2021
ANNUAL
REPORT
MHWirth merged with Baker Hughes’ Subsea Drilling
Systems business to create HMH, a full- service oshore
drilling company that provides customers with a broad
portfolio of products and services
As part of the closing of the HMH transaction, Akastor
received a net cash consideration of NOK 644 million,
reducing net debt and strengthening the balance sheet
Simultaneously with the completion of the HMH
transaction, Akastor completed a renancing of its
existing corporate credit facilities
Contracts with a total value of around USD 160 million
secured within HMH regarding delivery of drilling
equipment to Guangzhou Marine Geological Survey
DDW Oshore entered into bareboat and forward sale
agreements with OceanPact for two vessels for a period
of 26 months
NOK .bn
Net Capital Employed
(: .bn)
NOK m
Net Interest-bearing Debt
(: m)
Total Shareholder return
(: %)
Equity share
(: %)
0
1000
2000
3000
4000
5000
6000
2 650
759
807
621
471
217
(440)
5 084
(984)
4 100
Other
DRU
contracts NCE NIBD Equity (excl.
derivative instruments)
Net capital employed per year end 2021
NOK million
2021 in brief
Book value per share (NOK)
9.7 2.8 2.9 2.3 1.7 0.8 -1.6 18.6 -3.6 15.0
3Annual Report 2021
TABLE OF CONTENTS
01. BOARD OF DIRECTORS' REPORT 4
02. DECLARATION BY THE BOARD
OF DIRECTORS AND CEO
13
03. CORPORATE GOVERNANCE STATEMENT
– AKASTOR ASA 14
04. FINANCIALS AND NOTES 23
a. Akastor Group 23
b. Akastor ASA 80
05. AUDITOR'S REPORT 92
06. ALTERNATIVE PERFORMANCE
MEASURES 97
07. BOARD OF DIRECTORS 99
08. MANAGEMENT 102
09. COMPANY INFORMATION 103
4 Annual Report 2021 | Board of Directors' Report
Board of Directors’ Report
Akastor ASA (hereinafter referred to as Akastor) is an invest-
ment company based in Norway with a portfolio of companies in
the oileld services sector, with a exible mandate for active
ownership and long-term value creation. The shares of Akastor
are traded on the Oslo Stock Exchange under the ticker AKAST.
The Akastor portfolio of companies had a total net capital
employed of NOK 5.1 billion at the end of 2021.
Highlights 2021
2021 continued to be affected by the COVID-19 virus, and the
following turmoil in the oil and gas markets. Akastor has thus
remained focused on mitigating operational effects and
minimizing negative nancial consequences for its portfolio
companies while preserving liquidity and assuring nancial
exibility. However, 2021 also brought positive market
development through higher covid vaccination rates and fewer
restrictions as well as increasing crude oil price through the year
followed by higher offshore upstream capex and rig activity
compared to 2020.
In March, Baker Hughes and Akastor announced an agreement
to create a joint venture company bringing together Baker
Hughes’ Subsea Drilling Systems (SDS) business with Akastor’s
wholly owned subsidiary, MHWirth. The new joint venture
company, later branded HMH, delivers a global full-service
offshore drilling equipment offering that provides customers with
a broad portfolio of products and services. The broad scope of
services gives the company a solid foundation for future growth,
including the capability to contribute to the oil & gas industry’s
transition towards more energy-efcient solutions. Also, the
transaction is viewed as an important milestone for Akastor to
prepare for a future exit, considerably increasing size of the
holding and thus increasing the potential for a separate listing.
As a result of the transaction, MHWirth was presented as
discontinued operations as from the rst quarter.
Later in March, Akastor announced that its wholly owned
subsidiary, DDW Offshore, had entered into bareboat charter
agreements with OceanPact Servicos Maritimos S.A., a
Brazilian subsea and logistic company, for the two AHTS
vessels Skandi Saigon and Skandi Pacic for a period of 26
months. As part of the agreements, forward sale of the vessels
has been agreed whereby OceanPact shall purchase the
vessels at the end of the charter period. The arrangement will
ensure revenue and predictability going forward.
In September, Akastor announced that the previously announced
award regarding a contract for delivery of a drilling equipment
package to Guangzhou Marine Geological Survey (GMGS) had
been signed. The contract had a total value of about USD
83 million.
In October, Akastor and Baker Hughes completed the merger
between MHWirth and SDS. The company, which is owned
50/50 by Baker Hughes and Akastor, was named HMH. As part
of the closing of the transaction, Akastor received a net cash
consideration of approximately USD 78 million. Simultaneously
with the completion of the transaction, Akastor completed a
renancing of its existing corporate credit facilities. As a result of
the transaction, MHWirth was deconsolidated and a gain upon
divestment was recognized in the fourth quarter as part of net
prot from discontinued operations. As from closing, Akastor’s
50 percent ownership in HMH was initially recognized at fair
value and HMH is accounted for as a joint venture using the
equity method.
In December, AKOFS Offshore was awarded a three-year
contract with Petrobras for its vessel Skandi Santos. The vessel
will perform a broad scope of subsea services in Brazil. The
services will commence in the fourth quarter of 2022 and the
total contract value is about USD 107 million, of which USD 53
million was booked as order intake in AKOFS Offshore in the
quarter, while the remaining value will go through separate
contracts between the end-client and sub-suppliers of AKOFS
Offshore.
Also in December, HMH was awarded the contract to deliver a
pressure control system to Guangzhou Marine Geological
Survey (GMGS). The system will be comprised of a blowout
preventer (BOP) stack, control system, as well as a riser
package, with a total contract value of approximately USD 77
million. This award followed the contract awarded by GMGS to
MHWirth in September for the delivery of a topside drilling
equipment package and was the rst joint commercial project
win in HMH. The award can be viewed as a concrete example
of the revenue synergy potential going forward for the new
combined company.
Akastor’s total net capital employed increased from NOK 5.0
billion in 2020 to NOK 5.1 billion in 2021, driven by MHWirth
divestment and subsequent recognition of Akastor’s 50 percent
ownership in HMH. Net interest-bearing debt for Akastor was
reduced from NOK 1.4 billion per year end 2020 to NOK 1.0
billion per 2021 driven by proceeds received in connection with
the HMH transaction. Based on this, total equity of Akastor
increased by NOK 0.5 billion through the year to NOK 4.1 billion
per year end 2021.
Company Overview
Aker Holding AS, wholly owned by Aker ASA, is the largest
shareholder of Akastor with a shareholding of 36.7 percent.
Akastor is primarily focused on the oileld services sector. The
portfolio per 2021 covers several industrial holdings in this
sector, including:
01. BOARD OF DIRECTORS' REPORT
5Annual Report 2021 | Board of Directors' Report
HMH, which provides drilling systems, equipment and
aftermarket services. Ownership interest is 50 percent.
AKOFS Offshore, a subsea well installation and interven
-
tion services provider. Ownership interest is 50 percent.
AGR, which delivers well-, reservoir- and software
services to the offshore drilling industry. Economic
interest is 64 percent.
Cool Sorption, a supplier of vapour recovery units and
systems. Ownership interest is 100 percent.
Each above-mentioned Akastor portfolio company is organized
as an independent business which is self-sufcient and with its
own dedicated management team fully responsible for all
aspects of its operational activities. All portfolio companies have
separate boards of directors, consisting of appointed Akastor
investment managers, including, for some companies, external
board members and employee representatives. This governance
model provides for strong management of operational activities
and a good foundation for close cooperation between Akastor,
the portfolio companies and their employees.
In addition to its portfolio of industrial holdings, Akastor has
several nancial investments, including:
DDW Offshore, which owns and operates ve offshore
vessels. Ownership interest is 100 percent.
NES Fircroft, a technical and engineering stafng com
-
pany. Economic interest is approximately 15 percent.
Odfjell Drilling, preferred equity instrument with carrying
amount of USD 89.5 million plus a warrant structure of
up to 5.9 million shares.
DRU contracts, full economic interest in four drilling
equipment contracts with Jurong Shipyard. This posi
-
tion was carved out from MHWirth in connection with
the merger with Baker Hughes’ SDS business.
Awilco Drilling, ownership interest is 5.6 percent.
The Akastor corporate organization is based at Fornebu, just
outside of Oslo in Norway, with a team of 15 employees, working
closely with the boards and management of its portfolio
companies.
Akastor has a total of 431 employees (including hired-ins) within
its consolidated subsidiaries at year end 2021.
Strategy
Akastor is an investment company, employing an independent
approach for each portfolio company to optimize its development
potential. Akastor aims to create long-term value for its
shareholders through active development of its portfolio
companies as stand-alone businesses, while maintaining the
exibility to be opportunistic. Akastor works closely with each
portfolio company’s management to make decisions on
operational activity, business development, acquisitions and
divestments to maximize the value of the company. Each
portfolio company develops and executes independent value
creation plans in close cooperation with the Akastor investment
team. As an owner, Akastor emphasizes understanding the
portfolio companies’ markets and challenges in depth, in order
to evaluate current valuation versus future potential.
The business models of the portfolio companies are decentra-
lized with each entity being self-sufcient, but as part of the
Akastor portfolio, all companies share a common foundation
based on Akastor’s values, governing documents and
compliance structure.
Akastor seeks to maximize value by combining strategic,
operational and nancial measures. Akastor’s strategy as an
investment company remains as before, targeting to generate
an acceptable return on its current investments. New
investments may be made in the existing portfolio companies in
order to strengthen the companies and prepare for a future exit.
The ultimate goal is to return the capital to the shareholders of
Akastor upon divestments of assets, however ensuring that
Akastor has a solid capital structure.
Market Outlook
Akastor’s portfolio companies operate mainly in the oileld
services industry. Over the last couple of years, this industry
has been heavily affected by the outbreak of the COVID-19
virus which caused signicant disruption to the global economy.
The oil and gas market was strongly affected by negative
demand development following lower global activity, adding
additional pressure on the global economy, with direct effects
on the investment level of oil companies and thereby effects
also for the oileld services industry. These effects continued
into 2021, however with mitigation through increased vaccination
rate and loosening of restrictions. Towards the end of 2021, the
Omicron variant created additional uncertainty and increased
restriction in many regions. Thus, new variants and mutations
still make the market situation uncertain. Despite this, the oil
and gas markets saw a positive development in key macro
fundamentals through 2021, including crude oil prices, which in
turn should have a positive bearing on Akastor’s portfolio
companies. During the rst months of 2022, the world has seen
increased geopolitical tension driven by the Russian invasion of
Ukraine. Despite Akastor’s portfolio companies having very
limited exposure towards the Russian or Ukrainian markets, the
situation could still have negative effects for Akastor through
increased volatility as well as implications on nancial markets
and general industrial activity levels going forward.
Through 2021, the oil and gas markets have seen an increase
in important macro fundamentals such as global offshore
6 Annual Report 2021 | Board of Directors' Report
upstream capex spending and rig utilization, which in turn
should have a positive bearing on Akastor through increased
activity for the Akastor group of companies. As an example,
AGR with its primary exposure towards the Norwegian
continental shelf experienced an increasing level of activity in
2021, with revenues for the year around 14% higher than in
2020. Assuming these tail winds continue, Akastor management
remains optimistic that activity levels within the oileld services
industry will increase going forward.
The low level of investments among oil companies seen over
the last couple of years continued to affect the capital equipment
segment of HMH through relatively low activity within both
single equipment and larger projects following low order intake
last year. However, HMH secured important orders within the
Project and Products segment in 2021, both within larger
projects as well as within single equipment, which serves as a
good sign regarding the competitive strength of the company
and caters for growth in activity in 2022 within this segment. The
Aftermarket Services segment of HMH, which accounted for 74
percent of revenues in 2021 (pro-forma, adjusted), around
same level as last year, is also affected through a lower number
of active units with HMH equipment than pre-COVID. However,
this segment has remained resilient through the market turmoil
with a lower decline in nominal revenues. Going forward, the
development of macro fundamentals through 2021, including
increased rig activity and offshore capex spending among oil
companies, should have positive longer-term bearings for all
segments within HMH assuming that development continues.
An important milestone for Akastor in 2021 was the combination
between MHWirth and SDS, which created HMH as a stronger
and more resilient unit with a broader scope of services and a
stronger installed base generating stable and increasing
aftermarket revenues. The new entity will also provide a more
solid foundation for future growth, including the capability to
participate in the oil & gas industry’s transition towards more
energy-efcient solutions, as well as deploying technologies
and service solutions to make the sector more competitive
through increased drilling efciency.
In 2022, Akastor will continue to monitor the COVID-19 situ-
ation with a target of minimizing disruptions to operations
throug hout the portfolio. Akastor management remains
cautiously optimistic that the market situation will improve
through easing of restrictions and gradual re-opening of the
society, which in turn should lead to increased global activity
and thus increased demand for products and services offered
by the Akastor group of companies. Still, there is a risk for
continued effects of the epidemic in 2022, for instance through
new mutations. Also, Akastor will closely follow the war in
Ukraine and target also here to mitigate any direct effects
following these circumstances, including securing compliance
with relevant economic sanctions. Despite limited direct
exposure to the regions, Akastor could be affected through
more general market effects. The nancial impact as a result of
both these situations remain uncertain as it is difcult to predict
the duration and the longer-term impact on nancial markets
and industrial activity level. From an accounting perspective,
these factors could impact future assessments of recoverable
amounts of Akastor’s assets if the current volatility results in a
negative long-term market outlook.
Based on the current footprint of the portfolio, the oileld
services industry will remain the primary market for Akastor
going forward. However, Akastor will through its role as an
active owner also focus on developing its offering within non-oil
markets and the renewable energy space to further diversify the
portfolio. Technology development remains a clear strategic
target for all portfolio companies and Akastor is targeting to
support the industry’s transition to more energy-efcient
operations for its clients through development of new solutions.
As an example, HMH is continuing its efforts to optimize and
reduce fuel consumption and carbon footprint for its clients
through enabling more efcient drilling operations while also
seeking opportunities within industries outside of oil and gas.
AGR is strongly focusing on developing its suite of software
solutions, enabling more efcient operations for oil companies
and are also positioning themselves within low carbon solutions
such as carbon capture, geothermal drilling and wind solutions.
Early 2022, AGR established Føn Energy Services, a joint
venture together with IKM to provide wind power project
management, operations and maintenance services to offshore
wind farms.
Group Financial Performance
Akastor presents its consolidated nancial statements in
accordance with the International Financial Reporting Standards
(IFRS) as adopted by the European Union.
All amounts below refer to the consolidated nancial statements
for the group, unless otherwise stated. Please note that following
the deconsolidation of MHWirth in 2021 as a result of the merger
with Baker Hughes’ SDS business, consolidated revenue and
operating prot in Akastor only include nancial performance of
portfolio companies that constitute a minor part of Akastor’s
total net capital employed.
Income Statement
Revenue and other income for 2021 increased by 16 percent to
NOK 953 million. Operating prot before interest, tax, depreciation and
amortization (EBITDA) increased by NOK 71 million to break even.
Depreciation, amortization and impairment was NOK 82 million
in 2021, compared to NOK 61 million in the previous year.
Net nancial expenses were NOK 152 million in 2021 compared
to NOK 387 million in the previous year. The net nancial
expenses included Akastor’s share of net loss of NOK 346
million from the equity-accounted investees AKOFS Offshore
and HMH, dividend income of NOK 74 million from equity
investment and an unrealized gain of NOK 11 million in fair
value changes of nancial investments.
7Annual Report 2021 | Board of Directors' Report
The pre-tax loss for the year was NOK 235 million, compared to
a loss of NOK 519 million the previous year.
The income tax benet for 2021 was NOK 20 million, compared
to a tax expense of NOK 18 million in 2020. The effective tax rate
is impacted by several items, such as impairment of deferred tax
assets, non-tax deductible items as well as mix of revenue
generated in various jurisdictions with different tax rates.
Net loss from continuing operations was NOK 215 million, while
net prot from discontinued operations was NOK 1 140 million.
The net prot from discontinued operations was mainly related
to operating losses in the discontinued operation MHWirth, as
well as gain from the divestment of MHWirth. The group had an
operating prot of NOK 925 million for the year.
The board of directors has resolved to propose to the annual
general meeting that no dividend is distributed for 2021.
Financial Position
Total assets of Akastor amounted to NOK 7.2 billion as of Dece-
mber 31, 2021, compared with NOK 9.1 billion at year-end 2020.
The decrease is mainly related to reductions in non-current assets
of NOK 4.6 billion as a result of divestment of MHWirth, offset by
investment of NOK 2.7 billion in the new joint venture HMH.
Net debt (excluding lease liabilities) was NOK 1.3 billion at the
end of the period, while net interest-bearing debt (NIBD) was
NOK 1.0 billion. Net debt decreased through the year, primarily
explained by the cash release from MHWirth divestment in
October 2021.
Total equity amounted to NOK 4.1 billion at year-end 2021, of
which non-controlling interests were NOK 18 million. The equity
ratio was 57 percent as of December 31, 2021, compared to 40
percent in 2020.
Cash Flow
As of December 31, 2021, Akastor had cash of NOK 89 million,
compared to NOK 275 million in 2020. The net cash ow from
operating activities was negative NOK 96 million, compared to
operating cash ow of positive NOK 211 million in the previous
year. The net cash ow from operating activities comprises of
cash ow generated from operating activities of negative NOK 8
million as well as net payments of NOK 88 million for interest
costs and income tax.
Net cash ow from investing activities was positive NOK 431
million, compared to negative NOK 219 million in 2020. The
cash ow from investing activities included net proceeds from
sale of subsidiaries of NOK 591 million, related to proceeds
from the divestment of MHWirth as well as contingent
consideration payments related to divestments in previous
years. Capex investments were NOK 136 million compared to
NOK 67 million in 2020.
Net cash ow from nancing activities amounted to negative
NOK 516 million, including net repayment of borrowings of NOK
405 million and payment of lease liabilities of NOK 112 million.
Going Concern
The COVID-19 situation, as well as the increased geopolitical
tension seen in the beginning of 2022, gives higher uncertainty for
the going concern assumption for most companies. This is also the
case for Akastor. However, the current assessment is that the
entity has the ability to meet the mandatory terms and conditions of
its banking facilities, taking into account the amendments agreed
with banks in February 2022 including removal of a mandatory
prepayment in March 2022 and adjustments to the gearing
covenant level and minimum required liquidity (see Note 29 Capital
Management for more information). Therefore, in accordance with
the Norwegian Accounting Act, the board of directors conrms
that the going concern assumption, on which the consolidated
nancial statements have been prepared, is appropriate.
The Akastor Portfolio
HMH
HMH was established in October 2021 following the merger
between MHWirth (previously 100% owned by Akastor) and
Baker Hughes’ Subsea Drilling Systems (SDS) business.
Akastor owns 50 percent of the shares in HMH, with the
remaining shares owned by Baker Hughes. HMH is per year
end 2021 classied as a joint venture and accounted for using
equity method in the consolidated nancial statements.
HMH is a global provider of drilling solutions, engineering,
projects, equipment and services. HMH has a track record of
product and service delivery in more than 120 countries
worldwide. At year-end 2021, the company employed approx-
imately 2 100 people. The company’s operations are divided in
two main business areas: Projects, Products and Other and
Aftermarket Services. HMH is Akastor’s largest portfolio
company both in terms of sales revenue and employees.
Key Figures
1)
Amounts in USD million Proforma 2021 Proforma 2020
Revenue (adj)
2)
586 715
Revenue 568 688
EBITDA (adj)
3)
85 107
EBITDA 64 97
Order intake 820 568
NIBD (incl. shareholder loans) 226 n/a
1)HMHgurespresentedon100%basis,proformaguresforfullyear2021and
2020areunaudited
2)Revenue(adj)includesrevenuefromStepOiltools
3)EBITDA(adj)excludesintegrationcostsandothernon-recurringitems
The revenue for 2021 of USD 586 million was down 18 percent
compared to 2020 proforma gures for the combined entity.
Proforma revenues from Projects, Products and Other
decreased with around 37 percent to USD 150 million in 2021,
driven by lower revenues from large projects following the
8 Annual Report 2021 | Board of Directors' Report
schedule of ongoing projects and also lower recorded revenues
from single equipment after a low order backlog within this
segment as per the beginning of the year. Proforma full year
revenues from Aftermarket Services was USD 436 million in
2021, down from USD 481 million in 2020. The number of active
rigs with equipment package from HMH remained relatively
stable through the year, however affected by a lower starting
point compared to 2020. EBITDA adjusted for integration cost
and dened non-recurring items decreased from USD 107
million in 2020 to USD 85 million in 2021. The adjusted EBITDA
margin ended at 14.5 percent for 2021, down from 15.0 percent
in 2020, primarily driven by a lower activity level.
The offshore drilling market continued to be affected by the
global turmoil during 2020 and is still suffering from overcapacity
of offshore drilling rigs. Despite this, order intake within Projects
and Products increased considerably in 2021 compared to last
year, driven primarily by the award of three larger project
contracts. Order intake within single equipment also increased
in 2021, with the non-oil segment as the main driver. Total order
intake for HMH was USD 820 million in 2021, compared to USD
568 million in 2020.
An important focus area for HMH through 2022 will be to secure
a successful integration between the two entities. A strategy and
business plan for the combined company will be established
together with Baker Hughes. The new company will focus on
growth through both organic initiatives as well as M&A and will
mainly focus on the global offshore and onshore drilling markets.
However, HMH will also seek to pursue opportunities within the
renewable sector and further expand its offering to non-oil
markets. It is expected that the company’s broader scope of
services will provide a more solid foundation for participating in
the oil and gas industry’s transition towards more energy-
efcient solutions, and this will form a key area in the strategy of
the new combined company.
AKOFS Offshore
AKOFS Offshore is a provider of vessel-based subsea well
installation and intervention services to the oil and gas industry.
The company operates three specialized offshore vessels,
Skandi Santos, Aker Wayfarer and AKOFS Seafarer, and
employed 292 people as per the end of 2021.
Akastor owns 50 percent of the shares in AKOFS Offshore, with
the remaining shares owned by Mitsui & Co and Mitsui O.S.K.
Lines, each with 25 percent. AKOFS Offshore is classied as a
joint venture and accounted for using equity method in the
consolidated nancial statements.
Key Figures
1)
Amounts in USD million 2021 2020
Revenue and other income 147 107
EBITDA 37 44
EBIT (15) (14)
CAPEX and R&D capitalization 5 23
NCOA 25 40
Net capital employed 375 437
Order intake 80 28
Order backlog 384 446
Employees (FTE) 292 294
1)
Theguresarepresentedat100percentbasis.
The company’s revenue was USD 147 million in 2021, around
38 percent higher than previous year, driven by full year
operations of the Seafarer vessel which commenced in the
fourth quarter of 2020, partly mitigated by the Skandi Santos
vessel that extended its contract with Petrobras in 2021 at a
reduced scope- and income level. The EBITDA decreased by
USD 7 million to USD 37 million in 2021, primarily explained by
the Skandi Santos day-rate, but also a planned yard stay for
AKOFS Wayfarer due to a SPS in the rst quarter.
AKOFS Offshore has through 2021 continued to focus on
mitigating operational effects of the ongoing COVID-19
pandemic, among other initiatives through strict regulations
regarding crew handling. Despite these efforts, AKOFS Offshore
also in 2021 was affected through reduced utilization as a result
of virus outbreaks on board its vessels. Also, the market
situation for AKOFS is affected by lowered investment levels
among oil companies. This has affected the prospects available
for the company, however AKOFS Offshore is expecting a
somewhat higher activity level on new tenders and contracts
going forward.
Through 2021, both of the vessels Skandi Santos and Aker
Wayfarer have operated on contracts with Petrobras in Brazil for
subsea equipment installation work. In December 2021, the
contract of Skandi Santos expired after almost twelve years of
operations in Brazil. Also in December, AKOFS Offshore signed
a rm three-year contract with Petrobras for Skandi Santos. The
new contract will commence in Q4 2022, under which the vessel
will perform a broad scope of subsea services in Brazil. Skandi
Santos is currently operating on a shorter contract in Brazil with
a third party, before it will go to yard in the third quarter to
prepare for the new contract with Petrobras.
The Brazilian eet was affected by certain periods of downtime
related to outbreaks of COVID-19 onboard Wayfarer, however
utilization for the two vessels was in general high throughout the
year, with revenue utilization of Wayfarer and Santos of
approximately 96 and 98 percent respectively, adjusted for the
planned SPS on Wayfarer in the rst quarter.
In October 2020, AKOFS Seafarer commenced its ve-year
contract with Equinor for Light Well Intervention services in the
North Sea and has through 2021 operated on this contract
delivering solid operational performance. The vessel recorded a
revenue utilization above 90 percent in 2021, which is deemed
satisfactory taking into account that the vessel had limited
operational experience going into the year and also considering
the challenging weather conditions in the North Sea in the
winter season, as the vessel only receives 50 percent of its
dayrate when waiting on weather.
9Annual Report 2021 | Board of Directors' Report
Going forward, AKOFS will continue to focus on delivering high
uptime on its existing contracts. Further, evaluation of options
regarding the AKOFS Wayfarer vessel, for which the contract
expires per year end 2022, will be a key focus area in
2022. Also, the company is continuously evaluating opportu-
nities to grow through further leveraging its competen cies within
subsea well construction and intervention services.
AGR
AGR is the result of the merger of First GEO AS (previously
owned 100 percent by Akastor) and AGR AS which was
completed in April 2019. At year-end 2021, Akastor held 100
percent of the shares and 64 percent of the economic interest in
the company. Nordea and DNB held the remaining 36 percent
economic interest.
Key Figures
AmountsinNOKmillion 2021 2020
Revenue and other income 723 637
EBITDA 33 31
EBIT 9 13
CAPEX and R&D capitalization 16 10
NCOA (9) (7)
Net capital employed 192 148
Order intake 769 618
Order backlog 518 483
Employees (FTE) 388 319
AGR had total revenues of NOK 723 million in 2021, while the
revenues in 2020 were NOK 637 million. EBITDA in 2021 ended
at NOK 33 million, up from 31 million in 2020.
During 2021, the activity level in AGR was affected by an
increase in activity within its Norwegian consultancy business.
The Norwegian market remains the largest segment in AGR,
constituting around 71 percent of revenues in 2021.
The company continued to have strong focus on its cost base,
targeting to improve protability within its international segments.
Due to the market situation, activity level in certain segments
outside of Norway remains low. As a result of this, AGR in
December 2021 closed down its UK well management business
through the sale of AGR Well Management Limited to SpotOn
Energy Holding AS. As compensation for the transfer, AGR has
received 20 percent ownership in SpotOn Energy, which will
strengthen the cooperation between AGR and SpotOn Energy
going forward. AGR recognized a loss of NOK 11 million in
relation to this transaction, affecting EBITDA of the company
negatively in the fourth quarter.
Going forward, the focus is to make all geographical segments
protable. Also, the company is continuing its effort to further
develop its software business which is providing solutions to
enhance the efciency of logistics and planning of drilling and
well operations for oil companies. Also, the newly created joint
venture between AGR and IKM, Føn Energy Services, is an
important strategic priority for AGR, aiming to create a complete
wind power project management, operations and maintenance
provider with strong growth ambitions.
Other Holdings
Other Holdings mainly include 100 percent ownership of Cool
Sorption, 100 percent ownership of DDW Offshore AS, around
15 percent economic interest of NES Fircroft, 5.6 percent
shareholding in Awilco Drilling, and a preferred equity instrument
of USD 89.5 million in Odfjell Drilling. Also, the nancial interest
in four drilling equipment contracts with Jurong Shipyard (the
DRU contracts) is included within Other Holdings. In addition,
this segment includes corporate functions and certain long-term
ofce lease contracts that remained in Akastor after the
demerger from Aker Solutions in 2014.
Key Figures
AmountsinNOKmillion 2021 2020
Revenue and other income 232 186
EBITDA (32) (102)
EBIT (92) (145)
CAPEX and R&D capitalization 65 1
NCOA 239 (158)
Net capital employed 1 483 990
Order intake 202 142
Order backlog 64 43
Employees (FTE) 43 47
Total EBITDA for Other Holdings for the year was negative NOK
32 million. Cool Sorption delivered an EBITDA of NOK 4 million
in 2021, down from NOK 6 million in 2020. DDW Offshore
contributed positively with NOK 17 million in 2021, compared to
negative NOK 11 million in 2020 (after consolidation of this
business as from October 2020). The positive results of DDW
Offshore were driven by the gain related to the bareboat charter
agreements with OceanPact Servicos Maritimos S.A., a
Brazilian subsea and logistic company, for the vessels Skandi
Saigon and Skandi Pacic for a period of 26 months. As part of
the agreements, forward sale of the vessels was agreed
whereby OceanPact shall purchase the vessels at the end of
the charter period. The agreement was thus classied as a
nance lease. The remaining negative EBITDA in this segment
is mainly related to corporate overhead costs, as well as certain
legacy costs.
Parent Company and Allocation of Net Loss
The parent company Akastor ASA is the ultimate parent
company in the Akastor group and its business is the ownership
and management of all subsidiaries. Akastor ASA has
outsourced all management functions to other companies within
the group, mainly Akastor AS. However, assets and liabilities
related to the Akastor Treasury function are held by Akastor
ASA. Akastor ASA has a net loss of NOK 664 million in 2021,
including dividend income of NOK 7.0 billion from investments
in subsidiaries offset by impairment of shares in and receivables
on subsidiaries of NOK 7.6 billion.
10 Annual Report 2021 | Board of Directors' Report
The parent company’s dividend policy states that Akastor's
shareholders shall receive a competitive return on their
investment either through cash dividends or increases in the
share price, or both. The company does not intend to distribute
regular or annual dividends, but will consider dividends on an
ongoing basis taking into consideration the company’s M&A
activities, expected cash ow, capital expenditure plans,
nancing requirements and appropriate nancial exibility. The
board thereby proposes the following allocation of the net loss
(amounts in NOK million):
Dividends: 0
From other equity: 664
Total allocated: 664
Risk Management
Akastor and its portfolio companies are exposed to various
forms of market, operational and nancial risks that may affect
the companies’ performance, their ability to meet strategic goals
and the companies’ reputation.
Akastor’s risk management model is designed on the basis that
Akastor is an investment company with an overall objective of
securing its shareholders’ investments and developing the
group’s assets in order to provide the shareholders with a solid
return. Akastor’s current investment portfolio is focused on the
oileld services industry. This focus is mainly driven by the
company’s experience, expertise and track-record within this
industry. Although Akastor has a exible mandate, it has
traditionally not sought to spread risk by investing in different
industries. Instead, Akastor has focused on mitigating its
vulnerability to the risk environment inherent to the oileld
services industry through sound risk management systems.
Although effects from the global COVID-19 pandemic continued
throughout 2021, we have seen that nancial and operational
impacts to the Akastor group have been fairly limited. This is
largely thanks to our portfolio companies and their focus on
mitigating measures and procedures, as well as their proven
ability to minimize downtime caused from outbreaks. Moreover,
it is also due to the more general fact that global business
operations have been gradually going back to a more normalised
situation.
Our focus on climate risk has continued throughout 2021. A
dedicated project team has engaged with our portfolio
companies to develop sustainability policies and targets tailored
to each respective operation. The aim is to improve each
company’s ability to meet the challenges imposed by the
necessary global energy transition, as well as to increase
climate risk awareness and monitoring of sustainability targets.
On the operational side, risks are primarily mitigated by a
combination of technology developments that support a
transition towards more sustainable operations as well as
securing new orders and sound project execution by the portfolio
companies. Results also depend on costs, both the portfolio
companies’ own costs and those charged by suppliers. Akastor
and its portfolio companies are also exposed to nancial risk
under performance guarantees and nancial guarantees issued,
and nancial market risks as further detailed below.
In addition, the portfolio companies, through their business
activities within their respective sectors and countries, are also
exposed to legal/compliance and regulatory/political risks, e.g.
political decisions on international sanctions that impact supply
and demand of the services offered by the portfolio companies,
as well as environmental regulations. As an investment
company, Akastor and its portfolio companies from time to time
engage in mergers and acquisitions and other transactions that
could expose the companies to nancial and other non-
operational risks, such as warranty and indemnity claims and
price adjustment mechanisms. Moreover, the entire transaction
process, including the process from signing to closing as well as
proper integration of new business operations, entails a set of
risks for Akastor that will need to be managed and mitigated.
To manage and mitigate risks within Akastor, risk evaluation is
an integral part of all business activities, including when making
decisions regarding mergers and acquisitions and other
investment matters. As an owner, Akastor actively supervises
risk management in its portfolio companies through participation
on the board of directors of each portfolio company, and by
dening a clear set of risk management and mitigation processes
and procedures that all portfolio companies must adhere to. The
current and revised governing documents dened by Akastor
were rolled out during the rst half of 2016 and are reviewed
annually. The overall responsibility for ensuring sound internal
control and an appropriate framework for risk management in
Akastor lies with its board of directors. A risk review is presented
to and reviewed by the audit committee and the board of
directors of Akastor on an annual basis.
The directors and ofcers of Akastor companies are covered
under an Aker group Director & Ofcer’s Liability Insurance
(D&O). The insurance covers personal legal liabilities including
defence- and legal costs. The ofcers and directors of the
parent company and all subsidiaries globally (owned 50 % or
more) are covered by the insurance. The cover also includes
employees in managerial positions or employees who become
named in a claim or investigation.
Financial Risks
Akastor is exposed to a variety of nancial market risks such as
currency risk, interest rate risk, tax risk, price risk, credit and
counterparty risk, liquidity risk and capital risk as well as risks
associated with access to and terms of nancing. The nancial
risks affect the group’s income and the value of any nancial
instruments held. The objective of nancial risk management is
to manage and control nancial risk exposures and thereby
increase the predictability of earnings and minimize potential
adverse effects on Akastor’s nancial performance. Akastor and
11Annual Report 2021 | Board of Directors' Report
its portfolio companies use nancial derivative instruments to
hedge certain risk exposures in order to reduce the volatility
resulting from the periodic market-to-market revaluation of
nancial instruments in the income statement. Risk management
is performed in every project. It is the responsibility of the project
managers, in cooperation with Akastor Treasury, to identify,
evaluate and hedge nancial risks under policies approved by
the board of directors. Akastor has well-established principles
for overall risk management, as well as policies for the use of
derivatives and nancial instruments.
Integrity Risks
All Akastor portfolio companies use education and awareness
training to manage and mitigate integrity risks. All employees
must complete an annual Code of Conduct training program. In
addition, all Akastor managers and ofce-based staff are
required to conduct integrity e-learning training and participate
in classroom courses. For employees in specic functions,
where chance of facing integrity risk is considered higher than
normal, additional training has been tailored for their role and
responsibilities. Hired-in personnel in high risk roles are also
required to undertake integrity training, just as third-party
representatives receive integrity training specially prepared for
them. The requirement for all portfolio companies is to complete
and report on the training within six months from employment or
publication of a new training session.
Akastor has established a whistleblowing system in line with the
company’s Governance Policy. The whistleblowing channel is
open for all external and internal stakeholders who wish to
report a breach of the Code of Conduct, other internal guidelines
or governing policies. Akastor employees are required to report
breaches of the Code of Conduct, and Akastor encourages
reporting of any concerns pertaining to compliance with law or
ethical standards.
Climate risks
The main climate-related risks in Akastor are with our industrial
investments due to the fact that the industry is in a state of
accelerated transition to a lower-carbon intensive industry.
Governmental regulation of GHG emissions is expected to
increase and it will continue to be challenging to get necessary
nancing with potential lenders electing not to invest in the oil
and gas market but rather move capital to new green markets.
Unless these risks are met with mitigating measures, we could
face a scenario where many of Akastor’s portfolio companies
lose its market positions and/or are left with product lines that
are obsolete and replaced by more energy efcient/green
alternatives. However, this transition to low carbon intensive
industry will also create several opportunities, which the portfolio
companies are addressing, for example HMH’s concept
developments towards the offshore wind industry and AGR’s
Carbon Capture and management services.
Each portfolio company addresses climate-related risks and
opportunities within its yearly risk assessment, and the
assessment is reviewed by its Board of Directors.
War in Ukraine
At the time of issuing this report, there is global geopolitical
uncertainty caused by the Russian invasion of Ukraine which
has given rise to a large number of global sanctions aimed at
impacting any business activities in Russia or towards Russian
companies. The Akastor group as a whole has relatively limited
business activities towards Russia and the short-term
operational impacts from these sanctions are therefore expected
to be relatively limited. However, as the scale of this war and its
impact on global economics remain uncertain, it represents a
clear concern and potentially a larger risk to Akastor that we will
need to closely monitor.
Environmental, Social and Governance
Akastor’s operating model reects the fact that the portfolio
companies are independent companies which operate different
business models and therefore face different Environmental,
Social and Governance (ESG) risks and expectations from
stakeholders. As a holding company, Akastor is responsible for
setting the overall ESG priorities and providing the appropriate
risk management framework and policies applicable for the
portfolio. Akastor Sustainability Policy describes how Akastor
aims to integrate sustainability in its investment processes, own
operations, and in the governance of its organisation. The policy
includes the investment policy and how Akastor engages with
the portfolio companies. In turn, and based on these
expectations, each portfolio company is responsible for dening
their own ESG strategy with relevant activities and, where
necessary, supporting policies.
Akastor also focuses on maintenance and development of
industrial relations and collaboration with unions. Historically,
good industrial relations have played an important role, and
maintaining these strong relations have proven to be one of the
success criteria in developing the company over the years.
Within the ESG efforts, Akastor is focused on areas that build
nancial and non-nancial value in the portfolio companies.
Akastor’s ESG strategy is based on four main priorities: working
against corruption, respecting human rights, addressing health
and safety and minimizing adverse impact on the environment.
Particularly the latter priority has seen an increased focus in
2021where Akastor wants to take part in the industry’s transition
towards more sustainable operations. All the portfolio companies
have completed climate risk and opportunities assessments
and are responsible for working systematically and managing
these possibilities and consequences. The portfolio companies
are dening their own ESG strategies encompassing these
priorities. Akastor is continuously monitoring the implementation
and integration of the priorities of the ESG strategy, Code of
Conduct, Sustainability Policy and Integrity Policy across all the
portfolio companies. For in-depth reporting on each portfolio
company’s approach to ESG, including their Health, Safety and
Environment work, refer to the Akastor ESG Report for 2021.
The full report is available on our website www.akastor.com.
12 Annual Report 2021 | Board of Directors' Report
Research, Innovation and Technology Development
NOK 24 million was capitalized in 2021, compared to NOK 38
million in 2020, related to development activities. In addition,
research and development costs of NOK 1 million were
expensed during the year because the criteria for capitalization
were not met (NOK 12 million in 2020).
All research, innovation and development initiatives are
performed by the Akastor portfolio companies. Akastor ASA and
Akastor AS performed no such activity in 2021.
People and Teams
Akastor is committed to equal opportunity and non-discrimination.
This commitment is described in Akastor’s Code of Conduct, as
well as Akastor’s policies and agreements, and builds on a
frame agreement signed with national and international trade
unions in 2008. This agreement was renewed in 2012 and sets
out fundamental labour rights and standards for general
employment terms and employee relations, with specic focus
on non-discrimination. Equal opportunities are fundamental for
Akastor and its portfolio companies. In 2021, as in previous
years, no events violating these agreements were reported.
As of year-end 2021, Akastor ASA’s board comprised eight
directors inclusive three employee elected directors, of which
two shareholders elected directors are female directors. Akastor
and its subsidiaries had a total of 431 employees (FTE) as of
December 31, 2021. AKOFS Offshore had a total of 292
employees (FTE) as of December 31, 2021. HMH had a total of
2 100 employees (FTE) as of December 31, 2021. In Akastor
AS, the male/female ratio was 69/31. The male/female ratio
(excluding hired ins) in the major portfolio companies and
Akastor Group were as follows:
HMH
1)
AKOFS
Offshore AGR
Akastor Group
(incl. AKOFS
Offshore and
HMH*)
Female 18% 11% 29% 19%
Male 82% 89% 71% 81%
*
)
DatareportedforHMHcontainstheMHWirthportionofthecompany.
All portfolio companies regularly assess whether they live up to
the principle of equal pay for equal work and no signicant
differences have been identied. Each portfolio company
promotes equal opportunities by setting specic requirements
for diversity in recruitment and people development, and by
supporting programs dedicated to equal opportunity. Akastor
and its portfolio companies are not aware of any employees that
work involuntary part time. Akastor ASA fulls the requirements
of the Norwegian Companies Act with regards to gender
representation on the board of directors, as two out of ve
shareholder elected directors are women.
Aggregated sick leave in Akastor was 3.0 percent in 2021.
There were no fatal injuries in any of the portfolio companies.
The total recordable incident frequency was low, and Akastor
has thoroughly analysed all incidents and taken actions to avoid
similar situations going forward. Caring for employee’s health
and safety is an integrated part of the group’s culture. See
gures below for details.
HMH**
AKOFS
Offshore AGR
Akastor
Group (inc
AKOFS Off-
shore and
HMH**)
Lost time Incident
Frequency (LTIF)* 0.8 - - 0.5
Total Recordable Incident
Frequency (TRIF)* 3.1 1.5 - 2.3
Fatalities incl. subcontractors - - - -
Sick leave (percent) 3.7 3.0 2.0 3.0
*Permillionhoursworked.Includessubcontractors
**DatareportedforHMHcontainstheMHWirthportionofthecompany
Corporate governance
Corporate governance is a framework of values, responsibilities
and governing documents to control the business and ensure
sustainable value creation for shareholders over time. It is the
responsibility of the board of directors of Akastor to ensure that
the company implements sound corporate governance. The
audit committee supports the board in safeguarding that the
company has internal procedures and systems in place to
ensure that corporate governance processes are effective.
Akastor’s corporate governance principles are based on the
Norwegian Code of Practice for Corporate Governance and are
designed to secure the shareholders’ investment through value
creation and to ensure good control with the portfolio
companies. The corporate governance principles are included
in this annual report and available on the company’s website
www.akastor.com.
Asle Christian Halvorsen | Director
Stian Sjølund | Director Karl Erik Kjelstad | CEO
Henning Jensen | Director Kathryn M. Baker | Director Luis Araujo | Director
Svein Oskar Stoknes | DirectorKristian Røkke | Chairman Lone Fønss Schrøder | Deputy Chairman
Fornebu, March 25, 2022 I Board of Directors of Akastor ASA
13Annual Report 2021 | Declaration by the Board of Directors and CEO
Declaration by the Board of Directors and CEO
The board and CEO have today considered and approved the annual report and nancial statements for the Akastor group and its
parent company Akastor ASA for the year ended on December 31, 2021. The board has based this declaration on reports and
statements from the group’s CEO and/or on the results of the group’s activities, as well as other information that is essential to
assess the group’s position which has been provided to the board of directors.
To the best of our knowledge:
The nancial statements for 2021 for Akastor group and its parent company have been prepared in accordance with all
applicable accounting standards.
The information provided in the nancial statements gives a true and fair portrayal of the group and its parent company’s
assets, liabilities, prot and overall nancial position as of December 31, 2021.
The annual report provides a true and fair overview of the development, prot and nancial position of Akastor group and its
parent company, as well as the most signicant risks and uncertainties facing the group and the parent company.
Fornebu, March 25, 2022 I Board of Directors of Akastor ASA
02. DECLARATION BY THE BOARD
OF DIRECTORS AND CEO
Asle Christian Halvorsen | Director
Stian Sjølund | Director Karl Erik Kjelstad | CEO
Henning Jensen | Director Kathryn M. Baker | Director Luis Araujo | Director
Svein Oskar Stoknes | DirectorKristian Røkke | Chairman Lone Fønss Schrøder | Deputy Chairman
14 Annual Report 2021 | Corporate Governance Statement
Corporate Governance Statement
Corporate governance is a framework of values, responsibilities
and governing documents to control the business and ensure
sustainable value creation for shareholders over time. Sound
corporate governance shall ensure that appropriate goals and
strategies are adopted, that the strategies are implemented in a
good manner and that the results achieved are subject to
measurement and follow-up.
1. The Corporate Governance Report
Basis for this Report
The corporate governance principles of the group are laid down
by the board of directors of Akastor ASA (“Akastor” or the
“company”). The principles are based on the Norwegian Code
of Practice for Corporate Governance dated 14 October 2021
(the «Code of Practice»), the regulations set out in the Rule-
book II of Oslo Børs (the stock exchange in Oslo) and the
relevant Norwegian background law such as the Norwegian
Accounting Act and the Norwegian Public Limited Liability
Companies Act. The Code of Practice may be found at
www.nues.no and the Oslo Børs Rulebook II may be found at
www.euronext.com. Norwegian laws and regulations are
available at www.lovdata.no.
This report outlines how Akastor has implemented the Code of
Practice. Deviations from the Code of Practice are addressed
under the relevant sections. In general, the Akastor board only
approves deviations that the board believes contributes to value
creation for its stakeholders.
In addition to the Code of Practice, the Norwegian Accounting
Act section 3-3b stipulates that companies must provide a
report on their policies and practices for corporate governance
either in the annual report or in a document referred to in the
annual report. Such report is integrated in the below corporate
governance statement.
Governance Structure
Akastor is an oileld services investment company with a
portfolio of industrial holdings and other investments. The
company has a exible mandate for active ownership and long-
term value creation. Completed transactions in 2021 include the
combination of MHWirth with Baker Hughes’ SDS operations to
create HMH as an entity controlled 50/50 by Baker Hughes and
Akastor. Whilst STEP Oiltools remains under the legal ownership
of Akastor, it forms part of the transaction perimeter for HMH
and will be transferred to HMH as long as certain regulatory
approvals have been obtained. On the other hand, all nancial
interest in the DRU Contracts still legally held by MHWirth have
been agreed excluded from the transaction.
On this background Akastor currently has an active investment
portfolio within the oileld services industry consisting of AGR,
Cool Sorption, DDW Offshore, 50 percent of the shares in HMH,
50 percent of the shares in AKOFS Offshore, a 15 percent
economic ownership in NES Fircroft, in addition to other
holdings and investments (see below), with a total net capital
employed of NOK 5.1 billion. HMH is a global provider of drilling
solutions, engineering, projects, equipment and services.
AKOFS Offshore is a provider of subsea well installation and
intervention services. AGR is a leading provider of well and
reservoir consultancy services as well as software and technical
manpower for its clients. Cool Sorption is a provider of vapour
recovery units and systems. DDW Offshore operates ve
1)
Below,theitemsinrespectofwhichinformationmustbedisclosedaccordingtosection3-3boftheNorwegianAccountingActarespecied,togetherwithreferencestowhere
suchrequiredinformationmaybefound:
1.“Astatementoftherecommendationsandregulationsconcerningcorporategovernancethattheenterpriseissubjecttoorotherwisechoosestocomplywith”canbefound
intheintroductionsectionofthiscorporategovernancestatement.
2.“Informationonwheretherecommendationsandregulationsmentionedinno.1areavailabletothepublic”canbefoundintheintroductionsectionofthiscorporate
governancestatement.
3.“Thereasonforanynon-conformancewithrecommendationsandregulationsmentionedinno.1”.Thenon-conformancesaredescribedintherelevantsectionwherethere
arenon-conformances,whicharesections6and14respectively.
4. “Adescriptionofthemainelementsintheenterprise’s,andforentitiesthatprepareconsolidatednancialstatements,ifrelevantalsotheGroup’sinternalcontrolandrisk
managementsystemslinkedtothenancialreportingprocess”canbefoundinsection10ofthiscorporategovernancestatement.
5.“ArticlesofAssociationwhichentirelyorpartlyexpandordepartfromprovisionsofChapter5ofthePublicLimitedLiabilityCompaniesAct”canbefoundinsection6ofthis
corporategovernancestatement.
6.“Thecompositionoftheboardofdirectors,thecorporateassembly,thecommitteeofshareholders’representativesandthecontrolcommitteeandanyworkingcommittees
relatedtothesebodies,aswellasadescriptionofthemaininstructionsandguidelinesthatapplytotheworkofthebodiesandanycommittees”canbefoundinsection8
and9ofthiscorporategovernancestatement.
7.“ArticlesofAssociationgoverningtheappointmentandreplacementofdirectors”canbefoundinsection8ofthiscorporategovernancestatement.
8. “ArticlesofAssociationandauthorizationsempoweringtheboardofdirectorstodecidethattheenterpriseistobuybackorissueitsownsharesorequitycerticates”can
befoundinsection3ofthiscorporategovernancestatement.
03. CORPORATE GOVERNANCE STATEMENT
– AKASTOR ASA
15Annual Report 2021 | Corporate Governance Statement
offshore vessels. NES Fircroft is a global technical and
engineering staff provider. Other investments mainly include
investments in Odfjell Drilling and Awilco Drilling, a subletting
portfolio through Akastor Real Estate and an investment in Aker
Pensjonskasse.
It is the responsibility of the board of directors of Akastor to
ensure that Akastor and its portfolio of companies implement
sound corporate governance. The board of directors evaluates
this corporate governance statement on an annual basis. The
board’s audit committee also evaluates the corporate
governance statement as well as other key policies and
procedures pertaining to compliance and governance.
Compliance with, and implementation of these corporate
governance guidelines are continuously evaluated by the board
and said committee; inter alia by way of the board being the
decisive body for the company’s dened management and
reporting structure, which include regular reporting.
Policies and Procedures
Akastor has a total of eleven corporate policies providing
business practice guidance within a number of key areas, all of
which are reviewed and updated on an annual basis. These
policy documents express the overall position of the group with
regard to for instance compliance, integrity and governance.
The policies provide instructions and guidelines that apply to the
portfolio companies and to individual employees in order to
ensure that the group’s operations are in compliance with
internal and external regulatory framework. In addition, the
portfolio companies are requested to implement their own
policies specic to their business within areas like project
execution, HSE and tendering.
Values and Code of Conduct
Akastor aims to develop and rene its portfolio of companies as
stand-alone enterprises, with the goal of maximizing the value
potential of each entity. The company works to develop the
business models of the portfolio companies, capitalize on their
market positions and promote aftersales services for the
equipment and systems delivered. The current investments are
within the oileld services sector, but the company has a exible
mandate for active ownership and long-term value creation.
Akastor has an opportunistic approach and will continue to own
the portfolio companies as long as Akastor creates more value
than alternative owners.
Akastor wishes to contribute to sustainable social develop ment
through responsible business practices. The company’s Code
of Conduct is a handbook that applies to all employees and
provides guiding on what Akastor considers to be responsible
ethical conduct. The Code of Conduct provides a frame work of
core corporate values which reects Akastor’s prudent business
practice and shall be reected in every aspect of our oper ations.
The ethical guidelines and other governing documents of the
group have been drafted on the basis of these core corporate
values.
2. Business
The objectives of the company, as dened in its articles of
association, are «to own or carry out industrial and other
associated businesses, management of capital, and other
functions for the group, and to participate in or acquire other
businesses». The articles of association are available at www.
akastor.com.
The principal strategies of the group are presented in the annual
report. To ensure value creation for its shareholders, the board
of directors annually performs a designated strategy process
where it sets objectives and targets for the company, assesses
risk, evaluates the existing strategy and approves any signicant
changes. Information concerning the nancial position and
principal strategies of the company, and any changes thereto is
disclosed to the market in the context of the company’s quarterly
reporting and in designated market presentations as well as at
www.akastor.com.
Corporate Responsibility
Akastor takes an active approach to corporate responsibility.
Corporate responsibility in Akastor is about making prudent
business decisions, with minimum risk to reputation, brand and
the future sustainability of our business. The main focus of
corporate responsibility activities in Akastor, dened in our
group-wide integrity policy, is to work against corruption, to
respect human rights and to care for health, safety and the
environment. In the Akastor Sustainability Policy it is described
how Akastor aims to integrate sustainability in its investment
processes and engages with the portfolio companies. Akastor’s
primary stakeholders are the shareholders (existing and
potential), customers of its portfolio companies and employees
of the Akastor group. Akastor has an ongoing stakeholder
dialogue, media analysis and investor presentations, which
provide important input to Akastor’s work on corporate
responsibility topics. All our portfolio companies are expected to
ensure integration of stakeholder engagement and a strong
corporate responsibility in their operations. Akastor recognizes
and respects the United Nations’ 17 Sustainable Development
Goals (SDGs), and has identied four SDGs that Akastor
positively impacts. A self-assessment is used to identify where
Akastor has the most opportunity to contribute to the SDGs.
Akastor identied 8, 12, 13 and 17 as priority SDGs and
encourages the portfolio companies to identify and work towards
relevant SDGs in their work and strategy.
Akastor is committed to follow the Global Framework Agreement
(GFA) entered into by Aker with the trade unions Fellesforbundet,
IndustriALL Global Union, NITO and Tekna on December 17,
2012. The GFA builds on and continues the commitment from
the previous framework agreements signed in 2008 and 2010,
and outlines key responsibilities in relation to human and trade
union rights. The parties commit themselves to achieving
continuous improvements within the areas of working conditions,
industrial relations with the employees of the Aker group of
companies, health and safety standards at the workplace and
16 Annual Report 2021 | Corporate Governance Statement
environmental performance. Akastor also aligns with the
principles of the UN Global Compact, the United Nations
Convention against Corruption, the Universal Declaration of
Human Rights, the UN Guiding Principles for Business and
Human Rights and the ILO Declaration on Fundamental
Principles and Rights at Work. These international principles
guide our Code of Conduct and Integrity Policy and provide the
overall framework for the corporate responsibility efforts in the
Akastor group.
Further information in respect of the corporate social
responsibility work of Akastor and its portfolio of companies can
be found in the separate Environmental, Social and Governance
(ESG) report published simultaneously as the company’s
annual report for 2021.
3. Equity and Dividends
Equity
The management and the board regularly monitor that the
group’s equity and liquidity are appropriate for its objectives,
strategy and risk prole. The book equity of the group as per
December 31, 2021 is NOK 4 109 million, which represents an
equity ratio of 57 percent. The management of nancial risk is
further described in the annual report.
Dividend Policy
The board proposes the level of dividend payment to the general
meeting who in turn is the decisive corporate body for dividend
decisions.
Over time, the aim is that Akastor’s shareholders shall receive a
competitive return on their investment either through cash
dividends or increase in the share price, or both. The company
does not intend to distribute regular or annual dividends, but will
consider dividends on an ongoing basis taking into consideration
the company’s M&A activities, expected cash ow, capital
expenditure plans, nancing requirements and appropriate
nancial exibility.
Authorizations for the Board of Directors
Proposals from the board of directors for future authorizations
for share capital increases, share buy-backs or similar shall be
for dened purposes, such as share purchase programs and
acquisitions of companies, and shall remain in effect until the
next annual general meeting.
The company’s annual general meeting on 15 April 2021
resolved to authorize the board to purchase treasury shares for
three purposes for utilization, all of which were subject to
separate voting under the general meeting: (i) purchase of
treasury shares to be used as transaction currency in connection
with acquisitions, mergers, demergers and other transactions,
(ii) purchase of treasury shares to be sold and/or transferred to
employees and directors under share purchase programs and
(iii) purchase of treasury shares for the purpose of investment or
for subsequent sale or deletion of such shares. The
authorizations were all limited to ten percent of the share capital.
The board’s authorizations to purchase treasury shares are
valid for the period until the date of the annual general meeting
of 2022. No shares were bought by the company in 2021
pursuant to the authorizations to the board of directors. As of
December 31, 2021, the company holds 2 390 215 own shares.
In addition, the annual general meeting in 2021 granted the
board of directors the mandate to approve the distribution of
dividends based on the company’s annual accounts for 2020 as
set out in the Public Limited Liability Companies Act section 8-2,
second paragraph. The mandate is valid for the period until the
date of the annual general meeting of 2022.
There are no current provisions in the articles of association of
the company or power of attorney from the general meeting
which grant the board of directors the mandate to issue or buy
back of shares in the company for the purposes of capital
increases.
Share Purchase Programs
Share purchase programs in Akastor include Akastor ASA and
Akastor AS (and not the portfolio companies).
4. Equal Treatment of Shareholders and Transac-
tions with Related Parties
The company has only one class of shares, and all shares carry
equal rights. Existing shareholders shall have pre-emptive
rights to subscribe for shares in the event of share capital
increases, unless otherwise indicated by special circumstances.
If the pre-emptive rights of existing shareholders are waived in
respect of a share capital increase, the reasons for such waiver
shall be explained by the board of directors. Transactions in
own shares are effected via Oslo Børs.
The largest shareholder of Akastor, Aker Holding AS, is wholly-
owned by Aker ASA, which in turn is controlled by Kjell Inge
Røkke through TRG Holding AS and The Resource Group TRG
AS. In December 2020, the previous common ownership in
Aker Holding AS between Aker ASA and the Norwegian
government was dissolved. As a consequence of the dissolution,
Akastor is no longer a subsidiary, but an associated company of
Aker ASA.
The board of directors is of the view that it is positive for Akastor
that Aker ASA assumes the role of an active owner and is
actively involved in matters of importance to Akastor and to all
shareholders. The cooperation with Aker ASA offers Akastor
access to special know-how and resources within strategy,
transactions and funding. Moreover, Aker ASA offers network
and negotiation resources from which Akastor benets in
various contexts. This complements and strengthens Akastor
without curtailing the autonomy of the group. It may be necessary
to offer Aker ASA special access to commercial information in
connection with such cooperation. Any information disclosed to
Aker ASA’s representatives in such a context is subject to
17Annual Report 2021 | Corporate Governance Statement
condentiality undertakings and disclosure regulations in
compliance with applicable laws.
Aker ASA and Aker Solutions ASA (or their subsidiaries) are not
deemed, within the meaning of the Public Limited Liability
Companies Act, to be a related party of Akastor. The board of
directors and the executive management team of Akastor are
nevertheless conscious that all relations with these companies
shall be premised on commercial terms and structured in line
with arm’s length principles.
In the event of any material transactions between the company
and shareholders, directors, senior executives, or related
parties thereof, which do not form part of the ordinary course of
the company’s business, the board of directors shall arrange for
an independent assessment. The same shall, generally
speaking, apply to the relationship between Akastor and Aker
ASA related companies.
In respect of the above, the «Related parties» note to the
consolidated nancial statements contains information on the
most signicant transactions between Akastor and companies
within the Aker ASA group.
5. Freely Negotiable Shares
The shares are listed on the Oslo Børs and are freely
transferable. No transferability restrictions are laid down in the
articles of association. There are no restrictions on the party’s
ability to own, trade or vote for shares in the company.
6. General Meetings
Attendance, Agenda and Voting
The general meetings will be conducted electronically as of this
year. The decision to hold virtual meetings without the possibility
to attend a physical meeting, is partly due to new requirements
in the Public Llimited Liability Companies Act section 5-8, third
paragraph, letter b, and party due to practical considerations.
The shareholders will be invited to participate online via PC,
phone or tablet, and a description of how to participate is
included in the notice of general meeting that will be announced.
By participating online, shareholders will receive a live webcast
from the general meeting, the opportunity to ask written
questions, and vote on each of the items. The company
encourages shareholders to attend the general meetings.
It will also, like previous years, be possible to vote in advance or
give a proxy before the meetings. Notices convening general
meetings, including comprehensive documentation relating to
the items on the agenda, including the recommendation of the
nomination committee, shall be sought made available on the
company’s website no later than 21 days prior to the general
meeting. The articles of association of the company stipulate
that documents pertaining to matters to be deliberated by the
general meeting shall only be made available on the company’s
website, and not normally be sent physically by post to the
shareholders unless required by statute.
The following matters are typically decided at the annual general
meeting, in accordance with the articles of association of
Akastor ASA and Norwegian background law:
Election of the nomination committee and stipulation of
the nomination committee's fees;
election of shareholder representatives to the board of
directors as well as stipulation of fees to the board of
directors;
election of the external auditor and approval of the
auditor’s fee;
approval of any amendments to the board of directors’
policy regarding stipulation of salary and other
remuneration to the executive management, if any;
advisory vote on the board of directors’ report on
remuneration to the executive management;
approval of the annual accounts and the board of
directors’ report, including distribution of dividend; and
other matters which, by law or under the articles of
association, are the business of the annual general
meeting.
The deadline for registering intended attendance is as close to
the general meeting as possible. Information concerning both
the registration procedure, online participation and the ling of
proxies is included in the notice convening the general meeting
and on the registration form. The company also aims to
structure, to the extent practicable, the proxy form such as to
enable the shareholders to vote on each individual item on
the agenda.
Chairman
The articles of association stipulate that the general meetings
shall be chaired by the chairman of the board of directors or a
person appointed by said chairman. According to the Code of
Practice the board should however «make arrangements to
ensure an independent chairman for the general meeting».
Thus, the articles of Akastor ASA deviate from the Code of
Practice in this respect. This has its background in a long-lasting
tradition in Akastor. Having the chairman of the board chairing
the general meeting also simplies the preparations for the
general meetings signicantly.
Election of Directors
It is a priority for the nomination committee that the board of
directors shall work in the best possible manner as a team, and
that the background and competence of the directors shall
complement each other. As a consequence, the nomination
committee will propose that the shareholders are invited to vote
on the full board composition proposed by the nomination
committee as a group, and not on each director separately.
Hence, Akastor deviates from the Code of Practice stipulating
18 Annual Report 2021 | Corporate Governance Statement
that one should make «appropriate arrangements for the
general meeting to vote separately on each candidate nominated
for election to the company’s corporate bodies».
Minutes
Minutes of general meetings will be published as soon as
practicable on the announcement system of Oslo Børs, www.
newsweb.no (ticker: AKAST), and at www.akastor.com.
7. Nomination Committee
The articles of association stipulate that the company shall have
a nomination committee. The nomination committee shall have
no less than three members, who shall normally serve for a term
of two years. The current members of the nomination committee
are Frank Reite (chairman), Georg Fr. Rabl, Ingebret G. Hisdal
and Ove A. Taklo. Two of the members of the committee, Ove A.
Taklo and Ingebret G. Hisdal are up for election at the 2022
annual general meeting. In addition, Frank O. Reite and Georg
F. Rabl have announced that they will resign from their positions.
Further Taklo has announced that he will not be available for
re-election. Reite is deputy chairman of the board of Aker ASA.
Ove A. Taklo was Group Corporate Controller of Aker ASA, but
has now resigned and is employed with a company unrelated of
Akastor. No members of the nomination committee are employed
by, or directors of, Akastor. The majority of the members of the
nomination committee are independent of both Akastor’s board
of directors and the executive management of the company.
The committee’s recommendations (relating to particularly the
board of directors and their remuneration) shall address how
the new board candidates will attend to the interests of the
shareholders in general and ll the requirements of the company,
including with respect to competence, capacity and
independence.
The composition of the nomination committee shall reect the
interests of all shareholders and ensure independence from the
board of directors and the executive management. The
members and the chairman of the nomination committee are
appointed by the general meeting, which also determines the
remuneration of the committee.
The annual general meeting in 2010 adopted guidelines
governing the duties of the nomination committee. According to
these guidelines, the committee shall emphasize that candidates
for the board have the necessary experience, competence, and
capacity to perform their duties in a satisfactory manner. A
reasonable representation with regard to gender and
background should also be emphasized.
The chairman of the nomination committee has the overall
responsibility for the work of the committee. In the exercise of its
duties, the nomination committee may contact, among others,
shareholders, the board, management, and external advisors.
The nomination committee shall also ensure that its
recommendations are endorsed by the largest shareholders.
Information concerning the nomination committee and deadlines
for making suggestions or proposing candidates for directorships
will be made available on the company’s website, www.akastor.
com when there are candidates up for election.
8. Composition and Independence of the Board of
Directors
Composition
It has been agreed with the employees that the company shall
have no corporate assembly. Hence, the board appoints its own
chairman, cf. the Public Limited Liability Companies Act section
6-1, second paragraph, unless the chairman is appointed by the
general meeting. The proposal of the nomination committee will
normally include a proposed candidate for appointment as
chairman of the board of directors. The board of directors
appoints its own deputy chairman. According to the Public
Limited Liability Companies Act, the directors are appointed for
a term of two years at a time unless otherwise stated in the
company’s articles of association. The articles of association of
Akastor stipulate that directors may be elected for a period of
one to three years.
The right of the employees to be represented and participate in
decision making is safeguarded through expanded employee
representation on the board of directors of both Akastor and in
a number of the group’s portfolio companies.
The articles of association stipulate that the board of directors
shall comprise six to twelve persons, one third of whom shall be
elected by and amongst the employees of the group. In addition,
up to three shareholder-appointed alternates may be appointed.
As per December 31, 2021, the board of directors comprised
eight directors, ve of whom were elected by the shareholders
and three of whom were elected by and amongst the employees.
The company encourages the directors to hold shares in the
company. The shareholdings of the directors as of December
31, 2021 will be set out in the 2021 remuneration report. The
chairman Kristian M. Røkke and the directors Lone Fønss
Schrøder, Kathryn M. Baker, Luis Araujo and Svein Oskar
Stoknes are currently shareholders in Akastor. The board
composition, including information about the directors’
background and expertise will be detailed in the annual report
for 2021.
The appointment of employee representatives to the board of
directors is conducted as prescribed by the Public Limited
Liability Companies Act and the Representation Regulations.
The board of directors has appointed a designated election
committee charged with implementing the appointment of such
employee representatives.
Independence
A majority of the directors elected by the shareholders are
independent of the executive personnel and important business
associates of Akastor. None of the executive personnel of the
company are members of the board of directors.
19Annual Report 2021 | Corporate Governance Statement
The composition of the board of directors aims to ensure that
the interests of all shareholders are attended to, and that the
company has the know-how, resources, and diversity it needs at
its disposal. Among the ve shareholder-elected directors, the
majority are deemed independent from the company’s largest
indirect shareholder, Aker ASA.
9. The Work of the Board of Directors
Procedures
For each calendar year, the board plans for its work and
meetings. Furthermore, there are rules of procedure for the
board of directors and Chief Executive Ofcer, which govern
areas of responsibility, duties and the distribution of roles
between the board of directors, the chairman of the board of
directors and the Chief Executive Ofcer. The rules of procedure
for the board of directors also include provisions on convening
and chairing board meetings, decision making, the duty and
right of the Chief Executive Ofcer to disclose information to the
board of directors, the duty of condentiality, etc. According to
the company’s articles of association, each of the directors
elected by the shareholders will serve for a period of one to
three years pursuant to further decision by the general meeting.
This to provide the nomination committee with the exibility to
propose varying terms of service for the candidates.
Akastor has prepared guidelines as part of its rules of procedure
for the Chief Executive Ofcer and board of directors ensuring
that directors and the Chief Executive Ofcer notify the board of
directors if they have any material direct or indirect personal
interest in any agreement concluded by the group. The
guidelines stipulate that the directors and the Chief Executive
Ofcer shall not participate in the preparation, deliberation, or
resolution of any matters that are of such special importance to
themselves, or any of their related parties, so that the person in
question must be deemed to have a prominent personal or
nancial interest in such matters. The relevant board member or
the Chief Executive Ofcer shall raise the issue of his or her
competence whenever there may be cause to question it, and
each director is the primary responsible for adopting the correct
decision as to whether he or she should step down from
participating in the discussion of the matter at hand.
In general, as further stipulated in Akastor’s principles for related
party transactions, directors of Akastor should be cautious in
participating in the consideration of issues where a potential
conict of interest or conict of role may arise, undermining the
condence in the decision process. Such person may not
participate in board discussions of more than one company that
is part of the same agreement, unless the companies have
common interests. These assessments will be carried out on a
case-by-case basis; in most events, and as a starting point, by
the relevant directors themselves, but often also in cooperation
with internal and/or external legal counsel.
The above principles will normally also be applied if Akastor
contracts with other companies in which said board members
hold direct or indirect ownership interests that exceed, in relative
terms, their ownership interests in Akastor.
If grounds for legal incapacity are established, the relevant
board member will, as a ground rule, not be granted access to
any documentation prepared to the board of directors for the
deliberation of the agenda item in question.
In general, Akastor applies a strict norm as far as competence
assessments are concerned. In cases where the chairman of
the board of directors does not participate in the deliberations,
the deputy chairman of the board of directors chairs the meeting.
As far as the other ofcers and employees of Akastor are
concerned, transactions with related parties and conicts of
interest are comprehensively addressed and regulated in the
group’s Code of Conduct.
Meetings
The board of directors will hold board meetings whenever
needed, but normally six to twelve times a year. The need for
extraordinary board meetings may typically arise because the
internal authorization structure of the company requires the
board of directors to deliberate and approve material tenders to
be submitted by the company or in relation to M&A transactions.
Whilst the deadlines for such submission often change, it is
difcult to t this into the calendar of ordinary board meetings.
The board of directors held six ordinary board meetings in 2021.
The aggregate attendance rate at the board meetings was close
to 100 percent.
The Matters Discussed by the Board of Directors
The Chief Executive Ofcer prepares cases for deliberation by
the board of directors in cooperation with the chairman of the
board. Endeavours are made to prepare and present matters in
such a way that the board of directors is provided with an
adequate basis for its deliberations. The board of directors has
overall responsibility for the management of Akastor and shall,
through the Chief Executive Ofcer, ensure that its activities are
organized in a sound manner. The board of directors shall adopt
plans and budgets for the business, and keep itself informed of
the nancial position of, and development within, the company.
This encompasses the annual planning process of Akastor, with
the adoption of overall goals and strategic choices for the group,
as well as nancial plans, budgets, and forecasts for the group
and the portfolio companies. The board of directors performs
annual evaluations of its work and its know-how.
Audit Committee
Akastor will have an audit committee comprising two to four of
the directors. The audit committee currently comprises the
directors Lone Fønss Schrøder (chair), Kathryn M. Baker and
Henning Jensen. The audit committee is independent from the
management.
20 Annual Report 2021 | Corporate Governance Statement
At least one of the members of the audit committee shall have
either formal qualications within accounting or auditing, or
relevant experience and skills within the same. Both members
Fønss Schrøder and Baker have such relevant experience and
skills. The audit committee has a mandate and a working
method that complies with statutory requirements. The audit
committee mandate forms an integrated part of the rules of
procedures for the board of directors. The committee will
participate, on behalf of the board of directors, in the quality
assurance of guidelines, policies, and other governing
instruments in Akastor. The audit committee performs a
qualitative review of the quarterly and annual reports of Akastor.
Signicant judgment calls (uncertain estimates) made in the
nancial statements in the quarter are reviewed by the audit
committee. The audit committee further supports the board of
directors in safeguarding that the company has sound risk
management and internal controls. The audit committee reviews
the status on internal controls on an annual basis. In order to
safeguard appropriate processes and assessments, the board’s
audit committee shall also review major M&A transactions as
well as related party transactions which are not part of the
company’s ordinary course of business, unless such related
party transactions are immaterial.
Akastor currently has no remuneration committee as the
experiences from having such showed more merit in discussing
matters comprised by this committee’s mandate with all directors
present. As of December 31, 2021, there are no other board
committees than the audit committee. The board does not
envisage appointing any further board committees in 2022.
The board evaluate its performance and qualication annually.
A summary of the evaluation was made available to the
nomination committee.
10. Risk Management and Internal Control
Governing Principles
The board of directors shall ensure that Akastor has sound internal
control and systems for risk management that are appropriate in
relation to the extent and nature of the company’s activities. The
audit committee supports the board of directors in safeguarding
that the company has internal procedures and systems that
ensure good corporate governance, stakeholder engagement,
effective internal controls and proper risk management,
particularly in relation to nancial reporting. The Chief Financial
Ofcer reports directly to the audit committee on matters relating
to nancial reporting, nancial risks and internal controls.
Akastor has implemented an internal system for reporting
serious matters such as breaches of ethical guidelines and
violations of the law, which is also available to external parties
at www.akastor.com.
Risk Management
Akastor and its portfolio companies are exposed to a variety of
market, operational and nancial risks. The board of directors
carries out an annual review of the company’s most important
areas of exposure to risk and its internal control arrangements.
Being an investment company, the main objective of Akastor is
to create value for its shareholders. Potential impacts on the net
asset value, share price or predictability of earnings are
therefore key parameters in the board’s risk evaluation. Sound
risk management throughout the organization is recognized by
Akastor as an invaluable tool in the process of achieving
strategic, nancial and operational goals while at the same time
ensuring compliance with regulatory requirements and
adherence to high integrity standards.
Risk evaluation is an integral part of all business activities and
Akastor employs a decentralized model for allocating managerial
responsibility under which the portfolio companies are required
to establish their own risk management and internal control
systems. Akastor’s representatives on boards of directors in the
portfolio companies seek to ensure that the portfolio companies
follow the principles of sound corporate governance.
Akastor manages risk through an internal framework both on a
corporate and portfolio company level comprising guide lines,
policies and procedures intended to ensure good business
operations and provide unied and reliable nancial reporting.
The board of directors has adopted an authorization matrix that
forms part of its governing documents where authority is
delegated to the Akastor Chief Executive Ofcer. Further more,
authorization matrices are adopted for each of the portfolio
companies, pursuant to which the Akastor Chief Executive Ofcer
delegates authority to the boards and Chief Executive Ofcers of
the respective portfolio companies, which again adopts
authorization matrices for the portfolio organizations. Special
expenditure approval procedures have also been developed.
The board receives and reviews risk reports prepared by the
management. The management’s risk reporting is based on the
total level of insight obtained through regular reporting and the
close cooperation that Akastor has with the portfolio companies,
including from Akastor’s investment directors and board
representatives. Management of operational risk primarily rests
with the underlying portfolio companies, although Akastor acts
as an active driver through its involvement on the boards and
through support and follow-up by the various Akastor corporate
functions towards relevant functions in the portfolio companies.
Akastor’s management holds review meetings with the
management of the different portfolio companies. The purpose
of the meetings is to conduct an in-depth review of the
development of each portfolio company, focusing on operat-
ions, risk management, market conditions, the competitive
situation and strategic issues. These meetings provide a solid
foundation for Akastor’s assessment of its overall nancial and
operational risk.
A key risk in one of the smaller portfolio companies may still be
negligible on the group level, whereas important risks in the
21Annual Report 2021 | Corporate Governance Statement
largest portfolio companies may have a serious impact on the
group as a whole. Akastor’s decentralized approach to
operational risk management, as described above, raises a
need for management to process and calibrate the insight
obtained through various interfaces with the portfolio companies
prior to the board’s annual risk review. The objective of such
exercise is to ensure that risks are reported in a format that
allows the board to acquire a true and fair view of the overall risk
environment of the Akastor group in an efcient manner and to
focus its attention on risks that are material on an aggregated
group level.
Prior to the board’s review of risk reporting, the audit committee
reviews the reported risks and associated risk-reducing
measures. The audit committee also reviews the company’s in-
house reporting systems and internal control and risk
management, and prepares the board’s review of nancial
reporting.
Financial Reporting
The Akastor nancial reporting division reports to the Chief
Financial Ofcer and is responsible for the external reporting
process and the internal management nancial reporting
process. This also includes assessing nancial reporting risks
and internal controls over nancial reporting in the group.
The consolidated external nancial statements are prepared in
accordance with IFRS and IAS standards as approved by the
EU. The existing policies and standards governing the annual
and quarterly nancial reporting in the group, including the
Akastor accounting principles, are available for Akastor
employees.
Clearing meetings are held with the management teams of the
portfolio companies in connection with the annual closing of
accounts and may also be held in connection with quarterly
nancial reporting. For the 2021 nancial year, clearing meetings
with the portfolio companies were held in October 2021 and
January 2022. The main purpose is to ensure high-quality
nancial reporting. Such meetings focus on important items
involving estimation and judgment, non-balance-sheet items,
accounting for signicant transactions, new or modied
accounting principles and other topics relevant to the respective
portfolio companies. The external auditor is present in the
clearing meetings.
Other Reporting
In addition to the abovementioned nancial reporting, there are
regular business review and board meetings in the portfolio
companies which ensure timely and high-quality reporting from
the portfolio companies to the corporate management.
Regular reports for Akastor and the portfolio companies are
submitted to the board of directors. The quarterly business
update contains key nancial numbers, M&A updates, nancing,
status of value creation plans, compliance, risk management
and share price information for the Akastor group. Further, it
contains key nancial numbers, key operational topics, status
on value drivers as well as key market information for the main
portfolio companies. The monthly business update contains
high level nancial and operational information for the Akastor
group, as well as key highlights for the main portfolio companies.
11. Remuneration of the Board of Directors
The remuneration of the board of directors will reect its
responsibilities, know-how and time commitment, as well as the
complexity of the business. The remuneration will be proposed
by the nomination committee, and is not performance-related or
linked to options in Akastor. More detailed information about the
remuneration of individual directors is provided in the
remuneration report for 2021, as further described in section 12
below. Neither the directors, nor companies with whom they are
afliated, should accept specic paid duties for Akastor beyond
their directorships. If they nevertheless do so, the board of
directors shall be informed and the remuneration shall be
approved by the board of directors. No remuneration shall be
accepted from anyone other than the company or the relevant
group company in connection with such duties.
12. Remuneration of Executive Personnel
The board of directors has adopted designated guidelines for
the remuneration of executive management pursuant to the
provisions of section 6-16a of the Public Limited Liability
Companies Act. The current guidelines were adopted by the
general meeting April 15, 2021. The board of directors’ has
suggested some amendments to the guidelines and the
updated policy will be presented and processed at the annual
general meeting on April 20, 2022. Upon approval, such updated
guidelines will replace the previous policy that was approved at
the annual general meeting 15 April 2021.
In accordance with section 6-16b of the Public Limited Liability
Companies Act, the board of directors has also prepared a
report on the remuneration to the executive management,
detailing the remuneration received by members of the
executive management in 2021. The report is available at www.
akastor.com, and will be subject for an advisory vote on the
annual general meeting 2022.
13. Information and Communication
Akastor has no option schemes or option programs for the
allotment of shares to employees. The Chief Executive Ofcer
determines the remuneration of executive management on the
basis of the guidelines laid down by the board of directors. All
performance-related remuneration within the group will be
made subject to a cap. Further information about the
remuneration of each executive manager is provided in the
mentioned remuneration report for 2021.
The company has adopted a designated communications and
investor relations policy which covers, among other things,
22 Annual Report 2021 | Corporate Governance Statement
guidelines for the company’s contact with shareholders other
than through general meetings.
The company’s reporting of nancial and other information is
based on openness and the equal treatment of all securities
market players. The long-term purpose of the investor relations
function is to ensure access for the company to capital on
competitive terms, whilst at the same time ensuring that the
shareholders are provided with the most correct pricing of the
shares that can be achieved. This shall take place through
correct and timely distribution of price-sensitive information,
whilst ensuring, at the same time, that the company is in
compliance with applicable rules and market practices.
Reference is also made to the above discussion concerning the
ow of information between Akastor and Aker ASA in connection
with their cooperation within, inter alia, strategy, transactions,
and funding.
All stock exchange announcements and press releases are
made available on the company’s website, and stock exchange
announcements are also available at www.newsweb.no. The
company holds open presentations in connection with the
reporting of nancial performance, either by a physical meeting
or by a conference call and webcast, and these presentations
are broadcasted on the internet. The nancial calendar of the
company is available at www.akastor.com.
14. Take-overs
The overriding principle for Akastor is equal treatment of
shareholders. In a bid situation, the board of directors and
management have an independent responsibility to help ensure
that shareholders are treated equally, and that the company’s
business activities are not disrupted unnecessarily. In a take-
over situation, the board will have a particular responsibility to
ensure that shareholders are given sufcient information and
time to form a view of the offer.
The board of directors has not deemed it appropriate to adopt
specic guidelines for take-over situations as long as Aker
Holdings AS continues to be the dominant shareholder of
Akastor. This represents a deviation from the Code of Practice.
15. Auditors
The external auditor presents a plan for the performance of the
audit work to the audit committee annually. In addition, the
auditor provides the audit committee with an annual written
conrmation to the effect that the independence requirement is
met. The auditor attends all audit committee meetings, and the
auditor has reviewed any material changes to the accounting
principles of the company, or to the internal controls of the
company, with the audit committee. The external auditor also
attends the board meeting where the annual nancial statements
are reviewed and approved, normally in March. The board of
directors holds a minimum of one annual meeting with the
auditor without any executive personnel being in attendance.
The board’s audit committee stipulates guidelines on the scope
for using the auditor for services other than auditing, and makes
recommendations to the board of directors concerning the
appointment of the external auditor and the approval of the
auditor’s fees. Fees payable to the auditor, separated into those
relating to auditing and those relating to other services, are
specied in the «Other operating expenses» note to the
consolidated nancial statements for the group and are also
reported to the general meeting. The auditor’s fees relating to
auditing are subject to approval by the general meeting.
23Annual Report 2021 | Financials and Notes | Akastor Group
Financials and Notes | Akastor Group
AKASTOR GROUP
Akastor Group | Consolidated income statement For the year ended December 31 24
Akastor Group | Consolidated statement of comprehensive income For the year ended December 31 25
Akastor Group | Consolidated statement of nancial position For the year ended December 31 26
Akastor Group | Consolidated statement of changes in equity 27
Akastor Group | Consolidated statement of cash ow For the year ended December 31 28
General
Note 1 | Corporate information 29
Note 2 | Basis for preparation 29
Note 3 | Signicant accounting policies 30
Note 4 | Signicant accounting estimates and judgements 36
Performance of the year
Note 5 | Discontinued operations 38
Note 6 | Disposal of subsidiaries and business combination 39
Note 7 | Operating segments 41
Note 8 | Revenue and other income 45
Note 9 | Salaries, wages and social security costs 48
Note 10 | Other operating expenses 48
Note 11 | Net nance expenses 49
Note 12 | Income tax 50
Note 13 | Earnings per share 52
Assets
Note 14 | Property, plant and equipment 53
Note 15 | Intangible assets 54
Note 16 | Impairment testing of goodwill 55
Note 17 | Equity-accounted investees 56
Note 18 | Other non-current assets 57
Note 19 | Other investments 58
Note 20 | Non-current interest-bearing receivables 58
Note 21 | Trade and other receivables 58
Note 22 | Cash and cash equivalents 59
Equity and liabilities
Note 23 | Capital and reserves 60
Note 24 | Borrowings 61
Note 25 | Other liabilities 62
Note 26 | Employee benets – pension 63
Note 27 | Provisions 66
Note 28 | Trade and other payables 66
Financial risk management
Note 29 | Capital management 67
Note 30 | Financial risk management and exposures 68
Note 31 | Financial instruments 71
Other
Note 32 | Leases 74
Note 33 | Group companies 76
Note 34 | Related parties 78
a.
04.
FINANCIALS AND NOTES
24 Annual Report 2021 | Financials and Notes | Akastor Group
Akastor Group | Consolidated income statement
For the year ended December 31
AmountsinNOKmillion Note 2021
2020
Restated
1)
Revenue and other income 7,8 953 819
Materials, goods and services (294 ) (450 )
Salaries, wages and social security costs 9 (367 ) (302 )
Other operating expenses 10 (78 ) (138 )
Impairment loss on contract assets 8 (214 ) -
Operating expenses (953 ) (890 )
Operating prot before depreciation, amortization and impairment - (71 )
Depreciation, amortization and impairment 14,15,32 (82 ) (61 )
Operating prot (loss) (82 ) (132 )
Finance income 369 201
Finance expenses (175 ) (226 )
Prot (loss) from equity-accounted investees 17 (346 ) (256 )
Impairment loss on receivables - (106 )
Net nance expenses 11 (152 ) (387 )
Prot (loss) before tax (235 ) (519 )
Income tax benet (expense) 12 20 (18 )
Prot (loss) from continuing operations (215 ) (537 )
Prot (loss) from discontinued operations (net of income tax) 5 1 140 (47 )
Prot (loss) for the period 925 (584 )
Prot(loss)fortheperiodattributableto:
Equity holders of the parent company 919 (581 )
Non-controlling interests 6 (3 )
Basic / diluted earnings (loss) per share (NOK) 13 3.38 (2.14 )
Basic / diluted earnings (loss) per share continuing operations (NOK) 13 (0.81 ) (1.97 )
Basic / diluted earnings (loss) per share discontinued operations (NOK) 13 4.20 (0.17 )
1)
SeeNote5Discontinuedoperations
25Annual Report 2021 | Financials and Notes | Akastor Group
Akastor Group | Consolidated statement of comprehensive income
For the year ended December 31
AmountsinNOKmillion Note 2021 2020
Prot (loss) for the period 925 (584 )
Other comprehensive income
Cash ow hedges, effective portion of changes in fair value (22 ) 48
Deferred tax of cash ow hedges, effective portion of changes in fair value - (10 )
Cash ow hedges, reclassication to income statement 1 (2 )
Deferred tax of cash ow hedges, reclassication to income statement - 1
Total change in hedging reserve, net of tax (21 ) 38
Total change in fair value reserve, net of tax (20 ) (42 )
Currency translation differences - foreign operations 33 (60 )
Currency translation differences, reclassication to income statement upon disposal (472 ) (7 )
Share of OCI from equity-accounted investees (7 ) (20 )
Total change in currency translation reserve, net of tax (446 ) (86 )
Total items that may be reclassied subsequently to prot or loss, net of tax (487 ) (90 )
Remeasurement gain (loss) net dened benet liability 26 9 (37 )
Deferred tax of remeasurement gain (loss) net dened benet liability (6 ) 7
Total items that will not be reclassied to prot or loss, net of tax 3 (30 )
Total other comprehensive income, net of tax (484 ) (120 )
Total comprehensive income (loss) for the period, net of tax 441 (704 )
Attributableto:
Equity holders of the parent company 435 (701 )
Non-controlling interests 6 (3 )
26 Annual Report 2021 | Financials and Notes | Akastor Group
Akastor Group | Consolidated statement of nancial position
For the year ended December 31
AmountsinNOKmillion Note 2021 2020
Deferred tax assets 12 42 329
Property, plant and equipment 14 251 1 017
Intangible assets 15 145 1 595
Right-of-use assets 32 41 468
Equity-accounted investees 17 3 408 1 064
Other investments 19 1 625 1 469
Non-current interest-bearing receivables 20 315 115
Non-current nance lease receivables 32 176 15
Other non-current assets 18 21 29
Total non-current assets 6 025 6 100
Current tax assets - 28
Inventories 5 485
Trade and other receivables 21 872 2 191
Derivative nancial instruments 10 61
Current nance lease receivables 32 64 7
Current investments 19 147 -
Cash and cash equivalents 22 89 275
Total current assets 1 187 3 047
Total assets 7 212 9 147
Issued capital incl. treasury shares 23 161 161
Other capital paid in 1 538 1 538
Reserves and retained earnings 2 393 1 959
Equity attributable to equity holders of the parent company 4 091 3 657
Non-controlling interests 18 11
Total equity 4 109 3 669
Non-current borrowings 24 1 372 628
Non-current lease liabilities 32 72 433
Employee benet obligations 26 108 388
Deferred tax liabilities 12 4 10
Other non-current liabilities 25 628 478
Provisions, non-current 27 26 50
Total non-current liabilities 2 211 1 986
Current borrowings 24 16 1 119
Current lease liabilities 32 82 159
Current tax liabilities 1 8
Provisions, current 27 20 109
Trade and other payables 28 625 2 060
Derivative nancial instruments - 37
Other current liabilities 25 148 -
Total current liabilities 892 3 492
Total liabilities 3 103 5 479
Total equity and liabilities 7 212 9 147
Fornebu, March 25, 2022 | Board of Directors of Akastor ASA
Asle Christian Halvorsen | Director
Stian Sjølund | Director Karl Erik Kjelstad | CEO
Henning Jensen | Director Kathryn M. Baker | Director Luis Araujo | Director
Svein Oskar Stoknes | DirectorKristian Røkke | Chairman Lone Fønss Schrøder | Deputy Chairman
27Annual Report 2021 | Financials and Notes | Akastor Group
Akastor Group | Consolidated statement of changes in equity
AmountsinNOKmillion
Share
capital
Treasury
shares
Other
capital
paid in
Hedging
reserve
1)
Fair
value
reserve
1)
Currency
trans-
lation
reserve
1)
Retained
earnings
Equity
attributable
to equity
holders of
the parent
company
Non-con-
trolling
interests
(NCI)
Total
equity
2020
Equity as of January 1, 2020 162 (2 ) 1 538 (17 ) (10 ) 268 2 415 4 353 18 4 371
Prot (loss) for the period - - - - - - (581 ) (581 ) (3 ) (584 )
Other comprehensive income - - - 38 (42 ) (86 ) (30 ) (120 ) - (120 )
Total comprehensive income - - - 38 (42 ) (86 ) (612 ) (701 ) (3 ) (704 )
Repayment of dividend - - - - - - 2 2 - 2
Acquisition of NCI - - - - - - 4 4 (4 ) -
Equity as of December 31, 2020 162 (2 ) 1 538 21 (52 ) 182 1 808 3 657 11 3 669
2021
Prot (loss) for the period - - - - - - 919 919 6 925
Other comprehensive income - - - (21 ) (20 ) (446 ) 3 (484 ) - (484 )
Total comprehensive income - - - (21 ) (20 ) (446 ) 922 435 6 441
Transaction with NCI - - - - - - (1 ) (1 ) 1 -
Equity as of December 31, 2021 162 (2 ) 1 538 - (72 ) (264 ) 2 730 4 091 18 4 109
1)
SeeNote23Capitalandreserves.
28 Annual Report 2021 | Financials and Notes | Akastor Group
Akastor Group | Consolidated statement of cash ow
For the year ended December 31
AmountsinNOKmillion Note 2021 2020
Cashowfromoperatingactivities
Prot (loss) for the period - continuing operations (215 ) (537 )
Prot (loss) for the period - discontinued operations 1 140 (47 )
Prot (loss) for the period 925 (584 )
Adjustmentsfor:
Income tax expense (benet) (20 ) 86
Net interest cost and unrealized currency (income) loss 142 45
Depreciation, amortization and impairment 14,15,32 260 278
(Gain) loss on disposal of subsidiaries (1 225 ) 120
(Gain) loss on disposal of assets (51 ) (2 )
(Prot) loss from equity-accounted investees 17 346 256
Other non-cash effects (272 ) 106
Prot (loss) for the period after adjustments 105 305
Changes in operating assets (113 ) 63
Cash generated from operating activities (8 ) 369
Interest paid (120 ) (122 )
Interest received 38 45
Net Interest paid for leases (14 ) (34 )
Income taxes paid 8 (47 )
Net cash from operating activities (96 ) 211
Cashowfrominvestingactivities
Acquisition of property, plant and equipment 14 (112 ) (29 )
Payments for capitalized development 15 (24 ) (38 )
Acquisition of subsidiaries, net of cash acquired - 37
Proceeds (payments) from sale of subsidiaries, net of cash 591 (77 )
Acquisition of other investments (9 ) -
Payments to equity-accounted investees (47 ) (120 )
Proceeds from nance lease receivables 29 9
Net cash ow from other investing activities 3 (1 )
Net cash from investing activities 431 (219 )
Cashowfromnancingactivities
Proceeds from borrowings 24 1 067 227
Repayment of borrowings 24 (1 472 ) (316 )
Payment of lease liabilities 32 (112 ) (139 )
Repayment of dividends - 2
Proceeds from transaction with non-controlling interests 1 -
Net cash used in nancing activities (516 ) (227 )
Effect of exchange rate changes on cash and bank deposits (5 ) (45 )
Net increase (decrease) in cash and bank deposits (186 ) (280 )
Cash and cash equivalents at the beginning of the period 275 555
Cash and cash equivalents at the end of the period 22 89 275
Of which is restricted cash - 6
The statement included cash ows from discontinued operations prior to the disposal.
29Annual Report 2021 | Financials and Notes | Akastor Group
Note 1 | Corporate information
located at Oksenøyveien 10, Bærum, Norway . The largest shareholder
is Aker Holding AS which is wholly owned by Aker ASA as of December
31, 2021.
The consolidated nancial statements of Akastor ASA and its subsidiaries
(collectively referred as Akastor or the group, and separately as group
companies) for the year ended December 31, 2021 were approved by
the board of directors and CEO on March 25, 2022. The consolidated
nancial statements will be authorized by the Annual General Meeting on
April 20, 2022.
The group is an oi l f i e l d services investment company with a portfolio of
Exchange under the ticker AKAST. Information on the group’s structure is
provided in Note 33 Group companies. Information on other related party
relationships of the group is provided in Note 34 Related parties.
Note 2 | Basis for preparation
Basis of accounting
The consolidated nancial statements have been prepared in accordance
with International Financial Reporting Standards as adopted by the
European Union (IFRS), their interpretations adopted by the International
Accounting Standards Board (IASB) and the additional requirements of the
Norwegian Accounting Act as of December 31, 2021.
Goingconcernbasisofaccounting
The consolidated nancial statements have been prepared on a going
concern basis, which assumes that the group will be able to meet the
mandatory terms and conditions of the banking facilities as disclosed in
Note 29 Capital management.
Basis of measurement
The consolidated nancial statements have been prepared on the historical
cost basis except for the following material items, which are measured on
an alternative basis on each reporting date:
Derivative nancial instruments are measured at fair value.
Non-derivative nancial instruments at Fair Value through Prot or
Loss (FVTPL) are measured at fair value.
Debt instrument at Fair Value through Other Comprehensive
Income (FVOCI) are measured at fair value.
Contingent considerations assumed in business disposals are
measured at fair value.
Net dened benet (asset) liability is recognized at fair value of
plan assets less the present value of the dened benet obligation.
Functional and presentation currency
The consolidated nancial statements are presented in NOK, which is
NOK has been rounded to the nearest million (NOK million), except when
otherwise stated. The subtotals and totals in some of the tables in these
consolidated nancial statements may not equal the sum of the amounts
shown due to rounding.
When the functional currency in a reporting unit is changed, the effect of the
change is accounted for prospectively.
Use of estimates and judgements
The preparation of nancial statements in conformity with IFRS requires
management to make judgements, estimates and assumptions that affect
the application of policies and reported amounts of assets and liabilities,
income and expenses. Although management believes these assumptions
to be reasonable, given historical experience, actual amounts and results
could differ from these estimates. The items involving a higher degree of
judgement or complexity, and items where assumptions and estimates are
material to the consolidated nancial statements, are disclosed in Note 4
Signicant accounting estimates and judgements.
The estimates and underlying assumptions are reviewed on an ongoing
basis. Revisions to accounting estimates are recognized in the period in
which the estimate is revised and in any future periods affected.
Adoption of new and revised standards and interpretations
The accounting policies adopted are consistent with those of the previous
nancial year. The following standards and interpretations were adopted
with effect from January 1, 2021, with no implementation impact on the
group’s consolidated nancial statements:
COVID-19-Related Rent Concessions (Amendment to IFRS 16)
Interest Rate Benchmark Reform – Phase 2 (Amendments to IFRS
9, IAS 39, IFRS 7, IFRS 4 and IFRS 16)
Standards issued but not yet effective
Several amended standards and interpretations are effective for annual
periods beginning after January 1, 2021. The group has not early adopted
any new or amended standards and they are not expected to have a
signicant impact on the group’s consolidated nancial statements.
30 Annual Report 2021 | Financials and Notes | Akastor Group
Note 3 | Signicant accounting policies
Summary of signicant accounting policies
The principal accounting policies applied in the preparation of these
consolidated nancial statements are set out below. These policies have
been consistently applied to all the years presented, unless otherwise stated.
Basis of consolidation
Subsidiaries
Subsidiaries are entities controlled by the group. The group controls
an entity when it 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 over the entity. The nancial statements of subsidiaries
are included in the consolidated nancial statements from the date on which
control commences until the date of which control ceases.
Businesscombinations
Business combinations are accounted for using the acquisition method
as of the acquisition date, which is the date when control is transferred
to the group. The consideration transferred in the acquisition is generally
measured at fair value, as are the identiable net assets acquired. Any
goodwill that arises is tested annually for impairment.
Transaction costs, other than those associated with the issue of debt or
equity securities incurred in connection with a business combination are
expensed as incurred.
Any contingent consideration payable is measured at fair value at the
acquisition date. Changes in the fair value of the contingent consideration
from acquisition of a subsidiary or non-controlling interest for transactions
will be recognized in Other income as gain or loss, except for the obligation
that is classied as equity.
Non-controllinginterests
Non-controlling interests are measured initially at their fair value at the date
of acquisition. Changes in the group’s ownership interest in a subsidiary that
do not result in a loss of control are accounted for as equity transactions.
Lossofcontrol
On the loss of control, the group derecognizes the assets and liabilities of
the subsidiary, any non-controlling interests and the other components of
equity. Any resulting gain or loss is recognized in the income statement.
Any interest retained in the former subsidiary is measured at fair value when
control is lost. Subsequently it is accounted for as an equity-accounted
investee or as an available-for-sale nancial asset depending on the level
of inuence retained.
Any contingent consideration receivable is measured at fair value at the
disposal date. Changes in the fair value of the contingent consideration
from divestment of a subsidiary for transactions will be recognized in Other
income as gain or loss.
Investmentsinjointventuresandassociates
The group’s interests in equity-accounted investees comprise interests in
joint ventures and associates.
A joint venture is an arrangement in which the group has joint control,
whereby the group has rights to the net assets of the arrangement, rather
to its assets and obligations for its liabilities. Joint control is established
by contractual agreement requiring unanimous consent of the ventures
for strategic, nancial and operating decisions. An associate is an entity
in which the group has signicant inuence, but not control or joint control,
over the nancial and operating policies.
Interests in joint ventures and associates are accounted for using the equity
method. They are initially recognized at cost, which includes transaction
costs. Subsequent to initial recognition, the consolidated nancial statements
include the group’s share of the prot and loss and other comprehensive
income of the equity-accounted investees. The group’s investment includes
goodwill identied on acquisition, net of any accumulated impairment
losses. When the group’s share of losses exceeds its interest in an equity-
accounted investee, the carrying amount of that interest, including any long-
term investments, is reduced to zero, and further losses are not recognized
except to the extent that the group incurs legal or constructive obligations or
has made payments on behalf of the investee.
The purpose of the investment determines the presentation of the group’s
share of prot and loss of the equity-accounted investee in the income
statement. Share of the prot or loss of a nancial investment is reported as
part of Net nance expenses.
Transactionseliminatedonconsolidation
Intra-group balances and transactions, and any unrealized gains and
losses or income and expenses arising from intra-group transactions, are
eliminated in preparing the consolidated nancial statements. Unrealized
gains arising from transactions with associates and joint ventures are
eliminated to the extent of the group’s interest in the entity. Unrealized
losses are eliminated in the same way as unrealized gains, but only to the
extent that there is no evidence of impairment.
Assets held for sale
Non-current assets, or disposal groups comprising assets and liabilities,
that are expected to be recovered primarily through sale rather than through
continuing use, are classied as held for sale. This condition is regarded as
met only when the sale is highly probable and the asset or disposal group is
available for immediate sale in its present condition. Management must be
committed to the sale, which should be expected to qualify for recognition
as a completed sale within one year from the date of classication.
Non-current assets and disposal groups classied as held for sale are
measured at the lower of their carrying amount and fair value less costs to
sell. Property, plant and equipment and intangible assets once classied
as held for sale are not depreciated or amortized, but are considered in the
overall impairment testing of the disposal group.
No reclassications are made for years prior to the year when non-current
assets or disposal groups are classied as a held for sale.
Discontinued operations
A discontinued operation is a component of the group’s business that
represents a separate major line of business or geographical area of
operations that has been disposed of or is held for sale, or is a subsidiary
acquired exclusively with a view to resale. Classication as a discontinued
31Annual Report 2021 | Financials and Notes | Akastor Group
operation occurs upon disposal or when the operation meets the criteria to
be classied as held for sale, if earlier.
In the consolidated income statement, income and expenses from
discontinued operations are reported separately from income and expenses
from continuing operations, down to the level of prot after taxes. When an
operation is classied as a discontinued operation, the comparative income
statement is restated as if the operation had been discontinued from the
start of the comparative year.
The statement of cash ow includes the cash ow from discontinued
operations prior to the disposal. Cash ows attributable to the operating,
investing and nancing activities of discontinued operations are presented
in the notes to the extent these represent cash ows with third parties.
Foreign currency
Foreigncurrencytransactionsandbalances
Transactions in foreign currencies are translated at the exchange rate at
the date of the transaction. Monetary assets and liabilities denominated
in foreign currencies at the reporting date are translated to the functional
currency at the exchange rate on that date. Foreign exchange differences
arising on translation are recognized in the income statement. Non-
monetary assets and liabilities measured in terms of historical cost in a
foreign currency are translated using the exchange rate on the date of the
transaction. Non-monetary assets and liabilities denominated in foreign
currencies that are measured at fair value are translated to the functional
currency at the exchange rates on the date the fair value is determined.
Investmentsinforeignoperations
Items included in the nancial statements of each of the group’s entities
are measured using the currency of the primary economic environment in
which the entity operates. The results and nancial positions of all the group
entities that have a functional currency different from the group’s presen tation
currency are translated into the presentation currency as follows:
Assets and liabilities, including goodwill and fair value adjustments,
are translated at the closing exchange rate at the reporting date.
Income statements are translated at average exchange rate for
the year, calculated on the basis of 12 monthly end rates.
Exchange differences arising from the translation of the net investment
in foreign operations, and of related hedges, are included in other
comprehensive income as currency translation reserve. These translation
differences are reclassied to the income statement upon disposal of the
related operations or when settlement is likely to occur in the near future.
Monetary items that are receivable from or payable to a foreign operation
are considered as part of the net investment in that foreign operation, when
the settlement is neither planned nor likely to occur in the foreseeable future.
Exchange differences arising from these monetary items are recognized in
other comprehensive income.
Current/non-current classication
An asset is classied as current when it is expected to be realized or is
intended for sale or consumption in the group’s normal operating cycle, it
is held primarily for the purpose of being traded, or it is expected/due to
be realized or settled within twelve months after the reporting date. Other
assets are classied as non-current.
A liability is classied as current when it is expected to be settled in the
group’s normal operating cycle, is held primarily for the purpose of being
traded, the liability is due to be settled within twelve months after the
reporting period, or if the group does not have an unconditional right to
defer settlement of the liability for at least twelve months after the reporting
period. All other liabilities are classied as non-current.
Financial assets, nancial liabilities and equity
On initial recognition, a nancial asset is classied as measured at amortized
costs, FVOCI or FVTPL. The classication depends on the group’s business
model for managing the nancial assets and the contractual terms of the
cash ows.
A nancial asset is measured at amortized costs if the business
model is to hold the asset to collect contractual cash ows, and
the contractual cash ows are solely payments of principal and
interests (SPPI criterion).
A debt instrument is classied at FVOCI if the business model
is both collecting contractual cash ows and selling the nancial
asset, and it meets the SPPI criterion.
All nancial assets not classied as measured at amortized cost or
FVOCI are measured at FVTPL.
Financial assets are not reclassied subsequent to their initial recognition
unless the group changes its business model for managing nancial assets.
Otherinvestments
Other investments include equity and debt investments in companies where
the group has neither control nor signicant inuence, usually represented
by less than 20 percent of the voting power. The investments are categorized
as nancial assets measured at FVTPL or FVOCI and recognized at fair
value at the reporting date. Subsequent to initial recognition, changes in
nancial assets measured at FVTPL are recognized in prot and loss.
32 Annual Report 2021 | Financials and Notes | Akastor Group
When a debt instrument is classied as nancial asset measured at FVOCI,
interest income calculated using the effective interest method, foreign
exchange gains and losses and impairment losses are recognized in prot
and loss. Other changes in fair value are recognized in other comprehensive
income and presented as part of fair value reserve. When nancial asset
measured at FVOCI is derecognized, the gain or loss accumulated in other
comprehensive income is reclassied to prot and loss.
Tradeandotherreceivables
Trade and other receivables are generally classied as nancial assets
measured at amortized costs. They are recognized at the original invoiced
amount, less loss allowance made for credit losses. The interest rate
element is disregarded if insignicant, which is the case for the majority of
the group’s trade receivables.
Interest-bearingreceivables
Interest-bearing receivables include loans to related parties and are
generally classied as nancial assets measured at amortized costs.
Such nancial assets are recognized initially at fair value and subsequent
measurement at amortized cost using the effective interest method, less
any impairment losses.
Cashandcashequivalents
Cash and cash equivalents include cash on hand, demand deposits held at
banks and other short-term highly liquid investments with original maturity
of three months or less.
Tradeandotherpayables
Trade payables are recognized at the original invoiced amount. Other
payables are recognized initially at fair value. Trade and other payables
are valued at amortized cost using the effective interest rate method. The
interest rate element is disregarded if it is insignicant, which is the case for
the majority of the group’s trade payables.
Interest-bearingborrowings
Interest-bearing borrowings are recognized initially at fair value less
attributable transaction costs. Subsequent to initial recognition, interest-
bearing borrowings are measured at amortized cost with any difference
between cost and redemption value being recognized in the income
statement over the period of the borrowings on an effective interest basis.
Sharecapital
Ordinary shares are classied as equity. Repurchase of share capital is
recognized as a reduction in equity and is classied as treasury shares.
Finance income and expense
Finance income and expense include interest income and expense,
foreign exchange gains and losses, dividend income, gains and losses on
derivatives, as well as change in fair value of nancial assets measured
at FVTPL. Interest income and expenses include calculated interest using
the effective interest method, in addition to discounting effects from assets
and liabilities measured at fair value. Gains and losses on derivatives
include effects from derivatives that do not qualify for hedge accounting
and embedded derivatives, in addition to the ineffective portion of qualifying
hedges.
Revenue from contract with customers
The signicant accounting policies relating to revenue recognition from con-
tracts with customers are described in Note 8 Revenue and other income.
Income tax
Income tax recognized in the income statement comprises current and
deferred tax. Income tax is recognized in the income statement except
to the extent that it relates to items recognized directly in equity or other
comprehensive income.
Current tax is the expected tax payable or receivable on the taxable income
or loss for the year, using tax rates enacted or substantially enacted at the
reporting date, and any adjustment to tax payable in respect of previous
years. Current tax payable also includes any tax liability arising from the
declaration of dividends, recognized at the same time as the liability to pay
the related dividend.
Deferred tax is recognized in respect of temporary differences between
the carrying amounts of assets and liabilities for nancial reporting and the
amounts used for taxation purposes. Deferred tax is not recognized for:
Goodwill not deductible for tax purposes
The initial recognition of assets or liabilities that affects neither
accounting nor taxable prot
Temporary differences relating to investments in subsidiaries to
the extent that they will not reverse in the foreseeable future
Deferred tax is measured at the tax rates that are expected to be applied to
temporary differences when they reverse, based on the tax rates that have
been enacted or substantively enacted at the reporting date.
Deferred tax assets and liabilities are offset if there is a legally enforceable
right to offset current tax liabilities and assets, and they relate to income taxes
levied by the same tax authority on the same taxable entity, or on different tax-
able entities which intend either to settle current tax liabilities and assets on a
net basis, or to realize the tax assets and settle the liabilities simultaneously.
Deferred tax assets are recognized for unused tax losses, tax credits
and deductible temporary differences, to the extent that it is probable that
future taxable prots will be available against which they can be utilized.
Measurement of deferred tax assets are reviewed at each reporting date.
Impairment
Tradereceivablesandcontractassets
Loss allowance is recognized in prot or loss and measured at lifetime
ECLs. ECLs are a probability-weighted estimate of credit losses. Lifetime
ECLs are the ECLs that result from all possible default events over the
expected life of a nancial asset. The group considers a nancial asset to be
in default when the group is unlikely to receive its outstanding contractual
amount in full, or the contractual payments are more than 90 days past due.
When estimating ECLs, the group considers reasonable and supportable
information that is relevant and available without undue cost or effort, based
on the group’s historical experience including forward-looking information.
The loss allowance is recognized in nancial items to the extent that
impairment is caused by the insolvency of the customer.
33Annual Report 2021 | Financials and Notes | Akastor Group
The gross carrying amount of trade receivable is written off when the group
has no reasonable expectations of recovering a trade receivable in its
entirety or a portion thereof. The group individually makes an assessment
with respect to the timing and amount of write-off based on whether there
is a reasonable expectation of recovery. Trade receivables that are written
off could still be subject to enforcement activities in order to comply with the
group’s procedures for recovery of amounts due.
DebtinstrumentsmeasuredatamortizedcostoratFVOCI
Debt instruments measured at amortized cost or at FVOCI are considered
to be “credit-impaired” when there is signicant nancial difculty of the
borrower or it is probable that the borrower will enter bankruptcy or other
nancial reorganization. The loss allowance is charged to prot and loss.
Non-nancialassets
The carrying amounts of the group’s non-nancial assets (other than
employee benet assets, inventories and deferred tax assets) are reviewed
at the end of each reporting period to determine whether there is any
indication of impairment. If an indication of impairment exists, the asset’s
recoverable amount is estimated. Cash-generating units (CGU) containing
goodwill, intangible assets with an indenite useful life and intangible assets
that are not yet available for use are tested for impairment annually.
The recoverable amount is the greater of fair value less costs to sell and
value in use. In assessing value in use, the estimated future cash ows
are discounted to their present value using a pre-tax discount rate that
reects current market assessments of the time value of money and the
risks specic to the asset. For an asset that does not generate largely
independent cash inows, the recoverable amount is determined for the
CGU to which the asset belongs.
An impairment loss is recognized whenever the carrying amount of an
asset or a CGU exceeds its recoverable amount. Impairment losses are
recognized in the income statement.
An impairment loss recognized in respect of a CGU (or a group of CGUs)
containing goodwill is allocated rst to goodwill and then to the other assets
in the CGU(s) on a pro rata basis.
An impairment loss on goodwill is not reversed. An impairment loss on
other assets is reversed if there has been a change in the estimates used
to determine the recoverable amount, and the change can be objectively
related to an event occurring after the impairment is recognized. An
impairment loss is reversed only to the extent that the asset’s carrying
amount does not exceed the carrying amount that would have been
determined, net of depreciation or amortization, if no impairment loss had
been recognized.
Provisions
A provision is recognized when the group has a present obligation as a
result of a past event that can be estimated reliably and it is probable that
the group will be required to settle the obligation. If the effect is material,
provisions are determined by discounting the expected future cash ows at
a market based pre-tax rate that reects current market assessments of the
time value of money and, where appropriate, the liability-specic risks. The
unwinding of the discount is recognized as nance expense.
Warranties
Provision for warranties is recognized when the underlying products or
services are sold. The provision is based on historical warranty data and
a weighting of all possible outcomes against their associated probabilities.
Onerouscontracts
Provision for onerous contracts is recognized when the expected benets to
be derived by the group from a contract are lower than the unavoidable costs
of meeting the obligations under the contract. The provision is measured at
the lower of the expected cost of terminating the contract and the expected net
cost of continuing with the contract. Before a provision is recognized, the group
recognizes any impairment loss on the assets associated with the contract.
Restructuring
A restructuring provision is recognized when the group has developed a
detailed formal plan for the restructuring and has raised a valid expectation
in those affected that the entity will carry out the restructuring by starting
to implement the plan or announcing its main features to those affected by
it. The measurement of a restructuring provision includes only the direct
expenditures arising from the restructuring, which are those amounts that
are both necessarily entailed by the restructuring and not associated with
the ongoing activities of the entity.
Leases
As a lessee
Right-of-useassets
The group recognizes right-of-use asset at the lease commencement date.
The right-of-use asset is initially measured at cost, which comprises the
initial amount of the lease liability adjusted for any prepaid lease payments
made at or before the commencement date, plus any initial direct costs.
Subsequently, the right-of-use asset is depreciated on a straight-line basis
over the shorter of its estimated useful life and the lease term. In addition,
the right-of-asset is subject to impairment assessment of non-nancial
assets and adjusted for certain remeasurement of the lease liability.
Leaseliabilities
At the lease commencement date, the group recognizes lease liability
measured at the present value of the lease payments over the lease term,
discounted using the group's incremental interest rate. Generally, the lease
payments include xed payments and variable lease payments that depend
on an index or rate.
The lease liability is subsequently increased by the interest cost on the
lease liability and decreased by lease payment made. It is remeasured
when there is a change in future lease payments arising from a change in
an index or rate, or as appropriate, changes in the assessment of whether
an extension option is reasonably certain to be exercised or a termination
option is reasonably certain not to be exercised.
Shorttermleasesandleasesoflow-valueassets
The group applies the recognition exemption to its leases that have a lease
term of 12 months or less from the commencement date and do not contain
a purchase option (short-term leases). The group also applies recognition
exemption to leases that are considered of low-value assets, mainly IT
equipment and ofce equipment. Lease payments associated with the short
-term leases and leases of low -value assets are recognized as expenses
on a straight -line basis over the lease term.
34 Annual Report 2021 | Financials and Notes | Akastor Group
Leaseterm
The group determines the lease term as the non-cancellable term of the
lease, together with any periods covered by an option to extend the lease
if it is reasonably certain to be exercised, or any period covered by an
option to terminate the lease if it is reasonably certain not to be exercised.
The group applies judgment in evaluating whether it is reasonably certain
to exercise extension option, considering all relevant factors that create
economic incentive to exercise the extension option.
As a lessor
When the group acts as a lessor, it determines at lease inception whether
each lease is a nance lease or an operating lease.
To classify each lease, the group makes an overall assessment of whether
the lease transfers substantially all of the risks and rewards incidental to
ownership of the underlying asset. If this is the case, then the lease is a
nance lease; if not, then it is an operating lease. As part of this assessment,
the group considers certain indicators such as whether the lease is for the
major part of the economic life of the asset.
When the group is an intermediate lessor, it accounts for its interests in the
head lease and the sub-lease separately. It assesses the lease classication
of a sub-lease with reference to the right-of-use asset arising from the head
lease, not with reference to the underlying asset.
The group recognizes lease payments received under operating leases as
income on a straight line basis over the lease term as part of “Lease revenue”.
Property, plant and equipment
Property, plant and equipment are measured at cost less accumulated
depreciation and impairment losses. The cost of self-constructed assets
includes the cost of materials, direct labour, borrowing costs on qualifying
assets, production overheads and the estimated costs of dismantling and
removing the assets and restoring the site on which they are located.
If the components of property, plant and equipment have different useful
lives, they are accounted for as separate components.
Subsequentcosts
The group capitalizes the cost of a replacement part or a component of
property, plant and equipment when that cost is incurred if it is probable
that the future economic benets embodied with the item will ow to the
group and the cost of the item can be measured reliably. All other costs are
expensed as incurred.
Depreciation
Depreciation is normally recognized on a straight-line basis over the
estimated useful lives of property, plant and equipment.
Intangible assets
Goodwill
Goodwill that arises from the acquisition of subsidiaries is presented as
intangible asset. For the measurement of goodwill at initial recognition, see
Business combinations.
Goodwill is measured at cost less accumulated impairment losses. In
respect of equity-accounted investees, the carrying amount of goodwill is
included in the carrying amount of the investment, and any impairment loss
is allocated to the carrying amount of the equity-accounted investee as a
whole.
When the group disposes of an operation within a CGU or group of CGUs
to which goodwill has been allocated, a portion of the goodwill is included
in the carrying amount of the operation when determining the gain or loss
on disposal. The portion of the goodwill allocated is measured based on
the relative values of the operation disposed of and the portion of the CGU
retained at the date of partial disposal, unless it can be demonstrated that
another method better reects the goodwill associated with the operation
disposed of. The same principle is used for allocation of goodwill when the
group reorganizes its businesses.
Researchanddevelopment
Expenditures on research activities undertaken with the prospect of
obtaining new scientic or technical knowledge and understanding is
recognized in the income statement as incurred.
Development activities involve a plan or design for the production of new or
substantially improved products or processes. Development expenditure is
capitalized only if development costs can be measured reliably, the product
or process is technically and commercially feasible, future economic
benets are probable and the group intends to and has sufcient resources
to complete development and to use or sell the asset. The capitalized
expenditure includes cost of materials, direct labour overhead costs that
are directly attributable to preparing the asset for it intended use and
capitalized interest on qualifying assets. Other development expenditures
are recognized in the income statement as an expense as incurred.
Capitalized development expenditure is measured at cost less accumulated
amortization and accumulated impairment losses.
Otherintangibleassets
Acquired intangible assets are measured at cost less accumulated
amortization and impairment losses.
Subsequentexpenditures
Subsequent expenditures on intangible assets are capitalized only when
they increase the future economic benets embodied in the specic asset to
which they relate. All other expenditures are expensed as incurred.
Amortization
Amortization is recognized in the income statement on a straight-line basis
over the estimated useful lives of intangible assets unless such useful
lives are indenite. Intangible assets are amortized from the date they are
available for use.
35Annual Report 2021 | Financials and Notes | Akastor Group
Employee benets
Denedcontributionplans
Obligations for contributions to dened contribution pension plans are
recognized as an expense in the income statement as incurred.
Denedbenetplans
The group’s net obligation in respect of dened benet pension plans is
calculated separately for each plan by estimating the amount of future
benet that employees have earned in the current and prior periods;
discounting that amount and deducting the fair value of any plan assets.
The calculation of dened benet obligations is performed annually by a
qualied actuary using the projected unit credit method. The discount
rate is the yield at the reporting date on government bonds or high-quality
corporate bonds with maturities consistent with the terms of the obligations.
Remeasurement of the net dened benet liability, which comprises
actuarial gains and losses, the return on plan assets (excluding interest)
and the effect of the asset ceiling (if any, excluding interest), are recognized
immediately in other comprehensive income. The group determines the net
interest expense (income) on the net dened benet liability (asset) for the
period by applying the discount rate used to measure the dened benet
obligation at the beginning of the annual period to the then-net dened
benet liability (asset), taking into account any changes in the net dened
benet liability (asset) during the period as a result of contributions and
benet payments. Net interest expense and other expenses related to
dened benet plans are recognized in the income statement.
When the benets of a plan are changed or when a plan is curtailed, the
resulting change in benet that relates to past service or the gain or loss on
curtailment is recognized immediately in the income statement. The group
recognizes gains and losses on the settlement of a dened benet plan
when the settlement occurs.
Fair value measurement
When available, the group measures the fair value of a nancial instrument
using the quoted price in an active market for that instrument. If there is no
quoted price in an active market, then the group uses valuation techniques
that maximize the use of relevant observable inputs and minimize the use
of unobservable inputs. The chosen valuation technique incorporates all
of the factors that market participants would take into account in pricing a
transaction.
The best evidence of the fair value of a nancial instrument on initial
recognition is normally the transaction price. If the group determines that
the fair value on initial recognition differs from the transaction price and
the fair value is evidenced neither by a quoted price in an active market
for an identical asset or liability nor based on a valuation technique that
uses only data from observable markets, the nancial instrument is initially
measured at fair value, and the difference between the fair value on initial
recognition and the transaction price is recognized as a deferred gain or
loss. Subsequently, the deferred gain or loss is recognized in prot or loss
on an appropriate basis over the life of the instrument.
36 Annual Report 2021 | Financials and Notes | Akastor Group
Note 4 | Signicant accounting estimates and judgements
Estimates and judgements are continually reviewed and are based on
historical experiences and expectations of future events. The resulting
accounting estimates will, by denition, seldom accurately match actual
results, but are based on the best estimate at the time. Estimates and
assumptions that have a signicant risk of causing material adjustments to
the carrying amounts of assets and liabilities within the next nancial year
are discussed below.
Fair value measurement
The group has invested in signicant nancial assets that require the
measurement of fair value. If there is no quoted price in an active market,
then the group uses valuation techniques that maximize the use of
relevant observable inputs and minimize the use of unobservable inputs.
The chosen valuation technique incorporates all of the factors that market
participants would take into account in pricing a transaction. The fair value
measurement requires a high degree of judgment. Judgements include
considerations of inputs such as cash ow projection, discount rate and
volatility. Further information about the fair value measurement using level
3 inputs is included in Note 31 Financial Instruments.
Deferred and contingent considerations
Deferred and contingent considerations resulting from business
combinations and disposals are measured at fair value at transaction date.
When a deferred and contingent consideration meets the denition of a
nancial asset or liability, it is subsequently remeasured at fair value at the
reporting date. The determination of fair value is based on discounted cash
ows. Key assumptions made by the management include the probability of
meeting each performance target and the discount factor.
Impairment of non-nancial assets
Property,plantandequipmentandintangibleassets
The group has non-current assets recognized in the consolidated statement
of nancial position related to Property, plant and equipment and intangible
assets. The value in use of some of these assets can be signicantly
impacted by changes of market conditions. The group considers whether
there are indications of impairment on the carrying amounts of such non-
current assets. If such indications exist, an impairment test is performed
to assess whether or not the assets should be impaired. The valuations,
often determined by value in use calculations, will often be performed based
on estimates of future cash ows discounted by an appropriate discount
rate. Signicant estimates and judgments are made by the management,
including determining appropriated cash-generating units and discount
rate, projections for future cash ows and assumptions of future market
conditions. References are made to Note 14 Property, plant and equipment
and Note 15 Intangible assets.
Goodwill
The group performs impairment testing of goodwill annually or more
frequently if any impairment indicators are identied. The recoverable
amounts of cash-generating units to which goodwill is allocated have been
determined based on value-in-use calculations. These calculations require
management to estimate future cash ows expected to arise from these
cash-generating units and an appropriate discount rate to reect the time
value of the money. Key assumptions made by the management include
also assumptions for future market conditions, which require a high degree
of judgment. Further details about goodwill allocation and impairment
testing are included in Note 16 Impairment testing of goodwill.
Income taxes
The group is subject to income taxes in numerous jurisdictions. Signicant
judgement is required to determine the worldwide provision for income
taxes. There are many transactions and calculations for which the ultimate
tax determination is uncertain during the ordinary course of business.
Provisions for anticipated tax audit issues are based on estimates of
eventual additional taxes.
Income tax expense is calculated based on reported income in the different
legal entities. Deferred income tax expense is calculated based on the
temporary differences between the assets’ carrying amount for nancial
reporting purposes and their respective tax basis. The total amount of
income tax expense and allocation between current and deferred income tax
requires management’s interpretation of complex tax laws and regulations
in the many tax jurisdictions where the group operates.
Valuation of deferred tax assets is dependent on management’s assessment
of future recoverability of the deferred tax benet. Expected recoverability
may result from expected taxable income in the near future, planned
transactions or planned tax optimizing measures. Economic conditions may
change and lead to a different conclusion regarding recoverability, and such
change may affect the results for each future reporting period.
Tax authorities in different jurisdictions may challenge calculation of income
taxes from prior periods. Such processes may lead to changes to prior
periods’ taxable income, resulting in changes to income tax expense. When
tax authorities challenge income tax calculations, management is required
to make estimates of the probability and amount of possible tax adjustments.
Such estimates may change as additional information becomes known.
Further details about income taxes are included in Note 12 Income tax.
Pension benets
The present value of the pension obligations depends on a number of factors
determined on the basis of actuarial assumptions. These assumptions
include nancial factors such as the discount rate, expected salary growth,
ination and return on assets as well as demographical factors concerning
mortality, employee turnover, disability and early retirement. Assumptions
about all these factors are based on the situation at the time the assessment
is made. However, it is reasonably certain that such factors will change over
the very long periods for which pension calculations are made. Any changes
in these assumptions will affect the calculated pension obligations with
immediate recognition in other comprehensive income. Further information
about the pension obligations and the assumptions used are included in
Note 26 Employee benets - pension.
Lease terms
Some of the property leases, in which the group is a lessee, contain
extension or termination options exercisable before the end of the non-
cancellable period. These options are used to provide operational exibility
for the group. In determining the lease term, the group considers all facts
and circumstances that create an economic incentive to exercise an
extension option, or not exercise a termination option. Extension options (or
37Annual Report 2021 | Financials and Notes | Akastor Group
periods after termination options) are only included in the lease term if the
lease is reasonably certain to be extended (or not terminated). The most
relevant factors to be considered as “creating economic incentive” include
signicant leasehold improvement, alternatives for the leased property and
the costs and business disruption required to replace the leased assets.
Most extension options in ofces leases have not been included in the lease
term, because the group expects to be able to replace the assets without
signicant cost or business disruption. Most of the early termination options
are not considered in the lease term either as the group assesses it as
reasonably certain that the leases will not be terminated early.
The lease term assessment requires management’s judgment and is made
at the commencement of the leases. The lease term is reassessed if an
option is actually exercised or the group becomes obliged to exercise it. The
assessment of reasonable certainty is only revised if a signicant event or a
signicant change in circumstances occurs, which affects this assessment,
and that is within the group’s control. Please see Note 32 Leases for more
information about the leases where the group is a lessee.
Legal disputes and contingent liabilities
Given the scope of the group’s worldwide operations, group companies are
inevitably involved in legal disputes in the course of their business activities.
In addition, as an investment company, Akastor and its portfolio companies
from time to time engage in mergers, acquisitions and other transactions
that could expose the companies to nancial and other non-operational
risks, such as indemnity claims and price adjustment mechanisms resulting
in recognition of deferred settlement obligations.
Provisions have been made to cover the expected outcome of the legal
claims and disputes to the extent negative outcomes are likely and reliable
estimates can be made. However, the nal outcomes of these cases are
subject to uncertainties, and resulting liabilities may exceed provisions
recognized. The group follows the development of these disputes on case-
by-case basis and makes assessment based on all available evidence as
at the reporting date.
38 Annual Report 2021 | Financials and Notes | Akastor Group
Note 5 | Discontinued operations
Discontinued operations MHWirth
On October 1, 2021, Akastor completed the transaction to bring together
Akastor’s wholly owned subsidiary, MHWirth AS (MHWirth) and Baker
Hughes’ Subsea Drilling Systems (SDS) business to create a joint
venture company HMH. HMH delivers a global full-service offshore drilling
equipment offering that will provide customers with a broad portfolio of
products and services.
HMH is owned 50/50 by Akastor and Baker Hughes. Akastor contributed
its shares in MHWirth to HMH in return for 50% of the shares of HMH and
USD 120 million in consideration, of which USD 100 million (before certain
adjustments) was paid in cash at closing. Baker Hughes contributed the
SDS business to HMH in return for the other 50% of the shares and USD
200 million in consideration, of which USD 120 million was paid in cash at
closing. HMH has issued shareholder notes to Akastor and Baker Hughes
representing the balance of the consideration owed to them. The notes are
subordinated to HMH’s external debt nancing. HMH nanced the cash
consideration payable to Baker Hughes and Akastor by way of a USD 220
million bank facility.
Following the transaction, HMH is classied as a joint venture to the group
and accounted for using the equity method. See Note 17 Equity-accounted
investees for more information. MHWirth is classied as discontinued
operations and the comparative consolidated income statement has been
restated to show the discontinued operations separately from continuing
operations.
Results of discontinued operations
AmountsinNOKmillion 2021 2020
Revenue 2 024 3 758
Expenses (2 096) (3 574)
Net nancial items (27) (49)
Prot (loss) before tax (99) 136
Income tax 3 (67)
Prot (loss) from operating activities, net of tax (96) 68
Gain (loss) on sale of discontinued operations
1)
1 236 (115)
Net prot (loss) from discontinued operations 1 140 (47)
Basic/diluted earnings (loss) per share from discontinued operations (NOK) 4.20 (0.17)
1)
IncludescurrencytranslationdifferencesofNOK362millionthatwerereclassiedfromOtherComprehensiveIncometotheincomestatementaspartofgainfromthe
disposalofMHWirthin2021.
Gain on sale from the disposal in 2021 included gain of NOK 1 240 million for MHWirth divestment, offset by loss of NOK 4 million on divestments from
previous years. The loss on sale of discontinued operations in 2020 was mainly related to re-assessment of contingent considerations related to divestments
from prior years.
Cash ows from (used in) discontinued operations
AmountsinNOKmillion 2021 2020
Net cash from operating activities 50 302
Net cash from investing activities (incl. net cash proceeds from sale of the operations) 592 (44)
Net cash from nancing activities (49) (75)
Net cash ow from discontinued operations 593 183
39Annual Report 2021 | Financials and Notes | Akastor Group
Note 6 | Disposal of subsidiaries and business combination
Disposal of entities in 2021
DisposalofMHWirth
On October 1, 2021, Akastor completed the transaction to bring together
Akastor’s wholly owned subsidiary, MHWirth AS (MHWirth) and Baker
Hughes’ Subsea Drilling Systems (SDS) business to create a joint venture
company HMH. Following the transaction, MHWirth was deconsolidated
and HMH is classied as a joint venture to the group and accounted for
using the equity method. See Note 5 discontinued operations for more
information about the transaction.
DisposalofAGRWellManagementLimited(UK)
On December 22, 2021, Akastor completed the transfer of the shares in
AGR Well Management Limited (“AGR Well Management”), a wholly-
owned subsidiary, to SpotOn Energy Holding AS (“SpotOn Energy”). As
compensation for the transfer, Akastor, through its subsidiary AGR AS,
received 20% ownership in SpotOn Energy, which is expected to strengthen
the cooperation between AGR and SpotOn Energy going forward. SpotOn
Energy is accounted as an associated company to the group.
Effect of disposal on the nancial position of the group
AmountsinNOKmillion 2021
Deferred tax assets (304)
Property, plant and equipment (646)
Right of Use assets (416)
Intangible assets (1 281)
Other non-current assets (31)
Inventories (429)
Trade and other receivables (1 303)
Other current assets (22)
Cash and cash equivalents (165)
Pension liabilities 243
Lease liability, non-current 305
Other non-current liabilities 40
Lease liability, current 93
Trade and other payables 1 377
Other current liabilities 86
Currency translation reserve 361
Net assets and liabilities
1)
(2 092)
Total consideration at fair value
2)
3 322
Portion of consideration received in cash, net of transaction costs 805
Cash and cash equivalents disposed of (165)
Cash inows from disposal, net of cash disposed of
3)
640
1)
IncludesnetassetsofNOK2082millioninMHWirthandNOK10millioninAGRWellManagement.
2)
TotalconsiderationatfairvaluefromdisposalofMHWirthincludesfairvalueof50%sharesofHMH,shareholdernotesofUSD20millionaswellascashreceivedfromthe
transaction,reducedbyprovisionforcontingentconsiderationsmainlyrelatedtoindemnityliabilitiesforpensionplansinMHWirth.SeealsoNote25Otherliabilities.
3)
NetcashowsfromdisposalexcludesthenetcashoutowofNOK49millionrelatedtodivestmentsmadeinprioryears.
40 Annual Report 2021 | Financials and Notes | Akastor Group
Business combinations in 2020
AcquisitionofDDWOffshoreAS
DDW Offshore AS (previously DOF Deepwater AS) was a joint venture
between Akastor and DOF ASA (“DOF”). On October 9, 2020, DDW
Offshore completed a restructuring of its debt with its lenders. The
restructuring involved DOF transferring all of its shares in DDW Offshore
to Akastor for a nominal amount, and Akastor hence assuming 100 percent
ownership in the company. Further, 50 percent of the debt in DDW Offshore
was converted to equity and the remaining 50 percent remains on existing
terms, including a parent company guarantee from Akastor ASA, albeit with
certain adjustments that include i.a. no xed instalments except an upfront
repayment of NOK 20 million. The maturity date of the debts is in October
2023. The company is obliged to divest all its ve vessels on or around the
maturity date of the debts and the sales proceeds after transaction costs
shall be shared 50/50 between the lenders and DDW Offshore.
DDW Offshore AS owns ve modern Anchor Handling Tug Supply (AHTS)
vessels with capability to operate and support clients on a world-wide basis.
The vessels are specially designed to perform anchor-handling, towing, and
supply services at offshore oil and gas elds.
The group expects that the restructuring will give DDW Offshore a
predictable and viable nancial structure for the coming three years. DDW
Offshore operates in a market which remains challenging, but with this
nancial structure and the relative modern and versatile eet, the company
should be well positioned to remain as a market player and thereby secure
revenue in a more normalized market in the future.
The acquired DDW Offshore contributed revenues of NOK 8 million and net
loss of NOK 18 million for the period from the acquisition date to December
31, 2020. If the acquisition of DDW Offshore had occurred on January 1,
2020, the group estimates that consolidated revenue would have been
NOK 4 693 million and net loss after tax would have been NOK 881 million
for the year ended December 31, 2020. In determining these amounts,
management has assumed that the fair value adjustments, determined
provisionally, that arose on the date of acquisition would have been the
same if the acquisition had occurred on January 1, 2020.
Details of the net assets acquired are as follows. No goodwill is identied
in the transaction.
Identiable assets and liabilities acquired in 2020
AmountsinNOKmillion DDW Offshore
Property, plant and equipment 397
Inventories 12
Trade and other receivables 9
Cash and cash equivalents 37
External borrowings (493)
Trade and other payables (24)
Other liabilities (198)
Total net identiable assets acquired (262)
Trade and other receivables comprise gross contractual amounts due of NOK 66 million in DDW Offshore, of which NOK 57 million was expected to be
uncollectable at the date of acquisition.
41Annual Report 2021 | Financials and Notes | Akastor Group
Note 7 | Operating segments
Basis for segmentation
As of December 31, 2021, Akastor has three reportable segments which
are the strategic business units of the group. The strategic business units
are managed separately and offer different products and services due
to different market segments and different strategies for their projects,
products and services:
HMH is a premier drilling solutions provider, which was formed as
an independent company in October 2021 through the merger of
Baker Hughes' Subsea Drilling Systems business and Akastor's
wholly owned subsidiary, MHWirth AS. HMH combines integrated
delivery capabilities, capital, renowned industry expertise and
delivers the full range of offshore drilling equipment products and
packages at scale.
AKOFS Offshore is a global provider of vessel-based subsea well
construction and intervention services to the oil and gas industry,
covering all phases from conceptual development to project
execution and offshore operations.
AGR is a well design and drilling project management, HSEQ,
reservoir and eld management service company delivering
solutions for the entire eld life cycle. The company also provides
rig procurement, tailored training, software and technical
manpower for clients globally.
As a result of the transaction to contribute MHWirth into the joint
venture HMH, MHWirth was presented as discontinued operations and
deconsolidated in 2021. See Note 5 Discontinued operations for more
information about the transaction. MHWirth is not presented as a reportable
segment as of December 31, 2021 and the historical segment information
in 2020 has been restated.
HMH and AKOFS Offshore are classied as joint ventures and accounted
for using the equity method, see Note 17 Equity-accounted investees. The
segment information of the two joint ventures are presented at 100% basis.
Further, Akastor holds 100 percent ownership in Cool Sorption, 100 percent
in DDW Offshore AS, 15 percent economic interest in NES Fircroft and 93
percent of Aker Pensjonskasse, as well as equity instruments in Odfjell
Drilling and Awilco Drilling. These are included in “Other holdings”.
Measurement of segment performance
Segment performance is measured by operating prot before depreciation,
amortization and impairment (EBITDA) which is reviewed by the group’s
Executive Management Group (the chief operating decision maker).
Segment prot, together with key nancial information as described below,
gives the Executive Management Group relevant information in evaluating
the results of the operating segments and is relevant in evaluating the
results of the segments relative to other entities operating within these
industries. Inter-segment pricing is determined on an arm’s length basis.
42 Annual Report 2021 | Financials and Notes | Akastor Group
Information about reportable segments
AmountsinNOKmillion Note
HMH
(JV)
1)
AKOFS
Offshore
(JV) AGR
Other
holdings
Total
operating
segments
Adjust-
ment
of JVs
Elimi na-
tions
Total
Akastor
2021
Incomestatement
External revenue and other
income 1 419 1 269 723 230 3 641 (2 688) - 953
Inter-segment revenue - - - 2 2 - (2) -
Total revenue and other income 1 419 1 269 723 232 3 643 (2 688) (2) 953
Operating prot before
depreciation, amortization and
impairment (EBITDA) 215 320 33 (32) 534 (534 ) - -
Depreciation and amortization 14,15,32 (116) (365) (16) (59) (556) 481 - (76)
Impairment - (88) (7) (0) (95) 88 - (7)
Operating prot (loss) (EBIT) 99 (134) 9 (92) (117) 35 - (82)
Assets
Current operating assets 3 701 610 149 736 5 195 (4 311) (7) 877
Non-current operating assets 6 736 4 249 228 2 045 13 257 (7 576) - 5 681
Finance lease receivables 32 - - - 241 241 - - 241
Segment assets 10 436 4 859 376 3 021 18 693 (11 887) (7) 6 799
Liabilities
Current operating liabilities 2 655 387 158 496 3 696 (3 042) (7) 647
Non-current operating liabilities 582 7 13 901 1 503 (589) - 914
Lease liabilities 32 381 1 163 13 142 1 699 (1 544) - 155
Segment liabilities 3 619 1 556 184 1 539 6 898 (5 175) (7) 1 716
Net current operating assets 1 045 224 (9) 239 1 499 (1 269) - 231
Net capital employed 6 817 3 303 192 1 483 11 796 (6 712) - 5 084
1)
HMHwasestablishedasajointventuretoAkastorasofOctober1,2021.Theincomestatementinformationispresentedat100%basisfortheperiodOctober1-
December31,2021.SegmentassetsandliabilitiesrefertonancialpositionsinHMHat100%basisasofDecember31,2021.
43Annual Report 2021 | Financials and Notes | Akastor Group
AmountsinNOKmillion Note
AKOFS
Off-
shore
(JV) AGR
Other
holdings
Total
operating
segments
Adjust-
ment
of JV
MHWirth
(Discon-
tinued)
Elimi-
nations
Total
Akastor
2020 (restated)
Incomestatement
External revenue and other
income 1 000 637 182 1 819 (1 000) - - 819
Inter-segment revenue - - 3 3 - - (3) -
Total revenue and other
income 1 000 637 186 1 822 (1 000) - (3) 819
Operating prot before
depreciation, amortization and
impairment (EBITDA) 414 31 (102) 344 (414) - - (71)
Depreciation and amortization 14,15,32 (333) (18) (39) (390) 333 - - (57)
Impairment (215) - (4) (219) 215 - - (4)
Operating prot (loss) (EBIT) (134) 13 (145) (266) 134 - - (132)
Assets
Current operating assets 677 115 58 850 (677) 2 537 (5) 2 704
Non-current operating assets 4 609 178 1 929 6 717 (3 546) 2 799 - 5 970
Finance lease receivables 32 - - 22 22 - 1 - 23
Segment assets 5 286 294 2 009 7 588 (4 223) 5 336 (5) 8 697
Liabilities
Current operating liabilities 332 122 216 670 (332) 1 845 (5) 2 177
Non-current operating liabilities 6 14 605 626 (6) 307 - 926
Lease liabilities 32 1 203 10 199 1 411 (1 203) 384 592
Segment liabilities 1 542 146 1 019 2 706 (1 542) 2 535 (5) 3 695
Net current operating assets 344 (7) (158) 180 (344) 692 - 527
Net capital employed 3 744 148 990 4 882 (2 681) 2 801 - 5 002
44 Annual Report 2021 | Financials and Notes | Akastor Group
Reconciliations of information on reportable segments to IFRS measures
AmountsinNOKmillion Note 2021 2020
Assets
Total segment assets 6 799 8 697
Derivative nancial instruments 10 61
Cash and cash equivalents 22 89 275
Non-current interest-bearing receivables 20 315 115
Consolidated assets 7 212 9 147
Liabilities
Total segment liabilities 1 716 3 695
Derivative nancial instruments - 37
Current borrowings 24 16 1 119
Non-current borrowings 24 1 372 628
Consolidated liabilities 3 103 5 479
Geographical information
Geographical revenue is presented on the basis of geographical location of the group companies selling to the customers. Non-current segment assets and
capital expenditures are based on the geographical location of the assets.
Revenue and other income
Non-current assets exclud-
ing deferred tax assets and
nancial instruments
AmountsinNOKmillion 2021
2020
Restated 2021 2020
Norway 663 447 1 180 2 482
Netherlands - - 2 650 -
United Kingdom 128 144 3 47
Denmark 79 132 1 2
Australia 75 63 9 39
Germany - - - 770
United States 5 5 3 430
Other countries 3 28 - 374
Total 953 819 3 847 4 144
Major customer
Revenues from one customer of AGR represents approximately NOK 150 million (NOK 80 million in 2020) of the group’s total revenue.
45Annual Report 2021 | Financials and Notes | Akastor Group
Note 8 | Revenue and other income
Revenue types
AmountsinNOKmillion Note 2021
2020
Restated
Revenue from contracts with customers 834 793
Other revenue and income
Lease revenue 32 76 31
Other revenue 3 -
Gain (loss) on disposal of subsidiaries (11) (5)
Gain on disposals of assets 51 -
Total revenue and other income 953 819
Disaggregation of revenue from contracts with customers
Revenue from contracts with customer is disaggregated in the following table by major contract and revenue types and timing of revenue recognition. The
table also includes a reconciliation of the disaggregated revenue with revenue information as shown in Note 7 Operating segments.
AmountsinNOKmillion
HMH
(JV)
1)
AKOFS
Offshore
(JV) AGR
Other
holdings
Adjustment
of JVs
Total
Akastor
2021
Majorcontract/revenuetypes
Construction revenue 190 - - 47 (190) 47
Sale of standard products 207 - 16 - (207) 16
Service revenue 1 022 868 718 53 (1 890) 771
Total Revenue from contracts with customers 1 419 868 734 100 (2 287) 834
Timingofrevenuerecognition
Transferred over time 1 212 868 718 100 (2 080) 818
Transferred at point in time 207 - 16 - (207) 16
Total Revenue from contracts with customers 1 419 868 734 100 (2 287) 834
Other revenue and income - 401 (11) 130 (401) 120
Total external revenue and other income in segment reporting 1 419 1 269 723 230 (2 688) 953
1)
HMHwasestablishedasajointventuretoAkastorasofOctober1,2021.Revenueinformationispresentedat100%basisfortheperiodOctober1-December31,2021.
46 Annual Report 2021 | Financials and Notes | Akastor Group
AmountsinNOKmillion
AKOFS
Offshore
(JV) AGR
Other
holdings
Adjust-
ment of
JV
Total
Akastor
2020 (restated)
Majorcontract/revenuetypes
Construction revenue - - 105 - 105
Sale of standard products - 6 - - 6
Service revenue 316 631 51 (316) 682
Total Revenue from contracts with customers 316 636 156 (316) 793
Timingofrevenuerecognition
Transferred over time 316 631 156 (316) 787
Transferred at point in time - 6 - - 6
Total Revenue from contracts with customers 316 636 156 (316) 793
Other revenue and income 684 - 26 (684) 26
Total external revenue and other income in segment reporting 1 000 637 182 (1 000) 819
Contract balances
AmountsinNOKmillion Note 2021 2020
Receivables, which are included in “trade and other receivables” 117 1 070
Contract assets 21 47 764
Contract liabilities 28 21 344
Contract assets relate to the group’s rights to consideration for work
completed, but not yet invoiced at the reporting date. The contract
assets are transferred to receivables when the rights to payment become
unconditional, which usually occurs when invoices are issued to the
customers. Impairment of NOK 214 million has been recognized on contract
assets in 2021 (2020: nil).
Contract liabilities relate to advance consideration received from customer
for work not yet performed. Revenue recognized in 2021 that was included
in contract liabilities in the beginning of the year is NOK 11 million (NOK 560
million in 2020).
No revenue was recognized in 2021 from performance obligation satised
(or partially satised) in previous period. In 2020, revenue of NOK 95
million was recognized, mainly due to changes in the estimates of progress
measurement for performance obligations satised over time and changes
in estimates relating to the constraining of revenues.
Transaction price allocated to the remaining performance obligations
The following table includes revenue expected to be recognized in the future related to performance obligations that are unsatised (or partially satised)
as of December 31, 2021.
AmountsinNOKmillion 2022 Later Total
Transaction price allocated 528 54 582
The amounts disclosed above do not include variable consideration which
is constrained. The group applies the practical expedient and does not
adjust the transaction price allocated to performance obligations for the
effects of a signicant nancing component if the group expects, at contract
inception, that the period between when the group transfers a promised
good or service to a customer and when the customer pays for that good or
service will be one year or less.
The following provides information about nature of performance obligations,
including signicant payment terms, and related signicant revenue
recognition policies.
47Annual Report 2021 | Financials and Notes | Akastor Group
Type of contract/revenue Nature of performance obligations, including signif-
icant payment terms
Signicant revenue recognition policies
Construction contracts Under construction contracts, specialized products
are built to a customer's specications and the assets
have no alternative use to the group. If a construction
contract is terminated by the customer, the group has
an enforceable right to payment for the work completed
to date. The contracts usually establish a milestone
payment schedule. The group has assessed that these
performance obligations are satised over time.
Each of the construction contracts normally includes
a single, combined output for the customer, such as
an integrated drilling equipment package. One single
performance obligation is usually identied in each
contract.
Assurance-type warranty for a period of 12-30 months
is normally included in construction contracts.
Revenue from the construction performance obligations
is recognized according to progress. The progress
is measured using an input method that best depicts
the group's performance. The input method used to
measure progress is determined by reference to the
costs incurred to date relative to the total estimated
contract costs. Revenue in excess of costs is not rec-
ognized until the outcome of the performance obligation
can be measured reliably, usually at 15-20 percent of
completion.
Variable considerations, such as incentive bonus or
penalties, are included in construction revenue when
it is highly probable that a signicant revenue reversal
will not occur. Potential penalty for Liquidated Damages
is recognized as a reduction of the transaction price
unless it is highly probable that it will not be incurred.
Disputed amounts and claims are only recognized when
negotiations have reached an advanced stage, custom-
er acceptance is highly likely and the amounts can be
measured reliably.
Contract modications, usually in form of variation
orders, are only accounted for when they are approved
by the customers.
Sale of standard products This revenue type involves sale of products or equip-
ment that are of a standard nature, not made to the
customer's specications. Customers obtain control of
these products usually when the goods are delivered to
the customers according to the contract terms. Invoices
are usually generated when the products are delivered.
The group has assessed that these performance obliga-
tions are satised at a point of time.
Assurance-type warranty for a period of 12-18 months
is normally included in these contracts.
Revenue from these performance obligations is recog-
nized when the customers obtain control of the goods,
which is essentially similar to the timing when the goods
are delivered to the customers.
Service revenue Service revenue is generated from rendering of services
to customers. The customers simultaneously receive
and consume the benets provided by these services.
The invoicing is usually based on the service provided
at regular basis. Under some service contracts, the in-
voices are based on hours or days performed at agreed
rates. The group has assessed that these performance
obligations are satised over time.
Service revenue is recognized over time as the services
are provided.
The revenue is recognized according to progress, or
using the invoiced amounts when the invoiced amounts
directly correspond with the value of the services
that are transferred to the customers. The progress
is normally measured using an input method, by the
reference of costs incurred to date relative to the total
estimated costs.
48 Annual Report 2021 | Financials and Notes | Akastor Group
Note 9 | Salaries, wages and social security costs
AmountsinNOKmillion Note 2021
2020
Restated
Salaries and wages including holiday allowance 299 240
Social security tax/ national insurance contribution 43 36
Pension cost 26 11 10
Other employee costs 13 17
Salaries, wages and social security costs 367 302
Note 10 | Other operating expenses
AmountsinNOKmillion 2021
2020
Restated
External consultants and hired-ins inclusive audit fees 55 90
Rental and other costs for premises and equipment 7 12
Ofce supplies and travel expenses 8 11
Other 9 26
Total other operating expenses 78 138
Fees to the auditors
The table below summarizes audit fees (exclusive VAT), as well as fees for audit related services, tax services and other services incurred by the group
during 2021 and 2020.
Akastor ASA Subsidiaries Total
AmountsinNOKmillion 2021 2020 2021 2020 2021 2020
Audit 2 2 2 8 4 10
Other assurance services - - 1 1 1 1
Total 2 3 3 9 5 11
49Annual Report 2021 | Financials and Notes | Akastor Group
Note 11 | Net nance expenses
AmountsinNOKmillion Note 2021
2020
Restated
Prot (loss) from equity-accounted investees 17 (346) (256)
Interest income on bank deposits measured at amortized cost 17 22
Interest income on debt instruments at FVOCI 89 86
Interest income on nance lease receivables 32 12 1
Net foreign exchange gain 55 4
Dividend income from equity instrument 74 77
Net changes in fair value of nancial assets at FVTPL 11 -
Liquidation of foreign entity
1)
110 7
Other nance income 2 4
Finance income 369 201
Interest expense on nancial liabilities measured at amortized cost (112) (93)
Interest expense on nancial liabilities measured at fair value (24) (20)
Interest expense on lease liabilities 32 (9) (13)
Net changes in fair value of nancial assets at FVTPL - (94)
Impairment loss on receivables
2)
- (106)
Loss on foreign currency forward contracts (17) -
Other nancial expenses (12) (7)
Financial expenses (175) (333)
Net nance expenses recognized in prot and loss (152) (387)
1)
RelatestocurrencytranslationdifferencesthatwerereclassiedfromOtherComprehensiveIncometotheincomestatementasresultofliquidation
2)
ImpairmentlossonreceivablesrelatedtolossallowanceondebtinstrumentsmeasuredatFVOCI
See Note 31 Financial instruments for information of the nance income and expense generating items.
50 Annual Report 2021 | Financials and Notes | Akastor Group
Note 12 | Income tax
Income tax expense
AmountsinNOKmillion 2021
2020
Restated
Currenttaxexpense
Current year (1) (6)
Adjustments for prior years - (5)
Total current tax expense (1) (11)
Deferredtaxexpense
Origination and reversal of temporary differences 25 48
Write down of tax loss and deferred tax assets (30) (122)
Recognition of previously unrecognized deferred tax assets 26 66
Total deferred tax income (expense) 21 (7)
Total tax income (expense) 20 (18)
Effective tax rate
The table below reconciles the reported income tax expense to the expected income tax expense according to the corporate income tax rate in Norway.
AmountsinNOKmillion 2021 2020 Restated
Prot (loss) before tax, continuing operations (235) (519)
Tax income (expense) using the company's domestic tax rate 52 22.0% 114 22.0%
Taxeffectsof:
Difference between local tax rate and Norwegian tax rate - - 5 0.9%
Permanent differences
1)
(32) (13.5%) (75) (14.5%)
Prior year adjustments (current tax) - (0.1%) (5) (1.0%)
Prior year adjustments (deferred tax) 4 1.8% (1) (0.1%)
Recognition of previously unrecognized deferred tax assets
2)
26 11.1% 66 12.8%
Write down of tax loss or deferred tax assets
3)
(30) (12.7%) (122) (23.5%)
Other - - (1) (0.1%)
Total tax income (expenses) 20 8.5% (18) (3.5%)
1)
Relatesmainlytonetprotandlossaftertaxfromequity-accountedinvesteesandprotandlossrecognizedonvarioustax-exemptedinvestments..
2)
Relatesmainlytopreviouslynotrecognizedtaxlosscarry-forwardinNorway.
3)
TheimpairmentrelatesmainlytodeferredtaxassetsinAkastorCorporateentitiesandDDWOffshoreASinNorway.
51Annual Report 2021 | Financials and Notes | Akastor Group
Recognized deferred tax assets and liabilities
Assets Liabilities Net
AmountsinNOKmillion 2021 2020 2021 2020 2021 2020
Property, plant and equipment - 40 - (5) - 35
Intangible assets 2 2 (1) (7) - (5)
Projects under construction - - - (50) - (50)
Pensions 2 65 - - 2 65
Provisions 1 37 - (9) 1 28
Derivatives - - (3) (14) (3) (14)
Other items 6 226 (5) (9) 1 217
Tax loss carry-forwards 37 44 - - 37 43
Total before set offs 48 414 (10) (95) 38 320
Set-off of tax (5) (85) 5 85 - -
Total deferred tax assets(liabilities) 42 329 (4) (10) 38 320
The group has made an evaluation of taxable prot for the next ve years based on management’s projection. Deferred tax assets are recognized to the
extent that it is probable that future taxable prot will be available, against which the deductible temporary difference can be utilized.
Change in net recognized deferred tax assets (liabilities)
AmountsinNOKmillion
Property,
plant and
equip-
ment
Intan-
gible
assets
Projects
under
construc-
tion
Pen-
sions
Provi-
sions
Deriva-
tives
Other
items
Tax loss
carry-for-
wards Total
Balance as of December 31, 2019 39 (8) (102) 80 42 (65) 231 160 377
Recognized in prot and loss (restated) (7) 1 - (22) (30) 1 (1) 51 (7)
Recognized in other comprehensive income - - - 6 - (8) 1 - (1)
Discontinued operations 2 2 53 (1) 13 58 (11) (168) (52)
Currency translation differences 1 - - 2 2 - (2) 1 3
Balance as of December 31, 2020 35 (5) (50) 65 28 (14) 217 43 320
Disposal of sbusidiaries as of January 1, 2021 (34) 5 51 (57) (26) 9 (216) (27) (294)
Recognized in prot and loss - - - - (1) 1 (1) 22 21
Recognized in other comprehensive income - - - (6) - - - - (6)
Currency translation differences - - (2) (1) - - 1 (1) (3)
Balance as of December 31, 2021 - - - 2 1 (3) 1 37 38
Tax loss carry-forwards and deductible temporary differences for which no deferred tax assets are recognized
Deferred tax assets have not been recognized in respect of tax loss carry-forwards or deductible temporary differences when the group evaluates
that it is not probable that future taxable prot will be available against which the group can utilize these benets based on forecasts and realistic expectations.
Expirydateofunrecognizedtaxlosscarry-forwards
AmountsinNOKmillion 2021 2020
Expiry in 2022 - 43
Expiry in 2023 and later 350 531
Indenite 1 772 2 135
Total 2 121 2 710
Unrecognized other deductible temporary differences are NOK 1 022 million in 2021 (NOK 1 105 million in 2020).
52 Annual Report 2021 | Financials and Notes | Akastor Group
Note 13 | Earnings per share
Akastor ASA holds 2 390 215 treasury shares at year end 2021 (2 390 215 in 2020). Treasury shares are not included in the weighted average number of
ordinary shares.
AmountsinNOKmillion 2021
2020
Restated
Prot (loss) from continuing operations (215) (537)
Non-controlling interests (6) 3
Prot (loss) attributable to ordinary shares from continuing operations (221) (535)
Prot (loss) from discontinued operations 1 140 (47)
Prot (loss) attributable to ordinary shares 919 (581)
Basic/ diluted earnings per share
The calculation of basic/diluted earnings per share is based on the prot (loss) attributable to ordinary shareholders and a weighted average number of
ordinary shares outstanding.
2021
2020
Restated
Issued ordinary shares as of January 1 274 000 000 274 000 000
Weighted average number of issued ordinary shares for the year adjusted for treasury shares 271 609 785 271 609 785
Basic/ diluted earnings (loss) per share (NOK) 3.38 (2.14)
Basic/ diluted earnings (loss) per share for continuing operations (NOK) (0.81) (1.97)
Basic/ diluted earnings (loss) per share for discontinued operations (NOK) 4.20 (0.17)
53Annual Report 2021 | Financials and Notes | Akastor Group
Note 14 | Property, plant and equipment
The table below includes discontinued operations until these met the criteria to be classied as held for sale.
AmountsinNOKmillion Note
Buildings
and land Vessels
Machinery,
equipment,
software
Under
construction Total
Historicalcost
Balance as of January 1, 2020 741 - 1 407 28 2 175
Additions 38 - 30 - 68
Additions through business combinations 6 - 397 - - 397
Reclassications 27 - 8 6 41
Transfer from assets under construction - - 17 (17) -
Disposals and scrapping (7) - (105) (11) (123)
Currency translation differences (128) (31) (14) (1) (175)
Balance as of December 31, 2020 671 366 1 343 4 2 384
Additions - 65 11 3 79
Reclassications - - 10 - 10
Transfer from assets under construction - - 1 (1) -
Disposals and scrapping - (156) (8) - (164)
Disposal of subsidiaries 6 (654) - (1 248) (6) (1 908)
Currency translation differences (17) 8 (7) (1) (17)
Balance as of December 31, 2021 - 282 101 - 384
Accumulateddepreciation
Balance as of January 1, 2020 (338) - (1 067) (11) (1 415)
Depreciation for the year
1)
(15) (8) (78) - (101)
Reclassications (27) - (15) - (43)
Disposals and scrapping 7 - 98 11 115
Currency translation differences 63 1 12 - 76
Balance as of December 31, 2020 (310) (7) (1 051) - (1 368)
Depreciation for the year
1)
(2) (30) (13) - (46)
Disposals and scrapping - - 7 - 7
Disposal of subsidiaries 6 305 - 957 - 1 262
Currency translation differences 7 (1) 6 - 12
Balance as of December 31, 2021 - (38) (94) - (133)
Book value as of December 31, 2020 361 359 292 4 1 017
Book value as of December 31, 2021 - 244 7 - 251
1)
IncludesamortizationofNOK6millionfromdiscontinuedoperationsin2021(NOK51millionin2020).
Depreciation
Estimates for useful life, depreciation method and residual values are reviewed annually. Assets are mainly depreciated on a straight-line basis over their
expected economic lives as follows:
Machinery, equipment and software 3–15 years
Vessels 20–25 years
Buildings 8–30 years
Land No depreciation
54 Annual Report 2021 | Financials and Notes | Akastor Group
Note 15 | Intangible assets
AmountsinNOKmillion Note
Development
costs Goodwill Other Total
Historicalcost
Balance as of 1 January 2020 539 1 372 263 2 174
Reclassication 2 - - 2
Capitalized development 35 - 2 38
Currency translation differences 7 20 5 32
Balance as of December 31, 2020 583 1 392 270 2 246
Reclassication (10) - - (10)
Capitalized development 24 - 1 24
Adjustment from business combinations prior years - (1) - (1)
Disposals of subsidiaries 6 (544) (1 263) (244) (2 051)
Currency translation differences (4) (10) (3) (16)
Balance as of December 31, 2021 50 118 24 192
Accumulatedamortizationandimpairment
Balance as of 1 January 2020 (370) (88) (123) (581)
Amortization for the year
1)
(35) - (25) (60)
Currency translation differences (6) 2 (5) (10)
Balance as of December 31, 2020 (411) (86) (154) (651)
Amortization for the year (10) - (6) (16)
Impairment
2)
- (69) (86) (155)
Disposal of subsidiaries 6 390 146 233 770
Currency translation differences 3 (1) 3 5
Balance as of December 31, 2021 (28) (10) (9) (47)
Net book value as of 31 December 2020 172 1 307 116 1 595
Net book value as of 31 December 2021 22 109 15 145
1)IncludesamortizationofNOK6millionfromdiscontinuedoperationsin2021(NOK51millionin2020).
2)IncludesimpairmentofNOK149millionfromdiscontinuedoperationsin2021.
Research and development costs
NOK 24 million has been capitalized in 2021 (NOK 38 million in 2020)
related to development activities. In addition, research and development
costs of NOK 1 million were expensed during the year because the criteria
for capitalization are not met (NOK 12 million in 2020).
Amortization
Intangible assets all have nite useful lives and are amortized over the
expected economic life, ranging between 5-10 years.
55Annual Report 2021 | Financials and Notes | Akastor Group
Note 16 | Impairment testing of goodwill
Goodwill originates from a number of acquisitions. For the purpose of
impairment testing, goodwill has been allocated to the group’s cash-
generating units (portfolio companies) as shown in the table below, which
represents the lowest level at which goodwill is monitored in management
reporting.
AmountsinNOKmillion 2021 2020
AGR 109 116
MHWirth
1)
- 1 190
Total goodwill 109 1 307
1)
TheportfoliocompanyisdeconsolidatedandmergedintothejointventureHMHin2021,seeNote5andNote6formoreinformationaboutthetransaction.
Impairment testing for cash-generating units containing signicant
goodwill
The recoverable amounts of cash-generating units (portfolio companies)
are determined based on value-in-use calculations. Discounted cash ow
models are applied to determine the value in use for the portfolio companies
with goodwill. The management has made cash ow projections based
on budget and strategic forecast for the periods 2022-2026. Beyond the
explicit forecast period of ve years, the cash ows are extrapolated using
a constant growth rate.
Key assumptions used in the calculation of value in use are discussed
below. The values assigned to the key assumptions represent
management's assessment of future trends in the relevant industries as well
as management’s expectations regarding margin, and have been based on
historical data from both external and internal sources.
EBITDA used in the value-in-use calculations represents the operating
earnings before depreciation and amortization and is estimated based
on the expected future performance of the existing businesses in their
main markets. Assumptions are made regarding revenue growth, gross
margins and other cost components based on historical experience as
well as assessment of future market development and conditions. These
assumptions require a high degree of judgement, given the signicant
degree of uncertainty regarding oileld service activities in the forecast
period.
Terminal value growth rate The group uses a constant growth rate not
exceeding 2% (including ination) for periods beyond the management’s
forecast period of ve years. The growth rates used do not exceed the
growth rates for the industry in which the portfolio company operates.
Discount rates are estimated based on Weighted Average Cost of Capital
(WACC) for the industry in which the portfolio company operates. The
risk-free interest rates used in the discount rates are based on the 10 year
state treasury bond rate at the time of the impairment testing. Optimal debt
leverage is estimated for each portfolio company. The discount rates are
further adjusted to reect any additional short to medium term market risk
considering current industry conditions.
Discount rate after tax Discount rate pre tax
Discount rate assumptions used in impairment testing 2021 2020 2021 2020
AGR 13.0% 14.4% 16.3% 17.5%
MHWirth n/a 12.2% n/a 14.7%
Sensitivity to changes in assumptions
For the portfolio companies containing goodwill, the recoverable amounts
are higher than the carrying amounts based on the value in use analysis
and consequently no impairment loss of goodwill was recognized in 2021
or 2020.
The group has performed sensitivity calculations to identify any reasonably
possible change in key assumptions that could cause the carrying amount
to exceed the recoverable amount. In AGR, if the average revenue growth
in the forecast period were reduced by more than 10%, or if the average
EBITDA margin in the forecast period were reduced by more than 2%, the
estimated recoverable amount would be lower than the carrying amount
and it would result in impairment in AGR.
56 Annual Report 2021 | Financials and Notes | Akastor Group
Note 17 | Equity-accounted investees
Equity-accounted investees include joint ventures and associates. Such investments are dened as related parties to Akastor. See Note 34 Related parties
for signicant agreements and transactions with joint ventures, and any guarantees provided on behalf of or from such entities.
AmountsinNOKmillion HMH AKOFS Offshore DDW Offshore AS
1)
Total
Business ofce Amsterdam, Netherlands Oslo, Norway Storebø, Norway
Percentage of voting rights and ownership 50% 50 % 50%/100%
2021
Share of prot (loss) reported in Financial items 6 (352) - (346)
Carrying amount of investments 2 650 759 - 3 408
2020
Share of prot (loss) reported in Financial items - (117) (140) (256)
Carrying amount of investments - 1 064 - 1 064
1)
DDWOffshoreASwasajointventurewithDOFASA,whichbecamea100percentownedsubsidiaryinOctober2020.PleaseseeNote6Disposalofsubsidiariesand
businesscombinationformoreinformation.
HMH
On October 1, 2021, Akastor completed the transaction to bring together
Akastor’s wholly owned subsidiary, MHWirth AS (MHWirth) and Baker
Hughes’ Subsea Drilling Systems (SDS) business to create a joint venture
company HMH. Following the transaction, Akastor and Baker Hughes each
holds 50% and 50% of the shares in HMH, and have joint control over the
company. HMH is classied as a joint venture to the group and accounted
for using the equity method. See Note 5 Discontinued operations for more
information about the transaction.
AKOFS Offshore
AKOFS Offshore is a joint venture where Akastor, MITSUI & CO., Ltd.
("Mitsui") and Mitsui O.S.K. Lines, Ltd. ("MOL") hold 50%, 25% and 25%
of the shares respectively, and have joint control over the company.
57Annual Report 2021 | Financials and Notes | Akastor Group
Summary of nancial information for signicant equity-accounted investee (100 percent basis)
HMH
1)
AKOFS
AmountsinNOKmillion 2021 2021 2020
Current assets 6 265 951 928
– Cash and cash equivalents 817 337 247
Non-current assets 6 906 4 249 4 609
Current liabilities (4 092) (1 536) (1 379)
– Current nancial liabilities (excluding trade and other payables and provisions) (1 384) (1 149) (1 047)
Non-current liabilities (3 781) (2 146) (2 219)
– Non-current nancial liabilities (excluding trade and other payables and provisions) (3 199) (2 140) (2 212)
Net assets (100%) 5 299 1 517 1 939
Akastor's share of net assets (50%) 2 650 759 969
Goodwill - - 125
Elimination of unrealized gain on downstream sales
2)
- - (30)
Akastor's carrying amount of the investment 2 650 759 1 064
Revenue 1 419 1 269 1 000
Depreciation, amortization and impairment (116) (453) (548)
Interest expense (57) (269) (306)
Income tax expense (23) (65) (18)
Prot (loss) for the year 12 (516) (473)
Other comprehensive income (loss) - (15) (39)
Total comprehensive income (loss) (100%) 12 (531) (513)
Total comprehensive income (loss) (50%) 6 (266) (256)
Impairment of goodwill
3)
- (124) -
Elimination of unrealized gain on downstream sales - 30 120
Akastor's share of total comprehensive income (loss) 6 (360) (136)
1)
IncomestatementinformationforHMHin2021isrelatedtotheperiodbetweenOctober1–December31,2021aftertheformationofthecompany.
2)
In2016,AkastorsoldtheSkandiSantostopsideequipmenttoAviumSubseaAS,awhollyownedsubsidiarytoAKOFSOffshore.50%oftheaccountinggainfromthesalewas
eliminateduponconsolidation,reducingAkastor’scarryingamountoftheinvestment.
3)
GoodwillinAKOFSOffshorewasimpairedin2021asaresultofreassessmentofvaluationofthevesselsinAKOFSOffshore.
Note 18 | Other non-current assets
AmountsinNOKmillion Note 2021 2020
Deferred and contingent considerations 31 20 26
Other assets - 3
Total other non-current assets 21 29
Deferred and contingent considerations relate to divestments of subsidiaries in previous years and are measured at fair value.
58 Annual Report 2021 | Financials and Notes | Akastor Group
Note 19 | Other investments
AmountsinNOKmillion Note 2021 2020
Aker Pensjonskasse 158 158
NES Fircroft investment
1)
621 537
Awilco Drilling investment
2)
10 14
Odfjell Drilling investment
3)
807 758
Other equity securities 29 2
Total other non-current investments 31 1 625 1 469
AmountsinNOKmillion Note 2021 2020
Step Oiltools
4)
147 -
Total other current investments 31 147 -
1)
Akastorholds15%economicownershipinterestinNESFircroft,aglobaloilandgasmanpowerprovider.
2)
Akastorholds5.6%ofthecommonsharesinAwilcoDrilling,whichislistedontheOsloStockExchange.
3)
InMay2018,AkastormadeaninvestmentofUSD75millioninpreferredequityinOdfjellDrilling,whichgenerates5%p.a.cashdividendand5%p.a.payment-in-kind(PIK)
dividendfortherstsixyears,withstep-upcashdividendafter6years.Inaddition,Akastorhasacquiredwarrantsfor5925000commonsharesinOdfjellDrilling,dividedby
sixexercisabletranchesuntilMay30,2024.OdfjellDrillingislistedontheOsloStockExchange.
4)
StepOiltoolsisincludedinthetransactionscopeandthusformspartoftheMHWirthbusinesscontributedfromAkastortothenewjointventureHMH.However,thelegal
ownershipinsharesinStepOiltoolsremainswithAkastorasofDecember31,2021pendingcertainregulatoryapprovals.ThelegalownershipinStepOiltoolsdoesnot
constitutecontrolsinceAkastorhasenteredintoabindingagreementwithHMHonthetransferofStepOiltoolsandAkastorisnotexposedtovariablereturnsfromthelegal
ownershipfromthetimeofagreementbeingenteredinto.SeealsoNote25Otherliabilitiesformoreinformationabouttheseller’screditagreementrelatedtoStep
Oiltoolsshares.
Other investments are measured at fair value.
Note 20 | Non-current interest-bearing receivables
AmountsinNOKmillion Note 2021 2020
Receivables from AKOFS Offshore 113 94
Receivables from HMH 180 -
Receivables from Aker Pensjonskasse 22 21
Total non- current interest-bearing receivables 34 315 115
Note 21 | Trade and other receivables
AmountsinNOKmillion Note 2021 2020
Trade receivables
1)
191 1 226
Less provision for impairment (57) (131)
Trade receivables, net of provision 135 1 094
Other receivables 673 25
Trade and other receivables 31 808 1 120
Advances to suppliers - 94
Contract assets 8 47 764
Prepaid expenses 16 167
Public duty and tax refund 2 46
Total 872 2 191
1)TradereceivablesarenancialinstrumentsandanimpairmentlossofNOK36millionwasrecognizedintheincomestatementin2020.
Book value of trade and other receivables is approximately equal to fair value.
59Annual Report 2021 | Financials and Notes | Akastor Group
Aging of trade receivables
AmountsinNOKmillion 2021 2020
Not overdue 126 464
Past due 0-30 days 8 59
Past due 31-90 days - 37
Past due more than 90 days 57 665
Total trade receivables 191 1 226
The past due receivables are monitored regularly and impairment analysis is performed on an individual basis for major customers. As of December 31,
2021, trade receivables of a face value of NOK 57 million were impaired. See below for the movements in the provision for impairment of receivables.
AmountsinNOKmillion 2021 2020
Balance as of January 1 131 49
New provisions - 36
Utilized - (1)
Unused amounts reversed (8) (4)
Acquisition of subsidiaries - 57
Disposal of subsidiaries (68) -
Currency translation differences 2 (6)
Balance as of December 31 57 131
Note 22 | Cash and cash equivalents
AmountsinNOKmillion 2021 2020
Restricted cash - 6
Interest-bearing deposits 89 269
Total cash and cash equivalents 89 275
Additional undrawn committed current bank revolving credit facilities amount to NOK 553 million, that together with cash and cash equivalents gives a total
liquidity reserve of NOK 642 million as of December 31, 2021. See also Note 24 Borrowings.
60 Annual Report 2021 | Financials and Notes | Akastor Group
Note 23 | Capital and reserves
Share capital
Akastor ASA has one class of shares, ordinary shares, with equal rights for
all shares. The holders of ordinary shares are entitled to receive dividends
and are entitled to one vote per share at General Meetings. Total outstanding
shares are 274 000 000 at par value NOK 0.592 per share (NOK 0.592 in
2020). All issued shares are fully paid.
Treasury shares
At the Annual General Meeting in 2014, authorization was given to
repurchase up to 27.4 million shares, representing 10 percent of the share
capital of Akastor ASA. The group purchases treasury shares to meet the
obligation under employee share purchase programs. As of December 31,
2021, Akastor ASA holds 2 390 215 treasury shares (2 390 215 treasury
shares in 2020), representing 0.87 percent of total outstanding shares.
The Board of Directors has proposed no dividends for 2021 or 2020.
Hedging reserve
The hedging reserve relates to cash ow hedges of future revenues and
expenses against exchange rate uctuations. The income statement effects
of such instruments are recognized in accordance with the progress of
the underlying construction contract as part of revenues or expenses as
appropriate. The hedging reserve represents the value of such hedging
instruments that is not yet recognized in the income statement. The
underlying nature of a hedge is that a positive value on a hedging instrument
exists to cover a negative value on the hedged position. As of December
31, 2021, the group had no cash ow hedges as a result of disposal of
subsidiaries.
Fair value reserve
The fair value reserve comprises the cumulative net changes in the fair
value of nancial assets classied as Fair Value to OCI (FVOCI) until these
assets are impaired or derecognized.
Currency translation reserve
The translation reserve comprises all foreign currency differences arising
from the translation of the nancial statements of foreign operations, as well
as the effective portion of any foreign currency differences from hedges of
net investments in foreign operations.
The currency translation reserve includes exchange differences arising
from the translation of the net investments in foreign operations, and foreign
exchange gain or loss on loans dened as net investment hedge or part of
net investments in foreign operations. Upon the disposal of investments
in foreign operations during 2021, the accumulated currency translation
differences related to the disposed entities were reclassied from the
currency translation reserve to the income statement.
Accumulated gain in equity on net investment hedges as of 2021 is nil (gain
of NOK 11 million in 2020) as result of disposal of investments in the United
States and Cyprus.
61Annual Report 2021 | Financials and Notes | Akastor Group
Note 24 | Borrowings
Below are contractual terms of the group’s interest-bearing loans and borrowings which are measured at amortized cost. For more information about the
group’s exposure to interest rates, foreign currency and liquidity risk, see Note 30 Financial risk management and exposures.
Amounts in million Currency
Nominal
currency
value
Carrying
amount
(NOK)
Interest
rate
Fixed
interest
margin
Interest
coupon Maturity
1)
Interest terms
2021
Revolving credit facility
(USD 89 million) USD 83 721 0.48% 5.50%
2)
5.98% Feb 2023 USD LIBOR + margin
Revolving credit facility
(NOK 250 million) NOK - - 0.37% 5.50%
2)
5.87% Feb 2023 NIBOR + margin
Subordinated Aker facility
(NOK 250 million) NOK 3 3 0.95% 10.00% 10.95% Mar 2023 NIBOR + margin
Term loan facility AGR NOK 180 185 1.88% 2.12% 4.00% Apr 2027 Fixed rate
Term loan DDW Offshore USD 53 467 0.13% 4.25% 4.38% Oct 2023 USD LIBOR + margin
Overdraft NOK 11
Total borrowings 1 387
Current borrowings 16
Non-current borrowings 1 372
Total borrowings 1 387
2020
Revolving credit facility
(NOK 1 250 million) NOK 350 347 0.39% 3.25%
3)
3.64% Dec 2021 NIBOR + margin
Revolving credit facility
(USD 155 million) USD 90 772 0.15% 3.25%
3)
3.40% Dec 2021 USD LIBOR + margin
Term loan facility AGR NOK 180 173 1.88% 2.12% 4.00% Apr 2027 Fixed rate
Term loan DDW Offshore USD 53 445 0.23% 4.25% 4.48% Oct 2023 USD LIBOR + margin
Total borrowings 1 746
Current borrowings 1 119
Non-current borrowings 628
Total borrowings 1 746
1)
Thematuritydatereectsmaturitydateasdenedintheloanagreements.Forinformationaboutcontractualmaturitiesofborrowingsincludinginterestpaymentsandthe
periodinwhichtheymature,seeNote30Financialriskmanagementandexposures.
2)
Commitmentfeeis40percentofthemargin.
3)
Themarginapplicabletothefacilitieswasdecidedbyapricegridbasedontheleverageratioandlevelofutilization.Commitmentfeewas35percentofthemargin.
Bank debt
The revolving credit facilities are provided by a bank syndicate consisting of
high-quality Nordic and international banks and DNB is acting as the agent.
The terms and conditions include restrictions which are customary for
these kinds of facilities, including inter alia negative pledge provisions and
restrictions on acquisitions, disposals and mergers, dividend distribution
and change of control provisions. For information about nancial covenants,
see Note 29 Capital management.
The term loan facility of NOK 180 million to AGR is provided by Nordea and
DNB. The lenders have no recourse to Akastor ASA. This facility includes
restrictions which are customary for these kinds of facilities.
The term loan of USD 53 million to DDW Offshore is provided by GIEK, DNB
and BNP Paribas and matures in October 2023. The Facility is guaranteed
by Akastor ASA and the lenders benet from rst priority mortgages in the
vessels. This facility includes restrictions which are customary for these
kinds of secured nancing.
62 Annual Report 2021 | Financials and Notes | Akastor Group
Reconciliation of liabilities arising from nancing activities
AmountsinNOKmillion
Balance as
of December
31, 2020 Cash ows
Foreign
exchange
movements
Capitalized
borrowing
costs
Accrued
interest
Balance as
of December
31, 2021
Revolving credit facilities 1 119 (416) 6 7 5 721
Subordinated Aker facility - - - - 3 3
Term loan facility AGR 173 - - - 13 185
Term loan DDW Offshore 455 - 13 - - 467
Overdraft - 11 - - - 11
Total liabilities arising from nancing activities 1 746 (405) 18 7 20 1 387
Note 25 | Other liabilities
AmountsinNOKmillion Note 2021 2020
Deferred gain 51 72
Deferred settlement obligations 31 377 197
Liability for prot split 6,31 200 185
Other liabilities 31 1 24
Total other non-current liabilities 628 478
Seller’s credit 31 148 -
Total other current liabilities 148 -
Deferred gain
In May 2018, Akastor invested in preferred equity and warrants in Odfjell
Drilling. On initial recognition, the investment in the nancial assets is
recognized at fair value and the difference between the fair value and the
transaction price, NOK 117 million, was recognized as “Deferred gain”. The
deferred gain is subsequently amortized and recognized to prot and loss at
straight-line basis over six years. See Note 19 Other investments for more
information about the investment.
Deferred settlement obligations
Deferred settlement obligations represent contingent considerations
resulting from disposal of subsidiaries. The obligations are mainly related
to provision for indemnity liabilities for pension plans in connection with
MHWirth divestment and guaranteed preferred return to Mitsui and MOL in
connection with AKOFS Offshore divestment.
Liability for prot split
DDW Offshore AS has obligation to share 50 percent of the sale proceeds
from disposal of its vessels with its lenders prior to the maturity of the debts.
See Note 6 Disposal of subsidiaries and business combination for more
information.
Seller’s credit
Step Oiltools is included in the transaction scope and thus forms part of
the MHWirth business contributed from Akastor to the new joint venture
HMH. However, the legal ownership in shares in Step Oiltools remains with
Akastor as of December 31, 2021 pending certain regulatory approvals.
Akastor has a binding agreement with HMH on the transfer of Step Oiltools.
A seller’s credit agreement is entered between Akastor and HMH which will
be settled when the shares in Step Oiltools are transferred back to HMH.
See Note 5 and Note 6 for more information about the disposal of MHWirth.
63Annual Report 2021 | Financials and Notes | Akastor Group
Note 26 | Employee benets – pension
Akastor’s pension costs represent the future pension entitlement earned by
employees in the nancial year. In a dened contribution plan the company
is responsible for paying an agreed contribution to the employee’s pension
assets. In such a plan, this annual contribution is also the cost. In a dened
benet plan, it is the company’s responsibility to provide a certain pension.
The measurement of the cost and the pension liability for such arrangements
is subject to actuarial valuations. Akastor has over a long time period
gradually moved from dened benet arrangements to dened contribution
plans. Consequently, the impact of the remaining dened benet plans is
gradually reduced.
Pension plans in Norway
The main pension arrangement in Norway is a general pension plan organized
by the Norwegian Government. This arrangement provides the main
general pension entitlement of all Norwegians. All pension arrangements by
employers consequently represent limited additional pension entitlements.
Norwegian employers are obliged to provide an employment pension plan,
which can be organized as a dened benet plan or as a dened contribution
plan. The Norwegian companies in Akastor have closed the earlier dened
benet plans in 2008 and are now providing dened contribution plans for
all employees.
Denedbenetplan
Employees who were 58 years or older in 2008, when the change took
place, are still in the dened benet plan, which is a funded plan. There are
no longer any active employees in this plan. The estimated contributions
expected to be paid to the Norwegian plan during 2022 amount to
NOK 4 million.
Compensationplan
To ensure that the employees were treated fairly on the change over to the
contribution plan in 2008, the company introduced a compensation plan.
The basis for deciding the compensation amount is the difference between
calculated pension capital in the dened benet plan and the value of the
dened benet plan at the age of 67 years. The compensation amount will
be adjusted annually in accordance with the adjustment of the employees’
pensionable income, and accrued interest according to market interest. If
the employee leaves the company voluntarily before the age of 67 years,
the compensation amount will be reduced.
AFP–earlyretirementarrangement
AFP is an early retirement arrangement organized by Norwegian employers,
the main Labor Union organization in Norway (LO) and the Norwegian
Government. The AFP plan is providing additional lifelong pensions to
employees that retire before the general retirement age, to compensate
for the reduction of the ordinary pension entitlements. The employees are
given a choice of retirement age, with lower pension at earlier retirement.
The Norwegian Accounting Standards Board has issued a comment
concluding that the AFP plan is a multi-employer dened benet plan. The
AFP plan exposes the participating entities to actuarial risk associated
with employees of other entities with the result that there is no consistent
and reliable basis for allocating the obligation, plan assets and costs to
individual participating entities. Sufcient information is not available to use
dened benet accounting and the AFP plan is accounted for as a dened
contribution plan.
Pension plans outside Norway
Pension plans outside Norway are predominately dened contribution plans.
Pension cost
AmountsinNOKmillion Note 2021
2020
restated
Dened benet plans 1 1
Dened contribution plans including AFP 10 9
Total pension cost 9 11 10
Net employee dened benet obligations
AmountsinNOKmillion 2021 2020
Dened benet plans Norway 94 222
Dened benet plans Germany - 136
Dened benet plans USA 15 31
Dened benet plans other countries - (2)
Total employee benet obligations 108 388
64 Annual Report 2021 | Financials and Notes | Akastor Group
Movement in net dened benet (asset) liability
Pension obligation Pension asset Net pension obligation
AmountsinNOKmillion 2021 2020 2021 2020 2021 2020
Balance as of January 1 639 619 (251) (260) 388 359
Disposal of subsidiaries as of January 1, 2021 (279) - 28 - (251) -
Included in prot or loss
Service cost 1 9 - - 1 9
Interest cost (income) 2 8 (1) (3) 2 5
3 17 (1) (3) 2 14
Included in OCI
Remeasurements(loss)gain:
Actuarial loss (gain) arising from:
- demographic assumptions 6 7 - - 5 7
- nancial assumptions (10) 35 (2) - (12) 35
- experience adjustments (5) (4) - - (5) (4)
Return on plan assets excluding interest income - - - 1 - 1
Changes in asset ceiling - - - (1) - (1)
Effect of movements in exchange rates 3 6 (3) 5 - 11
(6) 44 (5) 4 (11) 49
Other
Benets paid by the plan (25) (41) 20 26 (5) (14)
Contributions paid into the plan - - (15) (20) (15) (20)
(25) (41) 5 7 (20) (34)
Balance as of December 31 332 639 (224) (251) 108 388
Plan assets
AmountsinNOKmillion 2021 2020
PlanassetsatfairvalueNorwegianplan
Government 5 7
Finance 15 10
Private and Government enterprise 26 26
Municipalities 15 25
Bonds 60 68
Fund/private equity 60 59
Total plan assets Norway at fair value 120 126
Equity securities 29 28
Debt securities 75 72
Total plan assets US at fair value 104 100
Total plan assets Germany at fair value - 23
Total plan assets at fair value 224 249
The equity portfolio is invested globally. The fair value of the equities is
based on their quoted prices at the reporting date without any deduction for
estimated future selling cost.
The investments in bonds are done in the Norwegian market and most of
the bonds are not listed on any exchange. The market value as at year end
is based on ofcial prices provided by the Norwegian Securities Dealers
Association. The Bond investments have on average a high credit rating.
Most of the investments are in Norwegian municipalities with a credit rating
of AA.
The investment in fund/private equity is mainly funds that invests in listed
securities and where the fund value is based on quoted prices.
65Annual Report 2021 | Financials and Notes | Akastor Group
Dened benet obligation – actuarial assumptions
The group’s most signicant dened benet plans are in Norway and USA. The followings are the principal actuarial assumptions at the reporting date for
the plans in these countries.
Norway USA
2021 2020 2021 2020
Discount rate 1.90 % 1.50% 2.41% 1.91%
Asset return 1.90 % 1.50% 2.41% 1.91%
Salary progression 2.75 % 2.25% n/a n/a
Pension indexation 0 -2.5% 0 -1.75% n/a n/a
Mortality table K2013 K2013
Pri-2012 Total
Dataset Mortality
with Scale
MP-2021
Pri-2012 Total
Dataset Mortality
with Scale
MP-2020
The information below relates only to Norwegian plans as these represent
the majority of the plans.
The discount rates and other assumptions in 2021 and 2020 are based
on the Norwegian high quality corporate bond rate and recommendations
from the Norwegian Accounting Standards Board. It should be expected
that uctuations in the discount rates would also lead to uctuations
in the pension indexations. The total effect of uctuations in economic
assumptions is consequently unlikely to be very signicant.
Assumptions regarding future mortality have been based on published
statistics and mortality tables. The current life expectancy underlying
the values of the dened benet obligation at the reporting date is
shown below.
Years 2021 2020
Life expectancy of male pensioners 22.6 22.5
Life expectancy of female pensioners 25.9 25.8
As of December 31, 2021, the weighted-average duration of the dened benet obligation was 8.8 years.
Sensitivity analysis
Reasonably possible changes at the reporting date to one of the relevant actuarial assumptions, holding other assumptions constant, would have affected
the dened benet obligation as of December 31, 2021 by the amounts shown below.
AmountsinNOKmillion Increase Decrease
Discount rate (1% movement) (8) 10
Future salary growth (1% movement) - -
Future pension growth (1% movement) 9 (4)
The change in discount rate assumptions would affect plan assets in the income statement in next period as it would change the estimated asset return but
have no effect on pension assets as of year-end.
66 Annual Report 2021 | Financials and Notes | Akastor Group
Note 27 | Provisions
AmountsinNOKmillion 2021 2020
Provision, current 20 109
Provision, non-current 26 50
Total provisions 47 160
Development of signicant provisions
AmountsinNOKmillion Warranties Restructuring
Onerous
contracts Other Total
Balance as of December 31, 2020 72 30 47 10 160
New provisions 10 - - - 10
Provisions utilized (1) - (9) (2) (12)
Provisions reversed - - (10) (1) (11)
Unwind of discount - - 2 - 2
Disposal of subsidiaries (71) (30) - - (101)
Currency translation differences (1) - - - (1)
Balance as of December 31, 2021 10 - 31 6 47
Expectedtimingofpayment
Within the next twelve months 10 - 5 6 20
After the next twelve months - - 25 - 26
Total 10 - 31 6 47
Warranties
The provision for warranties relates mainly to the possibility that Akastor,
based on contractual agreements, needs to perform guarantee work related
to products and services delivered to customers. Warranty provision is
presented as current as it is expected to be settled in the group’s normal
operating cycle. See Note 4 Signicant accounting estimates and judgments
for further descriptions.
Onerous contracts
Provision for onerous contracts relates mainly to unavoidable operational
costs for vacant properties where the group has committed to under lease
contracts.
Note 28 | Trade and other payables
AmountsinNOKmillion Note 2021 2020
Trade creditors
1)
99 305
Accrued expenses 377 1 232
Trade and other payables 31 476 1 537
Public duty and tax payables 46 101
Contract liabilities 8 21 344
Deferred settlement obligations 31 82 77
Total trade and other payables 625 2 060
1)
Tradecreditorsareduewithinoneyear.
Book value of trade creditors and other current liabilities is approximately equal to fair value.
67Annual Report 2021 | Financials and Notes | Akastor Group
Note 29 | Capital management
Akastor’s capital management is designed to ensure that the group has
sufcient nancial exibility to carry out its strategic targets, both short-
term and long-term. Akastor is targeting to maintain a nancial structure
that, through solidity and cash ow, secures the group’s strong long-term
creditworthiness, as well as maximize value creation for its shareholders
through:
Investing in projects and business areas which will increase the
company’s Return On Capital Employed (ROCE) over time.
Optimizing the company’s capital structure to ensure both sufcient
and timely funding over time to nance its activities at the lowest
cost.
Investment policy
Akastor’s capital management is based on a rigorous investment selection
process which considers not only Akastor’s weighted average cost of
capital and strategic orientation but also external factors such as market
expectations.
Funding policy
Liquidityplanning
Akastor has a strong focus on its liquidity situation to meet its capital needs
and ensure solvency for its nancial obligations. Akastor had a liquidity
reserve per year end 2021 of NOK 0.6 billion, composed of an undrawn
committed credit facility of NOK 553 million and cash and cash equivalents
of NOK 89 billion.
Fundingofoperations
Akastor’s group funding policy is that subsidiaries should nance their
operations with the treasury department (Akastor Treasury). This ensures
optimal availability and transfer of cash within the group and better control
of the company’s overall debt as well as cheaper funding for its operations.
However, AGR is nanced directly through a NOK 180 million Term Loan
maturing in 2027, and DDW Offshore is nanced directly through a USD 53
million Term loan maturing in 2023.
Fundingduration
Akastor emphasizes nancial exibility and steers its capital structure
accordingly to limit its liquidity and renancing risks. In this perspective,
loans and other external borrowings are to be renegotiated well in advance
of their due date and generally for periods of 3 to 5 years. However, as a
result of MHWirth divestment in 2021 and the required renancing carried
out in connection with this, corporate facilities currently have a shorter
duration as realization of assets are expected to be carried out in the short
to medium term.
Fundingcost
Akastor aims to have diversied funding sources in order to reach the
lowest possible cost of capital. These funding sources might include:
The use of banks based on syndicated credit facilities.
The issue of debt instruments in the Norwegian capital market.
The issue of debt instruments in foreign capital markets.
Ratios used in monitoring of capital/covenants
Akastor monitors capital on the basis of a gearing ratio (net debt/equity)
and equity ratio (equity/total assets). These ratios are similar to covenants
as dened in the new loan agreement entered into in 2021 for the revolving
credit facilities which are shown below. See Note 24 Borrowings for details
about these loans.
The company’s gearing ratio shall not exceed 0.4 times (0.5 times
effective from 2022) and is calculated from the consolidated total
borrowings to the consolidated Equity.
Equity ratio shall not be lower than 32.5%, calculated from the
consolidated total equity to consolidated total assets
Minimum liquidity amount shall exceed NOK 250 million (NOK 150
million effective from 2022) on consolidated level.
The ratios are calculated based on net debt including cash and borrowings
as shown in Note 31 Financial instruments, consolidated equity and
consolidated total assets, however adjusted for certain items as dened in
the loan agreement. Covenants ratios are based on accounting principles
as of December 31, 2021.
The covenants are monitored on a regular basis by the Akastor Treasury
department to ensure compliance with the loan agreements which are
tested and reported on a quarterly basis. Akastor was in compliance with its
covenants as of December 31, 2021. In February 2022, the group entered
into certain amendments to the loan agreement, including adjustments of
the covenant levels for gearing ratio and minimum liquidity, which provided
additional headroom. On the basis of the covenant levels and its nancial
forecasts, management believes that the risk of covenant being breached is
low and that the group will continue as a going concern for the foreseeable
future.
AGR’s external nancing has one nancial covenant the Liquidity shall be
not less than NOK 20 million, applicable from 1 January 2021.
68 Annual Report 2021 | Financials and Notes | Akastor Group
Note 30 | Financial risk management and exposures
The group is exposed to a variety of nancial risks: currency risk, interest
rate risk, price risk, credit risk, liquidity risk and capital risk. The capital
market risk affects the value of nancial instruments held. The objective of
nancial risk management is to manage and control nancial risk exposures
and thereby increase the predictability of earnings and minimize potential
adverse effects on the group’s nancial performance.
Risk management is present in every project. It is the responsibility of the
project managers, with the support of Akastor Treasury, to identify, evaluate
and hedge nancial risks under policies approved by the Board of Directors.
The group has well-established principles for overall risk management, as
well as policies for the use of derivatives and nancial investments. There
have not been any changes in these policies during the year.
Currency risk
The group operates internationally and is exposed to currency risk
on commercial transactions, recognized assets and liabilities and net
investments in foreign operations. Commercial transactions and recognized
assets and liabilities are subject to currency risk when payments are
denominated in a currency other than the respective functional currency
of the group company. The group’s exposure to currency risk is primarily
against USD.
Akastor had no net investment hedge or cash ow hedges as of December
31, 2021. The changes in hedge reserve in 2020 were related to hedges of
forecast sales and purchases in MHWirth which was divested in 2021, see
Note 5 and Note 6 for more information about the divestment.
Exposuretocurrencyrisk
Changes in currency rates change the values of borrowings, receivables
and cash balances. The group has forward exchange contracts with a
maturity of less than one year from the reporting date.
2021 2020
Amounts in million USD USD
Cash and cash equivalents (5) (59)
Intercompany loans 43 33
Loans and receivables 43 55
Deferred settlement assets and obligations (50) (29)
Balance sheet exposure 31 -
Estimated forecast receipts from customers - 108
Estimated forecast payments to vendors - (5)
Cash ow exposure - 104
Forward exchange contracts (75) (154)
Net exposure (43) (50)
Sensitivity analysis
A strengthening of USD against NOK as of December 31 would have
affected the measurement of nancial instruments denominated in a foreign
currency and increased (decreased) income statement by the amounts
shown below. This analysis is based on foreign currency exchange rate
variances that the group considered to be reasonably possible at the end
of the reporting period. The analysis assumes that all other variables, in
particular interest rates, remain constant and ignores any impact of forecast
sales and purchases. Figures in the table below only include the effect in
income statement for change in currency regarding nancial instruments
and do not include effect from operating cost and revenue.
EffectofweakeningofNOKagainstUSD:
2021 2020
AmountsinNOKmillion
Prot (loss)
after tax
Prot (loss)
after tax
USD (10%) (38) USD (30%) (101)
A strengthening of the NOK against USD as of December 31 would have
had the equal but opposite effect on the above amounts, on the basis that
all other variables remain constant. The sensitivity analysis does not include
effects on the consolidated result and equity from changed exchange rates
used for consolidation of foreign subsidiaries.
The primary currency-related risk is the risk of reduced competitiveness
abroad in the case of a strengthened NOK. This risk relates to future
commercial contracts and is not included in the sensitivity analysis above.
69Annual Report 2021 | Financials and Notes | Akastor Group
Interest rate risk
The group’s interest rate risk arises from cash balances, interest-bearing
borrowings and interest-bearing receivables. Borrowings and receivables
issued at variable rates as well as cash expose the group to cash ow
interest rate risk. Borrowings and receivables issued at xed rates expose
the group to fair value interest rate risk. However, as these borrowings are
measured at amortized cost, interest rate variations do not affect prot and
loss when held to maturity.
An increase of 100 basis points in interest rates during 2021 would have
increased (decreased) prot and loss by the amounts shown on the table
below. This analysis assumes that all other variables, in particular foreign
currency rates, remain constant. The analysis is performed on the same
basis as for 2020.
Effectofincreaseof100basispointsininterestratesonprot(loss)beforetax
AmountsinNOKmillion 2021 2020
Cash and cash equivalents 2 3
Interest-bearing receivables 2 2
Borrowings (19) (18)
Net (16) (14)
A decrease of 100 basis points in interest rates during 2021 would have
had the equal but opposite effect on the above amounts, on the basis that
all other variables remain constant. There are no effects on equity as there
are no interest swaps.
Guarantee obligations
The group has provided the following guarantees on behalf of subsidiaries
and related parties as of December 31, 2021 (estimated remaining exposure
as of December 31, 2021):
Performance guarantees on behalf of group companies are NOK
0.4 billion (NOK 0.7 billion in 2020)
Performance guarantees on behalf of related parties NOK 2.6
billion (NOK 2.6 million in 2020)
Parent company indemnity guarantees for fulllment of lease
obligations and nance obligations are NOK 3.0 billion (NOK 3.4
billion in 2020).
Financial guarantees including counter guarantees for bank/surety
bonds and guarantees for pension obligations to employees are
NOK 0.3 billion (NOK 0.5 billion in 2020).
Although guarantees are nancial instruments, they are considered
contingent obligations and the notional amounts are not included in the
nancial statements. See more information about guarantees for related
parties in Note 34 Related parties.
Price risk
The group is exposed to uctuations in market prices in the operational
areas related to contracts, including changes in market prices for raw
materials, equipment and development in wages. These risks are to the
extent possible managed in bid processes by locking in committed prices
from vendors as a basis for offers to customer or through escalation clauses
with customers.
Credit risk
Credit risk is the risk of nancial losses to the group if customer or
counterparty to nancial investments/instruments fails to meet contractual
obligations and arise principally from investment securities and receivables.
Derivatives are only traded against approved banks. All approved banks
have investment grade ratings. Credit risk related to investment securities
and derivatives is therefore considered to be insignicant.
Assessment of credit risk related to customers and subcontractors is an
important requirement in the bid phase and throughout the contract period.
Such assessments are based on credit ratings, income statement and
balance sheet reviews and using credit assessment tools available (e.g.
Dun & Bradstreet and Credit Watch). Sales to customers are settled in cash.
The group evaluates that signicant credit risk concentrations are related
to receivables and contract assets from major corporate customers. The
maximum exposure to credit risk at the reporting date equals the carrying
amounts of nancial assets (see Note 31 Financial instruments) and
contract assets (see Note 8 Revenue and other income). The group does
not hold collateral as security.
Based on estimates of incurred losses in respect of trade receivables and
contract assets, the group establishes a provision for impairment losses.
Provisions for loss on debtors are based on individual assessments.
Provisions for loss on receivables and contract assets were NOK 271
million in 2021 (NOK 131 million in 2020).
Liquidity risk
Liquidity risk is the risk that the group will encounter difculty in meeting the
obligations associated with its nancial liabilities. The group manages its
liquidity to ensure that it will always have sufcient liquidity reserves to meet
its liabilities when due.
Prudent liquidity risk management includes maintaining sufcient cash, the
availability of funding from an adequate amount of committed credit facilities
and the ability to close out market positions. Due to the dynamic nature of
the underlying businesses, Akastor Treasury maintains exibility in funding
by maintaining availability under committed credit lines.
70 Annual Report 2021 | Financials and Notes | Akastor Group
The group policy for the purpose of optimizing availability and exibility
of cash within the group is to operate a centrally managed cash pooling
arrangement. An important condition for the participants (business units)
in such cash pooling arrangements is that the group as an owner of such
pools is nancially viable and is able to prove its capability to service its
obligations concerning repayment of any net deposits made by business
units. Management monitors rolling monthly forecasts of the group’s liquidity
reserve on the basis of expected cash ow.
Financial liabilities and the period in which they mature
The following is the remaining contractual maturities of nancial liabilities at the reporting date. The amounts are gross and undiscounted and include
contractual interest payments and exclude the impact of netting agreements.
AmountsinNOKmillion Note
Book
value
Total cash
ow
1)
6 months
and less
6–12
months 1–2 years 2–5 years
More than
5 years
2021
Borrowings
2)
24 1 387 1 522 48 32 1 237 111 94
Lease liabilities 32 155 168 42 41 46 39 1
Other non-current liabilities 25 201 221 - - 221 - -
Deferred settlement obligations 25,28 459 481 8 60 82 163 168
Trade and other payables 28 476 476 240 236 - - -
Total nancial liabilities 2 678 2 868 338 369 1 586 313 263
Financial guarantees
3)
6 247 581 4 497 3 315 1 851
2020
Borrowings
2)
24 1 746 1 895 37 1 172 54 568 64
Lease liabilities 32 592 732 84 76 125 219 228
Other non-current liabilities 25 210 239 2 2 5 227 2
Derivative nancial instruments 37 37 28 1 8 - -
Deferred settlement obligations 25,28 274 274 11 68 67 128 -
Trade and other payables 28 1 537 1 537 1 266 272 - - -
Total nancial liabilities 4 396 4 714 1 429 1 590 258 1 142 295
Financial guarantees
3)
7 175 294 5 382 3 666 2 828
1)
Nominalcurrencyvalueincludinginterest.
2)
Theinterestcostsarecalculatedusingthelastxingrateknownbyyearend(plusapplicablemargin).
3)
Financialguaranteesarenotrecognizedontheconsolidatedbalancesheet.Theundiscountedcashowspotentiallypayableundernancialguaranteesareclassiedonthe
basisofexpirydate.
71Annual Report 2021 | Financials and Notes | Akastor Group
Note 31 | Financial instruments
Accounting classications and fair values
The following table shows the carrying amounts and fair values of nancial
assets and nancial liabilities, including their levels in the fair value
hierarchy. It does not include fair value information for nancial assets and
nancial liabilities not measured at fair value if the carrying amount is a
reasonable approximation of fair value. For nancial instruments measured
at fair value, the levels in the fair value hierarchy are as shown below.
Level 1 - fair values are based on prices quoted in an active market for
identical assets or liabilities.
Level 2 - fair values are based on price inputs other than quoted prices
derived from observable market transactions in an active market for
identical assets or liabilities. Level 2 includes currency derivatives, typically
when the group uses forward prices on foreign exchange rates as inputs to
valuation models.
Level 3 - Fair values are based on unobservable inputs, mainly based on
internal assumptions used in the absence of quoted prices from an active
market or other observable price inputs.
AmountsinNOKmillion Note
Carrying
amount
Financial
instruments
measured at
fair value
Level in
fair value
hierarchy
2021
Financial assets measured at fair value
Fairvalue–hedginginstruments
Derivative nancial instruments 10 10 Level 2
FairvaluethroughP&L(mandatorilyatFVTPL)
Equity securities 19 10 10 Level 1
Equity securities
1)
19 1 125 1 125 Level 3
Warrants 19 18 18 Level 3
Contingent considerations 18 20 20 Level 3
FairvaluethroughOthercomprehensiveincome
Debt instruments
1)
19 619 619 Level 3
Financial assets not measured at fair value
Financialassetsatamortizedcost
Cash and cash equivalents 22 89
Non-current interest-bearing receivables 20 315
Trade and other receivables 21 808
Financial assets 3 013
Financial liabilities not measured at fair value
Financialliabilitiesatamortizedcost
Borrowings
2)
24 (1 387) (1402) Level 2
Othernancialliabilities
Other non-current liabilities 25 (201)
Other current liabilities 25 (148)
Trade and other payables 28 (476)
Financial liabilities measured at fair value
Fairvaluethroughprot&loss
Deferred settlement obligations 25,28 (459) (459) Level 3
Financial liabilities (2 671)
72 Annual Report 2021 | Financials and Notes | Akastor Group
AmountsinNOKmillion Note
Carrying
amount
Financial
instruments
measured at
fair value
Level in
fair value
hierarchy
2020
Financial assets measured at fair value
Fairvalue–hedginginstruments
Derivative nancial instruments 61 61 Level 2
FairvaluethroughP&L(mandatorilyatFVTPL)
Equity securities 19 14 14 Level 1
Equity securities
1)
19 906 906 Level 3
Warrants 19 16 16 Level 3
Contingent considerations 18 26 26 Level 3
FairvaluethroughOthercomprehensiveincome
Debt instruments
1)
19 533 533 Level 3
Financial assets not measured at fair value
Financialassetsatamortizedcost
Cash and cash equivalents 22 275
Non-current interest-bearing receivables 20 115
Trade and other receivables 21 1 120
Financial assets 3 063
Financial liabilities not measured at fair value
Financialliabilitiesatamortizedcost
Borrowings
2)
24 (1 746) (1 753) Level 2
Othernancialliabilities
Other non-current liabilities 25 (210)
Trade and other payables 28 (1 537)
Financial liabilities measured at fair value
Fairvalue–hedginginstruments
Derivative nancial instruments (37) (37) Level 2
Fairvaluethroughprot&loss
Deferred settlement obligations 25, 28 (274) (274) Level 3
Financial liabilities (3 804)
1)
Investmentsinlevel3inthehierarchyrelatetoequitysecuritiesanddebtsecuritieswithnoactivemarket.Theseinvestmentsaremeasuredatthebestestimateoffairvalue.
2)
Forcreditfacilitiesandotherloanswithoatinginterest,notionalamountsareusedasapproximationoffairvalues.
73Annual Report 2021 | Financials and Notes | Akastor Group
Reconciliation of Level 3 nancial assets and nancial liabilities
AmountsinNOKmillion Assets Liabilities
Balance as of December 31, 2019 1 665 (271)
Settlements (39) 77
Net gain (loss) in the income statement (96) (78)
Fair value through OCI (42) -
Currency translation difference (8) -
Balance as of December 31, 2020 1 480 (274)
Additions 189 (220)
Settlements (37) 27
Net gain (loss) in the income statement 196 4
Fair value through OCI (20) -
Disposal of subsidiaries (26) 3
Balance as of December 31, 2021 1 782 (459)
Measurement of fair values at level 3
DebtinstrumentsatFVOCI
Financial assets measured at FVOCI are related to debt instruments
in NES Fircroft. The valuation model considers the present value of the
expected cash ows from the ultimate disposal of the investments weighted
with different probabilities. The expected disposal value is determined by
forecast EBITDA at the time of disposal and market multiples, adjusted by
forecast net debt of the investee. The estimated fair value would increase
(decrease) if:
The forecast EBITDA were higher (lower);
The market multiples applied were higher (lower); or
The net debt of the investees at the date of disposal were lower
(higher).
FinancialassetsatFVTPL
Financial assets measured using Level 3 inputs relate mainly to preferred
equity and warrant investment in Odfjell Drilling.
Preferred equity: The valuation model considers the present value
of the expected future payments, discounted using a risk-adjusted
discount rate of 10%. The estimated fair value would increase
(decrease) if the risk-adjusted discount rate were lower (higher).
Warrants: The valuation is obtained from external valuation
experts, using a Monte Carlo simulation model where the simulated
stock prices are based on a lognormal stock price model assumed
to follow a Geometric Brownian Motion. The key inputs to the
valuation model consist of the stock price of Odfjell Drilling (listed
on the Oslo Stock Exchange under ticker ODL) at the valuation
date, as well as assumption of future volatility based on the share’s
historical prices. The estimated fair value is mostly sensitive to the
ODL share price and would increase (decrease) if the ODL share
price were higher (lower).
Contingentconsiderationsanddeferredsettlementobligations
These assets and liabilities relate to contingent considerations and
obligations from business acquisitions and disposals. Final amounts
to be paid or received depend on future earnings in the acquired and
disposed companies or outcome of indemnity claims and price adjustment
mechanisms.
Assets and liabilities depending on future earnings: The recognized
amounts are determined based on recent forecasts and strategy
gures for these entities, thus the nal realized values are sensitive
to the above inputs as driven by market conditions.
Assets and liabilities depending of outcome of indemnity claims
and price adjustment mechanisms: Provisions are made based on
all available evidence as at the reporting date.
The credit exposure on the Level 3 asset is limited to the amount recognized
and the credit risk is not considered to be signicant due to the nature of
the arrangement.
74 Annual Report 2021 | Financials and Notes | Akastor Group
Note 32 | Leases
Group as lessee
The group has property leases on a number of locations. The leases typically
run for a period of 3-10 years and some of the leases have extension
options. The group has also lease agreements related to IT equipment and
ofce equipment. These leases have an average lease period of 2-3 years,
generally with no renewal options included.
The group applies the short-term lease recognition exemptions for leases
of property or machinery with lease term of 12 months or less. Leases of
IT equipment and ofce equipment are considered as leases of low-value
assets. The right-of-use assets and lease liabilities are not recognized for
short-term leases or leases of low-value assets.
The lease agreements do not impose any covenants or restrictions.
Right-of-useassets
AmountsinNOKmillion Note 2021 2020
Balance as of January 1 468 537
Additions 9 43
Depreciation
1)
(43) (113)
Impairment - (4)
Disposal of subsidiaries 6 (416) -
Remeasurement 25 (1)
Currency translation differences (2) 5
Balance as of December 31 41 468
1)
IncludesdepreciationrelatedtodiscontinuedoperationsofNOK11millionin2021(NOK77millionin2020)
The right-of-use assets are related to leases of properties.
Leaseliabilities
AmountsinNOKmillion Note 2021 2020
Balance as of January 1 592 677
Cash payments (112) (139)
Additions 9 43
Remeasurement 64 6
Disposal of subsidiaries 6 (397) -
Currency translation differences (1) 5
Balance as of December 31 30 155 592
Current lease liabilities 82 159
Non-current lease liabilities 72 433
Leasepaymentsrecognizedintheincomestatement
AmountsinNOKmillion 2021
2020
restated
Expenses related to leases of low-value items 2 1
Total 2 1
Leasepaymentsrecognizedinstatementofcashow
AmountsinNOKmillion 2021 2020
Total cash outow for leases (99) (279)
75Annual Report 2021 | Financials and Notes | Akastor Group
Some property leases contain extension or termination options exercisable
before the end of the non-cancellable period. They are used to maximize
operational exibility in terms of managing the assets used in the group’s
operations. The extension and termination options held are exercisable
only by the group and not by the respective lessor. The group assesses at
lease commencement date whether it is reasonably certain to exercise the
extension or termination options.
Most extension options in ofces leases have not been included in the
lease liability, because the group expects to be able to replace the assets
without signicant cost or business disruption. Most of the early termination
options are not considered in the lease term either as the group assesses
it as reasonably certain that the leases will not be terminated early. If the
group had exercised the extension options in signicant property leases as
of December 31, 2021, the group estimates potential future lease payments
(undiscounted) of approximately NOK 35 million, which are not included in
the lease liabilities.
Group as lessor
The group subleases out some of the property leases which are presented
as part of the right-of-use assets. DDW Offshore leases out some of its
vessels.
Financeleases
Some of the subleases of right-of-use assets are classied as nance
lease, with reference to the right-of-use assets arising from the head leases.
During 2021, DDW Offshore entered into bareboat charter agreements and
forward sale of two vessels, which are classied as nance lease. The
group recognized a gain of NOK 51 million from the transaction as “gain
from disposal of assets”, see Note 8 Revenue and other income.
The following table sets out a maturity analysis of nance lease receivables,
showing the undiscounted lease payments to be received after the reporting
date.
AmountsinNOKmillion 2021 2020
Due within one year 64 7
Due in one to two years 189 7
Due in two to three years 18 7
Due in three to four years - 5
Total undiscounted lease receivable 271 25
Unearned interest income 31 2
Total nance lease receivables 241 23
Current nance lease receivables 64 7
Non-current nance lease receivables 176 15
Operatingleases
Most of the leases are classied as operating leases except for the nance
leases identied above. The lease income from subleasing right-of-use
assets in 2021 was NOK 28 million (NOK 24 million in 2020).
The following table sets out future undiscounted sublease income under the
non-cancellable lease periods.
AmountsinNOKmillion 2021 2020
Due within one year 23 49
Due in one to two years - 10
Due in two to three years - 3
Due in three to four years - 3
Due in four to ve years - 3
Due in more than ve years - 8
Total 23 75
76 Annual Report 2021 | Financials and Notes | Akastor Group
Note 33 | Group companies
This note gives an overview of subsidiaries of Akastor ASA. For information about other investments in the group, refer to Note 17 Equity-accounted
investees and Note 19 Other investments. If not stated otherwise, ownership equals share of voting rights.
Group companies as of December 31
Ownership (%)
Company Country 2021 2020
Akastor ASA Norway
AGR
1)
AGR (Australia) Pty Ltd Australia 64 64
AGR AS Norway 64 64
AGR Energy Services AS
2)
Norway 64 64
AGR Software AS Norway 58 58
AGR Consultancy Services AS Norway 64 64
AGR Mexico Well Management S. de R. L. de C. V Mexico 64 64
AGR Well Management Ltd
3)
UK - 64
AGR Consultancy Solutions Ltd UK 64 64
AGR Group Americas, Inc. USA 64 64
AGR Wind Service AS Norway 52 -
Other companies
Frontica Global Employment Ltd
4)
Cyprus - 100
Cool Sorption A/S Denmark 100 100
Well Systems Servicing Ltd Nigeria 100 100
AKA SPH AS Norway 100 100
DDW Offshore AS Norway 100 100
Akastor AS Norway 100 100
Mercury HoldCo AS
5)
Norway 100 -
Akastor Real Estate AS Norway 100 100
KOP Surface Products Singapore Pte Ltd Singapore 100 100
Aker Cool Sorption Siam Ltd Thailand 100 100
Frontica Business Solutions Ltd UK 100 100
AK Willfab Inc USA 100 100
Mercury HoldCo Inc
5)
USA 100 -
AKOFS Angola Limitada
4)
Angola - 100
77Annual Report 2021 | Financials and Notes | Akastor Group
Financials and Notes | Akastor Group
Disposed entities
MHWirth
6)
MHWirth Pty Ltd Australia - 100
MHWirth do Brasil Equipamentos Ltda Brazil - 100
MHWirth Canada Inc Canada - 100
MHWirth Offshore Petroleum Engineering (Shanghai) Co Ltd China - 100
MHWirth GmbH Germany - 100
MHWirth (India) Pvt Ltd India - 100
MHWirth AS Norway - 100
Frontica Engineering AS Norway - 100
MHWirth Singapore Engineering Management Pte Ltd Singapore - 100
MHWirth (Singapore) Pte Ltd Singapore - 100
MHWirth UK Ltd UK - 100
MHWirth FZE UAE - 100
MHWirth Inc USA - 100
Bronco Manufacturing LLC USA - 100
Step Oiltools (Australia) Pty Ltd Australia - 100
Step Oiltools GmbH Germany - 100
PT Step Oiltools Indonesia - 100
Step Oiltools LLP Kazakhstan - 100
Step Oiltools (M) Sdn Bhd Malaysia - 100
Step Oiltools BV Netherlands - 100
Step Oiltools AS Norway - 100
Step Oiltools Services LLC Oman - 67
Step Oiltools LLC Russia - 100
Step Oiltools Pte Ltd Singapore - 100
Step Oiltools (Thailand) Ltd Thailand - 100
Step Oiltools (UK) Ltd UK - 100
Step Oiltools FZE UAE - 100
1)
Akastorholds100percentofthesharesand64percentoftheeconomicinterests
2)
PreviouslyAGRPetroleumServiceAS
3)
Disposedin2021
4)
Liquidatedin2021
5)
Establishedin2021
6)
MHWirthentitiesweremergedintothejointventureHMHanddeconsolidatedin2021.StepOiltoolsentitiesareincludedinthetransactionscopeandthusformpartofthe
MHWirthbusinesscontributedfromAkastortothenewjointventureHMH.However,thelegalownershipinsharesinStepOiltoolsremainswithAkastorasofDecember31,
2021pendingcertainregulatoryapprovals.ThelegalownershipinStepOiltoolsdoesnotconstitutecontrolsinceAkastorhasenteredintoabindingagreementwithHMHon
thetransferofStepOiltoolsandAkastorisnotexposedtovariablereturnsfromtheownershipfromthetimeofagreementbeingenteredinto.
78 Annual Report 2021 | Financials and Notes | Akastor Group
Financials and Notes | Akastor Group
Note 34 | Related parties
Related party relationships are those involving control (either direct or
indirect), joint control or signicant inuence. Related parties are in a
position to enter into transactions with the company that would not be
undertaken between unrelated parties. All transactions with related parties
to Akastor have been based on arm’s length terms.
Akastor ASA is a parent company with control of around 20 companies
around the world. These subsidiaries are listed in Note 33 Group companies.
Any transactions between the parent company and the subsidiaries
are shown line by line in the separate nancial statements of the parent
company, and are eliminated in the consolidated nancial statements.
Joint ventures and associates are accounted for using the equity method,
see Note 17 Equity-accounted investees.
The largest shareholder of Akastor, Aker Holding AS, is wholly-owned by
Aker ASA, which in turn is controlled by Kjell Inge Røkke through TRG
Holding AS and The Resource Group TRG AS. In December 2020, the
previous common ownership in Aker Holding AS between Aker ASA and the
Norwegian government was dissolved. As a consequence of the dissolution,
Akastor is an associate to Aker ASA as per year end 2021.
Below are descriptions of signicant related party agreements.
Signicant agreements with related parties to Aker ASA
AkerHoldingAS
In connection with the renancing of its corporate credit facilities, Akastor
entered into a subordinated loan agreement with Aker Holding AS, a wholly
owned subsidiary to Aker ASA. The agreement provides credit facility of
NOK 250 million (NIBOR 0.95 percent + margin 10.0 percent) available to
Akastor with maturity in March 2023. The carrying amount of the loan from
Aker Holding AS was NOK 3 million as of December 31, 2021, see Note 24
Borrowings for more information.
TheResourceGroupTRGAS
AK Wilfab Inc, a wholly owned subsidiary of Akastor, is together with Aker
Solutions Inc and The Resource Group TRG AS sponsoring the US pension
plan named the Kvaerner Consolidated Retirement Plan. Akastor holds one
third of the liability of the sponsors for the underfunded element of the plan
and The Resource Group TRG AS holds two thirds of the ultimate liability.
Aker ASA guarantees for The Resource Group TRG AS’ liability and covers
for all its expenses related to the pension plan.
FornebuportenNæring3AS
Akastor leases its headquarter ofces at Fornebu from Fornebuporten
Næring 3 AS, an associated company of The Resource Group TRG AS.
The contract term is 10 years starting August 31, 2015, with two additional
ve-year options.
Related party transactions with joint ventures
AKOFSOffshore
As of December 31, 2021, Akastor has interest-bearing receivables of
NOK 113 million against AKOFS Offshore, including term loan of NOK
86 million (LIBOR 0.13 percent + margin 5.5 percent) and drawn working
capital facility of NOK 28 million (NIBOR 0.78 percent + margin 5.5 percent).
Akastor has made available a NOK 100 million working capital revolving
facility to AKOFS Seafarer AS from contract commencement with Equinor.
As part of the joint venture shareholders agreement, the other two investors,
Mitsui and MOL, are entitled to a guaranteed preferred equity return, in
respect of the operations of AKOFS Seafarer, amounting to a total of USD
46 million over a 6 year’s period. The payment of preferred return will be
settled rstly by ordinary dividend from AKOFS Offshore, with any shortfall
being guaranteed by Akastor. Akastor ASA has issued a bank guarantee for
payment of preferred return for a total amount of NOK 185 million.
Akastor has issued a nancial guarantee of NOK 132 million in favour of
nance institutions for fullment of lease obligations related to Avium Subsea
AS. Akastor has issued a nancial parent company indemnity guarantee of
NOK 1.4 billion in favour of OCY Wayfarer Limited for fullment of lease
obligations related to AKOFS 3 AS. In addition, Akastor is guaranteeing the
performance of AKOFS Norway Operations AS (operating AKOFS Seafarer)
under the 5 years charter agreement with Equinor. The total contract value
of this charter agreement is NOK 2.3 billion. Avium Subsea AS, AKOFS
3 AS and AKOFS Seafarer AS are wholly owned subsidiaries of AKOFS
Offshore.
HMH
In October 2021, Akastor completed the transaction to bring together
Akastor’s wholly owned subsidiary, MHWirth AS (MHWirth) and Baker
Hughes’ Subsea Drilling Systems (SDS) business to create a joint venture
company HMH. Following the transaction, Akastor and Baker Hughes each
holds 50% and 50% of the shares in HMH, and have joint control over
the company. See Note 5 Discontinued operations and Note 17 Equity-
accounted investees for more information.
As of December 31, 2021, Akastor has interest-bearing receivables of NOK
180 million against HMH (xed interest rate 8.0 percent), see also Note
20 Non-current interest-bearing receivables. Further, Akastor has a seller’s
credit liability of NOK 148 million towards HMH related to Step Oiltools,
see also Note 25 Other liabilities for more information. Akastor has issued
nancial guarantees of NOK 602 million for MHWirth AS, a wholly owned
subsidiary of HMH, for fullment of lease obligations and performance
under certain operational support frame agreements.
Other related parties
AkerPensjonskasse
Aker Pensjonskasse was established by Aker ASA to manage the retirement
plan for employees and retirees in Akastor as well as related Aker companies.
Akastor holds 93.4 percent of the paid-in capital in Aker Pensjonskasse and
Akastor’s share of paid-in equity was NOK 158 million at the end of 2021
(NOK 158 million in 2020). Akastor’s premium paid to Aker Pensjonskasse
amounts to NOK 8 million in 2021 (NOK 7 million in 2020). Akastor also
has an interest-bearing receivable against Aker Pensjonskasse of NOK 22
79Annual Report 2021 | Financials and Notes | Akastor Group
Financials and Notes | Akastor Group
million and an additional nancing commitment NOK 10 million (3% interest
of drawn amount and 1% interest of committed amount).
Even though Akastor owns 93.4 percent in Aker Pensjonskasse, the
ownership does not constitute control since Akastor does not have the
power to govern the nancial and operating policies so as to obtain benets
from the activities in this entity.
Grantstoemployeerepresentative’scollectivefund
Aker ASA has signed an agreement with employee representatives that
regulate use of grants from Akastor ASA for activities related to professional
development. The grant in 2021 was NOK 510 000 (NOK 510 000 in 2020)
.
Compensation to key management
The key management personnel of Akastor includes the Board of Directors and the executive management team. Detailed remuneration disclosures are
provided in the remuneration report 2021. The gures below represent remuneration expenses recognized in the year.
Amounts in NOK million 2021 2020
Base salary 7 7
Variable pay and other benets 15 3
Post-employment benets (pension expenses to company) - -
Remuneration to Board of Directors 3 3
Total 26 14
80 Annual Report 2021 | Financials and Notes | Akastor ASA
Financials and Notes | Akastor ASA
04.b. FINANCIALS AND NOTES
AKASTOR ASA
Akastor ASA | Income statement For the year ended December 31 81
Akastor ASA | Statement of nancial position For the year ended December 31 82
Akastor ASA | Statement of cash ow For the year ended December 31 83
Note 1 | Accounting principles 84
Note 2 | Operating revenue and expenses 85
Note 3 | Net nancial items 85
Note 4 | Tax 86
Note 5 | Investments in group companies 86
Note 6 | Shareholders’ equity 87
Note 7 | Receivables and borrowings from group companies and related parties 87
Note 8 | Borrowings 88
Note 9 | Guarantees 89
Note 10 | Financial risk management 90
Note 11 | Related parties 90
Note 12 | Shareholders 91
81Annual Report 2021 | Financials and Notes | Akastor ASA
Akastor ASA | Income statement
For the year ended December 31
AmountsinNOKmillion Note 2021 2020
Operating revenue 2 2 1
Operating expenses 2 (53) (36)
Operating prot (loss) (51) (35)
Net nancial items 3 (613) 780
Prot (loss) before tax (664) 745
Income tax benet (expense) 4 - (21)
Prot (loss) for the period (664) 724
Prot(loss)fortheperioddistributedasfollows
Other equity (664) 724
Prot (loss) for the period (664) 724
82 Annual Report 2021 | Financials and Notes | Akastor ASA
Akastor ASA | Statement of nancial position
For the year ended December 31
AmountsinNOKmillion Note 2021 2020
Assets
Investments in group companies 5 4 515 5 650
Non-current interest-bearing receivables on group companies 7 500 891
Other non-current interest-bearing receivables 2 4
Total non-current assets 5 018 6 545
Current interest-bearing receivables on group companies 7 173 2
Other receivables on group companies 7 1 1
Other receivables 3 -
Cash in cash pool system 7 - -
Total current assets 177 3
Total assets 5 195 6 549
Equity and liabilities
Issued capital 162 162
Treasury shares (1) (1)
Share premium 2 000 2 000
Other paid in capital 2 003 2 003
Other equity 229 894
Total equity 6 4 393 5 057
Non-current borrowings, external 8 719 -
Total non-current liabilities 719 -
Current borrowings, external 8 16 1 119
Current borrowings from group companies 7 - 324
Other liabilities to group companies 7 52 36
Other current liabilities 15 13
Total current liabilities 83 1 491
Total liabilities 802 1 491
Total equity and liabilities 5 195 6 549
Fornebu, March 25, 2022 I Board of Directors of Akastor ASA
Asle Christian Halvorsen | Director
Stian Sjølund | Director Karl Erik Kjelstad | CEO
Henning Jensen | Director Kathryn M. Baker | Director Luis Araujo | Director
Svein Oskar Stoknes | DirectorKristian Røkke | Chairman Lone Fønss Schrøder | Deputy Chairman
83Annual Report 2021 | Financials and Notes | Akastor ASA
Akastor ASA | Statement of cash ow
For the year ended December 31
AmountsinNOKmillion Note 2021 2020
Prot (loss) before tax (664) 745
Adjustments:
Group contribution and dividend 3 (7 000) (750)
Non-cash impairment 7 593 -
Net interest cost and unrealized currency (income) loss 46 5
Prot (loss), net of adjustments (25) (1)
Changes in net operating assets 18 (6)
Net interest paid (38) (43)
Net cash from operating activities (45) (49)
Net cash from investing activities - -
Proceeds from borrowings 1 067 227
Repayment of borrowings (1 483) (316)
Changes in borrowings from group companies 844 -
Changes in borrowings to group companies (171) 430
Change in overdraft cash pool (225) (559)
Repayment of external dividends - 2
Net cash from nancing activities 32 (216)
Effect of exchange rate changes on cash and cash deposits 14 (51)
Net increase (decrease) in cash and bank deposits - (316)
Cash in cash pool system at the beginning of the period - 316
Cash in cash pool system at the end of the period
1)
7 - -
1)
UnusedcreditfacilitiesamountedtoNOK553millionasofDecember31,2021(NOK1.5billionin2020)
.
84 Annual Report 2021 | Financials and Notes | Akastor ASA
Note 1 | Accounting principles
Norwegian Accounting Act and Norwegian generally accepted accounting
principles (NGAAP).
Revenue recognition
Operating revenue mainly comprise parent company guarantees (PCG)
recharged to entities within the group. The revenue is recognized over the
guarantee period.
Investments in subsidiaries
Investments in subsidiaries are measured at cost in the parent company
accounts, less any impairment losses. The investments are impaired to
fair value if the impairment is not considered temporary. Impairment losses
are reversed if the basis for the impairment loss is no longer present.
Investments in subsidiaries and associates are reviewed for impairment
whenever events or changes in circumstances indicate that the carrying
amount may exceed the fair value of the investment.
Dividends, group contributions and other distributions from subsidiaries are
recognized as income the same year as they are recognized in the nancial
statement of the provider. If the dividends or group contributions exceed
withheld prots after the acquisition date, the excess amount represents
repayment of invested capital, and is recognized as a reduction of carrying
value of the investment.
Classication
Current assets and current liabilities include items due within one year or
items that are part of the operating cycle. Other balance sheet items are
classied as non-current assets/debts.
Non-current borrowings are presented as current if a loan covenant breach
exists at balance date. If a covenant waiver is approved subsequent to
year-end and before the approval of the nancial statements, the liability
is presented as non-current debt to the extent maturity date is beyond one
year.
Measurement of borrowings and receivables
Financial assets and liabilities consist of investments in other companies,
trade and other receivables, interest-bearing receivables, cash and cash
equivalents, trade and other payables and interest-bearing borrowing.
Trade receivables and other receivables are recognized in the balance
sheet at nominal value less provision for expected losses.
Interest-bearing borrowings are initially recorded at transaction value less
transaction costs. Subsequent to initial recognition, these borrowings
are measured at amortized cost with any difference between cost and
redemption value being recognized in the income statement over the period
of the borrowings on an effective interest basis.
Cash in cash pool system
Akastor ASA has a cash pool that includes the parent company’s cash as
well as net deposits from subsidiaries in the group cash pooling system
owned by the parent company. Correspondingly, Akastor ASA’s current
debt to group companies will include their net deposit in the group’s cash
pool system.
Share capital
Costs for purchase of own shares including transaction costs are accounted
for directly against equity. Sales of own shares are performed according
to stock-exchange quotations at the time of award and accounted for as
increase in equity.
Cash ow statement
The statement of cash ow is prepared according to the indirect method.
Cash and cash equivalents include cash, bank deposits and other short-
term liquid investments.
Functional currency and presentation currency
The parent company’s nancial statements are presented in NOK, which
is Akastor ASA’s functional currency. All nancial information presented in
NOK has been rounded to the nearest million (NOK million), except when
otherwise stated. The subtotals and totals in some of the tables in these
nancial statements may not equal the sum of the amounts shown due to
rounding.
Foreign currency
Transactions in foreign currencies are translated at the exchange rate
applicable at the date of the transaction. Monetary items in a foreign
currency are translated to NOK using the exchange rate applicable on the
balance sheet date. Foreign exchange differences arising on translation are
recognized in the income statement as they occur.
Tax
Tax income (expense) in the income statement comprises current tax,
withholding tax and changes in deferred tax. Deferred tax is calculated as
22 percent of temporary differences between accounting and tax values as
well as any tax losses carry-forward at the year end. Net deferred tax assets
are recognized only to the extent it is probable that they will be utilized
against future taxable prots.
85Annual Report 2021 | Financials and Notes | Akastor ASA
Note 2 | Operating revenue and expenses
Operating revenue comprises NOK 2 million in income from parent company
guarantees (NOK 1 million in 2020).
There are no employees in Akastor ASA and hence no salary or pension
related costs and also no loan or guarantees related to the executive
management team. Group management and corporate staff are employed
by other Akastor companies and costs for their services as well as other
parent company costs are recharged to Akastor ASA.
NOK 3.0 million has been allocated to payable fees to the Board of Directors
for 2021 (2020: NOK 3.0 million). Remuneration to and shareholding of the
Board of directors and CEO is described in the Remuneration Report.
Fees to the auditors
Fees to KPMG for statutory audit amounted to NOK 2.0 million exclusive
VAT (2020: NOK 2.5 million).
Note 3 | Net nancial items
AmountsinNOKmillion Note 2021 2020
Interest income from group companies 29 43
Interest income from related parties - 4
Interest income, external 31 37
Interest expense, external (82) (85)
Income on investment in subsidiary (group contribution) - 250
Other nancial income 1 -
Dividends from group companies 7 000 500
Impairment on receivables to group companies 7 (56) -
Impairment of shares (7 537) -
Other nancial expenses (3) (2)
Net foreign exchange gain (loss) 4 33
Net nancial items (613) 780
86 Annual Report 2021 | Financials and Notes | Akastor ASA
Note 4 | Tax
AmountsinNOKmillion 2021 2020
Calculationoftaxableincome
Prot (loss) before tax (664) 745
Dividend income from group companies (7 000) (500)
Impairment of shares and receivables to group companies 7 593 -
Changes in timing differences (7) 2
Group contribution without tax effect - (160)
Generated (utilized) tax loss 79 (88)
Taxable income - -
Taxable(deductible)temporarydifferences
Provisions (2) (9)
Interest deduction carry-forward (5) (5)
Tax loss carry-forward
1)
(79) -
Net temporary differences (86) (15)
Tax rate 22% 22%
Tax effects of temporary differences 19 3
Not recognized deferred tax assets
2)
(19) (3)
Deferred tax assets (liability) - -
Taxexpense
Origination and reversal of temporary differences in income statement 19 (18)
Write down of deferred tax assets (19) (3)
Income tax benet (expense) - (21)
1)
Inaddition,AkastorASAhasunrecognizedtaxlosscarryforwardsofNOK440millionasof2021whichiscurrentlybeingsubjecttoinquiriesfromNorwegianTaxAuthorities
2)
Deferredtaxassetsarenotrecognizedwhenthemanagementassessesthatitisnotprobablethatfuturetaxableprotwillbeavailable,againstwhichthedeductible
temporarydifferencecanbeutilized.
Note 5 | Investments in group companies
AmountsinNOKmillion
Registered
ofce
Share
capital
Number of
shares held
Percentage
owner- / vot-
ing share 2021 2020
Akastor AS Fornebu, Norway 1 004 1 100% 3 237 5 650
Mercury Holdco AS
1)
Fornebu, Norway - 1 000 100% 1 279 -
Total 4 515 5 650
1)
Thecompanywasestablishedin2021.
Akastor AS nancial information (unaudited)
AmountsinNOKmillion 2021
Prot (loss) for the period 435
Equity as of December 31 3 237
87Annual Report 2021 | Financials and Notes | Akastor ASA
Note 6 | Shareholders’ equity
AmountsinNOKmillion Share capital
Treasury
shares
Share
premium
Other paid in
capital
Retained
earnings Total
Equity as of January 1, 2020 162 (2) 2 000 2 003 168 4 331
Repayment of dividends - - - - 2 2
Prot (loss) for the period - - - - 724 724
Equity as of December 31, 2020 162 (1) 2 000 2 003 894 5 057
Prot (loss) for the period - - - - (664) (664)
Equity as of December 31, 2021 162 (1) 2 000 2 003 229 4 393
The share capital of Akastor ASA is divided into 274 000 000 shares with a
nominal value of NOK 0.592. The shares can be freely traded. See note 12
Shareholders for an overview of the company's largest shareholders.
The number of treasury shares held by the end of 2021 are 2 390 215
and are held for the purpose of being used for future awards under any
share purchase program for employees, as settlement in future corporate
acquisitions or for other purpose as decided by the board of directors.
Note 7 | Receivables and borrowings from group companies and related parties
AmountsinNOKmillion 2021 2020
Group companies (borrowings) deposits in the cash pool system (171) 324
Akastor ASA's net deposit (borrowings) in the cash pool system 171 (324)
Cash in cash pool system - -
Non-current interest-bearing receivables on group companies 500 819
Current interest-bearing receivables on group companies
1)
173 2
Current borrowings from group companies
2)
- (324)
Net interest-bearing receivables on group companies 673 569
Other receivables on group companies 1 -
Other liabilities to group companies (52) (36)
Total other receivables on group companies (52) (35)
1)
Includesgroupcompanies’borrowingsinthecashpoolsystem.
2)
IncludesAkastorASA’snetborrowingsinthecashpoolsystem.
Interest-bearing receivables on and borrowings from group
companies
Akastor ASA is the group’s central treasury function (Akastor Treasury)
and enters into borrowings and deposit agreements with group companies.
Deposits and borrowings are done at market terms and are dependent of
the group companies’ credit rating and the duration of the borrowings.
In 2021, an impairment of NOK 56 million was recognized related to interest-
bearing receivables on Step Oiltools BV prior to recapitalization of the entity.
Cash pool arrangement
Akastor ASA is the owner of the cash pool system arrangements with DNB.
The cash pool systems cover a majority of the group geographically and
assure good control and access to the group’s cash. Participation in the
cash pool is vested in the group’s policy and decided by each company’s
board of directors and conrmed by a statement of participation. The
participants in the cash pool system are jointly and severally liable and it
is therefore important that Akastor as a group is nancially viable and can
repay deposits and carry out transactions. Any debit balance on a sub
account can be set-off against any credit balance. Hence, a debit balance
represents a claim on Akastor ASA and a credit balance a borrowing from
Akastor ASA.
The cash pool system has a net overdraft of NOK 11 million as of December
31, 2021, which is included as external current borrowings, see also Note
8 Borrowings.
88 Annual Report 2021 | Financials and Notes | Akastor ASA
Note 8 | Borrowings
Amounts in million Currency
Nominal
currency
value
Carrying
amount
(NOK)
Interest
rate
Interest
mar-
gin
1)
Interest
coupon Maturity
3)
Interest terms
2021
Revolving credit facility
(USD 89 million) USD 83 721 0.48% 5.50% 5.98% Feb 2023 USD LIBOR + margin
Revolving credit facility
(NOK 250 million) NOK - - 0.37% 5.50% 5.87% Feb 2023 NIBOR + margin
Subordinated Aker facility
(NOK 250 million) NOK 3 3 0.95% 10.00% 10.95% Mar 2023 NIBOR + margin
Overdraft facility NOK - 11
Total borrowings 735
Current borrowings 16
Non-current borrowings 719
Total 735
2020
Revolving credit facility
(NOK 1 250 million) NOK 350 347 0.39% 3.25%
2)
3.64% Dec 2021 NIBOR+margin
Revolving credit facility
(USD 155 million) USD 90 772 0.15% 3.25%
2)
3.40% Dec 2021 USD LIBOR+margin
Total borrowings 1 119
Current borrowings 1 119
Total 1 119
1)
Commitmentfeeis40percentofthemargin(2020:35percent).
2)
Themarginapplicabletothefacilitywasdecidedbyapricegridbasedontheleverageratioandlevelofutilization.
3)
Thematuritydatereectsmaturitydateasdenedintheloanagreements.
All facilities are provided by a bank syndicate consisting of high-quality
Nordic and international banks and DNB is acting as the agent. The terms
and conditions include restrictions which are customary for these kinds of
facilities, including inter alia negative pledge provisions and restrictions on
acquisitions, disposals and mergers, dividend distribution and change of
control provisions.
In 2021, Akastor ASA carried out renancing of its credit facilities as a result
of MHWirth divestment. Under the new loan agreements, the nancial
covenants are a gearing ratio based on net debt/equity, an equity ratio
based on equity/total assets and a minimum liquidity amount.
The company’s gearing ratio shall not exceed 0.4 times (0.5 times
effective from 2022) and is calculated from the consolidated total
borrowings to the consolidated Equity.
Equity ratio shall not be lower than 32.5%, calculated from the
consolidated total equity to consolidated total assets
Minimum liquidity amount shall exceed NOK 250 million (NOK 150
million effective from 2022) on consolidated level.
The covenants are monitored on a regular basis by the Akastor Treasury
department to ensure compliance with the loan agreements which are
tested and reported on a quarterly basis. Akastor was in compliance with
its covenants as of December 31, 2021. In February 2022, Akastor entered
into certain amendments to the loan agreements, including adjustments of
the covenant levels for gearing ratio and minimum liquidity, which provided
additional headroom. On the basis of the covenant levels and its nancial
forecasts, management believes that the risk of covenant being breached is
low and that the group will continue as a going concern for the foreseeable
future. See more information in Note 29 Capital management in Akastor
Group consolidated nancial statements.
89Annual Report 2021 | Financials and Notes | Akastor ASA
Financial liabilities and the period in which they mature
AmountsinNOKmillion
Carrying
amount
Total
undiscounted
cash ow
1)
6 months
and less 6–12 months 1–2 years
2)
2021
Revolving credit facility (USD 89 million) 721 787 27 22 738
Subordinated Aker facility (NOK 250 million) 3 3 - - 3
Overdraft facility 11 11 11 - -
Total borrowings 735 800 37 22 740
2020
Revolving credit facility (NOK 1 250 million) 347 363 6 356 -
Revolving credit facility (USD 155 million) 772 798 13 785 -
Total borrowings 1 119 1 161 19 1 141 -
1)
Theinterestcostsarecalculatedusingthelastxingrateknownbyyearend(plusapplicablemargin).
2)
Repaymentoftheloaninthetableisaccordingtomaturitydateofthefacilityintheloanagreement.
Note 9 | Guarantees
Akastor has provided the following guarantees on behalf of wholly owned subsidiaries and related parties as of December 31 (all obligations are per date
of issue):
AmountsinNOKmillion 2021 2020
Parent Company Guarantees to group companies
1)
1 025 1 907
Parent Company Guarantees to related companies
2)
4 416 4 226
Counter guarantees for bank/surety bonds, group companies
3)
305 497
Counter guarantees for bank/surety bonds, related parties
3)
8 -
Total guarantee liabilities 5 754 6 630
Maturityofguaranteeliabilities:
6 months and less 104 113
6-12 months 4 5
1-2 years 497 18
2-5 years 3 315 3 666
5 years and more 1 835 2 828
1)
ParentCompanyGuaranteestosupportsubsidiariesincontractualobligationstowardsclients.
2)
ParentCompanyGuaranteestosupportrelatedpartiesincontractualobligationstowardsclients,mainlyAKOFS1AS,AKOFS3AS,AKOFSNorwayOperationsASand
MHWirthAS.
3)
BankguaranteesandsuretybondsareissuedonbehalfofAkastorsubsidiariesandrelatedparties,andcounterindemniedbyAkastorASA.
Although guarantees are nancial instruments, they are considered contingent obligations and the notional amounts are not included in the nancial
statements.
US pension plan
AK Wilfab Inc, a wholly owned subsidiary of Akastor, is together The Resource Group TRG AS and Akastor ASA sponsoring the US pension plan named
the Kvaerner Consolidated Retirement Plan. Akastor Group holds one third of the liability of the sponsors for the underfunded element of the plan and
The Resource Group TRG AS holds two thirds of the ultimate liability. Aker ASA guarantees for The Resource Group TRG AS’ liability and covers for all its
expenses related to the pension plan.
90 Annual Report 2021 | Financials and Notes | Akastor ASA
Note 10 | Financial risk management
Currency risk
The company’s exposure to currency risk is primarily against USD as the
company has external borrowings denominated in USD. As of 31 December
2021 or 2020, Akastor ASA had not entered into any forward exchange
contracts.
Interest rate risk
The company is exposed to changes in interest rates because of oating
interest rate on loan receivables and loan payables. The company does
not hedge transactions exposure in nancial markets and does not have
any xed interest rate loan receivables nor loan payables. The company is
therefore not exposed to fair value risk on its outstanding loan receivables
or loan payables. Interest bearing loan receivables and loan payables
expose the company to income statement and cash ow interest risk.
Interest-bearing borrowings to group companies reect the cost of external
borrowing, reducing the interest risk exposure for Akastor ASA.
Credit risk
Credit risk is the risk of nancial losses to the company if a customer or
counterparty fails to meet contractual obligations. Credit risk relates to
loans to subsidiaries and related parties, guarantees to subsidiaries and
related parties and deposits with external banks. External deposits are done
according to a list of approved banks and primarily with banks where the
company also have a borrowing relationship.
Loss provisions for interest-bearing receivables are made in situations of
negative equity if the company is not expected to be able to fulll its loan
obligations from future earnings. Impairment of NOK 56 million related to
receivables from group companies was recognized in 2021 ( nil in 2020).
See Note 7 Receivables and borrowings from group companies for more
information about receivables.
Liquidity risk
Liquidity risk relates to the risk that the company will not be able to meet
its debt and guarantee obligations and is managed through maintaining
sufcient cash and available credit facilities. Due to the dynamic nature of
the underlying businesses, Akastor Treasury maintains exibility in funding
by maintaining availability under committed credit lines. Development in
the group’s and thereby Akastor ASA’s available liquidity is continuously
monitored through monthly cash ow forecasts, annual budgets and long
term planning.
Note 11 | Related parties
Transactions and balances with subsidiaries and related parties are described in the following notes:
Transactions Note
Other services Note 2
Financial items Note 3
Investments Note 5
Cash pool, receivables and borrowings Note 7
Guarantees Note 9
All transactions with related parties are carried out at market terms and in accordance with the arm’s lengths principle.
91Annual Report 2021 | Financials and Notes | Akastor ASA
Note 12 | Shareholders
Shareholders with more than 1 percent shareholding as per December 31
Company
Number of
shares held Ownership
2021
Aker Holding AS 100 565 292 36.70%
Goldman Sachs & Co Nominee 39 245 843 14.32%
Morgan Stanley & Co. LLC Nominee 33 139 698 12.09%
Ministry of Trade, Industry and Fisheries, Norway 33 100 085 12.08%
Verdipapirfond Odin Norge 10 575 925 3.86%
F2 Funds AS 3 239 187 1.18%
Company
Number of
shares held Ownership
2020
Aker Holding AS (previously “Aker Kværner Holding AS”) 100 565 292 36.70%
Morgan Stanley & Co. LLC Nominee 34 666 034 12.65%
Ministry of Trade, Industry and Fisheries, Norway 33 100 085 12.08%
Goldman Sachs & Co Nominee 26 159 547 9.55%
Euroclear Bank S.A./N.V. Nominee 13 198 538 4.82%
ODIN Norge 10 575 925 3.86%
92 Annual Report 2021 | Auditor's Report
Auditor's Report
KPMG AS
Sørkedalsveien 6
Postboks 7000 Majorstuen
0306 Oslo
Telephone
+47 45 40 40 63
Fax
Internet
www.kpmg.no
Enterprise
935 174 627 MVA
To the General Meeting of Akastor ASA
Independent Auditor’s Report
Report on the Audit of the Financial Statements
Opinion
We have audited the financial statements of Akastor ASA, which comprise:
• The financial statements of the parent company Akastor ASA (the Company), which comprise
the balance sheet as at 31 December 2021, the income statement and cash flow statement for
the year then ended, and notes to the financial statements, including a summary of significant
accounting policies, and
• The consolidated financial statements of Akastor ASA and its subsidiaries (the Group), which
comprise the balance sheet as at 31 December 2021, the income statement, statement of
comprehensive income, statement of changes in equity and statement of cash flows for the
year then ended, and notes to the financial statements, including a summary of significant
accounting policies.
In our opinion:
• the financial statements comply with applicable statutory requirements,
• the financial statements give a true and fair view of the financial position of the Company as at
31 December 2021, and its financial performance and its cash flows for the year then ended in
accordance with the Norwegian Accounting Act and accounting standards and practices
generally accepted in Norway, and
• the financial statements give a true and fair view of the financial position of the Group as at 31
December 2021, and its financial performance and its cash flows for the year then ended in
accordance with International Financial Reporting Standards as adopted by the EU.
Our opinion is consistent with our additional report to the Audit Committee.
Basis for Opinion
We conducted our audit in accordance with International Standards on Auditing (ISAs). Our
responsibilities under those standards are further described in the Auditor’s Responsibilities for the
Audit of the Financial Statements section of our report. We are independent of the Company and the
Group as required by laws and regulations and the International Ethics Standards Board for
Accountants’ International Code of Ethics for Professional Accountants (including International
Independence Standards) (IESBA Code), and we have fulfilled our other ethical responsibilities in
accordance with these requirements. We believe that the audit evidence we have obtained is sufficient
and appropriate to provide a basis for our opinion.
To the best of our knowledge and belief, no prohibited non-audit services referred to in the Audit
Regulation (537/2014) Article 5.1 have been provided.
We have been the auditor of the Company for 18years from the election by the general meeting of the
shareholders on 10.02.2004 for the accounting year 2004.
Key Audit Matters
05. AUDITOR'S REPORT
93Annual Report 2021 | Auditor's Report
Independent Auditor's Report - Akastor ASA
2
Key audit matters are those matters that, in our professional judgment, were of most significance in
our audit of the financial statements of the current period. These matters were addressed in the
context of our audit of the financial statements as a whole, and in forming our opinion thereon, and we
do not provide a separate opinion on these matters.
1. MHWirth divestment and transaction effects
Reference is made to Note 5 Discontinued operations, Note 6 Disposal of subsidiaries, Business
combinations, Note 17 Equity-accounted investees and the Board of Directors report paragraph
Highlights 2021.
The Key Audit Matter
How the matter was addressed in our audit
The MHWirth divestment, ie. the merger of
MHWirth and Baker Hughes’ Subsea Drilling
Systems business, was a significant transaction
for the group in 2021.
As from closing of the transaction, MHWirth was
deconsolidated and a gain upon divestment was
recognized. The group’s 50 percent ownership
in the new joint venture (“HMH”) was initially
recognized at fair value and accounted for using
the equity method.
The transaction has several accounting
implications, including the calculation of the gain
resulting from the divestment. The accounting
matter involves estimates and significant
judgement applied by management, for instance
in assessing the fair value of the consideration.
Given the amounts involved, the accounting for
the transaction is of significance to the financial
statements.
The divestment resulted in a gain of NOK 1 240
million and is considered to be a risk area due to
the judgement and estimation applied by
management, the size of the transaction and the
significant accounting effects to the financial
statements.
As such, the matter also required significant
attention during the audit and was subject to
auditor judgement.
In our audit, we addressed the matter through:
• Reading the transaction agreement and
related documentation to gain an
understanding of and evaluate the
accounting consequences;
• Critically assessing the gain calculation and
the assumptions made by management;
• Agreeing the book value of the disposed
amount to the underlying accounting records
as of the date of the disposal;
• Performing a closing audit for the financial
year up to the closing date of the
transaction;
• Obtaining the enterprise valuation report
issued by the external valuation expert
engaged by management to assist with the
valuation of the joint venture;
• Involving our valuation specialists in the
assessment of the valuation of the joint
venture;
• Assessing the appropriateness of the fair
value of the consideration received in
connection with the divestment;
• Considering additional elements in the
calculation of the gain, including closing
adjustments and cumulative exchange
translation differences;
• Evaluating the appropriateness of the
classification and accounting treatment of
the group’s investment in HMH;
• Evaluating the adequacy of the disclosure of
discontinued operations (Note 5), the
divestment (Note 6) and the disclosure of
the investee (Note 17) in the group’s
financial statements
Other Information
The Board of Directors and the Managing Director (management) are responsible for the information
in the Board of Directors’ report and the other information accompanying the financial statements. The
other information comprises information in the annual report, but does not include the financial
statements and our auditor’s report thereon. Our opinion on the financial statements does not cover
94 Annual Report 2021 | Auditor's Report
Independent Auditor's Report - Akastor ASA
3
the information in the Board of Directors’ report nor the other information accompanying the financial
statements.
In connection with our audit of the financial statements, our responsibility is to read the Board of
Directors’ report and the other information accompanying the financial statements. The purpose is to
consider if there is material inconsistency between the Board of Directors’ report and the other
information accompanying the financial statements and the financial statements or our knowledge
obtained in the audit, or whether the Board of Directors’ report and the other accompanying
information otherwise appears to be materially misstated. We are required to report if there is a
material misstatement in the Board of Directors’ report or the other information accompanying the
financial statements. We have nothing to report in this regard.
Based on our knowledge obtained in the audit, it is our opinion that the Board of Directors’ report
• is consistent with the financial statements and
• contains the information required by applicable legal requirements.
Our opinion on the Board of Director’s report applies correspondingly to the statements on Corporate
Governance and Corporate Social Responsibility.
Responsibilities of Management for the Financial Statements
Management is responsible for the preparation of financial statements that give a true and fair view in
accordance with the Norwegian Accounting Act and accounting standards and practices generally
accepted in Norway, and for the preparation and true and fair view of the consolidated financial
statements of the Group in accordance with International Financial Reporting Standards as adopted
by the EU, and for such internal control as management determines is necessary to enable the
preparation of financial statements that are free from material misstatement, whether due to fraud or
error.
In preparing the financial statements, management is responsible for assessing the Company’s and
the Group’s ability to continue as a going concern, disclosing, as applicable, matters related to going
concern. The financial statements of the Company use the going concern basis of accounting insofar
as it is not likely that the enterprise will cease operations. The consolidated financial statements of the
Group use the going concern basis of accounting unless management either intends to liquidate the
Group or to cease operations, or has no realistic alternative but to do so.
Auditor’s Responsibilities for the Audit of the Financial Statements
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole
are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that
includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that
an audit conducted in accordance with ISAs will always detect a material misstatement when it exists.
Misstatements can arise from fraud or error and are considered material if, individually or in aggregate,
they could reasonably be expected to influence the economic decisions of users taken on the basis of
these financial statements.
As part of an audit in accordance with ISAs, we exercise professional judgment and maintain
professional scepticism throughout the audit. We also:
• identify and assess the risks of material misstatement of the financial statements, whether due
to fraud or error. We design and perform audit procedures responsive to those risks, and
obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The
risk of not detecting a material misstatement resulting from fraud is higher than for one
resulting from error, as fraud may involve collusion, forgery, intentional omissions,
misrepresentations, or the override of internal control.
• obtain an understanding of internal control relevant to the audit in order to design audit
procedures that are appropriate in the circumstances, but not for the purpose of expressing an
opinion on the effectiveness of the Company's or the Group's internal control.
95Annual Report 2021 | Auditor's Report
Independent Auditor's Report - Akastor ASA
4
• evaluate the appropriateness of accounting policies used and the reasonableness of
accounting estimates and related disclosures made by management.
• conclude on the appropriateness of management’s use of the going concern basis of
accounting, and, based on the audit evidence obtained, whether a material uncertainty exists
related to events or conditions that may cast significant doubt on the Company and the
Group's ability to continue as a going concern. If we conclude that a material uncertainty
exists, we are required to draw attention in our auditor’s report to the related disclosures in the
financial statements or, if such disclosures are inadequate, to modify our opinion. Our
conclusions are based on the audit evidence obtained up to the date of our auditor’s report.
However, future events or conditions may cause the Company and the Group to cease to
continue as a going concern.
• evaluate the overall presentation, structure and content of the financial statements, including
the disclosures, and whether the financial statements represent the underlying transactions
and events in a manner that achieves a true and fair view.
• obtain sufficient appropriate audit evidence regarding the financial information of the entities or
business activities within the Group to express an opinion on the consolidated financial
statements. We are responsible for the direction, supervision and performance of the group
audit. We remain solely responsible for our audit opinion.
We communicate with the Board of Directors regarding, among other matters, the planned scope and
timing of the audit and significant audit findings, including any significant deficiencies in internal control
that we identify during our audit.
We also provide the Audit Committee with a statement that we have complied with relevant ethical
requirements regarding independence, and to communicate with them all relationships and other
matters that may reasonably be thought to bear on our independence, and where applicable, related
safeguards.
From the matters communicated with the Board of Directors, we determine those matters that were of
most significance in the audit of the financial statements of the current period and are therefore the
key audit matters. We describe these matters in our auditor’s report unless law or regulation precludes
public disclosure about the matter or when, in extremely rare circumstances, we determine that a
matter should not be communicated in our report because the adverse consequences of doing so
would reasonably be expected to outweigh the public interest benefits of such communication.
Report on Other Legal and Regulatory Requirements
Report on compliance with Regulation on European Single Electronic Format (ESEF)
Opinion
We have performed an assurance engagement to obtain reasonable assurance that the financial
statements with file name 5967007LIEEXZXIX5468-2021-12-31-en have been prepared in
accordance with Section 5-5 of the Norwegian Securities Trading Act (Verdipapirhandelloven) and the
accompanying Regulation on European Single Electronic Format (ESEF).
In our opinion, the financial statements have been prepared, in all material respects, in accordance
with the requirements of ESEF.
Management’s Responsibilities
Management is responsible for preparing, tagging and publishing the financial statements in the single
electronic reporting format required in ESEF. This responsibility comprises an adequate process and
the internal control procedures which management determines is necessary for the preparation,
tagging and publication of the financial statements.
Auditor’s Responsibilities
Our responsibility is to express an opinion on whether the financial statements have been prepared in
accordance with ESEF. We conducted our work in accordance with the International Standard for
Assurance Engagements (ISAE) 3000 – “Assurance engagements other than audits or reviews of
96 Annual Report 2021 | Auditor's Report
Independent Auditor's Report - Akastor ASA
5
historical financial information”. The standard requires us to plan and perform procedures to obtain
reasonable assurance that the financial statements have been prepared in accordance with the
European Single Electronic Format.
As part of our work, we performed procedures to obtain an understanding of the company’s processes
for preparing its financial statements in the European Single Electronic Format. We evaluated the
completeness and accuracy of the iXBRL tagging and assessed management’s use of judgement. Our
work comprised reconciliation of the financial statements tagged under the European Single Electronic
Format with the audited financial statements in human-readable format. We believe that the evidence
we have obtained is sufficient and appropriate to provide a basis for our opinion.
Oslo, 25 March 2022
KPMG AS
Vegard Tangerud
State Authorised Public Accountant
97Annual Report 2021 | Alternative Performance Measures
Alternative Performance Measures
06. ALTERNATIVE PERFORMANCE
MEASURES
Akastor discloses alternative performance measures as a supplement to the consolidated nancial statements prepared in accordance with IFRS. Such
performance measures are used to provide an enhanced insight into the operating performance, nancing abilities and future prospects of the group. These
measures are calculated in a consistent and transparent manner and are intended to provide enhanced comparability of the performance from period to
period. It is Akastor's experience that these measures are frequently used by securities analysts, investors and other interested parties.
The denitions of these measures are as follows:
EBITDA - earnings before interest, tax, depreciation and amortization, corresponding to "Operating prot before depreciation, amortization and impairment"
in the consolidated income statement.
EBIT - earnings before interest and tax, corresponding to "Operating prot (loss)" in the consolidated income statement.
Capex and R&D capitalization - a measure of expenditure on PPE or intangible assets that qualify for capitalization.
Net current operating assets (NCOA) - a measure of working capital. It is calculated by current operating assets minus current operating liabilities,
excluding nancial assets or nancial liabilities related to hedging activities.
Net capital employed - a measure of all assets employed in the operation of a business. It is calculated by non-current assets and nance lease receivables
(excluding non-current interest-bearing receivables) added by net current operating assets minus non-current operating liabilities (deferred tax liabilities,
employee benet obligations, other non-current liabilities and lease liabilities).
Gross debt - sum of current and non-current borrowings, excluding lease liabilities.
Net debt - gross debt minus cash and cash equivalents.
Net interest-bearing debt (NIBD) - net debt minus non-current and current interest-bearing receivables.
Equity ratio - a measure of investment leverage, calculated as total equity divided by total assets at the reporting date.
Liquidity reserve - comprises cash and cash equivalents and undrawn committed credit facilities.
Order intake - represents the estimated contract value from the contracts or orders that are entered into or committed in the reporting period.
Order backlog - represents the remaining unearned contract value from the contracts or orders that are entered into or committed at the reporting date.
The backlog does not include options on existing contracts, or contract value from short-cycled service orders.
The tables below show reconciliation of alternative performance measures to the line items in the nancial statements according to IFRS. .
Net current operating assets (NCOA)
AmountsinNOKmillion 2021 2020
Current tax assets - 28
Inventories 5 485
Trade and other receivables 872 2 191
Current operating assets 877 2 704
Current tax liabilities (1) (8)
Provisions, current (20) (109)
Trade and other payables (625) (2 060)
Current operating liabilities (647) (2 177)
Net current operating assets (NCOA) 231 527
98 Annual Report 2021 | Alternative Performance Measures
Net capital employed (NCE)
AmountsinNOKmillion 2021 2020
Total non-current assets 6 025 6 100
Net current operating assets (NCOA) 231 527
Current investment 148 -
Current nance lease receivables 64 7
Non-current interest-bearing receivables (315) (115)
Deferred tax liabilities (4) (10)
Employee benet obligations (108) (388)
Other non-current liabilities (628) (478)
Other current liabilities (148) -
Non-current provisions (26) (50)
Total lease liabilities (155) (592)
Net capital employed (NCE) 5 084 5 002
Gross debt/Net debt/NIBD
AmountsinNOKmillion 2021 2020
Non-current borrowings 1 372 628
Current borrowings 16 1 119
Gross debt 1 387 1 746
Cash and cash equivalents (89) (275)
Net debt 1 299 1 471
Non-current interest-bearing receivables (315) (115)
Net interest-bearing debt (NIBD) 984 1 357
Equity ratio
AmountsinNOKmillion 2021 2020
Total equity 4 109 3 669
Divided by Total assets 7 212 9 147
Equity ratio 57% 40%
Liquidity reserve
AmountsinNOKmillion 2021 2020
Cash and cash equivalents 89 275
Undrawn committed credit facilities 553 1 457
Liquidity reserve 642 1 732
99Annual Report 2021 | Board of Directors
Board of Directors
07. BOARD OF DIRECTORS
Kristian M. Røkke | Chairman of the Board
Kristian Røkke is CEO of Aker Horizons AS and has extensive experience from offshore oil
services, shipbuilding and M&A. More recently, Mr. Røkke has gained substantial experience from
renewable energy, climate solutions and green technologies. Prior to Aker Horizons, he was Chief
Investment Ofcer of Aker ASA and CEO of Akastor ASA from August 2015 to December 2017. Mr.
Røkke is chairman of the board of Mainstream Renewable Power, Aker Offshore Wind AS, Philly
Shipyard ASA and Ocean Data Foundation, and a board member of several companies, including
Aker Carbon Capture ASA, TRG Holding AS and American Shipping Company ASA. He holds an
MBA from The Wharton School at University of Pennsylvania.
As of March 25, 2022, Mr. Røkke holds, through a privately owned company, 200,000 shares in
Akastor ASA and has no stock options. Mr. Røkke is both a Norwegian and American citizen and
has been elected for the period 2020-2022.
Lone Fønss Schrøder | Deputy Chair
Lone Fønss Schrøder is CEO of Concordium AG, a global provider of blockchain technologies.
She is vice-chair of Volvo Cars AB and chair of the audit committee, and director of Geely Sweden
Holdings AB and Ingka Holding B.V. (Ikea Group). She has held several senior management and
CEO positions in the A.P. Møller-Maersk group and became CEO and president of Wallenius Lines
AB in 2005. Fønss Schrøder has board experience from Kværner ASA, Eukor Inc, Vattenfall AB,
Yara ASA, Valmet OY and others. Fønss Schrøder holds an MSc in law from the University of
Copenhagen and in economics from Copenhagen Business School in Denmark. As of March 25,
2022, she holds 4,400 shares in the company and has no stock options. She is a Danish citizen
and has been elected for the period 2020-2022.
Svein Oskar Stoknes | Director
Svein Oskar Stoknes has been CFO at Aker ASA since August 2019. Prior to this, he served as
CFO at Aker Solutions, where he joined in 2007 and was named CFO in 2014. Previously, Mr.
Stoknes held a range of senior positions within nance and advisory for organizations like
Tandberg, Citigroup and ABB. Mr. Stoknes is also a director of Aker Property Group AS and Aker
Capital AS. He graduated from the Norwegian School of Management and has an MBA from
Columbia Business School in New York. As of March 25, 2022, Mr. Stoknes owns 1,297 shares
and no stock options in the company. He is a Norwegian citizen and has been elected for the
period 2020-2022.
100 Annual Report 2021 | Board of Directors
Kathryn M. Baker | Director
Kathryn M. Baker has 35 years of business experience in a broad range of industries and roles.
She currently serves as Chairwoman of Pensionera AB, Genetic Analysis AS and Terra Mater
Renewable Investments AB and is a board member of several companies including DOF ASA and
MPC Energy Solutions NV. She is also a member of the Investment Committee of Norfund. Ms.
Baker previously served on the Executive Board of the Central Bank of Norway (Norges Bank),
where she was a member of the audit and the risk and investment committees and she was
Chairwoman of the Norwegian Private Equity and Venture Capital Association (NVCA). Ms. Baker
was a partner at the Norwegian private equity rm Reiten & Co for 15 years. Prior to that, she was
a management consultant at McKinsey & Company in Oslo and a nancial analyst at Morgan
Stanley in New York. Ms. Baker holds a bachelor’s degree in economics from Wellesley College
and an MBA from the Tuck School of Business at Dartmouth College. As of March 25, 2022, she
holds 45,683 shares in the company. Ms. Baker is an American citizen and has been elected for
the period 2021-2023.
Luis Araujo | Director
Luis Antonio G. Araujo has over 38 years of experience in the energy and oil & gas industries. He
was CEO of Aker Solutions from July 2014 to August 2020. Prior to his appointment as CEO, Mr.
Araujo held the position as Regional President and Executive Vice-President for Aker Solutions in
Brazil since November 2011 where he led a major turn-around of the local operations. Prior to his
period with Aker Solutions, he was CEO of Wellstream in Brazil (currently part of Baker Hughes
GE), and held several senior positions within ABB, FMC Technologies, Vetco Gray and Technip
Coexip. Mr. Araujo is currently an independent director and member of the board of Magseis
Faireld ASA listed on the Oslo Stock Exchange, and Chairman of the board of OceanPact, a
Brazilian company listed in the Brazilian stock exchange. He is also Chairman of the board of
Principle Power Inc and independent board member of DBO Energy in Brazil which are both
privately owned companies. Mr. Araujo holds a bachelor degree in Mechanical Engineering from
Gama Filho University and an MBA from Edinburgh University. As of March 25, 2022, Mr. Araujo
holds 25,757 shares and no stock options in the company. Mr. Araujo has triple citizenship;
Brazilian, British and Portuguese and has been elected for the period 2021-2023.
Henning Jensen | Director, Elected by the employees
Henning Jensen currently works as Service Account Manager in DLS department at HMH. Mr.
Jensen joined MHWirth in 2005. He has since then held various positions in the company. Mr.
Jensen holds a bachelor’s degree in marine technology and a Master in Industrial Economy and
Technology from Agder University College in Grimstad. As of March 25, 2022, Mr. Jensen holds no
shares or stock options in the company. Mr. Jensen is a Norwegian citizen and has been elected
for the period 2021-2023.
101Annual Report 2021 | Board of Directors
Asle Christian Halvorsen | Director, Elected by the employees
Asle Christian Halvorsen currently works as Senior Engineer in Mud Products dept at HMH. He
began his career with the Aker group in 2011 when he joined STEP Offshore. Mr. Halvorsen holds
a BS c in mechanical engineering from Sør-Trøndelag University College. As of March 25, 2022,
he holds 10,000 shares in the company. Mr. Halvorsen is a Norwegian citizen. He has been
elected for the period 2021-2023.
Stian Sjølund | Director, Elected by the employees
Stian Sjølund currently works as Performance Optimization Engineer at HMH. Mr. Sjølund joined
the Company in 1998 as an Engineer in Drilling Lifecycle Services department. He has since then
held various positions in the company in Norway and abroad. Mr. Sjølund holds a technical college
degree in electrical engineering from Grimstad Technical College. As of March 25, 2022, he holds
10,000 shares in the company. Mr. Sjølund is a Norwegian citizen and has been elected for the
period 2021-2023.
102 Annual Report 2021 | Management
Management
08. MANAGEMENT
Karl Erik Kjelstad | CEO
Karl Erik joined Akastor in 2014. He has been part of the Aker group since 1998 and has numerous
key positions including various CEO positions. Karl Erik has held several board positions in different
industries, including oil service, offshore drilling, offshore and merchant shipping, shipbuilding, IT
services, real estate and construction industry. Karl Erik holds an MSc in Marine Engineering from
the Norwegian University of Science and Technology (NTNU) and an AMP from Harvard Business
School. As of March 25, 2022, Kjelstad holds 600,000 shares in Akastor ASA through his company
Byesvollen AS.
Øyvind Paaske | CFO
Øyvind joined the investment team in Akastor as Investment Manager in 2014 and has held the
position as CFO of Akastor from March 2020. Prior to this he was Investment Manager at Converto
(Aker ASA). Øyvind holds an MSc in Financial Economics from the Norwegian School of Economics
and Business Administration (NHH) and UNC Kenan-Flagler Business School. As of March 25,
2022, Paaske holds 105,083 shares in Akastor ASA.
103Annual Report 2021 | Company Information
Company Information
Reports on the Internet
The quarterly and annual reports of Akastor are available on the
internet. Akastor encourages its shareholders to subscribe to
the company’s annual reports via the electronic delivery system
of the Norwegian Central securities Depository (VPS). Please
note that VPS services (VPS Investortjenester) are designed
primarily for Norwegian shareholders. Subscribers to this
service receive annual reports in PDF format by email. VPS
distribution takes place at the same time as distribution of the
printed version of Akastor’s annual report to shareholders who
have requested it. Quarterly reports, which are generally only
distributed electronically, are available on the company’s
website and other sources. Shareholders who are unable to
receive the electronic version of interim reports may subscribe
to the printed version by contacting Akastor’s investor relations
staff.
Copyright and Legal Notice
Copyright in all published material including photographs,
drawings and images in this publication remains vested in
Akastor and third party contributors to this publication as
appropriate. Accordingly, neither the whole nor any part of this
publication can be reproduced in any form without express prior
permission. Articles and opinions appearing in this publication
do not necessarily represent the views of Akastor. While all
steps have been taken to ensure the accuracy of the published
contents, Akastor does not accept any responsibility for any
errors or resulting loss or damage whatsoever caused and
readers have the responsibility to thoroughly check these
aspects for themselves. Enquiries about reproduction of content
from this publication should be directed to Akastor ASA.
09. COMPANY INFORMATION
Contact details
Akastor ASA
PO Box 124, 1325 L ysaker , Norway
+47 21 52 58 00
akastor.com
HMH
Norway
Butangen 20, 4639 Kristiansand, Norway
PO Box 413 Lundsiden, 4604 Kristiansand, Norway
+47 38 05 70 00
Houston
3300 North Sam Houston Parkway East
77032 Houston, Texas, United States
+1 281 449 2000
hmhw.com
AKOFS Offshore
Karenslyst Allé 57, 0277 Oslo, Norway
PO Box 244, 0213 Oslo, Norway
+47 23 08 44 00
akofsoffshore.com
AGR
Karenslyst allé 4, 0278 Oslo, Norway
+47 24 06 10 00
agr.com
Cool Sorption
Smedeland 6, DK2600 Glostrup, Denmark
+45 43 45 47 45
Coolsorption.com
22121004 • BOLT.as