2021 Artbox Report Template All rights reserved © Artbox AS 2021
Annual Report
2021
2021 Artbox Report Template All rights reserved © Artbox AS 2021
BW Offshore 2021 Annual Report
We engineer offshore production solutions
to progress the future of energy
BOE PER DAY
540 000
EMPLOYEES
1 849
EBITDA 2021 USD MILLION
401.3
UNITS
14
EXECUTED PROJECTS
40
OFFICES
15
Contents
EDITORIAL
CEO’s letter
BW Offshore in brief
Global footprint
STRATEGY
A diversified offshore energy company
Strategic priorities
GOVERNANCE
Directors’ report
Board of Directors
Management
Corporate governance report
Shareholder information
SUSTAINABILITY REPORT
Values
Commitment
Corporate ESG goals
Objective : Safe and secure
operations
Objective : Environmentally
conscious operations
Objective : Being a
non-discriminating and fair employer
Objective : A strong governance
framework
Summary of ESG KPIs
TCFD report
FINANCIAL STATEMENTS
Consolidated financial statements
Parent company financial statements
Responsibility statement
Alternative performance measures
Independent auditor’s report
142 ADDRESSES
143 GRI INDEX
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BW Offshore 2021 Annual ReportBW Offshore 2021 Annual Report
CEO’s letter
We have just completed a strategically important year where
BW Offshore made significant progress in becoming a diversified offshore
energy company. Our strategy is reflected in three clear priorities for
long-term value creation. Growing our core floating production business,
extracting maximum value from our conventional FPSO fleet, and
building a substantial and growing position in offshore renewable energy
infrastructure, in particular floating wind.
STRONG TAILWINDS
I am especially pleased with our first substantial
step within renewable energy. The acquisition and
listing of BW Ideol makes us an early mover in
floating offshore wind, a market with vast long-
term potential. By combining BW Ideol’s unique
floater technology and extensive offshore wind
capabilities with BW Offshore’s four decades
of experience from complex offshore floating
production projects, we are well positioned to benefit
from long-term growth and value-generation
opportunities created by the global energy
transition.
Following BW Ideol’s journey this past year has
been exciting. The culmination, for now, came
in January 2022 with the announcement by
BW Ideol and its partners in the Floating Energy
Allyance that they have secured the rights to
develop a 1GW-capacity floating wind farm off
the northeast coast of Scotland in the ScotWind
leasing round. The award validates BW Ideol’s
floater technology and project development
capabilities and confirms that we made the
right decision when investing in early 2021. BW
Offshore stands ready to support BW Ideol and
its partners in delivering this substantial project.
ATTRACTIVE LONG-TERM RETURNS AND STRONG
PARTNERSHIPS
The second transformational milestone to highlight
is the 15-year contract with Santos in Australia
for the FPSO to the Barossa gas field. The natural
gas from the field will, when production starts in
2025, be shipped to utilities in Asia as a cleaner
substitute for coal in electricity production.
Barossa represents a new type of infrastructure-
like projects for BW Offshore with attractive
long-term returns, supported by strong
partnerships with equity co-investors and
banks. The FPSO concept is based on our
own RapidFramework® design, leveraging
lessons learned from the BW Catcher development,
and proves that we can transfer competence from
traditional FPSO projects to the construction of
large-scale floating production infrastructure.
BW Offshore has always been an innovative
company, willing to explore new and better ways
to work, and creating purpose and value for our
employees, owners, partners and the communities
where we operate. We will continue to be a
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BW Offshore 2021 Annual ReportBW Offshore 2021 Annual Report
pioneering organisation guided by our values ‘We
LEAD with Integrity’ in all aspects of our operations.
This also includes taking a step back to evaluate
how we maximise the value from our non-core
fleet. In April 2021, our FPSO Berge Helene
was divested for recycling, in compliance with
our internal standard for responsible recycling as
well as international standards. In January 2022,
we signed an agreement with an Indonesian
consortium for the sale of FPSO Joko Tole for
further operations under local ownership, and
in February 2022, Cidade de São Vicente was
sold for recycling, in accordance with the same
procedure as for Berge Helene. These transactions
follow our strategy to optimise value from the
FPSO fleet, while progressing our transition to
floating energy infrastructure investments.
FOCUS ON CONTINUOUS IMPROVEMENT
A year ago, I emphasised the importance of
strengthening our culture based on the principle
of ‘Learning from Failure’ after we experienced an
accident onboard FPSO Espoir Ivoirien, resulting in
the loss of two colleagues. During 2021, we have
investigated the underlying and systemic issues
that may have contributed to the accident. Project
Evolve was launched as an extension to this
work, with a goal to strengthen the BW Offshore
organisation and its capacity to continuously
make all efforts to minimise risks and ensure the
safety and security of everyone working for the
company. We are committed to ‘Zero Harm’ as
the consistent and transparent outcome of all our
operations.
As a company, we have a responsibility to all our
stakeholders to have a sound environmental, social,
and governance framework to guide our business.
We seek to communicate transparently on how
we manage risks and capture opportunities in
the fast-moving energy transition, through our
strategy and our sustainability and governance
reporting, as you can read more about in this
annual report.
A STRONG FOUNDATION FOR FUTURE
VALUE CREATION
The Covid-19 pandemic continues to affect
operations and the market environment. Higher
energy prices in 2021 and into 2022 are a sign
of improved market fundamentals supported by
vaccines and more normalised global activity
levels. We, like the rest of the world, still have to
handle the pandemic, which includes following
public health advice concerning vaccinations,
travel restrictions, quarantine protocols for our
offshore personnel and other measures such as
continued use of home offices.
Despite these challenges, we maintained 95 per
cent commercial uptime in 2021 and significantly
progressed strategic initiatives. I recognise the work
put in by the entire BW Offshore team to make
this possible, and would like to extend my gratitude
to every single employee, contractor and business
partner, and especially to our very own offshore
teams for their dedication through the year.
WE ENGINEER OFFSHORE PRODUCTION SOLUTIONS
TO PROGRESS THE FUTURE OF ENERGY
I am proud to lead a company with a clear purpose
that sets our course moving forward.
This guides our strategy and the opportunities
we pursue to grow within offshore energy
infrastructure and low-carbon solutions, in order
to generate sustainable and growing returns to all
our stakeholders over time.
Marco Beenen
CEO
“
BW Offshore has
always been an
innovative company,
willing to explore new
and better ways to
work, and creating
purpose and value for
our employees, owners,
partners and the
communities where
we operate.
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KEY EVENTS
•
Signed USD 4.6 billion, 15-year firm FPSO Services contract for the Barossa project
with Santos.
•
Successfully completed Floating Wind subsidiary BW Ideol private placement
and listing on Euronext Growth.
•
One-year contract extensions for Sendje Berge and ABO FPSO.
•
Recycling of Berge Helene in compliance with Hong Kong International Convention.
•
Total FPSO contract backlog of USD 7.7 billion.
•
Quarterly dividend payments, totaling USD 25 million annually.
•
USD 66 million in gross proceeds from block sale of shares in BW Energy in October.
KEY FIGURES
Commercial uptime 95.0%
LTI Per million hours 0.78
Operating revenues USD million 829.3
EBITDA USD million 401.3
EBIT USD million 42.0
Operating cash flow USD million 510.2
Net profit USD million 62.2
Total assets USD million 3009.7
Total equity USD million 1021.4
Equity ratio 33.9%
Market cap USD million 547
Enterprise value USD million 1409
Daily export BOE per day 540000
BW Offshore 2021 Annual ReportBW Offshore 2021 Annual Report
BW Offshore in brief
BW Offshore engineers innovative floating production solutions, and has
nine FPSOs in operation. By leveraging four decades of offshore operations
and project execution, the Company creates tailored energy solutions for
evolving markets worldwide.
The BW Offshore team delivers with a combined engineering and
operating mindset when designing new FPSOs, preparing redeployments
and exploring new opportunities. The Company fosters a culture where
people grow and thrive.
BW Offshore has around 2 000 employees and is publicly listed on the
Oslo Stock Exchange.
Read about BW Offshore’s history on the Company’s website.
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BW Offshore 2021 Annual ReportBW Offshore 2021 Annual Report
Global footprint
INDONESIA
SINGAPORE
GABON
NETHERLANDS
FRANCE
INDIA
UAE
NIGERIA
BRAZIL
BERMUDA
OFFICES
UNITS
USA
MEXICO
IVORY
COAST
NORWAY
UK
AFRICA
Abo FPSO
BW Adolo
Espoir Ivoirien
Petróleo Nautipa
Sendje Berge
EUROPE
BW Athena
BW Catcher
AMERICAS
BW Cidade de São Vicente
BW Pioneer
FPSO Polvo
YÙUM K’AK’NÁAB
SOUTH EAST ASIA & OCEANIA
BW Joko Tole
BW Opportunity
Umuroa
Note: Global footprint
per year end 2021.
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BW Offshore 2021 Annual ReportBW Offshore 2021 Annual Report
A diversified offshore
energy company
Access to safe and affordable energy is essential for the development
of people, businesses and societies around the world – and there is an
increasing global demand for more and cleaner energy. These factors
are shaping today’s offshore industry, and are reflected in BW Offshore’s
strategy and purpose: to engineer offshore production solutions to progress
the future of energy.
BW Offshore is committed to responsible growth,
with the courage to explore new ventures that
create value for all its stakeholders. The Company
seeks to generate positive returns by finding
innovative solutions to the opportunities and
challenges of the energy transition. BW Offshore
is leveraging its proven capabilities in developing
flexible floating production assets, as well as
applying its expertise and experience to adjacent
business segments.
This ambition is reflected in the framework guiding
the most significant strategic development since
offshore production commenced in 1982, with
the LPG FPSO (floating production storage and
offloading) Berge Sisar off the coast of Angola.
Establishing BW Energy as a standalone, publicly
listed upstream exploration and production (E&P)
company from early 2020 is an example of how
BW Offshore has been able to build a new business
segment by applying current competencies and
adopting new ones.
By evolving from a pure-play FPSO lease-and-
operate model to a diversified offshore energy
company, BW Offshore is shifting more of its
financial and operational resources towards
the value creation opportunities of low-carbon
energy solutions. This transition is enabled by the
Company’s long-term cashflow generation from
floating offshore oil and gas production, which
supports safe, stable and affordable energy supply.
The launch of BW Ideol in 2021 was an important
next step. This involved applying in-house
competencies, capabilities and assets to create
a leading global offshore floating wind company
with a dual strategy – both wind farm project
developer and EPCI (engineering, procurement,
construction and installation) provider, based on
the proprietary Damping Pool® technology.
BW Offshore continues to explore additional
investment opportunities, positioning the company
for sustainable value creation in a changing energy
landscape.
A CHANGING LANDSCAPE
The global energy market transition reflects
both public environmental concerns and political
commitments to reduce carbon emissions. The
transition is a crucial component in achieving
the 1.5-degree Celsius global warming ambition
stated in the 2015 Paris Agreement, which was
reaffirmed at the UN Climate Change Conference
(COP26) in November 2021.
BW Offshore is committed to minimising the
impact of the Company’s activities over time,
while applying the full scope of its capabilities to
ensure safe and secure operations – and to enable
its clients to deliver on their supply commitments
to end users.
After years of underinvestment in the oil and gas
industry and a gradual normalisation of energy
demand through the Covid-19 pandemic, oil and
gas prices have recovered to levels that support
profitable investments. Investments in renewable
energy sources are also growing rapidly, led by
solar and wind. A combination of technology
innovation and scale is crucial to reducing costs
and improving the outlook for long-term energy
investments.
Despite this growth, the predicted increases in
solar, wind and other renewable energy capacity
remain insufficient to meet long-term energy
demand, which is driven by population growth and
urbanisation. Many renewable energy sources also
lack the flexibility to efficiently adjust output to
shorter-term demand cyclicality.
Oil and gas are therefore expected to remain
significant contributors to the global energy mix,
even in sustainable growth scenarios, with natural
gas a preferred source of energy to accelerate the
phase-out of coal. Macroeconomic factors are
increasingly conducive for oil and gas companies
to proceed with new, large investment projects,
as Brent prices have moved to levels well above
break-even in most regions.
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Strategy | A diversified offshore energy companyStrategy | A diversified offshore energy company
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Growing the core floating production business
through new offshore energy infrastructure projects
Extracting maximum value from the
conventional FPSO fleet
Building a substantial and growing position in
offshore renewable energy infrastructure
Executing on
strategic priorities
Within this changing landscape, BW Offshore has defined a
set of clear strategic priorities for long-term value creation.
1
2
3
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Positioned for the future
BW Offshore plans to grow through the execution of value-accretive
offshore energy projects. Over time, the Company will shift an increasing
share of resources towards global energy transition opportunities. The
Company has a sound financial position, enabling investments in offshore
energy infrastructure projects and low-carbon solutions, while providing
growing shareholder returns.
OPERATIONS AND MAINTENANCE EXPERTISE
The Company is a trusted partner for clients
seeking to outsource the technical competence
needed to operate complex offshore assets. With
its existing operational network, the Company
offers synergies that are difficult for a client to
obtain on a standalone basis. These include well-
established infrastructure, manning pools and
supply chain networks, as well as familiarity with
regulatory requirements, technical maintenance
and life cycle cost management.
BW Offshore is committed to safe, efficient, reliable
and compliant operations, with Zero Harm as an
overriding objective for personnel, communities
and the environment. Safe operations and high
uptime are not only requirements but obligations
with regard to clients and employees.
DIGITALISATION OF THE FPSO FLEET
By using available technology in innovative ways,
BW Offshore is tapping into artificial intelligence,
the Internet of Things and machine learning. In
2021, the Company launched an Integrated
Operational Integrity performance dashboard
that provides a real-time overview of fleet asset
integrity and performance assurance status.
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BW Offshore 2021 Annual ReportBW Offshore 2021 Annual Report
Strategic priority 1
Growing the core floating production business
through new energy infrastructure projects
The Company has established clear selection criteria for new offshore oil and gas production projects, targeting
infrastructure-type projects with:
•
Investment grade counterparties
•
Firm contract periods >15 years
•
Project execution and
co-investing with partners
The Barossa project in Australia, for which the
contract was awarded in 2021, was the first to
reflect the selection criteria above. The project
execution combines engineering, procurement,
construction and installation (EPCI) capabilities and
operational experience to generate strong cashflows
and the required return over time. This is supported
by a robust financing structure with top-tier equity
partners, leading banks and significant customer
prepayments.
BW Offshore aims to secure one new project of this
type every two to three years, fully leveraging the
organisation, capturing scale benefits and improving
long-term returns. Working and co-investing with
partners provides additional execution capabilities
and financing capacity, and de-risks the project
development phase.
Demand for lease-and-operate solutions is expected
to increase, based on the evolving capital allocation
priorities of the major oil and gas companies. At the
same time, lenders and equity investors are becoming
more selective, favouring large infrastructure-type
projects with long-term cashflow visibility. BW Offshore
is well positioned to capture such opportunities.
With experience in all phases – from design and
engineering through to long-term operations – BW
Offshore has a competitive advantage when it comes
to providing clients with an efficient total life cycle cost.
Over the past four decades, BW Offshore has
completed 40 FPSO and FSO developments and
operated most of the assets after completion, building
unique competencies and a very robust platform for
the execution of future projects. Additionally, BW
Offshore has valuable insights into developing and
managing reservoirs, making the Company an even
stronger partner for current and future clients.
BW Offshore’s core fleet is made up of the BW
Catcher, BW Pioneer and BW Adolo FPSOs, all
operating on multi-year contracts, and the Barossa
FPSO, which is under development. The four vessels
represented 98 per cent of the firm and probable
revenue backlog at the end of 2021.
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Strategic priority 2
Extracting maximum
value from the conventional
FPSO fleet
The conventional FPSO lease-and-operate
business model typically involves short-to-
medium contract durations, multiple option periods
and residual value exposure. This makes it difficult
to meet the risk-adjusted return requirements in
a market with increased macro uncertainty and
energy price volatility.
At year end, the Company’s conventional fleet
comprised six FPSOs on short-term contracts
and five in lay-up, which in combination
accounted for 2 per cent of revenue backlog.
The conventional FPSOs in operation are all
coming off their firm contracts within the next
12 months. The Company will ensure safe and
secure operations during the remaining firm and
option periods. Two of the idle units, FPSO Polvo
and BW Opportunity, are considered potential
candidates for redeployment with specific projects
identified, while the remaining three vessels have
been designated as candidates for recycling.
BW Offshore, in collaboration with BW Energy,
will selectively seek redeployment projects that
meet return requirements in order to maximise the
value of suitable units. For the remaining units, the
Company may divest units to local operators with
different cost bases and return requirements, and/
or recycle idle vessels to reduce lay-up costs and
realise recycled steel values.
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Strategic priority 3
Building a substantial and growing position
in offshore renewable energy infrastructure
BW Offshore is committed to contributing to the energy transition by
developing low-carbon offshore energy production solutions. The Company
is applying four decades of experience in the sector, with extensive
innovation and financing capabilities, to develop floating energy solutions
and offshore renewable power production at industrial scale.
The primary investment in offshore floating wind
is through a 53.2 per cent ownership of BW
Ideol, a global market leader with more than 10
years’ experience in the design, execution and
development of floating wind projects, based
on proprietary and patented technology and
engineering capabilities.
BW Ideol’s mission is to create a sustainable
future, using floating technology to unlock the vast
potential of offshore wind. BW Ideol has two full-
scale offshore floating wind turbines in operation in
France and Japan, and a significant project pipeline
including ongoing commercial scale tenders.
BW Ideol is making good progress in executing
its dual growth strategy. Several development
projects are moving ahead, and the initial
investments as a wind farm co-owner have been
made. As part of the Floating Energy Allyance
(FEA), BW Ideol secured the rights to develop a
floating offshore wind farm with an approximate
capacity of 1GW off the north-east coast of
Scotland, through Crown Estate Scotland’s
ScotWind leasing round in January 2022. The
development will be supported by BW Offshore’s
extensive experience of developing and operating
energy production systems.
Political and financial commitments to reducing
the carbon intensity of global energy systems
continue to gain momentum, using solutions
such as floating wind, hydrogen, ammonia and
carbon capture. BW Offshore will consider
opportunities to apply its financial, development
and operational capabilities to transition-related
offshore production solutions and technologies.
Investment decisions will be based on a disciplined
policy, with clearly defined requirements in terms
of long-term returns, accretive partnerships, and
use of appropriate capital sources.
This includes combining existing FPSO and
floating wind capabilities to develop and deploy
clean offshore energy production and develop
new adjacent business areas. These may include
low-carbon FPSOs powered by floating wind or
floating gas-to-power plants.
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BW Offshore 2021 Annual ReportBW Offshore 2021 Annual Report
Directors’ report 2021
Progressing strategic initiatives for long-term value
creation.
During 2021, BW Offshore made significant progress
in executing its dual-track strategy of evolving the
core floating production business and capturing
energy transition opportunities by developing
adjacent business areas. The FPSO fleet delivered
stable commercial uptime in a continued challenging
operational environment, and the Company
maintained a robust financial position and paid
quarterly dividends.
These achievements were supported by a strong
internal operational integrity framework and a focus
on business continuity and development, while the
Company continued to prioritise management of the
impact from the Covid-19 pandemic.
The award of the FPSO contract for the Barossa
natural gas field in Australia, and the creation of BW
Ideol as a leading global offshore floating wind project
developer and technology provider, were the main
strategic initiatives executed in 2021.
The Barossa FPSO project reflects a shift for the
FPSO business into infrastructure developments
that increase long-term backlog and financial
performance. The project model enables long-term
returns with robust counterparties and accretive
partnerships.
The Company will selectively progress similar
opportunities and has the ambition and capacity to
deliver one new project approximately every second
year. These projects must meet defined return
requirements during the firm contract period, with
investment-grade counterparties, co-investors to
optimise capital requirements and partnerships for
increased execution capacity and risk-sharing.
BW Ideol is an offshore floating wind company
addressing the rapidly growing demand for offshore
power production through in-house developed
and proven floater technology, supported by BW
Offshore’s global experience as a developer of offshore
projects. The investment in BW Ideol is in line with the
Company’s strategy to apply its competencies to drive
value creation in the ongoing energy transition and
position BW Offshore as a provider of clean energy
solutions for the coming decades.
Ensuring financial flexibility to pursue value-accretive
growth opportunities is a priority for BW Offshore. The
Company has a strong platform for long-term value
creation following debt and bond refinancing in recent
years, and the listing of the E&P business BW Energy
in early 2020. In October 2021, BW Offshore sold
20 million shares in BW Energy for USD 66 million in
gross proceeds for growth opportunities within energy
infrastructure, including FPSO and renewable energy
investments. Co-investment in infrastructure projects,
similar to the Barossa equity joint venture partnership,
is another enabler for improved capital allocation and
increased financial flexibility.
BW Offshore has a financial position which supports
growth into accretive offshore energy projects and
long-term value creation.
FPSO OPERATIONS
As of 31 December 2021, BW Offshore had nine out
of 14 FPSOs in operation. The Company reports on
actual average commercial uptime, not a weighted
average, and the 2021 commercial uptime for the
operating fleet was 95 per cent (96.7 per cent
in 2020). Commercial uptime was impacted by
planned shutdowns on Espoir Ivoirien and an extensive
tank inspection programme on Sendje Berge.
The Group’s order backlog amounted to approximately
USD 6.5 billion of firm contracts and USD 7.7 billion
when including contract extension options.
In March 2021, the Company signed a 15-year firm
FPSO lease-and-operate contract for the Barossa
gas field, offshore Australia. Initial gas production
from the FPSO is targeted for the first half of 2025.
The firm period contract value is USD 4.6 billion. The
total FPSO project cost of around USD 2.4 billion
is financed through a combination of bank debt and
equity partners, and approximately USD 1 billion in
pre-payments during the construction period by
the Barossa Upstream Joint Venture Partners. All
key subcontractors were assigned at year end and
purchase orders for all major mechanical packages
have been issued. This provides good visibility for
available resources and project timeline. By proactively
locking in vendors and equipment packages, the
Company has managed to mitigate cost inflation
and maintain schedule despite continued challenges
affecting global supply chains.
In April 2021, BW Offshore completed the sale of
Berge Helene for environmentally safe demolition
and recycling in compliance with the Hong Kong
Convention at Priya Blue shipyard in India. Grieg
Green has been nominated as representative on site
at the yard to monitor progress, compliance with
environmental and safety regulations as well as proper
application of BW Offshore’s ship recycling policy.
FPSO Polvo reached the end of contract in July
2021. The unit has been demobilised from the
field and is currently en route to the Middle East,
where planned condition assessment will be
undertaken while awaiting a final investment decision
on BW Energy’s Maromba field development.
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In November, BW Offshore signed an agreement for
a one-year extension for the lease and operation of
FPSO Sendje Berge. In January 2022, the Company
extended the contract for the Abo FPSO. Both
contracts were extended until the end of 2022.
BW Opportunity is being marketed for new projects,
while BW Athena and Umuroa are currently in lay-up
and are considered to be candidates for recycling.
In January 2022, BW Offshore signed an agreement
with an Indonesian consortium for the sale of
FPSO Joko Tole for further operations under local
ownership. The transaction is part of BW Offshore’s
strategy to transition to floating energy infrastructure
investments.
In February 2022, BW Cidade de São Vicente was
sold for demolition and recycling in accordance with
the same procedure as for Berge Helene, to ensure
environmentally safe demolition and recycling of the
unit.
OFFSHORE FLOATING WIND
BW Offshore is actively engaged in the energy
transition by developing clean energy production
solutions, applying its offshore engineering and
operations capabilities to drive future value
creation through its 53.2 per cent ownership in BW
Ideol, a leading floating offshore wind company.
BW Ideol was listed on Euronext Growth Oslo in
March 2021, and has a dual strategy as a floater
EPCI (Engineering, Procurement, Construction and
Installation) and maintenance services provider, and as
a floating wind farm project developer and co-owner.
In January 2022, BW Ideol secured close to 1GW
of offshore floating wind acreage in the ScotWind
leasing round as a partner in the Floating Energy
Allyance. In addition, the company has two full-scale
offshore floating wind turbines in operation in France
and Japan as well as a significant project pipeline in
these countries.
HEALTH, SAFETY, SECURITY,
ENVIRONMENT, QUALITY
Health, safety, security, environment and quality
(‘HSSEQ’) have the highest priority throughout
the BW Offshore organisation. The Company has
established policies for safety, security, occupational
health and environmental management. BW Offshore
prioritises safety in all its operations and has ‘Zero
Harm’ as an overriding objective for personnel and
the environment to ensure all assets are operated
in the safest manner. The Company also shows
due respect for the individual, human rights and
employment practices.
BW Offshore is committed to achieve sustainable
development and integrates corporate responsibility
in all processes and daily operations, seeking to meet
the Company’s environmental, social and governance
(ESG) related targets. For more information, please
see the Sustainability section of this annual report.
Despite strong focus on HSSEQ, an accident
regrettably occurred onboard Espoir Ivoirien on
14 January 2021, which resulted in two fatalities
as hydrocarbons leaked into a tank where work
was being carried out. The Change Programme
‘Project Evolve’ was initiated following the internal
investigation to address underlying issues. The goal
is to apply lessons learned, derived from a company-
wide engagement with the workforce, in all relevant
areas of the organisation. The programme represents
a long-term commitment driven by the Company’s
Senior Management to mature the culture based on
openness, Learning from Failure and the Stop Work
Policy, with the overall objective to ensure safe and
secure operations.
BW Offshore has proactively taken steps to
minimise risk of business interruption due to
the Covid-19 pandemic, by implementing
comprehensive procedures to safeguard people
and operations and adhering to local public health
advice across all locations. The vaccine roll-out
and a normalisation of global industry and business
activity in 2021 led to a recovery in energy demand
and prices, and supported a positive momentum
throughout the oil and gas industry during the year.
Throughout 2021, the impact on operations was
managed through good risk management, planning
and procedures, but still resulted in a direct financial
impact of approximately USD 19 million related to
additional crew management, quarantine and logistics.
FINANCIAL PERFORMANCE
Income statement
Group revenue was USD 829.3 million in 2021
compared to USD 886.3 million in 2020. Total
operating expenses were USD 428.0 million
compared to USD 450.2 million in 2020.
Operating profit before depreciation,
amortisation, impairment and sale of assets
(EBITDA) for 2021 was USD 401.3 million
compared to USD 436.1 million in 2020.
In 2021, BW Offshore recorded an impairment
on the FPSO fleet of USD 90.5 million. The
impairment reflects reduced probability of extension
of current contracts, as well as lack of redeployment
opportunities after end of contract period for the
more mature part of the FPSO fleet. Impairment
charges were recognised on BW Athena, Espoir
Ivoirien, Berge Helene, Sendje Berge, Joko Tole,
Petróleo Nautipa and Umuroa.
Operating profit was USD 42.0 million, compared
to an operating loss of USD 140.6 million in 2020.
Share of profit of equity-accounted investees was
USD 33.5 million compared to a loss of USD 15.7
million in 2020 and included BW Offshore’s share
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of net result from the ownership in BW Energy. In
October 2021, BW Offshore sold 20 million shares
in BW Energy for USD 65.7 million in gross proceeds.
This transaction resulted in a gain of USD 14.9 million.
Net financial expenses were USD 28.6 million
compared to USD 115.7 million in 2020. The
decrease was mainly due to fair value effects on
financial instruments and positive effects from
currency exchange gains.
The Group recognised net tax income of USD 15.3
million, compared with a tax expense of USD 38.0
million in 2020. BW Offshore had tax losses carried
forward in Australia from a previous operation linked
to the acquisition of Prosafe Production. This tax loss
has previously not been recognised in the balance
sheet as BW Offshore has had no operation in
Australia in recent years. With the signing of the
Barossa FPSO contract, it is anticipated that this
tax loss can be utilised and consequently a deferred
tax asset of USD 60.7 million was recognised in
2021 resulting in a net tax income for the year. The
Group has also written down a deferred tax asset
of USD 11.8 million relating to the sale of Joko Tole.
Net profit for 2021 was USD 62.2 million compared
to a loss of USD 272.3 million for 2020.
Financial position
At 31 December 2021, the Group had a net equity of
USD 1 021.4 million compared to USD 945.0 million
as of 31 December 2020. The equity ratio at the end
of 2021 was 33.9 per cent, compared to 36.5 per
cent at the end of 2020.
At 31 December 2021, the Group had interest-
bearing debt of USD 927.6 million compared to
USD 1 075.7 million in 2020. The interest-bearing
debt comprises mainly the Catcher facility, the
corporate loan facility, convertible bond, unsecured
bond loan and a finance liability relating to the
Barossa project.
Net interest-bearing debt as of 31 December 2021
was USD 653.4 million compared to USD 936.1
million in 2020.
Cash flow
Net cash inflow from operating activities was
USD 510.2 million compared to net cash inflow of
USD 387.3 million in 2020. The increase was mainly
driven by prepayments relating to the Barossa project
starting in March 2021.
Net cash outflow from investment activities
amounted to USD 323.0 million, compared to
USD 149.6 million in 2020. The increase was mainly
related to investment in the Barossa project and
investment in BW Ideol, partly offset by net proceeds
from the sale of shares in BW Energy.
Net cash outflow from financing activities
amounted to USD 52.6 million compared to
USD 348.3 million in 2020. The decrease in
outflow mainly relates to financing of the Barossa
project and proceeds from BW Ideol share issue.
Dividends
During 2021, BW Offshore paid USD 25.3 million in
dividends to shareholders, equal to USD 0.035 per
share per quarter.
PARENT COMPANY ACCOUNTS
BW Offshore Limited is a holding company. The
Company reported a net loss of USD 282.7 million
for 2021, compared to a net loss of USD 156.9
million in 2020. The loss for 2021 is mainly related to
impairment of investment in subsidiaries, associates
and intercompany loans.
Total assets were USD 1 414.7 million as of
31 December 2021 compared to USD 1 785.4 million
in 2020.
Total shareholders’ equity in BW Offshore Limited
as of 31 December 2021, was USD 276.2 million,
corresponding to an equity ratio of 19.5 per cent.
GOING CONCERN
Based on the Group’s overall position at the end of
the year, as well as the current outlook, the Board
believes BW Offshore has a good foundation for
continued operations. The accounts have been
prepared on a going concern basis.
ORGANISATION
BW Offshore is represented in the major energy
regions worldwide, across Asia Pacific, the Americas,
Europe and West Africa, supported by local onshore
teams and is an organisation with a global presence.
At year end 2021, BW Offshore had 1 849 employees
including contract staff, compared to 1 927 in 2020.
The working environment and culture in BW Offshore
are considered strong, and there is continuous focus
on initiatives for improvement. In 2021, onshore
absence due to sickness was 1.4 per cent of the
total hours worked by employees. This compares to
1.2 per cent in 2020.
BW Offshore strives to be an attractive workplace
which offers challenging and motivating jobs and
equal development opportunities for all. There is
no discrimination due to gender, nationality, culture
or religion with respect to remuneration, promotion
or recruitment. The Company is committed to
recognising diversity and inclusion, to ensure equal
opportunities, and providing fair employment
conditions.
CORPORATE GOVERNANCE
The Board of Directors of the Company has
adopted a Corporate Governance policy to reflect
BW Offshore’s commitment to good corporate
governance. This policy is based on the latest
update to the ‘Norwegian Guidelines on Corporate
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Governance’, prepared by the Norwegian Corporate
Governance Board. BW Offshore’s Corporate
Governance policy complies with the Norwegian
Guidelines, with certain deviations, as outlined and
explained in the Corporate Governance Report in this
annual report.
RISK
BW Offshore’s risk exposure is analysed and evaluated
to ensure sound internal control and appropriate risk
management based on internal values, policies and
code of ethics. The Group is exposed to operational
and financial risks (including currency risk, interest
rate risk, credit risk and liquidity risk).
The most important operational risk factors are
related to the operation of FPSOs and project
execution, which could lead to accidents and oil spills
to the environment if not managed properly.
On a fleet-wide basis, the Group takes out insurance
coverage for its crew and support staff, pollution and
clean up, damage to vessels, third-party liabilities
and on some units’ loss of hire. The insurance also
covers losses resulting from acts of war and terrorism.
Coverage for oil pollution and oil pollution caused by
war and war-like actions is limited per incident.
BW Offshore Ltd has purchased and maintains a
Directors and Officers Liability Insurance issued by
a reputable insurer with an appropriate rating.
The overall financial risk management focuses on
the unpredictability of financial markets and seeks
to minimise potential adverse effects on the Group’s
financial performance.
During 2021, the Company registered a shift in
investor attention to energy transition activities
with capital increasingly being allocated towards
electrification and clean fuels. This may over time
lead to increased uncertainty related to access to
financing and the capital cost for new hydrocarbon-
based projects as well as increased costs to comply
with changing regulatory requirements.
BW Offshore’s operational activities are subject to
tax in various jurisdictions. As contracts with clients
are long-term in nature, the Group’s results are
exposed to risk of changes to tax legislation.
OUTLOOK
The Company expects that core units in the existing
fleet will continue to generate significant cash flow
in the time ahead. The firm FPSO contract backlog
at end of 2021 amounted to USD 6.5 billion when
including the Barossa contract. With probable
options, the backlog was USD 7.7 billion at the end
of the year.
The Covid-19 pandemic continues to affect
operations and the market environment. Higher
energy prices in 2021 and into 2022 are a sign of
improved market fundamentals as distribution of
vaccines accelerates and more nations normalise
activity levels.
The oil and gas industry is expected to continue
to focus on progressing long-term large field
development initiatives with low break-even
costs and low carbon emissions. This expectation
is supported by the higher oil and gas prices. BW
Offshore maintains a selective approach to such
opportunities, progressing discussions on only a
few high-end projects which can be developed in
partnership with global infrastructure investors.
The Company is seeking to optimise the current
asset portfolio considering the overall cost base.
This includes potential divestment or recycling of
units if FPSO redeployment opportunities do not
materialise.
BW Ideol is BW Offshore’s vehicle for investment in
floating offshore wind. The company is progressing
multiple projects supported by the funding from the
private placement in 2021.
With the recent divestment of FPSO assets and
part of the shareholding in BW Energy, the Company
has further strengthened the balance sheet, and is
positioned for growth into accretive offshore energy
projects and long-term value creation.
27 February 2022
Sign Sign Sign Sign Sign
Mr Andreas Sohmen-Pao Ms Rebekka Glasser Herlofsen Mr Maarten Scholten Mr René Kofod-Olsen Mr Carl K. Arnet
Chairman Director Director Director Director
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Board of Directors
ANDREAS SOHMEN-PAO
Chairman
Andreas Sohmen-Pao is Chairman
of BW Group and listed affiliates BW
Offshore, BW LPG, Hafnia, BW Epic
Kosan, BW Energy and Cadeler. He
is Chairman of the Global Centre for
Maritime Decarbonisation, a director of
Navigator Holdings and a trustee of the
Lloyd’s Register Foundation.
Mr Sohmen-Pao was previously
Chairman of the Singapore Maritime
Foundation and has served as a non-
executive director of Hongkong and
Shanghai Banking Corporation Ltd,
London P&I Club, Esplanade Co Ltd,
National Parks Board Singapore, Sport
Singapore and the Maritime and Port
Authority of Singapore amongst others.
REBEKKA GLASSER HERLOFSEN
Director
Rebekka Glasser Herlofsen has over 25
years of experience from the shipping
and finance industries, and has served
on the management teams of several
leading Norwegian shipping companies.
Ms Herlofsen is a board member of
Equinor ASA, Rockwool International
A/S, SATS ASA, Klaveness Combination
Carriers ASA, Wilh. Wilhelmsen Holding
ASA and chairman of the board of the
marine insurer Norwegian Hull Club.
Ms Herlofsen is independent from
the Company’s management, major
shareholders and principal business
associates.
MAARTEN R. SCHOLTEN
Director
Maarten R. Scholten, Director has over
30 years of extensive legal, financial and
operational experience in the upstream
oil and gas sector.
Mr Scholten has held senior and
executive positions at Schlumberger
spanning two decades. During his
career at Schlumberger, Mr Scholten
was Director of Legal Service; Head of
Finance; President, Schlumberger Oilfield
Services ECA (Europe, Africa and CIS);
and Director, Mergers & Acquisitions/
Business Development.
Mr Scholten is independent from
the Company’s management, major
shareholders and principal business
associates.
RENÉ KOFOD-OLSEN
Director
René Kofod-Olsen has experience
from almost three decades in the global
shipping and energy industries.
Mr Kofod-Olsen was appointed Chief
Executive Officer and Board Executive
of V.Group in 2020. In 2012, he was
appointed Chief Executive Officer of
Topaz Energy & Marine, a position he
held until the company’s successful
divestment in 2019. He stepped down
after completing the integration process
in 2020.
Mr Kofod-Olsen is independent from
the Company’s management, major
shareholders and principal business
associates.
CARL K. ARNET
Director
Carl Krogh Arnet has over 40 years of
experience in the oil and gas industry.
Mr Arnet is currently the Chief Executive
Officer of BW Energy Limited. Prior to this
role, he was the Chief Executive Officer of
BW Offshore Limited.
Mr Arnet holds a number of other board
memberships and chairmanships in non-
related companies and is a non-executive
director of the Maritime and Port Authority
of Singapore.
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Management
Senior Management Functional Management
MARCO BEENEN
CEO
RUNE BJORBEKK
CCO
STÅLE ANDREASSEN
CFO
MAGDA VAKIL
General Counsel
KEI IKEDA
COO
LUCY MCCABE
Head of Corporate
Integrity
HANS KRISTIAN
LANGSRUD
Head of Asset
Engineering
& Maintenance
MIKE MCAREAVEY
Head of Operational
Integrity
MICHAEL SKYUM
Head of Supply
Chain
PIA SCHNITLER
Head of Human
Capital
FRITZ EKLØFF
Head of IT
& Systems
COMMITTEES
Gender Role
Audit Committee
Rebekka Glasser Herlofsen
F
Chair
René Kofod-Olsen M Member
Nomination Committee
Andreas Sohmen-Pao
M
Chair
Bjarte Bøe
M
Member
Elaine Yew Wen Suen F Member
Technical and Commercial Committee
Carl K. Arnet
M
Chair
Maarten R. Scholten
M
Member
Compensation Committee
Andreas Sohmen-Pao M Chair
Maarten R. Scholten
M
Member
Read more about the committees on the Company’s website.
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BW Offshore 2021 Annual ReportBW Offshore 2021 Annual Report
Corporate governance report
BW Offshore Limited is a Bermuda limited liability company listed on Oslo
Børs (the ‘Oslo Stock Exchange‘ – part of Euronext). BW Offshore Limited
(hereinafter ‘BW Offshore’ or ‘Company’) and its activities are primarily
governed by the Bermuda Companies Act, its Memorandum of Association
and its Bye-laws. Certain aspects of the Company’s activities are governed by
Norwegian law pursuant to the Listing Agreement between the Oslo Stock
Exchange and the Company. In particular, the Norwegian Securities Trading
Act and the Norwegian Stock Exchange Regulations will generally apply.
1 IMPLEMENTATION AND REPORTING ON
CORPORATE GOVERNANCE
The Board of Directors (the ‘Board’) is of the
opinion that the interests of the Company, and
its shareholders taken as a whole, are best served
by the adoption of business policies and practices
which are legal, compliant, ethical and open in
relation to all dealings with customers, potential
customers and other third parties. These policies
are fair and in accordance with best market
practice in relationships with employees and are
also sensitive to reasonable expectations of public
interest.
The Board therefore commits the Company to
good corporate governance and seeks to comply
with the most current version of the Norwegian
Code of Practice for Corporate Governance,
dated 14 October 2021 (the ‘Code’), prepared by
the Norwegian Corporate Governance Board.
The Board provides an overview of the Company’s
corporate governance practices in the Company’s
annual report. The review addresses each individual
section of the Code and provides an explanation
and description of the chosen alternative approach
if the Company does not fully comply with the
Code.
Deviations to the Code
On 31 December 2021, the Company did not
comply with the following recommendations of
the Code:
•
Section 3: Board powers to issue and
purchase shares are neither limited to
specific purposes nor to a specified period.
•
Section 5: Bye-laws include a
right for the Board to decline to
register the transfer of shares.
•
Section 6: The Chairman of the Board also
acts as the Chair of the General Meetings.
•
Section 7: A member of the Board of
Directors is a member of the Nomination
Committee and may offer him- or
herself for re-election to the Board.
•
Section 8: The composition of the
Board does not meet the recommended
gender guidelines of the Code.
2 THE BUSINESS
In accordance with common practice for Bermuda
incorporated companies, the Company’s objectives
as set out in the Company’s Memorandum of
Association are wider and more extensive than
recommended by the Code.
The Board is responsible for and shall take the lead
on the Company’s strategic planning, and should
define clear objectives, strategies and risk profiles
for the Company’s business activities such that
the Company creates value for the shareholders,
other stakeholders and society at large in a
sustainable manner. The Company’s objectives,
main strategies and risk profiles are subject to
annual review and described in the annual report,
and take into consideration financial, social and
environmental factors.
BW Offshore has implemented corporate values
and ethical guidelines that are described in the
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Company’s Code of Ethics and Business Conduct
(the Code) and internal policies, as well as in the
sustainability report, included in the annual report.
The Company’s expectations of suppliers and third
parties are stated in the BW Offshore’s Supplier
Code of Ethics and Business Conduct (the
Supplier Code). Both the Code and the Supplier
Code are available on the company website www.
bwoffshore.com. Identified risks and opportunities
are described in the annual report, and a corporate
risk registry is subject to annual review.
3 EQUITY AND DIVIDENDS
Equity and capital structure
On 31 December 2021, the Company’s
consolidated equity was USD 1 021.4 million,
which is equivalent to 33.9 per cent of total
assets. The Board continuously evaluates the
Company’s capital requirements to ensure that
the Company’s capital structure is at a level which
is suitable considering the Company’s objectives,
strategy and risk profile.
Dividend policy
Pursuant to the Company’s Bye-laws, the
Board is authorised to declare dividend to the
shareholders. The Board has drawn up a clear and
predictable dividend policy, which was last revised
and approved by the annual general meeting on
18 May 2020:
“BW Offshore has an objective to generate
competitive long-term total shareholder
returns. This return will be achieved through
growth and dividend payments. The Company
targets to pay dividends on a quarterly basis.
The Board of Directors will target a sustainable
dividend level that can grow over time, taking
into account the overall cash flow position
and future capital requirements. In addition to
paying a cash dividend, BW Offshore may also
buy back shares as part of its plan to distribute
capital to shareholders.”
During 2021, the Company paid a total of
USD 0.14 per share as cash dividend, split between
four payments in February, June, September and
December.
Authorisations to issue new shares and share
buy-backs
Pursuant to Bermuda law and as is common
practice for Bermuda-incorporated companies,
the Board has wide powers to issue any authorised
unissued shares in the Company on such terms
and conditions as it may decide, and may exercise
all powers of the Company to purchase the
Company’s own shares. The powers of the Board
to issue and purchase shares are neither limited
to specific purposes nor to a specified period as
recommended in the Code. On 31 December
2021, the total authorised share capital in the
Company was USD 214 million.
Share option programme for key employees
On 8 April 2019, the Group established a
long-term share option programme (LTIP) that
entitles key personnel to purchase shares in the
Company. The programme is discretionary, and
participants are invited on an annual basis. Under
the programme, holders of vested options are
entitled to purchase shares at the market price of
the shares at the grant date.
In 2021, a total of 1 849 600 options were
awarded under the LTIP, giving the holder the
right to acquire one BW Offshore share. The strike
price of the options is calculated based on the
volume weighted average share price five trading
days prior to grant date, plus a premium of 15.76
per cent. A total of 60 BW Offshore employees
were invited to participate in the programme. The
options have a three-year vesting period, followed
by a three-year exercise period. Exercise windows
are set by the Company. The options will expire
six years after the award date.
In June 2021, the Company transferred shares to
certain employees in relation to a long-term bonus
plan. CEO Marco Beenen received 3 301 shares,
CCO Rune Bjorbekk received 3 279 shares and
COO Kei Ikeda received 4 806 shares. The shares
will be restricted until June 2022.
Purchase of own shares
There were no transactions related to the
Company’s own shares in 2021. On 31 December
2021, BW Offshore held a total of 4 141 437
treasury shares or 2.24 per cent of the total
number of issued shares.
4 EQUAL TREATMENT OF SHAREHOLDERS
The Company has one class of shares. Each
share in the Company carries one vote, and all
shares carry equal rights, including the right to
participate in general meetings. All shareholders
shall be treated on an equal basis, unless there is
just cause for treating them differently.
Pre-emption rights to subscribe
Pursuant to Bermuda law and common practice
for Bermuda-incorporated companies, the
shareholders of the Company do not have pre-
emption rights in share issues unless otherwise
resolved by the Company. Any decision to issue
shares without pre-emption rights for existing
shareholders shall be justified. In the event that
BW Offshore waives the pre-emption rights of
existing shareholders, the Board of Directors will
explain the justification in the stock exchange
announcement issued in connection with the
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increase in share capital. There were no share
issues in 2021.
Trading in own shares
Any transactions the Company carries out in its
own shares shall be carried out either through
the Oslo Stock Exchange or with reference to
prevailing stock exchange prices if carried out
in another way. If there is limited liquidity in the
Company’s shares, the Company shall consider
other ways to ensure equal treatment of all
shareholders. See section 3 on page 20 for details
about trading in treasury shares during 2021.
5 SHARES AND NEGOTIABILITY
The Company’s constituting documents do not
impose any restrictions on the ability to own, trade
or vote for shares in the Company and the shares in
the Company are freely transferable. However, the
Bye-laws include a right for the Board to decline
to register the transfer of any share, and may direct
the Registrar to decline (and the Registrar shall
decline if so requested) to register the transfer of
any interest in a share held through Euronext VPS,
where such transfer would, in the opinion of the
Board, likely result in 50 per cent or more of the
aggregate issued and outstanding share capital of
the Company, or shares of the Company to which
are attached 50 per cent or more of the votes
attached to all issued and outstanding shares of
the Company, being held or owned directly or
indirectly by individuals or legal persons resident
for tax purposes in Norway or, alternatively, such
shares being effectively connected to a Norwegian
business activity, or the Company otherwise
being deemed a Controlled Foreign Company as
such term is defined pursuant to Norwegian tax
legislation. The purpose of this provision is to avoid
the Company being deemed a Controlled Foreign
Company pursuant to Norwegian tax rules.
6 GENERAL MEETINGS
The annual general meeting normally takes place
on or before 31 May each year. The 2021 annual
general meeting was held on 14 May. The Board
seeks to ensure that as many shareholders as
possible can participate in the Company’s general
meetings and that the general meetings are an
effective forum for the views of shareholders and
the Board. In order to facilitate this:
•
the notice and the supporting documents
and information on the resolutions to be
considered at the general meeting shall
be available on the Company’s website
no later than 21 calendar days prior to
the date of the general meeting.
•
the resolutions and supporting
documentation, if any, shall be sufficiently
detailed, comprehensive and specific
to allow shareholders to understand
and form a view on matters that are
to be considered at the meeting.
•
the registration deadline, if any, for
shareholders to participate at the
general meeting shall be set as closely
to the date of the general meeting as
practically possible and permissible
under the provision in the Bye-laws.
•
the shareholders shall have the opportunity
to vote separately on each individual matter,
including on each individual candidate
nominated for election to the Company’s
Board and committees (if applicable).
Registration is made in writing, per telefax or by
e-mail. Shareholders who cannot be present at the
general meeting must be given the opportunity to
vote by proxy or to participate by using electronic
means. The Company shall in this respect:
•
provide information on the procedure
for attending by proxy;
•
nominate a person who will be
available to vote on behalf of
shareholders as their proxy; and
•
prepare a proxy form, which shall, insofar
as this is possible, be formulated in such
a manner that the shareholder can vote
on each item that is to be addressed
and vote for each of the candidates
that are nominated for election.
Pursuant to common practice for Bermuda-
incorporated companies, the Company’s Bye-laws
states that the general meeting shall be chaired
by the chairman of the Board unless otherwise
agreed by a majority of those shares represented
at the meeting. The Code states that the Board
should ensure that the general meeting may elect
an independent person to chair the meeting. BW
Offshore consequently deviates from the code
of practice in this respect since the Chairman of
the Board also chairs the general meeting. This is
based on tradition and simplifies preparations for
the meeting.
The minutes of the annual general meeting are
published on the Company’s website no later than
three business days after the date of the meeting.
7 NOMINATION COMMITTEE
The Nomination Committee is governed by the
Company Bye-laws section 37.3.
The Nomination Committee composition is
determined by the Company’s general meeting
from time to time, and the members are appointed
by a general meeting resolution, including the
chairman of the committee. The general meeting
determines the remuneration of the Nomination
Committee and stipulates guidelines for the duties
of the Nomination Committee. The guidelines
are available at the Company’s website www.
bwoffshore.com, and the Company will provide
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shareholders with any deadlines for submitting
proposals for candidates to the Nomination
Committee.
The composition of the Nomination Committee
should reflect a broad range of shareholder
interests. The majority of the committee shall
be independent of the Board and the executive
personnel of the Company. No more than one
member of the Nomination Committee shall
be a member of the Board of Directors. The
Nomination Committee shall not include the
Company’s Chief Executive Officer or any other
executive personnel.
The Nomination Committee’s primary duty is
to propose candidates for election as members
of the Board of Directors and to propose the
remuneration to be paid to the members of the
Board of Directors. The Nomination Committee
justifies its recommendations for each candidate
separately.
Any member of the Board of Directors who is
also a member of the Nomination Committee
may offer himself for re-election to the Board of
Directors. This deviation from the Code has been
implemented to facilitate cooperation between
the Nomination Committee and the Board, and
continuity in the Board. This will be revised at the
AGM in 2022 to achieve compliance with the
Code.
8 THE COMPOSITION AND INDEPENDENCE OF THE
BOARD
The Board composition is governed by the
Company’s Bye-laws. The Board may consist of
between five to eight directors. The directors are
elected for a period of two years unless otherwise
determined by the general meeting. Members of
the Board may be re-elected. Only a minority
of the directors participating in any decision can
be domiciled or living in Norway. The same shall
be reflected in the composition of the Board.
The Board appoints the Chairman amongst the
elected Board members.
The composition of the Board ensures that it
can act independently of any special interests.
A majority of the shareholder-elected members
of the Board are independent of the Company’s
executive personnel and material business
connections of the Company. In addition, at least
three of the members of the Board are independent
of the Company’s major shareholder(s). A major
shareholder is defined as owning 10 per cent
or more of the Company’s shares or votes,
and independence entails that there are no
circumstances or relations that may be expected
to be able to influence independent assessments
of the person in question.
The Board does not include the Company’s chief
executive officer or any other executive personnel.
The composition of the Board does not meet the
recommended gender guidelines of the Code but
meets the Company’s need for expertise and
diversity. A short description of our directors and
their respective areas of expertise are presented
on the Company’s website www.bwoffshore.com.
Members of the Board are welcome to own
shares in the Company.
9 THE WORK OF THE BOARD
The Board is ultimately responsible for the
management of the Company and for supervising
its day-to-day management. The duties and
tasks of the Board are detailed in the Company’s
Bye-laws.
The Board produces an annual plan for its work,
with particular emphasis on objectives, strategy
and implementation. The Board issues instructions
for its own work, as well as for the Company’s
executive personnel, with particular emphasis
on clear internal allocation of responsibilities and
duties. The Board carries out an annual evaluation
of its performance and expertise.
In case of any material transactions between
the Company and a shareholder, a shareholder’s
parent company, director, officer, or persons
closely related to any of these (collectively referred
to as ‘related parties’), the Company has in place
guidelines and procedures as to how the Board
and executive personnel of the Company shall
handle agreements with related parties, including
when the Board should obtain a valuation from an
independent third party. Independent valuations
shall also be obtained in respect of transactions
between companies within the same group where
NOMINATION COMMITTEE
Name Role
Considered independent of the main
shareholder and management
Served
since
Mr Andreas Sohmen-Pao Chair No, chairman of the board
Mr Bjarte Bøe Member Yes
Ms Elaine Yew Wen Suen Member Yes
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any of the companies involved have minority
shareholders. For more information regarding
related party transactions, see Note 28 of the
annual report.
Directors and officers of the Company and other
leading personnel shall notify the Board if they
directly or indirectly have a significant interest
in matters to be considered by the Board of
Directors.
In order to conduct its work, the Board annually
schedules in advance quarterly meetings of the
Board for the following calendar year, although
additional meetings may be called by any director
of the Company. The Board held an aggregate
of six meetings in 2021. The directors normally
meet in person, but if allowed by the chairman,
directors may participate in any meeting of the
Board by means of telephone or video conference.
The majority of Board meetings in 2021 were
held digitally due to the Covid-19 pandemic and
related travel restrictions. Minutes in respect of the
meetings of the Board of Directors are maintained
by the Company in Bermuda.
The Board shall provide details in the annual
report of any Board committees appointed.
On 31 December 2021, the Company had the
following Board-appointed Committees:
Audit Committee
The Audit Committee acts as an advisory
committee to the Board. The Audit Committee is
responsible for reviewing the financial statements
of the Company and advising the Board as to
whether they show a true and fair view and have
been prepared in accordance with the law and
all regulations and standards applicable to the
Company. The Audit Committee also reviews
the Company’s key areas of exposure to risk and
internal control arrangements, as well as an annual
supervisory plan for internal audit work. The Audit
Committee follows up on internal controls in
connection with quarterly reviews of the Group’s
financial reporting. At least once a year, the Board
and the Audit Committee review the Company’s
internal control procedures relating to its financial
reporting process. On 31 December 2021, the
Audit Committee consisted of Rebekka Glasser
Herlofsen (Chair) and René Kofod-Olsen, both
of whom are independent members of the Board.
Technical and Commercial Committee
The Technical and Commercial Committee acts
as a preparatory and advisory committee to
the Board in respect of the management of the
Company’s business. Matters reviewed by the
Committee, and reported to the Board, include
commercial and technical matters relating to the
Company’s operations, and marketing and tender
activities of the Company. At least once a year,
the Technical and Commercial committee will
also review the systems utilised by the Company
for identifying areas of material business risk, for
measuring their possible impact on the Group and
the procedures in place to mitigate the impact of
such risks. On 31 December 2021, the Technical
and Commercial Committee consisted of Carl K.
Arnet (Chair) and Maarten R. Scholten, both of
whom were also members of the Board.
Compensation Committee
The Compensation Committee acts as a
preparatory and advisory committee for the Board
in order to ensure thorough and independent
preparation of matters relating to compensation
to the executive personnel. On 31 December
2021, the Compensation Committee consisted
of Andreas Sohmen-Pao (Chair) and Maarten
R. Scholten, both of whom were also members
of the Board.
The Terms of Reference for the Audit Committee
and the Guidelines for the Nomination Committee
BOARD OF DIRECTORS
Name Role
Considered independent of the main
shareholder and management
Served
since
Term
expires
Participation in
board mettings in
Shares in BW
Offshore
(direct/indirect) Nationality
Mr Andreas Sohmen-Pao Chair No % Austrian
Ms Rebekka Glasser Herlofsen Director Yes % Norwegian
Mr Maarten R. Scholten Director Yes % Dutch
Mr René Kofod-Olsen Director Yes % Danish
Mr Carl K. Arnet Director No % Norwegian
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and the Technical and Commercial Committee are
available on www.bwoffshore.com.
10 RISK MANAGEMENT AND INTERNAL CONTROL
The Board ensures that the Company has sound
internal control procedures and systems to manage
its exposure to risks related to the conduct of the
Company’s business, to support the quality of its
financial reporting and to ensure compliance with
laws and regulations. Such procedures and systems
contribute to securing shareholders’ investment
and the Company’s assets.
Management and internal control are based on
Company-wide policies and internal guidelines
in areas such as Finance and Accounting, HSE,
Project Management, Operation, Technical
and Business Development, in addition to
implementation and follow-up of a risk
assessment process. The management system
is central to BW Offshore’s internal control and
ensures that the Company’s purpose, policies,
goals and procedures are known and adhered to.
The Board annually reviews the Company’s most
important areas of exposure to risk and its internal
control arrangements and an annual supervisory
plan for internal audit work is approved by the
CEO, based on HSSEQ recommendations and
risk assessments carried out.
The internal auditor position is independent from
the line management and reports directly to the
CEO. In addition to its own controlling bodies
and external audit, BW Offshore is subject to
external supervision by DNV for classification in
accordance with relevant ISO standards.
The Board’s Audit Committee follows up internal
control in connection with quarterly reviews
of the Group’s financial reporting in addition to
two meetings in which internal control issues
are addressed specifically. The Chief Financial
Officer, the Company’s other relevant senior staff
and representatives of the external auditor, attend
the meetings of the Audit Committee.
The systems for risk management and internal
control also encompass the Company’s
guidelines regarding how the Company integrates
considerations related to stakeholders into
its creation of value. Please see the separate
sustainability report included in the annual report
for further information.
BW Offshore has established a Code of Conduct
for the Company and its employees, providing
guidance on how they can communicate with
the Board to report matters relating to illegal or
unethical conduct by the Company.
11 REMUNERATION OF THE BOARD OF DIRECTORS
The general meeting decides the remuneration of
the Board based on a proposal from the Nomination
Committee. The remuneration of the Board and
its individual directors shall reflect the Board’s
responsibility, competence, use of resources and
the complexity of the business activities. The
remuneration of the directors shall not be linked to
the Company’s performance and the directors do
not receive profit-related remuneration or share
options or retirement benefits from the Company.
Any remuneration in addition to normal fees to the
directors is specifically stated in the annual report.
Detailed information of Board remuneration can
be found in Note 9 of the consolidated financial
statements.
Directors or companies related to BW Offshore,
shall not normally undertake special tasks for the
Company in addition to the directorship. However,
if they do so, the entire Board shall be informed,
and the fee, if any, shall be approved by the Board.
12 SALARY AND OTHER REMUNERATION OF THE
EXECUTIVE PERSONNEL
Salary and other remuneration of the executive
personnel is reviewed annually by the
Compensation Committee, which generally
considers the executive personnel’s performance
and also gathers information from comparable
companies before making its recommendation to
the Board for approval. Such recommendation shall
contribute to execution of strategy, long-term
value creation and financial viability and ensure
convergence of the interests of the executive
personnel and the shareholders. The Guidelines
on Executive Remuneration is available on the
Company’s website, www.bwoffshore.com.
Any performance-related remuneration to
executive personnel is subject to an absolute
limit. The limit is approved by the Board of
Directors based on a recommendation from the
Remuneration Committee which is available on
the website. The maximum potential pay-out
of the Variable Compensation Scheme for the
Executive Management Team is set at six months’
salary.
Any share option programme in the Company
available to the employees of the Company, and
subsidiaries, requires the approval of the Board.
Detailed information of remuneration, loans,
shareholding of the management and any share
option programmes can be found in Note 9 of the
consolidated financial statements.
13 INFORMATION AND COMMUNICATIONS
BW Offshore is committed to provide information
in a manner that contributes to establishing and
maintaining confidence with important interest
groups and stakeholders. The information is
based upon transparency, openness and equal
treatment of all shareholders. A pre-condition for
the share value to reflect the underlying values
in the Company is that all relevant information
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is disclosed to the market. Based on this, BW
Offshore will endeavour to keep the shareholders
informed about profit developments, prospects
and other relevant factors for their analysis of the
Company’s position and value. It is emphasised
that the information is uniform and simultaneous.
Please see the Investor Relations Policy available
on www.bwoffshore.com.
14 TAKEOVERS
In the event of a takeover process, the Board
shall ensure that the Company’s shareholders are
treated equally and that BW Offshore’s activities
are not unnecessarily interrupted. The Board shall
also ensure that the shareholders have sufficient
information and time to assess the offer. In the
event of a takeover process, the Board shall abide
by the principles of the Code, and also ensure that
the following take place:
•
the Board shall ensure that the offer is made
to all shareholders, and on the same terms;
•
the Board shall not undertake any actions
intended to give shareholders or others an
unreasonable advantage at the expense
of other shareholders or the Company;
•
the Board shall strive to be completely
open about the takeover situation;
•
the Board shall not institute measures which
have the intention of protecting the personal
interests of its members at the expense
of the interests of the shareholders; and
•
the Board must be aware of the
particular duty the Board carries for
ensuring that the values and interests
of the shareholders are safeguarded.
The Board shall not attempt to prevent or impede
the takeover bid unless this has been decided
by the shareholders in the general meeting in
accordance with applicable laws. The main
underlying principles shall be that the Company’s
shares shall be kept freely transferable and that
the Company shall not establish any mechanisms
which can prevent or deter takeover offers unless
this has been decided by the shareholders in the
general meeting in accordance with applicable law.
If an offer is made for the Company’s shares, the
Board shall issue a statement evaluating the offer
and making a recommendation as to whether
shareholders should or should not accept the
offer. If the Board finds itself unable to give a
recommendation to the shareholders on whether
or not to accept the offer, it should explain the
reasons for this. The Board’s statement on a bid
shall make it clear whether the views expressed
are unanimous, and if this is not the case, it shall
explain the reasons why specific members of
the Board have excluded themselves from the
statement. The Board shall consider whether to
obtain a valuation from an independent expert. If
any member of the Board, or close associates of
such member, or anyone who has recently held a
position but has ceased to hold such a position
as a member of the Board, is either the bidder or
has a particular personal interest in the bid, the
Board shall obtain an independent valuation. This
shall also apply if the bidder is a major shareholder
(as defined in section 8 on page 22). Any such
valuation should either be enclosed with the
Board’s statement or reproduced or referred to in
the statement.
15 AUDITOR
The auditor is appointed by the general meeting
and is independent of the business of the
Company. The auditor shall annually confirm its
independence in writing to the Audit Committee.
On 31 December 2021, the external auditor of the
Company is KPMG AS.
The auditor holds office for the term resolved by the
general meeting or until a successor is appointed
and is responsible for the audit of the consolidated
financial statements of the Company. The Board
of Directors shall ensure that the auditor annually
presents an audit plan to the Audit Committee
and/or the Board.
The Audit Committee shall invite the auditor
to participate in the Audit Committee’s review
and discussion of the annual accounts and
quarterly interim accounts. In these meetings,
the Audit Committee is informed of the annual
and quarterly accounts and issues of special
interest to the auditor. Further, the auditor shall
participate in meeting(s) of the Board that deal
with the annual accounts. At these meetings the
auditor should review any material changes in the
Company’s accounting principles, comment on
any material estimated accounting figures and
report all material matters on which there has
been disagreement between the auditor and the
management of the Company and/or the Audit
Committee.
At least once a year, the Audit Committee reviews
the Company’s internal control procedures with
the auditor, including weaknesses identified by the
auditor and proposals for improvement.
The Board has established guidelines specifying
the right of the Company’s executive management
to use the auditor for purposes other than auditing.
The auditor’s remuneration is approved by the
shareholders at the general meeting or in such
manner as the general meeting may determine.
For more information about remuneration of the
auditor, see Note 9 in the consolidated financial
statements.
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Shareholder information
It is in the interest of BW Offshore, as a public
listed company, to effectively communicate with
the financial community and other stakeholders
in order to provide consistent and transparent
information to ensure fair treatment of all
stakeholders. The integrity of the capital markets
is based on full and fair disclosure of information.
BW Offshore will maintain a reliable and open
relationship with investors, and the Company’s
objective is to provide a higher return than
alternative investments with a comparable
risk profile. Return is measured on a total
shareholder return basis, including both share price
performance and dividend payments. Based on
these value parameters, the BW Offshore share
shall be an attractive investment opportunity.
All shareholders in BW Offshore have equal
rights and the Company treats all shareholders
equally. The Company has one share class and
each share carries one vote at the Company’s
general meetings. BW Offshore is a Bermuda
limited liability company listed on the Oslo Stock
Exchange. The Company is therefore obliged to
comply with the Bermuda Companies Act, its
Memorandum of Association and its Bye-laws,
as well as the disclosure requirements of the
Oslo Stock Exchange. Certain aspects of the
Company’s activities are governed by Norwegian
law pursuant to the Listing Agreement between
the Oslo Stock Exchange and the Company. In
particular, the Norwegian Securities Trading Act
and the Norwegian Stock Exchange Regulations
will generally apply.
BW Offshore is committed to providing timely,
orderly, consistent and credible information.
Information and communication are regulated by
the Company’s media policy and investor relation
policy, and cover disclosures to the investment
community, the press, industry consultants and
other audiences. All investors have equal access to
material information, and all information provided
externally by the Company shall be consistent
with disclosures to the investment community.
During a period of two weeks before the planned
release of an interim financial report, BW Offshore
will not comment on matters related to the
Company’s financial performance or expectations,
save for ordinary communication with analysts
and investors on general aspects of the business.
BW Offshore maintains a list of primary insiders in
the Company, and will also maintain internal lists
for insiders in cases sensitive to the stock prices.
The investor relations activities aims to ensure
that:
•
The information it provides to the
financial markets gives market players
the best possible basis for establishing
a precise picture of the Company’s
financial condition and factors which
might affect its future value creation.
•
The market price of BW Offshore’s shares
reflects the fair value of the Company.
•
BW Offshore’s shares remain as liquid as
possible, with lowest possible volatility.
•
BW Offshore maintains access to capital
markets on the most favourable possible terms.
•
BW Offshore’s Board of Directors and
executive management are adequately
informed about developments in financial
markets and about stakeholder views on
the Company’s position and development.
Bermuda 49.92%
Norway 29.70%
Spain 3.00%
Switzerland 0.80%
US 6.90%
Other 9.68%
GEOGRAPHICAL
DISTRIBUTION
OF SHAREHOLDERS
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20 LARGEST SHAREHOLDERS
Name No of shares Holding %
1 BW Group Limited 90 245 285 49.92%
2 Cobas Asset Management SGIIC S.A. 6 737 659 3.73%
3 First Fondene 5 053 174 2.79%
4 Arctic Fund Management 4 727 785 2.61%
5 Dimensional Fund Advisors 4 459 950 2.47%
6 Vanguard 3 377 969 1.87%
7 DNB Funds 3 318 119 1.84%
8 Salt Value AS 2 907 887 1.61%
9 Pareto Funds 2 689 000 1.49%
10 Carl K. Arnet 1 310 000 0.74%
11 Fidelity International (FIL) 1 287 598 0.71%
12 BlackRock 1 018 665 0.56%
13 Nordnet Livsforsikring AS 988 093 0.55%
14 KLP Kapitalforvaltning AS 959 641 0.53%
15 Holmen Fondsforvaltning AS 820 000 0.45%
16 NHO - Næringslivets Hovedorganisasjon 806 146 0.45%
17 Fondsfinans Kapitalforvaltning 789 881 0.44%
18 AS Clipper 736 525 0.41%
19 Kyrre Dyregrov 701 500 0.39%
20 Harald Espedal 692 354 0.38%
BW Offshore has issued a total of 184 956 320 shares of which 4 141 437 were held as treasury shares as of
31 December 2021. The year end total number of outstanding shares stood at 180 814 883.
Source: Monitor by Modular Finance. Compiled and processed data from various sources, including VPS, Morningstar,
Norwegian Financial Supervisory Authority (Finanstilsynet), Millistream. The verification date may vary for certain shareholders.
10
20
30
40
50
60
70
80
2022
20212020201920182017
0
5
10
15
20
25
30
35
January
2021
December
2021
0
200
400
600
800
20212020201920182017
0
300
600
900
1 200
1 500
0
10
20
30
40
Net debt (USD mill, LHS) Equity ratio (RHS)
Q4'21
Q3'21
Q2'21
Q1'21
Q4'20
Q3'20
Q2'20
Q1'20
Q4'19
Q3'19
Q2'19
Q1'19
Q4'18
Q3'18
Q2'18
Q1'18
SHARE PRICE
NOK
EBITDA
1
USD Million
VOLUME
Million
NET DEBT & EQUITY RATIO
USD Million %
Adjusted for discontinued operation.
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Sustainability Report
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BW Offshore 2021 Annual ReportBW Offshore 2021 Annual Report
We LEAD with Integrity
BW Offshore’s values are summarised in ‘We LEAD with Integrity’. These
values reflect who the Company is and how it conducts its business.
BW Offshore is committed to delivering sustainable operations and
long-term value creation for its stakeholders – not because this is
expected by society, but because it is the right thing to do.
The Company’s values have evolved from ‘I
LEAD’ to ‘We LEAD with Integrity’, emphasising
that team collaboration is the key to making a
positive contribution to stakeholders and to
society at large. BW Offshore has defined a set
of sustainability goals to measure its performance,
related to environmental, social and governance
(ESG) factors.
There is a strong focus on developing a culture
where everyone is encouraged to treat failure
as an opportunity to learn and improve, to take
accountability, and to be part of solutions that
keep advancing the future of energy.
DEFINING FACTORS FOR LONG-TERM
VALUE CREATION
BW Offshore is part of a value chain that
provides a safe and affordable supply of energy
– an important factor for economic growth in
both developed and developing economies. The
Company has an established framework for
risk management, ensuring safe and effective
operations by adhering to a Zero Harm policy
and by minimising environmental impact and
unnecessary use of resources. As a responsible
and inclusive employer, BW Offshore makes a
positive contribution to local job creation and
development.
Risks and opportunities related to these factors
are described throughout this report, and evaluated
from a safety, operational, regulatory, reputational
and market perspective. BW Offshore has an
established, holistic approach to health, safety,
security, environment and quality (HSSEQ) across
all its operations. The Company demonstrates due
respect for the individual, through human rights
and employment practices.
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We LEAD – with Integrity
BW Offshore 2021 Annual Report
LEVERAGING THE TEAM
We trust each other and recognise that
we are stronger as a team. We commend
contributions and make each other
better, embracing diversity and collective
competencies to achieve the best result.
EXCELLENCE
We strive to do everything to the best
of our abilities, and we always seek to
improve. We see sharing of failure as a sign
of strength and an opportunity to learn.
ACCOUNTABILITY
Each of us care about what we do and the
people we work with. We take ownership to
understand and ensure positive outcomes
for all our stakeholders.
DEVELOPMENT
We are open and actively seek
opportunities to learn, inspiring
individual growth and enabling progress.
We continuously seek feedback from
others to develop and improve.
WITH INTEGRITY
Integrity is the definition of who we are and what we do. It is the sum of our values. We are committed to speaking up and making the right decisions to resolve any dilemma we face.
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BW Offshore’s
commitment to ESG
BW Offshore is committed to efficient, reliable and compliant
operations, with zero harm to people, the environment and
the communities in which it operates. The Company applies
best-in-class as the benchmark for monitoring, assurance and
improvement of its operational performance and compliance.
Guided by its purpose and values, BW Offshore aims to
achieve sustainable development by striking a fair balance
between financial results, value creation, sustainability and
corporate responsibility.
SAFE AND SECURE OPERATIONS (ZERO HARM)
Ensuring the safety and wellbeing of its employees is BW Offshore’s greatest responsibility
and is reflected in its zero-harm principle. Therefore, all business processes seek to leverage
optimal human performance through a strong culture of care.
ENVIRONMENTALLY CONSCIOUS OPERATIONS
BW Offshore is committed to contributing to a sustainable environment. Risk management is
used to identify, assess and eliminate – and where this is not possible, mitigate – all actual or
potential environmental impacts arising from the Company’s operations.
BEING A NON-DISCRIMINATING AND FAIR EMPLOYER
BW Offshore focuses on its employees and organisation, and on the opportunities it can provide
for the wider community. The Company is deeply aware of the importance of its people and
their contribution to meeting business objectives.
A STRONG GOVERNANCE FRAMEWORK
BW Offshore stands for consistent adherence to all applicable laws, rules and regulations in
every country in which it operates. It is committed to conducting business in a fair, ethical and
transparent manner by adhering to the principles and guidelines stated in the Code of Ethics
and Business Conduct. The Company strives to be a good corporate citizen, and to uphold the
highest ethical and responsibility standards.
1
2
3
4
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ESG COMMITTEE
To improve the way the Company approaches,
records and improves its performance related to
corporate sustainability goals, an internal ESG
Steering Committee was established in 2020.
It is chaired by the CEO and reports directly
to the Board of Directors. The committee’s
mandate is to ensure that sustainability and the
relevant environmental, social and governance-
related risks and opportunities are recognised
throughout the organisation, and are integrated
in the Company’s risk management and long-
term strategy for value creation. The committee
has quarterly meetings to review progress on the
sustainability goals and specific objectives set for
2021.
BW Offshore’s sustainability reporting is reviewed
by Senior Management and approved by the Board
of Directors annually. The Company incorporates
information about its corporate responsibilities in
its annual report – reflecting its commitment to
integrate corporate responsibility in all processes
and daily operations.
STAKEHOLDER ENGAGEMENT TO IDENTIFY
MATERIAL TOPICS
BW Offshore continually engages with
stakeholders such as customers, partners,
regulators, suppliers, contractors, investors and
lenders, as well as with internal stakeholders such
as employees and contracted staff. This helps the
Company identify the areas where it can make
the greatest environmental, social and economic
impact.
The Company strives for two-way communication
with both external and internal stakeholders in
day-to-day activities. On a corporate level, it
regularly engages with lenders, investors and
regulators, and takes part in quarterly meetings
with the investor market. The Company also
engages with suppliers, clients and partners on a
day-to-day basis, and regular communication is
embedded into the organisation’s workflow.
Internally, the Company holds quarterly global
town halls for all employees and contract staff.
It performs employee surveys on a regular basis,
and actively follows up on feedback to ensure
meaningful engagement with the workforce.
In 2020, a materiality analysis was conducted.
This was based on feedback from external
stakeholders, responding to questions on topics
inspired by Global Reporting Initiative (GRI)
standards. Internal stakeholders were also included:
employee feedback was provided through a global
culture assessment survey conducted by a third
party in 2019.
Based on the materiality analysis, BW Offshore
defined the following as the most important
factors for long-term value creation:
•
Safe and secure
operations
•
Environmentally
conscious operations
•
A strong governance
framework
•
Being a non-discriminating
and fair employer
These factors are aligned with the Sustainability
Accounting Standards Board (SASB) Materiality
Map®.
Board of Directors
ESG Steering Committee
Chair: CEO
Environment
Head of Operational Integrity
Social
Head of Human Capital
Governance
General Counsel
Organisation
Programme management team
ESG COMMITTEE STRUCTURE
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The key factors also tie in with relevant industry-
specific external independent materiality
frameworks. They align with the Company’s
commitment to operational integrity and safety,
and its Zero Harm objective for personnel and the
environment at large – as encapsulated in the
‘We LEAD with Integrity’ values that guide and
motivate leadership at all levels. These factors are
also reflected in the Company’s support for the
United Nations Sustainable Development Goals
(SDGs).
BW Offshore operates in a highly regulated
industry, where there is a growing body of
applicable environmental law and increased
public interest in sustainability. The Company has
developed corporate ESG goals that tie in with
these overarching topics, and which align with the
targets of the SDGs.
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BW OFFSHORE CORPORATE ESG GOALS
Apply Company resources
and capabilities to develop
renewable energy
production solutions
Economically minimise Greenhouse Gas (GHG) emissions
from oshore operations
Eliminate single-use plastics
within company operations
Eliminate the use of harmful
CFCs and HCFCs wherever
practicable
Maximise recruitment and long-term development
of local talents in areas of operation
Recognise diversity and ensure
equal opportunities, including
fair employment conditions
Eliminate any unethical and non-compliant
business practices in the organisation
2021
Objectives
Develop new business
renewable energy
production.
Minimising GHG emissions from oshore assets to align with
global eorts to combat climate change and its impacts.
Ensuring that the GHG emissions sources of the asset design are reduced to
‘as low as reasonably practicable’ through Best Available Techniques (BAT)
engineering assessment in the project phase of an asset development.
Improving the energy eiciency and harnessing waste energy streams
of asset design and operations contributes to aordable and clean
energy by maximising the economic recovery of natural resources.
In the project phase, optimal energy eicient plant design and best available
technologies shall be demonstrated through engineering studies.
In the operations phase, asset operational reliability, power
management and waste energy streams shall be monitored and
managed according to Best Environmental Practices (BEP).
Engaging with suppliers to influence
their packaging selection.
Implement alternative technical solutions
to eliminate the need for plastic use,
such as replacing bottled water with
alternative drinking water supplies.
Maximising operational
eiciency of power and
combustion equipment and
the reliability of the process
plant to minimise combustion
emissions, flaring and direct
emissions during operations.
Develop targeted recruitment and development programmes
in all locations where the Company operates.
Assign experienced assessors and mentors to support
individual development for local talent.
Continue implementation of,
and securing of a Living Wage
standard for all employees
and subcontractors.
Further strengthen diversity within
the Company. Define targeted
actions to recognise and promote
diversity and inclusion across
the organisation. Involve and
engage employees via the internal
Diversity and Inclusion Committee.
Ensure zero tolerance for corruption throughout
the organisation, via implementation of anti-
bribery compliance programme measures.
2021
Performance
Successful creation of
oshore floating wind
specialist BW Ideol
and subsequent listing
of the company on
Euronext Growth Oslo.
Partnering with Invenergy
to submit bid to develop
up to 5.4 gigawatts of
oshore wind in the
ScotWind tender.
Partnering with BW
Ideol to develop Power
to Plant solution.
Designing the Barossa FPSO to have minimum impact on environment.
Established five-year plans for the legacy FPSOs to enhance maintenance,
targeting reduction of fugitive emissions sources, fluorinated gas leaks
and optimising combustion emission sources as far as practicable.
Monitoring of FPSO fuel consumption.
Joined the Carbon Disclosure Project (CDP) with a first submission of the
climate change questionnaire for access by the CDP investor signatories.
Commitment statement included in
Packing and Preservation Requirements
for Suppliers used for applicable vendors
tendering for the Barossa project.
Two operating assets have eliminated
single-use plastic bottled water onboard.
This equates to the elimination of 140000
waste plastic bottles annually.
Introduced fleet-wide enhanced plastic waste
monitoring systems to identify further sources
of single-use plastics that may be eliminated.
Barossa FPSO designed
with freon systems that
are CFC- and HCFC-free.
Implemented system for
monitoring and reporting
usage of freon gases
on the legacy fleet.
Replaced HVAC charging
gas on BW Catcher with a
product that has a reduced
global warming potential.
The process of establishing new development programmes has
been aected by the Covid-19 pandemic, and travel restrictions
imposed throughout the world have aected assessors’ and mentors’
abilities to travel to local oices to support individual development.
Digital support has been provided to follow up remotely.
Despite the Covid-19 pandemic, the Company was able to facilitate
its Global Summer Internship Programme in several locations,
and plans to expand this to additional locations and functions.
Revised recruitment procedure to include priority of
local candidates for all oshore positions.
Plans in progress for targeted assets to secure increased
percentage of employees with local nationality.
Plan established for Barossa recruitment, with goal of 100 per
cent of the oshore personnel to be Australian residents.
All employees have been included
in the Living Wage standard.
Increased focus on Diversity,
Equality and Inclusion (DE&I)
through strengthening the
definition and commitment
by establishing a DE&I policy
statement and including
DE&I requirements in the
recruitment procedure.
Company-wide DE&I
survey conducted.
Wellbeing committee established,
mental health awareness
campaigns conducted.
Developed the Code of Ethics and Business
Conduct refresher programme to update
employees on key developments of the Company’s
compliance programme and continued
strengthening of awareness campaigns.
Increased accessibility to the online Compliance
Platform for all oshore employees,
enabling online compliance reporting such
as conflict of interest declaration, gis,
hospitality, donations and sponsorships.
Benchmarking exercise against Ethisphere ’World’s
Most Ethical Companies’ honourees list criteria.
Developed audit protocol on ethical
employment practices.
2022
Objectives
Continue to support BW
Ideol’s commercialisation
of its unique floating
oshore wind technology
within the growing
oshore wind energy
market as a leading
shareholder, and through
strategic technology
partnerships and joint
development agreements.
Continue to improve transparency related to the corporate climate action
measures and disclosure mechanisms through the Carbon Disclosure Project.
Perform a gap analysis of the corporate climate action strategy against
the Task Force on Climate-related Financial Disclosures.
Execute five-year maintenance plan to manage, and where
feasible, minimise emissions from fleet operations.
Establish monthly operational emissions thresholds for all
operating assets and introduce procedures to identify causes
and mitigating actions should thresholds be exceeded.
Ensure all Barossa project sites are free of single-
use plastic bottled water in favour of re-usable
drinking canisters and water dispensers.
Perform a detailed plastic wastes audit
onboard a selected unit which will include
crew training by a specialist environmental
organisation. The purpose of the plastics
waste audit is to independently verify
the quantity of plastic waste generated
onboard the unit, identify opportunities
for the future reduction or elimination of
plastic waste, enhance crew education and
engagement on plastic waste reduction.
Enhance routine maintenance
on freon gas systems to
minimise leaks and reduce
freon gas consumption
amongst legacy assets.
Engage with freon gas suppliers
to determine if environmentally
friendlier alternatives are
available for all FPSOs.
Phase out the use of controlled
ozone depleting substances
in line with international
norms and timelines.
Finalise and implement specific asset plans to secure increased
percentage of employees with local nationality
for targeted assets.
Expand the Graduate Programme to
additional locations and functions.
Conduct a new Culture
Assessment.
Continue implementation
of a Living Wage standard
for all subcontractors.
As a part of the Code of Ethics
and Business Conduct refresher
programme, a Diversity
and Inclusion awareness
module will be launched.
Monitor implementation of
Diversity and Inclusion in the
recruitment processes.
Increased KPI reporting to enable improved tracking
of the Compliance Programme eectiveness.
Roll out Code of Ethics and Business Conduct
refresher programme for all employees.
Related
UN Goal
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Objective 1
Safe and secure operations
(Zero Harm)
RISKS AND IMPACTS
Operating in a high-risk industry, BW Offshore is
focused on identifying and mitigating risks that
may impact its people, the environment or the
communities where the Company operates. As
the Company operates large offshore floating
process facilities, often in remote areas far from
shore, identifying risks becomes critical to ensure
safe and secure operations.
Hazardous incidents occurring onboard an FPSO
have the potential to escalate quickly, owing to the
structure of the units and storage facilities onboard.
The worst-case scenario involves fatalities or
severe injuries, followed in severity by the spillage of
hydrocarbons into the environment, damage to the
units and irreparable damage to reputation across
the full spectrum of stakeholders.
An overall understanding and management of risk
exposure is important in ensuring BW Offshore’s
objectives are achieved. Different levels of risk
assessment are used throughout the organisation,
depending on the type of activity undertaken –
such as during tender and project phases in
operational and corporate offices, in yards and
onboard offshore units during operation.
BW Offshore performs regular reviews of significant
risks to the business and evaluates internal control
measures to adequately mitigate these risks. Risk
management is used as a tool to assess and
enhance the Company’s internal control systems
and to effectively identify, assess and manage risk.
MANAGEMENT FRAMEWORK
Operational integrity
The Operational Integrity (OI) function defines the
Company’s health, safety, security, environmental
and quality (HSSEQ), and asset integrity
performance requirements and targets. It also
provides an assurance framework to demonstrate
OI performance throughout an asset life cycle, from
design and construction to installation, operations
and decommissioning.
BW Offshore’s Operational Integrity (OI) function
has established processes and tools to demonstrate
operational performance and compliance in a transparent
manner. The process is based on BW Offshore’s
operational objectives and how the OI function supports
the organisation in meeting these targets through a
continuous improvement cycle.
Assure and verify
Set expectations
Promote
understanding
Seek
improvements
Perform
our work
Monitor
performance
OPERATIONAL
INTEGRITY
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The Company maintains an effective Management
System that enables BW Offshore to meet and
exceed mandatory requirements, as well as those
the Company has chosen to apply as best practice.
Legal requirements for health, safety, security and
environment exist in many of the jurisdictions in which
BW Offshore operates, and a register of applicable
legislation is maintained by the OI function.
However, the predominant reason for the BW
Offshore Management System is to manage
the risk to BW Offshore’s people and assets. The
Management System applies to all employees,
contractors and visitors working at locations
controlled by BW Offshore. It is available via the
Company’s intranet page, and adequate awareness
of the proper use of the Management System and its
processes is maintained through e-learning courses.
The BW Offshore Management System is
consistent with industry best practices (the
Energy Institute Process Safety Management
framework), and is certified to several international
standards, such as:
•
The International Safety Management
(ISM) Code for safe operation of
ships and pollution prevention.
•
ISO 9001 for quality management.
•
ISO 14001 environmental management.
•
ISO 45001 occupational health
and safety management.
All BW Offshore’s FPSO assets are certified
in accordance with the requirements of the
International Ship and Port Facility Security (ISPS)
Code. The security policy of the Company is to
prevent unauthorised access and the introduction
of weapons and other dangerous devices or
substances. This is in keeping with the Company’s
commitments to ensuring zero harm to personnel
and preventing damage to assets.
The Operational Integrity framework is based
on three core elements:
PEOPLE
Strong competence and behaviour
delivering operational excellence.
PROCESS
Robust and transparent policies,
standards and procedures that set
clear expectations and accountabilities.
ASSET
Asset integrity maintained to deliver
safe, efficient and reliable operations.
This framework is defined within the BW Offshore
Management System, to which all workers have
access. It enables feedback to be logged at any
time for review and action by the document
owner. Documents are subjected to a formal
stakeholder review and approval process in the
workflow – a process that is mandatory for all
published documents. A management review (as
per ISO 9001) is conducted annually to assess
the effectiveness of the Management System.
PERFORMANCE
BW Offshore monitors key indicators of process
safety, occupational safety, environmental
performance and asset integrity. This allows
the Company to identify potential performance
issues, so that it can take proactive steps towards
incident prevention and operational improvement.
The Company follows the International
Association of Oil and Gas Producers (IOGP)
guidelines for incident reporting, allowing for
benchmarking against the wider industry.
Contractors working at BW Offshore sites
operate under the Company’s control of work
processes, and BW Offshore maintains oversight
to manage risks. Improvements are made to the
Management System as a result of identified
hazards, incident investigation findings, the annual
management review and worker input captured
in the Management System publishing function.
BW Offshore registered four Lost Time Injury
(LTI) incidents in 2021 (compared with nine in
2020). The LTI ratio (number of LTIs/million man-
hours) was 0.78 in 2021 (1.86 in 2020). The High
Potential Incident (HPI) ratio was 0.97 in 2021
(1.03 in 2020).
BW Offshore HSE statistics
Per million hours
0
1
2
3
4
5
21
20191817
Total Recordable Injury (TRI)
Lost Time Injury (LTI)
High Potential Incident (HPI)
In January 2021, an incident onboard FPSO
Espoir Ivoirien led to a leakage of hydrocarbons
into a tank where tank inspection work was
being performed, resulting in two fatalities. As a
result, the Company has adjusted the operating
model for the relevant FPSOs and will strive not
to conduct such tank inspections while a unit is
producing hydrocarbons, to the extent possible.
The priority of Zero Harm overrides any financial
impact this may have for the Company.
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Initiatives, programmes and policies
Learning from failure – Project Evolve
Following the fatal accident on the FPSO Espoir
Ivoirien, BW Offshore conducted a comprehensive
review of underlying or systemic issues that may
have contributed to this incident. The review
also included an assessment of other previous
major incidents, including the Cidade de São
Mateus accident in 2015. This led to the creation
of Project Evolve, which aims to address the
necessary changes to prevent future accidents
and major incidents. Project Evolve represents a
long-term commitment, driven by the Company’s
Senior Management, to ensure safe and secure
operations.
At the heart of Project Evolve is workforce
involvement. For the project to be successful
in delivering meaningful and sustainable
improvements, it is imperative that specific actions
are embraced at all levels of the organisation. To
help achieve the necessary level of workforce
involvement, the following approach is being taken:
. Leadership engagement: Engage
with leader ship to ensure the
reasons for improvement are well
understood and fully supported.
. Define the problem areas: Define the
problems that contribute most towards major
incidents within BW Offshore, based upon
assessment and feedback from the workforce.
. Planning for improvement: Define and plan
improvement options that will effectively
address the problems in a suitable manner.
. Develop improvements: As
defined by Step .
. Test improvements: Representation
from the workforce will check that the
improvements resonate and will work.
. Implement improvements: Representation
from the workforce will communicate the
improvements to the organisation in their terms.
Following this, traditional roll out can occur.
. Check effectiveness: Following
implementation, the effectiveness of
each improvement is checked, and then
the cycle repeated to make further
improvements as necessary.
As part of step two of Project Evolve,
approximately 30 per cent of the BW Offshore
workforce participated in structured feedback
sessions. These were planned as small peer group
sessions to ensure comprehensive and genuine
feedback on the problems and their potential
solutions.
This provides a solid basis for steps three to
seven, so that the continuous improvement
process adopted by Project Evolve can reduce
the risks associated with major accidents and
significant incidents to as low a level as reasonably
practicable.
Emergency preparedness
BW Offshore’s commitment to emergency
preparation and response is captured in the
Company’s Operational Integrity standards.
These standards define requirements for
emergency response, emergency support and
crisis management for operational assets, project
worksites, permanent office locations and the
corporate organisation. Each offshore asset has
a specific Emergency Response Plan covering the
major accident hazards present onboard.
Emergency Response and Crisis Management
Plans are aligned with industry recognised
Incident Management System (IMS) principles,
including the incident planning cycle and risk-
based prioritisation concepts.
Regular training in the form of emergency
exercises and drills is conducted to ensure
personnel maintain a high level of readiness, and to
test aspects of each asset’s Emergency Response
Plan. The lessons learned are shared onboard
during post-drill debriefs and with onshore teams.
Drill reports are sent to OI management for review
and analysis.
Cyber security
The risks related to cyber security are complex,
and change rapidly as technology develops. There
is an increased need to transmit operational data
from every unit’s Operational Technology (OT)
environment to the Information Technology (IT)
environment, and to onshore teams. This results
in a wider cyber-attack surface.
BW Offshore strives to maintain safe operation
through the deployment of a continuous threat
detections system and a sophisticated safe
remote access application, along with essential
collaborations between OT and IT that range from
training to incident response.
Technology barriers and mitigations are not the
only solutions: training of employees is paramount
to avoid hacks and data breaches. The Company
has established a Cyber Security Portal with
training and information, and has initiated a
phishing awareness campaign for all users in 2021.
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Culture programme
To ensure safe and secure operations, people in the organisation are key. The
Company fosters a strong culture through its corporate values, recording
all incidents and applying a ‘learning from failures’ approach to continuous
improvement at all levels. A culture programme was initiated in 2020, with
targeted improvement areas as identified in an assessment by external party
Sayfr in 2019. The overall objective of the programme is to ensure a continual
development of the Company’s safety culture.
The programme aims to direct attention to the Company’s values and increase
awareness of them. It supports and develops leaders’ and employees’ leadership
skills, improving the Company’s ability to manage failure and mature its safety
culture.
In the programme, which is driven by the Company’s own leaders, eight Leadership
Behaviours describe norms that determine the ability to manage failures:
Two hundred and fifty leaders have been trained to facilitate the culture
programme. All employees are receiving additional training, using 3D gamification
modules of everyday situations developed for BW Offshore. During 2021, 70
per cent of the Company’s workforce started the gamified training. To reinforce
learning, leaders facilitate discussion and awareness sessions for each of the
Leadership Behaviours with their teams. The effect of the programme will be
monitored by a new culture assessment when the first implementation sequence
is completed in 2022.
Practising the Leadership Behaviours and maturing BW Offshore’s
culture will ultimately make the Company better at living its own values:
We LEAD with Integrity.
TRUST
See the value of and
have confidence in other
people. Believing that
people act with good
intentions (and without
hidden agendas), even
when they act and think
in a way that is different
from you.
CARE
Take ownership of
your job by resolving
problems and managing
failures, even when
they are outside of
your formal role. Show
colleagues that you care
about their wellbeing.
FEEDBACK
Give personal feedback
to show that you see
and appreciate what
people around you do.
Give critical feedback
without blame or
causing shame.
SPEAK UP
Speak up if you observe
non-compliance or
hazards, or if you
have any concerns.
Encourage and
empower others to do
the same.
OPENNESS
Be open to the
possibility that no one
(not even you) is right
and that this might have
severe consequences.
Be open to feedback
from others.
LEARN
Have the attitude that
you can always learn
something new, and
to see failure as a vital
source of learning.
TEAMWORK
Collaborate towards
common goals and
agreed-upon norms,
while helping each other
become better in the
process.
DILEMMAS
Seek out and manage
failures arising from
conflicts and dilemmas
between goals, policies
and people.
Eight key Leadership Behaviours
Sayfr’s eight key leadership behaviours.
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Stop Work
BW Offshore aims to be an industry leader, with the lowest reasonably practicable
frequencies of Lost Time Injuries, High Potential Incidents (including spills to the
environment and unplanned emissions) and occupational illnesses. BW Offshore
believes this is aligned with the firm commitment of Zero Harm.
A safety observation card system is used at all work locations, offshore and
onshore. Observations can be made anonymously. BW Offshore gives all
employees the explicit authority to stop any actions they think are unsafe and/or
they are unsure about, and to initiate a process to define and clarify their concerns
without any repercussions or questions. The Stop Work policy is endorsed by
the CEO, and conveys the expectation that everyone has the right to stop work
without consequence.
Promotion of worker health
In 2021, BW Offshore arranged wellbeing awareness campaigns throughout the
year for all employees. The Company also collaborated with other BW Group
companies to provide online mental wellbeing sessions to all employees. These
aim to promote mental health awareness and provide employees with tools to
safeguard their mental wellbeing. Personnel also have access to internal mental
health support tools.
All personnel can also call upon Employee Assistance Programmes (EAP) support,
which includes mental and emotional support and counselling, and access to 24/7
hotlines that provide guidance and medical advice.
Doc. no: MS-PO05247 Rev: 2 Published: 01.07.2019
No task is so important that you must put yourself or others at risk of
injury or illness to get it done.
This policy covers all employees, visitors, contractors and any other person
affected by BW Offshore activities.
All employees, contractors and visitors have the permission and the
responsibility to stop a work task or decline to perform an assigned task,
without fear of negative consequences, when they believe there is a threat to
the health and safety of themselves or others.
Individuals calling for Stop Work should inform their Supervisor or
the person in charge of the work immediately. All people with the
responsibility for performing work also have the responsibility to stop and
reassess the work when a safety concern is raised.
If you are worried about your safety
or the safety of others
If something feels wrong
STOP – don’t do it
You have my support
Marco Beenen
CEO BW Offshore
1 July 2019
STOP WORK
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Objective 2
Environmentally
conscious operations
RISKS AND IMPACTS
The risks of environmental impacts caused by BW Offshore’s
operations and activities are considered material. The Company
integrates environmental management within the overarching
BW Offshore Management System to ensure environmental
risks are appropriately identified, assessed, controlled and
monitored. Continual improvement is integral to the framework.
BW Offshore is engaged in the transition to renewable energy
sources. This both poses new risks and creates opportunities
for the Company to leverage its four decades of offshore
development and operations experience to develop new low-
impact solutions for clean energy production.
BW Offshore’s Management System is independently certified
by DNV GL to the ISO 14001:2015 environmental management
standard. In 2021, the environmental management system was
subject to an independent, annual ISO 14001:2015 certification
audit. Compliance of environmental management practices was
verified, with no major non-conformities recorded.
MANAGEMENT FRAMEWORK
Environmental management is led by the organisation’s Senior
Management. The Environmental Policy is endorsed by the CEO,
who steers the direction of corporate climate action strategies.
BW Offshore’s environmental impact is determined by assessing
operational performance against key performance indicators. The
Board of Directors and Senior Management review fleet-wide
environmental performance on a quarterly basis. All employees
within the organisation have real-time access to the fleet’s
environmental performance statistics.
PERFORMANCE
In 2021, BW Offshore engaged with several external parties
to define the Company’s Scope 1, 2 and 3 emissions. Dividing
emissions into Scopes allows for more transparency and the
development of targeted climate action strategies.
Going forward, BW Offshore will maintain close relationships
with clients and suppliers to support reduction efforts for Scope
3 emissions. In partnership with the client, BW Offshore will
implement cloud-based artificial intelligence emissions software
on the BW Catcher FPSO in 2022, facilitating operations with
the lowest possible emissions and optimising energy usage to
minimise environmental impacts.
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Corporate goals, initiatives and policies
As an energy sector services provider, BW Offshore is inherently involved
in the transition to renewable energy sources. This transition poses new
risks from an operational, regulatory, reputational and market perspective.
It also generates new opportunities for participation, by ensuring existing
fossil fuel infrastructures are operated with a minimum carbon footprint,
by engaging with transitional fuels (such as natural gas) and by evaluating
alternative clean energy sources.
CORPORATE GOAL: APPLY COMPANY RESOURCES
AND CAPABILITIES TO DEVELOP RENEWABLE
ENERGY PRODUCTION SOLUTIONS
BW Offshore aims to capture energy transition
opportunities by developing adjacent business
areas – employing the Company’s project,
operational and financial experience to explore
new technologies that can be applied offshore,
and to leverage resources within the extended BW
Group. Floating wind will be an integral element of
these energy transition opportunities.
BW Offshore has a unique ability to implement
novel concepts within its fleet, and to develop new
concepts and applications by utilising emerging
technologies in the market. In 2021, the Company
sponsored the creation of a leading floating
offshore wind developer and technology provider,
BW Ideol. BW Offshore held 53.2 per cent of the
shares in BW Ideol at the year’s end.
BW Ideol’s ambition is to become a major long-
term owner of floating offshore wind assets
through a dual strategy. BW Ideol will form joint
ventures with local utilities and financial sponsors
to develop, build, install and operate floating wind
farms, supported by the project execution and
financing resources of BW Offshore. In addition,
BW Ideol will, in cooperation with BW Offshore,
act as an EPCI contractor and floater maintenance
services provider, leveraging both companies’
engineering, procurement, construction and
installation experience. As an alternative
proposition, BW Ideol offers to lease the floater
and turbine as a combined asset, supported by
BW Offshore’s extensive experience as a lessor
of FPSOs.
2021 Objectives
•
Develop new business within
renewable energy production
2021 Achievements summary
•
Successful creation of offshore floating wind
specialist BW Ideol and subsequent listing
of the company on Euronext Growth Oslo
•
Partnering with Invenergy to submit bid to
develop up to 5.4 gigawatts of offshore
wind in the ScotWind tender
•
Partnering with BW Ideol to develop
Power to Plant solution
Future priorities
BW Offshore will continue to support BW Ideol’s
commercialisation of its unique floating offshore
wind technology within this growing market
as a leading shareholder, and through strategic
technology partnerships and joint development
agreements.
The Company also plans to continue supporting
its clients’ carbon capture and storage technology,
as was recently the case with the client for the
Barossa Project.
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CORPORATE GOAL: ECONOMICALLY MINIMISE
GREENHOUSE GAS (GHG) EMISSIONS FROM
OFFSHORE OPERATIONS
BW Offshore aims to minimise GHG emissions,
both from its existing offshore assets and through
the design of new offshore assets. In line with this,
the Company set several objectives for 2021, and
has delivered several tangible results as well as
developing concrete plans.
2021 Objectives
•
Minimising GHG emissions from offshore
assets to align with global efforts to
combat climate change and its impacts.
•
Ensuring that the GHG emissions
sources in the asset design are reduced
to ‘as low as reasonably practicable’
through Best Available Techniques
(BAT) engineering assessment in the
project phase of asset development.
•
Improving energy efficiency of asset
design and harnessing waste energy
streams from operations to maximise the
economic recovery of natural resources,
and contribute to the efficient and safe
supply of affordable, clean energy.
•
In the project phase, optimal energy
efficient plant design and best available
technologies will be demonstrated
through engineering studies.
•
During operations, monitoring and
manging asset operational reliability,
power management and waste
energy streams according to Best
Environmental Practices (BEP).
2021 Achievements summary
•
Designing the Barossa FPSO to have
minimum impact on the environment.
•
Established five-year plans for the
legacy FPSOs to enhance maintenance,
targeting reduction of fugitive emissions
sources and fluorinated gas leaks,
and optimising combustion emission
sources as far as practicable.
•
Monitoring of FPSO fuel consumption.
•
Joined the Carbon Disclosure Project
(CDP) with a first submission of the
climate change questionnaire for access
by the CDP investor signatories.
BW Offshore shares the global commitment
to cleaner energy sources and the reduction of
Greenhouse Gas (GHG) emissions.
Barossa FPSO
In its design, BW Offshore has achieved a 15
per cent reduction in greenhouse gas emissions
generated by the Barossa FPSO’s heating and
power system, compared with alternative legacy
power generation configurations currently in use
in the Australian offshore oil and gas sector. This
has been achieved by applying the latest power
generation technologies of combined cycle gas
turbines (CCGT) with waste heat recovery.
The design selection enables a reduction in
greenhouse gas emissions of 2.3 million tonnes
over the planned operating life of the Barossa
FPSO, which is designed with a closed flame
flare system and a hydrocarbon cargo tank
blanket system with vapour recovery. This design
is expected to minimise the greenhouse gas
emissions from open flame flaring (start-up and
emergency only) and cargo tank operations over
the operating life of the asset.
In 2021, a Barossa FPSO Energy Efficiency
study was conducted. Through BW Offshore’s
design efforts and its selection of energy
efficient technologies, it estimates that during
normal operations, the Barossa FPSO facility
will consume up to 66 per cent less energy than
an industry standard design. This maximises the
economic recovery from the field and significantly
reduces the environmental impact.
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Emissions from the legacy FPSO fleet
In 2021, BW Offshore enhanced corporate data
collection, quantification and internal validation of
GHG emissions sources across the fleet. FPSO
fuel consumption was monitored to maximise
the use of available associated gas, and to limit
the use of bunkered fuels. In 2021, 86 per cent
of the fuel mix used to power the Company’s
operating assets was sourced from by-product
gas available infield.
Measures were taken to minimise operational
GHG emissions through equipment maintenance
and upgrades, and the performance of root cause
analysis when unplanned plant upsets occurred.
Monthly combustion GHG emissions performance
was monitored against key performance targets.
In 2022, BW Offshore will continue to roll out
the implementation of its goal to minimise GHG
emissions across all fleet operations, verify the
quality and content of asset-specific GHG
emissions minimisation plans, and periodically
assess GHG emissions performance over time.
Energy efficiency
The Company has two main ways of improving
fleet-wide energy efficiency:
. By maximising use of the cleanest and
most readily available fuel sources for
power generation, and minimising GHG
emissions associated with transporting
bunker fuels to the facility.
. By reducing total energy demand, fuel
consumption and GHG emissions,
through maintaining optimal operations
and ensuring systems and equipment
run at their optimal efficiency range.
Future priorities
BW Offshore will continue to improve transparency
related to the corporate climate action measures
and disclosure mechanisms through the Carbon
Disclosure Project.
In 2022, the Company will perform a gap analysis
of the corporate climate action strategy against
the Task Force on Climate-related Financial
Disclosures.
A five-year maintenance plan to manage – and
where feasible, minimise – emissions from fleet
operations will be executed, monthly operational
emissions thresholds will be established for all
operating assets, and procedures to identify
causes and mitigating actions, should thresholds
be exceeded, will be introduced.
CORPORATE GOAL: ELIMINATE SINGLE-USE
PLASTICS WITHIN COMPANY OPERATIONS
In 2021, BW Offshore launched awareness
campaigns targeted at all employees, to enhance
the organisation’s understanding of climate
change and the environmental challenges posed
by single-use plastic waste.
For the Barossa project, a commitment statement
is included in the Packing and Preservation
Requirements for Suppliers, stating that suppliers
of goods shall consider environmental impacts
of packing/packaging materials by minimising
materials and promoting re-use or recycling.
For EU member states, the EU Packaging and
Packaging Waste Directive (94/62/EC) Ref.
/24/ shall be followed.
2021 Objectives
•
Engaging with suppliers to influence
their packaging selection.
•
Implement alternative technical solutions
to eliminate the need for plastic use,
such as replacing bottled water with
alternative drinking water supplies.
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2021 Achievements summary
•
Commitment statement included in the
Packing and Preservation Requirements
for Suppliers used for applicable vendors
tendering for the Barossa project.
•
Two operating assets have eliminated
single-use plastic bottled water onboard.
This equates to the elimination of
140 000 waste plastic bottles annually.
•
Introduced fleet-wide enhanced
plastic waste monitoring systems to
identify further sources of single-use
plastics that may be eliminated.
Consumption, waste and materials
management
In 2021, the amount of waste generated offshore
and shipped to shore for recycling increased.
Hazardous waste volume reduced significantly in
2021, compared with 2020. The transportation
and onshore processing of offshore-generated
waste is managed through licensed waste disposal
companies contracted by the Company’s clients.
Future priorities
BW Offshore will ensure all Barossa project sites
are free of single-use plastic bottled water in
favour of reusable drinking canisters and water
dispensers.
The Company also aims to perform a detailed
plastics waste audit onboard a selected unit,
which will include crew training by a specialist
environmental organisation. The purpose of the
audit is to independently verify the quantity
of plastic waste generated onboard the unit,
identify opportunities for reduction or elimination
of plastic waste, and enhance crew education and
engagement on plastic waste reduction.
CORPORATE GOAL: ELIMINATE THE USE OF HARMFUL
CFCS AND HCFCS WHEREVER PRACTICABLE
The release of chlorofluorocarbons (CFCs) and
hydrochlorofluorocarbons (HCFCs) into the
atmosphere contributes to depletion of the ozone
layer and global warming. There is a global regulatory
regime, via the Montreal Protocol and its subsequent
amendments, that implements the global phasing
out of harmful freon gases. BW Offshore operations
utilise freon gases to charge HVAC, refrigeration
and fire-suppression systems onboard its assets.
The Company strives to align with international
action to reduce the harmful atmospheric effects
of these freon gases and to ensure compliance with
international phase-out regulations.
To comply with Australian regulatory requirements,
the Barossa FPSO is designed with freon systems
that are CFC- and HCFC-free.
On BW Catcher, an environmentally friendlier
HVAC charging gas was identified in 2021, and
has now been deployed. Combined with enhanced
system maintenance, this reduces the likelihood of
(and potential for) environmental impacts arising
from unplanned system leaks.
2021 Objectives
•
Maximising operational efficiency of
power and combustion equipment and
the reliability of the process plant to
minimise combustion emissions, flaring
and direct emissions during operations.
2021 Achievements summary
•
Barossa FPSO designed with freon
systems that are CFC- and HCFC-free.
•
Implemented a system for monitoring
and reporting usage of freon
gases on the legacy fleet.
•
Replaced HVAC charging gas on BW
Catcher with a product that has a
reduced global warming potential.
Future priorities
In 2022, routine maintenance on freon gas systems
will be enhanced, to minimise leaks and reduce
freon gas consumption in legacy assets. BW
Offshore will engage with freon gas suppliers to
determine if environmentally friendlier alternatives
are available for all FPSOs, and phase out the use
of controlled ozone-depleting substances in line
with international norms and timelines.
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Additional environmental aspects
OIL SPILL MANAGEMENT
The most significant short-term impact to the
marine environment and regional biodiversity
associated with BW Offshore operations would
be a significant oil spill event. In 2021, all assets
performed scheduled annual oil spill response drills
to test their responsiveness and preparedness
for unplanned oil pollution events. Drills onboard
all facilities will continue in 2022 to ensure the
preparedness of personnel, equipment and
management systems.
Cumulatively, accidental spills to sea of
hydrocarbons totalled less than 1 barrel in 2021.
Number of significant oil spills
Ye ar
Overboard spills
> bbls
Overboard spill
< bbls
2021 65 litres
2020 10 litres
2019 19 litres
2018 319 litres
2017 401 litres
2016 237 litres
2015 238 litres
AIR QUALITY
Non-GHG (non-greenhouse gas) emissions,
such as sulphur and nitrogen oxides, are released
during fuel combustion for the power generation
and heating systems required to run the FPSO
plant. These pollutants impact human and animal
health and air quality, and may lead to acid rain
and the subsequent acidification of waterways
and habitat contamination. BW Offshore is
committed to reducing the impact of non-GHGs,
and emissions are recorded and monitored fleet-
wide.
EFFLUENT MANAGEMENT
All fleet planned effluent streams (produced
water, sewage, engine room bilges, cooling water
and food wastes) have been discharged within
regulatory requirements and industry guidelines.
Produced water discharges across the BW
Offshore fleet are well within the World Banking
Group guideline limit of 29ppm (parts per million)
oil in water content (monthly average). In 2021,
the average produced water discharge from the
BW Offshore fleet was 12.71 parts per million.
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BIODIVERSITY MANAGEMENT
BW Offshore is committed to protecting local
habitats and native wildlife in the areas where
the Company operates. BW Offshore’s potential
impact on biodiversity is included in the oilfield
operator’s environmental impact assessments
and monitoring programmes, which are subject
to local regulatory approvals.
Biofouling and ballast water are specific maritime
hazards that are relevant only when an FPSO
relocates from one location to another. The hull,
appendages and seawater systems provide an
opportunity to transport non-native, invasive
marine species between locations, which can
lead to the displacement of native marine species
and alter the natural biodiversity at transit points
or at the final destination. BW Offshore follows
applicable local regulatory requirements when
relocating assets.
In 2022, BW Offshore will complete design
lighting studies for the Barossa FPSO to reduce
light pollution to the environment and to improve
energy efficiency on the unit.
SHIP RECYCLING
Ship recycling is inherently sustainable, involving
the maximum material recovery of an end-of-
life asset. Nonetheless, BW Offshore is aware
that ship recycling practices can also pose
unacceptable risks to the environment, human
health and safety due to unsustainable recycling
practices. BW Offshore has integrated safe and
sustainable ship recycling practices that comply
with the IMO Hong Kong Convention into its
corporate operational standards and procedures.
Future recycling projects will ensure all assets
are delivered with hazardous material inventories.
BW Offshore’s policy on ship recycling is to ensure
any vessel owned by the Company (or sold to an
intermediary with the intention of being scrapped
or recycled) is recycled at a yard that operates
in accordance with the Hong Kong International
Convention for the safe and environmentally
sound recycling of ships. These requirements have
been translated into standard business operating
practice.
In 2021, BW Offshore disposed of the FPSO
Berge Helene for recycling in Alang, India. The
unit departed Singapore with a statement of
compliance to the Hong Kong Convention and
all necessary import permits. The Company
has nominated Grieg Green as representatives
to be on site at the recycling yard to monitor
progress, compliance with environmental and
safety regulations and that the ship recycling
plan is applied. A recycling plan was prepared and
provided by the yard in cooperation with Grieg
Green to ensure strict compliance with the above
regulations. Recycling activities are under way, and
expected to be completed in 2022. BW Offshore
is providing daily site supervision of the recycling
activities to ensure continual compliance to Hong
Kong Convention health, safety, human rights and
environmental goals.
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Objective 3
Being a non-discriminating
and fair employer
RISKS AND IMPACT
Operating in several countries, BW Offshore
is dependent on being perceived as a fair and
non-discriminating employer to attract and
retain competent and engaged employees. The
Company carefully considers any impact of its
activities on local communities and indigenous
peoples.
Maintaining a competent workforce that is
culturally aligned with Company objectives
is imperative to deliver safe and sustainable
operations. A lack of training and development
may prevent workers from making their fullest
possible contribution to the workplace, and
impede the creation of a harmonious, motivated
and productive working environment.
BW Offshore believes that diversity promotes
healthy collaboration and positive development
of the Company’s capabilities, and operates with
multinational teams on all offshore assets and in
all onshore locations. The Company is committed
to ensuring equal opportunities regardless of
gender, ethnic background, age, religion or sexual
orientation, and aims to provide a comfortable and
adequate work environment for all employees.
MANAGEMENT FRAMEWORK
BW Offshore prohibits unlawful discrimination
based on ethnic or national origin, age, gender
identity or expression, sexual orientation, marital
status or family structure, religion or disability.
Inappropriate workplace conduct, such as
harassment, violence or discrimination, is not
tolerated. This is reflected in the Company’s
Human Capital policy.
The Company has established policies, routines
and procedures aligned with ethical and compliant
business practices, such as rules for transparent
recruitment and the provision of employment
agreements that establish the rights and
entitlements of personnel.
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BW Offshore supports the United Nations
Universal Declaration of Human Rights and the
standards advised by the International Labour
Organisation (ILO). Slavery, forced labour, child
labour, torture and other violations of human rights
are totally unacceptable.
PERFORMANCE
The Company’s workforce consists of permanent
employees, contracted staff on direct hire and
consultants hired via third parties. The total
headcount in BW Offshore decreased from 1 927
in 2020 to 1 849 at the end of 2021. This reflects
a shift in workforce composition as the FPSO
contracts in Brazil expired and the Barossa project
activity increased.
Gender composition has been stable from 2020
to 2021. On 31 December 2021, 14 per cent of
the total workforce was female and 86 per cent
male. Onshore, the workforce comprised 33 per
cent female and 67 per cent male employees.
Women held 20 per cent of the seats on the
Board of Directors of BW Offshore Limited, and
accounted for 27 per cent of the Senior and
Functional Management team. In 2021, 32 per
cent of new joiners onshore were women (39 per
cent in 2020). The average age of the Senior and
Functional Management team is 51.3 years.
BW Offshore strives to eliminate gender bias and
supports equal opportunities both in recruitment
and career advancement. In order to further
enhance the evaluation of remuneration based
on position and level of seniority, BW Offshore
is currently developing a streamlined system
for monitoring trends. This will enable improved
methods of verifying that employees get the same
remuneration for the same job.
Corporate goals, initiatives and policies
CORPORATE GOAL: MAXIMISE RECRUITMENT AND
LONG-TERM DEVELOPMENT OF LOCAL TALENT IN
AREAS OF OPERATION
Local content
A strong local connection provides knowledge,
widens the available competence base and
fosters a strong joint Company culture. The
Company is committed to meeting and
exceeding minimum local content requirements
in its areas of operation. Developing local content
and competencies strengthens BW Offshore’s
position and operational capabilities.
2021 Objectives
•
Develop targeted recruitment and
development programmes in all locations
where the Company operates.
•
Assign experienced assessors
and mentors to support individual
development for local talent.
2021 Achievements summary
•
Revised recruitment procedure to
include priority for local candidates
in all offshore positions.
•
Plans in progress for targeted assets
to secure increased percentage of
employees with local nationality.
•
Plan established for Barossa recruitment,
with the goal of 100 per cent of offshore
personnel to be Australian residents.
The share of local offshore management was at
33 per cent in 2021, compared with 35 per cent
in 2020. The decrease is due to the shutdown
of operational activities in Brazil and New
Zealand. BW Offshore’s strategy is to increase
this percentage by prioritising local candidates
for any open management positions, maintaining
focus on training programmes for fast-track
development of local talents, and providing clear
goals on workforce nationality within the regional
presence. Building competence takes time, and
the Company is committed to developing local
competencies in leading positions. The percentage
of local employees in the total offshore staff was
steady at 70 per cent in 2021.
GENDER COMPOSITION
Gender/Position type SMT/FMT SVP/VP Manager Others Tota l
Female % % % % %
Male % % % % %
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Barossa project
For the Barossa project phase, which will last
until 2025, approximately 60 contractors and
consultants have been hired. A recruitment
plan for the operations of the FPSO is under
development. Actual recruitment for offshore
personnel is expected to start in 2022, with an
emphasis on diversity and local hiring in Australia.
An Employment Relationship Management Plan
(ERMP) was developed in 2021, and approved
by the client in January 2022. A Diversity and
Inclusion Plan was also developed in 2021 with
a local Australian specialist to create recruitment
principles related to the Barossa recruitment
plan. BW Offshore is collaborating with local
recruitment agencies in Australia to ensure
the Company adheres to applicable laws and
regulations related to local content, diversity and
inclusion.
Training, competency and assessment
Learning and development is a continuous process
throughout the course of employment, and
BW Offshore continuously invests in employee
development.
BW Offshore has its own e-learning portal,
the BW Offshore Academy, with more than
160 internal courses available. The portfolio
includes technical and operational training,
administration, mental health awareness and
Covid-19 awareness modules. Specific e-learning
courses are included in a global training matrix for
offshore units, ensuring all workers have sufficient
training for their roles, and HSE induction training
is mandatory for all offshore and onshore work
locations.
BW Offshore records and monitors progress to
ensure that all employees have valid training and
certification to comply with internal and external
requirements for each position. The applicable
training and certification requirements are
specified in the Management System.
Internal courses are developed and reviewed
on a continuous basis, based on industry best
standards. To improve understanding and increase
the effect of training, a large proportion of the
courses are available in several languages, such as
English, Spanish, French, Portuguese and Bahasa.
The e-learning portal is also important to ensure
visitors, including consultants and subcontractors,
have access to relevant training before they
embark on the Company’s units. During 2021,
visitors completed a total of 5 055 e-learning
courses.
BW Offshore has its own team of Competency
Assessors to ensure that all offshore personnel
are properly trained and competent to safely carry
out the roles and responsibilities assigned.
The process of establishing new development
programmes has been affected by the Covid-19
pandemic, and travel restrictions imposed
throughout the world have affected assessors’
and mentors’ abilities to travel to local offices to
support individual development. Digital support
has been provided, permitting them to follow up
remotely.
Attracting young talent
The oil and gas sector is increasingly competing
with other industries to attract and retain
competent and engaged employees. BW
Offshore’s Young Talent Programmes are aimed
at attracting and retaining talent even before
graduation, and aim to recruit five to 10 young
people every year.
The BW Offshore Summer Internship Programme
is a three-time winner of the Student Placement
Award conferred by the Aberdeen & Grampian
Chamber of Commerce during the annual
Northern Star Business Awards in the UK. The
programme won the award in 2018, 2019 and
2021. During 2021, six summer interns from
two different countries participated in the global
programme. In addition, the Company facilitates
several local initiatives for young talent.
The BW Offshore Graduate Programme aims
to give recent graduates a comprehensive
introduction to the business, as well as a strong
understanding of expectations and opportunities
within the Company. In 2021, four new graduates
were enrolled into the programme. This kept the
total number of current graduates at 11 – eight
male and three female – employed at three
different locations.
E-LEARNING COURSES OFFERED AND COMPLETED BY BW OFFSHORE EMPLOYEES:
Total courses offered
Courses completed
Onshore - -
Offshore - -
Average courses completed per employee . . .
Hours per employee . . .
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Because of the ongoing Covid-19 pandemic, the
opportunity to engage with students via career
fairs and university visits was impacted, resulting
in fewer new graduate approaches than initially
planned. In 2022, the Company will expand the
graduate programme by reaching out to more
universities and targeting students from more
fields of study.
In 2021, the first graduate exchange took place
with BW Ideol, integrating experience within
offshore wind technology. Additionally, the
first graduate programme based offshore was
inaugurated: one graduate was assigned to a
position in the production department on BW
Catcher, with the objective of beginning a long-
term offshore career.
Future priorities
Going forward, BW Offshore will finalise and
implement plans to increase the percentage of the
workforce from the local area for targeted assets.
The Company also plans to expand the Graduate
Programme to additional locations and functions.
CORPORATE GOAL: RECOGNISE DIVERSITY AND
ENSURE EQUAL OPPORTUNITIES, INCLUDING FAIR
EMPLOYMENT CONDITIONS
2021 Objectives
•
Continue to implement and secure
a Living Wage standard for all
employees and subcontractors.
•
Further strengthen diversity within the
Company. Define targeted actions to
recognise and promote diversity and
inclusion across the organisation. Involve
and engage employees via the internal
Diversity and Inclusion Committee.
2021 Achievements summary
•
All employees have been included
in the Living Wage standard.
•
Increased focus on diversity, equity and
inclusion (DE&I) through strengthening the
definition and commitment by establishing
a DE&I policy statement and including DE&I
requirements in the recruitment procedure.
•
A company-wide DE&I
survey was conducted.
•
A wellbeing committee was
established and mental health
awareness campaigns conducted.
Fair compensation
BW Offshore considers a Living Wage to be a
human right. The Global Living Wage Coalition
defines it as ‘The remuneration received for a
standard work week by a worker in a particular
place sufficient to afford a decent standard of living
for the worker and her or his family’. The Company
has implemented a Living Wage standard for its
personnel, and has set the expectation that a Living
Wage should be paid throughout the Company’s
supply chain. This expectation is stated in the BW
Offshore Supplier Code of Ethics and Business
Conduct.
The Company has initiated a project to analyse
the wage levels and conditions of supply chain
partners, on a tiered basis, with the long-term
objective of ensuring that all existing suppliers
meet this expectation. A commitment to paying
a Living Wage is one of the criteria assessed
during the qualification and selection of third
parties. In 2021, implementation of Living Wage
for personnel hired through subcontractors was
completed in Nigeria, and implementation for
personnel hired through subcontractors in Ivory
Coast and Gabon is in its final phase and will be
completed during 2022.
BW Offshore takes a holistic view of various factors
to ensure that total employee compensation is
fair, and is above the minimum legal requirements
and Living Wage standards in the various locations
in which the Company operates. These factors
include:
•
Pay for position: Independent compensation
consultants are engaged periodically to
ensure that pay levels in the Company
are competitive with other companies
of comparable size and business nature
operating in the same markets.
•
Pay for person: An employee’s personal
attributes, such as skills, experience and
competency, influence the individual pay level
and salary reviews.
•
Pay for results and performance: The
individual remuneration should reflect
achievement of results, accomplishments
and performance. The differentiation
of base pay and variable pay should
be a fair recognition and reward.
The fair evaluation of compensation is ensured
through alignment processes in the yearly salary
review. The Management team, guided by the
Human Capital function, collectively review
all evaluations and salaries across teams and
locations. Further, the Human Capital function
reviews and ensure aligned and fair compensation
for same jobs in each location, as well as monitor
competitiveness in the local employee market.
The Human Capital policy clearly states that
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compensation schemes should be effective and
equitable.
The compensation structure may incorporate any
of the following elements:
•
Fixed compensation
•
Variable compensation (short-term and
long-term incentives programme)
•
Pension and insurance schemes
•
Other employment-related benefits
The BW Offshore Compensation Committee,
appointed by the Board of Directors, is responsible
for assisting the Board of Directors on executive
compensation. Executive compensation,
including variable compensation schemes (VCS)
and benefits, is subject to annual review at the
discretion of the Board of Directors in accordance
with the Company’s Guidelines on Executive
Remuneration.
The VCS pay-out is determined according to
overall Company results broken down to net profit,
return on equity and equity ratio, and HSEQ (health,
safety, environment and quality) performance
where the target is to keep or improve the safety
statistics throughout the year. The maximum
potential pay-out of the Variable Compensation
Scheme for the Executive Management Team is
set at an equivalent to six months’ base salary.
Employee rights and obligations
BW Offshore is committed to supporting freedom
of association and collective bargaining, and all
employees have the right to such involvement.
Collective bargaining is exercised in Brazil,
Gabon, Singapore and Nigeria. The interests
of the employees are commonly presented by
representatives of a trade union to which the
employees belong, and the negotiation timeframe
may vary according to local regulations. At year
end, 37 per cent of the total global workforce was
covered by collective agreements.
Singapore, the Company’s largest office, is
covered under a collective agreement by the
Shipbuilding and Marine Engineering Employees’
Union (SMEEU). The agreement enables a
tripartite employment arrangement in which the
government, employer and union work together
to provide employees with a fair and progressive
work environment.
Working conditions for employees not covered by
formal collective bargaining are based either on
agreements involving other relevant employees
covered under collective bargaining, or – where
such agreements do not exist – by evaluating
external market standards and benchmarks.
Labour relations and work environment
Local Work Environment Committees (WEC)
or their equivalent are in place to ensure that a
secure, safe and healthy working environment is
implemented, discussed between management
and employee representatives and maintained
appropriately. In Norway and Singapore, the
Company’s two largest offices, committees with
employee representatives meet on a quarterly
basis. The WEC participates in planning of
safety and environmental work, and follow-up
developments relating to the safety, health and
welfare of the employees.
At all offshore units in operation, there is an
equivalent organisation called the Offshore
Safety Committee (OSC) that maintains monthly
meetings between employee representatives and
the Company to discuss occupational health and
HSE-related topics. Health risk assessments are
in place for all operational locations. At offshore
work locations, a dedicated medic, equipment and
facility are provided to manage illness and injury.
At all locations, onshore and offshore, employees
have access to observation cards where safety-
critical actions, improvements, positive actions
and recommendations can be submitted. All cards
are registered, and follow-up is required by the
Company.
Third-party compliance with human
rights and fair employment
Third parties providing goods and services to BW
Offshore are expected to comply with human
rights and relevant employment practices. The
Company performs due diligence to support
efforts to ensure the various supply chains operate
in an ethical and responsible manner – preventing
slavery, human trafficking, forced or child labour
and any other violations of human rights or labour
standards.
Performance management
Performance management is the ongoing
process of dialogue and following up on personal
development, clarification of expectations, setting
goals and giving feedback between a manager and
an employee that occurs throughout the year. This
process is an important element of leadership,
continual learning and personal development in the
Company. In line with BW Offshore’s continuous
improvement efforts, the Company is reviewing
the value and effect of the current Performance
Management process and aligning it with the
goals and objectives of the Culture Programme
and the outcomes of Project Evolve.
Annual performance dialogues are initiated for all
permanent employees, and are encouraged for
all long-term temporary employees. In 2021, the
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completion rate of performance dialogues was 70.7 per cent, compared with 83.4 per
cent in 2020.
Diversity, equality and inclusion (DE&I)
BW Offshore’s commitment to DE&I was in 2021 reinforced by BW Offshore’s Diversity,
Inclusion and Equity Statement, available on the Company’s website.
The Company has a diverse workforce, and it attracts, recruits, develops and retains people
regardless of gender, nationality, ethnic background, age, religion or sexual orientation, across
all types of positions. The Company has employees from 55 nationalities, aged between
21 and 73.
BW Offshore has established a Diversity and Inclusion (D&I) Committee, which in 2021
was appointed to work as a reference group to promote initiatives and internal mapping
of DE&I matters. The reference group comprises employees of different nationalities,
locations, genders and races. A voluntary workforce survey in April 2021 concluded that
there is a desire for more awareness and training around DE&I topics – such as what these
concepts mean for the organisation, and how they should be safeguarded at the work site.
To ensure diversity is taken into account in all recruitment processes, DE&I principles
have been included in the global Recruitment Procedure. The intention is to evaluate and
secure overall diversity in the organisation, by ensuring these principles are considered
when making new hires.
Future priorities
In 2022, BW Offshore will continue implementation of a Living Wage standard for all
subcontractors.
As part of the Code of Ethics and Business Conduct refresher programme, a diversity
and inclusion awareness module will be launched, and the Company will monitor
implementation of DE&I principles in the recruitment processes, as well as conduct a
new Culture Assessment among the workforce.
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Objective 4
A strong governance framework
RISKS AND IMPACTS
As a global organisation, BW Offshore deals with
regulators and legislators in different countries.
Ensuring compliance with all laws, rules and
regulations is a priority for the Company, so that
it can ensure there is zero tolerance for corruption
and unethical business practice.
The Company’s conduct, and the development of
its business, is subject to several categories of risk,
and is monitored via third-party vendor auditing,
grievance mechanisms and a strong governance
framework.
The Company respects the rights and dignity of all
people in the organisation, and supports activities
that contribute and generate substantial local
revenue in terms of salaries and tax income.
GOVERNANCE STRUCTURE
BW Offshore has a well-developed corporate governance structure, and adheres to the Norwegian
Corporate Governance Board (NUES) Code of Practice, last updated on 14 October 2021.
External auditors Annual General Meeting Nomination Committee
Compensation Committee
Internal Framework
CEO & Senior Management Team
Functional Management Team
Board of Directors
Technical and
Commercial Committee
Audit Committee
External Framework
Internal Audit
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MANAGEMENT FRAMEWORK
Ethics and business conduct compliance
The Company has developed policies for ethics
and business conduct, which provide a basis for
the attitudes and principles that govern its culture.
These comprise the BW Offshore Ethics and
Business Conduct compliance programme.
The BW Offshore Code of Ethics and Business
Conduct (‘the Code’) represents the commitment
to respect the individual, uphold human rights and
institute fair and ethical employment practices.
The latest version of the Code is available on the
Company website. The Code is supplemented by
specific Ethics and Business Conduct Guidelines
(‘the Guidelines’), other subject-matter policies
and relevant internal procedures in BW Offshore’s
Management System.
The Code applies to all personnel and
representatives of BW Offshore and companies
in which BW Offshore has a majority interest
(including joint ventures), and to all BW Offshore
Board members, officers, temporary employees
and legal agents, consultants, intermediaries and
others who act on behalf of BW Offshore.
The BW Offshore Ethics and Business Conduct
compliance programme covers a range of subjects
and comprises compliance management activities
administered by BW Offshore’s Head of Corporate
Integrity, who reports directly to the CEO.
The activities and progress of the Ethics and
Business Conduct compliance programme are
reported to the BW Offshore Board of Directors
and discussed on a quarterly basis.
PERFORMANCE
In 2021, BW Offshore completed a benchmarking
exercise against the criteria for honourees on
Ethisphere’s ‘World’s Most Ethical Companies’
list. Ethisphere is considered a global leader in
defining and advancing the standards of ethical
business practices, allowing organisations to
compare themselves with peers and learn about
the strengths and weaknesses of their applicable
programmes. On the basis of these findings,
BW Offshore will initiate and follow up on the
activities required, with the aim of being included
on Ethisphere’s list.
In 2021, BW Offshore implemented several anti-
bribery compliance programmes, and will continue
this work in 2022. The Company also aims to
complete integration of a third-party screening
platform with an internal vendor qualification
programme, to enable automation of existing
compliance processes and risk assessment, and
enable the assigning of action items based on
identified associated risk level.
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Code of
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Respect for
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Human
Rights
Appropriate
workplace
conduct
Facilitation
Payments
Insider Trading
Fraud controls
Communication
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Data Protection
Trade Compliance
Competition
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Data Protection
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Money
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Duty of Loyalty
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Donations,
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Reporting
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Business
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Gifts and
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Protection
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Corporate goals, initiatives and policies
CORPORATE GOAL: ELIMINATE ANY UNETHICAL
AND NON-COMPLIANT BUSINESS PRACTICES IN
THE ORGANISATION
2021 Objectives
•
Ensure zero tolerance for corruption
throughout the organisation, via
implementation of anti-bribery
compliance programme measures.
2021 Achievements summary
•
Developed the Code of Ethics and Business
Conduct refresher programme to update
employees on key developments of the
Company’s compliance programme.
•
Increased accessibility to the online
Compliance Platform for all offshore
employees, enabling online compliance
reporting such as conflict of interest
declarations, gifts, hospitality, donations.
and sponsorships.
•
Benchmarking exercise against.
Ethisphere ‘World’s Most Ethical
Companies’ honourees list criteria.
•
Developed audit protocol on
ethical employment practices.
Awareness programme
Seven of the Company’s e-learning courses are
related to compliance. This training is developed for
all personnel and representatives, and is completed
on a regular basis to ensure that the entire workforce
knows and understands the Company’s expectations
and commitment to compliance. The completion
rate for the compliance-related mandatory
e-learning modules was 96 per cent in 2021.
The Corporate Integrity function will be launching
a yearly attestation for all personnel and
representatives on the Company’s Ethics and
Business Conduct guidelines, including awareness
of the Company’s Speak Up Channel – on which
they can raise questions or concerns about ethical
and legal dilemmas.
Anti-bribery and corruption principles
BW Offshore opposes any and all forms of
corruption. Together with the other companies in
the BW Group, it is a member of the Maritime
Anti-Corruption Network (MACN), a global
business network working towards the vision of a
maritime industry free of corruption, enabling fair
trade to the benefit of society at large.
Guidelines on anti-bribery and corruption can
be found on the BW Offshore website. These
guidelines are based on the principles stated
in the Code of Ethics and Business Conduct
and associated Guidelines, and provide further
guidance to all personnel and representatives.
Recognising bribery and corruption
Bribery is understood to be an offer or receipt
of any gift, loan, fee, reward – monetary or in
any other form of advantage – to or from any
person, as an inducement to do something that
is dishonest, illegal or a breach of trust, such
as to improperly retain or obtain business or
other improper advantage, in the conduct of the
Company’s business.
Bribery and corruption can be hidden in
common forms of disguise, such as through
gifts and entertainment, donations, sponsorship
or political contributions. Instances of gifts or
hospitality that are excessive or could be seen
to influence decision-making or judgements are
not acceptable. BW Offshore has established
corporate reporting and approval mechanisms to
review and monitor the giving or receipt of gifts or
hospitality. During review and approval activities,
no instances of inappropriate gifts or hospitality
(giving or receiving) were discovered in 2021.
Facilitation payments
BW Offshore does not pay what are commonly
known as facilitation payments, and will actively
work to avoid them in all operations.
BW Offshore personnel should never encourage
nor initiate facilitation payments, and the general
rule is that they should be resisted. Such payments
can only be made in exceptional circumstances, as
in cases of extortion where demands for payment
are associated with expressed or reasonably
perceived threats (of physical harm, detention or
undue harassment). BW Offshore has established
reporting requirements and procedures for dealing
with cases of extortion or threat of harm.
Loyalty and conflicts of interest
The Company expects that no employee will
knowingly place himself or herself in a position that
would be, or would have the appearance of being,
in conflict with the interests of the Company.
The Company requires that all employees
transparently and honestly complete the annual
Conflict of Interest Declaration assigned to them.
This requires personnel to disclose all business,
commercial or financial interests, or other related
activities (including those of their immediate
family members) that might create a conflict of
interest.
Conflict of Interest Declarations are collected
through the Company’s Compliance Platform
(the Corporate Compliance Reporting System)
to make reporting easier and allow for more
comprehensive review and recording of decision-
making related to declared conflicts of interest.
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The Compliance Platform was launched in late
2019, and was initially only available for onshore
employees.
From November 2021, offshore users can also
perform online compliance reporting such as
Conflict of Interest Declarations, and details
of gifts, hospitality, sponsorship and donations
(previously submitted in paper format). The
Corporate Integrity function may also assign
action items and/or communicate compliance
campaigns to the offshore users in a streamlined
way, via the system.
Political contributions
BW Offshore, through its officers, agents and/or
personnel, will not make any offer or payment to,
promise to pay, or authorise the transfer of any
BW Offshore assets to political parties, officials
or candidates for political office, as this can be
perceived as an attempt to gain an improper
business advantage, and presents an area of risk
of damage to the Company’s reputation.
BW Offshore allows personnel to exercise their
personal right to voluntarily participate in political
and democratic processes. However, personal
political activities must be conducted on their own
time, and with their own resources. In addition,
it is the personnel’s responsibility to make sure
that personal political pursuits and contributions
do not create potential conflicts of interest with
the Company, and comply with applicable laws
governing political activities and contributions.
BW Offshore is committed to ensuring that the
Company discloses any political donations and/
or lobbying expenditures.
Record keeping and approval procedures
BW Offshore has financial policies and
procedures covering record keeping and several
other internal financial controls. Such controls
ensure that BW Offshore and its subsidiaries
will maintain books, records and accounts
which, in reasonable detail, accurately and fairly
reflect all the Company’s transactions. At a
minimum, BW Offshore and its subsidiaries
will maintain a system of internal accounting
controls sufficient to reinforce compliance with
this policy and provide reasonable assurance that:
•
Transactions are executed in accordance
with management’s general and specific
authorisation procedures.
•
Transactions are recorded as necessary
to permit accurate preparation of financial
statements in conformity with generally
accepted accounting principles or any other
criteria applicable to such statements, and
to maintain accountability of assets.
•
Access to Company assets
and funds is permitted only in
accordance with management’s
general or specific authorisation.
It is expressly forbidden to forge accounting
records or otherwise try to conceal, disguise or
hide bribes or facilitation payments. Failure to
comply with this directive may result in disciplinary
action, including termination, and the case may
need to be reported to the relevant authorities.
Reporting concerns, asking questions and
raising grievances
BW Offshore has established routines and an
externally available grievance mechanism (the BW
Offshore Speak Up Channel) allowing employees,
business partners and relevant stakeholders to
report any concerns involving breaches of laws,
regulations or BW Offshore’s expectations in the
Code and Guidelines. The Speak Up Channel
enables reporting via the web or by telephone, with
local access numbers provided for most countries
in the world. Users can speak to operators in 58
languages, including the official languages of all
the countries in which BW Offshore operates.
Reports can be made anonymously.
BW Offshore undertakes that no retaliation will
be taken against any personnel for raising any
concern, question, grievance or complaint in
good faith. All reports are treated confidentially
and investigated promptly, thoroughly and fairly.
Reports received and questions asked through the
Speak Up Channel function are communicated to
the BW Offshore Board of Directors on a quarterly
basis. The results of investigations will be reported
to the Board on at least an annual basis.
Breaches of BW Offshore’s Code or relevant
statutory provisions may result in disciplinary
action, or dismissal with or without notice, and
may also be reported to the relevant authorities.
BW Offshore is committed to making necessary
corrections and taking remedial action to prevent
recurrence, should improper practice occur.
In 2021, BW Offshore recorded 19 reports across
the BW Offshore Speak Up Channel, of which 16
were subject to further investigation and specific
actions taken by the Company. None included any
confirmed cases of corruption.
Compliance assessment of business partners
BW Offshore requires its suppliers to observe high
standards of business and personal ethics in the
conduct of their duties and responsibilities. The
Supplier Code of Ethics and Business Conduct
expresses the expectations that BW Offshore
holds for its suppliers, and is available on the
Company website.
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All business partners (including country partners,
agents acting on behalf of the Company, and suppliers
who provide goods and services) are assessed for:
•
Compliance with relevant laws and
regulations.
•
Compliance with the principles and spirit
of the BW Offshore Code of Ethics and
Business Conduct (and the Guidelines).
•
Any red flags that may indicate that use of
the external party might have an adverse
effect on BW Offshore’s reputation.
The Company will not engage an external party if
the compliance risk is deemed too high.
In 2021, BW Offshore compliance assessed 1 046
business partners, of which 155 (or roughly 15
per cent) were subject to additional compliance
activities prior to being accepted as a potential
tenderer, or prior to being engaged to provide
goods or services to the Company. Recurring
screenings are also performed using a third-party
platform (Diligent) on existing suppliers when
any new red flags are identified. During 2021, no
potential business partners were rejected from
doing business with BW Offshore following the
compliance assessment.
Vendor labour practices
The Company’s commitment to respect for the
individual, human rights and ethical employment
practices is also reflected in qualification
compliance assessment work. BW Offshore is
collaborating and harmonising with Achilles (a
third-party qualification platform for suppliers)
to incorporate standard ESG scoring to measure
the response made by suppliers to questions in
the different categories (environment, social and
governance). This joint effort will help create an
industry standard for ESG measurement and the
evaluation of suppliers.
The BW Offshore Supplier Code of Ethics and
Business Conduct and BW Offshore’s Modern
Slavery Statement – which can be found on the
Company website – detail the risk assessments
and activities that aim to eradicate the risk of
modern slavery, human trafficking and forced or
child labour within the Company’s business and
supply chain.
In 2021, BW Offshore developed an Audit
Protocol on ethical employment practices, as
an extension of the existing vendor qualification
programme. Identified high-risk suppliers are
required to respond to an additional, detailed
desktop questionnaire on ethical employment
practices. The questionnaire will be followed up by
on-site verification audits for selected suppliers.
This audit protocol will be rolled out in early 2022
for key suppliers to the Barossa Project, with the
ultimate goal of expanding it to BW Offshore’s
global third-party compliance programme by the
end of 2022.
Approach to tax
The Company supports the Organisation for
Economic Co-operation and Development
(OECD) commitment to enhance tax
transparency, and is committed to being in full
compliance with applicable laws in countries
where it operates. The Company complies with
the OECD transfer pricing guideline. Consistent
with this approach, BW Offshore supports the
initiatives on Base Erosion and Profit Shifting
(BEPS), and files detailed reports and transfer
pricing documentation in accordance with BEPS
Action 13.
BW Offshore aims to be tax efficient in order to
be cost competitive, while fully complying with
local and international tax laws. The Company
makes use of the availability of international
tax treaties to avoid double taxation and does
not apply aggressive intra-company financing
structures such as hybrids.
In 2021, BW Offshore reported a current corporate
tax income of USD 15.3 million under IFRS
(compared with USD 38.0 million tax expense
in 2020). USD 24.9 million was paid in taxes in
2021 (USD 34.9 million in 2020).
Future priorities
The Company will focus on increased KPI reporting
to enable improved tracking of the Compliance
Programme effectiveness. In 2022, the Code
of Ethics and Business Conduct refresher
programme will be rolled out for all employees.
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Summary of ESG KPIs
2021
PEOPLE
Group total
Onshore
Offshore
Split nationals/expat Offshore % / % % / % % / %
Employee turnover rate .% .% .%
Gender split (female/male)
Group total % / % % / % % / %
Onshore % / % % / % % / %
Offshore % / % % / % % / %
Group Senior Management and Functional Management % / % % / % % / %
Board of Directors % / % % / % % / %
HEALTH AND SAFETY
Sick leave .% .% .%
Fatalities Employees
Fatalities Contractors
Lost Time Injuries rate (per million exposed hours)
. . .
Number of Lost Time Injuries
Total Recordable Injury rate (per million exposed hours)
. . .
Number of Total Recordable Injury
High Potential Incidents (per million exposed hours)
. . .
Number of High Potential Incidents
Contractors Lost Time Injuries
Total Exposure Hours (million man hours)
. . .
In 2020, the calculation of exposure hours has been adjusted to reflect actual working hours (12hr shift) compared to a 24hr exposure period.
This has significantly reduced the total exposure hours across the fleet and therefore increases LTI, TRI and HPI rates compared to prior reported performance.
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2021
ENVIONMENTAL IMPACT
Scope 1 - CO
2
, eq (CO
2
, CH
4
, N
2
O and HFCs) tonnes
Scope 2 - CO
2
, eq (CO
2
, CH
4
, N
2
O) tonnes
Scope 3 - CO
2
, eq (CO
2
, CH
4
, N
2
O) tonnes
Energy consumption offshore GJ
GHG (Fleet Operations)
CO
2
equivalent tonnes
N
2
O tonnes
CH
4
(Methane) tonnes
CO
2
tonnes
CO
2
equivalent per barrel produced kg / boe
GHG emissions intensity (Includes scope 1 and 2; CO
2
, CH
4
, N
2
O, HFCs) Te CO
2
eq/mill USD
Non-GHG and Discharges
CO tonnes
NO
x
tonnes
SO
2
tonnes
nmVOC tonnes
Flaring
Flared Gas mmscf
Air Travel Emissions (in Tonnes CO
2
, equivalent)
Fleet Operations tonnes
Corporate tonnes
Marine Discharges and Chemical Management
Produced Water Re-Injected bbl
Produced Water Discharged to Sea bbl
Oil in Water Content ppm . . .
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BW Offshore 2021 Annual ReportBW Offshore 2021 Annual Report
2021
Waste
Total waste tonnes
General Waste tonnes
Recyclable Waste tonnes
Hazardous Waste tonnes
Number of significant oil spills
Scope 1: All non-hydrocarbon, direct emissions from BW Offshore facilities when operating under a services agreement. All combustion and direct emissions from offshore assets when they are not operating under a services agreement.
All combustion emissions from 3
rd
party vessels directly contracted by BW Offshore and not operating under a head services agreement.
Scope 2: All electricity purchased to operate global office locations based on utility metered consumption and emissions factors for location-based accounting according to Carbon Disclosure Project guidelines.
Scope 3: All direct and combustion emissions associated with hydrocarbon reception, processing, storage and offloading arising from a BW Offshore facility when operating under a services agreement.
All air transportation emissions for BW Offshore employees or direct hire contractors required to travel for work activities.
Reporting boundaries for emissions calculations include:
Annual direct emissions (annual calculated estimate)
Plant combustion processes (calculated daily through environmental reporting system)
Gas flaring (calculated daily through environmental reporting system)
Unplanned gas releases (recorded through incident reporting system)
Direct and fugitive emissions (API Compendium estimation methods)
Air travel emissions recorded by 3
rd
party agent
Global warming potentials taken from IPCC 5
th
assessment report (2014)
Emissions are limited to FPSO operations and air travel. Project activities are excluded
“-“ indicates data not available
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BW Offshore 2021 Annual Report
Taskforce on Climate-
related Financial Disclosures
(TCFD)
BW Offshore started preparing disclosure pursuant to the TCFD for the 2020
Annual Report. The Company is now advancing its reporting in anticipation
of the enhanced climate-related risk disclosure requirements that are part
of EU Regulation expected to be implemented in the coming years.
BW Offshore participates in the global energy
supply chain, which is critical to the world economy.
The Company is therefore observant of the
potential climate-related risks and opportunities
that may materialise in the coming decades. This
relates to BW Offshore’s role in ensuring adequate
supply of affordable energy, how climate change
will influence the global energy mix, as well as the
Company’s own climate impact. BW Offshore’s
business activities are currently primarily within
fossil fuels. Therefore, the Company recognises
that material financial exposure to the energy
transition tied to GHG emissions may develop
over time. Moreover, the Company’s assets are
operated at sea and subject to potential long-
term physical risks related to climate change.
GOVERNANCE
The Board of Directors has the ultimate oversight
of climate-related risks and opportunities and
considers this as part of its strategic agenda.
Along with general matters pertaining to
sustainability and strategy, climate-related risks
and opportunities are reviewed annually by the
Board of Directors. In addition, the Board of
Directors and Senior Management review fleet-
wide environmental performance on a quarterly
basis.
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To ensure sufficient implementation of the strat-
egy at management level and in the organisation
as such, BW Offshore has established an ESG
Steering Committee that reports directly to the
Board of Directors. The ESG Steering Committee
is chaired by the CEO and its role is to define
and improve key areas related to sustainability
and set them into action, to create a corporate
ESG strategy and to inspire the organisation in
ESG-related matters. This includes evaluation of
climate-related risks and direct measures that
can be implemented by the Company.
In addition to the CEO, the ESG Committee
consists of senior members of management,
including heads of departments from Operational
Integrity, Compliance, Human Capital, Supply
Chain, Development and Concepts, and Investor
Relations. The committee has four fixed annual
meetings and ad-hoc meetings as deemed
necessary. The committee held four meetings in
2021. The meetings have included the members
of the programme management team (PMT). The
PMT coordinates and facilitates the sustainability
initiatives throughout the BW Offshore organisa-
tion (see page 32 in the annual report).
STRATEGY
BW Offshore has started a structured process to
identify the most material climate-related risks and
opportunities. The ambition is to be able to quantify
these factors so that the Company can provide a
transparent overview to its stakeholders of impor-
tant elements related to its strategy going forward.
In this process, BW Offshore is considering several
climate scenarios relevant to its business. One
scenario that provides adequate granularity for the
Company’s business is DNV’s ‘Energy Transition
Outlook’, which represents DNV’s view of ‘most
likely way forward’ when it comes to changing the
world’s energy supply towards a renewable and
climate-neutral future. This scenario, which points
to 2.3° global warming by 2100, is then compared
to other scenarios that imply a tighter timeline
for changes to be implemented, such as IEA’s
‘Sustainable Development Scenario’ and ‘DNV’s
Pathway to Net Zero’, pointing towards 1.5°
global warming in line with the Paris Agreement.
The Company believes it is important to factor in
the possibility of a more rapid implementation of
net zero commitments and pledges by countries
and companies, with a corresponding acceler-
ated roll out of carbon pricing schemes and other
regulations that may impact the hydrocarbon
sector at an earlier stage. Currently, the lack of
available renewable energy sources to replace a
faster phase-out of fossil fuels is having a pos-
itive impact on the oil and gas sector, as energy
prices are increasing. This also makes long-term
investments in renewable energy more attractive.
The main differences between these scenarios
relate to factors such as:
•
Carbon pricing
•
CCS technology development and uptake
•
Fossil fuel phase-out
•
Bioenergy
•
Nuclear power
Overall, these scenarios indicate reasonably steady
conditions for BW Offshore’s current operations
in the next 10-15 years. The more transforma-
tive changes to global energy supply are, in these
scenarios, expected to materialise towards 2040,
where fossil fuel supply in the global energy mix is
expected to decline in relative and nominal terms,
with natural gas a potential exception. In the near
term, other transition risks may be more important,
such as stigmatisation of the oil and gas sector,
which could impact access to and cost of capital
– important issues for capital intensive industries,
as well as restricting access to qualified personnel.
Physical risks are expected to be manageable in
the foreseeable future, although more extreme
weather events may potentially impact opera
-
tional uptime and the cost of insurance.
Access to renewable energy is at the core of
the global transition to net zero emissions. Being
deeply rooted in offshore energy production, BW
Offshore sees significant medium- to long-term
opportunities for applying its competencies
in developing floating offshore wind projects.
Subsequently, this enables opportunities for
floating clean fuel production like hydrogen and
ammonia, leveraging the combination of FPSO
and floating wind competence.
An overview table at the end of this report sum-
marises the initial review of climate-related risks
and opportunities. BW Offshore generally con-
siders the potential financial impact as low in the
short-term (towards 2025), low to medium in the
medium-term (2025-35), and medium to high in
the long-term (2035 and onwards).
Opportunity-wise, the short-term impact is
considered low, however, value creation potential
related to offshore floating wind, as well as an
increased share of natural gas production, will start
to have meaningful impact in the medium term,
with offshore floating wind holding the potential
of becoming a material part of future cash flow
and asset values longer term.
BW Offshore has already started on a strategic
re-direction in line with the above analysis which
centres around three pillars (See page 8 in the
annual report for more details):
•
Growing the core floating production business
through new offshore energy infrastructure
projects based on clear selection criteria.
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This includes a preference for gas projects,
providing exposure to an energy source that
is increasingly seen as an intermediary miti-
gator for climate change. The Barossa FPSO
contract signed in 2021 is an example of this
strategy.
•
Accelerate and maximise value extraction
from the conventional FPSO fleet, which
includes divesting older assets with marginal
contracts close to end of the firm period, and
assets not considered strong candidates for
redeployment. In 2021, one unit was divested
for responsible recycling, followed by one
more in February 2022. Additionally, one unit
was sold for continued operations with new
local owners in January 2022. This makes
the operations and asset base more resilient
towards tougher environmental regulations
and reduces residual value risk.
•
Building a substantial and growing position
in offshore renewable energy infrastructure,
led by floating offshore wind by leveraging
the Company’s abilities within floating energy
production. As a result, BW Ideol was estab-
lished in 2021 and in early 2022 won its first
large-scale project to develop a 1GW facility
offshore Scotland together with partners. BW
Offshore is the majority owner of BW Ideol.
It is BW Offshore’s opinion that its strategy has
a good resilience towards future climate-related
risks. This is also highlighted by the USD 7.7 billion
order backlog, which lasts towards 2040, with
additional potential for extensions. This backlog
is expected to provide cash flow for investments
into new and transition supportive business
opportunities.
During 2022, BW Offshore aims to widen the
analysis of climate-related risks and opportu
-
nities and to establish operational parameters
to be implemented across the organisation. This
includes an ambition to improve quantification of
the financial impact of the risks and opportunities.
RISK MANAGEMENT
The Board of Directors, together with the exec-
utive management, is responsible for identifying
and assessing climate-related risk. While some
of the long-term trends have already been identi-
fied and are reflected in the strategic repositioning
outlined above, BW Offshore intends to use a
more thorough analysis of climate-related risks
and opportunities to further strengthen the basis
for decision-making and strategic prioritisation.
The Operational Integrity (OI) function supports
the wider BW Offshore organisation in matters
relating to health, safety, security, environmental
and quality (HSSEQ). The OI function is there-
fore essential in establishing the framework for
managing all aspects of operational risk and is
integral to understand, assess and mitigate future
climate-related risks, particularly those relating to
physical risks. The OI framework is defined with
the BW Offshore Management System, which
is certified to the ISM Code for safe operation
of ships and pollution prevention, ISO 9001 for
quality management and OHSAS 18001 for
occupational health and safety management.
METRICS
BW Offshore discloses a set of metrics related
to its environmental performance and therefore
relevant to climate-related risks. These can be
found on page 60.
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APPENDIX 1 – OVERVIEW OF CLIMATE-RELATED RISKS
Risk type Classification Risk description Magnitude of financial impact Mitigation
Short
Term
Medium
Term
Long
Term
Physical
Acute
Increased severity and frequency of cyclones and hurricanes leading to
disruption of operations and/or damage to assets
Low Low Low
Emergency response preparedness, risk management systems
and contract terms
Chronic Sea level rise, wave heights and marine heat waves n.a. Low Low
Upgrade design of offshore installations to handle severe
weather conditions
Transition
Policy and legal
Carbon pricing mechanisms leading to increased costs Low n.a. n.a. Cost increase to be charged to field operators
Carbon pricing mechanisms result in lower demand for hydrocarbons Low Medium High
High energy efficient assets
Restriction on exploration acreage for oil and gas clients n.a. Medium High
Regulation of production levels or processes Low Medium High Minimising emissions from operations
Technology
Offshore floating wind production is competitive vs oil & gas for energy
production
n.a. n.a. High Early investment in offshore floating wind segment
Market
Reduced demand for hydrocarbons Low Medium High
Clear selection criteria for new offshore oil and gas production
projects
Uncertainty of market signals Low n.a. n.a. Develop new business in renewable energy segments
Reputation
Stigmatisation of sector resulting in weaker personnel recruiting and retention Low Medium High
Enter renewable energy market through early investment in
offshore floating wind
Stigmatisation of sector resulting in higher financial costs or lack of capital Medium High High
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APPENDIX 2 – OVERVIEW OF CLIMATE-RELATED OPPORTUNITIES
Type Classification Description Magnitude of financial impact Mitigation
Short
Term
Medium
Term
Long
Term
Resource
efficiency
Energy efficiency More efficient processing plants Low Medium Medium Divestment of non-core FPSOs
Recycling
Recycling of onboard energy Low Low Medium Digitalisation, smart systems
Recycling of onboard waste materials Low Low Low Clear KPIs on waste management
Energy
sources
Lower emission
source
Electricity, stranded gas Low Low Low CO
2
pricing
Use of new
technologies
Offshore floating wind power Low Medium Medium Floating wind power to O&G facilities by BW Ideol
Products
and services
Low emission
services
Offshore gas developments Medium High Medium Focus on gas markets
Diversification
Move into offshore floating wind power Low High High BW Ideol floating wind solutions
Gas to power units Low Medium Medium FPP/FSRP solutions to deliver power
Floating clean fuel production (ammonia/hydrogen) Low Medium High Product development: NH3 FPSO
Markets
Access to new
markets
Respond to clean fuel demand (ammonia/hydrogen) Low Medium High Green ammonia/hydrogen market development
Offshore floating wind power Low High High Development of BW Ideol project pipeline for floating wind
Resilience
Participation in
renewables
Own & operate floating clean fuel production (ammonia/hydrogen) assets Low Medium High Partnerships with ammonia/hydrogen offtakers
Own & operate offshore floating wind farms Low Medium High BW Ideol positioning as co-developer of floating wind farms
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Consolidated financial statements
CONSOLIDATED FINANCIALSTATEMENTS
Consolidated Statement of Income
Consolidated Statement of Comprehensive Income
Consolidated Statement of Financial Position
Consolidated Statement of Changes in Equity
Consolidated Statement of Cash Flows
Notes
Note Basis of preparation
Note Significant accounting policies
Note Standards issued but not yet effective
Note Operating segments
Note Discontinued operation
Note Revenue
Note Operating, administrative and other expenses
Note Earnings per share
Note Employee benefit expenses, remuneration to
directors and auditors
Note Income taxes
Note Inventories
Note Trade and other current assets
Note Cash and cash equivalents
Note Assets and liabilities held for sale
Note Property, plant and equipment
Note Intangible assets and goodwill
Note Equity-accounted investees
Note Capital and reserves
Note Loans and borrowings
Note Trade, other payables and other non-current
liabilities
Note Financial instruments – fair values and risk
management
Note List of subsidiaries, associates and joint ventures
Note Business combinations
Note Non-controlling interests
Note Leases
Note Commitments and guarantees
Note Contingent assets and liabilities
Note Related party transactions
Note Covid-
Note Subsequent events
PARENT COMPANY FINANCIAL STATEMENTS
Statement of Income
Statement of Comprehensive Income
Statement of Financial Position
Statement of Changes in Shareholders’ Equity
Statement of Cash Flows
Notes
Note Reporting entity
Note Significant accounting policies
Note Revenue
Note Operating expenses
Note Income tax
Note Cash and cash equivalents
Note Share capital and reserves
Note Loans and borrowings
Note Trade and other payables
Note Financial assets and liabilities
Note Financial risk management
Note Shares in subsidiaries and associates
Note Guarantees
Note Intercompany receivables and payables
Note Intangible assets
RESPONSIBILITY STATEMENT
137
ALTERNATIVE PERFORMANCE MEASURES
138
INDEPENDENT AUDITOR’S REPORT
139
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Consolidated Statement of Income
USD MILLION (Year ended December) Note 2021
Revenue 4, 5, 6, 25 829.3 886.3
Operating expenses
7, 9 (378.4 ) (348.0 )
Other expenses
7 (40.2 ) (63.1 )
Administrative expenses
7, 9, 25 (8.6 ) (39.1 )
Impairment loss on trade receivables
12 (0.8 ) -
Total expenses (428.0 ) (450.2 )
Operating profit before depreciation, amortisation,
impairment and sale of assets 401.3 436.1
Depreciation and amortisation
15, 16, 25 (270.0 ) (284.0 )
Impairment
15, 16 (90.5 ) (292.7 )
Net gain/ (loss) on sale of tangible fixed assets
15, 16 1.2 -
Operating profit/ (loss) 42.0 (140.6 )
Interest income 0.3 0.5
Interest expense (48.4 ) (57.7 )
Fair value gain/ (loss) on financial instruments
21 16.0 (44.9 )
Net currency gain/ (loss) 8.5 (10.9 )
Other financial items
25 (5.0 ) (2.7 )
Net financial items (28.6 ) (115.7 )
Share of profit/ (loss) of equity-accounted investees
17 33.5 (15.7 )
Profit/ (loss) before tax 46.9 (272.0 )
Income tax benefit/ (expense)
10 15.3 (38.0 )
Net profit/ (loss) for the year from continuing operations 62.2 (310.0 )
USD MILLION (Year ended December) Note 2021
Discontinued operation
Profit/(loss) from discontinued operation, net of tax
5 - 37.7
Net profit/ (loss) for the year 62.2 (272.3 )
Net profit/ (loss) for the year attributable to
Shareholders of the parent 62.6 (282.2 )
Non-controlling interests
24 (0.4 ) 9.9
Net profit/ (loss) for the year 62.2 (272.3 )
The notes on pages 73–121 are an integral part of these consolidated financial statements.
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Consolidated Statement of Comprehensive Income
USD MILLION (Year ended December) Note 2021
Profit/ (loss) for the period 62.2 (272.3 )
Other comprehensive income
Items that will not be reclassified subsequently to profit or loss:
Remeasurement of defined benefit liability (asset)
9 (0.2 ) (0.1 )
(0.2 ) (0.1 )
Items that are or may be reclassified subsequently to profit or loss:
Foreign operations - foreign currency translation differences (6.1 ) (2.4 )
Equity accounted investees - share of OCI (7.8 ) -
Cash flow hedges - effective portion of changes in fair value
21 (0.4 ) -
(14.3 ) (2.4 )
Other comprehensive income for the period, net of tax (14.5 ) (2.5 )
Total comprehensive income for the period 47.7 (274.8 )
Total comprehensive income attributable to
Shareholders of the parent 50.3 (284.7 )
Non-controlling interests (2.6 ) 9.9
The notes on pages 73–121 are an integral part of these consolidated financial statements.
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Consolidated Statement of Financial Position
USD MILLION (As at December) Note 2021
ASSETS
Vessels
15 1 836.0 1 893.1
Other property, plant and equipment
15 17.3 4.1
Right-of-use assets
25 19.2 18.5
Intangible assets and goodwill
16 99.7 3.3
Equity-accounted investees
17 210.3 231.6
Finance lease receivables
25 - 12.3
Deferred tax assets
10 62.9 17.3
Derivatives
21 3.2 4.3
Other non-current assets 5.0 1.1
Non-current assets 2 253.6 2 185.6
Inventories
11 25.7 34.5
Trade and other current assets
12 296.7 199.6
Finance lease receivables
25 12.3 23.4
Current tax assets
10 0.7 1.0
Derivatives
21 3.4 3.1
Cash and cash equivalents
13 274.2 139.6
Assets held for sale
14 143.1 -
Current assets 756.1 401.2
Total assets 3 009.7 2 586.8
USD MILLION (As at December) Note 2021
EQUITY
Share capital
18 92.5 92.5
Share premium 1 095.5 1 095.5
Other equity
19 (414.5 ) (441.5 )
Equity attributable to shareholders of the parent 773.5 746.5
Non-controlling interests
24 247.9 198.5
Total equity 1 021.4 945.0
LIABILITIES
Interest-bearing long-term debt
19, 21 807.4 958.0
Financial liability related to Barossa lease
19, 21 198.1 -
Pension obligations
9 5.2 6.0
Other non-current liabilities
20 380.7 214.1
Long-term lease liabilities
25 8.0 13.7
Derivatives
21 17.6 50.6
Deferred tax liabilities
10 24.2 11.6
Non-current liabilities 1 441.2 1 254.0
Current tax liabilities
10 21.8 21.0
Interest-bearing short-term debt
19, 21 120.2 117.7
Trade and other payables
20 355.5 236.5
Contract liabilities
6 3.7 3.6
Derivatives
21 5.4 2.9
Short-term lease liabilities
25 6.2 6.1
Liabilities held for sale
14 34.3 -
Current liabilities 547.1 387.8
Total equity and liabilities 3 009.7 2 586.8
The notes on pages 73–121 are an integral part of these consolidated financial statements.
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Consolidated Statement of Changes in Equity
USD MILLION Note
Share
capital
Share
premium
Treasury
share
reserve
Currency
translation
reserve
Hedging
reserve
Equity
component
of convertible
bonds Other elements
Shareholders'
equity
Non-controlling
interests
To ta l
equity
Equity at 1 January 2020 92.5 1 095.5 (0.3 ) (18.8 ) - 50.1 (99.4 ) 1 119.6 338.9 1 458.5
Profit/ (loss) for the period - - - - - - (282.2 ) (282.2 ) 9.9 (272.3 )
Other comprehensive income - - - (2.4 ) - - (0.1 ) (2.5 ) - (2.5 )
Treasury shares acquired
18 - - (10.0 ) - - - - (10.0 ) - (10.0 )
Dividends
18 - - - - - - (18.6 ) (18.6 ) - (18.6 )
Share-based payment
9 - - 0.1 - - - 1.4 1.5 - 1.5
Dilutive effect of BW Energy IPO
5 - - - - - - (61.3 ) (61.3 ) - (61.3 )
Dividends to non-controlling interest
24 - - - - - - - - (9.9 ) (9.9 )
Transactions with non-controlling interests
24 - - - - - - - - (140.4 ) (140.4 )
Total equity at 31 December 2020 92.5 1 095.5 (10.2 ) (21.2 ) - 50.1 (460.2 ) 746.5 198.5 945.0
Equity at 1 January 2021 92.5 1 095.5 (10.2 ) (21.2 ) - 50.1 (460.2 ) 746.5 198.5 945.0
Profit/ (loss) for the period - - - - - - 62.6 62.6 (0.4 ) 62.2
Other comprehensive income - - - (4.0 ) (0.4 ) - (7.9 ) (12.3 ) (2.2 ) (14.5 )
Dividends
18 - - - - - - (25.3 ) (25.3 ) - (25.3 )
Share-based payment
9 - - 0.1 - - - 3.4 3.5 1.0 4.5
BW Ideol private placement
23 - - - - - - - - 80.6 80.6
BW Ideol transaction fees
23 - - - - - - (1.5 ) (1.5 ) (1.2 ) (2.7 )
Dividends to non-controlling interest
24 - - - - - - - - (7.9 ) (7.9 )
Transactions with non-controlling interests
24 - - - - - - - - (20.5 ) (20.5 )
Total equity at 31 December 2021 92.5 1 095.5 (10.1 ) (25.2 ) (0.4 ) 50.1 (428.9 ) 773.5 247.9 1 021.4
The notes on pages 73–121 are an integral part of these
consolidated financial statements.
Hedging reserve
The hedging reserve comprises the effective portion of
the cumulative net change in the fair value of hedging
instruments used in cash flow hedges pending subsequent
recognition in profit or loss.
Convertible notes
The reserve for the convertible notes comprises the amount
allocated to the equity component for the convertible notes
issued by the Group in November 2019.
Treasury share reserve
The reserve for the Company’s treasury shares comprises
the cost of the Company’s shares held by the Group.
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Consolidated Statement of Cash Flows
USD MILLION (Year ended December) Note 2021
Operating activities
Profit/(loss) before taxes 46.9 (272.0 )
Adjustments for:
Depreciation and amortisation
15, 16, 23 270.0 284.0
Impairment
15 90.5 292.7
Change in fair value of derivatives (16.0 ) (6.1 )
Unrealised currency exchange loss/(gain) (4.0 ) 10.8
Add back of net interest expense 48.1 58.1
Share of loss/(profit) from equity accounted investments
17 (33.5 ) 15.7
Loss/ (gain) on disposal of property, plant & equipment
14, 15 (1.2 ) -
Share-based payment expense
9 4.5 1.5
Changes in:
Instalment on financial lease
25 23.3 21.7
Changes in inventories 8.8 18.8
Changes in trade and other current assets (93.4 ) 5.0
Changes in trade and other payables 18.4 (26.5 )
Changes in other balance sheet items and items related to
operating activities 33.6 32.1
Changes in deferred revenues 139.1 (2.0 )
Cash generated from operating activities 535.1 433.8
Taxes paid
10 (24.9 ) (34.9 )
Net effect from discontinued operation
6 - (11.6 )
Net cash flow from operating activities 510.2 387.3
USD MILLION (Year ended December) Note 2021
Investing activities
Interest received 0.3 0.5
Dividends received
28 - 0.2
Proceeds from disposal of property, plant & equipment
15, 16 17.6 -
Proceeds from sale of investments
17 65.7 -
Discontinued operation, net of cash disposed off
6 - (66.3 )
Investment in associated companies (7.7 ) -
Effect of cashflows from loss of control
17 (28.7 ) -
Acquisition of subsidiary, net of cash acquired
23 (71.6 ) -
Acquisition of other investments (3.2 ) -
Investment in property, plant & equipment and intangible assets
15, 16 (295.4 ) (84.0 )
Net cash flow from investing activities (323.0 ) (149.6 )
Financing activities
Proceeds from loans and borrowings
19 312.9 140.0
Proceeds from share issue in subsidiary
23 61.6 -
Paid dividend and redemption
24 (28.4 ) (36.2 )
Treasury shares acquired
18 - (10.0 )
Interest paid (52.3 ) (50.6 )
Transaction costs relating to share issue (2.7 ) -
Repayment of loans and borrowings
19 (305.0 ) (367.0 )
Payment of lease liabilities
25 (13.4 ) (5.9 )
Dividends paid
18 (25.3 ) (18.6 )
Net cash flow from financing activities (52.6 ) (348.3 )
Net change in cash and cash equivalents 134.6 (110.6 )
Cash and cash equivalents at beginning of period 139.6 250.2
Cash and cash equivalents at end of period
13 274.2 139.6
The notes on pages 73–121 are an integral part of these consolidated financial statements.
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Notes
NOTE 1 Basis of preparation
REPORTING ENTITY
was incorporated in Bermuda in 2005 and is domiciled
in Bermuda with its registered address at Washington
Mall Phase 2, 4
th
Floor, Suite 400, 22 Church Street,
Hamilton HM1189, Bermuda .
BW Offshore Limited and its subsidiaries are referred
to as the ‘Group‘. The Group builds, owns and operates
FPSOs (Floating, Production, Storage and Offloading
vessels). The Group also does strategic investments to
capture energy transition opportunities. The Company
is listed on Oslo Stock Exchange (OSE).
BASIS OF ACCOUNTING
The consolidated financial statements of the Group
have been prepared pursuant to International Financial
Reporting Standards (‘IFRS’) as adopted by the
European Union (‘EU’). The consolidated financial
statements have been prepared in accordance with the
historical cost convention with some exceptions, as
detailed in the accounting policies set out below.
The consolidated financial statements were approved by
the Board of Directors on 27 February 2022.
Details of the Group’s accounting policies, including
changes thereto, are included in Note 2.
FUNCTIONAL AND PRESENTATION CURRENCY
These consolidated financial statements are presented
in United States Dollars (USD). This is also the func-
tional currency of the parent company and most of its
subsidiaries. The functional currency is determined in
each entity in the Group based on the currency within
the entity’s primary economic environment. All figures
are in USD million if not otherwise stated. Because of
rounding differences, numbers and or percentages may
not add up to the total. Figures in brackets refer to cor-
responding figures for 2020.
USE OF JUDGEMENTS AND ESTIMATES
The preparation of financial statements in conformity
with IFRS requires the use of certain critical accounting
estimates. It also requires Management to exercise its
judgement in the process of complying with the Group’s
accounting policies. The following is a summary of the
judgements and estimates made that could have a
material effect on the consolidated financial statements.
Depreciation
The level of depreciation depends on the estimated
useful life of the different components of the assets and
residual value at the end of its useful life. The estimated
useful life is based on experience and knowledge of the
vessels owned by the Group. Management will have
to make assessments as to the expected useful life
of the hull and marine scope as well as the process
equipment for an FPSO. Assumptions will also have
to be made about the expected contract period for
non-recoverable components for the assets, which
can deviate significantly from the useful life of hull and
process equipment.
Assumptions on residual value are based on knowledge
of current scrap values which in turn depend on steel
prices in the world market and demobilisation costs,
together with an expected inflation.
Impairment
The Group reviews periodically whether tangible assets,
FPSOs, FPSOs under construction, FPSOs marked
for projects, equity accounted investees and goodwill
have suffered any impairment in accordance with the
accounting policy stated in Note 2.
The recoverable amounts of each vessel, being defined
as a cash-generating unit, is the higher of its fair value
less cost of disposal and its value in use. Value in use
calculations are based on contracted cash flows and
estimates of uncontracted cash flows for the useful lives
of each vessel, including residual values discounted by an
estimated discount rate. Assumptions on uncontracted
cash flows are based on several variables, such as
comparing the specifications on a particular FPSO
with planned new FPSO projects around the world,
assessment of investment levels to redeploy the FPSO
on a new field and assumptions on rates to be achieved
from redeployment. The key assumptions used for the
impairment testing of FPSOs are described in Note 15.
All impairment assessment calculations demand a high
degree of estimation. Management must make complex
assessment of the expected cash flows arising from
such assets and the selection of discount rates. Changes
to these estimates could have significant impact on the
impairments recognised and future changes may lead
to reversals of recognised impairments.
The financial forecasts used in the preparation of the
goodwill and technology asset impairment test reflects
Management’s judgement on the probability of realis-
ing projects, related revenue and costs and the related
Internal Rate of Return (IRR). This judgement is based
on present circumstances at the valuation date, as to the
most likely set of conditions and the course of action it
is most likely to take. It is usually the case that some
events and circumstances do not occur as expected
or are not anticipated. Therefore, actual results during
the forecast period will almost always differ from the
forecasts and as such differences may be material. In
addition, floating offshore wind is a new industry with no
commercial projects established yet globally, resulting in
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a high degree of estimation uncertainty related to the
identification of prospective projects and chances of
acquiring such projects.
Lease classification
When the Group enters into a new or amended lease
arrangement, the terms and conditions of the con-
tract are analysed in order to assess whether or not
the Group retains the significant risks and rewards of
ownership of the asset subject of the lease contract.
To identify whether risks and rewards are retained,
the Group considers the indicators listed by IFRS 16
on a contract-by-contract basis. By performing such
assessment, the Group makes significant judgement to
determine whether the arrangement results in a finance
lease or an operating lease. This judgement can have
a significant effect on the amounts recognised in the
consolidated financial statements and its recognition of
profits in the future.
Taxation
The Group is subject to income taxes payable to various
jurisdictions across the globe. Significant judgement is
required in some jurisdictions to determine the provision
for income taxes. There are many transactions and
calculations for which the final tax determination is
uncertain during the ordinary course of business. The
Group monitors each issue around uncertain tax treat-
ments across the Group in order to ensure that the
Group applies sufficient judgement to the resolution of
tax disputes that might arise.
The Group recognises liabilities for anticipated tax
audit issues based on estimates of whether additional
taxes will be due. The income tax liabilities include any
penalties and interest that could be associated with a
tax audit issue. Where the final tax outcome of these
matters is different from the amounts that were initially
recorded, such differences will influence the income tax
and deferred tax amounts in the period in which such
determination is made.
CHANGES IN SIGNIFICANT ACCOUNTING POLICIES
Various new standards are effective from 1 January
2021, none of these changes have a material impact on
the Group’s financial statements.
NOTE 2 Significant accounting policies
BASIS OF CONSOLIDATION
Business combinations
The Group accounts for business combinations using the
acquisition method when the acquired set of activities
and assets meets the definition of a business and control
is transferred to the Group. In determining whether a
particular set of activities and assets is a business, the
Group assesses whether the set of assets and activities
acquired includes, at a minimum, an input and substan-
tive process and whether the acquired set has the ability
to produce outputs.
The consideration transferred in the acquisition is
generally measured at fair value, as are the identifiable
net assets acquired. Any goodwill that arises is tested
annually for impairment. Any gain on a bargain purchase
is recognised in profit or loss immediately. Transaction
costs are expensed as incurred, except if related to the
issue of debt or equity instruments.
Subsidiaries
The subsidiaries are legal entities (including special
purpose entities) controlled by the Group. Control is
achieved when the Group is exposed or has rights to
variable returns from its involvement with a company in
which it has invested and has the ability to use its power
to affect its returns from this company. Subsidiaries
are fully consolidated from the date on which control
commences until the date on which control ceases.
Non-controlling interests
Non-controlling interests (NCI) represent the portion
of the statement of income and net assets in the
subsidiaries not held by the Group, and the amount
attributable to the non-controlling interest is shown
beneath the statement of income and is included in
equity in the statement of financial position. Profit or loss
and each component of Other Comprehensive Income
(OCI) are attributed to the shareholders of the parent
of the Group and to the non-controlling interests, even
if this results in the non-controlling interest having a
deficit balance.
Loss of control
When the Group loses control over a subsidiary, it
derecognises the assets and liabilities of the subsidiary,
and any related NCI and other components of equity.
Any resulting gain or loss is recognised in profit or
loss. Any interest retained in the former subsidiary is
measured at fair value when control is lost.
Interests in equity-accounted investees
The Group’s interests in equity-accounted investees
comprise interests in associates and a joint venture.
Associates are those entities in which the Group has a
significant influence, but not control, or has joint control,
over the financial and operating policies, generally
accompanying a shareholding of between 20 per cent
and 50 per cent of the voting rights. Joint ventures
are joint arrangements in which the parties that share
control have rights to the net assets of the arrangement.
Joint arrangements, which are arrangements of which
the Group has joint control together with one or more
parties, are classified into joint ventures and joint
operations. Joint operations are joint arrangements in
which the parties that share joint control have rights to
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the assets, and obligations for the liabilities, relating to
the arrangement.
Interests in associates and joint ventures are accounted
for using the equity method.
The interests include goodwill and excess values
identified as per the date of acquisition, net of any
accumulated impairment loss. Any excess values
that are to be amortised are deducted from the profit
pursuant to the same principles as for consolidated
companies. Goodwill is not amortised. The balance
sheet value of associates and joint ventures represents
the original cost price (equalling the fair value at the time
of purchase) plus profit accumulated up to the present,
less any amortisation of excess values and accumulated
dividends received.
Transactions eliminated on consolidation
Intercompany transactions, balances and unrealised
gains on transactions between Group companies are
eliminated. Unrealised gains on transactions between
the Group and its associated companies and joint
ventures are eliminated to the extent of the Group’s
interest in the associates and joint ventures.
FOREIGN CURRENCY
Foreign currency transactions
Transactions in foreign currency are translated to
functional currency using the exchange rate at the
date of the transaction. At the end of each reporting
period foreign currency monetary items are translated
using the closing rate, non-monetary items that are
measured in terms of historical cost are translated using
the exchange rate at the date of the transaction and
non-monetary items that are measured at fair value in a
foreign currency are translated using the exchange rates
at the date when the fair value was measured. Foreign
currency differences are generally recognised in profit or
loss and presented within finance costs.
However, foreign currency differences arising from
qualifying cash flow hedges to the extent that the
hedges are effective, are recognised in OCI.
Foreign operations
The assets and liabilities of entities whose functional
currencies are other than USD, are translated into USD
at the exchange rates at the balance sheet date. The
revenues and expenses of such entities are translated
into USD using the monthly average exchange rates.
Exchange differences are recognised in OCI and
accumulated in the currency translation reserve in
other equity, except to the extent that the translation
difference is allocated to NCI.
Upon disposal of a foreign subsidiary, or when a loss
of control, significant influence or joint control is lost,
the accumulated exchange differences related to
investments accumulated in shareholders’ equity are
reclassified to the consolidated statement of income.
If the Group disposes of parts of its interests in a
subsidiary but retains control, the proportionate share
of the accumulated exchange differences is allocated to
non-controlling interests. When the Group disposes of
only part of an associate or joint venture while retaining
significant influence or joint control, the proportionate
share of the accumulated exchange differences is
reclassified to profit or loss.
DISCONTINUED OPERATION
A discontinued operation is a component of the Group’s
business, the operations and cash flows of which can
be clearly distinguished from the rest of the Group and
which:
•
Represents a separate major line of business or
geographic area of operations,
•
Is part of a single co-ordinated plan to dispose of a
separate major line of business or geographic area
of operations, or
•
Is a subsidiary acquired exclusively with a view to resale.
Classification as a discontinued operation occurs at
the earlier of disposal or when the operation meets the
criteria to be classified as held-for-sale.
When an operation is classified as a discontinued
operation, the comparative statement of profit or loss
and OCI is presented as if the operation had been
discounted from the start of the comparative year.
REVENUES
The Group’s revenues derive from chartering of FPSOs,
rendering of operational services related to FPSOs and
engineering and management services.
Revenue from contracts with customers
Revenue from contracts with customers is recognised
upon satisfaction of the performance obligations for the
transfer of services in each such contract. A perfor-
mance obligation is satisfied when or as the customer
obtains the goods or services delivered. It is recognised
at an amount that reflects the consideration which the
Group expects to receive in exchange for those goods
or services. Revenues are presented net of indirect
sales taxes. The Group’s performance obligations are
to operate and lease out FPSOs.
Operational services
Income from the rendering of operational services related
to FPSOs and other services is recognised as revenue
over time in the period when the services are rendered.
Variable consideration
Some of the contracts contain variable elements
like production incentive-, KPI- and maintenance
bonuses. If the consideration in a contract includes a
variable amount, the Group estimates the amount of
consideration to which it will be entitled. The variable
consideration is only recognised when its highly probable
that it would not be subject to significant reversal in the
future.
FEED (Front-End Engineering Design)
A FEED study is a preliminary step taken before basic
engineering level work and is undertaken to confirm
the technical and economic feasibility of a prospective
oil field development. Income from FEED contracts is
recognised as revenue from contracts with customers
if control transfers to the customer.
Lease revenue
Chartering of vessels
Revenue from chartering of FPSOs is based on whether
the contract is considered an operating lease or a
finance lease.
Operating lease
Leases, in which a significant portion of the risks and
rewards of ownership are retained by the lessor, are
classified as operating leases. Payments received
under operating leases are recognised as revenue on a
straight-line basis over the lease term, unless another
systematic basis is more representative of the time
pattern in which use benefit derived from the leased
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asset is diminished. The lease term period for each
lease contract is the non-cancellable period for which
the lessee has contracted the asset together with an
assessment of any further terms that the lessee has
the option to continue the lease, when Management
considers it reasonably certain that the lessee will exer-
cise the option. As lease rates can vary over the lease
term, this implies that there might be significant timing
differences between cash flow and recognised revenue
from a particular lease.
If an arrangement contains lease and non-lease com-
ponents, the Group applies IFRS 15 to allocate the
consideration in the contract. Contingent rental income is
recognised as revenue in the period in which it is earned.
Finance lease
Leases in which substantially all of the risks and rewards
of ownership are transferred to the lessee are classified
as finance leases. Assets held pursuant to a finance
lease are presented in the balance sheet as a receivable
at an amount equal to the net investment in the lease.
The recognition of finance income on the receivable is
based on a pattern reflecting a constant periodic rate of
return on the lessor’s net investment in the finance lease.
During the construction phase of the asset, the contract
is treated like a construction contract.
Interest income arising from a finance lease, is recog-
nised on a time proportion basis applying the effective
interest method. Interest income arising from a finance
lease is classified as part of operational income while
other interest income is classified as finance income.
Government grants
Grants that compensate the Group for expenses incurred
are recognised in profit or loss as other income on a
systematic basis in the periods in which the expenses
are recognised, unless the conditions for receiving the
grant are met after the related expenses have been
recognised. In this case, the grant is recognised when it
becomes receivable.
EMPLOYEE BENEFITS
Defined benefit plans
The Group has unfunded defined benefit pension plans.
Unfunded schemes are financed through the Group’s
operations.
A defined benefit plan is a pension plan that is not a
defined contribution plan. Typically, defined benefit plans
define an amount of pension benefit that an employee
will receive on retirement, usually dependent on one
or more factors such as age, years of service and
compensation.
The liability recognised in the balance sheet in respect
of defined benefit pension plans equals the present
value of the defined benefit obligation at the balance
sheet date less the fair value of plan assets. The defined
benefit obligation is calculated annually by independent
actuaries applying the projected unit credit method.
The present value of the defined benefit obligation is
determined by discounting the estimated future cash
outflows using interest rates of high-quality corporate
bonds denominated in the currency in which the benefits
will be paid and at terms to maturity approximating to
the terms of the related pension liability.
Actuarial gains and losses are recognised immediately in
the statement of financial position with a corresponding
debit or credit to the retained earnings through OCI in
the period in which they occur.
Defined contribution plans
In addition to the defined benefit plan described above,
the Group has contributed to other pension plans. The
pension premiums are charged to expenses as they
are incurred. The Group has no legal or constructive
obligation to pay further contributions if the fund does
not hold sufficient assets to pay all employees the
benefits relating to employee service in the current and
prior periods.
Share-based payment
The grant date fair value of equity settled share-
based payment arrangements granted to employees
is recognised as an employee benefits expense, with a
corresponding increase in equity, over the vesting period
of the awards. The amount recognised as an expense is
adjusted to reflect the number of awards for which the
related service and non-market performance conditions
are expected to be met, such that the amount ultimately
recognised is based on the number of awards that meet
the related service and non-market performance con-
ditions at the vesting date.
TAXES
The Company is not subject to any income taxes in
Bermuda, but the Company and its subsidiaries may
be subject to income tax in the countries in which they
operate. The Group provides for tax on profit based on
the profit for financial reporting purposes, adjusted for
non-taxable revenue and expenses.
Income tax expense represents the sum of tax cur-
rently payable, changes in deferred tax liabilities and
deferred tax assets, and withholding tax on charter hire
and financial items. Charter hire and financial items are
presented gross including withholding taxes payable
where applicable.
Deferred tax liabilities / tax assets are calculated on all
differences between the book value and tax value of
assets and liabilities, except for:
•
Differences linked to goodwill which are not tax
deductible.
•
Differences related to investments in subsidiar-
ies, associates or joint ventures when the Group
controls when the temporary differences are to be
reversed and this is not expected to take place in
the foreseeable future.
Deferred tax assets are recognised when it is probable
that the company will have a sufficient profit for tax pur-
poses in subsequent periods to utilise the tax asset. The
companies recognise previously unrecognised deferred
tax assets to the extent it has become probable that the
company can utilise the deferred tax asset. Similarly, the
company will reduce a deferred tax asset to the extent
that the company no longer regards it as probable that
it can utilise the deferred tax asset.
Deferred tax assets and liabilities are recognised when
assets with temporary differences are acquired through
business combinations.
Deferred tax liabilities and deferred tax assets are
measured on the basis of the expected future tax rates
applicable to the companies in the Group where tem-
porary differences exist.
Deferred tax assets and deferred tax liabilities are
recognised at their nominal value and classified as
non-current asset investments (long-term liabilities)
in the balance sheet.
Taxes payable and deferred taxes are recognised directly in
equity to the extent that they relate to equity transactions.
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INVENTORIES
Inventories are valued at the lower of cost or net realis-
able value. Cost of materials and other consumables is
based on the weighted average cost method and cost
of fuel oil is based on the ‘first-in, first-out’ allocation
method. The cost of inventories comprises the purchase
price, import duties and other taxes, transport, handling
and other costs directly attributable to the acquisition
of finished goods, materials and services.
PROPERTY, PLANT AND EQUIPMENT (PP&E)
Measurement
PP&E are recognised at cost and subsequently
measured at cost less accumulated depreciation and
impairment charges. This includes costs of material,
direct labour and any costs directly attributable to bring-
ing the asset to the location and condition necessary
for it to be capable of operating in the manner intended
by Management, including attributable overheads and
estimate of costs of demobilising the asset.
Borrowing costs directly attributable to an acquisition or
construction of vessels, which take a substantial period to
get ready for their intended use, are added to the cost of
the asset until the assets are ready for their intended use.
Borrowing cost consists of interest and other cost, which
the entity incurs in connection with the borrowing of funds.
Subsequent costs are included in the asset’s carrying
amount, as appropriate, only when it is probable that
future economic benefits associated with the item
will flow to the Group and the cost of the item can be
measured reliably.
Depreciation
Depreciation will start when an item of PP&E is ready
for use as intended by Management.
For FPSOs this will be when the unit is successfully
installed on the oil field.
When significant parts of an item of PP&E have differ-
ent useful lives, those components are accounted for as
separate items of PP&E. The different components are
depreciated by using a straight-line method over their
expected useful life, taking into account the residual
value.
The estimated useful lives of the categories of PP&E
are as follows:
FPSOs:
•
Hull and Marine scope, including associated invest-
ments like refurbishment: 15–25 years.
•
Field-specific equipment and associated invest-
ment costs which are incurred for a specific project,
e.g. installation costs and transport costs: 3–25
years.
•
Process equipment and associated investment. (In
case of long-term contracts these items can be fully
depreciated over the contract duration.): 10–25 years.
Other PP&Es, like IT equipment, office equipment, tech-
nical installation and cars: 3–10 years.
The assets’ useful life and residual values are reviewed,
and if necessary adjusted, at each reporting date.
Disposal activities
Gains and losses that result from the disposal of vessels,
vehicles and equipment are recorded in a separate line
in the consolidated statement of income.
Impairment
Assets including vessels, vessels under construction,
conversion candidates and other PP&Es, are reviewed
for impairment whenever events or changes in circum-
stances indicate that the carrying amount may not be
recoverable. An impairment loss is recognised for the
amount that the asset’s carrying amount exceeds its
recoverable amount, being the higher of an asset’s net
selling price and its value in use. For the purpose of
assessing impairment, assets are grouped at the lowest
levels for which there are separate identifiable cash flows
(cash-generating units). Each FPSO is identified as a
cash-generating unit.
At the end of each reporting period the Group will assess
whether there is any indication that an impairment rec-
ognised in previous periods may no longer exist or may
have decreased. If any such indication exists, the Group
will estimate the recoverable amount of the asset. If the
recoverable amount is higher than the carrying amount
of the asset, the carrying amount of the asset will be
increased to its recoverable amount. The increase shall
not exceed the carrying amount that would have been
determined if no impairment loss had been recognised
in previous periods. Previously recognised impairments
should be reversed if there are significant changes with
a favourable effect in the indicators.
INTANGIBLE ASSETS AND GOODWILL
Goodwill
Goodwill arising on the acquisition of subsidiaries is
measured at cost less accumulated impairment losses.
Goodwill is allocated to cash-generating units (CGUs)
for the purpose of the annual impairment testing.
Technology
Technology acquired in a business combination is recog-
nised at fair value at the acquisition date when intangible
assets criteria are met and amortised on a straight-line
basis over the useful life of fifteen years.
Research and development
Expenditure on research activities is recognised in profit
or loss as incurred.
Development expenditure is capitalised only if the
expenditure can be measured reliably, the product or
process is technically and commercially feasible, future
economic benefits are probable, and the Group intends
to and has sufficient resources to complete devel-
opment and to use or sell the asset. Otherwise, it is
recognised in profit or loss as incurred. Subsequent to
initial recognition, development expenditure is measured
at cost less accumulated amortisation and any accu-
mulated impairment losses.
Capitalised development costs are amortised over the
period of expected future benefit, usually five years.
Computer software
Software licences are capitalised based on the cost
incurred when acquiring and bringing to use the specific
software. These costs are amortised over the estimated
useful life of the software. Costs directly associated with
the development of identifiable and unique software
products controlled by the Group, estimated to generate
economic benefits exceeding the cost beyond one year,
are recognised as intangible assets. Other development
expenditures are recognised as an expense when incurred.
ASSETS HELD FOR SALE
Non-current assets, or disposal groups comprising
assets and liabilities, are classified as held-for-sale if
it is highly probable that they will be recovered primarily
through sale rather than through continuing use. Such
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assets, or disposal groups, are generally measured at
the lower of their carrying amount and fair value less
costs to sell. Once classified as held-for-sale, intangible
assets and property, plant and equipment are no longer
amortised or depreciated, and any equity-accounted
investee is no longer equity accounted.
Assets and liabilities classified as held-for-sale are
presented separately as current items in the statement
of financial position.
FINANCIAL INSTRUMENTS
A financial instrument is any contract that gives rise to
a financial asset of one entity and a financial liability or
equity instrument of another entity.
Financial assets
The Group’s financial assets are derivatives, trade and
financial lease receivables and cash and cash equivalents.
The classification of financial assets at initial recogni-
tion depends on the financial asset’s contractual cash
flow characteristics and the Group’s business model for
managing them. Except for trade receivables that do not
contain a significant financing component, the Group
initially measures a financial asset at its fair value plus,
in the case of a financial asset not at fair value through
profit or loss, transaction costs.
The Group classifies its financial assets in two cate-
gories:
•
Financial assets at amortised cost.
•
Financial assets at fair value through profit or loss
(FVTPL).
Financial assets at amortised cost
The Group measures financial assets at amortised cost
if both of the following conditions are met:
•
The financial asset is held within a business model
with the objective to hold financial assets in order to
collect contractual cash flows.
•
The contractual terms of the financial asset give
rise on specified dates to cash flows that are solely
payments of principal and interest on the principal
amount outstanding.
Financial assets at amortised cost are subsequently
measured using the effective interest method and are
subject to impairment. Gains and losses are recognised
in the consolidated statement of income when the asset
is derecognised, modified or impaired.
The Group’s financial assets at amortised cost include
trade and other receivables, finance lease and other
non-current assets. Trade receivables that do not
contain a significant financing component are measured
at the transaction price determined under IFRS 15 -
Revenue from contracts with customers.
Financial assets at fair value through profit or loss
Derivatives at fair value are carried in the statement
of financial position at fair value with net changes in
fair value through profit or loss. The category includes
foreign exchange contracts and interest rate swaps.
Derecognition of financial assets
A financial asset (or, where applicable, a part of a finan-
cial asset or part of a group of similar financial assets)
is primarily derecognised when:
•
The rights to receive cash flows from the asset
have expired, or
•
The Group has transferred its rights to receive cash
flows from the asset or has assumed an obligation
to pay the received cash flows in full without mate-
rial delay to a third party under a ‘pass-through’
arrangement, and either
a. the Group has transferred substantially all the
risks and rewards of the asset, or
b. the Group has neither transferred nor retained
substantially all the risks and rewards of the
asset, but has transferred control of the asset.
Impairment of financial assets
For trade and other receivables, finance lease and
other non-current assets, the Group applies a simpli-
fied approach in calculating Estimated Credit Losses
(ECLs). Therefore, the Group does not track changes
in credit risk, but instead recognises a loss allowance
based on lifetime ECLs at each reporting date, based
on its historical credit loss experience.
The Group considers a financial asset in default when
internal or external information indicates that the Group
is unlikely to receive the outstanding contractual amounts
in full before taking into account any credit enhance-
ments held by the Group. A financial asset is written
off when the Group has no reasonable expectations of
recovering the contractual cash flows. The Group indi-
vidually makes an assessment with respect to the timing
and amount of write-off based on whether there is a
reasonable expectation of recovery. This assessment is
based on historical experience of recoveries of similar
assets. The Group expects no significant recovery from
the amount written off. However, financial assets 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.
Financial liabilities
Financial liabilities are classified as measured at amor-
tised cost except for financial liabilities at fair value
through profit of loss (FVTPL). Such liabilities, includ-
ing derivatives that are liabilities, shall be subsequently
measured at fair value. Other financial liabilities are
subsequently measured at amortised cost using the
effective interest method. Interest expense and foreign
exchange gains and losses are recognised in the con-
solidated statement of income, as well as any gain or
loss on derecognition.
Derivatives are financial liabilities when the fair value is
negative, accounted for similarly as derivatives as assets.
Derecognition of financial liabilities
The Group has applied the derecognition requirement in
IFRS 9 - Financial Instruments prospectively to trans-
actions occurring on or after the transition date, but not
retrospectively to financial liabilities already derecog-
nised prior to the transition date.
Under IFRS, the amortised cost of a modified financial
liability, in which the terms of the financial liability are not
determined to be substantially modified, is recalculated as
the present value of the estimated future contractual cash
flows, discounted at the original effective interest rate. The
resulting gains or losses are recognised in profit or loss.
Derivative financial instruments and hedge accounting
The Group holds derivative financial instruments to
hedge its foreign currency risk exposures. Derivatives
are initially measured at fair value.
At inception of designated hedging relationships, the
Group documents the risk management objective and
strategy for undertaking the hedge. The Group also
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documents the economic relationship between the
hedged item and the hedging instrument, including
whether the changes in cash flows of the hedged item
and hedging instrument are expected to offset each
other. Derivatives are carried as financial assets when
the fair value is positive and as financial liabilities when
the fair value is negative.
Cash flow hedges
When a derivative is designated as a cash flow hedging
instrument, the effective portion of changes in the fair
value of the derivative is recognised in OCI and accu-
mulated in the hedging reserve. The effective portion of
changes in the fair value of the derivative that is rec-
ognised in OCI is limited to the cumulative change in
fair value of the hedged item, determined on a present
value basis, from inception of the hedge. Any ineffective
portion of changes in the fair value of the derivative is
recognised immediately in profit or loss.
When the hedged forecast transaction subsequently
results in the recognition of a non-financial item such
as inventory, the amount accumulated in the hedging
reserve and the cost of hedging reserve is included
directly in the initial cost of the non-financial item when
it is recognised. For all other hedged forecast transac-
tions, the amount accumulated in the hedging reserve
and the cost of hedging reserve is reclassified to profit
or loss in the same period or periods during which the
hedged expected future cash flows affect profit or loss.
If the hedged future cash flows are no longer expected
to occur, then the amounts that have been accumulated
in the hedging reserve and the cost of hedging reserve
are immediately reclassified to profit or loss.
CASH AND CASH EQUIVALENTS
Cash and cash equivalents include cash in hand, short-
term, highly liquid investments readily convertible to
known amounts of cash and which are subject to an
insignificant risk of changes in value and short-term
deposits with an original maturity of three months or
less. Restricted cash related to withholding tax from
employees is included as cash and cash equivalents.
SHARE CAPITAL
Ordinary shares
Ordinary shares are classified as equity. Incremental
costs directly attributable to the issue of new shares or
options are shown in the equity as a deduction, net of
tax, from the proceeds.
Treasury shares
When shares recognised as equity are repurchased, the
amount of the consideration paid, which includes directly
attributable costs, is recognised as a reduction from
equity. Repurchased shares are classified as treasury
shares and are presented in the treasury share reserve.
When treasury shares are sold or reissued subsequently,
the amount received is recognised as an increase in
equity and the resulting surplus or deficit on the trans-
action is presented within share premium.
Preference shares
Preference shares in subsidiaries are presented as
shareholders’ equity. For the Group, this is presented as
non-controlling interest and the result, equivalent to the
preference dividend, is presented as the non-controlling
interests share of the result regardless of whether divi-
dends have been paid or accumulated.
COMPOUND FINANCIAL INSTRUMENTS
Compound financial instruments issued by the Group
comprise convertible bonds denominated in USD, that
can be converted to ordinary shares at the option of the
holder, when the number of shares to be issued is fixed
and does not vary with changes in fair value.
The liability component of compound financial instru-
ments is initially recognised at the fair value of a similar
liability that does not have an equity conversion option.
The equity component is initially recognised as the dif-
ference between the fair value of the compound financial
instrument and the fair value of the liability component.
Any directly attributable transaction costs are allocated
to the liability and equity components in proportion to
their initial carrying amounts.
Subsequent to initial recognition, the liability compo-
nent of a compound financial instrument is measured at
amortised cost using the effective interest method. The
equity component of a compound financial instrument
is not remeasured.
Interest related to the financial liability is recognised in
the consolidated statement of income. On conversion
at maturity, the financial liability is reclassified to equity
and no gain or loss is recognised.
CLASSIFICATION OF ASSETS AND LIABILITIES
Assets for long-term ownership or use are classified
as non-current assets. Other assets are classified as
current assets. Liabilities which fall due more than one
year after being incurred are classified as non-current
liabilities, except for next year’s instalment on long-term
debt. This is presented as current interest-bearing debt.
Liabilities which fall due less than one year after they are
incurred are classified as current liabilities.
PROVISIONS AND CONTINGENT ASSETS AND LIABILITIES
Provisions are recognised when the Group has a legal or
constructive obligation resulting from past events, when
it is likely that an outflow of resources will be required
to settle the obligation and a reliable estimate of the
amount can be made.
Provisions are measured at the present value of the
expenditures expected to be required to settle the
obligation, using a pre-tax rate that reflects current
market assessments of the time value of money and
the risks specific to the obligation. The increase in
the provision due to passage of time is recognised as
interest expense.
Contingent liabilities are not recognised in the annual
accounts. Significant contingent liabilities are disclosed,
except for contingent liabilities that are unlikely to be incurred.
Contingent assets are not recognised in the annual
accounts but are disclosed if the probability that the
benefit will be added to the Group is more likely than not.
LEASES
The Group assesses at contract inception whether a
contract is, or contains, a lease. A contract is, or con-
tains, a lease if the contract transfers the right to control
the use of an identified asset for a period of time in
exchange for consideration.
The Group as a lessee
The Group applies a single recognition and measurement
approach for all leases except for short-term leases and
leases of low value. The Group recognises lease liabilities
to make lease payments and right-of-use assets repre-
senting the right to use the underlying assets. The Group
has elected to not separate non-lease components and
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account for the lease and the non-lease components
as a single lease component.
Right-of-use assets
The Group recognises a right-of-use asset and a lease
liability at the commencement date of the lease. This is
the date the underlying asset is available for use.
Right-of-use assets are measured at cost and
depreciated using the straight-line method from the
commencement date to the end of the lease term. In
addition, the right-of-use asset is periodically reduced
by impairment losses, if any, and adjusted for certain
remeasurements of the lease liability.
Lease liabilities
The lease liability is initially measured at the present
value of the lease payments that are not paid at the
commencement date. In calculating the present value,
the Group uses its incremental borrowing rate at the
lease commencement date because the interest rate
implicit in the lease is not readily determinable. After the
commencement date, the amount of lease liabilities is
increased to reflect the accretion of interest and reduced
for the lease payments made.
Lease payments included in the measurement of the
lease liability comprise the following:
•
Fixed payments, including in-substance fixed
payments.
•
Variable lease payments that depend on an index or
rate, initially measured using the index or rate as at
the commencement date.
The lease liability is measured at amortised cost using
the effective interest method. It is remeasured when
there is a change in future lease payments arising from
a change in an index or rate or if the Group changes its
assessment of whether it will exercise an extension or
termination option. When the lease liability is remeas-
ured in this way, a corresponding adjustment is made
to the carrying amount of the right-of-use asset or is
recorded in the consolidated statement of income if the
carrying amount of the right-of-use asset has been
reduced to zero.
The Group determines its incremental borrowing rate by
obtaining interest rates from the external bank financing.
Short-term leases and leases of low value
The Group applies the short-term lease recognition
exemption to its short-term leases. A short-term lease
is a lease that has a lease term of 12 months or less
from the commencement date. It also applies the low-
value exemption to leases of office equipment that are
considered to be low value. Lease payments for these
leases are recognised as an expense on a straight-line
basis over the lease term.
The Group as a lessor
When the Group acts as a lessor, it assesses 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 finance 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, including the existence and terms of any exten-
sion or purchase options.
NOTE 3 Standards issued but not yet effective
A number of new standards are effective for annual
periods beginning after 1 January 2021 and earlier appli-
cation is permitted; however, the Group has not early
adopted the new and amended standards in preparing
these consolidated financial statements. The following
new and amended standards are not expected to have a
significant impact on the Group’s consolidated financial
statements.
•
Covid-19-Related Rent Concessions beyond
30 June 2021 (Amendment to IFRS 16)
•
Onerous Contracts – Cost of Fulfilling a Contract
(Amendments to IAS 37)
•
Annual Improvements to IFRS Standards
2018–2020
•
Property, Plant and Equipment: Proceeds before
Intended Use (Amendments to IAS 16)
•
Reference to Conceptual Framework
(Amendments to IFRS 3)
•
IFRS 17 Insurance Contracts and amendments to
IFRS 17 Insurance Contracts
•
Classification of Liabilities as Current or Non-
current (Amendments to IAS 1)
•
Disclosure of Accounting Policies (Amendments to
IAS 1 and IFRS Practice Statement 2)
•
Definition of Accounting Estimates (Amendments
to IAS 8)
•
Deferred Tax related to Assets and Liabilities arising
from a Single Transaction (Amendments to IAS 12
Income Taxes)
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NOTE 4 Operating segments
Following the establishment of BW Ideol AS in March 2021, the Group’s activities are construction, lease and operation of FPSOs as well as offshore floating wind. Up until 17 February 2020, the Group’s activities also included upstream E&P
activities, which were partially divested upon the IPO of BW Energy Limited which is currently presented as an investment under the equity method.
The Group identifies segments on the basis of those components of the Group that are regularly reviewed by the chief operating decision-maker (‘CODM’). The Group identified its Top Management as the CODM, reference to Note 9 for definition
of Top Management. The reported measure of segment profit is net operating profit (EBIT). Deferred tax assets, pension assets and non-current financial assets are not allocated to the segments. Operating segment disclosures are consistent with
the information reviewed by the CODM.
Segment performance for 2021 and 2020 is presented below:
2021
USD MILLION FPSO
Floating
wind Eliminations To t a l
Revenues . . - .
Other revenue . . - .
Revenues inter-segment . - (.) -
Total revenues . . (.) .
Operating expenses (.) (.) . (.)
General and administrative expenses (.) - - (.)
Operating profit before depreciation, amortisation,
impairment and sale of assets
. (.) - .
Depreciation, amortisation and impairment (.) (.) - (.)
Profit/(loss) sale of fixed assets . - - .
Operating profit/(loss) . (.) - .
Capital expenditure . . - .
Balance sheet information
Equity-accounted investees . - - .
Non-current segment assets . . - .
Non-current assets, not allocated to segments .
Total non-current assets .
2020
USD MILLION FPSO E&P (discontinued)
Eliminations To t a l
Revenues . - . .
Other revenue . . (.) .
Revenues inter-segment - - (.) (.)
Total revenues . . (.) .
Operating expenses (.) (.) . (.)
General and administrative expenses (.) - . (.)
Operating profit before depreciation, amortisation,
impairment and sale of assets
. . (.) .
Depreciation, amortisation and impairment (.) (.) . (.)
Operating profit/(loss) (.) (.) (.) (.)
Capital expenditure . . - .
Balance sheet information
Equity-accounted investees . - - .
Non-current segment assets . - - .
Non-current assets, not allocated to segments .
Total non-current assets .
The E&P segment includes the period 1 January 2020 – 16 February 2020.
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Reconciliation of reportable segment operating profit or loss
Operating profit/(loss) for reportable segments (.)
Elimination of discontinued operation .
Operating profit/(loss) (.)
Reconciliation of reportable segment revenues
Revenues for reportable segments .
Elimination of discontinued operation .
Revenues .
GEOGRAPHIC INFORMATION
Revenue
For the FPSO segment, the classification of revenue per region is determined by the final destination of the FPSO, while
the classification in the floating wind segment is based on the geographic location of the customers.
USD MILLION 2021
Americas . .
Europe/Africa . .
Asia and the Pacific . .
Total revenues from continuing operations . .
Europe/Africa - (.)
Total revenues from discontinued operation - (.)
USD 4.3 million of revenues in the Europe/Africa region is related to the floating wind segment. Revenues in the other
regions are related to the FPSO segment. In 2020, USD million 5.1 of revenues in the Europe/Africa region was related
to the E&P segment.
Non-current assets
Non-current assets exclude deferred tax assets, derivatives, equity accounted investees and other non-current assets.
USD MILLION 2021
Americas . .
Europe/Africa . .
Asia and the Pacific . .
. .
MAJOR CUSTOMER
The Group has a limited number of customers (see also section regarding credit risk in Note 21). In accordance with
IFRS 8.34, the Group has evaluated whether any single customers amount to 10 per cent or more of the total revenue.
In 2021, the Group has identified two such customers. For these, the revenue was USD 383.4 million related to the FPSO
segment. In 2020, the Group identified two such customers. For these, the revenue was USD 374.5 million related to
the FPSO segment.
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NOTE 5 Discontinued operation
BW Offshore completed the IPO of BW Energy Limited in February 2020. Following the IPO, BW Offshore’s ownership
in BW Energy Limited was reduced from 68.6 per cent to 38.8 per cent. Considering a loss of control, the BW Energy
Group was no longer consolidated as part of the Group from 17 February 2020. The retained interest is classified as
an equity-accounted investee that is initially recognised at its fair value and subsequently measured using the equity
method. Further reference is made to Note 17 Equity-accounted investees.
Subsequent to the disposal, the Group has continued transactions with the BW Energy Group, primarily a lease and
operating contract for the FPSO Adolo as well as back-office support.
Although intra-group transactions have been fully eliminated in the consolidated statement of income, the Group has
elected to attribute the elimination of transactions between the continuing operations and the discontinued operation
before the disposal in a way that reflects the continuance of these transactions subsequent to the disposal, because
the Group believes this is useful to the users of the financial statements.
To achieve this presentation, the Group has eliminated the inter-segment sales (and costs, less unrealised profits)
from the results of the discontinued operation made before its disposal. Because sale to the discontinued operation will
continue after the disposal, inter-segment sale made to the continuing operations before the disposal are retained in
continuing operations.
RESULTS FROM DISCONTINUED OPERATION
USD MILLION
Revenue .
Elimination of inter-segment revenue (.)
External revenue (.)
Operating expenses (.)
Elimination of inter-segment expenses .
External expenses .
Operating profit /(loss) before depreciation/amortisation -
Depreciation (.)
Gain/(loss) sale of assets -
Operating profit/(loss) (.)
Interest income .
Other financial items .
Net financial income/(expense) .
Profit/(loss) before tax (.)
Income tax expense (.)
Profit/(loss) from operating activities (.)
Gain on sale of discontinued operation .
Profit/(loss) from discontinued operation for the period .
Earnings per share
Basic earnings/(loss) per share in USD net .
Diluted earnings/(loss) per share USD net .
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CASH FLOWS FROM/(USED IN) DISCONTINUED OPERATION
USD MILLION
Net cash flow from/(used in) operating activities .
Net cash flow from/(used in) investing activities (.)
Net cash flow from/(used in) financing activities
.
Net cash flow for the period .
2020 numbers includes IPO effect.
NOTE 6 Revenue
REVENUE STREAMS
The Group generates revenue primarily from rendering of services on operating FPSOs and chartering of FPSOs to its
customers. The Group recognises most of its revenue over time.
Continuing
operations
Discontinued
operation To t a l
USD MILLION 2021
Revenue from contracts with customers . . (.) .
Leasing revenue . . (.) .
Other revenue . . . .
Total revenue . . (.) .
During the normal course of business, the Group is involved in legal and other proceedings which are unresolved and
outstanding. We have accounted for such claims and litigations based on the Group’s best judgement. In 2021, the Group
recognised USD 2.4 million in ‘other revenue’ related to a settlement reached with Petrobras pertaining to the P-63 EPC
contract for which no receivable was previously recognised.
In November 2020, the Group reached an agreement with New Zealand Government for a fully funded disconnection of
FPSO Umuroa which was located on the Tui oil field offshore New Zealand. The Group presents this income as ‘other
revenue’ in the statement of profit or loss.
In 2021, the Norwegian Shipowners´ Mutual War Risks Insurance Association, Den Norske Krigsforsikring for Skib
(DNK) returned USD 7.5 million, net of 25 per cent withholding tax, of previous paid insurance. This is presented as
‘other revenue’ in the statement of profit or loss.
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CONTRACT BALANCES
The following table provides information about receivables and contract assets and liabilities.
USD MILLION 31 Dec 2021 Dec
Receivables included in trade and other current assets . .
Contract assets included in trade and other current assets . .
Contract liabilities - current . .
The majority of the Group’s contracts consist of a lease for the FPSO as well as an operating agreement. The Group
assessed the underlying risk profile to be equal.
The contract assets primarily relate to the Group’s rights to consideration for work completed but not billed at the
reporting date.
The contract liabilities primarily relate to advance consideration received from customers. USD 3.6 million (USD 1.9
million) recognised in contract liabilities in the beginning of the period has been recognised as revenue during 2021.
The remaining unsatisfied performance obligations to be recognised as revenues from contracts with customers over
the remaining contract period is USD 1 837.9 million (USD 999.8 million).
NOTE 7 Operating, administrative and other expenses
The table below sets out expenses by nature for items included in operating expenses, other expenses and administrative
expenses.
USD MILLION 2021
Employee benefit expenses (Note 9) . .
Vessel operating expenses . .
Other expenses . .
Total operating expenses . .
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NOTE 8 Earnings per share
BASIC EARNINGS PER SHARE
The calculation of basic EPS has been based on the following profit attributable to ordinary shareholders and the
weighted-average number of ordinary shares outstanding.
Profit/(loss) attributable to ordinary shareholders (basic)
2021
USD MILLION
Continuing
operations
Discontinued
operation To t a l
Continuing
operations
Discontinued
operation To t a l
Profit/(loss) attributable
to ordinary shareholders . - . (.) . (.)
Weighted-average number of ordinary shares (basic)
IN THOUSAND
Issued ordinary shares at 1 January
Effect of treasury shares held ( ) ( )
Weighted-average number of ordinary shares at 31 December
DILUTED EARNINGS PER SHARE
The calculation of diluted EPS has been based on the following profit attributable to ordinary shareholders and weighted-
average number of ordinary shares outstanding after adjustment for the effects of all dilutive potential ordinary shares.
Profit/(loss) attributable to ordinary shareholders (diluted)
2021
USD MILLION
Continuing
operations
Discontinued
operation To t a l
Continuing
operations
Discontinued
operation To t a l
Profit/(loss) attributable
to ordinary shareholders . - . (.) . (.)
Interest expense on
convertible notes . - . . - .
Profit/(loss) attributable
to ordinary shareholders
(diluted) . - . (.) . (.)
Weighted-average number of ordinary shares (diluted)
IN THOUSAND
Weighted-average number of ordinary shares (basic)
Effect of conversion of convertible bonds
Weighted-average number of ordinary shares (diluted) at 31 December
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EARNINGS PER SHARE
USD MILLION 2021
Basic earnings / (loss) per share net . (.)
Diluted earnings / (loss) per share net . (.)
EARNINGS PER SHARE – CONTINUING OPERATIONS
USD MILLION 2021
Basic earnings / (loss) per share net . (.)
Diluted earnings / (loss) per share net . (.)
NOTE 9 Employee benefit expenses, remuneration to directors and auditors
EMPLOYEE BENEFIT EXPENSES
USD MILLION 2021
Wages, crew . .
Wages, administrative personnel . .
Social security contributions . .
Expenses related to defined contribution scheme . .
Expenses related to defined benefit scheme . .
Share-based payment . .
Total employee benefit expenses . .
Average number of employees
TOP MANAGEMENT
1
REMUNERATION
(IN USD) Salary Bonus Pension benefits Share options Other benefits
Number of
shares
2021
2020
At 31 December 2021 Top Management comprises Chief Executive Officer, Chief Financial Officer, Chief Operating Officer, Chief
Commercial Officer and General Counsel.
Loans
Part of Top Management received a loan in 2016 in NOK on arm’s-length basis.
The Group has not provided any loans to affiliates.
(IN USD) 2021
Loans to Top Management
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Severance
Top Management has agreements that give them the right to compensation after termination of employment before
retirement that equals 100 per cent of the salary for a maximum of 18 months. Compensation received from other
employers during this period reduces this compensation, but not below 25 per cent of the compensation. There are no
similar agreements with the members of the Board of Directors.
Long-term incentive programme
The Group had a long-term incentive programme for C-suite Management (CFO, COO and CCO) and Head of Projects.
The programme intended to reward performance over a three-year period. Pay-out under the long-term incentive
programme was based on targets achieved within three parameters:
1. Company results – 1/3
2. Project performance – 1/3
3. Total shareholder return – 1/3
The long-term incentive programme was discontinued in 2019 and the last deferred payments were completed in 2021.
BOARD OF DIRECTORS’ REMUNERATION
(IN USD) Number of Share
Ye a r Directors’ fee shares options
2021 -
2020 -
The compensation for members of the Board of Directors for the period May 2021 to May 2022 will be decided at the
annual general meeting in May 2022.
EMPLOYEE REMUNERATION
Variable Compensation Scheme
The Variable Compensation Scheme (VCS) is a system for rewarding employees if and when the Group reaches set
goals, based on financial parameters. The VCS might differ from year to year depending on the challenges and goals set
by the Group, and the financial factors that influence the Group’s performance. The VCS for the performance year 2021
is based on the following parameters:
1. Overall company results
2. Health, Safety, Environment and Safety (HSEQ) performance
The assessment of the Group’s achievement will determine the pay-out of the VCS. The Board of Directors will exercise
its discretion to determine appropriate compensation levels.
Full pay-out is capped at three months’ salary for all employees, with the exception of a higher cap of six months for
the Senior Management Team. Individual assessment may be added to the general pay-out. Employees need to be
employed at the time of VCS payment to be eligible for VCS scheme benefits.
Long-term share option programme
In 2019, the Board approved to establish a long-term share option programme (LTIP) where key personnel were granted
options to purchase shares in the Company. The programme is approved for 5 years, with annual grants, each grant
corresponding to 1 per cent of the total outstanding shares in the Company. The first grant was in 2019, with the last
grant planned for 2023. The programme is discretionary, and participants are invited on an annual basis. The purpose of
the programme is to further align the interests of the Group and its shareholders by providing incentives to employees
to motivate them to contribute materially to the success and long-term profitability of the Group.
The key terms and conditions related to the grants under these programmes are as follows; all options are to be settled
by physical delivery of shares.
Grant date
Number of
instruments Vesting conditions Contractual life of options
On 8 April 2019
Vesting period of three years, followed by
a three years exercise period 6 years
On 6 March 2020 Same as above 6 years
On 26 February 2021 Same as above 6 years
Total share options
Each option will give the holder the right to acquire one BW Offshore share. In 2021, a total of 60 (59) BW Offshore
key employees were invited to participate in the programme.
The strike price of the options is calculated based on the volume weighted average share price five trading days prior
to grant date, plus a premium of 15.76 per cent which is corresponding to a 5 per cent increase annually over 3 years.
The Company’s exposure relating to the 2019 award is hedged by a Total Return Swap (TRS) agreement with financial
exposure to 1 732 000 shares in BW Offshore. The options are non-tradable and conditional upon the option holder
being employed by the Company and not having resigned or being terminated for cause prior to the vesting date.
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Measurement of fair values
The fair value of the employee share options has been measured using the Black-Scholes formula. The inputs used in
the measurement of the fair value at grant date were as follows.
2021
Fair value at grant date (NOK) . .
Share price at grant date (NOK) . .
Exercise price (NOK) . .
Expected volatility (weighted average) % %
Expected life years years
Expected dividends n/a n/a
Risk-free interest rate (based on government bonds) .% .%
Expected volatility has been based on an evaluation of the historical volatility of the Company’s share price particularly
over the historical period equal to the expected term, adjusted for extreme movements. The expected term of the
instruments has been based on historical experience and general option holder behaviour.
Reconciliation of outstanding share options
The number and weighted-average exercise prices of share options under the share option programmes were as follows:
2021
Number of
options
Weighted-
average exercise
price (NOK)
Number of
options
Weighted-
average exercise
price (NOK)
Outstanding at 1 January . .
Terminated during the year ( ) . - -
Granted during the year . .
Outstanding at 31 December . .
Exercisable at 31 December - n/a - n/a
Expense recognised in profit or loss
For details of the related employee benefit expenses, see the employee benefit expenses table.
Loans to other employees
(IN USD) 2021
Loans to other employees
AUDITORS’ REMUNERATION
USD ‘
Statutory audit . .
Other attest services . .
Tax-related services . .
Other services . -
Total fees . .
KPMG is the appointed auditor of the Group.
Increase in statutory audit compared to 2020 relates to increased scope due to acquisition of BW Ideol and the Barossa
project.
RETIREMENT BENEFIT PLANS
The Group has unfunded defined benefit plans for national employees in Indonesia and France and for early retirement
in Norway. During 2021, the funded defined benefit plans for Norwegian crew were discontinued.
The reconciliation of fair value of plan assets is as follows:
USD MILLION 2021
Fair value of plan assets - beginning of year . .
Expected return on plan assets - .
Benefits paid - funded plans (.) (.)
Asset gain/(loss) (.) (.)
Exchange differences . -
Fair value of plan assets - end of year - .
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The amounts recognised in the statement of financial position are determined as follows:
USD MILLION 2021
Present value of funded obligations - (.)
Fair value of plan assets - .
Present value of unfunded obligations (.) (.)
Net liability/asset in the statements of financial position (.) (.)
Of which classified as pension obligations (.) (.)
Of which classified as pension assets - -
The amounts recognised in the statement of income are determined as follows:
USD MILLION 2021
Current service cost . .
Net interest . .
Net periodic pension cost . .
Best estimate of net pension cost for 2022 amounts to USD 0.3 million (USD 0.7 million).
The movement in the net liability/asset recognised in the statement of financial position is as follows:
USD MILLION 2021
At 1 January (.) (.)
Pension paid . -
Exchange differences . (.)
Re-measurement gain/(loss) in other comprehensive income (.) (.)
Reclassified to liabilities held for sale . -
Charged to statement of income (.) (.)
At 31 December (.) (.)
The Group has defined contribution plans in all locations where the Group has employees.
NOTE 10 Income taxes
The income tax expenses for the period comprise corporate income tax, withholding tax and deferred tax.
BW Offshore Limited is a company registered in Bermuda. Currently, the Company is not required to pay taxes in Bermuda
on ordinary income or capital gains.
Depending on the jurisdiction, corporate income tax is due on the subsidiary’s actual profits, and withholding tax is
levied on a deemed profit basis or revenue basis (simplified calculation in lieu of profits tax). Deferred tax is calculated
on temporary differences in jurisdictions where actual profits are the basis for taxation. Where the Group’s activities are
subject to withholding taxes, these are normally deducted by the customer who pays the taxes directly to the local tax
authorities in the name of the Group.
The Group’s operational activities are subject to taxation rates which range from 0 per cent to 35 per cent.
As the Group’s operations are subject to different methods of taxation, income tax expenses will not necessarily change
proportionally with changes in the overall net profit before tax. As a consequence of this, a reduction in net profit will
often lead to a higher effective tax rate, while an increase in net profit can lead to a reduction in the effective tax rate.
TAX EXPENSE FOR THE YEAR
USD MILLION 2021
Deferred tax effect of changes in temporary differences (.) (.)
Taxes payable current year . .
Taxes payable prior years (.) .
Withholding taxes . .
Total tax expense continuing operations recognised in statement of income (.) .
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EFFECTIVE TAX RATE
USD MILLION 2021
Net result before tax . (.)
Effect on permanent differences . .
Income tax at Bermuda statutory income tax rate of 0% - -
Withholding taxes . .
Taxes payable current year, non-Bermuda jurisdictions . .
Taxes payable prior years, non-Bermuda jurisdictions (.) .
Deferred tax effect of changes in temporary differences (.) (.)
Total income tax expense continuing operations at the effective income tax rate (.) .
Effective tax rate n/a n/a
TAX LIABILITIES
USD MILLION 2021
Tax payable at 31 December . .
Deferred tax assets and liabilities are offset when there is a legally enforceable right to offset current tax assets against
current tax liabilities and when the deferred income becomes taxable.
Deferred tax liabilities and deferred tax assets are specified as follows:
USD MILLION 2021
Deferred tax assets
Vessels - .
Losses and unabsorbed capital allowances . .
Other . .
Deferred tax assets - gross . .
Deferred tax liabilities
Unpaid / Unremitted foreign interest income (.) (.)
Vessels (.) (.)
Other (.) -
Deferred tax liabilities - gross (.) (.)
Net recognised deferred tax assets / (deferred tax liabilities) . .
The Group has tax losses carried forward in Australia as a result of a previous operation linked to the acquisition of Prosafe
Production. This tax loss has previously not been capitalised in the consolidated statement of financial position, as the
Group has had no operation in Australia in recent years. With the signing of the Barossa contract in 2021, it is probable
that this tax loss can be utilised and consequently a deferred tax asset of USD 60.7 million was recognised in 2021.
Net recognised deferred tax assets are expected to be recovered or settled after more than 12 months.
The Group also has tax losses carried forward in several jurisdictions which are not recognised. The losses carried
forward are USD 492.1 million (USD 492.6 million). These losses are not recognised as it is not possible to predict with
reasonable certainty whether adequate taxable profit will be available in the future against which losses can be utilised.
None of these will expire in 2022. Some of the tax losses have no expiry date. Note 27, Contingent assets and liabilities,
provides information about tax audits and uncertainty of tax treatments.
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NOTE 11 Inventories
USD MILLION 2021
Fuel oil . .
Materials and consumables . .
Inventories at 31 December . .
In 2021, inventories were reduced by USD 5.0 million due to reclassification of inventory value on units held for sale.
NOTE 12 Trade and other current assets
USD MILLION 2021
Trade receivables . .
Contract assets . .
Other receivables . .
Prepayments . .
Trade and other current assets . .
Trade receivables are shown net of a provision for expected losses of USD 19.6 million (USD 18.9 million) of which
USD 13 million is relating to the Umuroa contract (reference to Note 27).
The fair value of trade and other current assets is the same as the carrying amount.
The ageing analysis of trade receivables is as follows:
USD MILLION 2021
Not past due . .
Up to 3 months . .
3–6 months . .
6–12 months . -
12 > months - -
Trade receivables - net . .
As of 31 December 2021 and 2020, the expected credit loss for the Group related to customers was immaterial.
The ageing of provision for impairment loss is as follows:
USD MILLION 2021
Up to 3 months - -
More than 3 months . .
Tota l . .
The carrying amount of the Group’s trade and other receivables are mainly denominated in USD.
Movement in allowance for impairment in respect of trade receivables are as follows:
USD MILLION 2021
Balance at 1 January . .
Net remeasurement of loss allowance . (.)
Balance at 31 December . .
Expected credit loss for other classes within trade and other receivables are immaterial.
Credit risk and foreign exchange risk regarding trade receivables are described in Note 21.
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NOTE 13 Cash and cash equivalents
Cash and cash equivalents are denominated primarily in USD, SGD, BRL, EUR, GBP, NGN and NOK. Restricted bank
deposits at 31 December 2021 amounted to USD 7.5 million (USD 6.5 million). This relates to taxes withheld from
employees and the Total Return Swap related to the long-term share option programme, reference to Note 9.
NOTE 14 Assets and liabilities held for sale
Assets and liabilities held for sale at 31 December 2021 comprised the following:
USD MILLION
Vessels .
Inventories .
Trade and other current assets .
Cash and cash equivalents .
Assets held for sale .
USD MILLION
Pension obligations .
Trade and other payables .
Current tax liabilities .
Liabilities held for sale .
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NOTE 15 Property, plant and equipment
VESSELS AND OTHER PROPERTY, PLANT AND EQUIPMENT
The owned fleet at 31 December 2021 included the
following vessels: Abo FPSO, BW Adolo, BW Athena,
BW Catcher, BW Cidade de São Vicente, BW Joko Tole,
BW Pioneer, BW Opportunity, Espoir Ivoirien, Petróleo
Nautipa, FPSO Polvo, Sendje Berge, Umuroa and Yùum
K’ak’ Náab. Vessels BW Joko Tole, BW Cidade de São
Vicente and FPSO Polvo are classified as held-for-sale
as of 31 December 2021.
Vessels available for projects include vessels that are cur-
rently not in operation. BW Athena and Umuroa are in lay-up
and the Group is currently evaluating recycling options.
In April 2021, the Group completed the sale of Berge
Helene for environmentally safe demolition and recycling
in compliance with the Hong Kong Convention at Priya
Blue shipyard in India. The vessel was sold for a cash
consideration of USD 16 million.
In November 2021, the Group signed a one-year con-
tract extension for Sendje Berge.
In January 2022, the Group signed a contract extension
for ABO to the end of 2022.
BW Opportunity is in lay-up and undergoing certain
repairs. The contract with Petrobras was terminated in
2020 and a full and final settlement of USD 43 million
was paid in 2021. The amount has previously been
provided for so there was no impact on the income
statement for 2021. This vessel is included in, ‘Vessels
available for projects’, on 31 December 2021 in the table
opposite.
Yùum K’ak’ Náab (reference to Note 25) is accounted
for as a finance lease and is not included in the table
opposite.
FPSOs’ capital expenditure in 2021 was mainly related
to investments in the Barossa FPSO. The Barossa
lease contract is assessed to be an operating lease. The
contract has a firm period of 15 years plus 10 years of
options. BW Offshore will be responsible for engineering,
procurement, construction, installation and operation of
the FPSO.
FPSOs’ capital expenditure in 2020 was mainly related
to capital expenditures for ongoing life extension
activities. Most life extension activities are on either a
reimbursable cost-plus basis or covered through higher
day rates.
The level of depreciation depends on the estimated
useful life of the different components of the vessels and
the residual value at the end of useful life. The estimated
useful life used for depreciations is based on experience
and knowledge of the vessels owned by the Group.
2021
USD MILLION
Vessels in
operation
Vessels under
construction
Vessels
available for
projects
Other
property, plant
& equipment To t a l
Cost at 1 January 2021 . . . . .
Additions . . . . .
Additions from business combinations - - - . .
Disposal - - (.) (.) (.)
Exchange differences - - - (.) (.)
Reclassification to held-for-sale (.) - (.) - (.)
Cost at 31 December 2021 . . . . .
Accumulated depreciation and impairment
charge at 1 January 2021 ( .) - (.) (.) ( .)
Current year depreciation (.) - (.) (.) (.)
Disposal - - . . .
Impairment (.) - (.) - (.)
Exchange differences - - - . .
Reclassification to held-for-sale . - . - .
Accumulated depreciation and impairment
charge at 31 December 2021 ( .) - (.) (.) ( .)
Book Value at 31 December 2021 . . . . .
Useful life Up to years
Capitalised interest cost for vessels under
construction .
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2020
USD MILLION
Vessels in
operation
Vessels under
construction
Vessels
available for
projects
Other
property, plant
& equipment To t a l
Cost at 1 January 2020 . - . . .
Additions . . . . .
Disposal - - - (.) (.)
Discontinued operation . - - (.) .
Exchange differences - - - (.) (.)
Reclassification (.) - . - -
Cost at 31 December 2020 . . . . .
Accumulated depreciation and impairment
charge at 1 January 2020 ( .) - (.) (.) ( .)
Current year depreciation (.) - (.) (.) (.)
Disposal - - - . .
Discontinued operation - - - . .
Impairment (.) - (.) (.) (.)
Exchange differences - - - . .
Reclassification . - (.) - -
Accumulated depreciation and impairment
charge at 31 December 2020 ( .) - (.) (.) ( .)
Book Value at 31 December 2020 . . . . .
Useful life Up to years
The Group has performed an impairment trigger
assessment thereby considering, amongst others, the
impact of the Covid-19 pandemic and the outlook for
each vessel including the effects of climate change and
associated energy transition. The Group further consid-
ered the remaining fixed contract period, option clauses
in the contracts and commerciality of the various fields
on which the vessels operate.
The Group considers the probability of redeployment of
more mature FPSOs after the end of current contracts
to be low. Due to economics of keeping mature assets
in a safe operating condition the Group also considers
it challenging to extend contracts on certain FPSOs
beyond their current contracts. This assessment has
triggered an impairment test to be performed. The
impairment test considered whether the recoverable
amount, using a value-in-use model, on individual
vessels was higher than the net book value.
Impairment charges were recognised in 2021 on BW
Athena (USD 2.0 million), Espoir Ivoirien (USD 21.4
million), Berge Helene (USD 4.2 million), Sendje Berge
(USD 15.7 million), Joko Tole (USD 23.8 million),
Petróleo Nautipa (USD 19.9 million) and Umuroa
(USD 7.6 million). As BW Cidade de São Vicente will be
sold for recycling in 2022 for USD 12.3 million, which is
higher than current NBV, this led to a reversal of previous
impairment of USD 4.2 million in 2021. The Group con
-
sequently recorded a net impairment loss of USD 90.5
million on the FPSO fleet.
Each vessel is regarded as a cash-generating unit for
impairment testing. The recoverable amount is based
on a value-in-use calculation for each of the vessels
in the fleet. To estimate the recoverable amount, the
Group has to make assumptions on contracted net cash
flows as well as uncontracted cash flows over the useful
life for each vessel. Uncontracted cash flows have been
estimated based on experience, expectations on future
market conditions and return on invested capital. The
assumptions made are built into different scenarios with
different cash flows for each unit. The Group expects an
improved market as a result of recovery in the oil price
where it is expected that it will be possible to extend
contracts for certain units already in operation as well
as more likely to achieve redeployment of units that
are currently idle. Each of the scenarios are weighted
to provide for a recoverable amount for each unit that
is a weighted average of all scenarios. Scenarios will
also include a weighted probability that a unit cannot
be redeployed beyond current contract and will have to
be recycled.
Cash flows were discounted at a rate of 8.0 per cent
(8.0 per cent) on a post-tax basis. The use of a post-tax
discount rate does not result in a different determination
of the need for, or the amount of, impairment (reversal)
that would be required if a pre-tax discount rate had
been used. The discount rate is based on Weighted
Average Cost of Capital (WACC) for the Group. The
following assumptions have been made for the WACC:
•
The equity risk premium is based on empirical data
of similar listed companies and is in consensus with
the market risk premium observed from the study
performed by the Norwegian Society of Financial
Analysts. The Group has also included a small cap
premium in setting the overall equity risk premium.
•
The equity ratio is based on long-term assumptions
on the Group’s financial strategy and capital struc-
ture, as well as peer group balance sheet data for
listed oil service companies.
•
For the risk-free rate, the Group is using the US
10-year treasury yields as the basis for calculations,
based on a weighted average contract length of the
FPSO fleet.
•
The debt margin used is based on an assessment
of the cost of providing long-term funding given the
current market outlook and current company risk
profile and contract structure.
•
For estimating beta, the Group has employed
various regression models and peer averages to
reach a metric of future equity risk for the FPSO
segment and BW Offshore.
•
Due to the structure of the Group’s operations,
there is very little effect on the WACC when adding
debt, as most of the Group’s taxes are based on
withholding tax deducted at source. The Group has
therefore assumed that effect from tax in calculat-
ing WACC is zero.
The critical assumptions for impairment are the discount
rate, assumptions used for cash flows and weight given
to each of the scenarios. The recoverable amount for
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each vessel would be sensitive to changes for any of the
above-mentioned assumptions.
An increase of the WACC for the Group by 1 per cent
would require an additional impairment of USD 0.5
million.
The Group makes assumptions on the redeployment of
vessels after the contemplated end of current contract.
An additional one-year before redeployment of vessels
in the weighted scenarios would not lead to an additional
impairment.
A further rate reduction of 10 per cent from the weighted
scenario on the same vessels would not lead to an addi-
tional impairment.
The Group did perform an impairment assessment of
the fleet for 2020. This assessment led to a USD 281.5
million impairment loss recorded to write down BW
Athena (USD 36.1 million), BW Cidade de São Vicente
(USD 104.8 million), Espoir Ivoirien (USD 34.9 million),
Berge Helene (USD 71.6 million), FPSO Polvo (USD 17.0
million) and Umuroa (USD 17.1 million) to the recover-
able amount.
E&P TANGIBLE ASSETS
E&P assets capital expenditure in 2020 relates mainly to the phase II development of Dussafu oil field in Gabon in the
period 1 January to 17 February, prior to the IPO and deconsolidation of BW Energy. E&P assets under development
are not depreciated.
2020
USD MILLION
E&P
assets under
development
E&P
production
assets To t a l
Cost at 1 January 2020 . . .
Additions . - .
Discontinued operation (.) (.) (.)
Cost at 31 December 2020 - - -
Accumulated depreciation at 1 January 2020 - (.) (.)
Current year depreciation - (.) (.)
Discontinued operation - . .
Accumulated depreciation at 31 December 2020 - - -
Book value at 31 December 2020 - - -
Useful life
Unit-of-
production
NOTE 16 Intangible assets and goodwill
2021
USD MILLION Software R&D Technology Goodwill
Tota l
intangible
assets
Cost at 1 January 2021 . - - - .
Additions . . - - .
Additions from business combinations . . . . .
Exchange differences - (.) (.) (.) (.)
Carrying amount at 31 December 2021 . . . . .
-
Amortisation and impairment
at 1 January 2021 (.) - - - (.)
Current year amortisation (.) (.) (.) - (.)
Exchange differences - - . - .
At 31 December 2021 (.) (.) (.) - (.)
-
Net book value at 31 December 2021 . . . . .
Useful life – years years years
Amortisation method linear linear linear
Goodwill, Technology and R&D were initially recognised in March 2021 as part of the acquisition of Ideol SA (reference
to Note 23). R&D assets represent the accumulated capitalised development projects. BW Ideol is pursuing a number of
initiatives around its Damping Pool® patented foundation technology including research and development of innovative
building materials, mooring systems and construction methods.
Goodwill has an indefinite useful life and is tested for impairment at least annually.
Goodwill was tested for impairment as of 31 December 2021 and the impairment test also included technology assets. A
discounted cash flow model was used to determine the fair value less cost of disposal for the CGU. The projected cash
flows were based on the most up-to-date forecast by Management, which includes probability weighted cash flows
for prospective offshore wind projects using end-of-life cash flows for projects identified. The impairment calculation
demonstrated that the value-in-use exceeded the carrying amount of the CGU, thus no impairment loss was recognised.
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KEY ASSUMPTIONS USED IN THE IMPAIRMENT CALCULATION
INCLUDE:
Cash flows, project IRR, price of electricity
For the co-development activity, cash flows related
to the estimated projects in portfolio include: (i)
development expenses, including expenses related
to engineering services provided by BW Ideol to each
project during this phase, (ii) capital expenditures during
construction phase, including royalties derived from BW
Ideol’s technology licensing, (iii) wind farm operating
expenses and (iv) reimbursement of project finance
debt. The tariff applied to the electricity sold is being
determined by using a target IRR estimated at the start
of the construction phase and takes into account the
target financial structure and expenses profiles. For
the co-EPCI activity, cash flows related to potential
EPCI contracts include engineering services during the
development phase, gross profit from procurement and
construction and royalties derived from licensing the
technology to each project.
Discount rate and Sectorial WACC
Based on the cumulated cashflows, the implied discount
rate at the time of the acquisition has been established
at 6.4 per cent and revised up to 6.7 per cent during the
impairment test.
In order to assess the relevance of the implied discount
rate-based approach to valuation, it was determined a
sectorial post-tax Weighted Average Cost of Capital
(WACC) derived from the Capital Asset Pricing Model
(CAPM) methodology and incremental borrowing rate,
assuming cash flows in Euro. A selected sample of
comparable companies active in the renewable power
sector was established. The WACC is based on a risk-
free rate in 2021 of 0.0 per cent based on S&P capital
IQ data, and a market risk premium of 8.0 per cent. The
estimated unlevered beta for equity was 0.57. The equity
to total capital ratio was 65 per cent in Ideol Group.
This resulted in a post-tax WACC of 5.4 per cent. The
targeted Discount Rate of 6.7 per cent being used as
part of the impairment test reflects a risk premium of
1.3 per cent compared to the sectorial WACC, notably
reflecting the riskier nature of the floating wind business
and the inherent risk to the pipeline of projects under
development.
Testing procedures of the Group’s single CGU related
Goodwill as of 31 December 2021 are conducted to
meet IFRS requirements, and especially IAS 36. In
compliance with IAS 36, the Group’s recoverable value
was based on the estimation of its value in use derived
from a discounted cash flow approach and is equivalent
to BW Ideol’s Enterprise Value as of 31 December 2021.
To determine the recoverable value of assets, the value
in use derived from future cash flows was considered.
Net probabilities have been updated to reflect current
evolutions for projects and the discount rate was revised
up to 6.7 per cent.
SENSITIVITIES
Prospective capacity
In the impairment test it was assumed the Group to
secure 10.7GW within the next 10 years based on 17
targeted prospects or anticipated licensing rounds.
A sensitivity whereby the overall capacity would be
reduced by 1.2GW (approximately 10 per cent), by
taking out a targeted prospect with a start-up in 2031,
would not result in an impairment to be recognised.
Discount rate
The impairment assessment is sensitive to changes in
the discount rate. A 0.5 per cent increase in the discount
rate would result in a full impairment of goodwill and
technology assets.
Internal rate of return
In the impairment assessment, the Group assumed a
certain return on investment by setting an internal rate
of return in the range of 5.6 per cent to 11.3 per cent
resulting in an estimated EBITDA. A decrease in the
estimated EBITDA by 0.5 per cent would result in an
impairment charge of USD 19.9 million.
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2020
USD MILLION Software
E&P intangible
assets
Total intangible
assets
Cost at 1 January 2020 . . .
Additions . . .
Discontinued operation - (.) (.)
Carrying amount at 31 December 2020 . - .
Amortisation and impairment at 1 January 2020 (.) (.) (.)
Discontinued operation - . .
Current year amortisation (.) - (.)
At 31 December 2020 (.) - (.)
Net book value at 31 December 2020 . - .
Useful life – years
Amortisation method linear
NOTE 17 Equity-accounted investees
USD MILLION
Interest in joint ventures . .
Interest in associates . .
Balance at 31 December . .
Equity-accounted investees relates mainly to the investment in BW Energy Limited (BWE).
On 21 January 2021, BWE completed a USD 75 million private placement and allocated and issued 23 690 000 new
shares at a subscription price of NOK 27 per share, raising gross proceeds of NOK 639 640 000. The Group was not
allocated shares in the private placement, consequently the ownership interest in BWE diluted by 3.56 per cent to 35.21
per cent.
On 29 October 2021, the Group sold 20 000 000 shares in BWE, representing approximately 7.8 per cent of the
outstanding shares, at NOK 28 per share. The share sale generated USD 65.7 million in gross proceeds, and a gain of
USD 14.9 million. Following the sale, the Group holds 70 840 553 shares in BWE, representing 27.5 per cent of the
shares outstanding in BWE.
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The following table illustrates the summarised financial information of the Group’s investment in BWE. The information
for 2020 presented in the table includes results of BWE for the period 17 February 2020 to 31 December 2020 when
BWE was no longer a consolidated subsidiary. Refer to Note 5, Discontinued operation, for further information.
USD MILLION 2021
Percentage ownership interest .% .%
Non-current assets . .
Current assets . .
Non-current liabilities . .
Current liabilities . .
Net assets (100%) . .
Group’s share of net assets . .
Excess value . .
Carrying amount of interest in associate . .
Revenue . .
Profit for the year (100%) . (.)
Total comprehensive income for the year
. (.)
Gain sale of shares . -
Gain dilution . -
Discontinued operation - .
Depreciation of excess value (.) (.)
Group’s share of total comprehensive income for the year . (.)
Adjusted for change in owned share during 2021
Up until September 2021, BW Offshore AUS-JV Pte. Ltd. was a wholly owned subsidiary. In October 2021, a joint venture
was established with external investors. The shareholders agreements between the Group and the external investors
resulted in the Group and the external investors having joint control over this company. The Group’s interest in BW Offshore
AUS-JV Pte. Ltd. is consequently accounted for using the equity method in the consolidated financial statements.
Considering the loss of control, BW Offshore AUS-JV Pte. Ltd. was no longer consolidated as part of the Group from
October 2021.
Refer to Note 10 for information about deferred tax asset, Note 21 for information about lending agreements and Note
26 for information about guarantees.
Summarised financial information of the joint venture and reconciliation with the carrying amount of the investment in
the consolidated financial statements are set out below.
USD MILLION 2021
Percentage ownership interest .% -
Non-current assets . -
Current assets (including cash and cash equivalents USD 45.7) . -
Non-current financial liabilities (including long-term borrowing USD 183.9) . -
Current liabilities . -
Net assets (100%) . -
Group’s share of net assets . -
Carrying amount of interest in joint venture . -
Interest expense (.) -
Profit for the year (100%) (.) -
Total comprehensive income for the year (.) -
Effect from loss of control . -
Group’s share of total comprehensive income for the year (.) -
The Group also has interests in two individually immaterial associates.
For OCS Services Limited, the Group owns 50 per cent, but does not have joint control over this investment. The partner
is in charge of the daily operation of the company while the Group act as an investment partner. The Group does not
have power over more than half of the voting rights in OCS. Further, the Group does not have the power to cast the
majority of votes at meetings of the Board of Directors or equivalent governing body. As the Group is only acting as
an investment partner, OCS is considered an associate. The Group’s interest in OCS is accounted for using the equity
method in the consolidated financial statements.
The following table analyses the carrying amount and share of profit and OCI of these associates.
USD MILLION 2021
Carrying amount of interests in associates . .
Share of:
Profit . -
OCI - -
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NOTE 18 Capital and reserves
SHARE CAPITAL
Authorised share capital:
At 1 January 2021: 214 000 000 ordinary shares at par value USD 0.50 each
At 31 December 2021: 214 000 000 ordinary shares at par value USD 0.50 each
Issued and fully paid USD THOUSAND
At 1 January 2021 .
At 31 December 2021 .
HEDGING RESERVE
The hedging reserve comprises the effective portion of the cumulative net change in the fair value of hedging instruments
used in cash flow hedges pending subsequent recognition in profit or loss.
CONVERTIBLE NOTES
The reserve for the convertible notes comprises the amount allocated to the equity component for the convertible notes
issued by the Group in November 2019.
TREASURY SHARE RESERVE
The reserve for the Company’s treasury shares comprises the cost of the Company’s shares held by the Group. At
31 December 2021, the Group held 4 141 437 of the Company’s shares (4 156 534). Book value of the treasury shares
was USD 10.1 million at 31 December 2021 (USD 10.2 million).
DIVIDENDS
The following dividends were declared and paid by the Company for the year.
USD MILLION 2021
Fourth quarter 2020: USD 0.035 per qualifying ordinary share .
First, second and third quarter: USD 0.035 per qualifying ordinary share .
.
USD MILLION
First and second quarter: USD 0.034 per qualifying ordinary share .
Third quarter: USD 0.035 per qualifying ordinary share .
.
Refer to ‘Shareholder information’ section for information on the 20 largest shareholders at 31 December 2021.
Refer to Note 24, Non-controlling interests, for information on preferred dividends.
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NOTE 19 Loans and borrowings
Carrying amount
USD MILLION Effective interest rate Maturity date 2021
USD 672.5 million Corporate Facility month LIBOR + .% -May- . .
Convertible bonds .% -Nov- . .
Catcher facility month LIBOR + .% -Jul- . .
Other facilities .% -Jun- . -
Petróleo Nautipa facility month LIBOR + .% -Sep- - .
BWO05 – NOK 900 million Bond month NIBOR + .% -Dec- . .
Total long-term debt . .
Carrying amount
USD MILLION Effective interest rate Maturity date 2021
USD 672.5 million Corporate Facility month LIBOR + .% -May- (.) (.)
Convertible bonds .% -Nov- (.) (.)
Catcher facility month LIBOR + .% -Jul- . .
Other facilities .% -Jun- . -
Petróleo Nautipa facility month LIBOR + .% -Sep- . .
BWO05 – NOK 900 million Bond month NIBOR + .% -Dec- (.) (.)
Total short-term debt . .
Total interest-bearing debt . .
Refer to Note 21 ,Financial instruments – Fair values and risk management, for information on Barossa finance liability.
The financial liability related to Barossa lease has a carrying amount of USD 198.1 million and implicit interest of 7.87
per cent at 31 December 2021.
The Group is in compliance with all covenants at 31 December 2021. Covenants are calculated and reported on
consolidated financials.
USD 672.5 MILLION CORPORATE FACILITY
During the second quarter of 2019, the Group refinanced the previous USD 2 400 million facility into a five-year senior
secured USD 672.5 million revolving credit facility. The facility is priced at a margin of 225 basis points above USD
LIBOR and if utilisation exceeds 50 per cent, the margin increases by another 25 basis points. The facility is reduced
semi-annually. The Group had USD 154.8 million undrawn under the revolving credit facility at 31 December 2021.
The USD 672.5 million Corporate Facility is subject to certain covenants, including minimum book equity of at least 25
per cent of total assets, debt to EBITDA of maximum 5.5, minimum USD 75 million available liquidity including undrawn
amounts and interest coverage ratio of minimum 3.0.
CATCHER USD 800 MILLION FACILITY
During the third quarter of 2014, the Group entered into a USD 800 million senior secured pre- and post-delivery term
loan facility, which is a project-specific bank financing in relation to construction of an FPSO to operate on the Catcher
oil field facility, which is a project-specific in the UK North Sea. The facility has a margin of 225 basis points above USD
LIBOR and is subject to financial covenants similar to the covenants under the USD 672.5 million Corporate Facility.
PETRÓLEO NAUTIPA USD 80 MILLION FACILITY
During the first quarter of 2015, the Group entered into a USD 80 million senior secured loan facility in respect of the
FPSO Petróleo Nautipa. The loan has a tenor of 7.5 years and will be used for general corporate purposes. The facility
is subject to financial covenants similar to the covenants under the USD 672.5 million Corporate Facility.
BWO05 – NOK 900 MILLION BOND
During the fourth quarter 2019, BW Offshore Limited successfully completed the placement of a NOK 900 million senior
unsecured bond with maturity date on 4 December 2023. The proceeds from the bond loan were used to partly repay
existing bond loans. The bond loan is subject to certain covenants, including minimum book equity of at least 25 per
cent of total assets and minimum USD 75 million available liquidity including undrawn amounts available for utilisation
by the Group.
OTHER FACILITIES
Other facilities comprise interest-bearing debt in BW Ideol Group. All debt is in EUR.
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CONVERTIBLE BONDS
During the fourth quarter 2019, BW Offshore Limited issued a USD 297.4 million convertible bond with a five-year
tenor and coupon of 2.50 per cent per annum, payable semi-annually in arrears. The convertible bond has no regular
repayments and matures in full on 12 November 2024. There are no financial covenants in the convertible bond agreement.
The proceeds from the convertible bond loan were used to refinance the existing bond loans and for general corporate
purposes. The initial conversion price of USD 10.24 corresponds to a conversion premium of 37.5 per cent over the volume
weighted average price of the shares on the Oslo Stock Exchange at 5 November 2019 (converted at the prevailing
USD:NOK spot rate equal to NOK 9.1921 / USD 1.00).
USD MILLION
Proceeds from issue of convertible bonds .
Transaction costs (.)
Net proceeds .
Amount classified as equity (net of transaction costs of USD 0.7 million) (.)
Accreted interest .
Expensed capitalised borrowing costs .
Carrying amount of liability at 31 December 2021 .
The conversion price is subject to adjustment for dividends paid and other changes affecting the value of the share.
During 2021, the quarterly dividends resulted in adjustments to the initial conversion rate.
Distribution declared per share Conversion price
First quarter, 2021 . .
Second quarter, 2021
. .
Third quarter, 2021 . .
Fourth quarter, 2021 . .
No adjustment
Distribution declared per share Conversion price
First quarter, 2020
.
Second quarter, 2020
. .
Third quarter, 2020 . .
Fourth quarter, 2020
. .
Distribution of BW Energy shares
No adjustment
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RECONCILIATION OF MOVEMENTS OF LIABILITIES AND EQUITY TO CASH FLOWS ARISING FROM FINANCING ACTIVITIES
Interest payable Other liabilities Liabilities Equity To ta l
USD MILLION
Interest-bearing
short-term debt
Interest-bearing
long-term debt
Balance at 1 January 2021 . . .
Proceeds from loans and borrowings - - - . - .
Repayment of borrowings - - - (.) - (.)
Proceeds from share issue - - - - . .
Transactions cost relating to share issue - - - - (.) (.)
Transferred to/from non-controlling interests - - - - (.) (.)
Payment of lease liabilities - (.) - - - (.)
Dividends paid - - - - (.) (.)
Interest paid (.) - - - - (.)
Total changes from financing cash flows (.) (.) - . . (.)
Effects of changes in foreign exchange rate and interest rate swaps - (.) - (.)
Liability-related:
Expensed capitalised borrowing costs . . - .
Accreted interest - . - .
From business combinations . . - .
Non-cash movements (.) . - .
Total liability-related other changes . . - .
Total equity-related other changes - - . .
Balance at 31 December 2021 . . .
Inclusive finance liability relating to Barossa lease
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Interest payable Other liabilities Liabilities Equity To ta l
USD MILLION
Interest-bearing
short-term debt
Interest-bearing
long-term debt
Balance at 1 January 2020 . . .
Proceeds from loans and borrowings - - - . - .
Repayment of borrowings - - (.) (.) - (.)
Transferred to/from non-controlling interests - - - - (.) (.)
Payment of lease liabilities - (.) - - - (.)
Dividends paid - - - - (.) (.)
Treasury shares acquired - - - - (.) (.)
Interest paid (.) - - - - (.)
Total changes from financing cash flows (.) (.) (.) (.) (.) (.)
Effects of changes in foreign exchange rate and interest rate swaps . . - .
Liability-related:
Expensed capitalised borrowing costs . . - .
Accreted interest - . - .
Non-cash movements (.) . - -
Total liability-related other changes (.) . - .
Total equity-related other changes - - (.) (.)
Balance at 31 December 2020 . . .
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NOTE 20 Trade, other payables and other non-current liabilities
USD MILLION 2021
Trade payables . .
Accrued vessel expenses . .
Accrued other expenses . .
Accrued construction expenses . -
Public duties payables . .
Deferred revenues . .
Total trade and other payables . .
USD MILLION
Deferred revenues . .
Long-term deposit - .
Other long-term liabilities . .
Total other non-current liabilities . .
Accrued other expenses in 2021 includes accruals for demobilisation of Petróleo Nautipa. Management did not previously
recognise a liability considering that the lessee should pay a fixed amount for the demobilisation. The Group has provided
for the excess amount in 2021.
Deferred revenues primarily relate to the advance consideration received from customers for which revenue is recognised
over time, mainly over the remaining contract period.
NOTE 21 Financial instruments – fair values and risk management
The Group’s finance department has the responsibility
for financing, treasury management and financial risk
management.
FINANCIAL RISK FACTORS
Activities expose the Group to a variety of financial
risks: market risk (including currency risk and interest
rate risk), credit risk and liquidity risk.
The Group’s overall risk management programme
focuses on the unpredictability of financial markets
and seeks to minimise potential adverse effects on the
Group’s financial performance. A finance management
team led by the Chief Financial Officer identifies and
evaluates financial risks in close co-operation with
the Group’s operating units. The finance management
team’s activities are governed by policies approved by
the Board of Directors for overall risk management, as
well as policies covering specific areas such as foreign
exchange risk, interest rate risk, credit risk, and invest-
ing excess liquidity. The finance management team
will report to the Group’s Top Management, the Audit
Committee and the Board of Directors of the status of
activities on a regular basis.
During 2021, the Group has seen an accelerated energy
transition and that capital is being reallocated from
hydrocarbons towards electrification and clean fuels.
The effect is an increasing cost of capital for the oil and
gas sector. However, the Group has been successful in
financing projects by keeping an open dialogue on ESG
performance with key lenders and partners. The Group
is committed to contributing to the energy transition by
developing clean energy production solutions, applying
its offshore engineering and operations capabilities to
drive future value creation.
The Group does not use financial instruments, including
financial derivatives, for trading purposes.
MARKET RISK
Market risk is the risk that changes in market prices, such
as foreign exchange rates and interest rates, will affect
the Group’s income or the value of its holding of finan-
cial instruments. The Group has international operations
and therefore a combination of natural and financial
hedging. The Group uses derivatives like FX forwards,
interest rate swaps and options to manage market risk.
Foreign currency risk
The functional currency of the Company and most of
its subsidiaries is USD. In general, most operating rev-
enues and a significant portion of operating expenses
as well as most interest-bearing debt are denominated
in USD. The Group is exposed to expenses and invest-
ments incurred in currencies other than USD (‘foreign
currencies’); the major currencies being Norwegian
Kroner (‘NOK’), Singapore Dollars (‘SGD’), Euro (‘EUR’),
Korean Won (‘KRW) and British Pounds (‘GBP’).
Operating expenses denominated in NOK, SGD, GBP,
and EUR constitute a part of the Group’s total operating
expenses. Capital expenditures related to construction
projects and life extension activities on FPSOs would
also to some extent be denominated in other currencies
than USD. Consequently, fluctuations in the exchange
rate on NOK, SGD, GBP, EUR, CHF and KRW may
have significant impact on the financial statements of
the Group.
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The Group enters into forward/futures contracts to
reduce the exchange rate risk on cash flows nominated
in foreign currencies, both related to construction pro-
jects and to operating and administrative expenses. The
Group does not apply hedge accounting for hedging of
its operational and administrative expenses in foreign
currencies and the changes in valuation are taken over
the profit and loss statement. The exchange rate risk
is calculated for each foreign currency and takes into
account assets and liabilities, liabilities not recognised
in the balance sheet and expected purchases and sales
in the currency in question. Currency hedges and other
currency effects include changes in fair value of currency
hedges, effects or settlement of these hedges, and other
currency effects related to operating cash flows.
Total nominal value of the Group’s foreign currency
contracts was USD 96.5 million at 31 December 2021.
Fair value of the foreign currency contracts amounted
to negative USD 0.1 million (compared to USD 144.2
million and USD 2.7 million in 2020) and are presented
gross in the statement of financial position. Net effect of
forward exchange contracts recognised in the statement
of income in 2021 is positive by USD 3.3 million (positive
USD 2.4 million).
The Group is exposed to foreign currency risk on
Bond Loan BWO05 which is issued in NOK, and per
31 December 2021 the issued bond had a value of
NOK 900 million. The foreign currency exposure on
BWO05 is hedged through cross-currency interest
rate swaps with a nominal value of USD 98.8 million.
The market value of the cross-currency interest swaps
was positive by USD 1.9 million at 31 December 2021
(positive USD 2.8 million).
The Group seeks to apply hedge accounting for larger
construction projects to manage volatility in the income
statement and statement of comprehensive income. BW
Offshore will apply hedge accounting for the foreign
exchange hedging related to the construction contract of
the Barossa FPSO. The purpose is to manage currency
risk during the project phase. The Group uses forward
currency contracts to eliminate the currency exposure
once the Group has entered into a firm commitment of
a project contract. For foreign currency risk, the principal
terms of the forward currency contract (notional and
settlement date) and the future expense (or revenue)
(notional and expected cash flow date) are identical.
The foreign exchange derivatives are entered to match
the respective supplier payments.
The following are identified as sources of ineffectiveness:
•
Over-hedging – if the total amount exposure is
less than the notional amount hedged.
•
Timing mismatch – if the total amount of exposure
exists, but occurs in a different period (month) than
anticipated.
The net effect of the hedge accounting recognised
in other comprehensive income amounts to USD 0.4
million. Hedge ineffectiveness recognised in profit or loss
during 2021 is immaterial.
Cash flow hedges
At 31 December 2021, the Group held the following instruments to hedge exposures to changes in foreign currency.
– months – Months
More than one
year
Foreign currency risk
Forward exchange contracts
Net exposure (in USD MILLION) . . (.)
Average USD:SGD Forward Contract rate . . .
Average USD:KRW Forward Contract rate . . .
Average USD:CHF Forward Contract rate . . -
Sensitivity analysis
A reasonably possible strengthening (weakening) of the NOK, SGD, KRW and CHF against USD at 31 December 2021
would have affected the measurement of financial instruments denominated in a foreign currency and affected equity
and profit or loss by the amounts shown below. NOK is being forward hedged in relation to operational and administrative
expenses, additional exposures in SGD, KRW, CHF and EUR are hedged in relation to ongoing construction of the
Barossa FPSO, all other currencies that the Group is exposed to are covered spot. This analysis assumes that all other
variables, in particular interest rates, remain constant and ignores any impact of forecasts.
Profit or loss Equity, net of tax
USD MILLION Strengthening Weakening Strengthening Weakening
31 December 2021
NOK (5% movement) . (.) . (.)
SGD (5% movement) . (.) . (.)
KRW (5% movement) . (.) . (.)
31 December 2020
NOK (5% movement) . (.) . (.)
SGD (5% movement) (.) . (.) .
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Interest rate risk
The Group is exposed to interest rate risk through its
funding activities. Most of the Group’s interest-bearing
debt has floating interest rate conditions, making the
Group influenced by changes in the market rates. The
Group aims to hedge at least 50 per cent of its interest
rate exposure.
A fundamental reform of major interest rate benchmarks
is being undertaken globally, including the replacement
of some interbank offered rates (IBORs) with alterna-
tive nearly risk-free rates (referred to as ‘IBOR reform’).
The Group has exposures to IBORs on its financial
instruments that will be replaced or reformed as part of
these market-wide initiatives. The Group’s main IBOR
exposure at 31 December 2021 was indexed to USD
LIBOR. The alternative reference rate for USD LIBOR
is the Secured Overnight Financing Rate (SOFR).
Although USD LIBOR was planned to be discontin
-
ued by the end of 2021, in November 2020 the ICE
Benchmark Administration (IBA), the FCA-regulated
and authorised administrator of LIBOR, announced that
it had started to consult on its intention to cease the
publication of certain USD LIBORs after June 2023.
As at 31 December 2021, it is still unclear when the
announcement that will set a date for the termination of
the publication of USD LIBOR will take place.
The Group’s finance department is managing BW
Offshore’s IBOR transition plan. The greatest change will
be amendments to the contractual terms of the USD
LIBOR referenced floating-rate debt and the associated
interest rate swaps and the corresponding update of the
hedge designation. As at 31 December 2021, the Group
has not finished the process of implementing appro-
priate fallback provisions for all USD LIBOR indexed
exposures. The counterparties to the Group’s interest
rate swaps are also counterparties to the floating loan
they are hedging. It is then assumed that the result of
the negotiations with external banks and the implemen-
tation of SOFR will not have material impacts on the
Group’s future financial results.
As of 31 December 2021, the Group’s floating rate debt
amounted to 959.1 USD million (USD 1 129) million).
The Group holds interest rate swaps with a nominal
value of USD 704 million and interest rate caps with
a nominal value of USD 100 million with maturity
during 2022–2030. The weighted average interest
swap rate was 1.657 per cent at 31 December 2021,
and the average cap rate was 3.5 per cent. The swaps
and caps are held to hedge the quarterly cash flows
from floating rate interest payments on the Corporate
Facility, the Catcher facility and the Petróleo Nautipa
loan facility. The market value of the interest swaps and
caps was negative by USD 16.7 million at 31 December
2021 (negative USD 50.2 million) and the changes in
fair value have been recognised as a fair value loss on
financial instruments.
The cross-currency interest rate swap held to hedge
the BWO05 bond also hedges the interest rate risk
on the bond with a nominal value of USD 98.8 million
and is maturing in 2023. The weighted average interest
swap rate was 6.3 per cent at 31 December 2021. The
market value of the cross-currency interest rate swaps
was positive by USD 1.9 million at 31 December 2021
(positive USD 2.8 million) and the changes in fair value
have been recognised as a fair value gain/(loss) on
financial instruments.
A reasonable possible change of 100 basis points in interest rates at the reporting date would have increased (decreased)
profit or loss by the amounts shown in the table below. The analysis assumes that all other variables, in particular foreign
currency exchange rates, remain constant.
Profit or loss Equity, net of tax
USD MILLION bp increase bp decrease bp increase bp decrease
31 December 2021
Variable rate instruments (.) . (.) .
Interest rate swaps . (.) . (.)
Cash flow sensitivity . (.) . (.)
31 December 2020
Variable rate instruments (.) . (.) .
Interest rate swaps . (.) . (.)
Cash flow sensitivity (.) . (.) .
CREDIT RISK
Credit risk is the risk of financial losses if a customer
or counterparty to financial receivables and financial
instruments fails to meet contractual obligations.
Loans, credit facilities, financial guarantees and deriva-
tives are only conducted with approved counterparties
and predominantly with investment grade financial
institutions, and are governed by standard agreements
(ISDA, Nordic Trustee and LMA documentation). The
Group has policies that limit the amount of credit expo-
sure against any financial institution. The maximum risk
exposure is represented by the carrying amount of the
financial assets in the balance sheet except for financial
guarantees.
Most of the Group’s customer contracts are long-term.
The Group assesses the credit quality of the custom-
ers on a regular basis, considering its financial position,
credit ratings from international credit rating agencies
if available, experience and other factors. New pro-
jects and clients will similarly be assessed by reviewing
financial statements and external credit ratings, but
also country-risk will be evaluated in relation to poten-
tial financing and legal impact of agreements. Parent
company guarantees are negotiated with customers
and the Group will normally have contractual clauses
to prevent a customer from novating the lease contract
to counterparts with credit rating lower than investment
grade (or comparable proxy), without consent. Given the
limited number of major customers of the Group and
the significant portion these represent to the Group’s
revenue, the inability of one or more of them to make
full payment on any of the Group’s contracted units
may have a significant adverse impact on the financial
position.
The Covid-19 pandemic and general market uncertain-
ties has increased the credit risk in most industries. With
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the additional factors of volatile commodity prices and
an increasing transition towards greener energy, credit
risk has increased more in the oil and gas industry
compared with other industries. As most of the Group’s
portfolio is with historically solid counterparties, where a
significant number are also rated by international credit
rating agencies, the Group believes that the credit risk
related to counterparties is at an acceptable level.
Overdue trade receivables were USD 64.8 million at the
end of 2021, compared to USD 44 million at the end of
2020. The overdue situation was mainly related to units
operating in West Africa and Mexico. A portion of the
overdue trade receivables was settled in January 2022.
The Group is also exposed to certain credit risk related
to agreements entered into with suppliers such as yards
used for construction projects. The Group manages its
exposure to such risks through a thorough evaluation
of the counterparty’s financial position, external credit
rating if available, and its backlog and ability to deliver
on time, and subsequently by continuous monitoring of
larger counterparties.
The Group regards its maximum credit risk exposure to
the carrying amount of trade receivables (refer to Note
12), other current assets and financial lease receivables
(refer to Note 25).
LIQUIDITY RISK
Prudent liquidity risk management implies maintaining
sufficient cash and marketable securities, the availability
of funding through an adequate amount of committed
credit facilities and the ability to close out market posi-
tions in order to meet obligations of finance liabilities
when they become due. Due to the dynamic nature of
the underlying businesses, the Group maintains suffi-
cient cash for its daily operations and its investment
programme via short-term cash deposits at banks and
a commitment to make available funds from the unu-
tilised portion of revolving facilities offered by financial
institutions to the Group.
The Group has a robust financial position. With the recent
divestment of part of the shareholding in BW Energy,
the Group has further strengthened the balance sheet,
to position for accelerated growth into future accretive
offshore energy projects and long-term value creation.
In 2021, the Group completed the debt financing and the
equity joint venture partnership for the Barossa project.
The Barossa FPSO is financed by a 14-year combined
construction and long-term debt facility of USD 1.150
billion with a syndicate of nine international banks and by
USD 240.0 million from the equity joint venture, con-
sisting of BW Offshore (51 per cent) and ICMK Offshore
Investment Pte Ltd (a 50:50 JV of ITOCHU Corporation
and a subsidiary of Meiji Shipping Co Ltd) (25 per cent)
and Macquarie Bank Limited (24 per cent). In addition,
approximately USD 1 billion in pre-payments will be paid
by the Barossa Upstream Joint Venture Partners during
the construction period. These pre-payments are linked
to progress and milestones on the project. By end of
2021, a total of USD 199.0 million has been received
as per plan, USD 40.0 million was injected in total by
equity partners and USD 210.0 million was drawn under
the loan facility.
The Group monitors the liquidity through cash flow
forecasting of operational and investment activities in
the short-, medium- and long-term.
The refinancing of the USD 672.5 million Corporate
Facility, the placement of BWO05 bond and the
Convertible bond in 2019, has extended tenors of the
Groups financing and has mitigated short-term refi-
nancing and liquidity risk. Cashflows from continuing
operations are sufficient to fulfil short-term financial
obligations. Production from BW Catcher throughout
2021 has been a significant contributor to the cash flow
of the Group together with BW Pioneer and BW Adolo.
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The following table sets out the maturity profile of the Group’s financial liabilities based on contractual undiscounted payments. When counterparties have a choice of when to settle an amount, the liability is included based on the earliest date of
which the counterparty can require settlement.
Maturity profile – financial liabilities, Year ended 2021
USD MILLION Carrying Amount Q Q Q Q – and beyond To t a l
USD 672.5 million Corporate Facility . - - - - - . - .
Convertible bonds
. - - - - - . - .
Catcher facility . . . . . . . - .
Petróleo Nautipa facility . . - . - . - - .
BWO05 - NOK 900 million Bond
. - - - - - . - .
Other facilities . . . . . . . - .
Finance liability related to Barossa lease . - - - - - . . .
Interest rate swaps . . . . . . . . .
Interest payments . . . . . . . - .
Other . . . . . . . - .
Contract liabilities . . - - - . - - .
Lease liabilities . . . . . . . . .
Trade and other payable current . . . . . . - - .
Tota l . . . . . . . . .
The cash flow presented reflects a full repayment of the loan without conversion into equity instruments
Bond loan illustrated at swapped USD/NOK rate.
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Maturity profile – financial liabilities, Year ended 2020
USD MILLION Carrying Amount Q Q Q Q – and beyond To t a l
USD 672.5 million Corporate Facility . - - - - - . - .
Convertible bonds
. - - - - - . - .
Catcher facility . . . . . . . - .
Petróleo Nautipa facility . . - . - . . - .
BWO05 - NOK 900 million Bond
. - - - - - . - .
Interest rate swaps . . . . . . . . .
Interest payments . . . . . . . - .
Other . . . . . . . - .
Contract liabilities . . - - - . - - .
Lease liabilities . . . . . . . . .
Trade and other payable current . . . . . . - - .
Tota l . . . . . . . . .
The cash flow presented reflects a full repayment of the loan without conversion into equity instruments.
Bond loan illustrated at swapped USD/NOK rate.
The Group has the following undrawn borrowing facilities:
USD MILLION 2021
Expire within one year - -
Expire beyond one year . .
FAIR VALUES
IFRS 13 requires disclosures of fair value measurements
by the following hierarchy:
•
Quoted prices (unadjusted) in active markets for
identical assets or liabilities (level 1)
•
Inputs other than quoted prices included within
level 1 that are observable for the asset or liability,
either directly (as prices) or indirectly (derived from
prices) (level 2)
•
Inputs for the asset or liability that are not based
on observable market data (unobservable inputs)
(level 3)
The fair value of the Group’s currency forward hedges
(plain vanilla hedges) is determined using forward
exchange rates at the balance sheet date, with the
resulting value discounted to present value (level 2).
This is presented on separate lines in the statement of
financial position.
The fair value of interest rate swaps is calculated as the
present value of the estimated future cash flows based
on observable yield curves (level 2). The fair value of
the cross-currency interest swaps is presented as non-
current liabilities in the statement of financial position.
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The following table shows the carrying amounts and fair values of financial assets and financial liabilities, including their levels in the fair value hierarchy. It does not include fair value information for financial assets and financial liabilities not measured
at fair value if the carrying amount is a reasonable approximation of fair value.
31 December 2021 Carrying amount Fair value
USD MILLION Note
Fair value -
hedging instrument
Financial assets at
amortised cost
Other financial
liabilities Tota l Level Level Level To ta l
Financial assets measured at fair value
Forward exchange contracts used for hedging
21 . - - . - . - .
Forward exchange contracts used in hedge accounting
21 . - - . . .
Interest Rate Swaps used for hedging
21 . - - . - . - .
Cross-currency swaps used for hedging
21 . - - . - . - .
. - - . - . - .
Financial assets not measured at fair value
Trade and other receivables
12 - . - - - - -
Financial lease receivable
25 - . - - - - -
Cash and cash equivalents
13 - . - - - - -
Other non-current assets - . - - - - -
- . - - - - -
Financial liabilities measured at fair value
Interest Rate Swaps used for hedging
21 (.) - - (.) - (.) - (.)
Forward exchange contracts used in hedge accounting
21 (.) - - (.) - (.) - (.)
Forward exchange contracts used for hedging
21 (.) - - (.) - (.) - (.)
(.) - - (.) - (.) - (.)
Financial liabilities not measured at fair value
Secured bank loans
19 - - (.) (.) - - (.) (.)
Unsecured bond issues
19 - - (.) (.) - (.) - (.)
Finance liability related to Barossa lease - - (.) (.) - - - -
Other non-current liabilities
20 - - (.) (.) - - - -
Trade and other payables
20 - - (.) (.) - - - -
Lease liabilities
25 - - (.) (.) - - - -
- - ( .) ( .) - (.) (.) (.)
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31 December 2020 Carrying amount Fair value
USD MILLION Note
Fair value -
hedging instrument
Financial assets at
amortised cost
Other financial
liabilities Tota l Level Level Level To t a l
Financial assets measured at fair value
Forward exchange contracts used for hedging
21 . - - . - . - .
Cross-currency swaps used for hedging
21 . - - . - . - .
. - - . - . - .
Financial assets not measured at fair value
Trade and other receivables
12 - . - . - - - -
Financial lease receivable
25 - . - . - - - -
Cash and cash equivalents
13 - . - . - - - -
Other non-current assets - . - . - - - -
- . - . - - - -
Financial liabilities measured at fair value
Interest Rate Swaps used for hedging
21 (.) - - (.) - (.) - (.)
Forward exchange contracts used for hedging
21 (.) - - (.) - (.) - (.)
(.) - - (.) - (.) - (.)
Financial liabilities not measured at fair value
Secured bank loans
19 - - (.) (.) - - (.) (.)
Unsecured bond issues
19 - - (.) (.) - (.) - (.)
Other non-current liabilities
20 - - (.) (.) - - - -
Trade and other payables
20 - - (.) (.) - - - -
Lease liabilities
25 - - (.) (.) - - - -
- - ( .) ( .) - (.) (.) ( .)
The difference between carrying amount and fair value of the unsecured bond relates to amortised loan costs and the equity portion of the convertible bond.
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CAPITAL STRUCTURE AND EQUITY
The primary focus of the Group’s financial strategy
is to ensure a healthy capital structure to support its
business, fulfil all financial obligations and maximise
shareholder values.
The Group also monitors and manages its capital struc-
ture in light of changes in the economic conditions. To
maintain or adjust the capital structure, the Group may
adjust dividend payments to its shareholders, return
capital to shareholders or issue new shares.
Construction and conversion projects will normally be
funded through current loan facilities and/or specific
project loan facilities equalling 70–80 per cent of the
cost of the project. Project loan facilities can be estab-
lished either before a contract for the conversion project
is signed, during the conversion phase of a project or
when the FPSO commences operation.
The Group has also issued bonds in NOK and will con-
sider continuing to do so when the market is attractive
and if it provides competitive funding as an alternative to
traditional bank financing. The Group placed a convert-
ible bond in 2019 and has now more diversified sources
of funding.
The Company has no specific targeted equity ratio.
However, the loan facilities of the Group have certain
covenants related to equity and equity ratio, both closely
monitored by the Company (reference to Note 19).
NOTE 22 List of subsidiaries, associates and joint ventures
Subsidiaries Country of incorporation
Ownership
Ownership
Berge Carmen Singapore Pte Ltd Singapore % %
Bergesen Worldwide Mexico, S.A. de C.V. Mexico % %
Bergesen Worldwide Offshore Mexico S. de RL de CV Mexico % %
BW Abo Pte Ltd Singapore % -
BW Adolo Pte Ltd Singapore % %
BW Athena Pte Ltd Singapore % %
BW Berge Helene Pte Ltd Singapore % %
BW Bergesen Worldwide Pte Ltd Singapore % %
BW Catcher Limited
Bermuda % %
BW Cidade de São Vicente Pte Ltd Singapore % %
BW Espoir Ivoirien Pte Ltd Singapore % %
BW Ideol AS
Norway % -
BW Ideol S.A.
France % -
BW Offshore Catcher (UK) Limited United Kingdom % %
BW Offshore Australia Management Pty Ltd Australia % -
BW Offshore China Ltd China % %
BW Offshore Cyprus Limited Cyprus % %
BW Offshore do Brazil Ltda Brazil % %
BW Offshore do Brazil Servicos Maritimos Ltda Brazil % %
BW Offshore EPC FZE United Arab Emirates % -
BW Offshore France SAS France % %
BW Offshore (Ghana) Pte Ltd Singapore % %
BW Offshore Global Manning Pte Ltd Singapore % %
BW Offshore Holdings Pte Ltd Singapore % %
BW Offshore Management B.V. Netherlands % %
BW Offshore Nautipa AS Norway % %
BW Offshore Netherlands B.V. Netherlands % %
BW Offshore Norway AS Norway % %
BW Offshore Norwegian Manning AS Norway % %
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Subsidiaries Country of incorporation
Ownership
Ownership
BW Offshore Opportunity I Limited Bermuda % %
BW Offshore Poland sp z o.o. Poland % %
BW Offshore Scotwind (UK) Limited United Kingdom % -
BW Offshore Shipholding Cyprus Limited Cyprus % %
BW Offshore Shipholding Pte Ltd Singapore % %
BW Offshore Singapore Pte Ltd Singapore % %
BW Offshore SPV B.V. Netherlands % -
BW Offshore SPV Pte Ltd Singapore % -
BW Offshore TSB Invest Pte Ltd Singapore % %
BW Offshore (UK) Limited United Kingdom % %
BW Offshore USA Management, Inc. USA % %
BW Offshore USA, LLC USA % %
BW Opportunity Limited Bermuda % %
BW Pioneer (UK) Limited United Kingdom % %
BW Polvo Pte Ltd Singapore % %
BW Sendje Berge Pte Ltd Singapore % %
BW Umuroa Pte Ltd Singapore % %
BWO-Premier Ghana Limited Ghana % %
Egyptian Winlines Shipping Co. SAE
Egypt - %
Ideol Japan, LLC
Japan % -
Ideol USA, Inc.
USA % -
Prosafe GFPSO I B.V. Netherlands % %
Prosafe Production B.V. Netherlands % %
Prosafe Services Cote d’Ivoire Pte Ltd Singapore % %
PT BW Offshore TSB Invest
Indonesia % %
Tinworth Pte Ltd Singapore % %
Tinworth France SAS France % %
Tinworth Gabon SA Gabon % %
Associates and joint ventures
Subsidiaries Country of incorporation
Ownership
2021
Ownership
OCS Services Limited British Virgin Islands % %
Euro Techniques Industries France % %
BW Energy Limited
Bermuda % %
BW Offshore AUS-JV Pte Ltd
Singapore % -
BW Offshore Nigeria Limited Nigeria % %
Preference shares are issued with a preferential dividend right to ICBCL. The preferential dividend is a fixed percentage of outstanding
preference shares, and accordingly the result allocated to non-controlling interest is independent of underlying result in the subsidiary.
The company is 51 per cent owned by Indonesian shareholders. The company is recognised in the balance sheet without non-controlling
interests, as the Group has put in place and has finalised agreements that ensure that 100 per cent of profits are retained by the Group.
Refer to Note 23 and Note 24.
Owned by BW Ideol AS, ownership effectively reduced to 53 per cent.
Ownership effectively reduced to 27 per cent in 2021 due to dilution and sale of shares, refer to Note 17.
Joint control due to shareholders agreements between the Group and external investors.
The company was derecognised during 2021.
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NOTE 23 Business combinations
On 16 February 2021, BW Ideol AS, a subsidiary of
BW Offshore Limited, entered into a sale and purchase
agreement (the ‘SPA’) regarding the acquisition of 100
per cent of the shares in Ideol SA for a total consideration
of USD 94.5 million settled as a combination of cash
and newly issued shares in BW Ideol AS. On 10 March
2021 and in connection with the closing of the SPA, BW
Ideol AS held an extraordinary general meeting where it
was resolved to (i) redeem the existing share capital, (ii)
issue 14 639 660 new shares to BW Offshore Holdings
Pte. Ltd. (a subsidiary of BW Offshore Limited) against
a cash injection of USD 62.2 million, and (iii) issue
5 815 240 new shares to the sellers against contribution
in-kind in the form of shares in Ideol SA. On 15 March
2021, the transaction was closed and BW Ideol AS
acquired 71.6 per cent of the shares of Ideol SA. The
remaining 28.4 per cent of Ideol SA were acquired and
paid in BW Ideol AS shares.
In parallel, BW Ideol AS completed a private placement
(including partial Greenshoe exercise) of 11 655 625
shares at a price of NOK 47.00 per share and got listed
on Euronext Growth Oslo. BW Offshore Holdings Pte.
Ltd. subscribed for USD 11.8 million (NOK 100 million)
in the private placement.
After the listing of BW Ideol AS on Euronext Growth in
Oslo on 18 March and the following Greenshoe exercise,
BW Offshore’s ownership in BW Ideol AS is 53.2 per
cent for a total cash consideration of USD 74.0 million.
Taking control of Ideol SA enables the BW Ideol Group
to establish itself as a leading global player in floating
offshore wind. The combination of Ideol technology,
operational track record and engineering capabilities,
and a pipeline of projects with the execution capabili-
ties focused on large-scale offshore projects within BW
Offshore, offers a unique combination.
Included in the identifiable assets and liabilities acquired
at the date of acquisition of Ideol S.A. are inputs (primarily
technology), processes and an organised workforce. The
Group has determined that together the acquired inputs
and processes significantly contribute to the ability to
create revenue. The Group has concluded that this is
acquisition of a business.
CONSIDERATION TRANSFERRED
USD MILLION
Cash .
Contribution in kind (5 815 240 shares à NOK 47) .
Total consideration transferred .
The value of the share retained for the valuation of the
portion of Ideol SA acquisition paid in shares has been
considered equal to the listing price of NOK 47.00.
ACQUISITION-RELATED COSTS
The Group incurred acquisition-related costs of USD 1.6
million on external legal fees and due diligence costs.
These costs have been included in operating expenses
in the consolidated statement of profit or loss.
IDENTIFIABLE ASSETS ACQUIRED AND LIABILITIES ASSUMED
The following table summarises the recognised
amounts of assets and liabilities assumed at the date
of acquisition.
USD MILLION
Intangible assets - R&D and software .
Intangible assets - Technology .
Property, plant & equipment .
Other non-current assets .
Trade receivables and other current assets .
Cash and cash equivalents .
Interest-bearing debt (.)
Other non-current liabilities (.)
Deferred tax liabilities (.)
Trade and other payables (.)
Other timing adjustments .
Total identifiable net assets acquired .
Acquired receivables were estimated at the contractual
amounts. The estimate at the acquisition date of the
contractual cash flows not expected to be collected was
zero and all amounts were collected during 2021.
Measurement of fair values
The Purchase Price Allocation analysis led to the rec-
ognition of a technology intangible asset. Ideol has
developed a floating barge for offshore wind turbines
based on its patented technology that optimises the
stability and performance of the floating wind turbine,
even in extreme conditions.
As of the acquisition date, it would be valued at USD 71.2
million. It will be amortised on a straight-line basis over
the remaining useful life of the asset estimated at 15
years, taking into consideration current industry expe-
rience and patents associated with the technology.
The fair value of the technology has been measured
provisionally, based on the present value of net cash
flows it is expected to generate, pending completion of
an independent valuation. If new information is obtained
within one year of the date of acquisition about facts and
circumstances that existed at the date of acquisition,
then the accounting for the acquisition will be revised.
GOODWILL
Goodwill arising from the acquisition has been recog-
nised as follows:
USD MILLION
Total consideration transferred .
Fair value of identifiable net assets (.)
Goodwill .
The goodwill is attributable mainly to the skills of the
established assembled workforce, to the synergies
expected to be achieved from integrating the new
business segment and the value from future offshore
windmill projects.
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NOTE 24 Non-controlling interests
The following table summarises the information related to the Group’s subsidiaries that has material NCI. Refer to Note
23 for information about incorporation of BW Ideol AS.
31 December 2021
USD MILLION BW Ideol AS
NCI Percentage .%
Non-current assets .
Current assets .
Non-current liabilities .
Current liabilities .
Net assets (100%) .
Net assets attributable to NCI .
Revenue .
Profit for the year (.)
OCI -
Total comprehensive income (100%) (.)
Profit allocated to NCI (.)
OCI allocated to NCI -
Cash flows from operating activities (.)
Cash flows from investing activities (.)
Cash flows from financing activities (dividends to NCI: nil) .
Net increase (decrease) in cash and cash equivalents (100%) .
ICBCL AGREEMENT
In November 2017, the Group closed an agreement with a nominee of the financial leasing firm, ICBC Financial Leasing Co.,
Ltd. (ICBCL), whereby such nominee becomes an equity partner in BW Catcher Limited. BW Catcher Limited has issued
preference shares with a preferential dividend right to ICBCL, for an aggregate subscription price of USD 275 000 000.
The aggregate redemption and dividends payments on the preference shares are estimated to reflect approximately
25–30 per cent of the estimated free cash flow after debt servicing in the Catcher contract over a similar term. The net
proceeds from the issue of the preference shares will be used for general corporate purposes. The investment by ICBCL
is presented as a non-controlling interest in the statement of financial position of the Group.
USD 7.9 million (USD 10.9 million) has been paid in dividends during 2021 and the redemption for 2021 amounts to
USD 20.5 million (USD 25.3 million).
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NOTE 25 Leases
THE GROUP AS A LESSEE
The Group leases office premises, apartments, warehouses and vessels. Leases of office premises generally have lease terms
between 1 and 7 years, while apartments and warehouses and vessels generally have lease terms between 1 and 3 years.
The Group has leases of certain office equipment (i.e., personal computers, printing- and photocopying machines, coffee
machines) that are considered of low value.
Total cash outflow for leases included in the statement of cash flows is USD 13.3 million (USD 5.9 million).
Right-of-use assets and lease liabilities
Land and
buildings
Right-of-use
assets Lease liabilities
Balance at 1 January 2021 . . .
Additions . . .
Adjustments . . .
Depreciation expense (.) (.) n/a
Interest expense n/a n/a .
Lease payments n/a n/a (.)
Foreign currency translation gain/(loss) (.) (.) (.)
Balance at 31 December 2021 . . .
Land and
buildings Vessels
Right-of-use
assets Lease liabilities
Balance at 1 January 2020 . . . .
Additions . - . .
Adjustments . - . .
Depreciation expense (.) (.) (.) n/a
Interest expense n/a n/a n/a .
Lease payments n/a n/a n/a (.)
Discontinued operation (.) (.) (.) (.)
Foreign currency translation gain/(loss) - - - .
Balance at 31 December 2020 . - . .
Amounts recognised in profit or loss
USD MILLION 2021
Interest on lease liabilities . .
Depreciation expense . .
Extension options
Some leases, such as office leases, contain contractual rights and options, such as extension and cancellation options,
exercisable only by the Group and not by the lessors. These options may impact the estimated lease term. The Group
assesses at lease commencement, and subsequently when facts and circumstances under the control of the Group
require it, whether it is reasonably certain to exercise these options and reflects this in the lease term.
THE GROUP AS A LESSOR
Finance lease
The FPSO Yùum K’ak’ Náab commenced operations in Mexico in July 2007 on a firm 15-year lease contract. The
title of the vessel will automatically be transferred to the customer at the end of the lease term without compensation.
The net present value of the minimum lease payments amounts to substantially all the fair value of the FPSO at the
inception of the lease. In addition, the firm contract period is for the major part of the economic life of the FPSO.
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Accordingly, this contract is classified as a finance lease. The Group will operate and maintain the FPSO over the 15-year
contract period. Revenues and expenses arising from this operation are recognised as revenues from contracts with
customers, lease interest and operating expenses on vessels.
The future minimum lease payments receivable from finance lease is presented in the table below:
USD MILLION 2021
Not later than one year . .
Later than one year and not later than five years - .
Later than five years - -
Gross receivables from finance leases . .
Unearned future finance income on finance leases (.) (.)
Net investment in finance leases . .
Included in non-current assets (Financial lease receivables) - .
Included in current assets (Financial lease receivables) . .
Operating leases
BW Athena, BW Cidade de São Vicente, BW Opportunity, Umuroa and FPSO Polvo are not on contract as of 31 December 2021.
All other FPSOs owned by year end are on firm operating lease contracts.
Future minimum payments receivable under non-cancellable operating lease contracts as at 31 December are as follows:
USD MILLION 2021
Not later than one year . .
Later than one year and not later than five years . .
Later than five years . .
Total amount . .
NOTE 26 Commitments and guarantees
Commitments related to construction projects and life extension activities and operations, contracted for at the balance
sheet date, but not recognised in the financial statements are as follows:
USD MILLION 2021
Nominal amount . .
Fair value . .
Interest rate .% .%
At 31 December 2021, the commitment included com-
mitted contract values related to the construction of the
FPSO for the Barossa gas field, life extension activities
on the fleet, as well as for ongoing operations.
At 31 December 2020, the commitment included com-
mitted contract values related to life extension activities
on the fleet, as well as for ongoing operations.
The Group has issued bank guarantees in favour of
various customers totalling USD 65.6 million (USD 67.3
million).
The bank debt related to the USD 672.5 million Corporate
Facility, as referred to in Note 19, is secured by:
•
a parent company guarantee from BW Offshore
Limited
•
first priority mortgages over eight FPSOs
•
first priority secured interest in all earnings and
proceeds of insurance related to the same eight
FPSOs.
The bank debt related to the Catcher loan facility, as
referred to in Note 19, is secured by:
•
a parent company guarantee from BW Offshore
Limited
•
a first priority mortgage over the FPSO BW
Catcher, owned by BW Catcher Limited, Bermuda
•
first priority secured interest in all earnings and
proceeds of insurance related to the FPSO.
The bank debt related to the Petróleo Nautipa facility,
as referred to in Note 19, is secured by:
•
a parent company guarantee from BW Offshore
Limited
•
a first priority mortgage over the FPSO Petróleo
Nautipa owned by Tinworth Pte Ltd
•
first priority secured interest in all earnings and
proceeds of insurance related to the FPSO Petróleo
Nautipa.
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The bank debt related to the USD 1 150 million Barossa
Loan Facility, as referred to in Note 21, is secured by:
•
a parent company guarantee from BW Offshore
Limited
•
assignment of key construction contracts
•
a first priority mortgage over the FPSO, once
completed, to be owned by BW Offshore AUS-JV
Pte Ltd, Singapore
•
first priority secured interest in all earnings and
proceeds of insurances related to the FPSO once
contract has commenced.
The carrying value of vessels pledged as collateral
per 31 December 2021 was USD 1 409.45 million
(USD 1 718.8 million). In addition, the shares in certain
vessel owning companies in the Group are pledged.
NOTE 27 Contingent assets and liabilities
In September 2021, Petro Rio Exploração e Produção
de Petróleo Ltda. (‘PetroRio’) filed a Request for
arbitration in relation to the FPSO Polvo against the
Group under the Charter and Services Agreements.
PetroRio puts forward different heads of claim in the
total amount of approximately USD 31 million for
overpayment of hire and arbitration costs and fees.
In October 2021, BW Offshore filed their Response
and put forward substantial counterclaims primar
-
ily for unpaid invoices and demobilisation costs for
approximately USD 30 million. It is expected that an
award will be obtained before the end of 2023. The net
exposure is considered approximately USD 11 million.
The contract for Umuroa was terminated effective
31 December 2019. Following the termination of the
FPSO contract, the client had contractual hire which was
due but not paid. The client, Tamarind Taranaki Limited,
is in liquidation. The Group has various claims against
the Tamarind group companies for deferred capex
payments, VOR settlements, unpaid charter hire and
operating day rates in addition to claims for early termi-
nation fees. No receivable is recognised and any recovery
of the outstanding amounts is considered uncertain.
In April 2016, the Group received a tax assessment
and tax collection letter issued by the Indonesian Tax
Office related to a tax audit for 2013 and 2014. The tax
office disagreed with the revenue recognition method
used by the Group. The Group obtained written expert
advice in respect of the revenue recognition method
adopted by the Group confirming that this is sup
-
ported by Indonesian GAAP and International Financial
Reporting Standards. Another tax audit for 2015 was
concluded in June 2017. Similar to the tax audit for 2013
and 2014, the tax office disagreed with the revenue
recognition method used by the Group. The claims
related to 2014 and 2015 have been through various
instances of the court system in Indonesia and was
finally rejected by the Supreme Court in writing in 2021
while the claim related to 2013 was rejected in February
2022, concluding that all claims have been rejected.
The Group has an ongoing tax audit in Brazil related to
allocation of revenue between the local entities and the
vessel owning entities outside Brazil. Based on an eval-
uation of the case in collaboration with legal advisors, it
is not found probable that the final tax assessment will
result in additional tax expense for the Group, and no
provision has been made. The total exposure is approx-
imately USD 4.4 million.
In addition to the cases mentioned above, the Group
also from time to time have tax audits and other minor
disputes with clients or vendors. Provisions or claims are
recognised in accordance with the accounting policies
as stated in Note 2.
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NOTE 28 Related party transactions
The largest individual shareholder, BW Group Limited owning 49.9 per cent, is incorporated in Bermuda and is controlled
by Sohmen family interests.
Investments in subsidiaries are disclosed in Note 22, investments in associates and joint ventures are disclosed in Note 17
and remuneration to the Board of Directors, Top Management and auditors is detailed in Note 9.
Other related party transactions:
Transaction values for
the year ended December
Balance outstanding
as at December
USD MILLION Note 2021 2021
Sale of goods and services
Joint ventures . - . -
Associates . . . .
Purchase of goods
Joint ventures . . . (.)
Associates . . . .
Others
Associates
-Dividends received
17 - . - -
-Short-term receivable - - . .
NOTE 29 Covid-19
The Group has proactively taken steps to minimise risk of business interruptions due to the Covid-19 pandemic, by
implementing comprehensive procedures to safeguard people and operations and adhering to local public health advisory
across all locations. The vaccine roll-out and a normalisation of global industry and business activity in 2021, led to a
recovery in energy demand and prices, and supported a positive momentum throughout the oil and gas industry during
the year.
Throughout 2021, the impact on operations was managed through good risk management, planning and procedures.
The Group has a financial impact due to extra costs related to additional crew management and logistics, in addition
to other negative financial impacts which are not directly measurable, such as challenges related to managing regular
offshore maintenance. The Group expects that the Covid-19-related costs will continue in 2022 and probably also in
2023, but it is expected to taper off over time.
For further description of Covid-19 effects, refer to Note 15 and Note 21.
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NOTE 30 Subsequent events
On 17 January 2022, the BW Offshore subsidiary BW
Ideol AS, as part of the Floating Energy Allyance, has
secured the rights to a significant floating offshore wind
farm with the approximate capacity of 1GW off the
northeast coast of Scotland through the Crown Estate
Scotland’s ScotWind leasing round. An estimate of the
financial effect cannot be made. The Group owns 53.2
per cent of the shares outstanding in BW Ideol.
BW Cidade de São Vicente was sold for recycling in
February 2022 for a cash consideration of USD 12.8
million. The unit was classified as held-for-sale at
31 December 2021.
On 24 January 2022, the Group signed an agreement
to sell shares in PT BW Offshore TSB Invest to PT
Bahari Inti Tanker and PT Cahaya Haluan Pasifik, both
of which are Indonesian companies, in consortium with
PT Buana Lintas Lautan Tbk, a company publicly listed
in Indonesia. The consortium will continue to operate the
FPSO under the lease contract with Kangean Energy
Indonesia.
The transaction is subject to precedent customary con-
ditions , with closing expected late in the first quarter of
2022. The FPSO operating company, BW Offshore TSB
Invest Pte Ltd, was classified as assets and liabilities
held-for-sale at 31 December 2021.
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Statement of Income
USD MILLION (Year ended December) Note 2021
Revenue 3 . .
Operating expenses
Other expenses
4 (.) (.)
Total operating expenses (.) (.)
Operating profit/(loss) . .
Amortisation
15 (.) (.)
Operating profit/(loss) (EBIT) . .
Interest income . .
Interest expense (.) (.)
Net currency exchange gain/(loss) . (.)
Fair value gain/(loss) on financial instruments . (.)
Loss on sale of shares in associate
12 (.) -
Impairment
12, 14 (.) (.)
Other financial expenses (.) (.)
Net financial items (.) (.)
Profit/(loss) before tax (.) (.)
Income tax expense
5 (.) (.)
Net profit/(loss) for the year (.) (.)
Statement of Comprehensive Income
USD MILLION (Year ended December) Note 2021
Profit/(loss) for the year (.) (.)
Other comprehensive income - -
Total comprehensive income for the year (.) (.)
The notes on pages 126–136 are an integral part of these financial statements.
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Statement of Financial Position
USD MILLION (As at December) Note 2021
ASSETS
Intangible assets
15 . .
Shares in subsidiaries
12 . .
Investment in associates
12 . .
Intercompany receivables long-term
14 . .
Derivatives
11 . .
Non-current assets . .
Trade and other receivables . .
Intercompany receivables short-term
14 . .
Derivatives
11 . .
Cash and cash equivalents
6 . .
Current assets . .
Total assets . .
USD MILLION (As at December) Note 2021
EQUITY
Share capital
7 . .
Share premium . .
Other equity
7, 8 (.) (.)
Total shareholders’ equity . .
LIABILITIES
Interest-bearing long-term debt
8, 10 . .
Intercompany payables long-term
14 . .
Derivatives
11 . .
Non-current liabilities . .
Interest-bearing short-term debt
8, 10 (.) (.)
Trade and other payables
9, 10 . .
Intercompany payables short-term
14 . .
Derivatives
11 . .
Current tax liabilities
5 . .
Current liabilities . .
Total shareholders’ equity and liabilities . .
The notes on pages 126–136 are an integral part of these financial statements.
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Statement of Changes in Shareholders’ Equity
USD MILLION Share capital Share premium
Treasury share
reserve
Equity component of
convertible bonds Other elements Tota l
At 1 January 2020 . . (.) . (.) .
Profit/(loss) for the period - - - - (.) (.)
Treasury shares acquired - - (.) - - (.)
Dividends - - - - (.) (.)
Share-based payment - - . - . .
Dividend distribution - - - - (.) (.)
Total equity at 31 December 2020 . . (.) . (.) .
At 1 January 2021 . . (.) . (.) .
Profit/(loss) for the period - - - - (.) (.)
Dividends - - - - (.) (.)
Share-based payment - - . - . .
Total equity at 31 December 2021 . . (.) . (.) .
The notes on pages 126–136 are an integral part of these financial statements.
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Statement of Cash Flows
USD MILLION (Year ended December) Note 2021
Operating activities
Profit/(loss) before tax (.) (.)
Adjustments for:
Amortisation
15 . .
Impairment charges
12, 14 . .
Fair value change on financial instruments (.) (.)
Currency gain/loss (.) .
Add back of net interest expense . (.)
Loss from sale of shares
12 . -
Dividends from group companies (.) -
Share-based payment expense . .
Changes in:
Receivables and accounts payable . (.)
Other items from operating activities . .
Cash generated from operating activities (.) .
Taxes paid
5 (.) (.)
Net cash flows from/(used) in operating activities (.) .
USD MILLION (Year ended December) Note 2021
Investing activities
Proceeds from sale of investments . -
Interest received . .
Dividends received
3 . .
Investments in subsidiaries - (.)
Investment in intangible assets
15 (.) (.)
Net cash flows from/(used in) investing activities . .
Financing activities
Changes in intercompany receivables/payables
14 (.) .
Repayment of long-term debt
8 - (.)
Treasury shares acquired
7 - (.)
Dividends paid (.) (.)
Interest paid (.) (.)
Net cash flows from/(used in) financing activities (.) (.)
Net change in cash and cash equivalents . (.)
Cash and cash equivalents at 1 January . .
Cash and cash equivalents at 31 December
6 . .
The notes on pages 126–136 are an integral part of these financial statements.
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Notes
NOTE 1 Reporting entity
Bermuda with its registered address at Washington Mall Phase 2, 4
th
Floor, Suite 400, 22 Church Street, Hamilton
HM1189, Bermuda. B W Offshor e Limit ed is the holding compa ny in the BW Offshore Limited Group and is listed on
Oslo Stock Exchange (OSE).
NOTE 2 Significant accounting policies
BASIS OF ACCOUNTING
The financial statements of the Company have been
prepared in accordance with International Financial
Reporting Standards (‘IFRS’) as adopted by the
European Union (‘EU’). The financial statements have
been prepared pursuant to the historical cost conven-
tion, with some exceptions, as detailed in the accounting
policies set out below.
The financial statements were approved by the Board of
Directors on 27 February 2022.
All figures are in USD million if not otherwise stated. As
a result of rounding differences, numbers and or per-
centages may not add up to the total. Figures in brackets
refer to corresponding figures for 2020.
CURRENCY TRANSLATION
Functional and presentation currency
The Company’s presentation currency is United States
Dollars (USD). This is also the functional currency of the
Company and most of its subsidiaries.
Transactions and balances
Transactions in a currency other than the functional
currency (‘foreign currency’) are translated into the
functional currency using the exchange rates prevail-
ing at the date of transactions. Currency translation
gains and losses resulting from the settlement of such
transactions and from the translation of financial year
end exchange rates of monetary assets and liabilities
denominated in foreign currencies are recognised in the
statement of income.
USE OF JUDGEMENTS AND ESTIMATES
The preparation of financial statements in conformity
with IFRS requires the use of certain critical account-
ing estimates. It also requires Management to exercise
its judgement in the process of complying with the
Company’s accounting policies.
Impairment
Shares in subsidiaries, investment in associates and
intercompany receivables are subject to impairment
testing at the end of each reporting period. Valuation
is subject to assessment of the recoverability in the
underlying investment or receivable. Management’s
assessment can affect the level of impairment loss, or
reversal of such, that is recognised in profit or loss.
CHANGES IN ACCOUNTING POLICIES
There are no changes in the accounting policies.
ACCOUNTING FOR SUBSIDIARIES AND ASSOCIATES
The subsidiaries are those entities (including special
purpose entities) in which the Company has control. Control
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is achieved when the Company is exposed or has rights
to variable returns from its involvement with a company in
which it has invested and has the ability to use its power
to affect its returns from this company. Investments
in subsidiaries are stated at cost less any impairment.
Associates are those entities in which the Company
has significant influence, but no control, or has joint
control, over the financial and operating policies, gen-
erally accompanying a shareholding of between 20 per
cent and 50 per cent of the voting rights. Significant
influence is the power to participate in the financial and
operating policy decisions of the investee. Investments
in associates are stated at cost less any impairment.
REVENUE RECOGNITION
Revenue from contracts with customers
Revenue from contracts with customers is recognised
upon satisfaction of the performance obligations for the
transfer of services in each such contract. A perfor-
mance obligation is satisfied when or as the customer
obtains the goods or services delivered. It is recognised
at an amount that reflects the consideration which the
Company expects to receive in exchange for those
goods or services. Revenues are presented net of indi-
rect sales taxes.
Interest income
Interest income is recognised on a time proportion basis
applying the effective interest method.
Dividend income
Dividend income is recognised when the right to receive
payment is established.
FINANCIAL INSTRUMENTS
A financial instrument is any contract that gives rise to
a financial asset of one entity and a financial liability or
equity instrument of another entity.
Financial assets
The Company’s financial assets are derivatives, trade- and
intercompany receivables and cash and cash equivalents.
The classification of financial assets at initial recognition
depends on the financial asset’s contractual cash flow
characteristics and the Company’s business model for
managing them. Except for trade receivables that do not
contain a significant financing component, the Company
initially measures a financial asset at its fair value plus,
(in the case of a financial asset not at fair value through
profit or loss), transaction costs.
The Company classifies its financial assets in two categories:
•
Financial assets at amortised cost.
•
Financial assets at fair value through profit or loss
(FVTPL).
Financial assets at amortised cost
The Company measures financial assets at amortised
cost if both of the following conditions are met:
•
The financial asset is held within a business model
with the objective to hold financial assets in order to
collect contractual cash flows.
•
The contractual terms of the financial asset give
rise on specified dates to cash flows that are solely
payments of principal and interest on the principal
amount outstanding.
Financial assets at amortised cost are subsequently
measured using the effective interest (EIR) method and
are subject to impairment. Gains and losses are recog-
nised in profit or loss when the asset is derecognised,
modified or impaired.
The Company’s financial assets at amortised cost
include trade- and intercompany receivables and cash
and cash equivalents.
Financial assets at fair value through profit or loss
Derivatives at fair value are carried in the statement
of financial position at fair value with net changes in
fair value through profit or loss. The category includes
foreign exchange contracts and interest rate swaps.
Derecognition of financial assets
A financial asset (or, where applicable, a part of a finan-
cial asset or part of a group of similar financial assets)
is primarily derecognised when:
•
The rights to receive cash flows from the asset
have expired, or
•
The Company has transferred its rights to receive
cash flows from the asset or has assumed an
obligation to pay the received cash flows in full
without material delay to a third party under a
‘pass-through’ arrangement; and either
a. the Company has transferred substantially all the
risks and rewards of the asset, or
b. the Company has neither transferred nor retained
substantially all the risks and rewards of the
asset, but has transferred control of the asset.
Impairment of financial assets
For intercompany receivables, the Company applies a
simplified approach in calculating ECLs. Therefore, the
Company does not track changes in credit risk, but
instead recognises a loss allowance based on lifetime
Estimated Credit Losses (ECLs) at each reporting date,
based on its historical credit loss experience.
The Company considers a financial asset in default
when internal or external information indicates that
the Company is unlikely to receive the outstanding
contractual amounts in full before taking into account
any credit enhancements held by the Company. A
financial asset is written off when there is no reasonable
expectation of recovering the contractual cash flows.
Financial liabilities
Financial liabilities are classified as subsequently
measured at amortised cost except for financial liabilities
at fair value through profit or loss (FVTPL). Such
liabilities, including derivatives that are liabilities, shall
be subsequently measured at fair value. Other financial
liabilities are subsequently measured at amortised cost
using the effective interest method. Interest expense
and foreign exchange gains and losses are recognised
in profit or loss. Any gain or loss on derecognition is also
recognised in profit or loss.
Derivatives are financial liabilities when the fair value
is negative and financial assets when the fair value is
positive.
Derecognition of financial liabilities
The Company has applied the derecognition requirement
in IFRS 9 - Financial Instruments prospectively to
transactions occurring on or after the transition date,
but not retrospectively to financial liabilities already
derecognised prior to the transition date.
Under IFRS, the amortised cost of a modified financial
liability, in which the terms of the financial liability are not
determined to be substantially modified, is recalculated
as the present value of the estimated future contractual
cash flows, discounted at the original effective interest
rate. The resulting gains or losses are recognised in profit
or loss.
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SHARE CAPITAL
Ordinary shares
Ordinary shares are classified as equity. Incremental
costs directly attributable to the issue of new shares or
options are shown in equity as a deduction, net of tax,
from the proceeds.
Treasury shares
When shares recognised as equity are repurchased, the
amount of the consideration paid, which includes directly
attributable costs, is recognised as a reduction from
equity. Repurchased shares are classified as treasury
shares and are presented in the treasury share reserve.
When treasury shares are sold or reissued subsequently,
the amount received is recognised as an increase in
equity and the resulting surplus or deficit on the trans-
action is presented within share premium.
COMPOUND FINANCIAL INSTRUMENTS
Compound financial instruments issued by the Company
comprise convertible bonds denominated in USD, that
can be converted to ordinary shares at the option of the
holder, when the number of shares to be issued is fixed
and does not vary with changes in fair value.
The liability component of compound financial instru-
ments is initially recognised at the fair value of a similar
liability that does not have an equity conversion option.
The equity component is initially recognised as the dif-
ference between the fair value of the compound financial
instrument and the fair value of the liability component.
Any directly attributable transaction costs are allocated
to the liability and equity components in proportion to
their initial carrying amounts.
Subsequent to initial recognition, the liability compo-
nent of a compound financial instrument is measured at
amortised cost using the effective interest method. The
equity component of a compound financial instrument
is not remeasured.
Interest related to the financial liability is recognised in
profit or loss. On conversion at maturity, the financial
liability is reclassified to equity and no gain or loss is
recognised.
PROVISIONS FOR OTHER LIABILITIES AND CHARGES
Provisions are recognised when the Company has
a legal or constructive obligation as a result of past
events, when it is likely that an outflow of resources will
be required to settle the obligation and a reliable esti-
mate of the amount can be made. Where the Company
expects a provision to be reimbursed, for example under
an insurance contract, the reimbursement is recognised
as a separate asset, but only when the reimbursement
is virtually certain.
Provisions are measured at the present value of the
expenditures expected to be required to settle the
obligation using a pre-tax rate that reflects current
market assessments of the time value of money and
the risks specific to the obligation. The increase in the
provision due to passage of time is recognised as inter-
est expense.
CLASSIFICATION OF ASSETS AND LIABILITIES
Assets for long-term ownership or use are classified
as fixed assets. Other assets are classified as current
assets. Liabilities which fall due more than one year
after being incurred are classified as long-term liabilities,
except for following year’s instalments on long-term
debt. This is presented as current interest-bearing debt.
Liabilities which fall due less than one year after they are
incurred are classified as current liabilities.
NOTE 3 Revenue
USD MILLION 2021
Revenue from contracts with customers . .
Dividend income . .
Total revenue . .
NOTE 4 Operating expenses
USD MILLION 2021
Management fee . .
Lawyer’s fee . .
Consultant’s fee . .
Auditor’s fee . .
Other operating expenses . .
Total operating expenses . .
Management fee is fee for management services provided to the Company by subsidiaries in the group.
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NOTE 5 Income tax
BW Offshore Limited is a Bermuda company. Currently, the Company is not required to pay taxes in Bermuda on ordinary
income or capital gains. The Company has received written assurance from the Minister of Finance in Bermuda that it
will be exempt from taxation until 2036.
The income tax for 2021 concerns withholding tax which the Company is subject to in certain countries where the
Company has financial income.
NOTE 6 Cash and cash equivalents
Cash and cash equivalents comprise the following items:
USD MILLION 2021
Bank deposits . .
Total cash and cash equivalents . .
NOTE 7 Share capital and reserves
Authorised share capital:
At 1 January 2021: 214 000 000 ordinary shares at par value USD 0.50 each
At 31 December 2021: 214 000 000 ordinary shares at par value USD 0.50 each
Issued and fully paid USD THOUSAND
At 1 January 2021 .
At 31 December 2021 .
TREASURY SHARE RESERVE
At 31 December 2021, the Company held a total of 4 141 437 own shares (4 156 534). Book value of the treasury
shares was USD 10.1 million at 31 December 2021 (USD 10.2 million).
CONVERTIBLE BONDS
The reserve for the convertible bonds comprises the amount allocated to the equity component for the convertible bonds
issued by the Company in November 2019.
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NOTE 8 Loans and borrowings
Carrying amount
USD MILLION Effective interest rate Maturity date 2021
Convertible bonds .% Nov . .
BWO05 – NOK 900 million Bond month NIBOR + .% Dec . .
Total long-term debt . .
Carrying amount
USD MILLION Effective interest rate Maturity date 2021
Convertible bonds .% Nov (.) (.)
BWO05 – NOK 900 million Bond month NIBOR + .% Dec (.) (.)
Total short-term debt (.) (.)
Total interest-bearing debt . .
BWO05 – NOK 900 MILLION BOND
During the fourth quarter 2019, BW Offshore Limited successfully completed the placement of a NOK 900 million senior
unsecured bond with maturity date on 4 December 2023. The proceeds from the bond loan were used to partly repay
existing bond loans. The bond loan is subject to certain covenants, including minimum book equity of at least 25 per
cent of total assets and minimum USD 75 million available liquidity including undrawn amounts available for utilisation
by the Group.
CONVERTIBLE BONDS
During the fourth quarter 2019, BW Offshore Limited issued a USD 297.4 million convertible bond with a five-year
tenor and coupon of 2.50 per cent per annum, payable semi-annually in arrears. The convertible bond has no regular
repayments and matures in full on 12 November 2024. There are no financial covenants in the convertible bond agreement.
The proceeds from the convertible bond loan were used to refinance the existing bond loans and for general corporate
purposes. The initial conversion price of USD 10.24 corresponds to a conversion premium of 37.5 per cent over the volume
weighted average price of the shares on the Oslo Stock Exchange at 5 November 2019 (converted at the prevailing
USD:NOK spot rate equal to NOK 9.1921 / USD 1.00).
USD MILLION
Proceeds from issue of convertible bonds .
Transaction costs (.)
Net proceeds .
Amount classified as equity (net of transaction costs of USD 0.7 million) (.)
Accreted interest .
Expensed capitalised borrowing costs .
Carrying amount of liability at 31 December 2021 .
The conversion price is subject to adjustment for dividends paid or other changes affecting the value of the share.
During 2021, the quarterly dividends resulted in adjustments to the initial conversion rate.
Distribution declared per share Conversion price
First quarter, 2021 . .
Second quarter, 2021
. .
Third quarter, 2021 . .
Fourth quarter, 2021 . .
No adjustment
Distribution declared per share Conversion price
First quarter, 2020
.
Second quarter, 2020
. .
Third quarter, 2020 . .
Fourth quarter, 2020
. .
Distribution of BW Energy shares
No adjustment
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RECONCILIATION OF MOVEMENTS OF LIABILITIES TO CASH FLOWS ARISING FROM FINANCING ACTIVITIES
Interest payable
Intercompany
payables Liabilities Equity To t a l
USD MILLION
Interest-bearing
short-term debt
Interest-bearing
long-term debt
Balance at 1 January 2021 - - (.) . .
Dividends paid - - - - (.) (.)
Interest paid (.) - - - - (.)
Changes in intercompany receivables - (.) - - - (.)
Total changes from financing cash flows (.) (.) - - (.) (.)
Effects of changes in foreign exchange rate and interest rate swaps - (.) - (.)
Liability-related:
Accreted interest - . - .
Expensed capitalised borrowing costs - . - .
Total liability-related other changes - . - .
Total equity-related other changes - - (.) (.)
Balance at 31 December 2021 (.) . .
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Interest payable
Intercompany
payables Liabilities Equity To t a l
USD MILLION
Interest-bearing
short-term debt
Interest-bearing
long-term debt
Balance at 1 January 2020 - - . . .
Repayment of borrowings - - (.) - - (.)
Dividends paid - - - - (.) (.)
Treasury shares acquired - - - - (.) (.)
Interest paid (.) - - - - (.)
Changes in intercompany receivables - . - - - .
Total changes from financing cash flows (.) . (.) - (.) (.)
Effects of changes in foreign exchange rate and interest rate swaps . . - .
Liability-related:
Accreted interest - . - .
Expensed capitalised borrowing costs - . - .
Total liability-related other changes - . - .
Total equity-related other changes - - (.) (.)
Balance at 31 December 2020 (.) . .
NOTE 9 Trade and other payables
USD MILLION 2021
Trade payables . .
Other accruals . .
Total trade and other payables . .
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NOTE 10 Financial assets and liabilities
As of 31 December, the Company had financial assets and liabilities in the following categories:
Year ended 31 December 2021 Carrying amount Fair value
USD MILLION Note
Fair value -
hedging instrument
Financial assets at
amortised cost
Other financial
liabilities Tota l Level Level Level To t a l
Financial assets measured at fair value
Forward exchange contracts used for hedging
11 . - - . - . - .
Cross-currency swaps used for hedging
11 . - - . - . - .
. - - . - . - .
Financial assets not measured at fair value
Other non-current assets
14 - . - . - - - -
Trade and other receivables
14 - . - . - - - -
Cash and cash equivalents
6 - . - . - - - -
- . - . - - - -
Financial liabilities measured at fair value
Interest rate swaps used for hedging
11 (.) - - (.) - (.) - (.)
Forward exchange contracts used for hedging
11 (.) - - (.) - (.) - (.)
(.) - - (.) - (.) - (.)
Financial liabilities not measured at fair value
Unsecured bond issues
8 - - (.) (.) - (.) - (.)
Other non-current liabilities
14 - - (.) (.) - - - -
Trade and other payables
9, 14 - - (.) (.) - - - -
- - ( .) ( .) - (.) - (.)
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Year ended 31 December 2020 Carrying amount Fair value
USD MILLION Note
Fair value -
hedging instrument
Financial assets at
amortised cost
Other financial
liabilities Tota l Level Level Level To t a l
Financial assets measured at fair value
Forward exchange contracts used for hedging
11 . - - . - . - .
Cross-currency swaps used for hedging
11 . - - . - . - .
. - - . - . - .
Financial assets not measured at fair value
Other non-current assets
14 - . - . - - - -
Trade and other receivables
14 - . - . - - - -
Cash and cash equivalents
6 - . - . - - - -
- . - . - - - -
Financial liabilities measured at fair value
Interest rate swaps used for hedging
11 (.) - - (.) - (.) - (.)
Forward exchange contracts used for hedging
11 (.) - - (.) - (.) - (.)
(.) - - (.) - (.) - (.)
Financial liabilities not measured at fair value
Unsecured bond issues
8 - - (.) (.) - (.) - (.)
Other non-current liabilities
14 - - (.) (.) - - - -
Trade and other payables
9, 14 - - (.) (.) - - - -
- - ( .) ( .) - (.) - (.)
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NOTE 11 Financial risk management
The Company’s activities expose it to a variety of financial
risks. Overall risk management follows and is handled by
the BW Offshore Group. These processes and policies
are described in more detail under Note 21 of the con-
solidated financial statements of BW Offshore Group.
FOREIGN CURRENCY RISK
The Company’s business is not exposed to significant
foreign exchange risk as its operating expenses are mainly
denominated in United States Dollars, which is the func-
tional currency of the Company. The Company enters
into forward/futures contracts to reduce the exchange-
rate risk in cash flows nominated in foreign currencies
related to administrative expenses. The exchange-rate
risk is calculated for each foreign currency and con-
siders assets and liabilities, liabilities not recognised in
the balance sheet and expected purchases and sales
in the currency in question. Currency hedges and other
currency effects include changes in fair value of currency
hedges, effects or settlement of these hedges, and
other currency effects related to operating cash flows.
The Company is exposed to foreign currency risk on
bond issued in NOK, respectively bond BWO05. The
foreign currency exposure on BWO05 is hedged through
cross-currency interest swaps with a nominal value of
USD 98.8 million.
INTEREST RATE RISK
Except for the amount due to and from subsidiaries,
the Company’s operating cash flows are independent
of changes in market interest rates.
The Company holds interest rate caps with a nominal
value of USD 100 million in total with maturity in 2023.
The caps are held to hedge the quarterly cash flows
from floating rate interest payments on the Corporate
Facility loan. The cross-currency interest swap held to
hedge the BWO05 bond also hedges the interest rate
risk on the bond.
CREDIT RISK
The Company’s credit risk is primarily attributable to the
amount due from the subsidiaries (non-trade). At the
balance sheet date, this amount due from subsidiaries
(non-trade) is not past due. The maximum exposure
is represented by the carrying amount of this financial
asset on the balance sheet.
LIQUIDITY RISK AND CAPITAL RISK
The funding requirements of the Company are met by the
subsidiaries of the BW Offshore Group. The Company’s
objective when managing capital is to ensure that the
Company is adequately capitalised and that funding
requirements are met by the BW Offshore Group.
The Company is not subject to any externally imposed
capital requirements.
NOTE 12 Shares in subsidiaries and associates
Subsidiaries Country of incorporation
Ownership
2021
Ownership
BW Catcher Limited Bermuda % %
BW Offshore do Brazil Ltda Brazil % %
BW Offshore EPC FZE United Arab Emirates % -
BW Offshore Holdings Pte. Ltd. Singapore % %
BW Offshore Opportunity I Limited Bermuda % %
In 2020, the Company recorded an impairment of USD 55.5 million on investments in subsidiaries.
Associates Country of incorporation
Ownership
Ownership
BW Energy Limited Bermuda % %
The Company recorded an impairment of USD 234.2 million on interest in associates to write down the carrying amount
to its recoverable amount.
On 29 October 2021, the Company sold 20 000 000 shares in BWE, representing approximately 7.8 per cent of the
outstanding shares, at NOK 28 per share. Following the sale, the Company holds 70 840 553 shares in BWE, representing
27.5 per cent of the shares outstanding in BWE.
On 21 January 2021, BW Energy Limited (BWE) completed a USD 75 million private placement and allocated and issued
23 690 000 new shares at a subscription price of NOK 27 per share, raising gross proceeds of NOK 639 640 000.
The Company was not allocated shares in the private placement, consequently the ownership interest in BWE diluted
by 3.56 per cent to 35.21 per cent.
In January 2020, the Company acquired 68.6 per cent of BWE and in February 2020, BWE was listed at Oslo Stock
Exchange. The Company resolved to distribute 37 741 000 shares in BWE (the ‘Dividend Shares’) to the eligible share-
holders. The total value of the Dividend Shares was USD 98.8 million. Following the completion of the Offering and the
Dividend Distribution, the Company’s share of the investment in BWE was reduced to 38.8 per cent. Considering a loss
of control, BWE is no longer a subsidiary from 17 February 2020.
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NOTE 13 Guarantees
The Company has issued parent guarantees as security for its subsidiaries’ bank debts, relating to the USD 672.5 million
Corporate facility, the Catcher USD 800 million facility and the Petróleo Nautipa USD 80 million facility, as listed in
Note 26 of the consolidated financial statements of BW Offshore Group.
NOTE 14 Intercompany receivables and payables
USD MILLION 2021
Intercompany receivables long-term . .
Intercompany receivables short-term . .
Intercompany payables long-term . .
Intercompany payables short-term . .
Intercompany loan agreements with subsidiaries are set up based on regular market rates, using 3-month LIBOR.
Outstanding balances at year end are unsecured.
In 2020, the Company recorded an impairment of USD 76.4 million on intercompany loan.
NOTE 15 Intangible assets
USD MILLION Software
Cost at 1 January 2021 .
Additions .
Carrying amount at 31 December 2021 .
Amortisation at 1 January 2021 (.)
Amortisation (.)
At 31 December 2021 (.)
Net book value at 31 December 2021 .
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Responsibility statement
We confirm that, to the best of our knowledge, the financial statements for the period 1 January to 31 December 2021 have been prepared in accordance with current applicable
accounting standards and give a true and fair view of the assets, liabilities, financial position and profit or loss of the Company and the Group taken as a whole. We also confirm
that the Board of Directors’ Report includes a true and fair review of the development and performance of the business and the position of the Company and the Group, together
with a description of the principal risks and uncertainties facing the Company and the Group.
Bermuda, 27 February 2022
Sign Sign Sign Sign Sign
Mr Andreas Sohmen-Pao Ms Rebekka Glasser Herlofsen Mr Maarten R Scholten Mr René Kofod-Olsen Mr Carl K. Arnet
Chairman Director Director Director Director
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Alternative Performance Measures (APMs)
The Group discloses alternative performance measures in addition to those required by IFRS, as we believe these provide
useful information to management, investors and security analysts regarding our historical financial performance.
EBIT
EBIT, as defined by the Group, means earnings before interest and tax.
EBITDA
EBITDA, as defined by the Group, means EBIT excluding depreciation and amortisation, impairment and disposal and
gain from sale of tangible fixed assets. EBITDA may differ from similarly titled measures from other companies.
USD MILLION 2021
Revenue . .
Operating expenses (.) (.)
Other expenses (.) (.)
Administrative expenses (.) (.)
Impairment loss on trade receivables (.) -
Total expenses (.) (.)
Operating profit before depreciation, amortisation, impairment and sale of assets (EBITDA) . .
Depreciation and amortisation (.) (.)
Impairment (.) (.)
Net gain/(loss) on sale of tangible fixed assets . -
Operating profit/(loss) (EBIT) . (.)
CAPITAL EXPENDITURES
Capital expenditures means investments in vessels, intangible assets and property and other equipment, including capi-
talised interest. Capital expenditure may differ from investment in operating fixed assets and intangible assets presented
in the Consolidated Statement of Cash Flows, as capital expenditure may also contain non-cash transactions.
USD MILLION 2021
Vessels and other property, plant and equipment . .
Tangible E&P assets - .
Intangible assets . .
Total capital expenditures . .
Change in working capital and asset retirement obligation (.) .
Investment in operating fixed asset and intangible assets . .
NET INTEREST-BEARING DEBT
Net interest-bearing debt is defined as short-term and long-term interest-bearing debt less cash and cash equivalents.
USD MILLION 2021
Cash and cash equivalents (.) (.)
Long-term interest-bearing debt . .
Short-term interest-bearing debt . .
Net interest-bearing debt . .
ORDER BACKLOG
Order backlog is defined as the aggregated revenue backlog from firm contracts and probable options.
EQUITY RATIO
Equity ratio is an indicator of the relative proportion of equity used to finance the Group’s assets, defined as total equity
divided by total assets.
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KPMG AS
Sørkedalsveien 6
Postboks 7000 Majorstuen
0306 Oslo
Telephone
+47 45 40 40 63
Internet
www.kpmg.no
Enterprise
935 174 627 MVA
To the General Meeting of BW Offshore Limited
Independent Auditor’s Report
Report on the Audit of the Financial Statements
Opinion
We have audited the financial statements of BW Offshore Limited, which comprise:
• The consolidated financial statements of BW Offshore and its subsidiaries (“the Group”),
which comprise the consolidated statement of financial position as at 31 December 2021, the
consolidated statement of income, consolidated statement of comprehensive income,
consolidated statement of changes in equity and consolidated statement of cash flows for the
year then ended, and notes to the financial statements, including a summary of significant
accounting policies.
• The financial statements of the parent company BW Offshore (“the Company”), which
comprise the statement of financial position as at 31 December 2021, the statement of
income, statement of comprehensive income, statement of changes in shareholders’ 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 accompanying consolidated 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 EU, and;
• the accompanying 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 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 have been provided.
We have been the auditor of the Company for 4 years from the election by the general meeting of the
shareholders on 28 May 2018 for the accounting year 2018.
Independent Auditor's Report - BW Offshore Limited
2
Key Audit Matters
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.
Valuation of FPSO fleet
Reference is made to Note 15 Property, plant & equipment in the Consolidated financial statements.
The Key Audit Matter
How the matter was addressed in our audit
The Group's FPSO fleet represents a significant
portion of total assets. The Group regularly
reviews whether there are any impairment
indicators and tests the individual assets for
impairment (reversal) if an indicator is identified.
In order to assess whether an impairment
indicator exists, management applies substantial
judgment related to the likelihood that option
periods in the contract are exercised and the
likelihood of redeployment of the vessel to new
contracts beyond the current contract period.
This uncertainty is mainly applicable to those
vessels that are nearing the end of the fixed
contract period and those that are currently not
on contract.
For those assets where management identified
an impairment (reversal) indicator management
determined the recoverability of these assets
using valuation models which includes
management's estimates of the future cash
flows that these assets are expected to produce.
The carrying value of these assets are
particularly sensitive to management's
assumptions made around utilisation of the
vessels beyond the current contract period.
During 2021, impairment charges were
recognised for BW Athena (USD 2.0 million),
Sendje Berge (USD 15.7 million), Espoir Ivoirien
(USD 21.4 million), Petróleo Nautipa (USD 19.9
million), Joko Tole (USD 23.8 million), Berge
Helene (USD 4.2 million), and Umuroa (USD 7.1
million). A reversal of impairment was
recognised for BW Citade de São Vicente (USD
4.2 million).
We assessed whether all material assets
requiring impairment testing had been identified
by management. For this purpose we have
assessed key input factors in the impairment
(reversal) trigger assessment, including
remaining contract period and field lifetime
expectancy.
For those assets where management identified
an impairment (reversal) trigger, we evaluated
the impairment calculations performed, including
the assumptions applied.
We assessed the estimates of future cash flows
and challenged whether these were appropriate
considering:
• historical performance and budgets;
• remaining contract period and status of
contract renegotiations;
• anticipated or executed sale agreements; and
• previous estimates.
We also assessed by reference to market data
the inputs to and calculation of the discount rate
used by management. The key inputs included
the risk-free rate, market risk premium and
industry financing structures (gearing and cost of
debt and equity). In testing these assumptions
we made use of KPMG valuation experts.
We assessed the mathematical accuracy of the
valuation models used to calculate the value in
use.
We assessed the adequacy of disclosure related
to impairments in Note 15 Property, plant &
equipment in the Consolidated financial
statements.
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3
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
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
The Board of Directors and the Chief Executive Officer (“Management”) are responsible for the
preparation of financial statements that give a true and fair view 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 ability
to continue as a going concern, disclosing, as applicable, matters related to going concern and using
the going concern basis of accounting unless management either intends to liquidate the Company 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 skepticism 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.
Independent Auditor's Report - BW Offshore Limited
4
• obtain an understanding of internal control relevant to the audit in order to design audit
procedures that are appropriate in the circumstances, but not for the purpose of expressing an
opinion on the effectiveness of the Company’s internal control.
• evaluate the appropriateness of accounting policies used and the reasonableness of
accounting estimates and related disclosures made by 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’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 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 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 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 “2138008LFKH8V2EOA915-2021-12-31-en.zip” 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.
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5
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
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, 27 February 2022
KPMG AS
Sign.
Dave Vijfvinkel
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BW Offshore 2021 Annual ReportBW Offshore 2021 Annual Report
Addresses
BW OFFSHORE LIMITED
BW OFFSHORE SINGAPORE PTE LTD
30 Pasir Panjang Road
#14-31/32 & #15-32 Mapletree
Business City
Singapore 117440
Tel: +65 6632 7888
BW OFFSHORE NORWAY AS
Drammensveien 151
P.O. Box 33 Skøyen
NO-0212 Oslo
Norway
Tel: +47 2313 0000
BW OFFSHORE DO BRASIL LTDA
Rua Lauro Muller 116 Sala 703 Torre
do Rio Sul - Botafogo
Rio de Janeiro
22290-160
Brazil
Tel.: +55 21 2244 8350
BW OFFSHORE MANAGEMENT USA INC
2925 Briar Park, Suite 1295
Houston, Texas 77042
USA
Tel.: +1 713 781 0670
GLOBAL PRESENCE
Bermuda: Hamilton
Singapore
Norway: Oslo, Arendal
Brazil: Rio de Janeiro
USA: Houston, New Orleans
Mexico: Ciudad del Carmen
India: Mumbai
Nigeria: Lagos
Republic of Côte d’Ivoire: Abidjan
Gabon: Port Gentil
Indonesia: Jakarta
United Kingdom: Aberdeen
Netherlands: Hoofddorp
France: Paris
UAE: Dubai
contact@bwoffshore.com
www.bwoffshore.com
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Global Reporting Initiative (GRI) Content Index 2021
General Disclosures
Disclosure Number Disclosure Title Disclosure Sector Specific Reference #
The organisation and its reporting practises
GRI 2-01 Organisational details
BW Offshore Limited
Organisational details are described in 2021 Annual Report, page 73, Note 1, and page 6.
GRI 2-02
Entities included in the organisation’s
sustainability reporting
A full list of subsidiaries and joint ventures is included in the 2021 Annual Report, page 113 (Note 22). BW Offshore
does not include Sustainability Reporting for BW Ideol.
GRI 2-03
Reporting period, frequency and
contact point
BW Offshore reports annually, and financial report and sustainability report is done for full year 2021, published
28 February 2022.
Contact person for BW Offshore’s Annual Report and Sustainability Report is Una Holmen, Senior Manager
Sustainability & Communications, una.holmen@bwoffshore.com
GRI 2-04 Restatements of information Not applicable
GRI 2-05 External assurance
BW Offshore does not have a policy in place for external assurance practises. BW Offshore's Sustainability Report is
assured internally by the Board of Directors.
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Disclosure Number Disclosure Title Disclosure Sector Specific Reference #
Activities and workers
GRI 2-06
Activities, value chain and other
business relationships
BW Offshore is a provider in the Oil & Gas sector, and the Company’s clients are primarily international E&P companies
and national oil companies. Other relevant business relationships are local state security forces in countries of operation.
The Company's value chain is described in the 2021 Annual Report page 29, and on the Company's website:
https://www.bwoffshore.com/about-us/
https://www.bwoffshore.com/working-with-us/vendor-information/
No major changes in sector or value chain occured in the reporting period for the 2021 Annual Report and Sustainability
Report.
GRI 2-07 Employees
Note to tables:
– The personnel statistics are based on the year end headcount from December 2021.
– ‘Other’ region for offshore personnel overview includes employees not bound to one specific FPSO or country.
– The onshore headcount has gone up from 2020 with ~6 per cent due to extended project work for Barossa.
The offshore headcount has gone down by ~10 per cent due to end of projects in Brazil and New Zealand.
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ONSHORE
GRI 2-07 continued
Gender Africa
Americas
Europe APAC
Grand
Tota l
Female
Male
Grand Total
Gender/Employment category Africa
Americas
Europe APAC
Grand
Tota l
Permanent Onshore Personnel
Female
Male
Direct Hire Contract Onshore Personnel
Female
Male
3
rd
Party Consultant Onshore Personnel
Female
Male
Resource Onshore Personnel
Female
Male
Consultant Onshore no hours
Female
Male
Grand Total
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OFFSHORE
GRI 2-07 continued
Gender Africa
Americas
Europe APAC Other
Grand
Tota l
Female
Male
Grand Total
Gender/Employment Category Africa
Americas
Europe APAC Other
Grand
Tota l
Permanent Expat Offshore Personnel
Male
Direct Hire Contract Expat Offshore Personnel
Male
3
rd
Party Consultant Expat Offshore Personnel
Female
Male
Permanent National Offshore Personnel
Female
Male
Direct Hire Contract National Offshore Personnel
Male
3
rd
Party Consultant National Offshore Personnel
Female
Male
Grand Total
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GRI 2-08 Workers who are not employees
Tables included in disclosure 2-07 are also applicable to disclosure 2-08.
Note to tables:
The most common type of non-permanent personnel are contract and consultant staff hired in for a time specific
period. Contract personnel have direct contracts with the Company, while consultants are employes via 3
rd
party agree-
ments.
Non-permanent personnel onshore are typically hired for the following roles:
1. Project positions, technical and administrative role to cover for peak capacity needs during temporary project periods.
2. Specialist advisory roles to cover for competencies that the Company does not have inhouse.
3. Other consultancy contracts signed with specialists and advisors as frame agreements, where work scope and
support are called off when and if needed.
There has been significant increase of the number of non-permanent personnel for onshore roles since end of 2020. This
is due to increased capacity needs for project execution and delivery work for a period of three years in relation to the
Barossa project.
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Disclosure Number Disclosure Title Disclosure Sector Specific Reference #
Governance
GRI 2-09 Governance structure and composition
BW Offshore governance structure is described in the 2021 Annual Report, page 53. All members of the board are
non-executive, and information about composition of the highest governance body and its committees is covered on
page 23,and on the corporate website:
https://www.bwoffshore.com/about-us/leadership/
GRI 2-10
Nomination and selection of the
highest governance body
Nomination and selection of BW Offshore’s Board of Directors is available on the Company’s website:
https://www.bwoffshore.com/about-us/leadership, and criteria is described in the 2021 Annual Report, page 22.
GRI 2-11 Chair of the highest governance body The Chairman of BW Offshore’s Board of Directors is not a senior executive in the Company.
GRI 2-12
Role of the highest governance body
in overseeing the management of
impacts
Information about the role of the highest governance body and its committees is covered in the 2021 Annual Report,
page 19 and 21, and on the Company’s website:
https://www.bwoffshore.com/about-us/leadership/
The Board of Directors performs annual reviews of BW Offshore’s strategic planning and impacts through the
Sustainability Report process. This is described in the 2021 Annual Report, page 32.
GRI 2-13
Delegation of responsibility for
managing impacts
Information about BW Offshore ESG Committee composition and responsibilities is included in the 2021 Annual
Report, page 32. The Company reports on impacts on economy, environment and people quarterly, in relation to Board
meetings, and the Board approves the annual sustainability report See the 2021 Annual Report, page 32.
GRI 2-14
Role of the highest governance body in
sustainability reporting
Information about BW Offshore ESG Committee composition and responsibilites is included in the 2021 Annual Report,
page 32. The Company reports on impacts on economy, environment and people quarterly, in relation to Board meet-
ings, and the Board approves the annual sustainability report See the 2021 Annual Report, page 32.
GRI 2-15 Conflicts of interest
BW Offshore's processes to manage conflicts of interese is described in the 2021 Annual Report, page 55, and page 22.
GRI 2-16 Communication of critical concerns
Critical concerts are reported to the Board of Directors on a quarterly basis. In 2021, 19 registered concerns related to
bribery or corruption were reported to the Board of Directors. 16 concerns were subject to further investigation, none of
which revealed any confirmed cases of corruption.
GRI 2-17
Collective knowledge of the highest
governance body
The members of the Board of Directors have substantial knowledge in areas related to sustainable development through
extensive experience from a variety of fields within the industry. Skills and knowledge are maintained through positions
held in various boards and committees, and through attending relevant events and forums.
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Disclosure Number Disclosure Title Disclosure Sector Specific Reference #
GRI 2-18
Evaluation of the performance of
thehighest governance body
An annual questionnaire is issued by the Chairman to the Board of Directors for self-review. Results are shared with
Nomination Committee who identifies any potential competence gaps. An annual evaluation of the Board of Directors is
performed by the Chairman and Nomination Committee (independent stakeholders). In 2021, no actions were taken in
response to evaluations.
GRI 2-19 Remuneration policies
BW Offshore’s Guidelines on Executive Remuneration and its Compensation Committee Guidelines are available on the
Company’s website:
https://www.bwoffshore.com/ir/corporate-governance/
https://www.bwoffshore.com/about-us/leadership/
GRI 2-20 Process to determine remuneration
BW Offshore’s process for designing its remuneration policies is described in its Guidelines on Executive Remuneration
and its Compensation Committee Guidelines, available on the Company’s website; and in the 2021 Annual Report,
page 24.
https://www.bwoffshore.com/ir/corporate-governance/
https://www.bwoffshore.com/about-us/leadership/
As voted during Annual General Meeting, 14 May 2021, Directors’ Fees were approved with 111 280 284 votes for, nil
against, and 2 310 000 abstain.
GRI 2-21 Annual total compensation ratio
The ratio of the annual total compensation for the BW Offshore’s highest-paid individual to the median annual total
compensation for all employees is 9.2:1. Numbers are based on all onshore permanent and direct contract employees.
No ratio for salary increase is available, as the BW Offshore management team agreed on a salary freeze and did not
adjust their salaries in the annual salary review.
In 2021, the salaries of the BW Offshore Management team were not increased. As there was no adjustment, a ratio is
not available.
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Disclosure Number Disclosure Title Disclosure Sector Specific Reference #
Strategy, policies and practices
GRI 2-22
Statement on sustainable development
strategy
For statement on BW Offshore's sustainable development strategy, see 2021 Annual Report, page 3 and 13, as well as
in general throughout the 2021 Annual Report.
GRI 2-23 Policy commitments
BW Offshore’s policy statements are described in the ‘Code of Ethics and Business Conduct’ and ‘Supplier Code of
Ethics and Business Conduct’, and its commitment to human rights is described in the ‘Supplier Ethical Employment
Practice Guidelines’, available from the Company’s website.
https://www.bwoffshore.com/sustainability/governance-and-strategic-commitment/
https://www.bwoffshore.com/sustainability/governance-and-strategic-commitment/supplier-code-of-ethics/
Modern Slavery Statement: https://www.bwoffshore.com/sustainability/governance-and-strategic-commitment/
The Code of Ethics, Supplier Code of Ethics, Supplier Ethical Employment Practice Guidelines are all approved by the
CEO, while the Modern Slavery Statement is approved by Chairman of the Board of Directors.
The policy commitments included in this section are applicable to all employees, business partners, suppliers, agents or
other third parties when conducting businesses with BW Offshore, and mandatory e-learning is in place for all employ-
ees and workers. Policy commitments are included in T&Cs for suppliers, and available on the Company's website.
https://www.bwoffshore.com/sustainability/governance-and-strategic-commitment/supplier-code-of-ethics/
GRI 2-24 Embedding policy commitments
BW Offshore’s policy commitments are included in the Code of Ethics and Business Conduct, and the subsequent
Code of Ethics Guidelines. Policy commitments are allocated to relevant stakeholders in the following functions: Process
and Document Owner / Implementation; and Verification. In the organisation’s Management System, it is stated which
departments/functions each policy is applicable for.
BW Offshore's Management System is structured into four levels, where level one is policies applicable for all employ-
ees. The subsequent levels are tied in to the level above ensuring embedment of policies throughout the various
processes in the organisation.
Processes for implementation of policy commitments are described in the 2021 Annual Report, page 56, and manda-
tory e-learning courses are routinely rolled out to all employees to ensure ownership and commitment throughout the
organisation.
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GRI 2-25
Processes to remediate negative
impacts
Commitment to remediate negative impacts is described in the 2021 Annual Report, page 56.
The BW Offshore Speak Up Channel is available to all employees and suppliers, managed by a third-party provider to
ensure anonymity. In addition, Safety Observation cards are available on all units, in all offices, and on the Corporate
website for any party to report a grievance or observation: https://www.bwoffshore.com/contact/observation-cards/
See 2021 Annual Report, page 56 for further details.
In 2021, Observation Card were made available on the Company's website. In this process, stakeholders from the
organisation were involved in the design and review of the selected solution.
In addition, all offshore employees have received personal email addresses in 2021, enabling access to the Speak Up
Channel, available in a wide variety of languages. The Company commits that no retaliation will be taken against any
personnel for raising any concern, question, grievance or complaint in good faith. Results of investigations are reported to
the Board of Directors at least on an annual basis.
GRI 2-26
Mechanisms for seeking advice
andraising concerns
Information about BW Offshore's Compliance Programme is made available in the Company intranet and through
infographics in offices and on offshore units for employees and visitors. For other parties, information is available on the
Company's website, through the Observation Cards, or by using the compliance email available on the website: https://
www.bwoffshore.com/sustainability/governance-and-strategic-commitment/
GRI 2-27 Compliance with laws and regulations
The Company has not been involved in any significant instances of non-compliance that resulted in administrative or
judicial sanctions or fines during 2021.
GRI 2-28 Membership associations
Maritime Anti-Corruption Network - MACN
Norwegian Energy Partners - NORWEP
Norwegian Business Association (Singapore) - NBAS
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Stakeholder engagement
GRI 2-29 Approach to stakeholder engagement
BW Offshore's approach to stakeholder engagement is described in the 2021 Annual Report, page 32.
GRI 2-30 Collective bargaining agreements
Collective bargaining agreements, and rights and obligations are described in the 2021 Annual Report, page 51.
Material topics
GRI 3-1 Process to determine material topics
BW Offshore continually engages with stakeholders such as customers, partners, regulators, suppliers, contractors,
investors and lenders, as well as with internal stakeholders such as employees and contracted staff. The process to
determine the Company’s material topics is described in the 2021 Annual Report, page 32, and generally throughout the
report.
GRI 3-2 List of material topics
Based on the 2020 materiality analysis, BW Offshore has defined the following as the most important factors for long-
term value creation:
•
Safe and secure operations
•
Environmentally conscious operations
•
A strong governance framework
•
Being a non-discriminating and fair employer
The Company did not make changes to its material topics in 2021.
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Safe and secure operations
Disclosure Number Disclosure Title Disclosure Sector Specific Reference #
Material Topic: Safe and secure operations
GRI 03-3 Management of material topics
Management of procedures to ensure safe and secure operations is described in the 2021 Annual Report, page 35, and
throughout the chapter on Safe and secure operations (Zero Harm). The Company has selected the following Topic
Standards to report specific information on the Material Topic:
GRI 403 Occupational Health and Safety
GRI 404 Training and Education
GRI Occupational Health and Safety
GRI 403-01
Occupational health and safety
management system
Information on how BW Offshore manages processes relates to occupational health and safety is described in the 2021
Annual Report, page 35.
11.9.2
GRI 403-02
Hazard identification, risk assessment,
and incident investigation
Contractors working at BW Offshore sites operate under the Company’s control of work processes, and BW Offshore
maintains oversight to manage risks. This is described in the 2021 Annual Report, page 35.
BW Offshore has a ’Stop Work’ policy in place, giving all employees the explicit authority to stop any actions they think
are unsafe and/or they are unsure about. Read more in the 2021 Annual Report, page 39.
Improvements are made to the Management System as a result of identified hazards, incident investigation findings, the
annual management review and worker input captured in the Company’s Management System. Read more in the 2021
Annual Report, page 36 and 37.
11.9.3
GRI 403-03 Occupational health services
BW Offshore’s occupational health services are described in the 2021 Annual Report, page 51. 11.9.4
GRI 403-04
Worker participation, consultation, and
communication on occupational health
and safety
Stakeholder review and approval of the BW Offshore Management System is described in the 2021 Annual Report,
page 35.
Local Work Environment Committees or their equivalent are in place to ensure that a secure, safe and healthy
working environment is implemented, discussed between management and employee representatives and maintained
appropriately., see 2021 Annual Report, page 51.
11.9.5
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GRI 403-05
Worker training on occupational health
and safety
HSE induction training is mandatory for all personnel and completion is recorded in the Company’s e-learning portal, as
described in the 2021 Annual Report, page 49.
11.9.6
GRI 403-06 Promotion of worker health
All personnel have access to non-occupational healthcare services. The services are described in the 2021 Annual
Report, page 39.
11.9.7
GRI 403-07
Prevention and mitigation of
occupational health and safety impacts
directly linked by business relationships
BW Offshore prevents or mitigates significant negative occupational health and safety impacts that are directly linked
to its operations, products or services by its business relationships. The Company’s approach is described in the 2021
Annual Report, page 56, and in the Supplier Code of Ethics and Business Conduct, available on the Company’s website:
https://www.bwoffshore.com/working-with-us/vendor-information/
11.9.8
GRI 403-08
Workers covered by an occupational
health and safety management system
BW Offshore has implemented an occupational health and safety management system based on legal requirements and
recognised standards. The management system applies to all workers, contractors and visitors who are present at any
BW Offshore controlled workplace. Read more in the 2021 Annual Report, page 35, and throughout the Safe and secure
operations section of the report.
11.9.9
GRI 403-09 Work-related injuries
BW Offshore’s complete HSE statistics are described in the ESG KPI table in the 2021 Annual Report, page 59. Rates
are calculated as per IOGP standard, with 1 000 000 hrs, and no workers are excluded from the statistics.
The main types of work-related injuries are asphyxiation, body and hand trauma, foreign body in eye and dehydration.
Work related hazards are managed through the control of work systems which requires risk assessment, control of
hazards and authorisation to work for all work scope undertaken offshore.
11.9.10
GRI 403-10 Work-related ill health
In 2021, BW Offshore had zero numbers of cases recorded as a result of ill health. Statistics include all workers at BW
Offshore premises, onshore and offshore.
An occupational health risk assessment process is in place to identify and manage occupational health hazards during
the operations phase, while at project phase health hazards are typically identified through the hazard identification
studies at the engineering design.
Health hazards are routinely managed through the health risk assessment process and management system processes
for management of noise, asbestos, naturally occurring radioactive material (NORM), hand/arm vibration syndrome,
potable water management, catering etc.
11.9.11
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GRI Training and Education
GRI 404-01
Average hours of training per year per
employee
A majority of Internal training courses are done in BW Offshore’s e-learning portal, described in the 2021 Annual Report,
page 49. The Company does not track training per gender.
GRI 404-03
Percentage of employees receiving
regular performance and career
development reviews
Performance Dialogues 2020 Completion
Employee Category Onshore Offshore
Tota l
Employee base/eligible for Performance Dialogue
Employees who have completed Performance Dialogues
.% .% .%
This includes employees on permanent rotation (both permanent and fixed term contracts on a permanent rotation
onboard the units).
The Company does not track performance review per gender.
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Environmentally conscious operations
Disclosure Number Disclosure Title Disclosure Sector Specific Reference #
Material Topic: Safe and secure operations
GRI 03-3 Management of material topics
Management of procedures to ensure environmentally conscious operations is described in the 2021 Annual Report,
page 40, and throughout the chapter. The Company has selected the following Topic Standard to report specific infor-
mation on the Material Topic:
GRI 305 Emissions
GRI Emissions
GRI 305-01 Direct (Scope 1) GHG emissions
BW Offshore’s complete environmental data is described in the ESG KPI table in the 2021 Annual Report, page 59–61.
The source of the emission factors and the global warming potential (GWP) rates used for Scope 1 emissions are the
Oil and Gas UK Environmental Emissions Monitoring System, the Climate Registry and IPCC 5
th
assessment report.
The consolidation approach used for emissions is operational control, and the methodologies/assumption used are
based on the Oil and Gas UK Environmental Emissions Monitoring System and American Petroleum Institute 2009
Compendium of Greenhouse Gas Emissions methodologies for the Oil and Natural Gas Industry.
11.1.5
GRI 305-02
Energy indirect (Scope 2)
GHG emissions
BW Offshore’s complete environmental data is described in the ESG KPI table in the 2021 Annual Report, page 59–61.
The source of the emission factors and the global warming potential (GWP) rates used for Scope 2 emissions are the
International Energy Agency 2020 Emissions Factors and IPCC 5
th
Assessment Report for GWP rates.
The consolidation approach used for emissions is operational control, and the methodologies/assumption used are
based on the Greenhouse Gas Protocol Scope 2 Guidance.
11.1.6
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GRI 305-03
Other indirect (Scope 3)
GHG emissions
BW Offshore’s complete environmental data is described in the ESG KPI table in the 2021 Annual Report, page 59–61.
The source of the emission factors and the global warming potential (GWP) rates used for Scope 3 emissions are the
Oil and Gas UK Environmental Emissions Monitoring System, the Climate Registry and IPCC 5
th
assessment report.
The consolidation approach used for emissions is operational control, and the methodologies/assumption used are
based on the Oil and Gas UK Environmental Emissions Monitoring System and American Petroleum Institute 2009
Compendium of Greenhouse Gas Emissions methodologies for the Oil and Natural Gas Industry.
11.1.7
GRI 305-04 GHG emissions intensity The metric chosen by BW Offshore to calculate the GHG emissions ratio is annual revenue (USD). 11.1.8
GRI 305-05 Reduction of GHG emissions
When including CO
2
, CH
4
, N
2
O and HFCs in the calculation, BW Offshore has reduced Scope 1 freon gas usage by
4 535 metric tonnes (27 per cent) from 2020 usage rates. Scope 3 air travel emissions was reduced by 114 metric
tonnes (2 per cent) from 2020 (9 034 metric tonnes / 59 per cent from 2019 rates).
The baseline GHG emissions for each asset in the operating fleet is formulated as a 5 per cent margin on top of the
12-month GHG emissions rolling average. The Company’s assets are operated under contracts with oil field operators
and therefore BW Offshore has minimal control over the GHG emissions produced by the asset, however, the Company
monitors emissions on a monthly basis, and seeks to minimise GHG emissions rates to within a reasonable optimal
operating range based on how the asset is instructed to operate contractually.
11.2.3
GRI 305-07
Nitrogen oxides (NOX), sulfur oxides
(SOX), and other significant air
emissions
BW Offshore reports on emissions of NOX, SOX and VOC in the 2021 Annual Report, page 60. The Company uses
the Oil and Gas UK Environmental Emissions Monitoring System, and bases its reporting on methodologies from the
American Petroleum Institute 2009 Compendium of Greenhouse Gas Emissions methodologies for the Oil and Natural
Gas Industry.
11.3.2
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Being a non-discriminating and fair employer
Disclosure Number Disclosure Title Disclosure Sector Specific Reference #
Material Topic: Being a non-discriminating and fair employer
GRI 03-3 Management of material topics
Management of procedures to ensure being a non-discriminating and fair employer is described in the 2021 Annual
Report, page 47, and throughout the chapter. The Company has selected the following Topic Standards to report spe-
cific information on the Material Topic:
GRI 401 Employment
GRI 405 Diversity and Equal Opportunity
GRI Employment
GRI 401-01
New employee hires and employee
turnover
Employee hires and turnover is monitored for onshore permanent personnel.
Note: There were no joiners in the Americas in 2021.
JOINERS
Gender/Region Africa Europe APAC To t a l
Female % % % %
Male % % % %
Gender / Age Number Percentage
Female %
<30 %
30-50 %
50< %
Male %
<30 %
30-50 %
50< %
Grand Total %
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TURNOVER
GRI 401-01 continued
Gender/Region Africa Americas Europe APAC Tota l
Female % % % % %
Male % % % % %
Gender / Age Number Percentage
Female %
<30 %
30-50 %
50< %
Male %
<30 %
30-50 %
50< %
Grand Total %
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GRI Diversity and Equal Opportunity
GRI 405-01
Diversity of governance bodies and
employees
BW Offshore’s Board and Management composition is described in the 2021 Annual Report, page 17 and 18, and on the
Company’s website: https://www.bwoffshore.com/about-us/leadership/
On 31 December 2021, 14 per cent of the total workforce was female and 86 per cent male.
11.11.4
Gender / Age Onshore Offshore
Female % %
<30 % %
30-50 % %
50< % %
Male % %
<30 % %
30-50 % %
50< % %
GRI 405-02
Ratio of basic salary and remuneration
of women to men
BW Offshore takes a holistic view of various factors to ensure that total employee compensation is fair, as described in
the 2021 Annual Report on page 50.The Company monitors ratio of basic salary and remuneration of women to men for
permanent employees by significant location of operation. This is done for same jobs onshore where there is statistical
representation in the location. The minor representation of women among offshore employees does not permit such ratio
comparison for offshore employees.
The ratio is around 1:1 for a majority of the same jobs. A few jobs are identified where the average salary levels are lower
for women. The opposite ratio difference is also identified, where the average salary level for men is found to be lower
than the average salary level for women.
11.11.5
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A strong governance framework
Disclosure Number Disclosure Title Disclosure Sector Specific Reference #
Material Topic: A strong governance framework
GRI 03-3 Management of material topics
Management of procedures to ensure a strong governance framework is described in the 2021 Annual Report, page 53,
and throughout the chapter. The Company has selected the following Topic Standards to report specific information on
the Material Topic:
GRI 205 Anti-corruption
GRI 409 Forced or Compulsory Labour
GRI 414 Supplier Social Assessment
GRI Anti-corruption
GRI 205-01
Operations assessed for risks related
to corruption
a. Nine offshore units (100 per cent of units in operation) and fifteen (100 per cent) offices. 11.20.2
GRI 205-02
Communication and training about
anti-corruption policies and procedures
BW Offshore’s Code of Ethics and Business Conduct (The Code) covers anti-corruption, and is applicable to 100 per
cent of the company’s governance body members. The Code is available on the Company’s website:
https://www.bwoffshore.com/sustainability/governance-and-strategic-commitment/
The Company’s Compliance Awareness Programme is described in the 2021 Annual Report, page 55.
The Code is included in mandatory E-learning for all employees, and is communicated to 100 per cent of personnel. The
Supplier Code of Ethics and Business conduct is communicated to 100 per cent of vendors.
An anti-corruption awareness session was conducted by BW Offshore’s Corporate Integrity function in December
2020 for the members of the Board. Hence, no specific training was provided in 2021.
11.20.3
GRI 205-03
Confirmed incidents of corruption and
actions taken
In 2021, BW Offshore did not record any confirmed cases of corruption, nor were there any cases where employees
were dismissed or disciplined as a result of corruption. The Company’s work to eliminate any unethical and non-com-
pliance business practices - including corruption - is described in the 2021 Annual Report, page 55, and throughout the
Governance section of the report.
11.20.4
GRI Forced or Compulsory Labour
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GRI 409-01
Operations and suppliers at
significant risk for incidents of
forced or compulsory labour
BW Offshore contributes to the elimination of all forms of forced or compulsory labour. The Company’s commitment is
described in the annual Modern Slavery Statement, available on the Company’s website:
https://www.bwoffshore.com/sustainability/governance-and-strategic-commitment/
11.12.2
GRI Supplier Social Assessment
GRI 414-01
New suppliers that were screened
using social criteria
In 2021, 100 per cent of new vendors were screened using social criteria as part of BW Offshore’s compliance
assessment of business partners. Details are described in the 2021 Annual report, page 57.
11.12.3
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