2021
ANNUAL
REPORT
2021 in brief
MHWirth merged with Baker Hughes’ Subsea Drilling
Systems business to create HMH, a full- service offshore
drilling company that provides customers with a broad
portfolio of products and services
As part of the closing of the HMH transaction, Akastor
received a net cash consideration of NOK 644 million,
reducing net debt and strengthening the balance sheet
Simultaneously with the completion of the HMH
transaction, Akastor completed a refinancing of its
existing corporate credit facilities
Contracts with a total value of around USD 160 million
secured within HMH regarding delivery of drilling
equipment to Guangzhou Marine Geological Survey
DDW Offshore entered into bareboat and forward sale
agreements with OceanPact for two vessels for a period
of 26 months
Net capital employed per year end 2021
NOK million
NOK 5.1bn
Net Capital Employed
(2020: 5.0bn)
NOK 984 m
Net Interest-bearing Debt
(2020: 1 357m)
-25%Total Shareholder return
(2020: -29%)
57%Equity share
(2020: 40%)
Book value per share (NOK)
9.7
2.8
2.9
2.3
621
807
759
2 650
6000
5000
4000
3000
2000
1000
0
1.7
471
0.8
217
-1.6
(440)
18.6
-3.6
15.0
(984)
5 084
4 100
DRU
contracts
Other
NCE
NIBD
Equity (excl.
derivative instruments)
3
TABLE OF CONTENTS
01. BOARD OF DIRECTORS' REPORT
02. DECLARATION BY THE BOARD
OF DIRECTORS AND CEO
03. CORPORATE GOVERNANCE STATEMENT
– AKASTOR ASA
04. FINANCIALS AND NOTES
a. Akastor Group
b. Akastor ASA
05. AUDITOR'S REPORT
06. ALTERNATIVE PERFORMANCE
MEASURES
07. BOARD OF DIRECTORS
08. MANAGEMENT
09. COMPANY INFORMATION
4
13
14
23
23
80
92
97
99
102
103
Annual Report 2021
4
01. BOARD OF DIRECTORS' REPORT
Akastor ASA (hereinafter referred to as Akastor) is an invest
ment company based in Norway with a portfolio of companies in
the oilfield services sector, with a flexible mandate for active
ownership and longterm value creation. The shares of Akastor
are traded on the Oslo Stock Exchange under the ticker AKAST.
The Akastor portfolio of companies had a total net capital
employed of NOK 5.1 billion at the end of 2021.
Highlights 2021
2021 continued to be affected by the COVID-19 virus, and the
following turmoil in the oil and gas markets. Akastor has thus
remained
focused on mitigating operational effects and
minimizing negative financial consequences for its portfolio
companies while preserving liquidity and assuring financial
flexibility. However, 2021 also brought positive market
development through higher covid vaccination rates and fewer
restrictions as well as increasing crude oil price through the year
followed by higher offshore upstream capex and rig activity
compared to 2020.
In March, Baker Hughes and Akastor announced an agreement
to create a joint venture company bringing together Baker
Hughes’ Subsea Drilling Systems (SDS) business with Akastor’s
wholly owned subsidiary, MHWirth. The new joint venture
company, later branded HMH, delivers a global full-service
offshore drilling equipment offering that provides customers with
a broad portfolio of products and services. The broad scope of
services gives the company a solid foundation for future growth,
including the capability to contribute to the oil & gas industry’s
transition towards more energy-efficient solutions. Also, the
transaction is viewed as an important milestone for Akastor to
prepare for a future exit, considerably increasing size of the
holding and thus increasing the potential for a separate listing.
As a result of the transaction, MHWirth was presented as
discontinued operations as from the first quarter.
Later in March, Akastor announced that its wholly owned
subsidiary, DDW Offshore, had entered into bareboat charter
agreements with OceanPact Servicos Maritimos S.A., a
Brazilian subsea and logistic company, for the two AHTS
vessels Skandi Saigon and Skandi Pacific for a period of 26
months. As part of the agreements, forward sale of the vessels
has been agreed whereby OceanPact shall purchase the
vessels at the end of the charter period. The arrangement will
ensure revenue and predictability going forward.
In September, Akastor announced that the previously announced
award regarding a contract for delivery of a drilling equipment
package to Guangzhou Marine Geological Survey (GMGS) had
been signed. The contract had a total value of about USD
83 million.
In October, Akastor and Baker Hughes completed the merger
between MHWirth and SDS. The company, which is owned
50/50 by Baker Hughes and Akastor, was named HMH. As part
of the closing of the transaction, Akastor received a net cash
consideration of approximately USD 78 million. Simultaneously
with the completion of the transaction, Akastor completed a
refinancing of its existing corporate credit facilities. As a result of
the transaction, MHWirth was deconsolidated and a gain upon
divestment was recognized in the fourth quarter as part of net
profit from discontinued operations. As from closing, Akastor’s
50 percent ownership in HMH was initially recognized at fair
value and HMH is accounted for as a joint venture using the
equity method.
In December, AKOFS Offshore was awarded a three-year
contract with Petrobras for its vessel Skandi Santos. The vessel
will perform a broad scope of subsea services in Brazil. The
services will commence in the fourth quarter of 2022 and the
total contract value is about USD 107 million, of which USD 53
million was booked as order intake in AKOFS Offshore in the
quarter, while the remaining value will go through separate
contracts between the endclient and subsuppliers of AKOFS
Offshore.
Also in December, HMH was awarded the contract to deliver a
pressure control system to Guangzhou Marine Geological
Survey (GMGS). The system will be comprised of a blowout
preventer (BOP) stack, control system, as well as a riser
package, with a total contract value of approximately USD 77
million. This award followed the contract awarded by GMGS to
MHWirth in September for the delivery of a topside drilling
equipment package and was the first joint commercial project
win in HMH. The award can be viewed as a concrete example
of the revenue synergy potential going forward for the new
combined company.
Akastor’s total net capital employed increased from NOK 5.0
billion in 2020 to NOK 5.1 billion in 2021, driven by MHWirth
divestment and subsequent recognition of Akastor’s 50 percent
ownership in HMH. Net interestbearing debt for Akastor was
reduced from NOK 1.4 billion per year end 2020 to NOK 1.0
billion per 2021 driven by proceeds received in connection with
the HMH transaction. Based on this, total equity of Akastor
increased by NOK 0.5 billion through the year to NOK 4.1 billion
per year end 2021.
Company Overview
Aker Holding AS, wholly owned by Aker ASA, is the largest
shareholder of Akastor with a shareholding of 36.7 percent.
Akastor is primarily focused on the oilfield services sector. The
portfolio per 2021 covers several industrial holdings in this
sector, including:
Annual Report 2021 | Board of Directors' ReportBoard of Directors’ Report 5
HMH, which provides drilling systems, equipment and
aftermarket services. Ownership interest is 50 percent.
AKOFS Offshore, a subsea well installation and interven
tion services provider. Ownership interest is 50 percent.
AGR, which delivers well-, reservoir- and software
services to the offshore drilling industry. Economic
interest is 64 percent.
Cool Sorption, a supplier of vapour recovery units and
systems. Ownership interest is 100 percent.
Each abovementioned Akastor portfolio company is organized
as an independent business which is self-sufficient and with its
own dedicated management team fully responsible for all
aspects of its operational activities. All portfolio companies have
separate boards of directors, consisting of appointed Akastor
investment managers, including, for some companies, external
board members and employee representatives. This governance
model provides for strong management of operational activities
and a good foundation for close cooperation between Akastor,
the portfolio companies and their employees.
In addition to its portfolio of industrial holdings, Akastor has
several financial investments, including:
shareholders through active development of its portfolio
companies as stand-alone businesses, while maintaining the
flexibility to be opportunistic. Akastor works closely with each
portfolio company’s management
to make decisions on
operational activity, business development, acquisitions and
divestments to maximize the value of the company. Each
portfolio company develops and executes independent value
creation plans in close cooperation with the Akastor investment
team. As an owner, Akastor emphasizes understanding the
portfolio companies’ markets and challenges in depth, in order
to evaluate current valuation versus future potential.
The business models of the portfolio companies are decentra
lized with each entity being self-sufficient, but as part of the
Akastor portfolio, all companies share a common foundation
based on Akastor’s values, governing documents and
compliance structure.
Akastor seeks to maximize value by combining strategic,
operational and financial measures. Akastor’s strategy as an
investment company remains as before, targeting to generate
an acceptable return on
investments. New
investments may be made in the existing portfolio companies in
order to strengthen the companies and prepare for a future exit.
The ultimate goal is to return the capital to the shareholders of
Akastor upon divestments of assets, however ensuring that
Akastor has a solid capital structure.
its current
DDW Offshore, which owns and operates five offshore
vessels. Ownership interest is 100 percent.
Market Outlook
NES Fircroft, a technical and engineering staffing com
pany. Economic interest is approximately 15 percent.
Odfjell Drilling, preferred equity instrument with carrying
amount of USD 89.5 million plus a warrant structure of
up to 5.9 million shares.
DRU contracts, full economic interest in four drilling
equipment contracts with Jurong Shipyard. This posi
tion was carved out from MHWirth in connection with
the merger with Baker Hughes’ SDS business.
Awilco Drilling, ownership interest is 5.6 percent.
The Akastor corporate organization is based at Fornebu, just
outside of Oslo in Norway, with a team of 15 employees, working
closely with the boards and management of its portfolio
companies.
Akastor has a total of 431 employees (including hiredins) within
its consolidated subsidiaries at year end 2021.
Strategy
Akastor’s portfolio companies operate mainly in the oilfield
services industry. Over the last couple of years, this industry
has been heavily affected by the outbreak of the COVID19
virus which caused significant disruption to the global economy.
The oil and gas market was strongly affected by negative
demand development following lower global activity, adding
additional pressure on the global economy, with direct effects
on the investment level of oil companies and thereby effects
also for the oilfield services industry. These effects continued
into 2021, however with mitigation through increased vaccination
rate and loosening of restrictions. Towards the end of 2021, the
Omicron variant created additional uncertainty and increased
restriction in many regions. Thus, new variants and mutations
still make the market situation uncertain. Despite this, the oil
and gas markets saw a positive development in key macro
fundamentals through 2021, including crude oil prices, which in
turn should have a positive bearing on Akastor’s portfolio
companies. During the first months of 2022, the world has seen
increased geopolitical tension driven by the Russian invasion of
Ukraine. Despite Akastor’s portfolio companies having very
limited exposure towards the Russian or Ukrainian markets, the
situation could still have negative effects for Akastor through
increased volatility as well as implications on financial markets
and general industrial activity levels going forward.
Akastor is an investment company, employing an independent
approach for each portfolio company to optimize its development
potential. Akastor aims to create longterm value for its
Through 2021, the oil and gas markets have seen an increase
in important macro fundamentals such as global offshore
Annual Report 2021 | Board of Directors' Report 6
upstream capex spending and rig utilization, which in turn
should have a positive bearing on Akastor through increased
activity for the Akastor group of companies. As an example,
AGR with its primary exposure towards the Norwegian
continental shelf experienced an increasing level of activity in
2021, with revenues for the year around 14% higher than in
2020. Assuming these tail winds continue, Akastor management
remains optimistic that activity levels within the oilfield services
industry will increase going forward.
The low level of investments among oil companies seen over
the last couple of years continued to affect the capital equipment
segment of HMH through relatively low activity within both
single equipment and larger projects following low order intake
last year. However, HMH secured important orders within the
Project and Products segment in 2021, both within larger
projects as well as within single equipment, which serves as a
good sign regarding the competitive strength of the company
and caters for growth in activity in 2022 within this segment. The
Aftermarket Services segment of HMH, which accounted for 74
percent of revenues in 2021 (pro-forma, adjusted), around
same level as last year, is also affected through a lower number
of active units with HMH equipment than pre-COVID. However,
this segment has remained resilient through the market turmoil
with a lower decline in nominal revenues. Going forward, the
development of macro fundamentals through 2021, including
increased rig activity and offshore capex spending among oil
companies, should have positive longer-term bearings for all
segments within HMH assuming that development continues.
An important milestone for Akastor in 2021 was the combination
between MHWirth and SDS, which created HMH as a stronger
and more resilient unit with a broader scope of services and a
stronger installed base generating stable and increasing
aftermarket revenues. The new entity will also provide a more
solid foundation for future growth, including the capability to
participate in the oil & gas industry’s transition towards more
energy-efficient solutions, as well as deploying technologies
and service solutions to make the sector more competitive
through increased drilling efficiency.
the portfolio. Akastor management
In 2022, Akastor will continue to monitor the COVID-19 situ-
ation with a target of minimizing disruptions to operations
throug hout
remains
cautiously optimistic that the market situation will improve
through easing of restrictions and gradual reopening of the
society, which in turn should lead to increased global activity
and thus increased demand for products and services offered
by the Akastor group of companies. Still, there is a risk for
continued effects of the epidemic in 2022, for instance through
new mutations. Also, Akastor will closely follow the war in
Ukraine and target also here to mitigate any direct effects
following these circumstances, including securing compliance
with relevant economic sanctions. Despite
limited direct
exposure to the regions, Akastor could be affected through
more general market effects. The financial impact as a result of
both these situations remain uncertain as it is difficult to predict
the duration and the longer-term impact on financial markets
and industrial activity level. From an accounting perspective,
these factors could impact future assessments of recoverable
amounts of Akastor’s assets if the current volatility results in a
negative longterm market outlook.
Based on the current footprint of the portfolio, the oilfield
services industry will remain the primary market for Akastor
going forward. However, Akastor will through its role as an
active owner also focus on developing its offering within nonoil
markets and the renewable energy space to further diversify the
portfolio. Technology development remains a clear strategic
target for all portfolio companies and Akastor is targeting to
support the industry’s transition to more energy-efficient
operations for its clients through development of new solutions.
As an example, HMH is continuing its efforts to optimize and
reduce fuel consumption and carbon footprint for its clients
through enabling more efficient drilling operations while also
seeking opportunities within industries outside of oil and gas.
AGR is strongly focusing on developing its suite of software
solutions, enabling more efficient operations for oil companies
and are also positioning themselves within low carbon solutions
such as carbon capture, geothermal drilling and wind solutions.
Early 2022, AGR established Føn Energy Services, a joint
venture together with IKM to provide wind power project
management, operations and maintenance services to offshore
wind farms.
Group Financial Performance
Akastor presents its consolidated financial statements in
accordance with the International Financial Reporting Standards
(IFRS) as adopted by the European Union.
All amounts below refer to the consolidated financial statements
for the group, unless otherwise stated. Please note that following
the deconsolidation of MHWirth in 2021 as a result of the merger
with Baker Hughes’ SDS business, consolidated revenue and
operating profit in Akastor only include financial performance of
portfolio companies that constitute a minor part of Akastor’s
total net capital employed.
Income Statement
Revenue and other income for 2021 increased by 16 percent to
NOK 953 million. Operating profit before interest, tax, depreciation and
amortization (EBITDA) increased by NOK 71 million to break even.
Depreciation, amortization and impairment was NOK 82 million
in 2021, compared to NOK 61 million in the previous year.
Net financial expenses were NOK 152 million in 2021 compared
to NOK 387 million in the previous year. The net financial
expenses included Akastor’s share of net loss of NOK 346
million from the equity-accounted investees AKOFS Offshore
and HMH, dividend income of NOK 74 million from equity
investment and an unrealized gain of NOK 11 million in fair
value changes of financial investments.
Annual Report 2021 | Board of Directors' Report 7
The pre-tax loss for the year was NOK 235 million, compared to
a loss of NOK 519 million the previous year.
NOK 516 million, including net repayment of borrowings of NOK
405 million and payment of lease liabilities of NOK 112 million.
The income tax benefit for 2021 was NOK 20 million, compared
to a tax expense of NOK 18 million in 2020. The effective tax rate
is impacted by several items, such as impairment of deferred tax
assets, non-tax deductible items as well as mix of revenue
generated in various jurisdictions with different tax rates.
Net loss from continuing operations was NOK 215 million, while
net profit from discontinued operations was NOK 1 140 million.
The net profit from discontinued operations was mainly related
to operating losses in the discontinued operation MHWirth, as
well as gain from the divestment of MHWirth. The group had an
operating profit of NOK 925 million for the year.
The board of directors has resolved to propose to the annual
general meeting that no dividend is distributed for 2021.
Financial Position
Total assets of Akastor amounted to NOK 7.2 billion as of Dece
mber 31, 2021, compared with NOK 9.1 billion at year-end 2020.
The decrease is mainly related to reductions in noncurrent assets
of NOK 4.6 billion as a result of divestment of MHWirth, offset by
investment of NOK 2.7 billion in the new joint venture HMH.
Net debt (excluding lease liabilities) was NOK 1.3 billion at the
end of the period, while net interest-bearing debt (NIBD) was
NOK 1.0 billion. Net debt decreased through the year, primarily
explained by the cash release from MHWirth divestment in
October 2021.
Total equity amounted to NOK 4.1 billion at year-end 2021, of
which non-controlling interests were NOK 18 million. The equity
ratio was 57 percent as of December 31, 2021, compared to 40
percent in 2020.
Cash Flow
As of December 31, 2021, Akastor had cash of NOK 89 million,
compared to NOK 275 million in 2020. The net cash flow from
operating activities was negative NOK 96 million, compared to
operating cash flow of positive NOK 211 million in the previous
year. The net cash flow from operating activities comprises of
cash flow generated from operating activities of negative NOK 8
million as well as net payments of NOK 88 million for interest
costs and income tax.
Net cash flow from investing activities was positive NOK 431
million, compared to negative NOK 219 million in 2020. The
cash flow from investing activities included net proceeds from
sale of subsidiaries of NOK 591 million, related to proceeds
from the divestment of MHWirth as well as contingent
consideration payments related to divestments in previous
years. Capex investments were NOK 136 million compared to
NOK 67 million in 2020.
Net cash flow from financing activities amounted to negative
Going Concern
The COVID-19 situation, as well as the increased geopolitical
tension seen in the beginning of 2022, gives higher uncertainty for
the going concern assumption for most companies. This is also the
case for Akastor. However, the current assessment is that the
entity has the ability to meet the mandatory terms and conditions of
its banking facilities, taking into account the amendments agreed
with banks in February 2022 including removal of a mandatory
prepayment in March 2022 and adjustments to the gearing
covenant level and minimum required liquidity (see Note 29 Capital
Management for more information). Therefore, in accordance with
the Norwegian Accounting Act, the board of directors confirms
that the going concern assumption, on which the consolidated
financial statements have been prepared, is appropriate.
The Akastor Portfolio
HMH
HMH was established in October 2021 following the merger
between MHWirth (previously 100% owned by Akastor) and
Baker Hughes’ Subsea Drilling Systems (SDS) business.
Akastor owns 50 percent of the shares in HMH, with the
remaining shares owned by Baker Hughes. HMH is per year
end 2021 classified as a joint venture and accounted for using
equity method in the consolidated financial statements.
HMH is a global provider of drilling solutions, engineering,
projects, equipment and services. HMH has a track record of
product and service delivery in more than 120 countries
worldwide. At year-end 2021, the company employed approx-
imately 2 100 people. The company’s operations are divided in
two main business areas: Projects, Products and Other and
Aftermarket Services. HMH is Akastor’s largest portfolio
company both in terms of sales revenue and employees.
Key Figures 1)
Amounts in USD million
Revenue (adj) 2)
Revenue
EBITDA (adj) 3)
EBITDA
Order intake
NIBD (incl. shareholder loans)
Proforma 2021
Proforma 2020
586
568
85
64
820
226
715
688
107
97
568
n/a
1) HMH figures presented on 100% basis, proforma figures for full year 2021 and
2020 are unaudited
2) Revenue (adj) includes revenue from Step Oiltools
3) EBITDA (adj) excludes integration costs and other non-recurring items
The revenue for 2021 of USD 586 million was down 18 percent
compared to 2020 proforma figures for the combined entity.
Proforma revenues
from Projects, Products and Other
decreased with around 37 percent to USD 150 million in 2021,
driven by lower revenues from large projects following the
Annual Report 2021 | Board of Directors' Report 8
schedule of ongoing projects and also lower recorded revenues
from single equipment after a low order backlog within this
segment as per the beginning of the year. Proforma full year
revenues from Aftermarket Services was USD 436 million in
2021, down from USD 481 million in 2020. The number of active
rigs with equipment package from HMH remained relatively
stable through the year, however affected by a lower starting
point compared to 2020. EBITDA adjusted for integration cost
and defined non-recurring items decreased from USD 107
million in 2020 to USD 85 million in 2021. The adjusted EBITDA
margin ended at 14.5 percent for 2021, down from 15.0 percent
in 2020, primarily driven by a lower activity level.
The offshore drilling market continued to be affected by the
global turmoil during 2020 and is still suffering from overcapacity
of offshore drilling rigs. Despite this, order intake within Projects
and Products increased considerably in 2021 compared to last
year, driven primarily by the award of three larger project
contracts. Order intake within single equipment also increased
in 2021, with the non-oil segment as the main driver. Total order
intake for HMH was USD 820 million in 2021, compared to USD
568 million in 2020.
An important focus area for HMH through 2022 will be to secure
a successful integration between the two entities. A strategy and
business plan for the combined company will be established
together with Baker Hughes. The new company will focus on
growth through both organic initiatives as well as M&A and will
mainly focus on the global offshore and onshore drilling markets.
However, HMH will also seek to pursue opportunities within the
renewable sector and further expand its offering to non-oil
markets. It is expected that the company’s broader scope of
services will provide a more solid foundation for participating in
the oil and gas industry’s transition towards more energy-
efficient solutions, and this will form a key area in the strategy of
the new combined company.
AKOFS Offshore
AKOFS Offshore is a provider of vesselbased subsea well
installation and intervention services to the oil and gas industry.
The company operates three specialized offshore vessels,
Skandi Santos, Aker Wayfarer and AKOFS Seafarer, and
employed 292 people as per the end of 2021.
Akastor owns 50 percent of the shares in AKOFS Offshore, with
the remaining shares owned by Mitsui & Co and Mitsui O.S.K.
Lines, each with 25 percent. AKOFS Offshore is classified as a
joint venture and accounted for using equity method in the
consolidated financial statements.
Key Figures 1)
Amounts in USD million
Revenue and other income
EBITDA
EBIT
CAPEX and R&D capitalization
NCOA
2021
2020
147
37
(15)
5
25
107
44
(14)
23
40
Net capital employed
Order intake
Order backlog
Employees (FTE)
1) The figures are presented at 100 percent basis.
375
80
384
292
437
28
446
294
The company’s revenue was USD 147 million in 2021, around
38 percent higher than previous year, driven by full year
operations of the Seafarer vessel which commenced in the
fourth quarter of 2020, partly mitigated by the Skandi Santos
vessel that extended its contract with Petrobras in 2021 at a
reduced scope and income level. The EBITDA decreased by
USD 7 million to USD 37 million in 2021, primarily explained by
the Skandi Santos day-rate, but also a planned yard stay for
AKOFS Wayfarer due to a SPS in the first quarter.
AKOFS Offshore has through 2021 continued to focus on
mitigating operational effects of
the ongoing COVID19
pandemic, among other initiatives through strict regulations
regarding crew handling. Despite these efforts, AKOFS Offshore
also in 2021 was affected through reduced utilization as a result
of virus outbreaks on board its vessels. Also, the market
situation for AKOFS is affected by lowered investment levels
among oil companies. This has affected the prospects available
for the company, however AKOFS Offshore is expecting a
somewhat higher activity level on new tenders and contracts
going forward.
Through 2021, both of the vessels Skandi Santos and Aker
Wayfarer have operated on contracts with Petrobras in Brazil for
subsea equipment installation work. In December 2021, the
contract of Skandi Santos expired after almost twelve years of
operations in Brazil. Also in December, AKOFS Offshore signed
a firm three-year contract with Petrobras for Skandi Santos. The
new contract will commence in Q4 2022, under which the vessel
will perform a broad scope of subsea services in Brazil. Skandi
Santos is currently operating on a shorter contract in Brazil with
a third party, before it will go to yard in the third quarter to
prepare for the new contract with Petrobras.
The Brazilian fleet was affected by certain periods of downtime
related to outbreaks of COVID-19 onboard Wayfarer, however
utilization for the two vessels was in general high throughout the
year, with revenue utilization of Wayfarer and Santos of
approximately 96 and 98 percent respectively, adjusted for the
planned SPS on Wayfarer in the first quarter.
In October 2020, AKOFS Seafarer commenced its five-year
contract with Equinor for Light Well Intervention services in the
North Sea and has through 2021 operated on this contract
delivering solid operational performance. The vessel recorded a
revenue utilization above 90 percent in 2021, which is deemed
satisfactory taking into account that the vessel had limited
operational experience going into the year and also considering
the challenging weather conditions in the North Sea in the
winter season, as the vessel only receives 50 percent of its
dayrate when waiting on weather.
Annual Report 2021 | Board of Directors' Report 9
Going forward, AKOFS will continue to focus on delivering high
uptime on its existing contracts. Further, evaluation of options
regarding the AKOFS Wayfarer vessel, for which the contract
expires per year end 2022, will be a key focus area in
2022. Also, the company is continuously evaluating opportu-
nities to grow through further leveraging its competen cies within
subsea well construction and intervention services.
AGR
AGR is the result of the merger of First GEO AS (previously
owned 100 percent by Akastor) and AGR AS which was
completed in April 2019. At year-end 2021, Akastor held 100
percent of the shares and 64 percent of the economic interest in
the company. Nordea and DNB held the remaining 36 percent
economic interest.
wind power project management, operations and maintenance
provider with strong growth ambitions.
Other Holdings
Other Holdings mainly include 100 percent ownership of Cool
Sorption, 100 percent ownership of DDW Offshore AS, around
15 percent economic interest of NES Fircroft, 5.6 percent
shareholding in Awilco Drilling, and a preferred equity instrument
of USD 89.5 million in Odfjell Drilling. Also, the financial interest
in four drilling equipment contracts with Jurong Shipyard (the
DRU contracts) is included within Other Holdings. In addition,
this segment includes corporate functions and certain longterm
office lease contracts that remained in Akastor after the
demerger from Aker Solutions in 2014.
Key Figures
Amounts in NOK million
Revenue and other income
EBITDA
EBIT
CAPEX and R&D capitalization
NCOA
Net capital employed
Order intake
Order backlog
Employees (FTE)
Key Figures
Amounts in NOK million
Revenue and other income
EBITDA
EBIT
CAPEX and R&D capitalization
NCOA
Net capital employed
Order intake
Order backlog
Employees (FTE)
2021
723
2020
637
33
9
16
(9)
192
769
518
388
31
13
10
(7)
148
618
483
319
2021
232
(32)
(92)
65
239
1 483
202
64
43
2020
186
(102)
(145)
1
(158)
990
142
43
47
AGR had total revenues of NOK 723 million in 2021, while the
revenues in 2020 were NOK 637 million. EBITDA in 2021 ended
at NOK 33 million, up from 31 million in 2020.
During 2021, the activity level in AGR was affected by an
increase in activity within its Norwegian consultancy business.
The Norwegian market remains the largest segment in AGR,
constituting around 71 percent of revenues in 2021.
The company continued to have strong focus on its cost base,
targeting to improve profitability within its international segments.
Due to the market situation, activity level in certain segments
outside of Norway remains low. As a result of this, AGR in
December 2021 closed down its UK well management business
through the sale of AGR Well Management Limited to SpotOn
Energy Holding AS. As compensation for the transfer, AGR has
received 20 percent ownership in SpotOn Energy, which will
strengthen the cooperation between AGR and SpotOn Energy
going forward. AGR recognized a loss of NOK 11 million in
relation to this transaction, affecting EBITDA of the company
negatively in the fourth quarter.
Going forward, the focus is to make all geographical segments
profitable. Also, the company is continuing its effort to further
develop its software business which is providing solutions to
enhance the efficiency of logistics and planning of drilling and
well operations for oil companies. Also, the newly created joint
venture between AGR and IKM, Føn Energy Services, is an
important strategic priority for AGR, aiming to create a complete
Total EBITDA for Other Holdings for the year was negative NOK
32 million. Cool Sorption delivered an EBITDA of NOK 4 million
in 2021, down from NOK 6 million in 2020. DDW Offshore
contributed positively with NOK 17 million in 2021, compared to
negative NOK 11 million in 2020 (after consolidation of this
business as from October 2020). The positive results of DDW
Offshore were driven by the gain related to the bareboat charter
agreements with OceanPact Servicos Maritimos S.A., a
Brazilian subsea and logistic company, for the vessels Skandi
Saigon and Skandi Pacific for a period of 26 months. As part of
the agreements, forward sale of the vessels was agreed
whereby OceanPact shall purchase the vessels at the end of
the charter period. The agreement was thus classified as a
finance lease. The remaining negative EBITDA in this segment
is mainly related to corporate overhead costs, as well as certain
legacy costs.
Parent Company and Allocation of Net Loss
The parent company Akastor ASA is the ultimate parent
company in the Akastor group and its business is the ownership
and management of all subsidiaries. Akastor ASA has
outsourced all management functions to other companies within
the group, mainly Akastor AS. However, assets and liabilities
related to the Akastor Treasury function are held by Akastor
ASA. Akastor ASA has a net loss of NOK 664 million in 2021,
including dividend income of NOK 7.0 billion from investments
in subsidiaries offset by impairment of shares in and receivables
on subsidiaries of NOK 7.6 billion.
Annual Report 2021 | Board of Directors' Report 10
The parent company’s dividend policy states that Akastor's
shareholders shall receive a competitive return on their
investment either through cash dividends or increases in the
share price, or both. The company does not intend to distribute
regular or annual dividends, but will consider dividends on an
ongoing basis taking into consideration the company’s M&A
activities, expected cash flow, capital expenditure plans,
financing requirements and appropriate financial flexibility. The
board thereby proposes the following allocation of the net loss
(amounts in NOK million):
Dividends:
From other equity:
Total allocated:
Risk Management
0
664
664
Akastor and its portfolio companies are exposed to various
forms of market, operational and financial risks that may affect
the companies’ performance, their ability to meet strategic goals
and the companies’ reputation.
Akastor’s risk management model is designed on the basis that
Akastor is an investment company with an overall objective of
securing its shareholders’ investments and developing the
group’s assets in order to provide the shareholders with a solid
return. Akastor’s current investment portfolio is focused on the
oilfield services industry. This focus is mainly driven by the
company’s experience, expertise and track-record within this
industry. Although Akastor has a flexible mandate, it has
traditionally not sought to spread risk by investing in different
industries. Instead, Akastor has focused on mitigating its
vulnerability to the risk environment inherent to the oilfield
services industry through sound risk management systems.
Although effects from the global COVID19 pandemic continued
throughout 2021, we have seen that financial and operational
impacts to the Akastor group have been fairly limited. This is
largely thanks to our portfolio companies and their focus on
mitigating measures and procedures, as well as their proven
ability to minimize downtime caused from outbreaks. Moreover,
it is also due to the more general fact that global business
operations have been gradually going back to a more normalised
situation.
Our focus on climate risk has continued throughout 2021. A
dedicated project
team has engaged with our portfolio
companies to develop sustainability policies and targets tailored
to each respective operation. The aim is to improve each
company’s ability to meet the challenges imposed by the
necessary global energy transition, as well as to increase
climate risk awareness and monitoring of sustainability targets.
On the operational side, risks are primarily mitigated by a
combination of
that support a
technology developments
transition towards more sustainable operations as well as
securing new orders and sound project execution by the portfolio
companies. Results also depend on costs, both the portfolio
companies’ own costs and those charged by suppliers. Akastor
and its portfolio companies are also exposed to financial risk
under performance guarantees and financial guarantees issued,
and financial market risks as further detailed below.
In addition, the portfolio companies, through their business
activities within their respective sectors and countries, are also
exposed to legal/compliance and regulatory/political risks, e.g.
political decisions on international sanctions that impact supply
and demand of the services offered by the portfolio companies,
as well as environmental regulations. As an investment
company, Akastor and its portfolio companies from time to time
engage in mergers and acquisitions and other transactions that
could expose the companies to financial and other non-
operational risks, such as warranty and indemnity claims and
price adjustment mechanisms. Moreover, the entire transaction
process, including the process from signing to closing as well as
proper integration of new business operations, entails a set of
risks for Akastor that will need to be managed and mitigated.
To manage and mitigate risks within Akastor, risk evaluation is
an integral part of all business activities, including when making
decisions regarding mergers and acquisitions and other
investment matters. As an owner, Akastor actively supervises
risk management in its portfolio companies through participation
on the board of directors of each portfolio company, and by
defining a clear set of risk management and mitigation processes
and procedures that all portfolio companies must adhere to. The
current and revised governing documents defined by Akastor
were rolled out during the first half of 2016 and are reviewed
annually. The overall responsibility for ensuring sound internal
control and an appropriate framework for risk management in
Akastor lies with its board of directors. A risk review is presented
to and reviewed by the audit committee and the board of
directors of Akastor on an annual basis.
The directors and officers of Akastor companies are covered
under an Aker group Director & Officer’s Liability Insurance
(D&O). The insurance covers personal legal liabilities including
defence- and legal costs. The officers and directors of the
parent company and all subsidiaries globally (owned 50 % or
more) are covered by the insurance. The cover also includes
employees in managerial positions or employees who become
named in a claim or investigation.
Financial Risks
Akastor is exposed to a variety of financial market risks such as
currency risk, interest rate risk, tax risk, price risk, credit and
counterparty risk, liquidity risk and capital risk as well as risks
associated with access to and terms of financing. The financial
risks affect the group’s income and the value of any financial
instruments held. The objective of financial risk management is
to manage and control financial risk exposures and thereby
increase the predictability of earnings and minimize potential
adverse effects on Akastor’s financial performance. Akastor and
Annual Report 2021 | Board of Directors' Report its portfolio companies use financial derivative instruments to
hedge certain risk exposures in order to reduce the volatility
resulting from the periodic markettomarket revaluation of
financial instruments in the income statement. Risk management
is performed in every project. It is the responsibility of the project
managers, in cooperation with Akastor Treasury, to identify,
evaluate and hedge financial risks under policies approved by
the board of directors. Akastor has wellestablished principles
for overall risk management, as well as policies for the use of
derivatives and financial instruments.
Integrity Risks
All Akastor portfolio companies use education and awareness
training to manage and mitigate integrity risks. All employees
must complete an annual Code of Conduct training program. In
addition, all Akastor managers and office-based staff are
required to conduct integrity e-learning training and participate
in classroom courses. For employees in specific functions,
where chance of facing integrity risk is considered higher than
normal, additional training has been tailored for their role and
responsibilities. Hiredin personnel in high risk roles are also
required to undertake integrity training, just as third-party
representatives receive integrity training specially prepared for
them. The requirement for all portfolio companies is to complete
and report on the training within six months from employment or
publication of a new training session.
Akastor has established a whistleblowing system in line with the
company’s Governance Policy. The whistleblowing channel is
open for all external and internal stakeholders who wish to
report a breach of the Code of Conduct, other internal guidelines
or governing policies. Akastor employees are required to report
breaches of the Code of Conduct, and Akastor encourages
reporting of any concerns pertaining to compliance with law or
ethical standards.
Climate risks
The main climaterelated risks in Akastor are with our industrial
investments due to the fact that the industry is in a state of
accelerated transition to a lowercarbon intensive industry.
Governmental regulation of GHG emissions is expected to
increase and it will continue to be challenging to get necessary
financing with potential lenders electing not to invest in the oil
and gas market but rather move capital to new green markets.
Unless these risks are met with mitigating measures, we could
face a scenario where many of Akastor’s portfolio companies
lose its market positions and/or are left with product lines that
are obsolete and replaced by more energy efficient/green
alternatives. However, this transition to low carbon intensive
industry will also create several opportunities, which the portfolio
companies are addressing, for example HMH’s concept
developments towards the offshore wind industry and AGR’s
Carbon Capture and management services.
Each portfolio company addresses climaterelated risks and
opportunities within its yearly risk assessment, and the
assessment is reviewed by its Board of Directors.
11
War in Ukraine
At the time of issuing this report, there is global geopolitical
uncertainty caused by the Russian invasion of Ukraine which
has given rise to a large number of global sanctions aimed at
impacting any business activities in Russia or towards Russian
companies. The Akastor group as a whole has relatively limited
business activities
the shortterm
operational impacts from these sanctions are therefore expected
to be relatively limited. However, as the scale of this war and its
impact on global economics remain uncertain, it represents a
clear concern and potentially a larger risk to Akastor that we will
need to closely monitor.
towards Russia and
Environmental, Social and Governance
Akastor’s operating model reflects the fact that the portfolio
companies are independent companies which operate different
business models and therefore face different Environmental,
Social and Governance (ESG) risks and expectations from
stakeholders. As a holding company, Akastor is responsible for
setting the overall ESG priorities and providing the appropriate
risk management framework and policies applicable for the
portfolio. Akastor Sustainability Policy describes how Akastor
aims to integrate sustainability in its investment processes, own
operations, and in the governance of its organisation. The policy
includes the investment policy and how Akastor engages with
the portfolio companies.
these
expectations, each portfolio company is responsible for defining
their own ESG strategy with relevant activities and, where
necessary, supporting policies.
turn, and based on
In
Akastor also focuses on maintenance and development of
industrial relations and collaboration with unions. Historically,
good industrial relations have played an important role, and
maintaining these strong relations have proven to be one of the
success criteria in developing the company over the years.
Within the ESG efforts, Akastor is focused on areas that build
financial and non-financial value in the portfolio companies.
Akastor’s ESG strategy is based on four main priorities: working
against corruption, respecting human rights, addressing health
and safety and minimizing adverse impact on the environment.
Particularly the latter priority has seen an increased focus in
2021where Akastor wants to take part in the industry’s transition
towards more sustainable operations. All the portfolio companies
have completed climate risk and opportunities assessments
and are responsible for working systematically and managing
these possibilities and consequences. The portfolio companies
are defining their own ESG strategies encompassing these
priorities. Akastor is continuously monitoring the implementation
and integration of the priorities of the ESG strategy, Code of
Conduct, Sustainability Policy and Integrity Policy across all the
portfolio companies. For indepth reporting on each portfolio
company’s approach to ESG, including their Health, Safety and
Environment work, refer to the Akastor ESG Report for 2021.
The full report is available on our website www.akastor.com.
Annual Report 2021 | Board of Directors' Report 12
Research, Innovation and Technology Development
NOK 24 million was capitalized in 2021, compared to NOK 38
million in 2020, related to development activities. In addition,
research and development costs of NOK 1 million were
expensed during the year because the criteria for capitalization
were not met (NOK 12 million in 2020).
All research,
initiatives are
innovation and development
performed by the Akastor portfolio companies. Akastor ASA and
Akastor AS performed no such activity in 2021.
People and Teams
Akastor is committed to equal opportunity and non-discrimination.
This commitment is described in Akastor’s Code of Conduct, as
well as Akastor’s policies and agreements, and builds on a
frame agreement signed with national and international trade
unions in 2008. This agreement was renewed in 2012 and sets
out fundamental labour rights and standards for general
employment terms and employee relations, with specific focus
on non-discrimination. Equal opportunities are fundamental for
Akastor and its portfolio companies. In 2021, as in previous
years, no events violating these agreements were reported.
As of year-end 2021, Akastor ASA’s board comprised eight
directors inclusive three employee elected directors, of which
two shareholders elected directors are female directors. Akastor
and its subsidiaries had a total of 431 employees (FTE) as of
December 31, 2021. AKOFS Offshore had a total of 292
employees (FTE) as of December 31, 2021. HMH had a total of
2 100 employees (FTE) as of December 31, 2021. In Akastor
AS, the male/female ratio was 69/31. The male/female ratio
(excluding hired ins) in the major portfolio companies and
Akastor Group were as follows:
HMH1)
18%
82%
AKOFS
Offshore
11%
89%
Female
Male
Akastor Group
(incl. AKOFS
Offshore and
HMH*)
19%
81%
AGR
29%
71%
*) Data reported for HMH contains the MHWirth portion of the company.
All portfolio companies regularly assess whether they live up to
the principle of equal pay for equal work and no significant
differences have been identified. Each portfolio company
promotes equal opportunities by setting specific requirements
for diversity in recruitment and people development, and by
supporting programs dedicated to equal opportunity. Akastor
and its portfolio companies are not aware of any employees that
work involuntary part time. Akastor ASA fulfils the requirements
of the Norwegian Companies Act with regards to gender
representation on the board of directors, as two out of five
shareholder elected directors are women.
Aggregated sick leave in Akastor was 3.0 percent in 2021.
There were no fatal injuries in any of the portfolio companies.
The total recordable incident frequency was low, and Akastor
has thoroughly analysed all incidents and taken actions to avoid
similar situations going forward. Caring for employee’s health
and safety is an integrated part of the group’s culture. See
figures below for details.
AKOFS
HMH**
Offshore AGR
Akastor
Group (inc
AKOFS Off-
shore and
HMH**)
Lost time Incident
Frequency (LTIF)*
Total Recordable Incident
Frequency (TRIF)*
Fatalities incl. subcontractors
Sick leave (percent)
0.8
3.1
3.7
1.5
3.0
2.0
0.5
2.3
3.0
* Per million hours worked. Includes subcontractors
** Data reported for HMH contains the MHWirth portion of the company
Corporate governance
Corporate governance is a framework of values, responsibilities
and governing documents to control the business and ensure
sustainable value creation for shareholders over time. It is the
responsibility of the board of directors of Akastor to ensure that
the company implements sound corporate governance. The
audit committee supports the board in safeguarding that the
company has internal procedures and systems in place to
ensure that corporate governance processes are effective.
Akastor’s corporate governance principles are based on the
Norwegian Code of Practice for Corporate Governance and are
designed to secure the shareholders’ investment through value
creation and to ensure good control with the portfolio
companies. The corporate governance principles are included
in this annual report and available on the company’s website
www.akastor.com.
Fornebu, March 25, 2022 I Board of Directors of Akastor ASA
Kristian Røkke | Chairman
Lone Fønss Schrøder | Deputy Chairman
Svein Oskar Stoknes | Director
Kathryn M. Baker | Director
Luis Araujo | Director
Henning Jensen | Director
Asle Christian Halvorsen | Director
Stian Sjølund | Director
Karl Erik Kjelstad | CEO
Annual Report 2021 | Board of Directors' Report 13
02. DECLARATION BY THE BOARD
OF DIRECTORS AND CEO
The board and CEO have today considered and approved the annual report and financial statements for the Akastor group and its
parent company Akastor ASA for the year ended on December 31, 2021. The board has based this declaration on reports and
statements from the group’s CEO and/or on the results of the group’s activities, as well as other information that is essential to
assess the group’s position which has been provided to the board of directors.
To the best of our knowledge:
The financial statements for 2021 for Akastor group and its parent company have been prepared in accordance with all
applicable accounting standards.
The information provided in the financial statements gives a true and fair portrayal of the group and its parent company’s
assets, liabilities, profit and overall financial position as of December 31, 2021.
The annual report provides a true and fair overview of the development, profit and financial position of Akastor group and its
parent company, as well as the most significant risks and uncertainties facing the group and the parent company.
Fornebu, March 25, 2022 I Board of Directors of Akastor ASA
Kristian Røkke | Chairman
Lone Fønss Schrøder | Deputy Chairman
Svein Oskar Stoknes | Director
Kathryn M. Baker | Director
Luis Araujo | Director
Henning Jensen | Director
Asle Christian Halvorsen | Director
Stian Sjølund | Director
Karl Erik Kjelstad | CEO
Annual Report 2021 | Declaration by the Board of Directors and CEODeclaration by the Board of Directors and CEO 14
03. CORPORATE GOVERNANCE STATEMENT
– AKASTOR ASA
Corporate governance is a framework of values, responsibilities
and governing documents to control the business and ensure
sustainable value creation for shareholders over time. Sound
corporate governance shall ensure that appropriate goals and
strategies are adopted, that the strategies are implemented in a
good manner and that the results achieved are subject to
measurement and followup.
1. The Corporate Governance Report
Basis for this Report
The corporate governance principles of the group are laid down
by the board of directors of Akastor ASA (“Akastor” or the
“company”). The principles are based on the Norwegian Code
of Practice for Corporate Governance dated 14 October 2021
(the «Code of Practice»), the regulations set out in the Rule-
book II of Oslo Børs (the stock exchange in Oslo) and the
relevant Norwegian background law such as the Norwegian
Accounting Act and the Norwegian Public Limited Liability
Companies Act. The Code of Practice may be found at
www.nues.no and the Oslo Børs Rulebook II may be found at
laws and regulations are
www.euronext.com. Norwegian
available at www.lovdata.no.
This report outlines how Akastor has implemented the Code of
Practice. Deviations from the Code of Practice are addressed
under the relevant sections. In general, the Akastor board only
approves deviations that the board believes contributes to value
creation for its stakeholders.
In addition to the Code of Practice, the Norwegian Accounting
Act section 33b stipulates that companies must provide a
report on their policies and practices for corporate governance
either in the annual report or in a document referred to in the
annual report. Such report is integrated in the below corporate
governance statement.
Governance Structure
Akastor is an oilfield services investment company with a
portfolio of industrial holdings and other investments. The
company has a flexible mandate for active ownership and long-
term value creation. Completed transactions in 2021 include the
combination of MHWirth with Baker Hughes’ SDS operations to
create HMH as an entity controlled 50/50 by Baker Hughes and
Akastor. Whilst STEP Oiltools remains under the legal ownership
of Akastor, it forms part of the transaction perimeter for HMH
and will be transferred to HMH as long as certain regulatory
approvals have been obtained. On the other hand, all financial
interest in the DRU Contracts still legally held by MHWirth have
been agreed excluded from the transaction.
On this background Akastor currently has an active investment
portfolio within the oilfield services industry consisting of AGR,
Cool Sorption, DDW Offshore, 50 percent of the shares in HMH,
50 percent of the shares in AKOFS Offshore, a 15 percent
economic ownership in NES Fircroft, in addition to other
holdings and investments (see below), with a total net capital
employed of NOK 5.1 billion. HMH is a global provider of drilling
solutions, engineering, projects, equipment and services.
AKOFS Offshore is a provider of subsea well installation and
intervention services. AGR is a leading provider of well and
reservoir consultancy services as well as software and technical
manpower for its clients. Cool Sorption is a provider of vapour
recovery units and systems. DDW Offshore operates five
1) Below, the items in respect of which information must be disclosed according to section 3-3b of the Norwegian Accounting Act are specified, together with references to where
such required information may be found:
1. “A statement of the recommendations and regulations concerning corporate governance that the enterprise is subject to or otherwise chooses to comply with” can be found
in the introduction section of this corporate governance statement.
2. “Information on where the recommendations and regulations mentioned in no. 1 are available to the public” can be found in the introduction section of this corporate
governance statement.
3. “The reason for any non-conformance with recommendations and regulations mentioned in no. 1”. The non-conformances are described in the relevant section where there
are non-conformances, which are sections 6 and 14 respectively.
4. “A description of the main elements in the enterprise’s, and for entities that prepare consolidated financial statements, if relevant also the Group’s internal control and risk
management systems linked to the financial reporting process” can be found in section 10 of this corporate governance statement.
5. “Articles of Association which entirely or partly expand or depart from provisions of Chapter 5 of the Public Limited Liability Companies Act” can be found in section 6 of this
corporate governance statement.
6. “The composition of the board of directors, the corporate assembly, the committee of shareholders’ representatives and the control committee and any working committees
related to these bodies, as well as a description of the main instructions and guidelines that apply to the work of the bodies and any committees” can be found in section 8
and 9 of this corporate governance statement.
7. “Articles of Association governing the appointment and replacement of directors” can be found in section 8 of this corporate governance statement.
8. “Articles of Association and authorizations empowering the board of directors to decide that the enterprise is to buy back or issue its own shares or equity certificates” can
be found in section 3 of this corporate governance statement.
Annual Report 2021 | Corporate Governance StatementCorporate Governance Statement
offshore vessels. NES Fircroft is a global technical and
engineering staff provider. Other investments mainly include
investments in Odfjell Drilling and Awilco Drilling, a subletting
portfolio through Akastor Real Estate and an investment in Aker
Pensjonskasse.
It is the responsibility of the board of directors of Akastor to
ensure that Akastor and its portfolio of companies implement
sound corporate governance. The board of directors evaluates
this corporate governance statement on an annual basis. The
board’s audit committee also evaluates
the corporate
governance statement as well as other key policies and
procedures pertaining
to compliance and governance.
Compliance with, and implementation of these corporate
governance guidelines are continuously evaluated by the board
and said committee; inter alia by way of the board being the
decisive body for the company’s defined management and
reporting structure, which include regular reporting.
Policies and Procedures
Akastor has a total of eleven corporate policies providing
business practice guidance within a number of key areas, all of
which are reviewed and updated on an annual basis. These
policy documents express the overall position of the group with
regard to for instance compliance, integrity and governance.
The policies provide instructions and guidelines that apply to the
portfolio companies and to individual employees in order to
ensure that the group’s operations are in compliance with
internal and external regulatory framework. In addition, the
portfolio companies are requested to implement their own
policies specific to their business within areas like project
execution, HSE and tendering.
Values and Code of Conduct
Akastor aims to develop and refine its portfolio of companies as
stand-alone enterprises, with the goal of maximizing the value
potential of each entity. The company works to develop the
business models of the portfolio companies, capitalize on their
market positions and promote aftersales services for the
equipment and systems delivered. The current investments are
within the oilfield services sector, but the company has a flexible
mandate for active ownership and longterm value creation.
Akastor has an opportunistic approach and will continue to own
the portfolio companies as long as Akastor creates more value
than alternative owners.
15
2. Business
The objectives of the company, as defined in its articles of
association, are «to own or carry out industrial and other
associated businesses, management of capital, and other
functions for the group, and to participate in or acquire other
businesses». The articles of association are available at www.
akastor.com.
The principal strategies of the group are presented in the annual
report. To ensure value creation for its shareholders, the board
of directors annually performs a designated strategy process
where it sets objectives and targets for the company, assesses
risk, evaluates the existing strategy and approves any significant
changes. Information concerning the financial position and
principal strategies of the company, and any changes thereto is
disclosed to the market in the context of the company’s quarterly
reporting and in designated market presentations as well as at
www.akastor.com.
Corporate Responsibility
Akastor takes an active approach to corporate responsibility.
Corporate responsibility in Akastor is about making prudent
business decisions, with minimum risk to reputation, brand and
the future sustainability of our business. The main focus of
corporate responsibility activities in Akastor, defined in our
group-wide integrity policy, is to work against corruption, to
respect human rights and to care for health, safety and the
environment. In the Akastor Sustainability Policy it is described
how Akastor aims to integrate sustainability in its investment
processes and engages with the portfolio companies. Akastor’s
primary stakeholders are the shareholders (existing and
potential), customers of its portfolio companies and employees
of the Akastor group. Akastor has an ongoing stakeholder
dialogue, media analysis and investor presentations, which
provide
to Akastor’s work on corporate
responsibility topics. All our portfolio companies are expected to
ensure integration of stakeholder engagement and a strong
corporate responsibility in their operations. Akastor recognizes
and respects the United Nations’ 17 Sustainable Development
Goals (SDGs), and has identified four SDGs that Akastor
positively impacts. A selfassessment is used to identify where
Akastor has the most opportunity to contribute to the SDGs.
Akastor identified 8, 12, 13 and 17 as priority SDGs and
encourages the portfolio companies to identify and work towards
relevant SDGs in their work and strategy.
important
input
Akastor wishes to contribute to sustainable social develop ment
through responsible business practices. The company’s Code
of Conduct is a handbook that applies to all employees and
provides guiding on what Akastor considers to be responsible
ethical conduct. The Code of Conduct provides a frame work of
core corporate values which reflects Akastor’s prudent business
practice and shall be reflected in every aspect of our oper ations.
The ethical guidelines and other governing documents of the
group have been drafted on the basis of these core corporate
values.
Akastor is committed to follow the Global Framework Agreement
(GFA) entered into by Aker with the trade unions Fellesforbundet,
IndustriALL Global Union, NITO and Tekna on December 17,
2012. The GFA builds on and continues the commitment from
the previous framework agreements signed in 2008 and 2010,
and outlines key responsibilities in relation to human and trade
union rights. The parties commit themselves to achieving
continuous improvements within the areas of working conditions,
industrial relations with the employees of the Aker group of
companies, health and safety standards at the workplace and
Annual Report 2021 | Corporate Governance Statement 16
environmental performance. Akastor also aligns with the
principles of the UN Global Compact, the United Nations
Convention against Corruption, the Universal Declaration of
Human Rights, the UN Guiding Principles for Business and
Human Rights and the ILO Declaration on Fundamental
Principles and Rights at Work. These international principles
guide our Code of Conduct and Integrity Policy and provide the
overall framework for the corporate responsibility efforts in the
Akastor group.
in
information
Further
the corporate social
respect of
responsibility work of Akastor and its portfolio of companies can
be found in the separate Environmental, Social and Governance
(ESG) report published simultaneously as the company’s
annual report for 2021.
3. Equity and Dividends
Equity
The management and the board regularly monitor that the
group’s equity and liquidity are appropriate for its objectives,
strategy and risk profile. The book equity of the group as per
December 31, 2021 is NOK 4 109 million, which represents an
equity ratio of 57 percent. The management of financial risk is
further described in the annual report.
Dividend Policy
The board proposes the level of dividend payment to the general
meeting who in turn is the decisive corporate body for dividend
decisions.
Over time, the aim is that Akastor’s shareholders shall receive a
competitive return on their investment either through cash
dividends or increase in the share price, or both. The company
does not intend to distribute regular or annual dividends, but will
consider dividends on an ongoing basis taking into consideration
the company’s M&A activities, expected cash flow, capital
expenditure plans, financing requirements and appropriate
financial flexibility.
Authorizations for the Board of Directors
Proposals from the board of directors for future authorizations
for share capital increases, share buy-backs or similar shall be
for defined purposes, such as share purchase programs and
acquisitions of companies, and shall remain in effect until the
next annual general meeting.
The company’s annual general meeting on 15 April 2021
resolved to authorize the board to purchase treasury shares for
three purposes for utilization, all of which were subject to
separate voting under the general meeting: (i) purchase of
treasury shares to be used as transaction currency in connection
with acquisitions, mergers, demergers and other transactions,
(ii) purchase of treasury shares to be sold and/or transferred to
employees and directors under share purchase programs and
(iii) purchase of treasury shares for the purpose of investment or
for subsequent sale or deletion of such shares. The
authorizations were all limited to ten percent of the share capital.
The board’s authorizations to purchase treasury shares are
valid for the period until the date of the annual general meeting
of 2022. No shares were bought by the company in 2021
pursuant to the authorizations to the board of directors. As of
December 31, 2021, the company holds 2 390 215 own shares.
In addition, the annual general meeting in 2021 granted the
board of directors the mandate to approve the distribution of
dividends based on the company’s annual accounts for 2020 as
set out in the Public Limited Liability Companies Act section 8-2,
second paragraph. The mandate is valid for the period until the
date of the annual general meeting of 2022.
There are no current provisions in the articles of association of
the company or power of attorney from the general meeting
which grant the board of directors the mandate to issue or buy
back of shares in the company for the purposes of capital
increases.
Share Purchase Programs
Share purchase programs in Akastor include Akastor ASA and
Akastor AS (and not the portfolio companies).
4. Equal Treatment of Shareholders and Transac-
tions with Related Parties
The company has only one class of shares, and all shares carry
equal rights. Existing shareholders shall have pre-emptive
rights to subscribe for shares in the event of share capital
increases, unless otherwise indicated by special circumstances.
If the pre-emptive rights of existing shareholders are waived in
respect of a share capital increase, the reasons for such waiver
shall be explained by the board of directors. Transactions in
own shares are effected via Oslo Børs.
The largest shareholder of Akastor, Aker Holding AS, is wholly-
owned by Aker ASA, which in turn is controlled by Kjell Inge
Røkke through TRG Holding AS and The Resource Group TRG
AS. In December 2020, the previous common ownership in
Aker Holding AS between Aker ASA and the Norwegian
government was dissolved. As a consequence of the dissolution,
Akastor is no longer a subsidiary, but an associated company of
Aker ASA.
The board of directors is of the view that it is positive for Akastor
that Aker ASA assumes the role of an active owner and is
actively involved in matters of importance to Akastor and to all
shareholders. The cooperation with Aker ASA offers Akastor
access to special know-how and resources within strategy,
transactions and funding. Moreover, Aker ASA offers network
and negotiation resources from which Akastor benefits in
various contexts. This complements and strengthens Akastor
without curtailing the autonomy of the group. It may be necessary
to offer Aker ASA special access to commercial information in
connection with such cooperation. Any information disclosed to
Aker ASA’s representatives in such a context is subject to
Annual Report 2021 | Corporate Governance Statement 17
confidentiality undertakings and disclosure regulations
compliance with applicable laws.
in
The following matters are typically decided at the annual general
meeting, in accordance with the articles of association of
Akastor ASA and Norwegian background law:
Aker ASA and Aker Solutions ASA (or their subsidiaries) are not
deemed, within the meaning of the Public Limited Liability
Companies Act, to be a related party of Akastor. The board of
directors and the executive management team of Akastor are
nevertheless conscious that all relations with these companies
shall be premised on commercial terms and structured in line
with arm’s length principles.
In the event of any material transactions between the company
and shareholders, directors, senior executives, or related
parties thereof, which do not form part of the ordinary course of
the company’s business, the board of directors shall arrange for
independent assessment. The same shall, generally
an
speaking, apply to the relationship between Akastor and Aker
ASA related companies.
In respect of the above, the «Related parties» note to the
consolidated financial statements contains information on the
most significant transactions between Akastor and companies
within the Aker ASA group.
5. Freely Negotiable Shares
The shares are listed on the Oslo Børs and are freely
transferable. No transferability restrictions are laid down in the
articles of association. There are no restrictions on the party’s
ability to own, trade or vote for shares in the company.
6. General Meetings
Attendance, Agenda and Voting
The general meetings will be conducted electronically as of this
year. The decision to hold virtual meetings without the possibility
to attend a physical meeting, is partly due to new requirements
in the Public Llimited Liability Companies Act section 5-8, third
paragraph, letter b, and party due to practical considerations.
The shareholders will be invited to participate online via PC,
phone or tablet, and a description of how to participate is
included in the notice of general meeting that will be announced.
By participating online, shareholders will receive a live webcast
from the general meeting, the opportunity to ask written
questions, and vote on each of the items. The company
encourages shareholders to attend the general meetings.
It will also, like previous years, be possible to vote in advance or
give a proxy before the meetings. Notices convening general
meetings, including comprehensive documentation relating to
the items on the agenda, including the recommendation of the
nomination committee, shall be sought made available on the
company’s website no later than 21 days prior to the general
meeting. The articles of association of the company stipulate
that documents pertaining to matters to be deliberated by the
general meeting shall only be made available on the company’s
website, and not normally be sent physically by post to the
shareholders unless required by statute.
Election of the nomination committee and stipulation of
the nomination committee's fees;
election of shareholder representatives to the board of
directors as well as stipulation of fees to the board of
directors;
election of the external auditor and approval of the
auditor’s fee;
approval of any amendments to the board of directors’
regarding stipulation of salary and other
policy
remuneration to the executive management, if any;
advisory vote on the board of directors’ report on
remuneration to the executive management;
approval of the annual accounts and the board of
directors’ report, including distribution of dividend; and
other matters which, by law or under the articles of
association, are the business of the annual general
meeting.
The deadline for registering intended attendance is as close to
the general meeting as possible. Information concerning both
the registration procedure, online participation and the filing of
proxies is included in the notice convening the general meeting
and on the registration form. The company also aims to
structure, to the extent practicable, the proxy form such as to
enable the shareholders to vote on each individual item on
the agenda.
Chairman
The articles of association stipulate that the general meetings
shall be chaired by the chairman of the board of directors or a
person appointed by said chairman. According to the Code of
Practice the board should however «make arrangements to
ensure an independent chairman for the general meeting».
Thus, the articles of Akastor ASA deviate from the Code of
Practice in this respect. This has its background in a longlasting
tradition in Akastor. Having the chairman of the board chairing
the general meeting also simplifies the preparations for the
general meetings significantly.
Election of Directors
It is a priority for the nomination committee that the board of
directors shall work in the best possible manner as a team, and
that the background and competence of the directors shall
complement each other. As a consequence, the nomination
committee will propose that the shareholders are invited to vote
on the full board composition proposed by the nomination
committee as a group, and not on each director separately.
Hence, Akastor deviates from the Code of Practice stipulating
Annual Report 2021 | Corporate Governance Statement 18
that one should make «appropriate arrangements for the
general meeting to vote separately on each candidate nominated
for election to the company’s corporate bodies».
Information concerning the nomination committee and deadlines
for making suggestions or proposing candidates for directorships
will be made available on the company’s website, www.akastor.
com when there are candidates up for election.
Minutes
Minutes of general meetings will be published as soon as
practicable on the announcement system of Oslo Børs, www.
newsweb.no (ticker: AKAST), and at www.akastor.com.
7. Nomination Committee
The articles of association stipulate that the company shall have
a nomination committee. The nomination committee shall have
no less than three members, who shall normally serve for a term
of two years. The current members of the nomination committee
are Frank Reite (chairman), Georg Fr. Rabl, Ingebret G. Hisdal
and Ove A. Taklo. Two of the members of the committee, Ove A.
Taklo and Ingebret G. Hisdal are up for election at the 2022
annual general meeting. In addition, Frank O. Reite and Georg
F. Rabl have announced that they will resign from their positions.
Further Taklo has announced that he will not be available for
reelection. Reite is deputy chairman of the board of Aker ASA.
Ove A. Taklo was Group Corporate Controller of Aker ASA, but
has now resigned and is employed with a company unrelated of
Akastor. No members of the nomination committee are employed
by, or directors of, Akastor. The majority of the members of the
nomination committee are independent of both Akastor’s board
of directors and the executive management of the company.
The committee’s recommendations (relating to particularly the
board of directors and their remuneration) shall address how
the new board candidates will attend to the interests of the
shareholders in general and fill the requirements of the company,
including with
to competence, capacity and
independence.
respect
The composition of the nomination committee shall reflect the
interests of all shareholders and ensure independence from the
board of directors and the executive management. The
members and the chairman of the nomination committee are
appointed by the general meeting, which also determines the
remuneration of the committee.
The annual general meeting in 2010 adopted guidelines
governing the duties of the nomination committee. According to
these guidelines, the committee shall emphasize that candidates
for the board have the necessary experience, competence, and
capacity to perform their duties in a satisfactory manner. A
to gender and
reasonable
background should also be emphasized.
representation with
regard
The chairman of the nomination committee has the overall
responsibility for the work of the committee. In the exercise of its
duties, the nomination committee may contact, among others,
shareholders, the board, management, and external advisors.
The nomination committee shall also ensure
its
recommendations are endorsed by the largest shareholders.
that
8. Composition and Independence of the Board of
Directors
Composition
It has been agreed with the employees that the company shall
have no corporate assembly. Hence, the board appoints its own
chairman, cf. the Public Limited Liability Companies Act section
6-1, second paragraph, unless the chairman is appointed by the
general meeting. The proposal of the nomination committee will
normally include a proposed candidate for appointment as
chairman of the board of directors. The board of directors
appoints its own deputy chairman. According to the Public
Limited Liability Companies Act, the directors are appointed for
a term of two years at a time unless otherwise stated in the
company’s articles of association. The articles of association of
Akastor stipulate that directors may be elected for a period of
one to three years.
The right of the employees to be represented and participate in
decision making is safeguarded through expanded employee
representation on the board of directors of both Akastor and in
a number of the group’s portfolio companies.
The articles of association stipulate that the board of directors
shall comprise six to twelve persons, one third of whom shall be
elected by and amongst the employees of the group. In addition,
up to three shareholderappointed alternates may be appointed.
As per December 31, 2021, the board of directors comprised
eight directors, five of whom were elected by the shareholders
and three of whom were elected by and amongst the employees.
The company encourages the directors to hold shares in the
company. The shareholdings of the directors as of December
31, 2021 will be set out in the 2021 remuneration report. The
chairman Kristian M. Røkke and the directors Lone Fønss
Schrøder, Kathryn M. Baker, Luis Araujo and Svein Oskar
Stoknes are currently shareholders in Akastor. The board
composition,
the directors’
background and expertise will be detailed in the annual report
for 2021.
information about
including
The appointment of employee representatives to the board of
directors is conducted as prescribed by the Public Limited
Liability Companies Act and the Representation Regulations.
The board of directors has appointed a designated election
committee charged with implementing the appointment of such
employee representatives.
Independence
A majority of the directors elected by the shareholders are
independent of the executive personnel and important business
associates of Akastor. None of the executive personnel of the
company are members of the board of directors.
Annual Report 2021 | Corporate Governance Statement 19
The composition of the board of directors aims to ensure that
the interests of all shareholders are attended to, and that the
company has the know-how, resources, and diversity it needs at
its disposal. Among the five shareholder-elected directors, the
majority are deemed independent from the company’s largest
indirect shareholder, Aker ASA.
9. The Work of the Board of Directors
Procedures
For each calendar year, the board plans for its work and
meetings. Furthermore, there are rules of procedure for the
board of directors and Chief Executive Officer, which govern
areas of responsibility, duties and the distribution of roles
between the board of directors, the chairman of the board of
directors and the Chief Executive Officer. The rules of procedure
for the board of directors also include provisions on convening
and chairing board meetings, decision making, the duty and
right of the Chief Executive Officer to disclose information to the
board of directors, the duty of confidentiality, etc. According to
the company’s articles of association, each of the directors
elected by the shareholders will serve for a period of one to
three years pursuant to further decision by the general meeting.
This to provide the nomination committee with the flexibility to
propose varying terms of service for the candidates.
Akastor has prepared guidelines as part of its rules of procedure
for the Chief Executive Officer and board of directors ensuring
that directors and the Chief Executive Officer notify the board of
directors if they have any material direct or indirect personal
interest in any agreement concluded by the group. The
guidelines stipulate that the directors and the Chief Executive
Officer shall not participate in the preparation, deliberation, or
resolution of any matters that are of such special importance to
themselves, or any of their related parties, so that the person in
question must be deemed to have a prominent personal or
financial interest in such matters. The relevant board member or
the Chief Executive Officer shall raise the issue of his or her
competence whenever there may be cause to question it, and
each director is the primary responsible for adopting the correct
decision as to whether he or she should step down from
participating in the discussion of the matter at hand.
In general, as further stipulated in Akastor’s principles for related
party transactions, directors of Akastor should be cautious in
participating in the consideration of issues where a potential
conflict of interest or conflict of role may arise, undermining the
confidence in the decision process. Such person may not
participate in board discussions of more than one company that
is part of the same agreement, unless the companies have
common interests. These assessments will be carried out on a
case-by-case basis; in most events, and as a starting point, by
the relevant directors themselves, but often also in cooperation
with internal and/or external legal counsel.
The above principles will normally also be applied if Akastor
contracts with other companies in which said board members
hold direct or indirect ownership interests that exceed, in relative
terms, their ownership interests in Akastor.
If grounds for legal incapacity are established, the relevant
board member will, as a ground rule, not be granted access to
any documentation prepared to the board of directors for the
deliberation of the agenda item in question.
In general, Akastor applies a strict norm as far as competence
assessments are concerned. In cases where the chairman of
the board of directors does not participate in the deliberations,
the deputy chairman of the board of directors chairs the meeting.
As far as the other officers and employees of Akastor are
concerned, transactions with related parties and conflicts of
interest are comprehensively addressed and regulated in the
group’s Code of Conduct.
Meetings
The board of directors will hold board meetings whenever
needed, but normally six to twelve times a year. The need for
extraordinary board meetings may typically arise because the
internal authorization structure of the company requires the
board of directors to deliberate and approve material tenders to
be submitted by the company or in relation to M&A transactions.
Whilst the deadlines for such submission often change, it is
difficult to fit this into the calendar of ordinary board meetings.
The board of directors held six ordinary board meetings in 2021.
The aggregate attendance rate at the board meetings was close
to 100 percent.
The Matters Discussed by the Board of Directors
The Chief Executive Officer prepares cases for deliberation by
the board of directors in cooperation with the chairman of the
board. Endeavours are made to prepare and present matters in
such a way that the board of directors is provided with an
adequate basis for its deliberations. The board of directors has
overall responsibility for the management of Akastor and shall,
through the Chief Executive Officer, ensure that its activities are
organized in a sound manner. The board of directors shall adopt
plans and budgets for the business, and keep itself informed of
the financial position of, and development within, the company.
This encompasses the annual planning process of Akastor, with
the adoption of overall goals and strategic choices for the group,
as well as financial plans, budgets, and forecasts for the group
and the portfolio companies. The board of directors performs
annual evaluations of its work and its knowhow.
Audit Committee
Akastor will have an audit committee comprising two to four of
the directors. The audit committee currently comprises the
directors Lone Fønss Schrøder (chair), Kathryn M. Baker and
Henning Jensen. The audit committee is independent from the
management.
Annual Report 2021 | Corporate Governance Statement 20
At least one of the members of the audit committee shall have
either formal qualifications within accounting or auditing, or
relevant experience and skills within the same. Both members
Fønss Schrøder and Baker have such relevant experience and
skills. The audit committee has a mandate and a working
method that complies with statutory requirements. The audit
committee mandate forms an integrated part of the rules of
procedures for the board of directors. The committee will
participate, on behalf of the board of directors, in the quality
assurance of guidelines, policies, and other governing
instruments in Akastor. The audit committee performs a
qualitative review of the quarterly and annual reports of Akastor.
Significant judgment calls (uncertain estimates) made in the
financial statements in the quarter are reviewed by the audit
committee. The audit committee further supports the board of
directors in safeguarding that the company has sound risk
management and internal controls. The audit committee reviews
the status on internal controls on an annual basis. In order to
safeguard appropriate processes and assessments, the board’s
audit committee shall also review major M&A transactions as
well as related party transactions which are not part of the
company’s ordinary course of business, unless such related
party transactions are immaterial.
Akastor currently has no remuneration committee as the
experiences from having such showed more merit in discussing
matters comprised by this committee’s mandate with all directors
present. As of December 31, 2021, there are no other board
committees than the audit committee. The board does not
envisage appointing any further board committees in 2022.
The board evaluate its performance and qualification annually.
A summary of the evaluation was made available to the
nomination committee.
10. Risk Management and Internal Control
Governing Principles
The board of directors shall ensure that Akastor has sound internal
control and systems for risk management that are appropriate in
relation to the extent and nature of the company’s activities. The
audit committee supports the board of directors in safeguarding
that the company has internal procedures and systems that
ensure good corporate governance, stakeholder engagement,
internal controls and proper risk management,
effective
particularly in relation to financial reporting. The Chief Financial
Officer reports directly to the audit committee on matters relating
to financial reporting, financial risks and internal controls.
Akastor has implemented an internal system for reporting
serious matters such as breaches of ethical guidelines and
violations of the law, which is also available to external parties
at www.akastor.com.
carries out an annual review of the company’s most important
areas of exposure to risk and its internal control arrangements.
Being an investment company, the main objective of Akastor is
to create value for its shareholders. Potential impacts on the net
asset value, share price or predictability of earnings are
therefore key parameters in the board’s risk evaluation. Sound
risk management throughout the organization is recognized by
Akastor as an invaluable tool in the process of achieving
strategic, financial and operational goals while at the same time
ensuring compliance with
requirements and
adherence to high integrity standards.
regulatory
Risk evaluation is an integral part of all business activities and
Akastor employs a decentralized model for allocating managerial
responsibility under which the portfolio companies are required
to establish their own risk management and internal control
systems. Akastor’s representatives on boards of directors in the
portfolio companies seek to ensure that the portfolio companies
follow the principles of sound corporate governance.
Akastor manages risk through an internal framework both on a
corporate and portfolio company level comprising guide lines,
policies and procedures intended to ensure good business
operations and provide unified and reliable financial reporting.
The board of directors has adopted an authorization matrix that
forms part of its governing documents where authority is
delegated to the Akastor Chief Executive Officer. Further more,
authorization matrices are adopted for each of the portfolio
companies, pursuant to which the Akastor Chief Executive Officer
delegates authority to the boards and Chief Executive Officers of
the
respective portfolio companies, which again adopts
authorization matrices for the portfolio organizations. Special
expenditure approval procedures have also been developed.
The board receives and reviews risk reports prepared by the
management. The management’s risk reporting is based on the
total level of insight obtained through regular reporting and the
close cooperation that Akastor has with the portfolio companies,
including from Akastor’s investment directors and board
representatives. Management of operational risk primarily rests
with the underlying portfolio companies, although Akastor acts
as an active driver through its involvement on the boards and
through support and followup by the various Akastor corporate
functions towards relevant functions in the portfolio companies.
Akastor’s management holds review meetings with
the
management of the different portfolio companies. The purpose
of the meetings is to conduct an indepth review of the
development of each portfolio company, focusing on operat-
ions, risk management, market conditions, the competitive
situation and strategic issues. These meetings provide a solid
foundation for Akastor’s assessment of its overall financial and
operational risk.
Risk Management
Akastor and its portfolio companies are exposed to a variety of
market, operational and financial risks. The board of directors
A key risk in one of the smaller portfolio companies may still be
negligible on the group level, whereas important risks in the
Annual Report 2021 | Corporate Governance Statement largest portfolio companies may have a serious impact on the
group as a whole. Akastor’s decentralized approach to
operational risk management, as described above, raises a
need for management to process and calibrate the insight
obtained through various interfaces with the portfolio companies
prior to the board’s annual risk review. The objective of such
exercise is to ensure that risks are reported in a format that
allows the board to acquire a true and fair view of the overall risk
environment of the Akastor group in an efficient manner and to
focus its attention on risks that are material on an aggregated
group level.
Prior to the board’s review of risk reporting, the audit committee
reviews
the reported risks and associated riskreducing
measures. The audit committee also reviews the company’s in-
internal control and risk
house reporting systems and
management, and prepares the board’s review of financial
reporting.
Financial Reporting
The Akastor financial reporting division reports to the Chief
Financial Officer and is responsible for the external reporting
process and the internal management financial reporting
process. This also includes assessing financial reporting risks
and internal controls over financial reporting in the group.
The consolidated external financial statements are prepared in
accordance with IFRS and IAS standards as approved by the
EU. The existing policies and standards governing the annual
and quarterly financial reporting in the group, including the
Akastor accounting principles, are available
for Akastor
employees.
Clearing meetings are held with the management teams of the
portfolio companies in connection with the annual closing of
accounts and may also be held in connection with quarterly
financial reporting. For the 2021 financial year, clearing meetings
with the portfolio companies were held in October 2021 and
January 2022. The main purpose is to ensure high-quality
financial reporting. Such meetings focus on important items
involving estimation and judgment, non-balance-sheet items,
accounting
transactions, new or modified
accounting principles and other topics relevant to the respective
portfolio companies. The external auditor is present in the
clearing meetings.
for significant
Other Reporting
In addition to the abovementioned financial reporting, there are
regular business review and board meetings in the portfolio
companies which ensure timely and high-quality reporting from
the portfolio companies to the corporate management.
Regular reports for Akastor and the portfolio companies are
submitted to the board of directors. The quarterly business
update contains key financial numbers, M&A updates, financing,
status of value creation plans, compliance, risk management
and share price information for the Akastor group. Further, it
21
contains key financial numbers, key operational topics, status
on value drivers as well as key market information for the main
portfolio companies. The monthly business update contains
high level financial and operational information for the Akastor
group, as well as key highlights for the main portfolio companies.
11. Remuneration of the Board of Directors
individual directors
The remuneration of the board of directors will reflect its
responsibilities, know-how and time commitment, as well as the
complexity of the business. The remuneration will be proposed
by the nomination committee, and is not performance-related or
linked to options in Akastor. More detailed information about the
remuneration of
the
remuneration report for 2021, as further described in section 12
below. Neither the directors, nor companies with whom they are
affiliated, should accept specific paid duties for Akastor beyond
their directorships. If they nevertheless do so, the board of
directors shall be informed and the remuneration shall be
approved by the board of directors. No remuneration shall be
accepted from anyone other than the company or the relevant
group company in connection with such duties.
is provided
in
12. Remuneration of Executive Personnel
The board of directors has adopted designated guidelines for
the remuneration of executive management pursuant to the
provisions of section 616a of the Public Limited Liability
Companies Act. The current guidelines were adopted by the
general meeting April 15, 2021. The board of directors’ has
suggested some amendments to the guidelines and the
updated policy will be presented and processed at the annual
general meeting on April 20, 2022. Upon approval, such updated
guidelines will replace the previous policy that was approved at
the annual general meeting 15 April 2021.
In accordance with section 616b of the Public Limited Liability
Companies Act, the board of directors has also prepared a
report on the remuneration to the executive management,
detailing the remuneration received by members of the
executive management in 2021. The report is available at www.
akastor.com, and will be subject for an advisory vote on the
annual general meeting 2022.
13. Information and Communication
Akastor has no option schemes or option programs for the
allotment of shares to employees. The Chief Executive Officer
determines the remuneration of executive management on the
basis of the guidelines laid down by the board of directors. All
performancerelated remuneration within the group will be
made subject
the
remuneration of each executive manager is provided in the
mentioned remuneration report for 2021.
to a cap. Further
information about
The company has adopted a designated communications and
investor relations policy which covers, among other things,
Annual Report 2021 | Corporate Governance Statement 22
guidelines for the company’s contact with shareholders other
than through general meetings.
15. Auditors
The external auditor presents a plan for the performance of the
audit work to the audit committee annually. In addition, the
auditor provides the audit committee with an annual written
confirmation to the effect that the independence requirement is
met. The auditor attends all audit committee meetings, and the
auditor has reviewed any material changes to the accounting
principles of the company, or to the internal controls of the
company, with the audit committee. The external auditor also
attends the board meeting where the annual financial statements
are reviewed and approved, normally in March. The board of
directors holds a minimum of one annual meeting with the
auditor without any executive personnel being in attendance.
The board’s audit committee stipulates guidelines on the scope
for using the auditor for services other than auditing, and makes
recommendations to the board of directors concerning the
appointment of the external auditor and the approval of the
auditor’s fees. Fees payable to the auditor, separated into those
relating to auditing and those relating to other services, are
specified in the «Other operating expenses» note to the
consolidated financial statements for the group and are also
reported to the general meeting. The auditor’s fees relating to
auditing are subject to approval by the general meeting.
The company’s reporting of financial and other information is
based on openness and the equal treatment of all securities
market players. The longterm purpose of the investor relations
function is to ensure access for the company to capital on
competitive terms, whilst at the same time ensuring that the
shareholders are provided with the most correct pricing of the
shares that can be achieved. This shall take place through
correct and timely distribution of price-sensitive information,
whilst ensuring, at the same time, that the company is in
compliance with applicable rules and market practices.
Reference is also made to the above discussion concerning the
flow of information between Akastor and Aker ASA in connection
with their cooperation within, inter alia, strategy, transactions,
and funding.
All stock exchange announcements and press releases are
made available on the company’s website, and stock exchange
announcements are also available at www.newsweb.no. The
company holds open presentations in connection with the
reporting of financial performance, either by a physical meeting
or by a conference call and webcast, and these presentations
are broadcasted on the internet. The financial calendar of the
company is available at www.akastor.com.
14. Take-overs
The overriding principle for Akastor is equal treatment of
shareholders. In a bid situation, the board of directors and
management have an independent responsibility to help ensure
that shareholders are treated equally, and that the company’s
business activities are not disrupted unnecessarily. In a take
over situation, the board will have a particular responsibility to
ensure that shareholders are given sufficient information and
time to form a view of the offer.
The board of directors has not deemed it appropriate to adopt
specific guidelines for take-over situations as long as Aker
Holdings AS continues to be the dominant shareholder of
Akastor. This represents a deviation from the Code of Practice.
Annual Report 2021 | Corporate Governance Statement 04.
a.
FINANCIALS AND NOTES
AKASTOR GROUP
Akastor Group | Consolidated income statement For the year ended December 31
Akastor Group | Consolidated statement of comprehensive income For the year ended December 31
Akastor Group | Consolidated statement of financial position For the year ended December 31
Akastor Group | Consolidated statement of changes in equity
Akastor Group | Consolidated statement of cash flow For the year ended December 31
General
Note 1 | Corporate information
Note 2 | Basis for preparation
Note 3 | Significant accounting policies
Note 4 | Significant accounting estimates and judgements
Performance of the year
Note 5 | Discontinued operations
Note 6 | Disposal of subsidiaries and business combination
Note 7 | Operating segments
Note 8 | Revenue and other income
Note 9 | Salaries, wages and social security costs
Note 10 | Other operating expenses
Note 11 | Net finance expenses
Note 12 | Income tax
Note 13 | Earnings per share
Assets
Note 14 | Property, plant and equipment
Note 15 | Intangible assets
Note 16 | Impairment testing of goodwill
Note 17 | Equity-accounted investees
Note 18 | Other noncurrent assets
Note 19 | Other investments
Note 20 | Noncurrent interestbearing receivables
Note 21 | Trade and other receivables
Note 22 | Cash and cash equivalents
Equity and liabilities
Note 23 | Capital and reserves
Note 24 | Borrowings
Note 25 | Other liabilities
Note 26 | Employee benefits – pension
Note 27 | Provisions
Note 28 | Trade and other payables
Financial risk management
Note 29 | Capital management
Note 30 | Financial risk management and exposures
Note 31 | Financial instruments
Other
Note 32 | Leases
Note 33 | Group companies
Note 34 | Related parties
23
24
25
26
27
28
29
29
30
36
38
39
41
45
48
48
49
50
52
53
54
55
56
57
58
58
58
59
60
61
62
63
66
66
67
68
71
74
76
78
Annual Report 2021 | Financials and Notes | Akastor GroupFinancials and Notes | Akastor Group 24
Akastor Group | Consolidated income statement
For the year ended December 31
Amounts in NOK million
Revenue and other income
Materials, goods and services
Salaries, wages and social security costs
Other operating expenses
Impairment loss on contract assets
Operating expenses
Operating profit before depreciation, amortization and impairment
Depreciation, amortization and impairment
Operating profit (loss)
Finance income
Finance expenses
Profit (loss) from equity-accounted investees
Impairment loss on receivables
Net finance expenses
Profit (loss) before tax
Income tax benefit (expense)
Profit (loss) from continuing operations
Profit (loss) from discontinued operations (net of income tax)
Profit (loss) for the period
Profit (loss) for the period attributable to:
Equity holders of the parent company
Noncontrolling interests
Basic / diluted earnings (loss) per share (NOK)
Basic / diluted earnings (loss) per share continuing operations (NOK)
Basic / diluted earnings (loss) per share discontinued operations (NOK)
1) See Note 5 Discontinued operations
Note
7, 8
9
10
8
14,15, 32
17
11
12
5
13
13
13
2021
953
(294)
(367)
(78)
(214)
(953)
-
(82)
(82)
369
(175)
(346)
-
(152)
(235)
20
(215)
1 140
925
919
6
3.38
(0.81)
4.20
2020
Restated1)
819
(450)
(302)
(138)
(890)
(71)
(61)
(132)
201
(226)
(256)
(106)
(387)
(519)
(18)
(537)
(47)
(584)
(581)
(3)
(2.14)
(1.97)
(0.17)
Annual Report 2021 | Financials and Notes | Akastor Group
Akastor Group | Consolidated statement of comprehensive income
For the year ended December 31
Amounts in NOK million
Profit (loss) for the period
Other comprehensive income
Cash flow hedges, effective portion of changes in fair value
Deferred tax of cash flow hedges, effective portion of changes in fair value
Cash flow hedges, reclassification to income statement
Deferred tax of cash flow hedges, reclassification to income statement
Total change in hedging reserve, net of tax
Total change in fair value reserve, net of tax
Currency translation differences foreign operations
Currency translation differences, reclassification to income statement upon disposal
Share of OCI from equity-accounted investees
Total change in currency translation reserve, net of tax
Total items that may be reclassified subsequently to profit or loss, net of tax
Remeasurement gain (loss) net defined benefit liability
Deferred tax of remeasurement gain (loss) net defined benefit liability
Total items that will not be reclassified to profit or loss, net of tax
26
Total other comprehensive income, net of tax
Total comprehensive income (loss) for the period, net of tax
Attributable to:
Equity holders of the parent company
Noncontrolling interests
25
Note
2021
925
2020
(584)
(22)
-
1
-
(21)
(20)
33
(472)
(7)
(446)
(487)
9
(6)
3
(484)
441
435
6
48
(10)
(2)
1
38
(42)
(60)
(7)
(20)
(86)
(90)
(37)
7
(30)
(120)
(704)
(701)
(3)
Annual Report 2021 | Financials and Notes | Akastor Group
26
Akastor Group | Consolidated statement of financial position
For the year ended December 31
Amounts in NOK million
Deferred tax assets
Property, plant and equipment
Intangible assets
Rightofuse assets
Equity-accounted investees
Other investments
Noncurrent interestbearing receivables
Non-current finance lease receivables
Other noncurrent assets
Total non-current assets
Current tax assets
Inventories
Trade and other receivables
Derivative financial instruments
Current finance lease receivables
Current investments
Cash and cash equivalents
Total current assets
Total assets
Issued capital incl. treasury shares
Other capital paid in
Reserves and retained earnings
Equity attributable to equity holders of the parent company
Noncontrolling interests
Total equity
Noncurrent borrowings
Noncurrent lease liabilities
Employee benefit obligations
Deferred tax liabilities
Other noncurrent liabilities
Provisions, non-current
Total non-current liabilities
Current borrowings
Current lease liabilities
Current tax liabilities
Provisions, current
Trade and other payables
Derivative financial instruments
Other current liabilities
Total current liabilities
Total liabilities
Total equity and liabilities
Note
2021
12
14
15
32
17
19
20
32
18
21
32
19
22
23
24
32
26
12
25
27
24
32
27
28
25
2020
329
1 017
1 595
468
1 064
1 469
115
15
29
6 100
28
485
2 191
61
7
275
3 047
9 147
161
1 538
1 959
3 657
11
3 669
628
433
388
10
478
50
42
251
145
41
3 408
1 625
315
176
21
6 025
-
5
872
10
64
147
89
1 187
7 212
161
1 538
2 393
4 091
18
4 109
1 372
72
108
4
628
26
2 211
1 986
16
82
1
20
625
-
148
892
3 103
7 212
1 119
159
8
109
2 060
37
3 492
5 479
9 147
Fornebu, March 25, 2022 | Board of Directors of Akastor ASA
Kristian Røkke | Chairman
Lone Fønss Schrøder | Deputy Chairman
Svein Oskar Stoknes | Director
Kathryn M. Baker | Director
Luis Araujo | Director
Henning Jensen | Director
Asle Christian Halvorsen | Director
Stian Sjølund | Director
Karl Erik Kjelstad | CEO
Annual Report 2021 | Financials and Notes | Akastor Group
27
Akastor Group | Consolidated statement of changes in equity
Share
capital
Treasury
shares
Other
capital
paid in
Hedging
reserve 1)
Fair
value
reserve1)
Currency
trans-
lation
reserve1)
Retained
earnings
Equity
attributable
to equity
holders of
the parent
company
Non-con-
trolling
interests
(NCI)
Total
equity
Amounts in NOK million
2020
Equity as of January 1, 2020
162
(2)
1 538
(17)
Profit (loss) for the period
Other comprehensive income
Total comprehensive income
Repayment of dividend
Acquisition of NCI
Equity as of December 31, 2020
162
(2)
1 538
2021
Profit (loss) for the period
Other comprehensive income
Total comprehensive income
Transaction with NCI
-
-
-
-
-
-
-
-
-
-
-
-
Equity as of December 31, 2021
162
(2)
1 538
38
38
21
-
(21)
(21)
-
-
1) See Note 23 Capital and reserves.
(10)
(42)
(42)
268
(86)
(86)
2 415
4 353
(581)
(30)
(612)
2
4
(581)
(120)
(701)
2
4
(52)
182
1 808
3 657
-
(20)
(20)
-
(72)
-
(446)
(446)
-
919
3
922
(1)
919
(484)
435
(1)
(264)
2 730
4 091
18
4 109
18
(3)
(3)
(4)
11
6
-
6
1
4 371
(584)
(120)
(704)
2
3 669
925
(484)
441
-
Annual Report 2021 | Financials and Notes | Akastor Group 28
Akastor Group | Consolidated statement of cash flow
For the year ended December 31
Amounts in NOK million
Note
2021
2020
Cash flow from operating activities
Profit (loss) for the period - continuing operations
Profit (loss) for the period - discontinued operations
Profit (loss) for the period
Adjustments for:
Income tax expense (benefit)
Net interest cost and unrealized currency (income) loss
Depreciation, amortization and impairment
(Gain) loss on disposal of subsidiaries
(Gain) loss on disposal of assets
(Profit) loss from equity-accounted investees
Other noncash effects
Profit (loss) for the period after adjustments
Changes in operating assets
Cash generated from operating activities
Interest paid
Interest received
Net Interest paid for leases
Income taxes paid
Net cash from operating activities
Cash flow from investing activities
Acquisition of property, plant and equipment
Payments for capitalized development
Acquisition of subsidiaries, net of cash acquired
Proceeds (payments) from sale of subsidiaries, net of cash
Acquisition of other investments
Payments to equity-accounted investees
Proceeds from finance lease receivables
Net cash flow from other investing activities
Net cash from investing activities
Cash flow from financing activities
Proceeds from borrowings
Repayment of borrowings
Payment of lease liabilities
Repayment of dividends
Proceeds from transaction with noncontrolling interests
Net cash used in financing activities
Effect of exchange rate changes on cash and bank deposits
Net increase (decrease) in cash and bank deposits
Cash and cash equivalents at the beginning of the period
Cash and cash equivalents at the end of the period
Of which is restricted cash
The statement included cash flows from discontinued operations prior to the disposal.
(215)
1 140
925
(20)
142
260
(1 225)
(51)
346
(272)
105
(113)
(8)
(120)
38
(14)
8
(96)
(112)
(24)
-
591
(9)
(47)
29
3
431
1 067
(1 472)
(112)
-
1
(516)
(5)
(186)
275
89
-
(537)
(47)
(584)
86
45
278
120
(2)
256
106
305
63
369
(122)
45
(34)
(47)
211
(29)
(38)
37
(77)
(120)
9
(1)
(219)
227
(316)
(139)
2
(227)
(45)
(280)
555
275
6
14, 15, 32
17
14
15
24
24
32
22
Annual Report 2021 | Financials and Notes | Akastor Group 29
Note 1 | Corporate information
Akastor ASA is a limited liability company incorporated and domiciled in
Functional and presentation currency
Norway and whose shares are publicly traded. The registered office is
The consolidated financial statements are presented in NOK, which is
located at Oksenøyveien 10, Bærum, Norway. The largest shareholder
Akastor ASA’s functional currency. All financial information presented in
is Aker Holding AS which is wholly owned by Aker ASA as of December
NOK has been rounded to the nearest million (NOK million), except when
31, 2021.
otherwise stated. The subtotals and totals in some of the tables in these
consolidated financial statements may not equal the sum of the amounts
The consolidated financial statements of Akastor ASA and its subsidiaries
shown due to rounding.
(collectively referred as Akastor or the group, and separately as group
companies) for the year ended December 31, 2021 were approved by
When the functional currency in a reporting unit is changed, the effect of the
the board of directors and CEO on March 25, 2022. The consolidated
change is accounted for prospectively.
financial statements will be authorized by the Annual General Meeting on
April 20, 2022.
Use of estimates and judgements
The group is an oilfield services investment company with a portfolio of
management to make judgements, estimates and assumptions that affect
industrial holdings and other investments. Akastor is listed on the Oslo Stock
the application of policies and reported amounts of assets and liabilities,
Exchange under the ticker AKAST. Information on the group’s structure is
income and expenses. Although management believes these assumptions
provided in Note 33 Group companies. Information on other related party
to be reasonable, given historical experience, actual amounts and results
relationships of the group is provided in Note 34 Related parties.
could differ from these estimates. The items involving a higher degree of
The preparation of financial statements in conformity with IFRS requires
judgement or complexity, and items where assumptions and estimates are
material to the consolidated financial statements, are disclosed in Note 4
Note 2 | Basis for preparation
Significant accounting estimates and judgements.
Basis of accounting
The estimates and underlying assumptions are reviewed on an ongoing
The consolidated financial statements have been prepared in accordance
basis. Revisions to accounting estimates are recognized in the period in
with International Financial Reporting Standards as adopted by the
which the estimate is revised and in any future periods affected.
European Union (IFRS), their interpretations adopted by the International
Accounting Standards Board (IASB) and the additional requirements of the
Adoption of new and revised standards and interpretations
Norwegian Accounting Act as of December 31, 2021.
The accounting policies adopted are consistent with those of the previous
Going concern basis of accounting
with effect from January 1, 2021, with no implementation impact on the
The consolidated financial statements have been prepared on a going
group’s consolidated financial statements:
concern basis, which assumes that the group will be able to meet the
mandatory terms and conditions of the banking facilities as disclosed in
Note 29 Capital management.
COVID19Related Rent Concessions (Amendment to IFRS 16)
Interest Rate Benchmark Reform – Phase 2 (Amendments to IFRS
financial year. The following standards and interpretations were adopted
Basis of measurement
9, IAS 39, IFRS 7, IFRS 4 and IFRS 16)
The consolidated financial statements have been prepared on the historical
cost basis except for the following material items, which are measured on
Standards issued but not yet effective
an alternative basis on each reporting date:
Several amended standards and interpretations are effective for annual
Derivative financial instruments are measured at fair value.
any new or amended standards and they are not expected to have a
periods beginning after January 1, 2021. The group has not early adopted
significant impact on the group’s consolidated financial statements.
Non-derivative financial instruments at Fair Value through Profit or
Loss (FVTPL) are measured at fair value.
Debt instrument at Fair Value through Other Comprehensive
Income (FVOCI) are measured at fair value.
Contingent considerations assumed in business disposals are
measured at fair value.
Net defined benefit (asset) liability is recognized at fair value of
plan assets less the present value of the defined benefit obligation.
Annual Report 2021 | Financials and Notes | Akastor Group 30
Note 3 | Significant accounting policies
A joint venture is an arrangement in which the group has joint control,
whereby the group has rights to the net assets of the arrangement, rather
Summary of significant accounting policies
to its assets and obligations for its liabilities. Joint control is established
The principal accounting policies applied in the preparation of these
by contractual agreement requiring unanimous consent of the ventures
consolidated financial statements are set out below. These policies have
for strategic, financial and operating decisions. An associate is an entity
been consistently applied to all the years presented, unless otherwise stated.
in which the group has significant influence, but not control or joint control,
Basis of consolidation
Subsidiaries
over the financial and operating policies.
Interests in joint ventures and associates are accounted for using the equity
Subsidiaries are entities controlled by the group. The group controls
method. They are initially recognized at cost, which includes transaction
an entity when it is exposed to, or has rights to, variable returns from
costs. Subsequent to initial recognition, the consolidated financial statements
its involvement with the entity and has the ability to affect those returns
include the group’s share of the profit and loss and other comprehensive
through its power over the entity. The financial statements of subsidiaries
income of the equity-accounted investees. The group’s investment includes
are included in the consolidated financial statements from the date on which
goodwill identified on acquisition, net of any accumulated impairment
control commences until the date of which control ceases.
losses. When the group’s share of losses exceeds its interest in an equity-
Business combinations
accounted investee, the carrying amount of that interest, including any long-
term investments, is reduced to zero, and further losses are not recognized
Business combinations are accounted for using the acquisition method
except to the extent that the group incurs legal or constructive obligations or
as of the acquisition date, which is the date when control is transferred
has made payments on behalf of the investee.
to the group. The consideration transferred in the acquisition is generally
measured at fair value, as are the identifiable net assets acquired. Any
The purpose of the investment determines the presentation of the group’s
goodwill that arises is tested annually for impairment.
share of profit and loss of the equity-accounted investee in the income
statement. Share of the profit or loss of a financial investment is reported as
Transaction costs, other than those associated with the issue of debt or
part of Net finance expenses.
equity securities incurred in connection with a business combination are
expensed as incurred.
Transactions eliminated on consolidation
Any contingent consideration payable is measured at fair value at the
losses or income and expenses arising from intra-group transactions, are
acquisition date. Changes in the fair value of the contingent consideration
eliminated in preparing the consolidated financial statements. Unrealized
from acquisition of a subsidiary or non-controlling interest for transactions
gains arising from transactions with associates and joint ventures are
will be recognized in Other income as gain or loss, except for the obligation
eliminated to the extent of the group’s interest in the entity. Unrealized
that is classified as equity.
losses are eliminated in the same way as unrealized gains, but only to the
Intra-group balances and transactions, and any unrealized gains and
extent that there is no evidence of impairment.
Non-controlling interests
Noncontrolling interests are measured initially at their fair value at the date
Assets held for sale
of acquisition. Changes in the group’s ownership interest in a subsidiary that
Non-current assets, or disposal groups comprising assets and liabilities,
do not result in a loss of control are accounted for as equity transactions.
that are expected to be recovered primarily through sale rather than through
Loss of control
continuing use, are classified as held for sale. This condition is regarded as
met only when the sale is highly probable and the asset or disposal group is
On the loss of control, the group derecognizes the assets and liabilities of
available for immediate sale in its present condition. Management must be
the subsidiary, any non-controlling interests and the other components of
committed to the sale, which should be expected to qualify for recognition
equity. Any resulting gain or loss is recognized in the income statement.
as a completed sale within one year from the date of classification.
Any interest retained in the former subsidiary is measured at fair value when
control is lost. Subsequently it is accounted for as an equity-accounted
Non-current assets and disposal groups classified as held for sale are
investee or as an available-for-sale financial asset depending on the level
measured at the lower of their carrying amount and fair value less costs to
of influence retained.
sell. Property, plant and equipment and intangible assets once classified
as held for sale are not depreciated or amortized, but are considered in the
Any contingent consideration receivable is measured at fair value at the
overall impairment testing of the disposal group.
disposal date. Changes in the fair value of the contingent consideration
from divestment of a subsidiary for transactions will be recognized in Other
No reclassifications are made for years prior to the year when non-current
income as gain or loss.
assets or disposal groups are classified as a held for sale.
Investments in joint ventures and associates
Discontinued operations
The group’s interests in equity-accounted investees comprise interests in
A discontinued operation is a component of the group’s business that
joint ventures and associates.
represents a separate major line of business or geographical area of
operations that has been disposed of or is held for sale, or is a subsidiary
acquired exclusively with a view to resale. Classification as a discontinued
Annual Report 2021 | Financials and Notes | Akastor Group 31
operation occurs upon disposal or when the operation meets the criteria to
Current/non-current classification
be classified as held for sale, if earlier.
An asset is classified as current when it is expected to be realized or is
In the consolidated income statement, income and expenses from
is held primarily for the purpose of being traded, or it is expected/due to
discontinued operations are reported separately from income and expenses
be realized or settled within twelve months after the reporting date. Other
intended for sale or consumption in the group’s normal operating cycle, it
from continuing operations, down to the level of profit after taxes. When an
assets are classified as non-current.
operation is classified as a discontinued operation, the comparative income
statement is restated as if the operation had been discontinued from the
A liability is classified as current when it is expected to be settled in the
start of the comparative year.
group’s normal operating cycle, is held primarily for the purpose of being
traded, the liability is due to be settled within twelve months after the
The statement of cash flow includes the cash flow from discontinued
reporting period, or if the group does not have an unconditional right to
operations prior to the disposal. Cash flows attributable to the operating,
defer settlement of the liability for at least twelve months after the reporting
investing and financing activities of discontinued operations are presented
period. All other liabilities are classified as non-current.
in the notes to the extent these represent cash flows with third parties.
Foreign currency
On initial recognition, a financial asset is classified as measured at amortized
Foreign currency transactions and balances
costs, FVOCI or FVTPL. The classification depends on the group’s business
Transactions in foreign currencies are translated at the exchange rate at
model for managing the financial assets and the contractual terms of the
Financial assets, financial liabilities and equity
the date of the transaction. Monetary assets and liabilities denominated
cash flows.
in foreign currencies at the reporting date are translated to the functional
currency at the exchange rate on that date. Foreign exchange differences
A financial asset is measured at amortized costs if the business
arising on translation are recognized in the income statement. Non
model is to hold the asset to collect contractual cash flows, and
monetary assets and liabilities measured in terms of historical cost in a
the contractual cash flows are solely payments of principal and
foreign currency are translated using the exchange rate on the date of the
interests (SPPI criterion).
transaction. Nonmonetary assets and liabilities denominated in foreign
currencies that are measured at fair value are translated to the functional
A debt instrument is classified at FVOCI if the business model
currency at the exchange rates on the date the fair value is determined.
is both collecting contractual cash flows and selling the financial
asset, and it meets the SPPI criterion.
Investments in foreign operations
Items included in the financial statements of each of the group’s entities
All financial assets not classified as measured at amortized cost or
are measured using the currency of the primary economic environment in
FVOCI are measured at FVTPL.
which the entity operates. The results and financial positions of all the group
entities that have a functional currency different from the group’s presen tation
Financial assets are not reclassified subsequent to their initial recognition
currency are translated into the presentation currency as follows:
unless the group changes its business model for managing financial assets.
Assets and liabilities, including goodwill and fair value adjustments,
Other investments
are translated at the closing exchange rate at the reporting date.
Other investments include equity and debt investments in companies where
the group has neither control nor significant influence, usually represented
Income statements are translated at average exchange rate for
by less than 20 percent of the voting power. The investments are categorized
the year, calculated on the basis of 12 monthly end rates.
as financial assets measured at FVTPL or FVOCI and recognized at fair
value at the reporting date. Subsequent to initial recognition, changes in
Exchange differences arising from the translation of the net investment
financial assets measured at FVTPL are recognized in profit and loss.
in foreign operations, and of related hedges, are included in other
comprehensive income as currency translation reserve. These translation
differences are reclassified to the income statement upon disposal of the
related operations or when settlement is likely to occur in the near future.
Monetary items that are receivable from or payable to a foreign operation
are considered as part of the net investment in that foreign operation, when
the settlement is neither planned nor likely to occur in the foreseeable future.
Exchange differences arising from these monetary items are recognized in
other comprehensive income.
Annual Report 2021 | Financials and Notes | Akastor Group 32
When a debt instrument is classified as financial asset measured at FVOCI,
Revenue from contract with customers
interest income calculated using the effective interest method, foreign
The significant accounting policies relating to revenue recognition from con-
exchange gains and losses and impairment losses are recognized in profit
tracts with customers are described in Note 8 Revenue and other income.
and loss. Other changes in fair value are recognized in other comprehensive
income and presented as part of fair value reserve. When financial asset
Income tax
measured at FVOCI is derecognized, the gain or loss accumulated in other
Income tax recognized in the income statement comprises current and
comprehensive income is reclassified to profit and loss.
deferred tax. Income tax is recognized in the income statement except
to the extent that it relates to items recognized directly in equity or other
Trade and other receivables
comprehensive income.
Trade and other receivables are generally classified as financial assets
measured at amortized costs. They are recognized at the original invoiced
Current tax is the expected tax payable or receivable on the taxable income
amount, less loss allowance made for credit losses. The interest rate
or loss for the year, using tax rates enacted or substantially enacted at the
element is disregarded if insignificant, which is the case for the majority of
reporting date, and any adjustment to tax payable in respect of previous
the group’s trade receivables.
years. Current tax payable also includes any tax liability arising from the
declaration of dividends, recognized at the same time as the liability to pay
Interest-bearing receivables
the related dividend.
Interestbearing receivables include loans to related parties and are
generally classified as financial assets measured at amortized costs.
Deferred tax is recognized in respect of temporary differences between
Such financial assets are recognized initially at fair value and subsequent
the carrying amounts of assets and liabilities for financial reporting and the
measurement at amortized cost using the effective interest method, less
amounts used for taxation purposes. Deferred tax is not recognized for:
any impairment losses.
Cash and cash equivalents
Goodwill not deductible for tax purposes
Cash and cash equivalents include cash on hand, demand deposits held at
The initial recognition of assets or liabilities that affects neither
banks and other short-term highly liquid investments with original maturity
accounting nor taxable profit
of three months or less.
Trade and other payables
Temporary differences relating to investments in subsidiaries to
the extent that they will not reverse in the foreseeable future
Trade payables are recognized at the original invoiced amount. Other
payables are recognized initially at fair value. Trade and other payables
Deferred tax is measured at the tax rates that are expected to be applied to
are valued at amortized cost using the effective interest rate method. The
temporary differences when they reverse, based on the tax rates that have
interest rate element is disregarded if it is insignificant, which is the case for
been enacted or substantively enacted at the reporting date.
the majority of the group’s trade payables.
Interest-bearing borrowings
Deferred tax assets and liabilities are offset if there is a legally enforceable
right to offset current tax liabilities and assets, and they relate to income taxes
Interestbearing borrowings are recognized initially at fair value less
levied by the same tax authority on the same taxable entity, or on different tax-
attributable transaction costs. Subsequent to initial recognition, interest-
able entities which intend either to settle current tax liabilities and assets on a
bearing borrowings are measured at amortized cost with any difference
net basis, or to realize the tax assets and settle the liabilities simultaneously.
between cost and redemption value being recognized in the income
statement over the period of the borrowings on an effective interest basis.
Deferred tax assets are recognized for unused tax losses, tax credits
Share capital
and deductible temporary differences, to the extent that it is probable that
future taxable profits will be available against which they can be utilized.
Ordinary shares are classified as equity. Repurchase of share capital is
Measurement of deferred tax assets are reviewed at each reporting date.
recognized as a reduction in equity and is classified as treasury shares.
Impairment
Finance income and expense
Trade receivables and contract assets
Finance income and expense include interest income and expense,
Loss allowance is recognized in profit or loss and measured at lifetime
foreign exchange gains and losses, dividend income, gains and losses on
ECLs. ECLs are a probabilityweighted estimate of credit losses. Lifetime
derivatives, as well as change in fair value of financial assets measured
ECLs are the ECLs that result from all possible default events over the
at FVTPL. Interest income and expenses include calculated interest using
expected life of a financial asset. The group considers a financial asset to be
the effective interest method, in addition to discounting effects from assets
in default when the group is unlikely to receive its outstanding contractual
and liabilities measured at fair value. Gains and losses on derivatives
amount in full, or the contractual payments are more than 90 days past due.
include effects from derivatives that do not qualify for hedge accounting
When estimating ECLs, the group considers reasonable and supportable
and embedded derivatives, in addition to the ineffective portion of qualifying
information that is relevant and available without undue cost or effort, based
hedges.
on the group’s historical experience including forward-looking information.
The loss allowance is recognized in financial items to the extent that
impairment is caused by the insolvency of the customer.
Annual Report 2021 | Financials and Notes | Akastor Group 33
The gross carrying amount of trade receivable is written off when the group
Warranties
has no reasonable expectations of recovering a trade receivable in its
Provision for warranties is recognized when the underlying products or
entirety or a portion thereof. The group individually makes an assessment
services are sold. The provision is based on historical warranty data and
with respect to the timing and amount of writeoff based on whether there
a weighting of all possible outcomes against their associated probabilities.
is a reasonable expectation of recovery. Trade receivables that are written
off could still be subject to enforcement activities in order to comply with the
Onerous contracts
group’s procedures for recovery of amounts due.
Provision for onerous contracts is recognized when the expected benefits to
be derived by the group from a contract are lower than the unavoidable costs
Debt instruments measured at amortized cost or at FVOCI
of meeting the obligations under the contract. The provision is measured at
Debt instruments measured at amortized cost or at FVOCI are considered
the lower of the expected cost of terminating the contract and the expected net
to be “credit-impaired” when there is significant financial difficulty of the
cost of continuing with the contract. Before a provision is recognized, the group
borrower or it is probable that the borrower will enter bankruptcy or other
recognizes any impairment loss on the assets associated with the contract.
financial reorganization. The loss allowance is charged to profit and loss.
Restructuring
Non-financial assets
A restructuring provision is recognized when the group has developed a
The carrying amounts of the group’s non-financial assets (other than
detailed formal plan for the restructuring and has raised a valid expectation
employee benefit assets, inventories and deferred tax assets) are reviewed
in those affected that the entity will carry out the restructuring by starting
at the end of each reporting period to determine whether there is any
to implement the plan or announcing its main features to those affected by
indication of impairment. If an indication of impairment exists, the asset’s
it. The measurement of a restructuring provision includes only the direct
recoverable amount is estimated. Cashgenerating units (CGU) containing
expenditures arising from the restructuring, which are those amounts that
goodwill, intangible assets with an indefinite useful life and intangible assets
are both necessarily entailed by the restructuring and not associated with
that are not yet available for use are tested for impairment annually.
the ongoing activities of the entity.
The recoverable amount is the greater of fair value less costs to sell and
Leases
value in use. In assessing value in use, the estimated future cash flows
As a lessee
are discounted to their present value using a pre-tax discount rate that
Right-of-use assets
reflects current market assessments of the time value of money and the
The group recognizes rightofuse asset at the lease commencement date.
risks specific to the asset. For an asset that does not generate largely
The right-of-use asset is initially measured at cost, which comprises the
independent cash inflows, the recoverable amount is determined for the
initial amount of the lease liability adjusted for any prepaid lease payments
CGU to which the asset belongs.
made at or before the commencement date, plus any initial direct costs.
Subsequently, the right-of-use asset is depreciated on a straight-line basis
An impairment loss is recognized whenever the carrying amount of an
over the shorter of its estimated useful life and the lease term. In addition,
asset or a CGU exceeds its recoverable amount. Impairment losses are
the right-of-asset is subject to impairment assessment of non-financial
recognized in the income statement.
assets and adjusted for certain remeasurement of the lease liability.
An impairment loss recognized in respect of a CGU (or a group of CGUs)
Lease liabilities
containing goodwill is allocated first to goodwill and then to the other assets
At the lease commencement date, the group recognizes lease liability
in the CGU(s) on a pro rata basis.
measured at the present value of the lease payments over the lease term,
discounted using the group's incremental interest rate. Generally, the lease
An impairment loss on goodwill is not reversed. An impairment loss on
payments include fixed payments and variable lease payments that depend
other assets is reversed if there has been a change in the estimates used
on an index or rate.
to determine the recoverable amount, and the change can be objectively
related to an event occurring after the impairment is recognized. An
The lease liability is subsequently increased by the interest cost on the
impairment loss is reversed only to the extent that the asset’s carrying
lease liability and decreased by lease payment made. It is remeasured
amount does not exceed the carrying amount that would have been
when there is a change in future lease payments arising from a change in
determined, net of depreciation or amortization, if no impairment loss had
an index or rate, or as appropriate, changes in the assessment of whether
been recognized.
Provisions
an extension option is reasonably certain to be exercised or a termination
option is reasonably certain not to be exercised.
A provision is recognized when the group has a present obligation as a
Short term leases and leases of low-value assets
result of a past event that can be estimated reliably and it is probable that
The group applies the recognition exemption to its leases that have a lease
the group will be required to settle the obligation. If the effect is material,
term of 12 months or less from the commencement date and do not contain
provisions are determined by discounting the expected future cash flows at
a purchase option (shortterm leases). The group also applies recognition
a market based pre-tax rate that reflects current market assessments of the
exemption to leases that are considered of low-value assets, mainly IT
time value of money and, where appropriate, the liability-specific risks. The
equipment and office equipment. Lease payments associated with the short
unwinding of the discount is recognized as finance expense.
-term leases and leases of low -value assets are recognized as expenses
on a straight line basis over the lease term.
Annual Report 2021 | Financials and Notes | Akastor Group 34
Lease term
Intangible assets
The group determines the lease term as the noncancellable term of the
Goodwill
lease, together with any periods covered by an option to extend the lease
Goodwill that arises from the acquisition of subsidiaries is presented as
if it is reasonably certain to be exercised, or any period covered by an
intangible asset. For the measurement of goodwill at initial recognition, see
option to terminate the lease if it is reasonably certain not to be exercised.
Business combinations.
The group applies judgment in evaluating whether it is reasonably certain
to exercise extension option, considering all relevant factors that create
Goodwill is measured at cost less accumulated impairment losses. In
economic incentive to exercise the extension option.
respect of equity-accounted investees, the carrying amount of goodwill is
As a lessor
included in the carrying amount of the investment, and any impairment loss
is allocated to the carrying amount of the equity-accounted investee as a
When the group acts as a lessor, it determines at lease inception whether
whole.
each lease is a finance lease or an operating lease.
When the group disposes of an operation within a CGU or group of CGUs
To classify each lease, the group makes an overall assessment of whether
to which goodwill has been allocated, a portion of the goodwill is included
the lease transfers substantially all of the risks and rewards incidental to
in the carrying amount of the operation when determining the gain or loss
ownership of the underlying asset. If this is the case, then the lease is a
on disposal. The portion of the goodwill allocated is measured based on
finance lease; if not, then it is an operating lease. As part of this assessment,
the relative values of the operation disposed of and the portion of the CGU
the group considers certain indicators such as whether the lease is for the
retained at the date of partial disposal, unless it can be demonstrated that
major part of the economic life of the asset.
another method better reflects the goodwill associated with the operation
disposed of. The same principle is used for allocation of goodwill when the
When the group is an intermediate lessor, it accounts for its interests in the
group reorganizes its businesses.
head lease and the sub-lease separately. It assesses the lease classification
of a sublease with reference to the rightofuse asset arising from the head
Research and development
lease, not with reference to the underlying asset.
Expenditures on research activities undertaken with the prospect of
obtaining new scientific or technical knowledge and understanding is
The group recognizes lease payments received under operating leases as
recognized in the income statement as incurred.
income on a straight line basis over the lease term as part of “Lease revenue”.
Property, plant and equipment
Development activities involve a plan or design for the production of new or
substantially improved products or processes. Development expenditure is
Property, plant and equipment are measured at cost less accumulated
capitalized only if development costs can be measured reliably, the product
depreciation and impairment losses. The cost of selfconstructed assets
or process is technically and commercially feasible, future economic
includes the cost of materials, direct labour, borrowing costs on qualifying
benefits are probable and the group intends to and has sufficient resources
assets, production overheads and the estimated costs of dismantling and
to complete development and to use or sell the asset. The capitalized
removing the assets and restoring the site on which they are located.
expenditure includes cost of materials, direct labour overhead costs that
If the components of property, plant and equipment have different useful
capitalized interest on qualifying assets. Other development expenditures
lives, they are accounted for as separate components.
are recognized in the income statement as an expense as incurred.
are directly attributable to preparing the asset for it intended use and
Subsequent costs
Capitalized development expenditure is measured at cost less accumulated
The group capitalizes the cost of a replacement part or a component of
amortization and accumulated impairment losses.
property, plant and equipment when that cost is incurred if it is probable
that the future economic benefits embodied with the item will flow to the
Other intangible assets
group and the cost of the item can be measured reliably. All other costs are
Acquired intangible assets are measured at cost less accumulated
expensed as incurred.
amortization and impairment losses.
Depreciation
Subsequent expenditures
Depreciation is normally recognized on a straightline basis over the
Subsequent expenditures on intangible assets are capitalized only when
estimated useful lives of property, plant and equipment.
they increase the future economic benefits embodied in the specific asset to
which they relate. All other expenditures are expensed as incurred.
Amortization
Amortization is recognized in the income statement on a straightline basis
over the estimated useful lives of intangible assets unless such useful
lives are indefinite. Intangible assets are amortized from the date they are
available for use.
Annual Report 2021 | Financials and Notes | Akastor Group 35
Employee benefits
Defined contribution plans
Obligations for contributions to defined contribution pension plans are
recognized as an expense in the income statement as incurred.
Defined benefit plans
The group’s net obligation in respect of defined benefit pension plans is
calculated separately for each plan by estimating the amount of future
benefit that employees have earned in the current and prior periods;
discounting that amount and deducting the fair value of any plan assets.
The calculation of defined benefit obligations is performed annually by a
qualified actuary using the projected unit credit method. The discount
rate is the yield at the reporting date on government bonds or high-quality
corporate bonds with maturities consistent with the terms of the obligations.
Remeasurement of the net defined benefit liability, which comprises
actuarial gains and losses, the return on plan assets (excluding interest)
and the effect of the asset ceiling (if any, excluding interest), are recognized
immediately in other comprehensive income. The group determines the net
interest expense (income) on the net defined benefit liability (asset) for the
period by applying the discount rate used to measure the defined benefit
obligation at the beginning of the annual period to the then-net defined
benefit liability (asset), taking into account any changes in the net defined
benefit liability (asset) during the period as a result of contributions and
benefit payments. Net interest expense and other expenses related to
defined benefit plans are recognized in the income statement.
When the benefits of a plan are changed or when a plan is curtailed, the
resulting change in benefit that relates to past service or the gain or loss on
curtailment is recognized immediately in the income statement. The group
recognizes gains and losses on the settlement of a defined benefit plan
when the settlement occurs.
Fair value measurement
When available, the group measures the fair value of a financial instrument
using the quoted price in an active market for that instrument. If there is no
quoted price in an active market, then the group uses valuation techniques
that maximize the use of relevant observable inputs and minimize the use
of unobservable inputs. The chosen valuation technique incorporates all
of the factors that market participants would take into account in pricing a
transaction.
The best evidence of the fair value of a financial instrument on initial
recognition is normally the transaction price. If the group determines that
the fair value on initial recognition differs from the transaction price and
the fair value is evidenced neither by a quoted price in an active market
for an identical asset or liability nor based on a valuation technique that
uses only data from observable markets, the financial instrument is initially
measured at fair value, and the difference between the fair value on initial
recognition and the transaction price is recognized as a deferred gain or
loss. Subsequently, the deferred gain or loss is recognized in profit or loss
on an appropriate basis over the life of the instrument.
Annual Report 2021 | Financials and Notes | Akastor Group 36
Note 4 | Significant accounting estimates and judgements
Estimates and judgements are continually reviewed and are based on
of judgment. Further details about goodwill allocation and impairment
historical experiences and expectations of future events. The resulting
testing are included in Note 16 Impairment testing of goodwill.
accounting estimates will, by definition, seldom accurately match actual
results, but are based on the best estimate at the time. Estimates and
Income taxes
assumptions that have a significant risk of causing material adjustments to
The group is subject to income taxes in numerous jurisdictions. Significant
the carrying amounts of assets and liabilities within the next financial year
judgement is required to determine the worldwide provision for income
are discussed below.
Fair value measurement
taxes. There are many transactions and calculations for which the ultimate
tax determination is uncertain during the ordinary course of business.
Provisions for anticipated tax audit issues are based on estimates of
The group has invested in significant financial assets that require the
eventual additional taxes.
measurement of fair value. If there is no quoted price in an active market,
then the group uses valuation techniques that maximize the use of
Income tax expense is calculated based on reported income in the different
relevant observable inputs and minimize the use of unobservable inputs.
legal entities. Deferred income tax expense is calculated based on the
The chosen valuation technique incorporates all of the factors that market
temporary differences between the assets’ carrying amount for financial
participants would take into account in pricing a transaction. The fair value
reporting purposes and their respective tax basis. The total amount of
measurement requires a high degree of judgment. Judgements include
income tax expense and allocation between current and deferred income tax
considerations of inputs such as cash flow projection, discount rate and
requires management’s interpretation of complex tax laws and regulations
volatility. Further information about the fair value measurement using level
in the many tax jurisdictions where the group operates.
3 inputs is included in Note 31 Financial Instruments.
Deferred and contingent considerations
of future recoverability of the deferred tax benefit. Expected recoverability
Deferred and contingent considerations
resulting
from business
may result from expected taxable income in the near future, planned
combinations and disposals are measured at fair value at transaction date.
transactions or planned tax optimizing measures. Economic conditions may
When a deferred and contingent consideration meets the definition of a
change and lead to a different conclusion regarding recoverability, and such
financial asset or liability, it is subsequently remeasured at fair value at the
change may affect the results for each future reporting period.
Valuation of deferred tax assets is dependent on management’s assessment
reporting date. The determination of fair value is based on discounted cash
flows. Key assumptions made by the management include the probability of
Tax authorities in different jurisdictions may challenge calculation of income
meeting each performance target and the discount factor.
taxes from prior periods. Such processes may lead to changes to prior
periods’ taxable income, resulting in changes to income tax expense. When
Impairment of non-financial assets
tax authorities challenge income tax calculations, management is required
Property, plant and equipment and intangible assets
to make estimates of the probability and amount of possible tax adjustments.
The group has noncurrent assets recognized in the consolidated statement
Such estimates may change as additional information becomes known.
of financial position related to Property, plant and equipment and intangible
Further details about income taxes are included in Note 12 Income tax.
assets. The value in use of some of these assets can be significantly
impacted by changes of market conditions. The group considers whether
Pension benefits
there are indications of impairment on the carrying amounts of such non
The present value of the pension obligations depends on a number of factors
current assets. If such indications exist, an impairment test is performed
determined on the basis of actuarial assumptions. These assumptions
to assess whether or not the assets should be impaired. The valuations,
include financial factors such as the discount rate, expected salary growth,
often determined by value in use calculations, will often be performed based
inflation and return on assets as well as demographical factors concerning
on estimates of future cash flows discounted by an appropriate discount
mortality, employee turnover, disability and early retirement. Assumptions
rate. Significant estimates and judgments are made by the management,
about all these factors are based on the situation at the time the assessment
including determining appropriated cashgenerating units and discount
is made. However, it is reasonably certain that such factors will change over
rate, projections for future cash flows and assumptions of future market
the very long periods for which pension calculations are made. Any changes
conditions. References are made to Note 14 Property, plant and equipment
in these assumptions will affect the calculated pension obligations with
and Note 15 Intangible assets.
immediate recognition in other comprehensive income. Further information
about the pension obligations and the assumptions used are included in
Goodwill
Note 26 Employee benefits - pension.
The group performs impairment testing of goodwill annually or more
frequently if any impairment indicators are identified. The recoverable
Lease terms
amounts of cashgenerating units to which goodwill is allocated have been
Some of the property leases, in which the group is a lessee, contain
determined based on value-in-use calculations. These calculations require
extension or termination options exercisable before the end of the non-
management to estimate future cash flows expected to arise from these
cancellable period. These options are used to provide operational flexibility
cash-generating units and an appropriate discount rate to reflect the time
for the group. In determining the lease term, the group considers all facts
value of the money. Key assumptions made by the management include
and circumstances that create an economic incentive to exercise an
also assumptions for future market conditions, which require a high degree
extension option, or not exercise a termination option. Extension options (or
Annual Report 2021 | Financials and Notes | Akastor Group 37
periods after termination options) are only included in the lease term if the
lease is reasonably certain to be extended (or not terminated). The most
relevant factors to be considered as “creating economic incentive” include
significant leasehold improvement, alternatives for the leased property and
the costs and business disruption required to replace the leased assets.
Most extension options in offices leases have not been included in the lease
term, because the group expects to be able to replace the assets without
significant cost or business disruption. Most of the early termination options
are not considered in the lease term either as the group assesses it as
reasonably certain that the leases will not be terminated early.
The lease term assessment requires management’s judgment and is made
at the commencement of the leases. The lease term is reassessed if an
option is actually exercised or the group becomes obliged to exercise it. The
assessment of reasonable certainty is only revised if a significant event or a
significant change in circumstances occurs, which affects this assessment,
and that is within the group’s control. Please see Note 32 Leases for more
information about the leases where the group is a lessee.
Legal disputes and contingent liabilities
Given the scope of the group’s worldwide operations, group companies are
inevitably involved in legal disputes in the course of their business activities.
In addition, as an investment company, Akastor and its portfolio companies
from time to time engage in mergers, acquisitions and other transactions
that could expose the companies to financial and other non-operational
risks, such as indemnity claims and price adjustment mechanisms resulting
in recognition of deferred settlement obligations.
Provisions have been made to cover the expected outcome of the legal
claims and disputes to the extent negative outcomes are likely and reliable
estimates can be made. However, the final outcomes of these cases are
subject to uncertainties, and resulting liabilities may exceed provisions
recognized. The group follows the development of these disputes on case
bycase basis and makes assessment based on all available evidence as
at the reporting date.
Annual Report 2021 | Financials and Notes | Akastor Group 38
Note 5 | Discontinued operations
Discontinued operations MHWirth
200 million in consideration, of which USD 120 million was paid in cash at
On October 1, 2021, Akastor completed the transaction to bring together
closing. HMH has issued shareholder notes to Akastor and Baker Hughes
Akastor’s wholly owned subsidiary, MHWirth AS (MHWirth) and Baker
representing the balance of the consideration owed to them. The notes are
Hughes’ Subsea Drilling Systems (SDS) business to create a joint
subordinated to HMH’s external debt financing. HMH financed the cash
venture company HMH. HMH delivers a global fullservice offshore drilling
consideration payable to Baker Hughes and Akastor by way of a USD 220
equipment offering that will provide customers with a broad portfolio of
million bank facility.
products and services.
HMH is owned 50/50 by Akastor and Baker Hughes. Akastor contributed
and accounted for using the equity method. See Note 17 Equity-accounted
its shares in MHWirth to HMH in return for 50% of the shares of HMH and
investees for more information. MHWirth is classified as discontinued
USD 120 million in consideration, of which USD 100 million (before certain
operations and the comparative consolidated income statement has been
adjustments) was paid in cash at closing. Baker Hughes contributed the
restated to show the discontinued operations separately from continuing
SDS business to HMH in return for the other 50% of the shares and USD
operations.
Following the transaction, HMH is classified as a joint venture to the group
Results of discontinued operations
Amounts in NOK million
Revenue
Expenses
Net financial items
Profit (loss) before tax
Income tax
Profit (loss) from operating activities, net of tax
Gain (loss) on sale of discontinued operations 1)
Net profit (loss) from discontinued operations
Basic/diluted earnings (loss) per share from discontinued operations (NOK)
2021
2020
2 024
(2 096)
(27)
(99)
3
(96)
1 236
1 140
4.20
3 758
(3 574)
(49)
136
(67)
68
(115)
(47)
(0.17)
1) Includes currency translation differences of NOK 362 million that were reclassified from Other Comprehensive Income to the income statement as part of gain from the
disposal of MHWirth in 2021.
Gain on sale from the disposal in 2021 included gain of NOK 1 240 million for MHWirth divestment, offset by loss of NOK 4 million on divestments from
previous years. The loss on sale of discontinued operations in 2020 was mainly related to reassessment of contingent considerations related to divestments
from prior years.
Cash flows from (used in) discontinued operations
Amounts in NOK million
Net cash from operating activities
Net cash from investing activities (incl. net cash proceeds from sale of the operations)
Net cash from financing activities
Net cash flow from discontinued operations
2021
2020
50
592
(49)
593
302
(44)
(75)
183
Annual Report 2021 | Financials and Notes | Akastor Group
39
Note 6 | Disposal of subsidiaries and business combination
Disposal of entities in 2021
Disposal of MHWirth
Disposal of AGR Well Management Limited (UK)
On October 1, 2021, Akastor completed the transaction to bring together
On December 22, 2021, Akastor completed the transfer of the shares in
Akastor’s wholly owned subsidiary, MHWirth AS (MHWirth) and Baker
AGR Well Management Limited (“AGR Well Management”), a wholly-
Hughes’ Subsea Drilling Systems (SDS) business to create a joint venture
owned subsidiary, to SpotOn Energy Holding AS (“SpotOn Energy”). As
company HMH. Following the transaction, MHWirth was deconsolidated
compensation for the transfer, Akastor, through its subsidiary AGR AS,
and HMH is classified as a joint venture to the group and accounted for
received 20% ownership in SpotOn Energy, which is expected to strengthen
using the equity method. See Note 5 discontinued operations for more
the cooperation between AGR and SpotOn Energy going forward. SpotOn
information about the transaction.
Energy is accounted as an associated company to the group.
Effect of disposal on the financial position of the group
Amounts in NOK million
Deferred tax assets
Property, plant and equipment
Right of Use assets
Intangible assets
Other noncurrent assets
Inventories
Trade and other receivables
Other current assets
Cash and cash equivalents
Pension liabilities
Lease liability, non-current
Other noncurrent liabilities
Lease liability, current
Trade and other payables
Other current liabilities
Currency translation reserve
Net assets and liabilities 1)
Total consideration at fair value 2)
Portion of consideration received in cash, net of transaction costs
Cash and cash equivalents disposed of
Cash inflows from disposal, net of cash disposed of 3)
2021
(304)
(646)
(416)
(1 281)
(31)
(429)
(1 303)
(22)
(165)
243
305
40
93
1 377
86
361
(2 092)
3 322
805
(165)
640
1) Includes net assets of NOK 2 082 million in MHWirth and NOK 10 million in AGR Well Management.
2) Total consideration at fair value from disposal of MHWirth includes fair value of 50% shares of HMH, shareholder notes of USD 20 million as well as cash received from the
transaction, reduced by provision for contingent considerations mainly related to indemnity liabilities for pension plans in MHWirth. See also Note 25 Other liabilities.
3) Net cash flows from disposal excludes the net cash outflow of NOK 49 million related to divestments made in prior years.
Annual Report 2021 | Financials and Notes | Akastor Group 40
Business combinations in 2020
Acquisition of DDW Offshore AS
The group expects that the restructuring will give DDW Offshore a
predictable and viable financial structure for the coming three years. DDW
DDW Offshore AS (previously DOF Deepwater AS) was a joint venture
Offshore operates in a market which remains challenging, but with this
between Akastor and DOF ASA (“DOF”). On October 9, 2020, DDW
financial structure and the relative modern and versatile fleet, the company
Offshore completed a restructuring of its debt with its lenders. The
should be well positioned to remain as a market player and thereby secure
restructuring involved DOF transferring all of its shares in DDW Offshore
revenue in a more normalized market in the future.
to Akastor for a nominal amount, and Akastor hence assuming 100 percent
ownership in the company. Further, 50 percent of the debt in DDW Offshore
The acquired DDW Offshore contributed revenues of NOK 8 million and net
was converted to equity and the remaining 50 percent remains on existing
loss of NOK 18 million for the period from the acquisition date to December
terms, including a parent company guarantee from Akastor ASA, albeit with
31, 2020. If the acquisition of DDW Offshore had occurred on January 1,
certain adjustments that include i.a. no fixed instalments except an upfront
2020, the group estimates that consolidated revenue would have been
repayment of NOK 20 million. The maturity date of the debts is in October
NOK 4 693 million and net loss after tax would have been NOK 881 million
2023. The company is obliged to divest all its five vessels on or around the
for the year ended December 31, 2020. In determining these amounts,
maturity date of the debts and the sales proceeds after transaction costs
management has assumed that the fair value adjustments, determined
shall be shared 50/50 between the lenders and DDW Offshore.
provisionally, that arose on the date of acquisition would have been the
DDW Offshore AS owns five modern Anchor Handling Tug Supply (AHTS)
vessels with capability to operate and support clients on a worldwide basis.
Details of the net assets acquired are as follows. No goodwill is identified
same if the acquisition had occurred on January 1, 2020.
The vessels are specially designed to perform anchor-handling, towing, and
in the transaction.
supply services at offshore oil and gas fields.
Identifiable assets and liabilities acquired in 2020
Amounts in NOK million
Property, plant and equipment
Inventories
Trade and other receivables
Cash and cash equivalents
External borrowings
Trade and other payables
Other liabilities
Total net identifiable assets acquired
DDW Offshore
397
12
9
37
(493)
(24)
(198)
(262)
Trade and other receivables comprise gross contractual amounts due of NOK 66 million in DDW Offshore, of which NOK 57 million was expected to be
uncollectable at the date of acquisition.
Annual Report 2021 | Financials and Notes | Akastor Group 41
Note 7 | Operating segments
Basis for segmentation
As a result of the transaction to contribute MHWirth into the joint
As of December 31, 2021, Akastor has three reportable segments which
venture HMH, MHWirth was presented as discontinued operations and
are the strategic business units of the group. The strategic business units
deconsolidated in 2021. See Note 5 Discontinued operations for more
are managed separately and offer different products and services due
information about the transaction. MHWirth is not presented as a reportable
to different market segments and different strategies for their projects,
segment as of December 31, 2021 and the historical segment information
products and services:
in 2020 has been restated.
HMH is a premier drilling solutions provider, which was formed as
HMH and AKOFS Offshore are classified as joint ventures and accounted
an independent company in October 2021 through the merger of
for using the equity method, see Note 17 Equity-accounted investees. The
Baker Hughes' Subsea Drilling Systems business and Akastor's
segment information of the two joint ventures are presented at 100% basis.
wholly owned subsidiary, MHWirth AS. HMH combines integrated
delivery capabilities, capital, renowned industry expertise and
Further, Akastor holds 100 percent ownership in Cool Sorption, 100 percent
delivers the full range of offshore drilling equipment products and
in DDW Offshore AS, 15 percent economic interest in NES Fircroft and 93
packages at scale.
percent of Aker Pensjonskasse, as well as equity instruments in Odfjell
Drilling and Awilco Drilling. These are included in “Other holdings”.
AKOFS Offshore is a global provider of vesselbased subsea well
construction and intervention services to the oil and gas industry,
Measurement of segment performance
covering all phases from conceptual development to project
Segment performance is measured by operating profit before depreciation,
execution and offshore operations.
amortization and impairment (EBITDA) which is reviewed by the group’s
AGR is a well design and drilling project management, HSEQ,
Segment profit, together with key financial information as described below,
reservoir and field management service company delivering
gives the Executive Management Group relevant information in evaluating
solutions for the entire field life cycle. The company also provides
the results of the operating segments and is relevant in evaluating the
rig procurement,
tailored
training, software and
technical
results of the segments relative to other entities operating within these
manpower for clients globally.
industries. Inter-segment pricing is determined on an arm’s length basis.
Executive Management Group (the chief operating decision maker).
Annual Report 2021 | Financials and Notes | Akastor Group 42
Information about reportable segments
Amounts in NOK million
Note
HMH
(JV) 1)
AKOFS
Offshore
(JV)
AGR
Other
holdings
Total
operating
segments
Adjust-
ment
of JVs
Elimi na-
tions
Total
Akastor
2021
Income statement
External revenue and other
income
Intersegment revenue
Total revenue and other income
Operating profit before
depreciation, amortization and
impairment (EBITDA)
Depreciation and amortization
14, 15, 32
Impairment
Operating profit (loss) (EBIT)
Assets
Current operating assets
Noncurrent operating assets
Finance lease receivables
32
Segment assets
Liabilities
Current operating liabilities
Noncurrent operating liabilities
Lease liabilities
Segment liabilities
32
Net current operating assets
Net capital employed
1 419
1 269
1 419
1 269
215
(116)
99
320
(365)
(88)
(134)
3 701
6 736
610
4 249
10 436
4 859
2 655
582
381
3 619
1 045
6 817
387
7
1 163
1 556
224
3 303
723
723
33
(16)
(7)
9
149
228
376
158
13
13
184
(9)
192
230
2
232
(32)
(59)
(0)
(92)
736
2 045
241
3 021
496
901
142
1 539
239
1 483
3 641
2
3 643
534
(556)
(95)
(117)
5 195
13 257
241
(2 688)
(2 688)
(534 )
481
88
35
(4 311)
(7 576)
18 693
(11 887)
3 696
1 503
1 699
6 898
1 499
11 796
(3 042)
(589)
(1 544)
(5 175)
(1 269)
(6 712)
(2)
(2)
(7)
(7)
(7)
953
953
-
(76)
(7)
(82)
877
5 681
241
6 799
647
914
155
(7)
1 716
231
5 084
1) HMH was established as a joint venture to Akastor as of October 1, 2021.The income statement information is presented at 100% basis for the period October 1-
December 31, 2021. Segment assets and liabilities refer to financial positions in HMH at 100% basis as of December 31, 2021.
Annual Report 2021 | Financials and Notes | Akastor Group
Amounts in NOK million
Note
2020 (restated)
Income statement
External revenue and other
income
Intersegment revenue
Total revenue and other
income
Operating profit before
depreciation, amortization and
impairment (EBITDA)
Depreciation and amortization
14, 15, 32
Impairment
Operating profit (loss) (EBIT)
Assets
Current operating assets
Noncurrent operating assets
Finance lease receivables
32
Segment assets
Liabilities
Current operating liabilities
Noncurrent operating liabilities
Lease liabilities
Segment liabilities
32
Net current operating assets
Net capital employed
AKOFS
Off-
shore
(JV)
1 000
1 000
414
(333)
(215)
(134)
677
4 609
5 286
332
6
1 203
1 542
344
3 744
43
AGR
Other
holdings
Total
operating
segments
Adjust-
ment
of JV
MHWirth
(Discon-
tinued)
Elimi-
nations
Total
Akastor
637
637
31
(18)
13
115
178
294
122
14
10
146
(7)
148
182
3
186
(102)
(39)
(4)
(145)
58
1 929
22
2 009
216
605
199
1 019
(158)
990
344
(390)
(219)
(266)
850
6 717
22
7 588
670
626
1 411
2 706
180
4 882
1 819
3
(1 000)
1 822
(1 000)
(414)
333
215
134
-
-
(677)
(3 546)
2 537
2 799
1
(4 223)
5 336
(332)
(6)
(1 203)
(1 542)
(344)
(2 681)
1 845
307
384
2 535
692
2 801
(3)
(3)
-
(5)
(5)
(5)
(5)
819
819
(71)
(57)
(4)
(132)
2 704
5 970
23
8 697
2 177
926
592
3 695
527
5 002
Annual Report 2021 | Financials and Notes | Akastor Group 44
Reconciliations of information on reportable segments to IFRS measures
Amounts in NOK million
Assets
Total segment assets
Derivative financial instruments
Cash and cash equivalents
Noncurrent interestbearing receivables
Consolidated assets
Liabilities
Total segment liabilities
Derivative financial instruments
Current borrowings
Noncurrent borrowings
Consolidated liabilities
Geographical information
Note
2021
2020
22
20
24
24
6 799
10
89
315
7 212
1 716
-
16
1 372
3 103
8 697
61
275
115
9 147
3 695
37
1 119
628
5 479
Geographical revenue is presented on the basis of geographical location of the group companies selling to the customers. Noncurrent segment assets and
capital expenditures are based on the geographical location of the assets.
Amounts in NOK million
Norway
Netherlands
United Kingdom
Denmark
Australia
Germany
United States
Other countries
Total
Major customer
Revenue and other income
2021
2020
Restated
663
-
128
79
75
-
5
3
953
447
144
132
63
5
28
819
Non-current assets exclud-
ing deferred tax assets and
financial instruments
2021
1 180
2 650
3
1
9
-
3
-
2020
2 482
47
2
39
770
430
374
3 847
4 144
Revenues from one customer of AGR represents approximately NOK 150 million (NOK 80 million in 2020) of the group’s total revenue.
Annual Report 2021 | Financials and Notes | Akastor Group Note 8 | Revenue and other income
Revenue types
Amounts in NOK million
Revenue from contracts with customers
Other revenue and income
Lease revenue
Other revenue
Gain (loss) on disposal of subsidiaries
Gain on disposals of assets
Total revenue and other income
45
Note
32
2021
834
76
3
(11)
51
953
2020
Restated
793
31
(5)
819
Disaggregation of revenue from contracts with customers
Revenue from contracts with customer is disaggregated in the following table by major contract and revenue types and timing of revenue recognition. The
table also includes a reconciliation of the disaggregated revenue with revenue information as shown in Note 7 Operating segments.
Amounts in NOK million
2021
Major contract/revenue types
Construction revenue
Sale of standard products
Service revenue
Total Revenue from contracts with customers
Timing of revenue recognition
Transferred over time
Transferred at point in time
Total Revenue from contracts with customers
Other revenue and income
HMH
(JV) 1)
AKOFS
Offshore
(JV)
AGR
Other
holdings
Adjustment
of JVs
Total
Akastor
190
207
1 022
1 419
1 212
207
1 419
868
868
868
868
401
1 269
16
718
734
718
16
734
(11)
723
47
53
100
100
100
130
230
(190)
(207)
(1 890)
(2 287)
(2 080)
(207)
(2 287)
(401)
(2 688)
47
16
771
834
818
16
834
120
953
Total external revenue and other income in segment reporting
1 419
1) HMH was established as a joint venture to Akastor as of October 1, 2021. Revenue information is presented at 100% basis for the period October 1- December 31, 2021.
Annual Report 2021 | Financials and Notes | Akastor Group 46
Amounts in NOK million
2020 (restated)
Major contract/revenue types
Construction revenue
Sale of standard products
Service revenue
Total Revenue from contracts with customers
Timing of revenue recognition
Transferred over time
Transferred at point in time
Total Revenue from contracts with customers
Other revenue and income
Total external revenue and other income in segment reporting
Contract balances
Amounts in NOK million
Receivables, which are included in “trade and other receivables”
Contract assets
Contract liabilities
AKOFS
Offshore
(JV)
AGR
Other
holdings
Adjust-
ment of
JV
Total
Akastor
316
316
316
316
684
1 000
6
631
636
631
6
636
637
105
51
156
156
156
26
182
(316)
(316)
(316)
(316)
(684)
(1 000)
Note
2021
21
28
117
47
21
105
6
682
793
787
6
793
26
819
2020
1 070
764
344
Contract assets relate to the group’s rights to consideration for work
in contract liabilities in the beginning of the year is NOK 11 million (NOK 560
completed, but not yet invoiced at the reporting date. The contract
million in 2020).
assets are transferred to receivables when the rights to payment become
unconditional, which usually occurs when invoices are issued to the
No revenue was recognized in 2021 from performance obligation satisfied
customers. Impairment of NOK 214 million has been recognized on contract
(or partially satisfied) in previous period. In 2020, revenue of NOK 95
assets in 2021 (2020: nil).
million was recognized, mainly due to changes in the estimates of progress
measurement for performance obligations satisfied over time and changes
Contract liabilities relate to advance consideration received from customer
in estimates relating to the constraining of revenues.
for work not yet performed. Revenue recognized in 2021 that was included
Transaction price allocated to the remaining performance obligations
The following table includes revenue expected to be recognized in the future related to performance obligations that are unsatisfied (or partially satisfied)
as of December 31, 2021.
Amounts in NOK million
Transaction price allocated
The amounts disclosed above do not include variable consideration which
is constrained. The group applies the practical expedient and does not
adjust the transaction price allocated to performance obligations for the
effects of a significant financing component if the group expects, at contract
inception, that the period between when the group transfers a promised
good or service to a customer and when the customer pays for that good or
service will be one year or less.
The following provides information about nature of performance obligations,
including significant payment terms, and related significant revenue
recognition policies.
2022
528
Later
54
Total
582
Annual Report 2021 | Financials and Notes | Akastor Group Type of contract/revenue
Construction contracts
Nature of performance obligations, including signif-
icant payment terms
Under construction contracts, specialized products
are built to a customer's specifications and the assets
have no alternative use to the group. If a construction
contract is terminated by the customer, the group has
an enforceable right to payment for the work completed
to date. The contracts usually establish a milestone
payment schedule. The group has assessed that these
performance obligations are satisfied over time.
Each of the construction contracts normally includes
a single, combined output for the customer, such as
an integrated drilling equipment package. One single
performance obligation is usually identified in each
contract.
Assurancetype warranty for a period of 1230 months
is normally included in construction contracts.
Sale of standard products
Service revenue
This revenue type involves sale of products or equip
ment that are of a standard nature, not made to the
customer's specifications. Customers obtain control of
these products usually when the goods are delivered to
the customers according to the contract terms. Invoices
are usually generated when the products are delivered.
The group has assessed that these performance obliga
tions are satisfied at a point of time.
Assurancetype warranty for a period of 1218 months
is normally included in these contracts.
Service revenue is generated from rendering of services
to customers. The customers simultaneously receive
and consume the benefits provided by these services.
The invoicing is usually based on the service provided
at regular basis. Under some service contracts, the in
voices are based on hours or days performed at agreed
rates. The group has assessed that these performance
obligations are satisfied over time.
47
Significant revenue recognition policies
Revenue from the construction performance obligations
is recognized according to progress. The progress
is measured using an input method that best depicts
the group's performance. The input method used to
measure progress is determined by reference to the
costs incurred to date relative to the total estimated
contract costs. Revenue in excess of costs is not rec
ognized until the outcome of the performance obligation
can be measured reliably, usually at 15-20 percent of
completion.
Variable considerations, such as incentive bonus or
penalties, are included in construction revenue when
it is highly probable that a significant revenue reversal
will not occur. Potential penalty for Liquidated Damages
is recognized as a reduction of the transaction price
unless it is highly probable that it will not be incurred.
Disputed amounts and claims are only recognized when
negotiations have reached an advanced stage, custom
er acceptance is highly likely and the amounts can be
measured reliably.
Contract modifications, usually in form of variation
orders, are only accounted for when they are approved
by the customers.
Revenue from these performance obligations is recog
nized when the customers obtain control of the goods,
which is essentially similar to the timing when the goods
are delivered to the customers.
Service revenue is recognized over time as the services
are provided.
The revenue is recognized according to progress, or
using the invoiced amounts when the invoiced amounts
directly correspond with the value of the services
that are transferred to the customers. The progress
is normally measured using an input method, by the
reference of costs incurred to date relative to the total
estimated costs.
Annual Report 2021 | Financials and Notes | Akastor Group 48
Note 9 | Salaries, wages and social security costs
Amounts in NOK million
Salaries and wages including holiday allowance
Social security tax/ national insurance contribution
Pension cost
Other employee costs
Salaries, wages and social security costs
Note 10 | Other operating expenses
Amounts in NOK million
External consultants and hired-ins inclusive audit fees
Rental and other costs for premises and equipment
Office supplies and travel expenses
Other
Total other operating expenses
Note
2021
2020
Restated
26
299
43
11
13
367
240
36
10
17
302
2021
2020
Restated
55
7
8
9
78
90
12
11
26
138
Fees to the auditors
The table below summarizes audit fees (exclusive VAT), as well as fees for audit related services, tax services and other services incurred by the group
during 2021 and 2020.
Amounts in NOK million
2021
2020
2021
2020
2021
2020
Akastor ASA
Subsidiaries
Total
Audit
Other assurance services
Total
2
-
2
2
3
2
1
3
8
1
9
4
1
5
10
1
11
Annual Report 2021 | Financials and Notes | Akastor Group Note 11 | Net finance expenses
Amounts in NOK million
Profit (loss) from equity-accounted investees
Interest income on bank deposits measured at amortized cost
Interest income on debt instruments at FVOCI
Interest income on finance lease receivables
Net foreign exchange gain
Dividend income from equity instrument
Net changes in fair value of financial assets at FVTPL
Liquidation of foreign entity 1)
Other finance income
Finance income
Interest expense on financial liabilities measured at amortized cost
Interest expense on financial liabilities measured at fair value
Interest expense on lease liabilities
Net changes in fair value of financial assets at FVTPL
Impairment loss on receivables 2)
Loss on foreign currency forward contracts
Other financial expenses
Financial expenses
Net finance expenses recognized in profit and loss
49
2021
2020
Restated
(346)
(256)
17
89
12
55
74
11
110
2
369
(112)
(24)
(9)
-
-
(17)
(12)
(175)
(152)
22
86
1
4
77
7
4
201
(93)
(20)
(13)
(94)
(106)
(7)
(333)
(387)
Note
17
32
32
1) Relates to currency translation differences that were reclassified from Other Comprehensive Income to the income statement as result of liquidation
2) Impairment loss on receivables related to loss allowance on debt instruments measured at FVOCI
See Note 31 Financial instruments for information of the finance income and expense generating items.
Annual Report 2021 | Financials and Notes | Akastor Group 50
Note 12 | Income tax
Income tax expense
Amounts in NOK million
Current tax expense
Current year
Adjustments for prior years
Total current tax expense
Deferred tax expense
Origination and reversal of temporary differences
Write down of tax loss and deferred tax assets
Recognition of previously unrecognized deferred tax assets
Total deferred tax income (expense)
Total tax income (expense)
2021
2020
Restated
(1)
-
(1)
25
(30)
26
21
20
(6)
(5)
(11)
48
(122)
66
(7)
(18)
Effective tax rate
The table below reconciles the reported income tax expense to the expected income tax expense according to the corporate income tax rate in Norway.
Amounts in NOK million
Profit (loss) before tax, continuing operations
Tax income (expense) using the company's domestic tax rate
Tax effects of:
Difference between local tax rate and Norwegian tax rate
Permanent differences 1)
Prior year adjustments (current tax)
Prior year adjustments (deferred tax)
Recognition of previously unrecognized deferred tax assets 2)
Write down of tax loss or deferred tax assets 3)
Other
Total tax income (expenses)
2021
(235)
52
-
(32)
-
4
26
(30)
-
20
22.0%
-
(13.5%)
(0.1%)
1.8%
11.1%
(12.7%)
-
8.5%
2020 Restated
(519)
114
5
(75)
(5)
(1)
66
(122)
(1)
(18)
22.0%
0.9%
(14.5%)
(1.0%)
(0.1%)
12.8%
(23.5%)
(0.1%)
(3.5%)
1) Relates mainly to net profit and loss after tax from equity-accounted investees and profit and loss recognized on various tax-exempted investments..
2) Relates mainly to previously not recognized tax loss carry-forward in Norway.
3) The impairment relates mainly to deferred tax assets in Akastor Corporate entities and DDW Offshore AS in Norway.
Annual Report 2021 | Financials and Notes | Akastor Group 51
Recognized deferred tax assets and liabilities
Amounts in NOK million
2021
2020
2021
2020
2021
2020
Assets
Liabilities
Net
Property, plant and equipment
Intangible assets
Projects under construction
Pensions
Provisions
Derivatives
Other items
Tax loss carry-forwards
Total before set offs
Set-off of tax
Total deferred tax assets(liabilities)
-
2
-
2
1
-
6
37
48
(5)
42
40
2
65
37
226
44
414
(85)
329
-
(1)
-
-
-
(3)
(5)
-
(10)
5
(4)
(5)
(7)
(50)
(9)
(14)
(9)
(95)
85
(10)
-
-
-
2
1
(3)
1
37
38
-
38
35
(5)
(50)
65
28
(14)
217
43
320
320
The group has made an evaluation of taxable profit for the next five years based on management’s projection. Deferred tax assets are recognized to the
extent that it is probable that future taxable profit will be available, against which the deductible temporary difference can be utilized.
Change in net recognized deferred tax assets (liabilities)
Amounts in NOK million
Balance as of December 31, 2019
Recognized in profit and loss (restated)
Recognized in other comprehensive income
Discontinued operations
Currency translation differences
Balance as of December 31, 2020
Disposal of sbusidiaries as of January 1, 2021
Recognized in profit and loss
Recognized in other comprehensive income
Currency translation differences
Balance as of December 31, 2021
Property,
plant and
equip-
ment
Intan-
gible
assets
Projects
under
construc-
tion
Pen-
sions
Provi-
sions
Deriva-
tives
Other
items
Tax loss
carry-for-
wards
39
(7)
2
1
35
(34)
-
-
-
-
(8)
(102)
1
2
(5)
5
-
-
-
-
53
(50)
51
-
-
(2)
-
80
(22)
6
(1)
2
65
(57)
-
(6)
(1)
2
42
(30)
13
2
28
(26)
(1)
-
-
1
(65)
231
1
(8)
58
(14)
9
1
-
-
(3)
(1)
1
(11)
(2)
217
(216)
(1)
-
1
1
160
51
(168)
1
43
(27)
22
-
(1)
37
Total
377
(7)
(1)
(52)
3
320
(294)
21
(6)
(3)
38
Tax loss carry-forwards and deductible temporary differences for which no deferred tax assets are recognized
Deferred tax assets have not been recognized in respect of tax loss carry-forwards or deductible temporary differences when the group evaluates
that it is not probable that future taxable profit will be available against which the group can utilize these benefits based on forecasts and realistic expectations.
Expiry date of unrecognized tax loss carry-forwards
Amounts in NOK million
Expiry in 2022
Expiry in 2023 and later
Indefinite
Total
2021
-
350
1 772
2 121
2020
43
531
2 135
2 710
Unrecognized other deductible temporary differences are NOK 1 022 million in 2021 (NOK 1 105 million in 2020).
Annual Report 2021 | Financials and Notes | Akastor Group
52
Note 13 | Earnings per share
Akastor ASA holds 2 390 215 treasury shares at year end 2021 (2 390 215 in 2020). Treasury shares are not included in the weighted average number of
ordinary shares.
Amounts in NOK million
Profit (loss) from continuing operations
Noncontrolling interests
Profit (loss) attributable to ordinary shares from continuing operations
Profit (loss) from discontinued operations
Profit (loss) attributable to ordinary shares
Basic/ diluted earnings per share
2021
(215)
(6)
(221)
1 140
919
2020
Restated
(537)
3
(535)
(47)
(581)
The calculation of basic/diluted earnings per share is based on the profit (loss) attributable to ordinary shareholders and a weighted average number of
ordinary shares outstanding.
Issued ordinary shares as of January 1
Weighted average number of issued ordinary shares for the year adjusted for treasury shares
Basic/ diluted earnings (loss) per share (NOK)
Basic/ diluted earnings (loss) per share for continuing operations (NOK)
Basic/ diluted earnings (loss) per share for discontinued operations (NOK)
2021
2020
Restated
274 000 000
274 000 000
271 609 785
271 609 785
3.38
(0.81)
4.20
(2.14)
(1.97)
(0.17)
Annual Report 2021 | Financials and Notes | Akastor Group Note 14 | Property, plant and equipment
The table below includes discontinued operations until these met the criteria to be classified as held for sale.
Amounts in NOK million
Historical cost
Balance as of January 1, 2020
Additions
Additions through business combinations
Reclassifications
Transfer from assets under construction
Disposals and scrapping
Currency translation differences
Balance as of December 31, 2020
Additions
Reclassifications
Transfer from assets under construction
Disposals and scrapping
Disposal of subsidiaries
Currency translation differences
Balance as of December 31, 2021
Accumulated depreciation
Balance as of January 1, 2020
Depreciation for the year 1)
Reclassifications
Disposals and scrapping
Currency translation differences
Balance as of December 31, 2020
Depreciation for the year 1)
Disposals and scrapping
Disposal of subsidiaries
Currency translation differences
Balance as of December 31, 2021
Book value as of December 31, 2020
Book value as of December 31, 2021
Note
Buildings
and land
Vessels
Machinery,
equipment,
software
Under
construction
6
6
6
741
38
27
(7)
(128)
671
-
-
-
-
(654)
(17)
-
(338)
(15)
(27)
7
63
(310)
(2)
-
305
7
-
361
-
397
(31)
366
65
-
-
(156)
-
8
282
(8)
1
(7)
(30)
-
-
(1)
(38)
359
244
1 407
30
8
17
(105)
(14)
1 343
11
10
1
(8)
(1 248)
(7)
101
(1 067)
(78)
(15)
98
12
(1 051)
(13)
7
957
6
(94)
292
7
28
6
(17)
(11)
(1)
4
3
-
(1)
-
(6)
(1)
-
(11)
11
-
-
-
-
-
-
4
-
53
Total
2 175
68
397
41
(123)
(175)
2 384
79
10
-
(164)
(1 908)
(17)
384
(1 415)
(101)
(43)
115
76
(1 368)
(46)
7
1 262
12
(133)
1 017
251
1) Includes amortization of NOK 6 million from discontinued operations in 2021 (NOK 51 million in 2020).
Depreciation
Estimates for useful life, depreciation method and residual values are reviewed annually. Assets are mainly depreciated on a straight-line basis over their
expected economic lives as follows:
Machinery, equipment and software
Vessels
Buildings
Land
3–15 years
20–25 years
8–30 years
No depreciation
Annual Report 2021 | Financials and Notes | Akastor Group
54
Note 15 | Intangible assets
Amounts in NOK million
Historical cost
Balance as of 1 January 2020
Reclassification
Capitalized development
Currency translation differences
Balance as of December 31, 2020
Reclassification
Capitalized development
Adjustment from business combinations prior years
Disposals of subsidiaries
Currency translation differences
Balance as of December 31, 2021
Accumulated amortization and impairment
Balance as of 1 January 2020
Amortization for the year 1)
Currency translation differences
Balance as of December 31, 2020
Amortization for the year
Impairment 2)
Disposal of subsidiaries
Currency translation differences
Balance as of December 31, 2021
Net book value as of 31 December 2020
Net book value as of 31 December 2021
Note
Development
costs
Goodwill
Other
Total
539
2
35
7
583
(10)
24
-
(544)
(4)
50
(370)
(35)
(6)
(411)
(10)
-
390
3
(28)
172
22
1 372
263
2 174
20
2
5
2
38
32
1 392
270
2 246
-
-
(1)
(1 263)
(10)
118
(88)
2
(86)
-
(69)
146
(1)
(10)
1 307
109
-
1
-
(244)
(3)
24
(123)
(25)
(5)
(154)
(6)
(86)
233
3
(9)
116
15
(10)
24
(1)
(2 051)
(16)
192
(581)
(60)
(10)
(651)
(16)
(155)
770
5
(47)
1 595
145
6
6
1) Includes amortization of NOK 6 million from discontinued operations in 2021 (NOK 51 million in 2020).
2) Includes impairment of NOK 149 million from discontinued operations in 2021.
Research and development costs
Amortization
NOK 24 million has been capitalized in 2021 (NOK 38 million in 2020)
Intangible assets all have finite useful lives and are amortized over the
related to development activities. In addition, research and development
expected economic life, ranging between 5-10 years.
costs of NOK 1 million were expensed during the year because the criteria
for capitalization are not met (NOK 12 million in 2020).
Annual Report 2021 | Financials and Notes | Akastor Group 55
Note 16 | Impairment testing of goodwill
Goodwill originates from a number of acquisitions. For the purpose of
represents the lowest level at which goodwill is monitored in management
impairment testing, goodwill has been allocated to the group’s cash-
reporting.
generating units (portfolio companies) as shown in the table below, which
Amounts in NOK million
AGR
MHWirth 1)
Total goodwill
2021
109
-
109
2020
116
1 190
1 307
1) The portfolio company is deconsolidated and merged into the joint venture HMH in 2021, see Note 5 and Note 6 for more information about the transaction.
Impairment testing for cash-generating units containing significant
main markets. Assumptions are made regarding revenue growth, gross
goodwill
margins and other cost components based on historical experience as
The recoverable amounts of cashgenerating units (portfolio companies)
well as assessment of future market development and conditions. These
are determined based on value-in-use calculations. Discounted cash flow
assumptions require a high degree of judgement, given the significant
models are applied to determine the value in use for the portfolio companies
degree of uncertainty regarding oilfield service activities in the forecast
with goodwill. The management has made cash flow projections based
period.
on budget and strategic forecast for the periods 20222026. Beyond the
explicit forecast period of five years, the cash flows are extrapolated using
Terminal value growth rate The group uses a constant growth rate not
a constant growth rate.
exceeding 2% (including inflation) for periods beyond the management’s
forecast period of five years. The growth rates used do not exceed the
Key assumptions used in the calculation of value in use are discussed
growth rates for the industry in which the portfolio company operates.
below. The values assigned
to
the key assumptions
represent
management's assessment of future trends in the relevant industries as well
Discount rates are estimated based on Weighted Average Cost of Capital
as management’s expectations regarding margin, and have been based on
(WACC) for the industry in which the portfolio company operates. The
historical data from both external and internal sources.
riskfree interest rates used in the discount rates are based on the 10 year
state treasury bond rate at the time of the impairment testing. Optimal debt
EBITDA used in the valueinuse calculations represents the operating
leverage is estimated for each portfolio company. The discount rates are
earnings before depreciation and amortization and is estimated based
further adjusted to reflect any additional short to medium term market risk
on the expected future performance of the existing businesses in their
considering current industry conditions.
Discount rate assumptions used in impairment testing
AGR
MHWirth
Discount rate after tax
Discount rate pre tax
2021
13.0%
n/a
2020
14.4%
12.2%
2021
16.3%
n/a
2020
17.5%
14.7%
Sensitivity to changes in assumptions
The group has performed sensitivity calculations to identify any reasonably
For the portfolio companies containing goodwill, the recoverable amounts
possible change in key assumptions that could cause the carrying amount
are higher than the carrying amounts based on the value in use analysis
to exceed the recoverable amount. In AGR, if the average revenue growth
and consequently no impairment loss of goodwill was recognized in 2021
in the forecast period were reduced by more than 10%, or if the average
or 2020.
EBITDA margin in the forecast period were reduced by more than 2%, the
estimated recoverable amount would be lower than the carrying amount
and it would result in impairment in AGR.
Annual Report 2021 | Financials and Notes | Akastor Group 56
Note 17 | Equity-accounted investees
Equity-accounted investees include joint ventures and associates. Such investments are defined as related parties to Akastor. See Note 34 Related parties
for significant agreements and transactions with joint ventures, and any guarantees provided on behalf of or from such entities.
Amounts in NOK million
HMH
AKOFS Offshore
DDW Offshore AS 1)
Total
Business office
Amsterdam, Netherlands
Oslo, Norway
Storebø, Norway
Percentage of voting rights and ownership
50%
50 %
50%/100%
2021
Share of profit (loss) reported in Financial items
Carrying amount of investments
2020
Share of profit (loss) reported in Financial items
Carrying amount of investments
6
2 650
(352)
759
(117)
1 064
-
-
(346)
3 408
(140)
(256)
1 064
1) DDW Offshore AS was a joint venture with DOF ASA, which became a 100 percent owned subsidiary in October 2020. Please see Note 6 Disposal of subsidiaries and
business combination for more information.
HMH
AKOFS Offshore
On October 1, 2021, Akastor completed the transaction to bring together
AKOFS Offshore is a joint venture where Akastor, MITSUI & CO., Ltd.
Akastor’s wholly owned subsidiary, MHWirth AS (MHWirth) and Baker
("Mitsui") and Mitsui O.S.K. Lines, Ltd. ("MOL") hold 50%, 25% and 25%
Hughes’ Subsea Drilling Systems (SDS) business to create a joint venture
of the shares respectively, and have joint control over the company.
company HMH. Following the transaction, Akastor and Baker Hughes each
holds 50% and 50% of the shares in HMH, and have joint control over the
company. HMH is classified as a joint venture to the group and accounted
for using the equity method. See Note 5 Discontinued operations for more
information about the transaction.
Annual Report 2021 | Financials and Notes | Akastor Group Summary of financial information for significant equity-accounted investee (100 percent basis)
Amounts in NOK million
Current assets
– Cash and cash equivalents
Noncurrent assets
Current liabilities
– Current financial liabilities (excluding trade and other payables and provisions)
Noncurrent liabilities
– Non-current financial liabilities (excluding trade and other payables and provisions)
Net assets (100%)
Akastor's share of net assets (50%)
Goodwill
Elimination of unrealized gain on downstream sales 2)
Akastor's carrying amount of the investment
Revenue
Depreciation, amortization and impairment
Interest expense
Income tax expense
Profit (loss) for the year
Other comprehensive income (loss)
Total comprehensive income (loss) (100%)
Total comprehensive income (loss) (50%)
Impairment of goodwill 3)
Elimination of unrealized gain on downstream sales
Akastor's share of total comprehensive income (loss)
57
AKOFS
2021
2020
951
337
4 249
(1 536)
(1 149)
(2 146)
(2 140)
1 517
759
-
-
928
247
4 609
(1 379)
(1 047)
(2 219)
(2 212)
1 939
969
125
(30)
759
1 064
1 269
1 000
(453)
(269)
(65)
(516)
(15)
(531)
(266)
(124)
30
(360)
(548)
(306)
(18)
(473)
(39)
(513)
(256)
120
(136)
HMH 1)
2021
6 265
817
6 906
(4 092)
(1 384)
(3 781)
(3 199)
5 299
2 650
-
-
2 650
1 419
(116)
(57)
(23)
12
-
12
6
-
-
6
1) Income statement information for HMH in 2021 is related to the period between October 1 – December 31, 2021 after the formation of the company.
2) In 2016, Akastor sold the Skandi Santos topside equipment to Avium Subsea AS, a wholly owned subsidiary to AKOFS Offshore. 50% of the accounting gain from the sale was
eliminated upon consolidation, reducing Akastor’s carrying amount of the investment.
3) Goodwill in AKOFS Offshore was impaired in 2021 as a result of reassessment of valuation of the vessels in AKOFS Offshore.
Note 18 | Other noncurrent assets
Amounts in NOK million
Deferred and contingent considerations
Other assets
Total other non-current assets
Note
31
2021
2020
20
-
21
26
3
29
Deferred and contingent considerations relate to divestments of subsidiaries in previous years and are measured at fair value.
Annual Report 2021 | Financials and Notes | Akastor Group 58
Note 19 | Other investments
Amounts in NOK million
Aker Pensjonskasse
NES Fircroft investment 1)
Awilco Drilling investment 2)
Odfjell Drilling investment 3)
Other equity securities
Note
2021
2020
158
621
10
807
29
158
537
14
758
2
Total other non-current investments
31
1 625
1 469
Amounts in NOK million
Step Oiltools 4)
Total other current investments
Note
31
2021
147
147
2020
1) Akastor holds 15% economic ownership interest in NES Fircroft, a global oil and gas manpower provider.
2) Akastor holds 5.6% of the common shares in Awilco Drilling, which is listed on the Oslo Stock Exchange.
3) In May 2018, Akastor made an investment of USD 75 million in preferred equity in Odfjell Drilling, which generates 5% p.a. cash dividend and 5% p.a. payment-in-kind (PIK)
dividend for the first six years, with step-up cash dividend after 6 years. In addition, Akastor has acquired warrants for 5 925 000 common shares in Odfjell Drilling, divided by
six exercisable tranches until May 30, 2024. Odfjell Drilling is listed on the Oslo Stock Exchange.
4) Step Oiltools is included in the transaction scope and thus forms part of the MHWirth business contributed from Akastor to the new joint venture HMH. However, the legal
ownership in shares in Step Oiltools remains with Akastor as of December 31, 2021 pending certain regulatory approvals. The legal ownership in Step Oiltools does not
constitute control since Akastor has entered into a binding agreement with HMH on the transfer of Step Oiltools and Akastor is not exposed to variable returns from the legal
ownership from the time of agreement being entered into. See also Note 25 Other liabilities for more information about the seller’s credit agreement related to Step
Oiltools shares.
Other investments are measured at fair value.
Note 20 | Noncurrent interestbearing receivables
Amounts in NOK million
Receivables from AKOFS Offshore
Receivables from HMH
Receivables from Aker Pensjonskasse
Total non- current interest-bearing receivables
34
Note 21 | Trade and other receivables
Amounts in NOK million
Trade receivables 1)
Less provision for impairment
Trade receivables, net of provision
Other receivables
Trade and other receivables
Advances to suppliers
Contract assets
Prepaid expenses
Public duty and tax refund
Total
Note
2021
31
8
191
(57)
135
673
808
-
47
16
2
872
1) Trade receivables are financial instruments and an impairment loss of NOK 36 million was recognized in the income statement in 2020.
Book value of trade and other receivables is approximately equal to fair value.
Note
2021
2020
113
180
22
315
94
21
115
2020
1 226
(131)
1 094
25
1 120
94
764
167
46
2 191
Annual Report 2021 | Financials and Notes | Akastor Group Aging of trade receivables
Amounts in NOK million
Not overdue
Past due 030 days
Past due 3190 days
Past due more than 90 days
Total trade receivables
59
2021
126
8
-
57
191
2020
464
59
37
665
1 226
The past due receivables are monitored regularly and impairment analysis is performed on an individual basis for major customers. As of December 31,
2021, trade receivables of a face value of NOK 57 million were impaired. See below for the movements in the provision for impairment of receivables.
Amounts in NOK million
Balance as of January 1
New provisions
Utilized
Unused amounts reversed
Acquisition of subsidiaries
Disposal of subsidiaries
Currency translation differences
Balance as of December 31
Note 22 | Cash and cash equivalents
Amounts in NOK million
Restricted cash
Interestbearing deposits
Total cash and cash equivalents
2021
2020
131
-
-
(8)
-
(68)
2
57
49
36
(1)
(4)
57
(6)
131
2021
2020
-
89
89
6
269
275
Additional undrawn committed current bank revolving credit facilities amount to NOK 553 million, that together with cash and cash equivalents gives a total
liquidity reserve of NOK 642 million as of December 31, 2021. See also Note 24 Borrowings.
Annual Report 2021 | Financials and Notes | Akastor Group 60
Note 23 | Capital and reserves
Share capital
Fair value reserve
Akastor ASA has one class of shares, ordinary shares, with equal rights for
The fair value reserve comprises the cumulative net changes in the fair
all shares. The holders of ordinary shares are entitled to receive dividends
value of financial assets classified as Fair Value to OCI (FVOCI) until these
and are entitled to one vote per share at General Meetings. Total outstanding
assets are impaired or derecognized.
shares are 274 000 000 at par value NOK 0.592 per share (NOK 0.592 in
2020). All issued shares are fully paid.
Currency translation reserve
Treasury shares
The translation reserve comprises all foreign currency differences arising
from the translation of the financial statements of foreign operations, as well
At the Annual General Meeting in 2014, authorization was given to
as the effective portion of any foreign currency differences from hedges of
repurchase up to 27.4 million shares, representing 10 percent of the share
net investments in foreign operations.
capital of Akastor ASA. The group purchases treasury shares to meet the
obligation under employee share purchase programs. As of December 31,
The currency translation reserve includes exchange differences arising
2021, Akastor ASA holds 2 390 215 treasury shares (2 390 215 treasury
from the translation of the net investments in foreign operations, and foreign
shares in 2020), representing 0.87 percent of total outstanding shares.
exchange gain or loss on loans defined as net investment hedge or part of
net investments in foreign operations. Upon the disposal of investments
The Board of Directors has proposed no dividends for 2021 or 2020.
in foreign operations during 2021, the accumulated currency translation
differences related to the disposed entities were reclassified from the
Hedging reserve
currency translation reserve to the income statement.
The hedging reserve relates to cash flow hedges of future revenues and
expenses against exchange rate fluctuations. The income statement effects
Accumulated gain in equity on net investment hedges as of 2021 is nil (gain
of such instruments are recognized in accordance with the progress of
of NOK 11 million in 2020) as result of disposal of investments in the United
the underlying construction contract as part of revenues or expenses as
States and Cyprus.
appropriate. The hedging reserve represents the value of such hedging
instruments that is not yet recognized in the income statement. The
underlying nature of a hedge is that a positive value on a hedging instrument
exists to cover a negative value on the hedged position. As of December
31, 2021, the group had no cash flow hedges as a result of disposal of
subsidiaries.
Annual Report 2021 | Financials and Notes | Akastor Group
61
Note 24 | Borrowings
Below are contractual terms of the group’s interest-bearing loans and borrowings which are measured at amortized cost. For more information about the
group’s exposure to interest rates, foreign currency and liquidity risk, see Note 30 Financial risk management and exposures.
Amounts in million
Currency
Nominal
currency
value
Carrying
amount
(NOK)
Interest
rate
Fixed
interest
margin
Interest
coupon
Maturity 1)
Interest terms
2021
Revolving credit facility
(USD 89 million)
Revolving credit facility
(NOK 250 million)
Subordinated Aker facility
(NOK 250 million)
Term loan facility AGR
Term loan DDW Offshore
Overdraft
Total borrowings
Current borrowings
Noncurrent borrowings
Total borrowings
2020
Revolving credit facility
(NOK 1 250 million)
Revolving credit facility
(USD 155 million)
Term loan facility AGR
Term loan DDW Offshore
Total borrowings
Current borrowings
Noncurrent borrowings
Total borrowings
USD
NOK
NOK
NOK
USD
NOK
NOK
USD
NOK
USD
83
3
180
53
350
90
180
53
721
0.48%
5.50%2)
5.98%
Feb 2023
USD LIBOR + margin
0.37%
5.50%2)
5.87%
Feb 2023
NIBOR + margin
0.95%
1.88%
0.13%
10.00%
10.95%
Mar 2023
NIBOR + margin
2.12%
4.25%
4.00%
4.38%
Apr 2027
Fixed rate
Oct 2023
USD LIBOR + margin
0.39% 3.25% 3)
3.64%
Dec 2021
NIBOR + margin
0.15% 3.25% 3)
2.12%
1.88%
0.23%
4.25%
3.40%
4.00%
4.48%
Dec 2021
USD LIBOR + margin
Apr 2027
Fixed rate
Oct 2023
USD LIBOR + margin
-
3
185
467
11
1 387
16
1 372
1 387
347
772
173
445
1 746
1 119
628
1 746
1) The maturity date reflects maturity date as defined in the loan agreements. For information about contractual maturities of borrowings including interest payments and the
period in which they mature, see Note 30 Financial risk management and exposures.
2) Commitment fee is 40 percent of the margin.
3) The margin applicable to the facilities was decided by a price grid based on the leverage ratio and level of utilization. Commitment fee was 35 percent of the margin.
Bank debt
The term loan facility of NOK 180 million to AGR is provided by Nordea and
The revolving credit facilities are provided by a bank syndicate consisting of
DNB. The lenders have no recourse to Akastor ASA. This facility includes
high-quality Nordic and international banks and DNB is acting as the agent.
restrictions which are customary for these kinds of facilities.
The terms and conditions include restrictions which are customary for
these kinds of facilities, including inter alia negative pledge provisions and
The term loan of USD 53 million to DDW Offshore is provided by GIEK, DNB
restrictions on acquisitions, disposals and mergers, dividend distribution
and BNP Paribas and matures in October 2023. The Facility is guaranteed
and change of control provisions. For information about financial covenants,
by Akastor ASA and the lenders benefit from first priority mortgages in the
see Note 29 Capital management.
vessels. This facility includes restrictions which are customary for these
kinds of secured financing.
Annual Report 2021 | Financials and Notes | Akastor Group
Balance as
of December
31, 2020
Foreign
exchange
movements
Capitalized
borrowing
costs
Accrued
interest
Balance as
of December
31, 2021
Cash flows
62
Reconciliation of liabilities arising from financing activities
Amounts in NOK million
Revolving credit facilities
Subordinated Aker facility
Term loan facility AGR
Term loan DDW Offshore
Overdraft
Total liabilities arising from financing activities
1 746
Note 25 | Other liabilities
Amounts in NOK million
Deferred gain
Deferred settlement obligations
Liability for profit split
Other liabilities
Total other non-current liabilities
Seller’s credit
Total other current liabilities
1 119
(416)
173
455
11
(405)
6
13
18
7
7
5
3
13
20
721
3
185
467
11
1 387
Note
2021
2020
31
6, 31
31
31
51
377
200
1
628
148
148
72
197
185
24
478
Deferred gain
Liability for profit split
In May 2018, Akastor invested in preferred equity and warrants in Odfjell
DDW Offshore AS has obligation to share 50 percent of the sale proceeds
Drilling. On initial recognition, the investment in the financial assets is
from disposal of its vessels with its lenders prior to the maturity of the debts.
recognized at fair value and the difference between the fair value and the
See Note 6 Disposal of subsidiaries and business combination for more
transaction price, NOK 117 million, was recognized as “Deferred gain”. The
information.
deferred gain is subsequently amortized and recognized to profit and loss at
straight-line basis over six years. See Note 19 Other investments for more
Seller’s credit
information about the investment.
Step Oiltools is included in the transaction scope and thus forms part of
the MHWirth business contributed from Akastor to the new joint venture
Deferred settlement obligations
HMH. However, the legal ownership in shares in Step Oiltools remains with
Deferred settlement obligations represent contingent considerations
Akastor as of December 31, 2021 pending certain regulatory approvals.
resulting from disposal of subsidiaries. The obligations are mainly related
Akastor has a binding agreement with HMH on the transfer of Step Oiltools.
to provision for indemnity liabilities for pension plans in connection with
A seller’s credit agreement is entered between Akastor and HMH which will
MHWirth divestment and guaranteed preferred return to Mitsui and MOL in
be settled when the shares in Step Oiltools are transferred back to HMH.
connection with AKOFS Offshore divestment.
See Note 5 and Note 6 for more information about the disposal of MHWirth.
Annual Report 2021 | Financials and Notes | Akastor Group 63
Note 26 | Employee benefits – pension
Akastor’s pension costs represent the future pension entitlement earned by
Compensation plan
employees in the financial year. In a defined contribution plan the company
To ensure that the employees were treated fairly on the change over to the
is responsible for paying an agreed contribution to the employee’s pension
contribution plan in 2008, the company introduced a compensation plan.
assets. In such a plan, this annual contribution is also the cost. In a defined
The basis for deciding the compensation amount is the difference between
benefit plan, it is the company’s responsibility to provide a certain pension.
calculated pension capital in the defined benefit plan and the value of the
The measurement of the cost and the pension liability for such arrangements
defined benefit plan at the age of 67 years. The compensation amount will
is subject to actuarial valuations. Akastor has over a long time period
be adjusted annually in accordance with the adjustment of the employees’
gradually moved from defined benefit arrangements to defined contribution
pensionable income, and accrued interest according to market interest. If
plans. Consequently, the impact of the remaining defined benefit plans is
the employee leaves the company voluntarily before the age of 67 years,
gradually reduced.
the compensation amount will be reduced.
Pension plans in Norway
AFP – early retirement arrangement
The main pension arrangement in Norway is a general pension plan organized
AFP is an early retirement arrangement organized by Norwegian employers,
by the Norwegian Government. This arrangement provides the main
the main Labor Union organization in Norway (LO) and the Norwegian
general pension entitlement of all Norwegians. All pension arrangements by
Government. The AFP plan is providing additional lifelong pensions to
employers consequently represent limited additional pension entitlements.
employees that retire before the general retirement age, to compensate
for the reduction of the ordinary pension entitlements. The employees are
Norwegian employers are obliged to provide an employment pension plan,
given a choice of retirement age, with lower pension at earlier retirement.
which can be organized as a defined benefit plan or as a defined contribution
plan. The Norwegian companies in Akastor have closed the earlier defined
The Norwegian Accounting Standards Board has issued a comment
benefit plans in 2008 and are now providing defined contribution plans for
concluding that the AFP plan is a multi-employer defined benefit plan. The
all employees.
Defined benefit plan
AFP plan exposes the participating entities to actuarial risk associated
with employees of other entities with the result that there is no consistent
and reliable basis for allocating the obligation, plan assets and costs to
Employees who were 58 years or older in 2008, when the change took
individual participating entities. Sufficient information is not available to use
place, are still in the defined benefit plan, which is a funded plan. There are
defined benefit accounting and the AFP plan is accounted for as a defined
no longer any active employees in this plan. The estimated contributions
contribution plan.
expected to be paid to the Norwegian plan during 2022 amount to
NOK 4 million.
Pension plans outside Norway
Pension plans outside Norway are predominately defined contribution plans.
Pension cost
Amounts in NOK million
Defined benefit plans
Defined contribution plans including AFP
Total pension cost
Net employee defined benefit obligations
Amounts in NOK million
Defined benefit plans Norway
Defined benefit plans Germany
Defined benefit plans USA
Defined benefit plans other countries
Total employee benefit obligations
Note
2021
1
10
11
9
2020
restated
1
9
10
2021
2020
94
-
15
-
108
222
136
31
(2)
388
Annual Report 2021 | Financials and Notes | Akastor Group 64
Movement in net defined benefit (asset) liability
Amounts in NOK million
Balance as of January 1
Disposal of subsidiaries as of January 1, 2021
Included in profit or loss
Service cost
Interest cost (income)
Included in OCI
Remeasurements (loss) gain:
Actuarial loss (gain) arising from:
demographic assumptions
- financial assumptions
- experience adjustments
Return on plan assets excluding interest income
Changes in asset ceiling
Effect of movements in exchange rates
Other
Benefits paid by the plan
Contributions paid into the plan
Balance as of December 31
Plan assets
Amounts in NOK million
Plan assets at fair value Norwegian plan
Government
Finance
Private and Government enterprise
Municipalities
Bonds
Fund/private equity
Total plan assets Norway at fair value
Equity securities
Debt securities
Total plan assets US at fair value
Total plan assets Germany at fair value
Total plan assets at fair value
Pension obligation
2021
2020
Pension asset
Net pension obligation
2021
2020
2021
2020
639
(279)
1
2
3
6
(10)
(5)
-
-
3
(6)
(25)
-
(25)
332
619
9
8
17
7
35
(4)
6
44
(41)
(41)
639
(251)
28
(260)
388
(251)
359
-
(1)
(1)
-
(2)
-
-
-
(3)
(5)
(3)
(3)
1
(1)
5
4
20
(15)
5
(224)
26
(20)
7
(251)
1
2
2
5
(12)
(5)
-
-
-
(11)
(5)
(15)
(20)
108
9
5
14
7
35
(4)
1
(1)
11
49
(14)
(20)
(34)
388
2021
2020
5
15
26
15
60
60
120
29
75
104
-
224
7
10
26
25
68
59
126
28
72
100
23
249
The equity portfolio is invested globally. The fair value of the equities is
Most of the investments are in Norwegian municipalities with a credit rating
based on their quoted prices at the reporting date without any deduction for
of AA.
estimated future selling cost.
The investments in bonds are done in the Norwegian market and most of
securities and where the fund value is based on quoted prices.
The investment in fund/private equity is mainly funds that invests in listed
the bonds are not listed on any exchange. The market value as at year end
is based on official prices provided by the Norwegian Securities Dealers
Association. The Bond investments have on average a high credit rating.
Annual Report 2021 | Financials and Notes | Akastor Group
65
Defined benefit obligation – actuarial assumptions
The group’s most significant defined benefit plans are in Norway and USA. The followings are the principal actuarial assumptions at the reporting date for
the plans in these countries.
Norway
USA
Discount rate
Asset return
Salary progression
Pension indexation
2021
1.90 %
1.90 %
2.75 %
0 -2.5%
2020
1.50%
1.50%
2.25%
0 -1.75%
Mortality table
K2013
K2013
2021
2.41%
2.41%
n/a
n/a
2020
1.91%
1.91%
n/a
n/a
Pri-2012 Total
Dataset Mortality
with Scale
MP-2021
Pri2012 Total
Dataset Mortality
with Scale
MP2020
The information below relates only to Norwegian plans as these represent
in the pension indexations. The total effect of fluctuations in economic
the majority of the plans.
assumptions is consequently unlikely to be very significant.
The discount rates and other assumptions in 2021 and 2020 are based
Assumptions regarding future mortality have been based on published
on the Norwegian high quality corporate bond rate and recommendations
statistics and mortality tables. The current life expectancy underlying
from the Norwegian Accounting Standards Board. It should be expected
the values of the defined benefit obligation at the reporting date is
that fluctuations in the discount rates would also lead to fluctuations
shown below.
Years
Life expectancy of male pensioners
Life expectancy of female pensioners
2021
22.6
25.9
2020
22.5
25.8
As of December 31, 2021, the weighted-average duration of the defined benefit obligation was 8.8 years.
Sensitivity analysis
Reasonably possible changes at the reporting date to one of the relevant actuarial assumptions, holding other assumptions constant, would have affected
the defined benefit obligation as of December 31, 2021 by the amounts shown below.
Amounts in NOK million
Discount rate (1% movement)
Future salary growth (1% movement)
Future pension growth (1% movement)
Increase
Decrease
(8)
9
10
(4)
The change in discount rate assumptions would affect plan assets in the income statement in next period as it would change the estimated asset return but
have no effect on pension assets as of yearend.
Annual Report 2021 | Financials and Notes | Akastor Group 66
Note 27 | Provisions
Amounts in NOK million
Provision, current
Provision, non-current
Total provisions
2021
2020
20
26
47
109
50
160
Development of significant provisions
Amounts in NOK million
Warranties Restructuring
Onerous
contracts
Other
Total
Balance as of December 31, 2020
New provisions
Provisions utilized
Provisions reversed
Unwind of discount
Disposal of subsidiaries
Currency translation differences
Balance as of December 31, 2021
Expected timing of payment
Within the next twelve months
After the next twelve months
Total
Warranties
72
10
(1)
(71)
(1)
10
10
10
30
(30)
-
-
47
(9)
(10)
2
31
5
25
31
10
(2)
(1)
6
6
6
160
10
(12)
(11)
2
(101)
(1)
47
20
26
47
The provision for warranties relates mainly to the possibility that Akastor,
Onerous contracts
based on contractual agreements, needs to perform guarantee work related
Provision for onerous contracts relates mainly to unavoidable operational
to products and services delivered to customers. Warranty provision is
costs for vacant properties where the group has committed to under lease
presented as current as it is expected to be settled in the group’s normal
contracts.
operating cycle. See Note 4 Significant accounting estimates and judgments
for further descriptions.
Note 28 | Trade and other payables
Amounts in NOK million
Trade creditors 1)
Accrued expenses
Trade and other payables
Public duty and tax payables
Contract liabilities
Deferred settlement obligations
Total trade and other payables
1) Trade creditors are due within one year.
Book value of trade creditors and other current liabilities is approximately equal to fair value.
Note
2021
31
8
31
99
377
476
46
21
82
625
2020
305
1 232
1 537
101
344
77
2 060
Annual Report 2021 | Financials and Notes | Akastor Group 67
Note 29 | Capital management
Akastor’s capital management is designed to ensure that the group has
Funding cost
sufficient financial flexibility to carry out its strategic targets, both short-
Akastor aims to have diversified funding sources in order to reach the
term and long-term. Akastor is targeting to maintain a financial structure
lowest possible cost of capital. These funding sources might include:
that, through solidity and cash flow, secures the group’s strong long-term
creditworthiness, as well as maximize value creation for its shareholders
through:
Investing in projects and business areas which will increase the
company’s Return On Capital Employed (ROCE) over time.
Optimizing the company’s capital structure to ensure both sufficient
and timely funding over time to finance its activities at the lowest
cost.
Investment policy
The use of banks based on syndicated credit facilities.
The issue of debt instruments in the Norwegian capital market.
The issue of debt instruments in foreign capital markets.
Ratios used in monitoring of capital/covenants
Akastor monitors capital on the basis of a gearing ratio (net debt/equity)
and equity ratio (equity/total assets). These ratios are similar to covenants
as defined in the new loan agreement entered into in 2021 for the revolving
credit facilities which are shown below. See Note 24 Borrowings for details
Akastor’s capital management is based on a rigorous investment selection
about these loans.
process which considers not only Akastor’s weighted average cost of
capital and strategic orientation but also external factors such as market
expectations.
Funding policy
Liquidity planning
The company’s gearing ratio shall not exceed 0.4 times (0.5 times
effective from 2022) and is calculated from the consolidated total
borrowings to the consolidated Equity.
Equity ratio shall not be lower than 32.5%, calculated from the
Akastor has a strong focus on its liquidity situation to meet its capital needs
consolidated total equity to consolidated total assets
and ensure solvency for its financial obligations. Akastor had a liquidity
reserve per year end 2021 of NOK 0.6 billion, composed of an undrawn
Minimum liquidity amount shall exceed NOK 250 million (NOK 150
committed credit facility of NOK 553 million and cash and cash equivalents
million effective from 2022) on consolidated level.
of NOK 89 billion.
Funding of operations
The ratios are calculated based on net debt including cash and borrowings
as shown in Note 31 Financial instruments, consolidated equity and
Akastor’s group funding policy is that subsidiaries should finance their
consolidated total assets, however adjusted for certain items as defined in
operations with the treasury department (Akastor Treasury). This ensures
the loan agreement. Covenants ratios are based on accounting principles
optimal availability and transfer of cash within the group and better control
as of December 31, 2021.
of the company’s overall debt as well as cheaper funding for its operations.
However, AGR is financed directly through a NOK 180 million Term Loan
The covenants are monitored on a regular basis by the Akastor Treasury
maturing in 2027, and DDW Offshore is financed directly through a USD 53
department to ensure compliance with the loan agreements which are
million Term loan maturing in 2023.
tested and reported on a quarterly basis. Akastor was in compliance with its
Funding duration
covenants as of December 31, 2021. In February 2022, the group entered
into certain amendments to the loan agreement, including adjustments of
Akastor emphasizes financial flexibility and steers its capital structure
the covenant levels for gearing ratio and minimum liquidity, which provided
accordingly to limit its liquidity and refinancing risks. In this perspective,
additional headroom. On the basis of the covenant levels and its financial
loans and other external borrowings are to be renegotiated well in advance
forecasts, management believes that the risk of covenant being breached is
of their due date and generally for periods of 3 to 5 years. However, as a
low and that the group will continue as a going concern for the foreseeable
result of MHWirth divestment in 2021 and the required refinancing carried
future.
out in connection with this, corporate facilities currently have a shorter
duration as realization of assets are expected to be carried out in the short
AGR’s external financing has one financial covenant the Liquidity shall be
to medium term.
not less than NOK 20 million, applicable from 1 January 2021.
Annual Report 2021 | Financials and Notes | Akastor Group 68
Note 30 | Financial risk management and exposures
The group is exposed to a variety of financial risks: currency risk, interest
investments in foreign operations. Commercial transactions and recognized
rate risk, price risk, credit risk, liquidity risk and capital risk. The capital
assets and liabilities are subject to currency risk when payments are
market risk affects the value of financial instruments held. The objective of
denominated in a currency other than the respective functional currency
financial risk management is to manage and control financial risk exposures
of the group company. The group’s exposure to currency risk is primarily
and thereby increase the predictability of earnings and minimize potential
against USD.
adverse effects on the group’s financial performance.
Risk management is present in every project. It is the responsibility of the
31, 2021. The changes in hedge reserve in 2020 were related to hedges of
project managers, with the support of Akastor Treasury, to identify, evaluate
forecast sales and purchases in MHWirth which was divested in 2021, see
and hedge financial risks under policies approved by the Board of Directors.
Note 5 and Note 6 for more information about the divestment.
Akastor had no net investment hedge or cash flow hedges as of December
The group has well-established principles for overall risk management, as
well as policies for the use of derivatives and financial investments. There
Exposure to currency risk
have not been any changes in these policies during the year.
Changes in currency rates change the values of borrowings, receivables
and cash balances. The group has forward exchange contracts with a
Currency risk
maturity of less than one year from the reporting date.
The group operates internationally and is exposed to currency risk
on commercial transactions, recognized assets and liabilities and net
Amounts in million
Cash and cash equivalents
Intercompany loans
Loans and receivables
Deferred settlement assets and obligations
Balance sheet exposure
Estimated forecast receipts from customers
Estimated forecast payments to vendors
Cash flow exposure
Forward exchange contracts
Net exposure
2021
USD
(5)
43
43
(50)
31
-
-
-
(75)
(43)
2020
USD
(59)
33
55
(29)
108
(5)
104
(154)
(50)
Sensitivity analysis
of the reporting period. The analysis assumes that all other variables, in
A strengthening of USD against NOK as of December 31 would have
particular interest rates, remain constant and ignores any impact of forecast
affected the measurement of financial instruments denominated in a foreign
sales and purchases. Figures in the table below only include the effect in
currency and increased (decreased) income statement by the amounts
income statement for change in currency regarding financial instruments
shown below. This analysis is based on foreign currency exchange rate
and do not include effect from operating cost and revenue.
variances that the group considered to be reasonably possible at the end
Effect of weakening of NOK against USD:
Amounts in NOK million
2021
Profit (loss)
after tax
USD (10%)
(38)
USD (30%)
2020
Profit (loss)
after tax
(101)
A strengthening of the NOK against USD as of December 31 would have
The primary currencyrelated risk is the risk of reduced competitiveness
had the equal but opposite effect on the above amounts, on the basis that
abroad in the case of a strengthened NOK. This risk relates to future
all other variables remain constant. The sensitivity analysis does not include
commercial contracts and is not included in the sensitivity analysis above.
effects on the consolidated result and equity from changed exchange rates
used for consolidation of foreign subsidiaries.
Annual Report 2021 | Financials and Notes | Akastor Group 69
Interest rate risk
An increase of 100 basis points in interest rates during 2021 would have
The group’s interest rate risk arises from cash balances, interest-bearing
increased (decreased) profit and loss by the amounts shown on the table
borrowings and interestbearing receivables. Borrowings and receivables
below. This analysis assumes that all other variables, in particular foreign
issued at variable rates as well as cash expose the group to cash flow
currency rates, remain constant. The analysis is performed on the same
interest rate risk. Borrowings and receivables issued at fixed rates expose
basis as for 2020.
the group to fair value interest rate risk. However, as these borrowings are
measured at amortized cost, interest rate variations do not affect profit and
loss when held to maturity.
Effect of increase of 100 basis points in interest rates on profit (loss) before tax
Amounts in NOK million
Cash and cash equivalents
Interestbearing receivables
Borrowings
Net
2021
2020
2
2
(19)
(16)
3
2
(18)
(14)
A decrease of 100 basis points in interest rates during 2021 would have
Credit risk
had the equal but opposite effect on the above amounts, on the basis that
Credit risk is the risk of financial losses to the group if customer or
all other variables remain constant. There are no effects on equity as there
counterparty to financial investments/instruments fails to meet contractual
are no interest swaps.
Guarantee obligations
obligations and arise principally from investment securities and receivables.
Derivatives are only traded against approved banks. All approved banks
The group has provided the following guarantees on behalf of subsidiaries
have investment grade ratings. Credit risk related to investment securities
and related parties as of December 31, 2021 (estimated remaining exposure
and derivatives is therefore considered to be insignificant.
as of December 31, 2021):
Performance guarantees on behalf of group companies are NOK
important requirement in the bid phase and throughout the contract period.
0.4 billion (NOK 0.7 billion in 2020)
Such assessments are based on credit ratings, income statement and
Assessment of credit risk related to customers and subcontractors is an
balance sheet reviews and using credit assessment tools available (e.g.
Performance guarantees on behalf of related parties NOK 2.6
Dun & Bradstreet and Credit Watch). Sales to customers are settled in cash.
billion (NOK 2.6 million in 2020)
Parent company indemnity guarantees for fulfillment of lease
to receivables and contract assets from major corporate customers. The
obligations and finance obligations are NOK 3.0 billion (NOK 3.4
maximum exposure to credit risk at the reporting date equals the carrying
The group evaluates that significant credit risk concentrations are related
billion in 2020).
amounts of financial assets (see Note 31 Financial instruments) and
contract assets (see Note 8 Revenue and other income). The group does
Financial guarantees including counter guarantees for bank/surety
not hold collateral as security.
bonds and guarantees for pension obligations to employees are
NOK 0.3 billion (NOK 0.5 billion in 2020).
Based on estimates of incurred losses in respect of trade receivables and
contract assets, the group establishes a provision for impairment losses.
Although guarantees are financial instruments, they are considered
Provisions for loss on debtors are based on individual assessments.
contingent obligations and the notional amounts are not included in the
Provisions for loss on receivables and contract assets were NOK 271
financial statements. See more information about guarantees for related
million in 2021 (NOK 131 million in 2020).
parties in Note 34 Related parties.
Liquidity risk
Price risk
Liquidity risk is the risk that the group will encounter difficulty in meeting the
The group is exposed to fluctuations in market prices in the operational
obligations associated with its financial liabilities. The group manages its
areas related to contracts, including changes in market prices for raw
liquidity to ensure that it will always have sufficient liquidity reserves to meet
materials, equipment and development in wages. These risks are to the
its liabilities when due.
extent possible managed in bid processes by locking in committed prices
from vendors as a basis for offers to customer or through escalation clauses
Prudent liquidity risk management includes maintaining sufficient cash, the
with customers.
availability of funding from an adequate amount of committed credit facilities
and the ability to close out market positions. Due to the dynamic nature of
the underlying businesses, Akastor Treasury maintains flexibility in funding
by maintaining availability under committed credit lines.
Annual Report 2021 | Financials and Notes | Akastor Group 70
The group policy for the purpose of optimizing availability and flexibility
pools is financially viable and is able to prove its capability to service its
of cash within the group is to operate a centrally managed cash pooling
obligations concerning repayment of any net deposits made by business
arrangement. An important condition for the participants (business units)
units. Management monitors rolling monthly forecasts of the group’s liquidity
in such cash pooling arrangements is that the group as an owner of such
reserve on the basis of expected cash flow.
Financial liabilities and the period in which they mature
The following is the remaining contractual maturities of financial liabilities at the reporting date. The amounts are gross and undiscounted and include
contractual interest payments and exclude the impact of netting agreements.
Amounts in NOK million
2021
Borrowings 2)
Lease liabilities
Other noncurrent liabilities
Deferred settlement obligations
Trade and other payables
Total financial liabilities
Financial guarantees 3)
2020
Borrowings 2)
Lease liabilities
Other noncurrent liabilities
Derivative financial instruments
Deferred settlement obligations
Trade and other payables
Total financial liabilities
Financial guarantees 3)
Note
24
32
25
25, 28
28
24
32
25
25, 28
28
Book
value
Total cash
flow 1)
6 months
and less
6–12
months
1–2 years
2–5 years
More than
5 years
1 387
1 522
155
201
459
476
168
221
481
476
2 678
2 868
6 247
1 746
1 895
592
210
37
274
1 537
4 396
732
239
37
274
1 537
4 714
7 175
48
42
8
240
338
581
37
84
2
28
11
1 266
1 429
294
32
41
60
236
369
4
1 172
76
2
1
68
272
1 590
5
1 237
46
221
82
1 586
497
54
125
5
8
67
258
382
111
39
163
313
3 315
568
219
227
128
1 142
3 666
94
1
168
263
1 851
64
228
2
295
2 828
1) Nominal currency value including interest.
2) The interest costs are calculated using the last fixing rate known by year end (plus applicable margin).
3) Financial guarantees are not recognized on the consolidated balance sheet. The undiscounted cash flows potentially payable under financial guarantees are classified on the
basis of expiry date.
Annual Report 2021 | Financials and Notes | Akastor Group 71
Note 31 | Financial instruments
Accounting classifications and fair values
Level 2 - fair values are based on price inputs other than quoted prices
The following table shows the carrying amounts and fair values of financial
derived from observable market transactions in an active market for
assets and financial liabilities, including their levels in the fair value
identical assets or liabilities. Level 2 includes currency derivatives, typically
hierarchy. It does not include fair value information for financial assets and
when the group uses forward prices on foreign exchange rates as inputs to
financial liabilities not measured at fair value if the carrying amount is a
valuation models.
reasonable approximation of fair value. For financial instruments measured
at fair value, the levels in the fair value hierarchy are as shown below.
Level 3 - Fair values are based on unobservable inputs, mainly based on
internal assumptions used in the absence of quoted prices from an active
Level 1 - fair values are based on prices quoted in an active market for
market or other observable price inputs.
identical assets or liabilities.
Amounts in NOK million
2021
Financial assets measured at fair value
Fair value – hedging instruments
Derivative financial instruments
Fair value through P&L (mandatorily at FVTPL)
Equity securities
Equity securities 1)
Warrants
Contingent considerations
Fair value through Other comprehensive income
Debt instruments 1)
Financial assets not measured at fair value
Financial assets at amortized cost
Cash and cash equivalents
Noncurrent interestbearing receivables
Trade and other receivables
Financial assets
Financial liabilities not measured at fair value
Financial liabilities at amortized cost
Borrowings 2)
Other financial liabilities
Other noncurrent liabilities
Other current liabilities
Trade and other payables
Financial liabilities measured at fair value
Fair value through profit & loss
Deferred settlement obligations
Financial liabilities
Note
Carrying
amount
Financial
instruments
measured at
fair value
Level in
fair value
hierarchy
10
10
Level 2
10
1 125
18
20
10
1 125
18
20
Level 1
Level 3
Level 3
Level 3
619
619
Level 3
89
315
808
3 013
(1 387)
(1402)
Level 2
(201)
(148)
(476)
19
19
19
18
19
22
20
21
24
25
25
28
25, 28
(459)
(2 671)
(459)
Level 3
Annual Report 2021 | Financials and Notes | Akastor Group 72
Amounts in NOK million
2020
Financial assets measured at fair value
Fair value – hedging instruments
Derivative financial instruments
Fair value through P&L (mandatorily at FVTPL)
Equity securities
Equity securities 1)
Warrants
Contingent considerations
Fair value through Other comprehensive income
Debt instruments 1)
Financial assets not measured at fair value
Financial assets at amortized cost
Cash and cash equivalents
Noncurrent interestbearing receivables
Trade and other receivables
Financial assets
Financial liabilities not measured at fair value
Financial liabilities at amortized cost
Borrowings 2)
Other financial liabilities
Other noncurrent liabilities
Trade and other payables
Financial liabilities measured at fair value
Fair value – hedging instruments
Derivative financial instruments
Fair value through profit & loss
Deferred settlement obligations
Financial liabilities
Note
Carrying
amount
Financial
instruments
measured at
fair value
Level in
fair value
hierarchy
61
61
Level 2
14
906
16
26
14
906
16
26
Level 1
Level 3
Level 3
Level 3
533
533
Level 3
275
115
1 120
3 063
(1 746)
(1 753)
Level 2
(210)
(1 537)
19
19
19
18
19
22
20
21
24
25
28
(37)
(37)
Level 2
25, 28
(274)
(3 804)
(274)
Level 3
1) Investments in level 3 in the hierarchy relate to equity securities and debt securities with no active market. These investments are measured at the best estimate of fair value.
2) For credit facilities and other loans with floating interest, notional amounts are used as approximation of fair values.
Annual Report 2021 | Financials and Notes | Akastor Group Reconciliation of Level 3 financial assets and financial liabilities
Amounts in NOK million
Balance as of December 31, 2019
Settlements
Net gain (loss) in the income statement
Fair value through OCI
Currency translation difference
Balance as of December 31, 2020
Additions
Settlements
Net gain (loss) in the income statement
Fair value through OCI
Disposal of subsidiaries
Balance as of December 31, 2021
73
Assets
Liabilities
1 665
(39)
(96)
(42)
(8)
1 480
189
(37)
196
(20)
(26)
(271)
77
(78)
(274)
(220)
27
4
-
3
1 782
(459)
Measurement of fair values at level 3
Debt instruments at FVOCI
to follow a Geometric Brownian Motion. The key inputs to the
valuation model consist of the stock price of Odfjell Drilling (listed
Financial assets measured at FVOCI are related to debt instruments
on the Oslo Stock Exchange under ticker ODL) at the valuation
in NES Fircroft. The valuation model considers the present value of the
date, as well as assumption of future volatility based on the share’s
expected cash flows from the ultimate disposal of the investments weighted
historical prices. The estimated fair value is mostly sensitive to the
with different probabilities. The expected disposal value is determined by
ODL share price and would increase (decrease) if the ODL share
forecast EBITDA at the time of disposal and market multiples, adjusted by
price were higher (lower).
forecast net debt of the investee. The estimated fair value would increase
(decrease) if:
Contingent considerations and deferred settlement obligations
These assets and liabilities relate to contingent considerations and
The forecast EBITDA were higher (lower);
obligations from business acquisitions and disposals. Final amounts
The market multiples applied were higher (lower); or
disposed companies or outcome of indemnity claims and price adjustment
to be paid or received depend on future earnings in the acquired and
The net debt of the investees at the date of disposal were lower
mechanisms.
(higher).
Financial assets at FVTPL
Assets and liabilities depending on future earnings: The recognized
amounts are determined based on recent forecasts and strategy
figures for these entities, thus the final realized values are sensitive
Financial assets measured using Level 3 inputs relate mainly to preferred
to the above inputs as driven by market conditions.
equity and warrant investment in Odfjell Drilling.
Preferred equity: The valuation model considers the present value
and price adjustment mechanisms: Provisions are made based on
of the expected future payments, discounted using a risk-adjusted
all available evidence as at the reporting date.
Assets and liabilities depending of outcome of indemnity claims
discount rate of 10%. The estimated fair value would increase
(decrease) if the riskadjusted discount rate were lower (higher).
The credit exposure on the Level 3 asset is limited to the amount recognized
and the credit risk is not considered to be significant due to the nature of
Warrants: The valuation is obtained from external valuation
experts, using a Monte Carlo simulation model where the simulated
stock prices are based on a lognormal stock price model assumed
the arrangement.
Annual Report 2021 | Financials and Notes | Akastor Group 74
Note 32 | Leases
Group as lessee
The group applies the short-term lease recognition exemptions for leases
The group has property leases on a number of locations. The leases typically
of property or machinery with lease term of 12 months or less. Leases of
run for a period of 3-10 years and some of the leases have extension
IT equipment and office equipment are considered as leases of low-value
options. The group has also lease agreements related to IT equipment and
assets. The rightofuse assets and lease liabilities are not recognized for
office equipment. These leases have an average lease period of 2-3 years,
shortterm leases or leases of lowvalue assets.
generally with no renewal options included.
The lease agreements do not impose any covenants or restrictions.
Right-of-use assets
Amounts in NOK million
Balance as of January 1
Additions
Depreciation 1)
Impairment
Disposal of subsidiaries
Remeasurement
Currency translation differences
Balance as of December 31
1) Includes depreciation related to discontinued operations of NOK 11 million in 2021 (NOK 77 million in 2020)
The rightofuse assets are related to leases of properties.
Lease liabilities
Amounts in NOK million
Balance as of January 1
Cash payments
Additions
Remeasurement
Disposal of subsidiaries
Currency translation differences
Balance as of December 31
Current lease liabilities
Non-current lease liabilities
Lease payments recognized in the income statement
Amounts in NOK million
Expenses related to leases of low-value items
Total
Lease payments recognized in statement of cash flow
Amounts in NOK million
Total cash outflow for leases
Note
2021
2020
6
Note
6
30
468
9
537
43
(43)
(113)
-
(416)
25
(2)
41
(4)
(1)
5
468
2021
592
2020
677
(112)
(139)
9
64
(397)
(1)
155
82
72
2021
2
2
2021
(99)
43
6
5
592
159
433
2020
restated
1
1
2020
(279)
Annual Report 2021 | Financials and Notes | Akastor Group 75
Some property leases contain extension or termination options exercisable
Group as lessor
before the end of the non-cancellable period. They are used to maximize
The group subleases out some of the property leases which are presented
operational flexibility in terms of managing the assets used in the group’s
as part of the right-of-use assets. DDW Offshore leases out some of its
operations. The extension and termination options held are exercisable
vessels.
only by the group and not by the respective lessor. The group assesses at
lease commencement date whether it is reasonably certain to exercise the
Finance leases
extension or termination options.
Some of the subleases of right-of-use assets are classified as finance
lease, with reference to the right-of-use assets arising from the head leases.
Most extension options in offices leases have not been included in the
During 2021, DDW Offshore entered into bareboat charter agreements and
lease liability, because the group expects to be able to replace the assets
forward sale of two vessels, which are classified as finance lease. The
without significant cost or business disruption. Most of the early termination
group recognized a gain of NOK 51 million from the transaction as “gain
options are not considered in the lease term either as the group assesses
from disposal of assets”, see Note 8 Revenue and other income.
it as reasonably certain that the leases will not be terminated early. If the
group had exercised the extension options in significant property leases as
The following table sets out a maturity analysis of finance lease receivables,
of December 31, 2021, the group estimates potential future lease payments
showing the undiscounted lease payments to be received after the reporting
(undiscounted) of approximately NOK 35 million, which are not included in
date.
the lease liabilities.
Amounts in NOK million
Due within one year
Due in one to two years
Due in two to three years
Due in three to four years
Total undiscounted lease receivable
Unearned interest income
Total finance lease receivables
Current finance lease receivables
Non-current finance lease receivables
2021
2020
64
189
18
-
271
31
241
64
176
7
7
7
5
25
2
23
7
15
Operating leases
The following table sets out future undiscounted sublease income under the
Most of the leases are classified as operating leases except for the finance
noncancellable lease periods.
leases identified above. The lease income from subleasing right-of-use
assets in 2021 was NOK 28 million (NOK 24 million in 2020).
Amounts in NOK million
Due within one year
Due in one to two years
Due in two to three years
Due in three to four years
Due in four to five years
Due in more than five years
Total
2021
23
-
-
-
-
-
23
2020
49
10
3
3
3
8
75
Annual Report 2021 | Financials and Notes | Akastor Group 76
Note 33 | Group companies
This note gives an overview of subsidiaries of Akastor ASA. For information about other investments in the group, refer to Note 17 Equity-accounted
investees and Note 19 Other investments. If not stated otherwise, ownership equals share of voting rights.
Group companies as of December 31
Company
Akastor ASA
AGR1)
AGR (Australia) Pty Ltd
AGR AS
AGR Energy Services AS 2)
AGR Software AS
AGR Consultancy Services AS
AGR Mexico Well Management S. de R. L. de C. V
AGR Well Management Ltd 3)
AGR Consultancy Solutions Ltd
AGR Group Americas, Inc.
AGR Wind Service AS
Other companies
Frontica Global Employment Ltd 4)
Cool Sorption A/S
Well Systems Servicing Ltd
AKA SPH AS
DDW Offshore AS
Akastor AS
Mercury HoldCo AS 5)
Akastor Real Estate AS
KOP Surface Products Singapore Pte Ltd
Aker Cool Sorption Siam Ltd
Frontica Business Solutions Ltd
AK Willfab Inc
Mercury HoldCo Inc 5)
AKOFS Angola Limitada 4)
Country
Norway
Australia
Norway
Norway
Norway
Norway
Mexico
UK
UK
USA
Norway
Cyprus
Denmark
Nigeria
Norway
Norway
Norway
Norway
Norway
Singapore
Thailand
UK
USA
USA
Angola
Ownership (%)
2021
2020
64
64
64
58
64
64
-
64
64
52
-
100
100
100
100
100
100
100
100
100
100
100
100
-
64
64
64
58
64
64
64
64
64
100
100
100
100
100
100
100
100
100
100
100
100
Annual Report 2021 | Financials and Notes | Akastor Group Disposed entities
MHWirth 6)
MHWirth Pty Ltd
MHWirth do Brasil Equipamentos Ltda
MHWirth Canada Inc
MHWirth Offshore Petroleum Engineering (Shanghai) Co Ltd
MHWirth GmbH
MHWirth (India) Pvt Ltd
MHWirth AS
Frontica Engineering AS
MHWirth Singapore Engineering Management Pte Ltd
MHWirth (Singapore) Pte Ltd
MHWirth UK Ltd
MHWirth FZE
MHWirth Inc
Bronco Manufacturing LLC
Step Oiltools (Australia) Pty Ltd
Step Oiltools GmbH
PT Step Oiltools
Step Oiltools LLP
Step Oiltools (M) Sdn Bhd
Step Oiltools BV
Step Oiltools AS
Step Oiltools Services LLC
Step Oiltools LLC
Step Oiltools Pte Ltd
Step Oiltools (Thailand) Ltd
Step Oiltools (UK) Ltd
Step Oiltools FZE
Australia
Brazil
Canada
China
Germany
India
Norway
Norway
Singapore
Singapore
UK
UAE
USA
USA
Australia
Germany
Indonesia
Kazakhstan
Malaysia
Netherlands
Norway
Oman
Russia
Singapore
Thailand
UK
UAE
77
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
67
100
100
100
100
100
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
1) Akastor holds 100 percent of the shares and 64 percent of the economic interests
2) Previously AGR Petroleum Service AS
3) Disposed in 2021
4) Liquidated in 2021
5) Established in 2021
6) MHWirth entities were merged into the joint venture HMH and deconsolidated in 2021. Step Oiltools entities are included in the transaction scope and thus form part of the
MHWirth business contributed from Akastor to the new joint venture HMH. However, the legal ownership in shares in Step Oiltools remains with Akastor as of December 31,
2021 pending certain regulatory approvals. The legal ownership in Step Oiltools does not constitute control since Akastor has entered into a binding agreement with HMH on
the transfer of Step Oiltools and Akastor is not exposed to variable returns from the ownership from the time of agreement being entered into.
Annual Report 2021 | Financials and Notes | Akastor GroupFinancials and Notes | Akastor Group 78
Note 34 | Related parties
Related party relationships are those involving control (either direct or
Related party transactions with joint ventures
indirect), joint control or significant influence. Related parties are in a
AKOFS Offshore
position to enter into transactions with the company that would not be
As of December 31, 2021, Akastor has interest-bearing receivables of
undertaken between unrelated parties. All transactions with related parties
NOK 113 million against AKOFS Offshore, including term loan of NOK
to Akastor have been based on arm’s length terms.
86 million (LIBOR 0.13 percent + margin 5.5 percent) and drawn working
capital facility of NOK 28 million (NIBOR 0.78 percent + margin 5.5 percent).
Akastor ASA is a parent company with control of around 20 companies
Akastor has made available a NOK 100 million working capital revolving
around the world. These subsidiaries are listed in Note 33 Group companies.
facility to AKOFS Seafarer AS from contract commencement with Equinor.
Any transactions between the parent company and the subsidiaries
are shown line by line in the separate financial statements of the parent
As part of the joint venture shareholders agreement, the other two investors,
company, and are eliminated in the consolidated financial statements.
Mitsui and MOL, are entitled to a guaranteed preferred equity return, in
Joint ventures and associates are accounted for using the equity method,
46 million over a 6 year’s period. The payment of preferred return will be
see Note 17 Equity-accounted investees.
settled firstly by ordinary dividend from AKOFS Offshore, with any shortfall
respect of the operations of AKOFS Seafarer, amounting to a total of USD
being guaranteed by Akastor. Akastor ASA has issued a bank guarantee for
The largest shareholder of Akastor, Aker Holding AS, is wholly-owned by
payment of preferred return for a total amount of NOK 185 million.
Aker ASA, which in turn is controlled by Kjell Inge Røkke through TRG
Holding AS and The Resource Group TRG AS. In December 2020, the
Akastor has issued a financial guarantee of NOK 132 million in favour of
previous common ownership in Aker Holding AS between Aker ASA and the
finance institutions for fulfilment of lease obligations related to Avium Subsea
Norwegian government was dissolved. As a consequence of the dissolution,
AS. Akastor has issued a financial parent company indemnity guarantee of
Akastor is an associate to Aker ASA as per year end 2021.
NOK 1.4 billion in favour of OCY Wayfarer Limited for fulfilment of lease
obligations related to AKOFS 3 AS. In addition, Akastor is guaranteeing the
Below are descriptions of significant related party agreements.
performance of AKOFS Norway Operations AS (operating AKOFS Seafarer)
under the 5 years charter agreement with Equinor. The total contract value
Significant agreements with related parties to Aker ASA
of this charter agreement is NOK 2.3 billion. Avium Subsea AS, AKOFS
Aker Holding AS
3 AS and AKOFS Seafarer AS are wholly owned subsidiaries of AKOFS
In connection with the refinancing of its corporate credit facilities, Akastor
Offshore.
entered into a subordinated loan agreement with Aker Holding AS, a wholly
owned subsidiary to Aker ASA. The agreement provides credit facility of
HMH
NOK 250 million (NIBOR 0.95 percent + margin 10.0 percent) available to
In October 2021, Akastor completed the transaction to bring together
Akastor with maturity in March 2023. The carrying amount of the loan from
Akastor’s wholly owned subsidiary, MHWirth AS (MHWirth) and Baker
Aker Holding AS was NOK 3 million as of December 31, 2021, see Note 24
Hughes’ Subsea Drilling Systems (SDS) business to create a joint venture
Borrowings for more information.
The Resource Group TRG AS
company HMH. Following the transaction, Akastor and Baker Hughes each
holds 50% and 50% of the shares in HMH, and have joint control over
the company. See Note 5 Discontinued operations and Note 17 Equity-
AK Wilfab Inc, a wholly owned subsidiary of Akastor, is together with Aker
accounted investees for more information.
Solutions Inc and The Resource Group TRG AS sponsoring the US pension
plan named the Kvaerner Consolidated Retirement Plan. Akastor holds one
As of December 31, 2021, Akastor has interest-bearing receivables of NOK
third of the liability of the sponsors for the underfunded element of the plan
180 million against HMH (fixed interest rate 8.0 percent), see also Note
and The Resource Group TRG AS holds two thirds of the ultimate liability.
20 Non-current interest-bearing receivables. Further, Akastor has a seller’s
Aker ASA guarantees for The Resource Group TRG AS’ liability and covers
credit liability of NOK 148 million towards HMH related to Step Oiltools,
for all its expenses related to the pension plan.
see also Note 25 Other liabilities for more information. Akastor has issued
Fornebuporten Næring 3 AS
financial guarantees of NOK 602 million for MHWirth AS, a wholly owned
subsidiary of HMH, for fulfilment of lease obligations and performance
Akastor leases its headquarter offices at Fornebu from Fornebuporten
under certain operational support frame agreements.
Næring 3 AS, an associated company of The Resource Group TRG AS.
The contract term is 10 years starting August 31, 2015, with two additional
Other related parties
five-year options.
Aker Pensjonskasse
Aker Pensjonskasse was established by Aker ASA to manage the retirement
plan for employees and retirees in Akastor as well as related Aker companies.
Akastor holds 93.4 percent of the paidin capital in Aker Pensjonskasse and
Akastor’s share of paid-in equity was NOK 158 million at the end of 2021
(NOK 158 million in 2020). Akastor’s premium paid to Aker Pensjonskasse
amounts to NOK 8 million in 2021 (NOK 7 million in 2020). Akastor also
has an interestbearing receivable against Aker Pensjonskasse of NOK 22
Annual Report 2021 | Financials and Notes | Akastor GroupFinancials and Notes | Akastor Group 79
million and an additional financing commitment NOK 10 million (3% interest
Grants to employee representative’s collective fund
of drawn amount and 1% interest of committed amount).
Aker ASA has signed an agreement with employee representatives that
regulate use of grants from Akastor ASA for activities related to professional
Even though Akastor owns 93.4 percent in Aker Pensjonskasse, the
development. The grant in 2021 was NOK 510 000 (NOK 510 000 in 2020)
ownership does not constitute control since Akastor does not have the
power to govern the financial and operating policies so as to obtain benefits
.
from the activities in this entity.
Compensation to key management
The key management personnel of Akastor includes the Board of Directors and the executive management team. Detailed remuneration disclosures are
provided in the remuneration report 2021. The figures below represent remuneration expenses recognized in the year.
Amounts in NOK million
Base salary
Variable pay and other benefits
Post-employment benefits (pension expenses to company)
Remuneration to Board of Directors
Total
2021
2020
7
15
3
26
7
3
3
14
Annual Report 2021 | Financials and Notes | Akastor GroupFinancials and Notes | Akastor Group 80
04.b. FINANCIALS AND NOTES
AKASTOR ASA
Akastor ASA | Income statement For the year ended December 31
Akastor ASA | Statement of financial position For the year ended December 31
Akastor ASA | Statement of cash flow For the year ended December 31
Note 1 | Accounting principles
Note 2 | Operating revenue and expenses
Note 3 | Net financial items
Note 4 | Tax
Note 5 | Investments in group companies
Note 6 | Shareholders’ equity
Note 7 | Receivables and borrowings from group companies and related parties
Note 8 | Borrowings
Note 9 | Guarantees
Note 10 | Financial risk management
Note 11 | Related parties
Note 12 | Shareholders
81
82
83
84
85
85
86
86
87
87
88
89
90
90
91
Annual Report 2021 | Financials and Notes | Akastor ASAFinancials and Notes | Akastor ASA Akastor ASA | Income statement
For the year ended December 31
Amounts in NOK million
Operating revenue
Operating expenses
Operating profit (loss)
Net financial items
Profit (loss) before tax
Income tax benefit (expense)
Profit (loss) for the period
Profit (loss) for the period distributed as follows
Other equity
Profit (loss) for the period
81
Note
2021
2020
2
2
3
4
2
(53)
(51)
(613)
(664)
-
(664)
(664)
(664)
1
(36)
(35)
780
745
(21)
724
724
724
Annual Report 2021 | Financials and Notes | Akastor ASA
82
Akastor ASA | Statement of financial position
For the year ended December 31
Amounts in NOK million
Assets
Investments in group companies
Noncurrent interestbearing receivables on group companies
Other noncurrent interestbearing receivables
Total non-current assets
Current interestbearing receivables on group companies
Other receivables on group companies
Other receivables
Cash in cash pool system
Total current assets
Total assets
Equity and liabilities
Issued capital
Treasury shares
Share premium
Other paid in capital
Other equity
Total equity
Non-current borrowings, external
Total non-current liabilities
Current borrowings, external
Current borrowings from group companies
Other liabilities to group companies
Other current liabilities
Total current liabilities
Total liabilities
Total equity and liabilities
Note
2021
2020
5
7
7
7
7
6
8
8
7
7
4 515
500
2
5 018
173
1
3
-
177
5 195
162
(1)
2 000
2 003
229
4 393
719
719
16
-
52
15
83
802
5 195
5 650
891
4
6 545
2
1
3
6 549
162
(1)
2 000
2 003
894
5 057
1 119
324
36
13
1 491
1 491
6 549
Fornebu, March 25, 2022 I Board of Directors of Akastor ASA
Kristian Røkke | Chairman
Lone Fønss Schrøder | Deputy Chairman
Svein Oskar Stoknes | Director
Kathryn M. Baker | Director
Luis Araujo | Director
Henning Jensen | Director
Asle Christian Halvorsen | Director
Stian Sjølund | Director
Karl Erik Kjelstad | CEO
Annual Report 2021 | Financials and Notes | Akastor ASA
Akastor ASA | Statement of cash flow
For the year ended December 31
Amounts in NOK million
Profit (loss) before tax
Adjustments:
Group contribution and dividend
Noncash impairment
Net interest cost and unrealized currency (income) loss
Profit (loss), net of adjustments
Changes in net operating assets
Net interest paid
Net cash from operating activities
Net cash from investing activities
Proceeds from borrowings
Repayment of borrowings
Changes in borrowings from group companies
Changes in borrowings to group companies
Change in overdraft cash pool
Repayment of external dividends
Net cash from financing activities
Effect of exchange rate changes on cash and cash deposits
Net increase (decrease) in cash and bank deposits
Cash in cash pool system at the beginning of the period
Cash in cash pool system at the end of the period 1)
1) Unused credit facilities amounted to NOK 553 million as of December 31, 2021 (NOK 1.5 billion in 2020).
83
2020
745
(750)
5
(1)
(6)
(43)
(49)
227
(316)
430
(559)
2
(216)
(51)
(316)
316
2021
(664)
(7 000)
7 593
46
(25)
18
(38)
(45)
-
1 067
(1 483)
844
(171)
(225)
-
32
14
-
-
-
Note
3
7
Annual Report 2021 | Financials and Notes | Akastor ASA
84
Note 1 | Accounting principles
Norwegian Accounting Act and Norwegian generally accepted accounting
Cash in cash pool system
principles (NGAAP).
Revenue recognition
Akastor ASA has a cash pool that includes the parent company’s cash as
well as net deposits from subsidiaries in the group cash pooling system
owned by the parent company. Correspondingly, Akastor ASA’s current
Operating revenue mainly comprise parent company guarantees (PCG)
debt to group companies will include their net deposit in the group’s cash
recharged to entities within the group. The revenue is recognized over the
pool system.
guarantee period.
Share capital
Investments in subsidiaries
Costs for purchase of own shares including transaction costs are accounted
Investments in subsidiaries are measured at cost in the parent company
for directly against equity. Sales of own shares are performed according
accounts, less any impairment losses. The investments are impaired to
to stock-exchange quotations at the time of award and accounted for as
fair value if the impairment is not considered temporary. Impairment losses
increase in equity.
are reversed if the basis for the impairment loss is no longer present.
Investments in subsidiaries and associates are reviewed for impairment
Cash flow statement
whenever events or changes in circumstances indicate that the carrying
The statement of cash flow is prepared according to the indirect method.
amount may exceed the fair value of the investment.
Cash and cash equivalents include cash, bank deposits and other short-
Dividends, group contributions and other distributions from subsidiaries are
term liquid investments.
recognized as income the same year as they are recognized in the financial
Functional currency and presentation currency
statement of the provider. If the dividends or group contributions exceed
The parent company’s financial statements are presented in NOK, which
withheld profits after the acquisition date, the excess amount represents
is Akastor ASA’s functional currency. All financial information presented in
repayment of invested capital, and is recognized as a reduction of carrying
NOK has been rounded to the nearest million (NOK million), except when
value of the investment.
Classification
otherwise stated. The subtotals and totals in some of the tables in these
financial statements may not equal the sum of the amounts shown due to
rounding.
Current assets and current liabilities include items due within one year or
items that are part of the operating cycle. Other balance sheet items are
Foreign currency
classified as non-current assets/debts.
Transactions in foreign currencies are translated at the exchange rate
applicable at the date of the transaction. Monetary items in a foreign
Noncurrent borrowings are presented as current if a loan covenant breach
currency are translated to NOK using the exchange rate applicable on the
exists at balance date. If a covenant waiver is approved subsequent to
balance sheet date. Foreign exchange differences arising on translation are
year-end and before the approval of the financial statements, the liability
recognized in the income statement as they occur.
is presented as non-current debt to the extent maturity date is beyond one
year.
Tax
Measurement of borrowings and receivables
withholding tax and changes in deferred tax. Deferred tax is calculated as
Financial assets and liabilities consist of investments in other companies,
22 percent of temporary differences between accounting and tax values as
trade and other receivables, interest-bearing receivables, cash and cash
well as any tax losses carry-forward at the year end. Net deferred tax assets
equivalents, trade and other payables and interest-bearing borrowing.
are recognized only to the extent it is probable that they will be utilized
Tax income (expense) in the income statement comprises current tax,
against future taxable profits.
Trade receivables and other receivables are recognized in the balance
sheet at nominal value less provision for expected losses.
Interestbearing borrowings are initially recorded at transaction value less
transaction costs. Subsequent to initial recognition, these borrowings
are measured at amortized cost with any difference between cost and
redemption value being recognized in the income statement over the period
of the borrowings on an effective interest basis.
Annual Report 2021 | Financials and Notes | Akastor ASA 85
Note 2 | Operating revenue and expenses
Operating revenue comprises NOK 2 million in income from parent company
NOK 3.0 million has been allocated to payable fees to the Board of Directors
guarantees (NOK 1 million in 2020).
for 2021 (2020: NOK 3.0 million). Remuneration to and shareholding of the
Board of directors and CEO is described in the Remuneration Report.
There are no employees in Akastor ASA and hence no salary or pension
related costs and also no loan or guarantees related to the executive
Fees to the auditors
management team. Group management and corporate staff are employed
Fees to KPMG for statutory audit amounted to NOK 2.0 million exclusive
by other Akastor companies and costs for their services as well as other
VAT (2020: NOK 2.5 million).
parent company costs are recharged to Akastor ASA.
Note 3 | Net financial items
Amounts in NOK million
Interest income from group companies
Interest income from related parties
Interest income, external
Interest expense, external
Income on investment in subsidiary (group contribution)
Other financial income
Dividends from group companies
Impairment on receivables to group companies
Impairment of shares
Other financial expenses
Net foreign exchange gain (loss)
Net financial items
Note
2021
2020
29
-
31
(82)
-
1
7 000
(56)
(7 537)
(3)
4
(613)
43
4
37
(85)
250
500
(2)
33
780
7
Annual Report 2021 | Financials and Notes | Akastor ASA 86
Note 4 | Tax
Amounts in NOK million
Calculation of taxable income
Profit (loss) before tax
Dividend income from group companies
Impairment of shares and receivables to group companies
Changes in timing differences
Group contribution without tax effect
Generated (utilized) tax loss
Taxable income
Taxable (deductible) temporary differences
Provisions
Interest deduction carryforward
Tax loss carry-forward 1)
Net temporary differences
Tax rate
Tax effects of temporary differences
Not recognized deferred tax assets 2)
Deferred tax assets (liability)
Tax expense
Origination and reversal of temporary differences in income statement
Write down of deferred tax assets
Income tax benefit (expense)
2021
2020
(664)
(7 000)
7 593
(7)
-
79
-
(2)
(5)
(79)
(86)
22%
19
(19)
-
19
(19)
-
745
(500)
2
(160)
(88)
(9)
(5)
(15)
22%
3
(3)
(18)
(3)
(21)
1) In addition, Akastor ASA has unrecognized tax loss carry forwards of NOK 440 million as of 2021 which is currently being subject to inquiries from Norwegian Tax Authorities
2) Deferred tax assets are not recognized when the management assesses that it is not probable that future taxable profit will be available, against which the deductible
temporary difference can be utilized.
Note 5 | Investments in group companies
Registered
office
Share
capital
Number of
shares held
Percentage
owner- / vot-
ing share
Fornebu, Norway
Fornebu, Norway
1 004
1
1 000
100%
100%
Amounts in NOK million
Akastor AS
Mercury Holdco AS 1)
Total
1) The company was established in 2021.
Akastor AS financial information (unaudited)
Amounts in NOK million
Profit (loss) for the period
Equity as of December 31
2020
5 650
5 650
2021
3 237
1 279
4 515
2021
435
3 237
Annual Report 2021 | Financials and Notes | Akastor ASA
Note 6 | Shareholders’ equity
Amounts in NOK million
Share capital
Treasury
shares
Share
premium
Other paid in
capital
Retained
earnings
Equity as of January 1, 2020
Repayment of dividends
Profit (loss) for the period
Equity as of December 31, 2020
Profit (loss) for the period
Equity as of December 31, 2021
162
162
162
(2)
(1)
(1)
2 000
2 003
2 000
2 003
2 000
2 003
168
2
724
894
(664)
229
87
Total
4 331
2
724
5 057
(664)
4 393
The share capital of Akastor ASA is divided into 274 000 000 shares with a
The number of treasury shares held by the end of 2021 are 2 390 215
nominal value of NOK 0.592. The shares can be freely traded. See note 12
and are held for the purpose of being used for future awards under any
Shareholders for an overview of the company's largest shareholders.
share purchase program for employees, as settlement in future corporate
acquisitions or for other purpose as decided by the board of directors.
Note 7 | Receivables and borrowings from group companies and related parties
Amounts in NOK million
2021
2020
Group companies (borrowings) deposits in the cash pool system
Akastor ASA's net deposit (borrowings) in the cash pool system
Cash in cash pool system
Noncurrent interestbearing receivables on group companies
Current interestbearing receivables on group companies 1)
Current borrowings from group companies 2)
Net interest-bearing receivables on group companies
Other receivables on group companies
Other liabilities to group companies
Total other receivables on group companies
1) Includes group companies’ borrowings in the cash pool system.
2) Includes Akastor ASA’s net borrowings in the cash pool system.
(171)
171
-
500
173
-
673
1
(52)
(52)
324
(324)
819
2
(324)
569
(36)
(35)
Interest-bearing receivables on and borrowings from group
cash pool is vested in the group’s policy and decided by each company’s
companies
board of directors and confirmed by a statement of participation. The
Akastor ASA is the group’s central treasury function (Akastor Treasury)
participants in the cash pool system are jointly and severally liable and it
and enters into borrowings and deposit agreements with group companies.
is therefore important that Akastor as a group is financially viable and can
Deposits and borrowings are done at market terms and are dependent of
repay deposits and carry out transactions. Any debit balance on a sub
the group companies’ credit rating and the duration of the borrowings.
account can be set-off against any credit balance. Hence, a debit balance
represents a claim on Akastor ASA and a credit balance a borrowing from
In 2021, an impairment of NOK 56 million was recognized related to interest-
Akastor ASA.
bearing receivables on Step Oiltools BV prior to recapitalization of the entity.
Cash pool arrangement
The cash pool system has a net overdraft of NOK 11 million as of December
31, 2021, which is included as external current borrowings, see also Note
Akastor ASA is the owner of the cash pool system arrangements with DNB.
8 Borrowings.
The cash pool systems cover a majority of the group geographically and
assure good control and access to the group’s cash. Participation in the
Annual Report 2021 | Financials and Notes | Akastor ASA 88
Note 8 | Borrowings
Amounts in million
Currency
Nominal
currency
value
Carrying
amount
(NOK)
Interest
rate
Interest
mar-
gin 1)
Interest
coupon
Maturity 3)
Interest terms
2021
Revolving credit facility
(USD 89 million)
Revolving credit facility
(NOK 250 million)
Subordinated Aker facility
(NOK 250 million)
Overdraft facility
Total borrowings
Current borrowings
Noncurrent borrowings
Total
2020
Revolving credit facility
(NOK 1 250 million)
Revolving credit facility
(USD 155 million)
Total borrowings
Current borrowings
Total
USD
83
721
0.48%
5.50%
5.98%
Feb 2023
USD LIBOR + margin
NOK
NOK
NOK
3
NOK
USD
350
90
-
0.37%
5.50%
5.87%
Feb 2023
NIBOR + margin
0.95% 10.00% 10.95%
Mar 2023
NIBOR + margin
3
11
735
16
719
735
347
0.39% 3.25%2)
3.64%
Dec 2021
NIBOR+margin
0.15% 3.25%2)
3.40%
Dec 2021
USD LIBOR+margin
772
1 119
1 119
1 119
1) Commitment fee is 40 percent of the margin (2020: 35 percent).
2) The margin applicable to the facility was decided by a price grid based on the leverage ratio and level of utilization.
3) The maturity date reflects maturity date as defined in the loan agreements.
All facilities are provided by a bank syndicate consisting of high-quality
The covenants are monitored on a regular basis by the Akastor Treasury
Nordic and international banks and DNB is acting as the agent. The terms
department to ensure compliance with the loan agreements which are
and conditions include restrictions which are customary for these kinds of
tested and reported on a quarterly basis. Akastor was in compliance with
facilities, including inter alia negative pledge provisions and restrictions on
its covenants as of December 31, 2021. In February 2022, Akastor entered
acquisitions, disposals and mergers, dividend distribution and change of
into certain amendments to the loan agreements, including adjustments of
control provisions.
the covenant levels for gearing ratio and minimum liquidity, which provided
additional headroom. On the basis of the covenant levels and its financial
In 2021, Akastor ASA carried out refinancing of its credit facilities as a result
forecasts, management believes that the risk of covenant being breached is
of MHWirth divestment. Under the new loan agreements, the financial
low and that the group will continue as a going concern for the foreseeable
covenants are a gearing ratio based on net debt/equity, an equity ratio
future. See more information in Note 29 Capital management in Akastor
based on equity/total assets and a minimum liquidity amount.
Group consolidated financial statements.
The company’s gearing ratio shall not exceed 0.4 times (0.5 times
effective from 2022) and is calculated from the consolidated total
borrowings to the consolidated Equity.
Equity ratio shall not be lower than 32.5%, calculated from the
consolidated total equity to consolidated total assets
Minimum liquidity amount shall exceed NOK 250 million (NOK 150
million effective from 2022) on consolidated level.
Annual Report 2021 | Financials and Notes | Akastor ASA
89
Financial liabilities and the period in which they mature
Amounts in NOK million
2021
Revolving credit facility (USD 89 million)
Subordinated Aker facility (NOK 250 million)
Overdraft facility
Total borrowings
2020
Revolving credit facility (NOK 1 250 million)
Revolving credit facility (USD 155 million)
Total borrowings
Carrying
amount
Total
undiscounted
cash flow 1)
6 months
and less
6–12 months
1–2 years 2)
721
3
11
735
347
772
1 119
787
3
11
800
363
798
1 161
27
11
37
6
13
19
22
22
356
785
1 141
738
3
740
1) The interest costs are calculated using the last fixing rate known by year end (plus applicable margin).
2) Repayment of the loan in the table is according to maturity date of the facility in the loan agreement.
Note 9 | Guarantees
Akastor has provided the following guarantees on behalf of wholly owned subsidiaries and related parties as of December 31 (all obligations are per date
of issue):
Amounts in NOK million
Parent Company Guarantees to group companies 1)
Parent Company Guarantees to related companies 2)
Counter guarantees for bank/surety bonds, group companies 3)
Counter guarantees for bank/surety bonds, related parties 3)
Total guarantee liabilities
Maturity of guarantee liabilities:
6 months and less
612 months
12 years
25 years
5 years and more
2021
1 025
4 416
305
8
5 754
104
4
497
3 315
1 835
2020
1 907
4 226
497
6 630
113
5
18
3 666
2 828
1) Parent Company Guarantees to support subsidiaries in contractual obligations towards clients.
2) Parent Company Guarantees to support related parties in contractual obligations towards clients, mainly AKOFS 1 AS, AKOFS 3 AS, AKOFS Norway Operations AS and
MHWirth AS.
3) Bank guarantees and surety bonds are issued on behalf of Akastor subsidiaries and related parties, and counter indemnified by Akastor ASA.
Although guarantees are financial instruments, they are considered contingent obligations and the notional amounts are not included in the financial
statements.
US pension plan
AK Wilfab Inc, a wholly owned subsidiary of Akastor, is together The Resource Group TRG AS and Akastor ASA sponsoring the US pension plan named
the Kvaerner Consolidated Retirement Plan. Akastor Group holds one third of the liability of the sponsors for the underfunded element of the plan and
The Resource Group TRG AS holds two thirds of the ultimate liability. Aker ASA guarantees for The Resource Group TRG AS’ liability and covers for all its
expenses related to the pension plan.
Annual Report 2021 | Financials and Notes | Akastor ASA 90
Note 10 | Financial risk management
Currency risk
loans to subsidiaries and related parties, guarantees to subsidiaries and
The company’s exposure to currency risk is primarily against USD as the
related parties and deposits with external banks. External deposits are done
company has external borrowings denominated in USD. As of 31 December
according to a list of approved banks and primarily with banks where the
2021 or 2020, Akastor ASA had not entered into any forward exchange
company also have a borrowing relationship.
contracts.
Interest rate risk
Loss provisions for interestbearing receivables are made in situations of
negative equity if the company is not expected to be able to fulfill its loan
The company is exposed to changes in interest rates because of floating
obligations from future earnings. Impairment of NOK 56 million related to
interest rate on loan receivables and loan payables. The company does
receivables from group companies was recognized in 2021 ( nil in 2020).
not hedge transactions exposure in financial markets and does not have
See Note 7 Receivables and borrowings from group companies for more
any fixed interest rate loan receivables nor loan payables. The company is
information about receivables.
therefore not exposed to fair value risk on its outstanding loan receivables
or loan payables. Interest bearing loan receivables and loan payables
Liquidity risk
expose the company to income statement and cash flow interest risk.
Liquidity risk relates to the risk that the company will not be able to meet
its debt and guarantee obligations and is managed through maintaining
Interest-bearing borrowings to group companies reflect the cost of external
sufficient cash and available credit facilities. Due to the dynamic nature of
borrowing, reducing the interest risk exposure for Akastor ASA.
the underlying businesses, Akastor Treasury maintains flexibility in funding
Credit risk
by maintaining availability under committed credit lines. Development in
the group’s and thereby Akastor ASA’s available liquidity is continuously
Credit risk is the risk of financial losses to the company if a customer or
monitored through monthly cash flow forecasts, annual budgets and long
counterparty fails to meet contractual obligations. Credit risk relates to
term planning.
Note 11 | Related parties
Transactions and balances with subsidiaries and related parties are described in the following notes:
Transactions
Other services
Financial items
Investments
Cash pool, receivables and borrowings
Guarantees
Note
Note 2
Note 3
Note 5
Note 7
Note 9
All transactions with related parties are carried out at market terms and in accordance with the arm’s lengths principle.
Annual Report 2021 | Financials and Notes | Akastor ASA Note 12 | Shareholders
Shareholders with more than 1 percent shareholding as per December 31
Company
2021
Aker Holding AS
Goldman Sachs & Co
Morgan Stanley & Co. LLC
Ministry of Trade, Industry and Fisheries, Norway
Verdipapirfond Odin Norge
F2 Funds AS
Company
2020
Aker Holding AS (previously “Aker Kværner Holding AS”)
Morgan Stanley & Co. LLC
Ministry of Trade, Industry and Fisheries, Norway
Goldman Sachs & Co
Euroclear Bank S.A./N.V.
ODIN Norge
Nominee
Nominee
Nominee
Nominee
Nominee
91
Number of
shares held
Ownership
100 565 292
39 245 843
33 139 698
33 100 085
10 575 925
3 239 187
36.70%
14.32%
12.09%
12.08%
3.86%
1.18%
Number of
shares held
Ownership
100 565 292
34 666 034
33 100 085
26 159 547
13 198 538
10 575 925
36.70%
12.65%
12.08%
9.55%
4.82%
3.86%
Annual Report 2021 | Financials and Notes | Akastor ASA
92
05. AUDITOR'S REPORT
Annual Report 2021 | Auditor's ReportAuditor's ReportKPMG AS Sørkedalsveien 6 Postboks 7000 Majorstuen 0306 Oslo Telephone +47 45 40 40 63 Fax Internet www.kpmg.no Enterprise 935 174 627 MVA To the General Meeting of Akastor ASA Independent Auditor’s Report Report on the Audit of the Financial Statements Opinion We have audited the financial statements of Akastor ASA, which comprise: • The financial statements of the parent company Akastor ASA (the Company), which comprise the balance sheet as at 31 December 2021, the income statement and cash flow statement for the year then ended, and notes to the financial statements, including a summary of significant accounting policies, and • The consolidated financial statements of Akastor ASA and its subsidiaries (the Group), which comprise the balance sheet as at 31 December 2021, the income statement, statement of comprehensive income, statement of changes in equity and statement of cash flows for the year then ended, and notes to the financial statements, including a summary of significant accounting policies. In our opinion: • the financial statements comply with applicable statutory requirements, • the financial statements give a true and fair view of the financial position of the Company as at 31 December 2021, and its financial performance and its cash flows for the year then ended in accordance with the Norwegian Accounting Act and accounting standards and practices generally accepted in Norway, and • the financial statements give a true and fair view of the financial position of the Group as at 31 December 2021, and its financial performance and its cash flows for the year then ended in accordance with International Financial Reporting Standards as adopted by the EU. Our opinion is consistent with our additional report to the Audit Committee. Basis for Opinion We conducted our audit in accordance with International Standards on Auditing (ISAs). Our responsibilities under those standards are further described in the Auditor’s Responsibilities for the Audit of the Financial Statements section of our report. We are independent of the Company and the Group as required by laws and regulations and the International Ethics Standards Board for Accountants’ International Code of Ethics for Professional Accountants (including International Independence Standards) (IESBA Code), and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion. To the best of our knowledge and belief, no prohibited non-audit services referred to in the Audit Regulation (537/2014) Article 5.1 have been provided. We have been the auditor of the Company for 18years from the election by the general meeting of the shareholders on 10.02.2004 for the accounting year 2004. Key Audit Matters 93
Independent Auditor's Report - Akastor ASA
Key audit matters are those matters that, in our professional judgment, were of most significance in
our audit of the financial statements of the current period. These matters were addressed in the
context of our audit of the financial statements as a whole, and in forming our opinion thereon, and we
do not provide a separate opinion on these matters.
1. MHWirth divestment and transaction effects
Reference is made to Note 5 Discontinued operations, Note 6 Disposal of subsidiaries, Business
combinations, Note 17 Equity-accounted investees and the Board of Directors report paragraph
Highlights 2021.
The Key Audit Matter
The MHWirth divestment, ie. the merger of
MHWirth and Baker Hughes’ Subsea Drilling
Systems business, was a significant transaction
for the group in 2021.
How the matter was addressed in our audit
In our audit, we addressed the matter through:
• Reading the transaction agreement and
related documentation to gain an
understanding of and evaluate the
accounting consequences;
As from closing of the transaction, MHWirth was
deconsolidated and a gain upon divestment was
recognized. The group’s 50 percent ownership
in the new joint venture (“HMH”) was initially
recognized at fair value and accounted for using
the equity method.
• Critically assessing the gain calculation and
the assumptions made by management;
• Agreeing the book value of the disposed
amount to the underlying accounting records
as of the date of the disposal;
• Performing a closing audit for the financial
The transaction has several accounting
implications, including the calculation of the gain
resulting from the divestment. The accounting
matter involves estimates and significant
judgement applied by management, for instance
in assessing the fair value of the consideration.
Given the amounts involved, the accounting for
the transaction is of significance to the financial
statements.
The divestment resulted in a gain of NOK 1 240
million and is considered to be a risk area due to
the judgement and estimation applied by
management, the size of the transaction and the
significant accounting effects to the financial
statements.
As such, the matter also required significant
attention during the audit and was subject to
auditor judgement.
year up to the closing date of the
transaction;
• Obtaining the enterprise valuation report
issued by the external valuation expert
engaged by management to assist with the
valuation of the joint venture;
Involving our valuation specialists in the
assessment of the valuation of the joint
venture;
•
• Assessing the appropriateness of the fair
value of the consideration received in
connection with the divestment;
• Considering additional elements in the
calculation of the gain, including closing
adjustments and cumulative exchange
translation differences;
• Evaluating the appropriateness of the
classification and accounting treatment of
the group’s investment in HMH;
• Evaluating the adequacy of the disclosure of
discontinued operations (Note 5), the
divestment (Note 6) and the disclosure of
the investee (Note 17) in the group’s
financial statements
Other Information
The Board of Directors and the Managing Director (management) are responsible for the information
in the Board of Directors’ report and the other information accompanying the financial statements. The
other information comprises information in the annual report, but does not include the financial
statements and our auditor’s report thereon. Our opinion on the financial statements does not cover
2
Annual Report 2021 | Auditor's Report
94
Independent Auditor's Report - Akastor ASA
the information in the Board of Directors’ report nor the other information accompanying the financial
statements.
In connection with our audit of the financial statements, our responsibility is to read the Board of
Directors’ report and the other information accompanying the financial statements. The purpose is to
consider if there is material inconsistency between the Board of Directors’ report and the other
information accompanying the financial statements and the financial statements or our knowledge
obtained in the audit, or whether the Board of Directors’ report and the other accompanying
information otherwise appears to be materially misstated. We are required to report if there is a
material misstatement in the Board of Directors’ report or the other information accompanying the
financial statements. We have nothing to report in this regard.
Based on our knowledge obtained in the audit, it is our opinion that the Board of Directors’ report
•
•
is consistent with the financial statements and
contains the information required by applicable legal requirements.
Our opinion on the Board of Director’s report applies correspondingly to the statements on Corporate
Governance and Corporate Social Responsibility.
Responsibilities of Management for the Financial Statements
Management is responsible for the preparation of financial statements that give a true and fair view in
accordance with the Norwegian Accounting Act and accounting standards and practices generally
accepted in Norway, and for the preparation and true and fair view of the consolidated financial
statements of the Group in accordance with International Financial Reporting Standards as adopted
by the EU, and for such internal control as management determines is necessary to enable the
preparation of financial statements that are free from material misstatement, whether due to fraud or
error.
In preparing the financial statements, management is responsible for assessing the Company’s and
the Group’s ability to continue as a going concern, disclosing, as applicable, matters related to going
concern. The financial statements of the Company use the going concern basis of accounting insofar
as it is not likely that the enterprise will cease operations. The consolidated financial statements of the
Group use the going concern basis of accounting unless management either intends to liquidate the
Group or to cease operations, or has no realistic alternative but to do so.
Auditor’s Responsibilities for the Audit of the Financial Statements
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole
are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that
includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that
an audit conducted in accordance with ISAs will always detect a material misstatement when it exists.
Misstatements can arise from fraud or error and are considered material if, individually or in aggregate,
they could reasonably be expected to influence the economic decisions of users taken on the basis of
these financial statements.
As part of an audit in accordance with ISAs, we exercise professional judgment and maintain
professional scepticism throughout the audit. We also:
•
identify and assess the risks of material misstatement of the financial statements, whether due
to fraud or error. We design and perform audit procedures responsive to those risks, and
obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The
risk of not detecting a material misstatement resulting from fraud is higher than for one
resulting from error, as fraud may involve collusion, forgery, intentional omissions,
misrepresentations, or the override of internal control.
• obtain an understanding of internal control relevant to the audit in order to design audit
procedures that are appropriate in the circumstances, but not for the purpose of expressing an
opinion on the effectiveness of the Company's or the Group's internal control.
3
Annual Report 2021 | Auditor's Report
95
Independent Auditor's Report - Akastor ASA
• evaluate the appropriateness of accounting policies used and the reasonableness of
accounting estimates and related disclosures made by management.
• conclude on the appropriateness of management’s use of the going concern basis of
accounting, and, based on the audit evidence obtained, whether a material uncertainty exists
related to events or conditions that may cast significant doubt on the Company and the
Group's ability to continue as a going concern. If we conclude that a material uncertainty
exists, we are required to draw attention in our auditor’s report to the related disclosures in the
financial statements or, if such disclosures are inadequate, to modify our opinion. Our
conclusions are based on the audit evidence obtained up to the date of our auditor’s report.
However, future events or conditions may cause the Company and the Group to cease to
continue as a going concern.
• evaluate the overall presentation, structure and content of the financial statements, including
the disclosures, and whether the financial statements represent the underlying transactions
and events in a manner that achieves a true and fair view.
• obtain sufficient appropriate audit evidence regarding the financial information of the entities or
business activities within the Group to express an opinion on the consolidated financial
statements. We are responsible for the direction, supervision and performance of the group
audit. We remain solely responsible for our audit opinion.
We communicate with the Board of Directors regarding, among other matters, the planned scope and
timing of the audit and significant audit findings, including any significant deficiencies in internal control
that we identify during our audit.
We also provide the Audit Committee with a statement that we have complied with relevant ethical
requirements regarding independence, and to communicate with them all relationships and other
matters that may reasonably be thought to bear on our independence, and where applicable, related
safeguards.
From the matters communicated with the Board of Directors, we determine those matters that were of
most significance in the audit of the financial statements of the current period and are therefore the
key audit matters. We describe these matters in our auditor’s report unless law or regulation precludes
public disclosure about the matter or when, in extremely rare circumstances, we determine that a
matter should not be communicated in our report because the adverse consequences of doing so
would reasonably be expected to outweigh the public interest benefits of such communication.
Report on Other Legal and Regulatory Requirements
Report on compliance with Regulation on European Single Electronic Format (ESEF)
Opinion
We have performed an assurance engagement to obtain reasonable assurance that the financial
statements with file name 5967007LIEEXZXIX5468-2021-12-31-en have been prepared in
accordance with Section 5-5 of the Norwegian Securities Trading Act (Verdipapirhandelloven) and the
accompanying Regulation on European Single Electronic Format (ESEF).
In our opinion, the financial statements have been prepared, in all material respects, in accordance
with the requirements of ESEF.
Management’s Responsibilities
Management is responsible for preparing, tagging and publishing the financial statements in the single
electronic reporting format required in ESEF. This responsibility comprises an adequate process and
the internal control procedures which management determines is necessary for the preparation,
tagging and publication of the financial statements.
Auditor’s Responsibilities
Our responsibility is to express an opinion on whether the financial statements have been prepared in
accordance with ESEF. We conducted our work in accordance with the International Standard for
Assurance Engagements (ISAE) 3000 – “Assurance engagements other than audits or reviews of
4
Annual Report 2021 | Auditor's Report
96
Annual Report 2021 | Auditor's ReportIndependent Auditor's Report - Akastor ASA 5 historical financial information”. The standard requires us to plan and perform procedures to obtain reasonable assurance that the financial statements have been prepared in accordance with the European Single Electronic Format. As part of our work, we performed procedures to obtain an understanding of the company’s processes for preparing its financial statements in the European Single Electronic Format. We evaluated the completeness and accuracy of the iXBRL tagging and assessed management’s use of judgement. Our work comprised reconciliation of the financial statements tagged under the European Single Electronic Format with the audited financial statements in human-readable format. We believe that the evidence we have obtained is sufficient and appropriate to provide a basis for our opinion. Oslo, 25 March 2022 KPMG AS Vegard Tangerud State Authorised Public Accountant 97
06. ALTERNATIVE PERFORMANCE
MEASURES
Akastor discloses alternative performance measures as a supplement to the consolidated financial statements prepared in accordance with IFRS. Such
performance measures are used to provide an enhanced insight into the operating performance, financing abilities and future prospects of the group. These
measures are calculated in a consistent and transparent manner and are intended to provide enhanced comparability of the performance from period to
period. It is Akastor's experience that these measures are frequently used by securities analysts, investors and other interested parties.
The definitions of these measures are as follows:
EBITDA - earnings before interest, tax, depreciation and amortization, corresponding to "Operating profit before depreciation, amortization and impairment"
in the consolidated income statement.
EBIT - earnings before interest and tax, corresponding to "Operating profit (loss)" in the consolidated income statement.
Capex and R&D capitalization - a measure of expenditure on PPE or intangible assets that qualify for capitalization.
Net current operating assets (NCOA) - a measure of working capital. It is calculated by current operating assets minus current operating liabilities,
excluding financial assets or financial liabilities related to hedging activities.
Net capital employed - a measure of all assets employed in the operation of a business. It is calculated by non-current assets and finance lease receivables
(excluding non-current interest-bearing receivables) added by net current operating assets minus non-current operating liabilities (deferred tax liabilities,
employee benefit obligations, other non-current liabilities and lease liabilities).
Gross debt - sum of current and non-current borrowings, excluding lease liabilities.
Net debt - gross debt minus cash and cash equivalents.
Net interest-bearing debt (NIBD) - net debt minus noncurrent and current interestbearing receivables.
Equity ratio - a measure of investment leverage, calculated as total equity divided by total assets at the reporting date.
Liquidity reserve - comprises cash and cash equivalents and undrawn committed credit facilities.
Order intake - represents the estimated contract value from the contracts or orders that are entered into or committed in the reporting period.
Order backlog - represents the remaining unearned contract value from the contracts or orders that are entered into or committed at the reporting date.
The backlog does not include options on existing contracts, or contract value from short-cycled service orders.
The tables below show reconciliation of alternative performance measures to the line items in the financial statements according to IFRS. .
Net current operating assets (NCOA)
Amounts in NOK million
Current tax assets
Inventories
Trade and other receivables
Current operating assets
Current tax liabilities
Provisions, current
Trade and other payables
Current operating liabilities
Net current operating assets (NCOA)
2021
2020
-
5
872
877
(1)
(20)
(625)
(647)
231
28
485
2 191
2 704
(8)
(109)
(2 060)
(2 177)
527
Annual Report 2021 | Alternative Performance MeasuresAlternative Performance Measures 98
Net capital employed (NCE)
Amounts in NOK million
Total noncurrent assets
Net current operating assets (NCOA)
Current investment
Current finance lease receivables
Noncurrent interestbearing receivables
Deferred tax liabilities
Employee benefit obligations
Other noncurrent liabilities
Other current liabilities
Noncurrent provisions
Total lease liabilities
Net capital employed (NCE)
Gross debt/Net debt/NIBD
Amounts in NOK million
Noncurrent borrowings
Current borrowings
Gross debt
Cash and cash equivalents
Net debt
Noncurrent interestbearing receivables
Net interest-bearing debt (NIBD)
Equity ratio
Amounts in NOK million
Total equity
Divided by Total assets
Equity ratio
Liquidity reserve
Amounts in NOK million
Cash and cash equivalents
Undrawn committed credit facilities
Liquidity reserve
2021
6 025
231
148
64
(315)
(4)
(108)
(628)
(148)
(26)
(155)
2020
6 100
527
7
(115)
(10)
(388)
(478)
(50)
(592)
5 084
5 002
2021
1 372
16
1 387
(89)
1 299
(315)
984
2021
4 109
7 212
57%
2021
89
553
642
2020
628
1 119
1 746
(275)
1 471
(115)
1 357
2020
3 669
9 147
40%
2020
275
1 457
1 732
Annual Report 2021 | Alternative Performance Measures 07. BOARD OF DIRECTORS
99
Kristian M. Røkke | Chairman of the Board
Kristian Røkke is CEO of Aker Horizons AS and has extensive experience from offshore oil
services, shipbuilding and M&A. More recently, Mr. Røkke has gained substantial experience from
renewable energy, climate solutions and green technologies. Prior to Aker Horizons, he was Chief
Investment Officer of Aker ASA and CEO of Akastor ASA from August 2015 to December 2017. Mr.
Røkke is chairman of the board of Mainstream Renewable Power, Aker Offshore Wind AS, Philly
Shipyard ASA and Ocean Data Foundation, and a board member of several companies, including
Aker Carbon Capture ASA, TRG Holding AS and American Shipping Company ASA. He holds an
MBA from The Wharton School at University of Pennsylvania.
As of March 25, 2022, Mr. Røkke holds, through a privately owned company, 200,000 shares in
Akastor ASA and has no stock options. Mr. Røkke is both a Norwegian and American citizen and
has been elected for the period 20202022.
Lone Fønss Schrøder | Deputy Chair
Lone Fønss Schrøder is CEO of Concordium AG, a global provider of blockchain technologies.
She is vice-chair of Volvo Cars AB and chair of the audit committee, and director of Geely Sweden
Holdings AB and Ingka Holding B.V. (Ikea Group). She has held several senior management and
CEO positions in the A.P. Møller-Maersk group and became CEO and president of Wallenius Lines
AB in 2005. Fønss Schrøder has board experience from Kværner ASA, Eukor Inc, Vattenfall AB,
Yara ASA, Valmet OY and others. Fønss Schrøder holds an MSc in law from the University of
Copenhagen and in economics from Copenhagen Business School in Denmark. As of March 25,
2022, she holds 4,400 shares in the company and has no stock options. She is a Danish citizen
and has been elected for the period 20202022.
Svein Oskar Stoknes | Director
Svein Oskar Stoknes has been CFO at Aker ASA since August 2019. Prior to this, he served as
CFO at Aker Solutions, where he joined in 2007 and was named CFO in 2014. Previously, Mr.
Stoknes held a range of senior positions within finance and advisory for organizations like
Tandberg, Citigroup and ABB. Mr. Stoknes is also a director of Aker Property Group AS and Aker
Capital AS. He graduated from the Norwegian School of Management and has an MBA from
Columbia Business School in New York. As of March 25, 2022, Mr. Stoknes owns 1,297 shares
and no stock options in the company. He is a Norwegian citizen and has been elected for the
period 20202022.
Annual Report 2021 | Board of DirectorsBoard of Directors 100
Kathryn M. Baker | Director
Kathryn M. Baker has 35 years of business experience in a broad range of industries and roles.
She currently serves as Chairwoman of Pensionera AB, Genetic Analysis AS and Terra Mater
Renewable Investments AB and is a board member of several companies including DOF ASA and
MPC Energy Solutions NV. She is also a member of the Investment Committee of Norfund. Ms.
Baker previously served on the Executive Board of the Central Bank of Norway (Norges Bank),
where she was a member of the audit and the risk and investment committees and she was
Chairwoman of the Norwegian Private Equity and Venture Capital Association (NVCA). Ms. Baker
was a partner at the Norwegian private equity firm Reiten & Co for 15 years. Prior to that, she was
a management consultant at McKinsey & Company in Oslo and a financial analyst at Morgan
Stanley in New York. Ms. Baker holds a bachelor’s degree in economics from Wellesley College
and an MBA from the Tuck School of Business at Dartmouth College. As of March 25, 2022, she
holds 45,683 shares in the company. Ms. Baker is an American citizen and has been elected for
the period 20212023.
Luis Araujo | Director
Luis Antonio G. Araujo has over 38 years of experience in the energy and oil & gas industries. He
was CEO of Aker Solutions from July 2014 to August 2020. Prior to his appointment as CEO, Mr.
Araujo held the position as Regional President and Executive Vice-President for Aker Solutions in
Brazil since November 2011 where he led a major turnaround of the local operations. Prior to his
period with Aker Solutions, he was CEO of Wellstream in Brazil (currently part of Baker Hughes
GE), and held several senior positions within ABB, FMC Technologies, Vetco Gray and Technip
Coflexip. Mr. Araujo is currently an independent director and member of the board of Magseis
Fairfield ASA listed on the Oslo Stock Exchange, and Chairman of the board of OceanPact, a
Brazilian company listed in the Brazilian stock exchange. He is also Chairman of the board of
Principle Power Inc and independent board member of DBO Energy in Brazil which are both
privately owned companies. Mr. Araujo holds a bachelor degree in Mechanical Engineering from
Gama Filho University and an MBA from Edinburgh University. As of March 25, 2022, Mr. Araujo
holds 25,757 shares and no stock options in the company. Mr. Araujo has triple citizenship;
Brazilian, British and Portuguese and has been elected for the period 2021-2023.
Henning Jensen | Director, Elected by the employees
Henning Jensen currently works as Service Account Manager in DLS department at HMH. Mr.
Jensen joined MHWirth in 2005. He has since then held various positions in the company. Mr.
Jensen holds a bachelor’s degree in marine technology and a Master in Industrial Economy and
Technology from Agder University College in Grimstad. As of March 25, 2022, Mr. Jensen holds no
shares or stock options in the company. Mr. Jensen is a Norwegian citizen and has been elected
for the period 20212023.
Annual Report 2021 | Board of Directors 101
Asle Christian Halvorsen | Director, Elected by the employees
Asle Christian Halvorsen currently works as Senior Engineer in Mud Products dept at HMH. He
began his career with the Aker group in 2011 when he joined STEP Offshore. Mr. Halvorsen holds
a BS c in mechanical engineering from Sør-Trøndelag University College. As of March 25, 2022,
he holds 10,000 shares in the company. Mr. Halvorsen is a Norwegian citizen. He has been
elected for the period 20212023.
Stian Sjølund | Director, Elected by the employees
Stian Sjølund currently works as Performance Optimization Engineer at HMH. Mr. Sjølund joined
the Company in 1998 as an Engineer in Drilling Lifecycle Services department. He has since then
held various positions in the company in Norway and abroad. Mr. Sjølund holds a technical college
degree in electrical engineering from Grimstad Technical College. As of March 25, 2022, he holds
10,000 shares in the company. Mr. Sjølund is a Norwegian citizen and has been elected for the
period 20212023.
Annual Report 2021 | Board of Directors 102
08. MANAGEMENT
Karl Erik Kjelstad | CEO
Karl Erik joined Akastor in 2014. He has been part of the Aker group since 1998 and has numerous
key positions including various CEO positions. Karl Erik has held several board positions in different
industries, including oil service, offshore drilling, offshore and merchant shipping, shipbuilding, IT
services, real estate and construction industry. Karl Erik holds an MSc in Marine Engineering from
the Norwegian University of Science and Technology (NTNU) and an AMP from Harvard Business
School. As of March 25, 2022, Kjelstad holds 600,000 shares in Akastor ASA through his company
Byesvollen AS.
Øyvind Paaske | CFO
Øyvind joined the investment team in Akastor as Investment Manager in 2014 and has held the
position as CFO of Akastor from March 2020. Prior to this he was Investment Manager at Converto
(Aker ASA). Øyvind holds an MSc in Financial Economics from the Norwegian School of Economics
and Business Administration (NHH) and UNC Kenan-Flagler Business School. As of March 25,
2022, Paaske holds 105,083 shares in Akastor ASA.
Annual Report 2021 | ManagementManagement 103
09. COMPANY INFORMATION
Reports on the Internet
Copyright and Legal Notice
The quarterly and annual reports of Akastor are available on the
internet. Akastor encourages its shareholders to subscribe to
the company’s annual reports via the electronic delivery system
of the Norwegian Central securities Depository (VPS). Please
note that VPS services (VPS Investortjenester) are designed
primarily for Norwegian shareholders. Subscribers to this
service receive annual reports in PDF format by email. VPS
distribution takes place at the same time as distribution of the
printed version of Akastor’s annual report to shareholders who
have requested it. Quarterly reports, which are generally only
distributed electronically, are available on the company’s
website and other sources. Shareholders who are unable to
receive the electronic version of interim reports may subscribe
to the printed version by contacting Akastor’s investor relations
staff.
Copyright in all published material including photographs,
drawings and images in this publication remains vested in
Akastor and third party contributors to this publication as
appropriate. Accordingly, neither the whole nor any part of this
publication can be reproduced in any form without express prior
permission. Articles and opinions appearing in this publication
do not necessarily represent the views of Akastor. While all
steps have been taken to ensure the accuracy of the published
contents, Akastor does not accept any responsibility for any
errors or resulting loss or damage whatsoever caused and
readers have the responsibility to thoroughly check these
aspects for themselves. Enquiries about reproduction of content
from this publication should be directed to Akastor ASA.
Contact details
Akastor ASA
Oksenøyveien 10, 1366 Lysaker, Norway
PO Box 124, 1325 Lysaker, Norway
+47 21 52 58 00
akastor.com
HMH
Norway
Butangen 20, 4639 Kristiansand, Norway
PO Box 413 Lundsiden, 4604 Kristiansand, Norway
+47 38 05 70 00
Houston
3300 North Sam Houston Parkway East
77032 Houston, Texas, United States
+1 281 449 2000
hmhw.com
AKOFS Offshore
Karenslyst Allé 57, 0277 Oslo, Norway
PO Box 244, 0213 Oslo, Norway
+47 23 08 44 00
akofsoffshore.com
AGR
Karenslyst allé 4, 0278 Oslo, Norway
+47 24 06 10 00
agr.com
Cool Sorption
Smedeland 6, DK2600 Glostrup, Denmark
+45 43 45 47 45
Coolsorption.com
Annual Report 2021 | Company InformationCompany Information s
a
.
T
L
O
B
•
4
0
0
1
2
1
2
2