0 0 0 0 0
At 31.12.2022 2,453,445 33,231 27,565 0 2,514,241
Carrying amount 31.12.2022 4,311,979 11,984 35,114 199,396 4,558,472
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%
GROUP
TDKK Vessels
Operating
Equipment
& Fixtures Buildings
Prepay-
ments Total
Cost:
At 01.01.2023 6,765,423 45,215 62,679 199,396 7,072,713
Additions during the year 77,140 5,380 0 417,931 500,452
Disposals 0 0 0 0 0
Reclasssifications 6,035 -10,490 50 -7,831 -12,236
At 31.12.2023 6,848,598 40,106 62,729 609,495 7,560,928
Depreciation and impairment:
At 01.01.2023 2,453,445 33,231 27,565 0 2,514,241
Disposals 0 0 0 0 0
Depreciation 268,028 1,454 2,416 0 271,898
Reclassifications -11,597 33 0 0 -11,564
At 31.12.2023 2,709,876 34,718 29,982 0 2,774,576
Carrying amount 31.12.2023 4,138,722 5,387 32,748 609,495 4,786,353
The amount of borrowing costs capitalized during 2023 was TDKK 13,180. The rate used to determine the
amount of borrowing cost eligible for capitalization was 3.84%
Commitments for tangible assets
ESVAGT has one vessel under construction for delivery in 2024 and two vessels for delivery in 2026.
GROUP PARENT
TDKK 2023 2022 2023 2022
Remaining Commitments, new building program 1,100,000 420,000 1,100,000 420,000
1,100,000 420,000 1,100,000 420,000
Note 11
PROPERTY, PLANT AND EQUIPMENT
35
ESVAGT ANNUAL REPORT 2023
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
At 31.12.2022 6,765,423 45,215 62,679 199,396 7,072,713
Depreciation 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
Depreciation 254,319 564 3,358 0 258,241
Reclassifications 0 0 0 0 0
At 31.12.2022 2,453,445 33,231 27,565 0 2,514,241
Carrying amount 31.12.2022 4,311,979 11,984 35,114 199,396 4,558,472
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%
PARENT
TDKK Vessels
Operating
Equipment
& Fixtures Buildings
Prepay-
ments Total
Cost:
At 01.01.2023 6,765,423 45,215 62,679 199,396 7,072,713
Additions during the year 77,140 5,380 0 417,931 500,452
Disposals 0 0 0 0 0
Reclasssifications 6,035 -10,490 50 -7,831 -12,236
At 31.12.2023 6,848,598 40,106 62,729 609,495 7,560,928
Depreciation and impairment:
At 01.01.2023 2,453,445 33,231 27,565 0 2,514,241
Disposals 0 0 0 0 0
Depreciation 268,028 1,454 2,416 0 271,898
Reclassifications -11,597 33 0 0 -11,564
At 31.12.2023 2,709,876 34,718 29,982 0 2,774,576
Carrying amount 31.12.2023 4,138,722 5,387 32,748 609,495 4,786,353
The amount of borrowing costs capitalized during 2023 was TDKK 13,180. The rate used to determine the
amount of borrowing cost eligible for capitalization was 3.84%
Commitments for tangible assets
ESVAGT has one vessel under construction for delivery in 2024 and two vessels for delivery in 2026.
GROUP PARENT
TDKK 2023 2022 2023 2022
Remaining Commitments, new building program 1,100,000 420,000 1,100,000 420,000
1,100,000 420,000 1,100,000 420,000
Note 11 - continued
PROPERTY, PLANT AND EQUIPMENT
36
ESVAGT ANNUAL REPORT 2023
Impairment Analysis
ESVAGT have over the last years been affected by high inflation and increasing interest rates, but at the same
time been in an industry with increasing demand and dayrates. This uplift derived from the geopolitical focus
on securing alternative energy sources and the increasing ambitions for green energy transition.
ESVAGT proven to maneuver the volatile macroeconomic effects and market conditions by utilizing the fleet
efficient and optimal and keep cost increases to a minimum. ESVAGT thereby been able to keep the results
within expectations and continue the overall growth plan within the fast-growing offshore wind segment.
Outcome of the impairment test
The different assumptions behind ESVAGT’s short- and long-term budget are affecting the Impairment
both negatively and positively. The GBP and EUR increased a bit while NOK yet again dropping. The WACC
reduced with ~0,5% in both segments as the risk-free rate dropped a bit since last year, which reduced the
cost of equity and cost of debt. With the improved rates covering the increased cost, ESVAGT manage to
keep the headroom pretty much in line with last year and thereby no impairment loss to be recognized in
2023.
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% (2022: 2.5%) 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 6.50% (2022: 7.05%) for ERRV segment and 6.00%
(2022: 6.54%) for WIND segment 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 2023:
• GBP: 857.59 (2022: 838.45)
• NOK: 66.30 (2022: 70.73)
• EUR: 745.29 (2022: 743.65)
• USD: 674.47 (2022: 697.22)
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
111 million in 2023 and the sensitivity analysis for the unit shows that the headroom would have been:
• DKK 75 million and DKK 147 million with a +/- 0.5 percentage point change in the WACC, keeping all other
assumptions unchanged.
• DKK -29 million and DKK 251 million with a -/+ 5 percentage point change in the Market spot rate,
keeping all other assumptions unchanged.
• DKK 24 million and DKK 201 million with a -/+ 0.5 percentage point change in the long-term inflation rate,
keeping all other assumptions unchanged.
• DKK 118 million with FX Rates from 25th of March, 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 however 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 2023
GROUP PARENT
TDKK 2023 2022 2023 2022
Carrying Amount
Financial assets:
Financial assets at fair value
Interest rate swap 76,992 127,520 76,992 127,520
Foreign currency forwards 0 5,020 0 5,020
Total financial assets at fair value 76,992 132,540 76,992 132,540
Financial assets at amortised cost:
Trade receivables 218,654 198,367 159,490 153,158
Receivables from parent company 7,032 5,874 7,032 5,874
Receivables from Group companies 0 29 261,326 117,957
Receivables from joint ventures 127,825 0 0 0
Other Receivables 11,287 12,761 11,195 12,750
Cash and cash equivalents 125,412 317,945 103,114 231,935
Total Financial assets at amortised cost 490,210 534,976 542,156 521,676
Total Financial assets 567,202 667,516 619,148 654,216
Financial liabilities:
Financial liabilities at fair value
Foreign currency forwards (used for hedging) 4,052 0 4,052 0
Total financial liabilities at fair value 4,052 0 4,052 0
Financial liabilities at amortised cost:
Borrowings 3,059,428 2,829,283 3,059,428 2,829,283
Trade payables 77,370 87,078 77,248 87,029
Payables to Group companies 0 0 1,259 1,675
Lease liabilities 190,394 223,832 190,394 223,832
Other Payables 93,123 83,611 93,041 83,611
Total Financial liabilities at amortised cost 3,420,315 3,223,803 3,421,369 3,225,429
Total Financial liabilities 3,424,368 3,223,803 3,425,422 3,225,429
Fair value is approximately the same as the carrying amounts.
GROUP PARENT
TDKK 2023 2022 2023 2022
Bunker oil 18,260 24,457 18,260 24,457
18,260 24,457 18,260 24,457
During 2023 TDKK 106,964 (2022: TDKK 142,267) was recognized as an expense for the group, and TDKK
106,964 (2022: TDKK 142,267) for the parent company.
Note 14
TRADE RECEIVABLES
GROUP PARENT
TDKK 2023 2022 2023 2022
Trade receivables at 31 December 221,367 198,467 159,590 153,258
Expected credit loss -2,713 -100 -100 -100
Trade receivables net 218,654 198,367 159,490 153,158
The maturity of the trade receivables
is specified as follows:
Not overdue 141,965 143,785 107,877 105,916
Up to 30 days 73,653 49,660 51,086 42,320
Between 31 and 90 days 3,005 4,884 514 4,884
Between 91 and 365 days 31 38 12 38
Total 218,654 198,367 159,490 153,158
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 2023
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 2023 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, 98.6% less than 30 days overdue, 1.4% 30-90 days overdue and 0.0% over
90 days overdue, are immaterial and therefore not recognized. During the year a provision for bad debt has
been made for one customer.
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 2023 TDKK 2022 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 2023
The group has entered leases on land, properties, cars, equipment and two Multipurpose ERRV’s. The
remaining lease period for land is 19 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 2023 2022 2023 2022
Lease liabilities
Current 54,255 43,714 54,255 43,714
Non-current 136,139 180,118 136,139 180,118
190,394 223,832 190,394 223,832
Right-of-use assets
Land 6,553 6,890 6,553 6,890
Cars 2,013 925 2,013 925
Equipment 11,723 7,716 11,723 7,716
Vessels 223,512 231,869 223,512 231,869
243,801 247,399 243,801 247,399
Additions to the right-of-use assets during the 2023 financial year were TDKK 17,731 (2022: TDKK 9,921) for
the Group and TDKK 17,731 (2022: TDKK 9,921) for the parent company, respectively.
GROUP PARENT
TDKK 2023 2022 2023 2022
At 1 January 0 8 0 0
Deferred tax recognized in the income statement 349 0 0 0
Exchange Rate Adjustment 0 -8 0 0
At 31 December 349 0 0 0
Deferred tax relates to:
Loss carried forward 349 0 0 0
349 0 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 2023 TDKK 2022 TDKK
Group
Floating rate loans DKK 2029 200,000 0
Fixed-rate loans EUR 2027-2029 1,801,409 1,797,445
Fixed-rate loans DKK 2027-2029 413,000 413,000
Fixed-rate loans GBP 2027-2029 707,068 691,288
Parent
Floating rate loans DKK 2029 200,000 0
Fixed-rate loans EUR 2027-2029 1,801,409 1,797,445
Fixed-rate loans DKK 2027-2029 413,000 413,000
Fixed-rate loans GBP 2027-2029 707,068 691,288
The above fixed-rate loans are considered as fixed-rate until 2027 due to rate swaps. Hereafter TDKK
1,691,983 will be floating until 2029.
Note 16
DEFERRED TAX
Note 18
LEASING
40
ESVAGT ANNUAL REPORT 2023
The statement of profit or loss show the following amounts relating to leases:
GROUP PARENT
TDKK 2023 2022 2023 2022
Depreciation charge of right-of-use assets
Land 337 337 337 337
Cars 573 328 573 328
Equipment 12,466 8,678 12,466 8,678
Vessels 8,357 8,357 8,357 8,357
21,733 17,700 21,733 17,700
The total cash outflow for leases in 2023 was TDKK 51.169 (2022: TDKK 43,817) for the Group and TDKK
51.169 (2022: TDKK 43,817) for the parent company.
GROUP PARENT
TDKK 2023 2022 2023 2022
Interest expense (included in finance expenses) 18,205 21,535 18,205 21,535
Expense relating to short-term leases (included in
other operating expenses) 1,365 1,918 1,365 1,918
19,571 23,454 19,571 23,454
Note 19
FEE TO THE STATUTORY AUDITORS
GROUP PARENT
TDKK 2023 2022 2023 2022
Statutory audit 790 946 790 946
Other assurance services 0 0 0 0
Tax and VAT advisory services 337 631 337 631
Other services 424 776 424 776
Total fees to PwC 1,552 2,353 1,552 2,353
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 2023 2022 2023 2022
Reclassified from other comprehensive income
Gains/losses arising on currency forward contracts
(cash flow hedges) reclassified to revenue/other
operating expenses during the year 2,148 -3,513 2,148 -3,513
Interest rate swaps -50,826 127,818 -50,826 127,818
-48,678 124,305 -48,678 124,305
Note 21
RELATED PARTIES
The Company and its parent company ERRV ApS are included in the consolidated financial statements for
ERRV Holdings ApS, Dokvej 4, 6700 Esbjerg, 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:
GROUP PARENT
TDKK 2023 2022 2023 2022
Transactions with subsidiaries
Sales of services 0 0 276,611 244,844
Transactions with joint ventures
Sales of services 1,741 0 1,741 0
1,741 0 278,352 244,844
Note 18 - continued
LEASING
Note 20
DERIVATIVE FINANCIAL INSTRUMENTS
41
ESVAGT ANNUAL REPORT 2023
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 2023 2022 2023 2022
Receivables from subsidiaries 0 0 71,062 48,736
Receivables from joint ventures 1,741 0 1,741 0
Loans to related parties
Loans to ERRV ApS and ERRV Holding ApS (parent
company)
Beginning of the period 5,875 5,148 5,875 5,148
Loans advanced 809 523 809 523
Loans repayments received 0 0 0 0
Interest charged 348 204 348 204
End of year 7,032 5,875 7,032 5,875
Loans to subsidiaries
Beginning of the period 0 0 280 165
Adjustment to previous period 0 0 -280 0
Loans advanced 0 0 192,274 109
Loans repayments received 0 0 0 0
Interest charged 0 0 7,765 6
End of year 0 0 200,039 280
Note 21 - continued
RELATED PARTIES
GROUP PARENT
TDKK 2023 2022 2023 2022
Loans to joint ventures
Beginning of the period 0 0 0 0
Loans advanced 127,825 0 0 0
Loans repayments received 0 0 0 0
Interest charged 0 0 0 0
End of year 127,825 0 0 0
Loans from subsidiaries
Beginning of the period 0 0 1,675 2,012
Adjustment to previous period 0 0 280 0
Loans advanced 0 0 692 0
Loans repayments 0 0 488 373
Interest charged 0 0 105 36
End of year 0 0 2,265 1,675
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 5.60% (2022: 3.75%) and the loans are expected to be settled in
cash.
42
ESVAGT ANNUAL REPORT 2023
The group has interest in a number of individually immaterial joint ventures that are accounted for using the
equity method.
GROUP PARENT
TDKK 2023 2022 2023 2022
Summarised balance sheet
Aggregated carrying amount of individually
immaterial associates 64,215 0 0 0
Aggregate amounts of the group's share of
Loss from continuing operations 84 8 0 8
Total comprehensive income 84 8 0 8
ESVAGT has, through Esvagt Holdings, Inc. (USA) invested in a joint venture, Crowley SOV 1, LLC with an
ownership of 25%. The activity of the joint venture is to build and operate an SOV vessel for Siemens Gamesa
Renewable Energy under a long-term contract. The construction proces of the SOV vessel has started in
second half of 2023 and the vessel is expected to be in operation during 2026.
Note 23
CONTINGENT LIABILITIES
Litigation
None
GROUP PARENT
TDKK 2023 2022 2023 2022
Bank loans secured in vessels
Bank and other credit institutions - amount secured 3,121,478 2,901,733 3,121,478 2,901,733
Carrying amount of vessels provided as security 4,138,722 4,311,979 4,138,722 4,311,979
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.
Note 22
INVESTMENTS IN JOINT VENTURES
Note 24
CASH FLOW STATEMENT
GROUP PARENT
TDKK 2023 2022 2023 2022
Change in working capital
Change in inventories 6,197 -8,258 6,197 -8,258
Change in trade receivables and receiv. from parent -20,363 -40,499 -27,300 -31,090
Change in other receivables and prepayments 2,518 -3,225 -130,807 -73,450
Change in trade payables, excl. payables related to
fixed assets 5,868 -2,430 5,868 -2,430
Change in other payables -6,100 20,958 -6,175 20,950
Change in received prepayments -2,577 -518 -2,577 -518
Exchange gains and losses on working capital -204 7,695 -152 7,522
-14,662 -26,276 -154,945 -87,274
Changes in liabilities arising
from financing activities
Bank and credit institutions at 1 January 2,829,283 2,449,200 2,829,283 2,449,200
Proceeds from loans from credit institutions 200,038 479,269 200,038 479,269
Amortized loan cost 10,400 -62,622 10,400 -62,622
Foreign currency 19,707 -36,564 19,707 -36,564
Bank and credit institutions at 31 December 3,059,428 2,829,283 3,059,428 2,829,283
Lease liabilities at 1 January 223,832 257,729 223,832 257,729
Repayment of leases -51,169 -43,817 -51,169 -43,817
New leases 17,731 9,921 17,731 9,921
Lease liabilities at 31 December 190,394 223,832 190,394 223,832
Financing liabilities at 31 December 3,249,822 3,053,116 3,249,822 3,053,116
43
ESVAGT ANNUAL REPORT 2023
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 most fuel
expenses are reinvoiced to customers, and therefore not hedged according to the Group policy. Increases
or decreases in the exchange rate of such foreign currency 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
2023
Trade receivables 78,805 63,678 23,641 1,710
Receivables from joint ventures 0 0 0 127,859
Cash and cash equivalents 7,496 17,741 39,062 17,631
Bank loans -1,801,409 -707,068 0 0
Trade payables -11,019 -3,774 -1,708 -15,421
-1,726,127 -629,422 60,996 131,779
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
PARENT
Currency amounts converted to TDKK EUR GBP NOK USD
2023
Trade receivables 75,277 5,373 23,641 0
Cash and cash equivalents 1,433 4,418 38,180 16,163
Bank loans -1,801,409 -707,068 0 0
Trade payables -11,019 -3,774 -1,708 -15,421
-1,735,719 -701,051 60,113 742
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
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 2023.
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.
44
ESVAGT ANNUAL REPORT 2023
Note 25 – continued
FINANCIAL RISK MANAGEMENT
2023 2022
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% -62,942 -62,942 -56,289 -56,289
NOK/DKK exchange rate - increase 10% 6,100 6,100 4,657 4,657
USD/DKK exchange rate - increase 10% 13,178 13,178 6,451 6,451
Parent
GBP/DKK exchange rate - increase 10% -70,105 -70,105 -61,938 -61,938
NOK/DKK exchange rate - increase 10% 6,011 6,011 4,597 4,597
USD/DKK exchange rate - increase 10% 74 74 -647 -647
2023 2022
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 -2,000 0 0 0
Interest rates – decrease by 100 basis points 2,000 0 0 0
Parent
Interest rates – increase by 100 basis points -2,000 0 0 0
Interest rates – decrease by 100 basis points 2,000 0 0 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.
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 1,135,000. 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.
45
ESVAGT ANNUAL REPORT 2023
Note 25 – continued
FINANCIAL RISK MANAGEMENT
GROUP
TDKK
Less than
1 year 1-5 years > 5 years Total
Non-derivatives
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
At 31.12.2023
Credit institutions* 151,341 0 3,121,478 3,272,819
Lease liabilities 54,255 136,139 0 190,394
Trade payables 77,370 0 0 77,370
Other payables 93,123 0 0 93,123
376,090 136,139 3,121,478 3,633,706
* Expected interest payment
Derivatives
At 31.12.2022
Foreign exchange options / forwards used to hedge
currency and interest rate risk 5,020 126,042 0 131,062
5,020 126,042 0 131,062
At 31.12.2023
Foreign exchange options / forwards used to hedge
currency and interest rate risk -3,337 76,276 0 72,940
-3,337 76,276 0 72,940
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
GROUP PARENT
TDKK 2023 2022 2023 2022
Significant other observable inputs (Level 2)
Forwards used to hedge currency risk -4,052 4,812 -4,052 4,812
Forwards used to hedge interest risk 76,992 126,250 76,992 126,250
72,940 131,062 72,940 131,062
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 76,992 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.
46
ESVAGT ANNUAL REPORT 2023
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 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
Foreign currency forwards as at 31 December 2023
Carrying amount in TDKK 0 21,000 18,600
Notional amount 0 176,691 126,484
Maturity date Jan2024 Jan2024
Jun2025 Mar2025
Weighted average hedged rate for the year (incl. forward points) 0.00 841.39 680.02
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
Crowley SOV I, LLC 25% United States
47
ESVAGT ANNUAL REPORT 2023
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.ESVAGT.com
E-mail mail@ESVAGT.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 2023
48
