1
Accommodating
the Offshore
Industry
ANNUAL REPORT
2
CONTENT
Financial calendar and key figures
About Prosafe
Special focus: Adapting to changing industry demands
Directors’ report
Statement of the members of the Board of Directors
Consolidated accounts
Accounts Prosafe SE
Independent auditors’ report
Fleet overview
This printed report
is a short version
of the annual
report
For a full report, including a presentation of executive
management and board of directors, information about
HSEQA, corporate governance, social responsibility, risk
management and financial and analytical information,
please refer to the Download centre on Prosafe’s website
www.prosafe.com.
In order to present updated and correct information at all
times, we will endeavour to update the information on the
website whenever required throughout the year.
s. 3
s. 4
s. 6
s. 10
s. 18
s. 20
s. 60
s. 74
s. 76
3
FINANCIAL CALENDAR
Reporting results
The following dates have been set for quarterly interim reporting and presentations in 2015:
1st quarter
2nd quarter
3rd quarter
4th quarter
13 May 2015
21 August 2015
4 November 2015
4 February 2016
Annual general meeting
The AGM for Prosafe SE will be held in the company’s premises at Stadiou 126, CY-6020 Larnaca,
Cyprus on Wednesday, 13 May 2015.
KEY FIGURES
PROFIT
Operating revenues
EBITDA
Operating profit
Net profit
Earnings per share
Operating margin
USD million
USD million
USD million
USD million
USD
BALANCE SHEET
Total assets
Interest-bearing debt
USD million
USD million
Net interest-bearing debt
USD million
USD million
Book equity
Book equity ratio
VALUATION
Note
2014
2013
2012
2011
2010
548.7
312.6
248.3
178.8
0.76
523.5
306.6
245.1
199.1
0.85
510.4
280.1
222.4
177.5
0.80
449.6
257.6
192.3
158.0
0.71
442.4
283.1
221.1
198.5
0.89
45.3 %
46.8 %
43.6 %
42.8 %
50.0 %
1 816.8
1 619.9
1 487.2
1 376.1
1 266.4
830.1
707.7
748.5
779.6
666.2
739.7
810.4
706.8
516.3
760.5
667.1
461.8
705.4
607.1
410.3
41.2 %
45.7 %
34.7 %
33.6 %
32.4 %
1
2
3
4
5
Market capitalisation
USD million
Share price
NOK
725
23.00
1 816
46.80
1 894
47.32
1 529
40.99
1 821
46.40
1. Operating profit before depreciation
2. Net profit / Average number of outstanding and potential shares
3. (Operating profit / Operating revenues) * 100
4. Interest-bearing debt - Cash and deposits
5. (Book equity / Total assets) * 100
4
ABOUT PROSAFE
Prosafe is the world’s leading owner and operator of semi-submersible
accommodation vessels. The company operates globally and employed 796
people at year-end. Operating profit reached USD 248.3 million in 2014 and
net profit was USD 178.8 million.
5
accommodation capacity for 306-812 people and
offer high quality welfare and catering facilities,
storage, workshops, offices, medical services, deck
cranes and lifesaving and fire fighting equipment.
The vessels are positioned alongside the host
installation and are connected by means of a
telescopic gangway so that personnel can walk to
work.
Prosafe has a strong track record from
demanding operations world wide, with first
class operational performance and good safety
results. The company has extensive experience
from operating gangway connected to fixed
installations, FPSOs, TLPs, Semis and Spars.
The company’s track record comprises operations
offshore Norway, UK, Mexico, USA, Brazil,
Denmark, Tunisia, West Africa, North-west and
South Australia, the Philippines and Russia.
Prosafe is listed on the Oslo Stock Exchange with
ticker code PRS.
With six dynamically positioned vessels and
five anchored vessels, Prosafe’s fleet is versatile
and able to operate in nearly all offshore
environments.
In addition, one new harsh environment semi-
submersible accommodation vessel compliant
with Norwegian regulations was delivered from
the yard in January 2015 and will commence
operations in the North Sea in the second quarter
of 2015. The sister vessel is under construction at
Jurong Shipyard and will be completed later this
year.
Furthermore, Prosafe is building two semi-
submersible accommodation vessels at COSCO
(Qidong) Offshore Co. Ltd. These vessels will
be the most advanced and flexible units for
worldwide operations excluding Norway, and will
be ready for operations in 2016.
The company’s
track record comprises
operations offshore Norway,
UK, Mexico, USA, Brazil,
Denmark, Tunisia, West
Africa, North-West and South
Australia, the Philippines
and Russia.
Prosafe’s operations are amongst other related
to maintenance and modification of installations
on fields already in production, hook-up and
commissioning of new fields, tie-backs to existing
infrastructure and decommissioning.
Accommodation vessels offer additional
accommodation, engineering, construction or
storage capacity offshore. Prosafe’s vessels have
6
SPECIAL FOCUS: ADAPTING TO
CHANGING INDUSTRY DEMANDS
The oil and gas industry has always been a cyclical industry with considerable
volatility in return on capital. On top of this, the industry has from time
to time gone through rapid structural changes that have transformed the
market dynamics and the way the business is working.
The ability to adapt to a changing environment has therefore always been
one of the key success factors for companies involved in the industry.
7
THE INDUSTRY CHALLENGE
Until the third quarter of 2015, the oil price had
been trading steadily above USD 90 per barrel for
almost four years. Despite the price of the most
important source of income for the oil companies
remaining at a reasonably high level for such a
long period of time, the return of capital among
the largest oil companies in the world trended
downwards in this period.
This development is a result of increased
investments by the oil companies combined with
cost inflation. Over the past eight to nine months
the oil price has fallen sharply, adding to the
challenge.
Production of oil and gas is impacting the
environment in different ways. The impact can
be felt and observed both globally (emission of
harmful gasses to the environment) and locally
(changes to the landscape, use of scarce natural
resources, impact on wild life, etc.).
Improving efficiency in the industry as well as
finding and using cleaner technologies and
smarter processes that reduce the oil industry’s
environmental footprint is vital for further
sustainable development.
In the long term, all companies involved in the oil
and gas sector, whether they are oil companies
or service/asset providers, are dependent on a
turnaround in these trends.
Declining return on capital among large integrated oil companies
l
d
e
e
y
o
p
m
E
l
a
t
i
p
a
C
n
o
n
r
u
t
e
R
30 %
25 %
20 %
15 %
10 %
5 %
0 %
Average oil price (Brent)
Average Return on Capital Employeed (10 large integrated oil companies)
1988
1989
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
SOURCE: NORDEA, BLOOMBERG
120
100
80
60
40
20
0
l
e
r
r
a
b
r
e
p
D
S
U
e
c
i
r
p
l
i
O
8
Only the companies that are able to adapt to the
changing realities will stay competitive.
In order to address these challenges, the majority
of oil companies in the world have initiated
efficiency programmes with the aim to do things
in a smarter way and to save cost. This has put
pressure on the service providers to do the same.
PROSAFE’S RESPONSE
Prosafe’s response to the changing realities can
be summarised in four main categories.
Fleet: Over the past few years, Prosafe has
substantially increased the investment in fleet
development. Several of the existing vessels
have gone through life-extension and upgrade
programmes, with the main purpose of making
them more efficient and better adapted to the
clients’ needs.
Furthermore, Prosafe has ordered four new builds
that all will be the most efficient and adaptive
vessels in their respective categories.
Improved efficiency of the fleet will not only
reduce emissions to the environment on a
like-for-like basis, but will also contribute to
accelerated offshore execution periods reducing
the overall emissions from the projects the
company is involved in.
All in all, this not only ensures that Prosafe
has the most modern and capable fleet in the
accommodation support segment, but that we
also can offer the widest range of vessels for
covering the varying needs of the clients.
Organisation: In 2013, Prosafe started a process
of changing the way the business is organised.
A key ambition was to facilitate improved
cooperation between disciplines and functions
at the same time as responsibilities were made
clearer.
Simultaneously, it has been made sure that
decision lines have been shortened. This has
improved efficiency and made the organisation
better suited to respond to changing client needs
more rapidly.
Ways of working: Following implementation
of the organisational changes described above,
focus shifted to the different processes and
interfaces in the business. The objective is to find
smarter and more efficient ways of working.
This involves numerous measures and initiatives.
One example is the implementation of improved
five-year vessel plans for activities such as
maintenance and special periodic survey, to a
greater extent taking the overall fleet plan and
group strategy into account.
Only the companies
that are able to adapt
to the changing realities
will stay competitive.
Another example is the review of the entire cost
structure both onshore and offshore. This has
already led to the introduction of cost efficiency
initiatives, and more is to come during the
remainder of 2015.
Cost of Capital: In a capital intensive business
like the accommodation support vessel industry,
the cost of capital is an important cost element
and competition parameter. On a relative basis
Prosafe has been able to reduce cost of capital
9
over the past few years. This has been done
through fleet renewal investments, consistently
robust operating performance and an active
capital allocation strategy.
Given the weakening market outlook for the
industry, Prosafe has lately been focusing on
extending the duration of the loan portfolio. The
new USD 1,300 million debt facility entered into
in February 2015 is the most important element
in this strategy, but also other measures are
contributing.
A solid financing structure with reduced
refinancing risk should make sure that Prosafe
remains the most robust and reliable provider of
accommodation support services for the oil and
gas industry also in the future.
WELL POSITIONED
In addition to being the world’s largest owner and
operator of semi-submersible accommodation
vessels, Prosafe also has the longest track-record
in terms of operations and can demonstrate
excellent HSEQ results. Furthermore, the
company has an efficient cost structure
through economies of scale, the world’s most
flexible and cost efficient fleet and a robust
financing structure. This makes the company
the undisputable market leader in the high-end
accommodation market.
Adding on the different measures and initiatives
to further improve efficiency and reduce cost,
Prosafe is well placed to take advantage of weaker
market conditions to further enhance its position
in the industry over the coming years.
10
DIRECTORS’ REPORT
Prosafe is the world’s largest owner and operator of semi-submersible
accommodation vessels, the company also has the longest track-record
in terms of operations and HSEQ. With the most efficient cost structure
through economies of scale, the world’s most versatile fleet and a robust
financing structure. Prosafe is well placed to enhance its position in the
accommodation market.
11
FINANCIAL RESULTS, FINANCING
AND FINANCIAL POSITION OF THE
GROUP
INCOME STATEMENT
Operating revenues totalled USD 548.7 million in
2014 (USD 523.5 million in 2013), with utilisation
of the fleet rising to 87 per cent (83 per cent).
Charter revenues reached USD 481.2 million
(USD 469.2 million), and non-charter revenues
increased from USD 54.3 million to USD 67.5
million.
Total operating expenses increased to USD 236.1
million (USD 216.9 million), largely as a result of
the higher activity level.
Depreciation increased to USD 64.3 million (USD
61.5 million).
The resulting operating profit amounts to USD
248.3 million (USD 245.1 million).
Net interest expenses totalled USD 37.0 million
(USD 32.9 million). This increase is mainly due to
higher interest-bearing debt. In accordance with
IFRS, interest costs totalling USD 7.9 million (USD
4.5 million) have been allocated to new build
and refurbishment projects, and consequently
capitalised as part of the vessel investment costs.
Other financial items amounted to USD -20
million (USD -8.5 million). These figures include
the net effect from changes in value of financial
currency hedging instruments and revaluation of
NOK denominated bond loans.
Taxes for 2014 were USD 12.5 million (USD 4.6
million). This increase is mainly due to increased
tax on operations on the UK continental shelf.
Net profit amounted to USD 178.8 million (USD
199.1 million), resulting in diluted earnings per
share of USD 0.76 (USD 0.85).
ASSETS
Total assets amounted to USD 1 816.8 million
(USD 1 619.9 million) at the end of 2014.
Investments in tangible assets totalled USD 211
million (USD 227.2 million). The investments in
2014 include the upgrade of Safe Scandinavia
and project expenses related to four new build
vessels.
As at year-end 2014, the Prosafe Group had total
liquid assets of USD 122.4 million (USD 113.4
million). The liquidity reserve (liquid assets plus
undrawn credit facilities) totalled USD 337.4
million (USD 486.4 million).
FINANCING
Total shareholders’ equity amounted to USD
748.5 million (USD 739.7 million), resulting in a
book equity ratio of 41.2 per cent (45.7 per cent).
Interest-bearing debt amounted to USD
830.1 million (USD 779.6 million) at year-end.
Repayments of debt totalled USD 198 million
(USD 407.8 million), while gross increase in
borrowing amounted to USD 332.2 million (USD
404.1 million). In May 2014, the company secured
a new credit facility. The credit facility, which
has a maturity of seven years, consists of two
tranches of USD 144 million (USD 288 million
in total) that can be drawn upon delivery of
the two new builds, Safe Notos and Safe Eurus.
The availability under each tranche is reduced
quarterly with USD 3 million, starting 3 months
after delivery of the tranche security. The annual
interest rate on the credit facility is 2.25 per cent
above 3-month LIBOR.
In February 2015, the company also secured a
new credit facility of USD 1 300 million for the
refinancing of the existing USD 1 100 million and
USD 420 million credit facilities. The credit facility,
which has a maturity of seven years, consists of
two term loan tranches totalling USD 800 million
(drawn on closing) and USD 200 million (drawn
on delivery of the Safe Zephyrus) and a revolver
loan tranche of USD 300 million. The availability
12
under the term loan tranches is reduced semi-
annually, starting 6 months after delivery of the
tranche security, with an amount that reduces
the term loan commitments to zero by the final
maturity. The annual interest rate on the credit
facility is 1.90 per cent above 3-month LIBOR
for the first five years and 2.15 per cent above
3-month LIBOR thereafter.
EVENTS AFTER THE BALANCE SHEET
Reference is made to note 25 to the consolidated
accounts, and note 16 to the parent separate
accounts for a description of events after the
balance sheet date.
OPERATIONS AND PROJECTS
Prosafe is the world’s largest owner and operator
of semi-submersible accommodation vessels. As
at year-end, the fleet consisted of 11 vessels in
operation plus four new builds in progress.
Specifications of each of the vessels and details of
the current vessel contracts can be found on the
company’s website at http://www.prosafe.com.
Safe Hibernia, Jasminia, Safe Britannia, Safe
Lancia and Safe Regency operated on long-term
bareboat charters in Mexico throughout the year.
The contract for Safe Hibernia was extended
during the year.
Safe Concordia operated on a long-term contract
in Brazil throughout the year. A three-year
extension of the contract, awarded in December
2013, commenced in July 2014 on expiry of the
previous contract.
Safe Astoria was under contract with Swiber in
Indonesia from January to May 2014. In July the
vessel mobilised to the Philippines to commence
an 11-month contract with Shell.
Safe Caledonia worked for BP in the UK until
the end of March 2014. In June 2014 the vessel
commenced a contract for Nexen in the UK until
April 2015.
Safe Scandinavia was completing a life extension
refurbishment and a five-year special periodic
survey (SPS) at the Remontowa yard in Gdansk,
Poland at the beginning of the year. In May 2014
the vessel commenced work for Statoil in Norway
until October, when it moved to UK to work on a
five-month contract with Premier Oil.
In May 2014 Prosafe signed a contract with
Statoil for the use of Safe Scandinavia as a
Tender Support Vessel (TSV) at the Oseberg Øst
field in Norway. Engineering, procurement and
fabrication of certain modules and items of
equipment started in the spring of 2014 and
the vessel went into the yard to undergo the
conversion in March 2015.
Regalia was in the Keppel Verolme yard in
Rotterdam, the Netherlands at the beginning
of 2014 undergoing refurbishment work and
a five-year SPS. From the end of February 2014
the vessel worked for Statoil in Norway, before
commencing a 450-day contract with Talisman in
the UK in late August 2014.
13
Safe Bristolia worked for BG in the UK from April
2014. In early October 2014 the vessel sustained
damage to lifeboats after experiencing severe
weather conditions. Operations were suspended
and the vessel was brought to a shipyard in
Norway for repair work, where it remained
throughout the year.
New builds. Prosafe had four vessels under
construction during 2014. In December 2011
and November 2012, respectively, the company
ordered Safe Boreas and Safe Zephyrus from
Jurong Shipyard Pte Ltd. in Singapore. The vessels
are constructed according to strict Norwegian
regulations and on completion will be the
most well-equipped and sophisticated offshore
accommodation units in the world.
Safe Boreas was delivered from the yard in
mid January 2015 and is currently in transit to
Norway, where it is scheduled to commence a
contract with Lundin Petroleum Norway AS in
late April or early May 2015. Safe Zephyrus is
scheduled for delivery during the summer of
2015.
In 2013 Prosafe entered into a turnkey contract
with COSCO (Qidong) Offshore Co., Ltd. in China,
for the delivery of two accommodation vessels,
Safe Notos and Safe Eurus, for use worldwide,
excluding Norway. The vessels are designed
and equipped to meet the requirements of the
accommodation industry and will be the leading
vessels in their sector when they are ready for use
in 2016.
In addition to the new builds, the company has
also invested substantially in the existing fleet
over the past years.
OUTLOOK
2014 saw a significant slow-down in contracting
activity compared to 2013. Nevertheless, the
gross value of charter contracts including clients’
extension options increased to USD 1 843 million
(USD 1 239 million excluding options) from
USD 1 689 million (USD 1 258 million excluding
options), mainly as a result of the TSV contract for
Safe Scandinavia.
Due to a combination of increasing spending
levels and cost inflation, the return on capital in
respect of E&P companies has gradually declined
during recent years. In order to address this issue,
most of the E&P companies in the world have
introduced measures to decrease spending by
reducing investment plans and cutting cost.
In addition, recent falls in oil price have led to
further negative revisions of spending plans
resulting in the deferral of several projects.
Since all providers of oil services are dependent
on E&P companies’ cash flow, reductions of
spending plans have led to a substantial decrease
in demand for oilfield services, including the
accommodation support vessel segment. This has
been particularly visible in the North Sea region
where the activity level is significantly lower than
recently experienced.
The accommodation support segment is late
cyclical by nature. Historically, around three
quarters of the work has been at producing fields,
whereas close to a quarter has been related
to hook-up and commissioning of new fields.
Accommodation support vessels are also used
during decommissioning of offshore installations.
As a result, opportunities do exist that could
lead to new contracts being awarded over the
coming year. These include certain prospects
related to maintenance of existing platforms on
the UK continental shelf and it is expected that
there will be growth in future demand related to
decommissioning of old platforms.
In Mexico, long-term demand continues to look
promising. The cost of shallow water production
in Mexico is fairly low and although the drop in
the price of oil has caused some uncertainty, it
is not expected to affect production volumes
negatively. Accordingly, it is expected that
14
services to support the oil recovery rate, including
accommodation support, continue to be needed.
In Brazil, accommodation support vessels are
mostly used for safety and maintenance purposes
on fields that are already producing. All the
vessels currently servicing the Brazilian market
operate in the Campos basin. In the longer term it
is likely that there will also be demand from other
areas. As a result, the outlook for further growth
in Brazil is still positive, despite higher uncertainty
resulting from the developments in the global oil
market.
Outside the three core markets for semi-
submersible accommodation vessels - the North
Sea, Mexico and Brazil – Australia and US Gulf
of Mexico are the most promising markets.
Although in the past, demand in both these
markets, has mostly been related to hook-up and
commissioning of new platforms or larger re-
developments, in the longer term, there should be
potential for growth related to maintenance and
modification. [In the short-term, these markets
are similarly negatively affected by the lower oil
price and spending cuts].
The supply side is anticipated to more than
double in size during the period from 2012 to
2016 with the entry into the market of a number
of new semi-submersible vessels during the next
couple of years. This increase is partly due to a
possible under-supply situation historically and
partly as a consequence of a positive underlying
demand development over the past 10 years.
The growth in number of units comprises vessels
of a varying degree of quality, both in respect
of technical specifications, owners’ operating
capabilities and financing structures.
RISK
Prosafe categorises its primary risks under the
following headings: strategic, operational,
financial and compliance related. The company’s
Board and senior officers manage these risk
factors through continuous reporting, board
meetings, periodic reviews of the business
and tenders, and rolling strategy and budget
processes. This is supplemented by dialogue
and exchange of views with the company’s
management.
The company aims to create shareholder value by
allocating capital and resources to the business
opportunities that yield the best return relative
to the risk involved within its specified strategic
direction.
Prosafe seeks to reduce its exposure to
operational, financial and compliance related risk
through proper operating routines, the use of
financial instruments and insurance policies.
Further information on financial risk
management is provided in note 20 to the
consolidated financial statements.
An account of the main features of the company’s
internal control and risk management systems
is available on Prosafe’s website http://www.
prosafe.com.
HEALTH, SAFETY AND THE ENVIRONMENT
(HSE)
Robust HSE performance is fundamental to all of
Prosafe’s operations and is therefore reflected in
Robust HSE performance
is fundamental to all of
Prosafe’s operations and is
therefore reflected
in the company’s
core values
the company’s core values. As a consequence, the
company works proactively and systematically to
reduce injuries and sickness absence.
Prosafe operates a zero accident mind-set
philosophy which means that no accidents or
serious incidents are acceptable. Over the past
years, the company has focused on preventive
measures and a number of initiatives have been
implemented in order to further strengthen the
safety culture. Together with the introduction of
new systems and procedures this has led to an
improvement of the HSE results in recent years.
During 2014, Prosafe recorded three Lost Time
Injury (LTI) (i.e. an incident that resulted in the
employee being absent from the next work shift).
This translates into an LTI frequency rate of 2.6 for
2014, compared to 0 in 2013. The LTI frequency is
calculated by multiplying the number of LTIs by 1
million and dividing this by the total number of
man-hours worked.
Sick leave decreased from 4.4 percent in 2013 to
3.0 per cent in 2014.
15
Prosafe had no accidental discharges to the
natural environment in 2014 and continues
to actively reduce emissions by investment in
more modern and fuel efficient equipment
and continuous improvement in operating
procedures.
HUMAN RESOURCES AND DIVERSITY
Prosafe’s workforce consisted of 796 individuals
at the end of 2014, compared to 595 in the
previous year. Prosafe’s global presence was
reflected in the fact that its employees came
from 29 countries around the world. The overall
workforce turnover in the group was 8.0 per cent
in 2014, as compared to 7.0 percent in 2013.
The company operates an equal opportunity
policy including gender equality. Men have,
however, traditionally made up a greater
proportion of the recruitment base for offshore
operations, and this is reflected in Prosafe’s
gender breakdown. As of 31 December 2014,
women accounted for 12.9 per cent of the overall
workforce, compared to 13.8 per cent in 2013.
Onshore the proportion of women was 44.1 per
cent, as opposed to 40.0 per cent in 2013.
Women constituted 14.6 per cent of the
managers as at 31 December 2014, as opposed to
13.6 per cent at the end of 2013.
Prosafe aims to offer the same opportunities to all
and there is no discrimination due to race, gender,
nationality, culture or religion with respect to
recruitment, remuneration or promotion.
CORPORATE GOVERNANCE
Corporate governance in Prosafe is based on
the principles contained in the Norwegian Code
of Practice for Corporate Governance of 30
October 2014. There are no significant deviations
between the Code of Practice and the way it has
been implemented in Prosafe. The company’s
full corporate governance report is set out on
Prosafe’s website http://www.prosafe.com.
16
By displaying robust corporate governance, the
company aims to strengthen confidence in the
company among shareholders, the capital market
and other interested parties, and will help ensure
maximum value creation over time in the best
interest of shareholders, employees and other
stakeholders.
At the Annual General Meeting on 28 May 2014,
Ronny Langeland was elected as Chairman of
the Board for a period of two years. Christian
Brinch was re-elected as Director for a one-year
period, and Nancy Ch. Erotocritou Charalambous
and Tasos Ziziros were elected as new Directors
for two years. Simultaneously, the period of
appointment of Michael Raymond Parker and
Christakis Pavlou as members of the Board
expired.
As at 31 December 2014 the following Directors
(including associated parties) held shares in
Prosafe SE:
• Ronny Langeland: 35 000 shares
• Roger Cornish: 7 000 shares
There have been no changes to the holdings after
31 December 2014.
CORPORATE SOCIAL RESPONSIBILITY
Prosafe aims to be a socially responsible
company and to further develop its business in a
sustainable manner. In order to ensure long-term,
viable development and profit, the company
balances economic, environmental and social
objectives and integrates them into its daily
business activities and decisions.
Prosafe’s objectives for corporate social
responsibility are based on the company’s
strategy, core values, Code of Conduct and
principles for corporate governance, in addition
to international recognised principles and
guidelines. In order to advance its commitment to
sustainability and corporate citizenship, Prosafe
signed up as a member of the United Nations
Global Compact in October 2008.
Going forward, the company will continue to
aim for continuous improvement of internal
standards, the way it works with partners and
suppliers, and to manage the impact of its
operations.
GOING CONCERN
The Board of Directors confirms their assumption
of the Prosafe Group as a going concern. This
assumption is based on the budgets for the
year and the Group’s long-term forecasts for the
following years. The Board of Directors confirms
that the annual accounts have been prepared
based on this assumption.
AUDITOR
The independent auditor of the company, Ernst &
Young Cyprus Ltd., has expressed its willingness to
continue as the company’s auditor. Reference to
auditors’ fee is made in note 7 to the consolidated
accounts.
SHAREHOLDERS AND SHARE CAPITAL
According to the shareholder register as at 31
December 2014, the ten largest shareholders held
a total of 53.3 per cent of the issued shares. The
remaining shares were held by 4 325 investors.
A nominee account in the name of State Street
Bank was the largest shareholder with a holding
of 19.9 per cent of the issued shares.
Prosafe carry out a survey every quarter
attempting to identify the underlying owners of
shares held at nominee accounts. This survey can
be found at the web site: http://www.prosafe.
com.
Prosafe has an issued share capital of
235 973 059 ordinary shares at a nominal value of
EUR 0.25 each.
Further information is shown in note 15 to the
consolidated financial statements.
DIVIDENDS AND PROPOSED DIVIDENDS
In 2014, the company paid interim dividends
of USD 125.8 million (USD 139.6 million),
corresponding to NOK 3.29 per share (NOK 3.47).
17
is targeting quarterly dividend payments
corresponding to an annual pay-out ratio in
the range of 25 to 35 per cent of the preceding
year’s net profit. Typically, an interim dividend
will be declared together with the release of the
quarterly results.
At 31 December 2014, Prosafe SE had a
distributable equity of USD 952.8 million. The
parent company showed a net profit of USD
186.2 million for 2014, which the Board of
Directors proposes to be allocated as follows (in
USD million):
Dividend
Transferred to equity
Total
0.0 million
186.2 million
186.2 million
Prosafe’s aim is that its shareholders receive a
competitive return on their shares through a
combination of share price appreciation and a
direct return in the form of dividends.
The Board of Directors has re-affirmed the long-
term dividend policy of paying out up to 75 per
cent of the preceding year’s net profit, adopted
in 2011. The exact level of dividend to be paid in
each period will depend on the supply/demand
balance in the market, the investment level and
the overall financial position of the Group. On
the basis of a faster fleet growth, the Board of
Directors will normally target a pay out ratio in
the range of 40 to 60 per cent of the preceding
year’s net profit. In periods with exceptional
conditions the pay-out ratio may be outside
that range. In light of the current weak market
outlook in the North Sea and the increase in
overall supply, the Board of Directors shall focus
on strengthening the balance sheet and securing
strategic flexibility. Therefore, for the period
until the end of 2016 the Board of Directors
Larnaca, 17 March 2015
Board of Directors of Prosafe SE
Ronny J. Langeland
Non-executive Chairman
Christian Brinch
Non-executive Deputy Chairman
Roger Cornish
Non-executive Director
Nancy Ch. Erotocritou
Non-executive Director
Carine Smith Ihenacho
Non-executive Director
Tasos Ziziros
Non-executive Director
STATEMENT OF THE MEMBERS OF
THE BOARD OF DIRECTORS AND OTHER
RESPONSIBLE PERSONS
STATEMENT OF THE MEMBERS OF THE
BOARD OF DIRECTORS AND OTHER
RESPONSIBLE PERSONS OF PROSAFE SE
FOR THE FINANCIAL STATEMENTS IN THE
ANNUAL REPORT FOR THE YEAR ENDING
DECEMBER 2014
In accordance with Sections 9 (3) (c) and 9 (7) of
the Cyprus Transparency Requirements (Securities
for Trading on Regulated Market) Law of 2007
(“Law”) and Cyprus Companies Law Cap. 113, we
the members of the Board of Directors and the
other responsible persons for the consolidated
financial statements of Prosafe SE and the other
companies included in the consolidated accounts
(“the Group”) and the financial statements of
Prosafe SE, for the year ended 31 December 2014,
confirm that, to the best of our knowledge:
19
(a) the annual consolidated and financial
statements that are presented on
pages 20 to 59:
(i) were prepared in accordance with the
International Financial Reporting Standards
as adopted by the European Union, and in
accordance with the provisions of Section 9
(4), of the Law; and
(ii) give a true and fair view of the assets,
liabilities, the financial position, and the profit
or losses of Prosafe SE and the Group included
in the consolidated accounts taken as a
whole; and
(b) the Directors’ Report gives a fair review of
the development and performance of the
business and the financial position of Prosafe
SE and the consolidated accounts of the
Group as a whole, together with a description
of the principal risks and uncertainties that
they face.
Ronny J. Langeland
Non-executive Chairman
Christian Brinch
Non-executive Deputy Chairman
Roger Cornish
Non-executive Director
Carine Smith Ihenacho
Non-executive Director
Tasos Ziziros
Non-executive Director
Nancy Ch. Erotocritou
Non-executive Director
Karl Ronny Klungtvedt
Chief Executive Officer
Prosafe Management AS
Sven Børre Larsen
Chief Financial Officer
Prosafe Management AS
Larnaca, Cyprus
17 March 2015
20
CONSOLIDATED
ACCOUNTS
CONSOLIDATED INCOME STATEMENT
(USD million)
Note
2014
2013
21
Charter revenues
Other operating revenues
Operating revenues
Employee benefits
Other operating expenses
Operating profit before depreciation
Depreciation
Operating profit
Interest income
Interest expenses
Other financial income
Other financial expenses
Net financial items
Profit before taxes
Taxes
Net profit
Attributable to equity holders of the parent
Earnings per share (USD)
Diluted earnings per share (USD)
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
(USD million)
Net profit for the year
4
4, 5
7
8
9
11
11
10, 11
10, 11
12
13
13
481.2
67.5
548.7
(110.6)
(125.5)
312.6
(64.3)
248.3
0.3
(37.3)
76.4
(96.4)
(57.0)
191.3
(12.5)
178.8
469.2
54.3
523.5
(99.4)
(117.5)
306.6
(61.5)
245.1
1.3
(34.2)
23.3
(31.8)
(41.4)
203.7
(4.6)
199.1
178.8
199.1
0.76
0.76
0.85
0.85
Note
2014
2013
178.8
199.1
Other comprehensive income to be reclassified to profit or loss in
subsequent periods
Foreign currency translation
Net gain/loss on cash flow hedges
(6.2)
(38.0)
20
(0.4)
35.4
Income tax effect on components of comprehensive income
0.0
0.0
Net other comprehensive income to be reclassified to profit or loss
in subsequent periods
Total comprehensive income for the year, net of tax
Attributable to equity holders of the parent
(44.2)
35.0
134.6
134.6
234.1
234.1
22
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
(USD million)
ASSETS
Goodwill
Vessels
New builds
Other tangible assets
Total non-current assets
Cash and deposits
Debtors
Other current assets
Total current assets
Total assets
EQUITY AND LIABILITIES
Share capital
Other equity
Total equity
Interest-bearing non-current liabilities
Deferred tax
Derivatives
Other provisions
Total non-current liabilities
Accounts payable
Taxes payable
Derivatives
Other current liabilities
Total current liabilities
Total equity and liabilities
Larnaca, 17 March 2015
Note
31.12.2014
31.12.2013
9
9
9, 24
9
19, 21
19, 20
19, 22
15
16, 19, 20
12
19, 20
19, 20
12
19, 20
17, 19, 20
226.7
1 027.3
311.8
5.7
1 571.5
122.4
83.9
39.0
245.3
1 816.8
65.9
682.6
748.5
830.1
13.4
39.0
3.5
886.0
18.6
17.3
87.9
58.5
182.3
1 816.8
226.7
946.9
248.9
4.9
1 427.4
113.4
55.2
23.9
192.5
1 619.9
65.9
673.8
739.7
779.6
20.1
0.9
4.0
804.6
4.7
18.3
6.5
46.1
75.6
1 619.9
Ronny J. Langeland
Non-executive Chairman
Christian Brinch
Non-executive Deputy Chairman
Roger Cornish
Non-executive Director
Nancy Ch. Erotocritou
Non-executive Director
Carine Smith Ihenacho
Non-executive Director
Tasos Ziziros
Non-executive Director
CONSOLIDATED CASH FLOW STATEMENT
(USD million)
Note
2014
2013
23
CASH FLOW FROM OPERATING ACTIVITIES
Profit before taxes
Unrealised currency (gain)/loss on long-term debt
Loss/(gain) on sale of tangible assets
Depreciation
Financial income
Financial cost
Taxes paid
Change in working capital
Other items from operating activities
Net cash flow from operating activities
CASH FLOW FROM INVESTING ACTIVITIES
Proceeds from sale of tangible assets
Acquisition of tangible assets
Interest received
Net cash flow from investing activities
CASH FLOW FROM FINANCING ACTIVITIES
16
9
5
9, 24
Proceeds from new interest-bearing debt
Repayments of interest-bearing debt
16, 19, 20
16, 19, 20
Share issue
Dividends paid
Interest paid
Net cash flow from financing activities
Net cash flow
Cash and deposits at 1 January
Cash and deposits at 31 December
15
14
21
191.3
(83.7)
2.3
64.3
(0.3)
37.3
(11.5)
63.0
(14.4)
248.3
0.3
(211.0)
0.3
(210.4)
332.2
(198.0)
0.0
(125.8)
(37.3)
(28.9)
9.0
113.4
122.4
203.7
(27.1)
2.4
61.5
(1.3)
34.2
(6.2)
5.8
(5.1)
267.9
16.4
(227.2)
1.3
(209.5)
404.1
(407.8)
128.9
(139.6)
(34.2)
(48.6)
9.8
103.6
113.4
24
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
(USD million)
Share
capital
Own
shares
Other
equity
Cash
flow
hedges
Foreign
currency
translation
Equity at 31 December 2012
63.9
(48.8)
Net profit
Other comprehensive income
Total comprehensive income
New shares (note 15)
Cancellation of own shares (note 15)
Dividend (note 14)
Equity at 31 December 2013
Net profit
Other comprehensive income
Total comprehensive income
Dividend (note 14)
Equity at 31 December 2014
0.0
0.0
0.0
4.3
(2.3)
0.0
65.9
0.0
0.0
0.0
0.0
65.9
0.0
0.0
0.0
0.0
48.8
0.0
0.0
0.0
0.0
0.0
0.0
0.0
485.4
199.1
0.0
199.1
124.6
(46.5)
(139.6)
623.1
178.8
0.0
178.8
(125.8)
676.1
(27.2)
0.0
35.4
35.4
0.0
0.0
0.0
8.2
0.0
(38.0)
(38.0)
0.0
(29.8)
43.0
0.0
(0.4)
(0.4)
0.0
0.0
0.0
42.6
0.0
(6.2)
(6.2)
0.0
36.4
Total
equity
516.3
199.1
35.0
234.1
128.9
0.0
(139.6)
739.7
178.8
(44.2)
134.6
(125.8)
748.5
The legal form of the share capital and the share premium accounts are reflected in the statement of
changes in equity of the accompanying parent financial statements. Other equity includes share premium
reserve and retained earnings.
25
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1: CORPORATE INFORMATION
Prosafe SE (the ‘Company’) is a public limited company domiciled in Larnaca, Cyprus. The registered office of
the Company is Stadiou 126, 6020 Larnaca, Cyprus. The Company is listed on the Oslo Stock Exchange with
ticker code PRS. The consolidated financial statements comprise the financial statements of the Company
and its subsidiaries (together referred to as the ‘Group’). The consolidated financial statements for the
year ended 31 December 2014 were authorised for issue in accordance with a resolution of the board of
directors on 17 March 2015. The Group is the world’s leading owner and operator of semi-submersible
accommodation vessels.
NOTE 2: BASIS OF PREPARATION
The consolidated financial statements have been prepared in accordance with International Financial
Reporting Standards (IFRS) endorsed by the European Union (EU) and the requirements of the Cyprus
Companies Law, Cap 113. The accounts have been prepared on a historical cost basis, except for derivative
financial instruments which are stated at fair value. The consolidated financial statements are presented
in US dollars (USD), and all values are presented in USD million unless otherwise stated. The accounting
principles adopted are consistent with those of the previous financial year.
New and amended standards
The following new and amended standards are relevant to the Group and have been adopted for the first
time in these financial statements, with no material impact:
• Amendments to IAS 32 ‘Financial Instruments: ‘Presentation’ provides additional guidance on when
financial assets and liabilities can be offset.
• Amendments to IAS 39 ‘Financial Instruments: ‘Recognition and Measurement’ provides relief from
discontinuing hedge accounting when a hedge derivative is novated.
• Amendment to IFRS 13 ‘Fair value measurement’ clarifies that short term receivables and payables
with no stated interest rates can be measured at invoice amounts when the effect of discounting
is immaterial.
Approved IFRSs and IFRICs with future effective dates
Standards and interpretations that are issued up to the date of issuance of the consolidated financial
statements, but not yet effective, are disclosed below. The Group’s intention is to adopt the relevant new
and amended standards and interpretations when they become effective, subject to EU approval before the
consolidated financial statements are issued. The Group is currently assessing the impact of the following
new standards that are not yet effective and are yet to quantify the potential impact.
• IFRS 9 will eventually replace IAS 39 Financial Instruments: Recognition and Measurement.
In order to expedite the replacement of IAS 39, the IASB divided the project into phases: classification
and measurement, hedge accounting and impairment. New principles for impairment were published
in July 2014 and the standard is now completed. The parts of IAS 39 that have not been amended as
part of this project have been transferred into IFRS 9. IFRS 9 is effective for annual periods beginning
on or after 1 January 2018. The Standard is not yet approved by the EU. Our preliminary view is that
the adoption of IFRS 9 will not materially impact the income statement or financial position of the
Company.
26
• IFRS 15 ‘Revenue from Contracts with Customers’ is applicable to all entities and supersedes all existing
revenue recognition requirements under IFRS. It applies to all transactions to provide goods and services
except those in the scope of other standards. Either full or modified retrospective application is required
for annual periods beginning on or after 1 January 2017. The Standard is not yet approved by the EU.
The Group does not currently believe adoption of the following new standards would have a material impact
on the income statement or financial position of the Group.
• IFRS 10 Consolidated Financial Statements and IAS 28 Investment in Associates and Joint Ventures
- The amendments address an inconsistency between the requirements in IFRS 10 and those in IAS
28 (2011), in dealing with the sale or contribution of assets between an investor and its associate or
joint venture. The main consequence of the amendments is that a full gain or loss is recognised when
a transaction involves a business (whether it is housed in a subsidiary or not). A partial gain or loss is
recognised when a transaction involves assets that do not constitute a business, even if these assets
are housed in a subsidiary. The amendments are not yet approved by the EU. Our preliminary view is
that the adoption of IFRS 9 will not materially impact the income statement or financial position of the
Company.
• IFRS 10 Consolidated Financial Statements, IFRS 12 Disclosure of Interests in Other Entities and IAS 28
Investments in Associates and Joint Ventures - The amendments to IFRS 10, IFRS 12 and IAS 28 address
three issues arising in practice in the application of the investment entities consolidation exception,
and also provide relief in particular circumstances. The amendments are not yet approved by the EU.
Our preliminary view is that the adoption of IFRS 10 will not materially impact the income statement or
financial position of the Company.
• IAS 1 Presentation of Financial Statements - The amendments to IAS 1, issued as part of IASBs
Disclosure Initiative, further encourage companies to apply professional judgment in determining what
information to disclose and how to structure it in their financial statements. The amendments are not
yet approved by the EU. The amendments affect presentation only and have no impact on the Group’s
financial position or performance.
• IAS 16 Property, Plant and Equipment and IAS 38 Intangible Assets- The amendments clarify that
the use of revenue-based methods to calculate the depreciation of an asset is not appropriate because
revenue generated by an activity that includes the use of an asset generally reflects factors other than
the consumption of the economic benefits embodied in the asset. The amendments also clarify that
revenue is generally presumed to be an inappropriate basis for measuring the consumption of the
economic benefits embodied in an intangible asset. This presumption, however, can be rebutted in
certain limited circumstances. The amendments are not yet approved by the EU. Our preliminary view is
that the adoption of IAS 16 will not materially impact the income statement or financial position of the
Company.
• IAS 27 Separate Financial Statements - The amendments restore the option to use the equity method
to account for investments in subsidiaries, joint ventures and associates in an entity’s separate
financial statements. The entity must apply the same accounting for each category of investments. The
amendments are not yet approved by the EU. Our preliminary view is that the adoption of IAS 27 will
not materially impact the income statement or financial position of the Company.
27
Annual Improvements 2010 – 2012
IASBs annual improvements project 2010 – 2012 includes amendments to a number of standards:
IFRS 2 Share-based Payment
Performance condition and service condition are defined in order to clarify various issues, including the
following:
• A performance condition must contain a service condition
• A performance target must be met while the counterparty is rendering service
• A performance target may relate to the operations or activities of an entity, or to those of another entity in
the same group
• A performance condition may be a market or non-market condition
• If the counterparty, regardless of the reason, ceases to provide service during the vesting period, the service
condition is not satisfied
IFRS 3 Business Combinations
Contingent consideration in a business acquisition that is not classified as equity is subsequently measured
at fair value through profit or loss whether or not it falls within the scope of IFRS 9 Financial Instruments.
IFRS 8 Operating Segments
Operating segments may be combined/aggregated if aggregation is consistent with the core principle of the
standard, if the segments have similar economic characteristics and if they are similar in other qualitative
respects. If they are combined, the entity must disclose the economic characteristics (e.g., sales and gross
margins) used to assess whether the segments are ‘similar’.
IFRS 13 Fair Value Measurement
The IASB clarified that short-term receivables and payables with no stated interest rates can be held at
invoice amounts when the effect of discounting is immaterial.
IAS 16 Property, Plant and Equipment and IAS 38 Intangible Assets
The amendment to IAS 16.35(a) and IAS 38.80(a) clarifies that revaluation can be performed, as follows:
• Adjust the gross carrying amount of the asset to market value, or
• Determine the market value of the carrying amount and adjust the gross carrying amount proportionately
so that the resulting carrying amount equals the market value
The IASB also clarified that accumulated depreciation/amortisation is the difference between the gross
carrying amount and the carrying amount of the asset. The amendment to IAS 16.35(b) and IAS 38.80(b)
clarifies that the accumulated depreciation/amortisation is eliminated so that the gross carrying amount
and carrying amount equal the market value.
Annual Improvements 2011 – 2013
IASBs annual improvements project 2011 – 2013 includes amendments to a number of standards:
IFRS 3 Business Combinations
The amendment clarifies that:
• Joint arrangements are outside the scope of IFRS 3, not just joint ventures
• The scope exception applies only to the accounting in the financial statements of the joint arrangement
itself.
28
IFRS 13 Fair Value Measurement
The portfolio exception in IFRS 13 can be applied to financial assets, financial liabilities and other contracts.
Annual Improvements 2012 - 2014
IASBs annual improvements project 2012 – 2014 includes amendments to a number of standards:
IFRS 7 Financial Instruments – Disclosures
Paragraphs 42A - H of IFRS 7 require an entity to provide disclosures for any continuing involvement in
a transferred asset that is derecognised in its entirety. The Board was asked whether servicing contracts
constitute continuing involvement for the purposes of applying these disclosure requirements. The
amendments clarify that a servicing contract that includes a fee can constitute continuing involvement in a
financial asset.
NOTE 3: SIGNIFICANT ACCOUNTING POLICIES
JUDGMENTS. The preparation of the Group’s consolidated financial statements requires management
to make judgments, estimates and assumptions that affect the reported amounts of revenue, expenses,
assets and liabilities, and the disclosure of contingent liabilities at the end of the reporting period. However,
uncertainty about these assumptions and estimates could result in outcomes that require a material
adjustment to the carrying amount of the asset or liability affected in future periods.
In the process of applying the Group’s accounting policies, management has made the following judgments,
which have the most significant effect on the amount recognised in the consolidated financial statements.
Prosafe owns and operates a fleet of accommodation vessels. Based on an evaluation of the terms and
conditions of the arrangements in the contracts, the Group has determined that it retains all significant risks
and rewards of ownership of the vessels and therefore none of the contracts have been accounted for as a
financial lease.
ESTIMATES AND ASSUMPTIONS. The estimates and assumptions are assessed on a continuous basis. The
estimates and assumptions which have the most significant effect on the amounts recognised in the
financial statements relate to depreciation of fixed assets, impairment assessment of non-financial assets,
share-based payments, taxes and fair value of financial instruments. Estimated useful life of the Group’s
semi-submersible accommodation vessels is 30 to 50 years dependent on the age at the time of acquisition
and subsequent refurbishments. The management determines whether goodwill is impaired at least
on an annual basis. This requires an estimation of the value in use of the cash-generating units to which
the goodwill is allocated, which requires management to estimate the future cash flow from the cash-
generating units and to apply a suitable discount rate. Further details are given in note 9. Estimating fair
value for share-based payments requires determination of the most appropriate valuation model and the
most appropriate inputs to the valuation model including the expected life of the share options, volatility
and dividend yield.
When the fair value of financial assets and financial liabilities recorded in the statement of financial position
cannot be derived from active markets, they are determined using valuation techniques including the
29
discounted cash flows model. The inputs to these models are taken from observable markets where possible,
but where this is not feasible, a degree of judgment is required in establishing fair values. The judgments
include considerations of inputs such as liquidity risk, credit risk and volatility.
Uncertainties exist with respect to the interpretation of complex tax regulations and the amount and timing
of future taxable income. Given the wide range of international business relationships and the long-term
nature and complexity of existing contractual agreements, differences arising between the actual results
and the assumptions made, or future changes to such assumptions, could necessitate future adjustments to
tax income and expense already recorded.
BASIS OF CONSOLIDATION. The consolidated financial statements comprise the financial statements of
the parent company and its subsidiaries. Subsidiaries are fully consolidated from the date of acquisition,
being the date on which the Group obtains control, and continue to be consolidated until the date that such
control ceases. The financial statements of the subsidiaries are prepared for the same reporting period as
the parent company, using consistent accounting policies. All intra-group balances, income and expenses,
unrealised gains and losses and dividends resulting from intra-group transactions are eliminated in full.
A change in the ownership interest of a subsidiary, without a loss of control, is accounted for as an equity
transaction. If the Group loses control over a subsidiary, it:
• derecognises the assets and liability of the subsidiary
• derecognises the carrying amount of any non-controlling interest
• derecognises the cumulative translation differences, recorded in other comprehensive income
• recognises the fair value of the consideration received
• recognises the fair value of any investment retained
• recognises any surplus or deficit in profit and loss
• reclassifies the parent’s share of components previously recognised in other comprehensive income
to profit and loss or retained earnings, as appropriate.
BUSINESS COMBINATIONS AND GOODWILL. Business combinations are accounted for using the acquisition
method. The cost of an acquisition is measured as the aggregate of the consideration transferred, measured
at acquisition date fair value. Acquisition costs incurred are expensed and included in administrative
expenses.
When the Group acquires a business, it assesses the financial assets and liabilities assumed for appropriate
classification and designation in accordance with the contractual terms, economic circumstances and
pertinent conditions as at the acquisition date.
Goodwill is initially measured at cost being the excess of the aggregate of the consideration transferred and
the amount recognised for non-controlling interest over the net identifiable assets acquired and liabilities
assumed. If this consideration is lower than the fair value of the net assets of the subsidiary acquired, the
difference is recognised in profit and loss.
After initial recognition, goodwill is measured at cost less any accumulated impairment losses. For the
purpose of impairment testing, goodwill acquired in a business combination is, from the acquisition date,
allocated to each of the Group’s cash generating units that are expected to benefit from the combination,
irrespective of whether other assets or liabilities of the acquiree are assigned to those units.
30
Where goodwill forms part of a cash generating unit and part of the operation within that unit is disposed of,
the goodwill associated with the operation disposed of is included in the carrying amount of the operation
when determining the gain or loss on disposal of the operation. Goodwill disposed of in this circumstance is
measured based on the relative values of the operation disposed of and the portion of the cash generating unit
retained.
FOREIGN CURRENCY TRANSLATION. The presentation currency is USD. This is also the functional currency
for the parent company. Transactions in other currencies than the functional currency are translated at the
exchange rate prevailing at the transaction date. Monetary items in other currencies than the functional
currency are translated to the functional currency at the exchange rate on the balance sheet date, and the
currency difference is recognised in the profit and loss account. Non-monetary items in other currencies
than the functional currency are translated at the exchange rate at the transaction date. When consolidating
companies with a functional currency other than the USD, profit and loss items are translated at the monthly
average exchange rate, while balance sheet items are translated at the exchange rate on the balance sheet
date. Translation differences are taken to other comprehensive income. On disposal of a foreign operation, the
deferred cumulative amount recognised in other comprehensive income, relating to that particular operation, is
recognised in the income statement.
SEGMENT REPORTING. For management and monitoring purposes, the Group is organised into one segment;
chartering and operation of accommodation vessels. For geographical information, reference is made to note 4.
REVENUE RECOGNITION. Some of the Group’s vessels operate on time charters, and others on bareboat charters.
Revenue is recognised to the extent that it is probable that the economic benefits will flow to Prosafe and
the revenue can be reliably measured. Revenue is measured at the fair value of the consideration received.
Charter income is recognised on a straight line basis over the period the vessel has operated. Mobilisation and
demobilisation fees are recognised in the period in which the mobilisation or demobilisation takes place. Prosafe
does not transfer the risks or benefits of ownership of the asset to the customers and none of the contracts are
accounted for as a financial lease. Management, crew services and other related income are recognised in the
period the services are rendered. Interest income is recognised on an accrual basis. Interest income is included in
financial items in the income statement. Dividends are recognised when Prosafe’s right to receive the payment
is established.
PROVISIONS are recognised when, and only when, the Group has a present obligation as a result of events that
have taken place, and it can be proven probable that a financial settlement will take place as a result of this
liability, and that the size of the amount can be measured reliably. Provisions are reviewed on each balance
sheet date and their level reflects the best estimate of the liability.
When Prosafe expects some or all of a provision to be reimbursed, the reimbursement is recognised as a
separate asset, but only when the reimbursement is virtually certain. The expense relating to any provision is
presented in the income statement net of any reimbursement.
TANGIBLE ASSETS are stated at acquisition cost less cumulative depreciation and accumulated impairment
losses, if any. Assets are depreciated on a straight-line basis over their estimated economically useful lives,
with account taken of their estimated residual value. The management makes annual assessments of residual
value, methods of depreciation and the remaining economic life of the assets. Components of an asset which
have an estimated shorter life than the main component of the asset are accordingly depreciated over this
shorter period. Acquisition cost includes costs directly attributable to the acquisition of the assets. Subsequent
expenditures are added to the book value of the asset or accounted for on a separate basis, when it is likely
that future benefits would derive from the expenditures. The vessels are subject to a periodic survey every
31
five years, and associated costs are amortised over the five-year period to the next survey. Other repair and
maintenance costs are expensed in the period they are incurred.
Expenditures for new builds are capitalised, including instalments paid to the yard, project management
costs, and costs relating to the initial preparation, mobilisation and commissioning until the vessel is placed
into service. In accordance with IAS 23, borrowing costs are capitalised on qualifying assets.
Tangible fixed assets are depreciated on a straight line basis over their useful lifetime as follows:
• Semi-submersible vessels – 30 to 50 years dependent on the age at the time of the acquisition
and subsequent refurbishments
• Buildings – 20 to 30 years
• Equipment – 3 to 5 years
IMPAIRMENT OF NON-FINANCIAL ASSETS. The Group assesses at each reporting date whether there is an
indication that an asset may be impaired. If any indication exists, or when annual impairment testing for
an asset is required, the Group estimates the asset’s recoverable amount. An asset’s recoverable amount
is the higher of an asset’s or cash generating unit’s fair value less costs to sell and its value in use and
is determined for an individual asset, unless the asset does not generate cash inflows that are largely
independent of those from other assets or groups of assets. Where the carrying amount of an asset or cash
generating unit exceeds its recoverable amount, the asset is considered impaired and is written down to
its recoverable amount. In assessing value in use, the estimated future cash flows are discounted to their
present value using a pre-tax discount rate that reflects current market assessments of the time value of
money and risks specific to the asset. In determining fair value less costs to sell, recent market transactions
are taken into account, if available. If no such transactions can be identified, an appropriate valuation model
is used. These calculations are corroborated by valuation multiples, quoted share prices for publicly traded
subsidiaries or other available fair value indicators.
The Group bases its impairment calculation on a detailed forecast calculation which is prepared for the
Group’s cash generating unit. The forecast calculation is generally covering a period of five years. For longer
periods, a long term growth rate is calculated and applied to project future cash flows after the fifth year.
For non-financial assets excluding goodwill, an assessment is made at each reporting date as to whether
there is any indication that previously recognised impairment losses may no longer exist or may have
decreased. If such indication exists, Prosafe estimates the asset’s recoverable amount. A previously
recognised impairment loss is reversed only if there has been a change in the assumptions used to
determine the asset’s recoverable amount since the last impairment loss was recognised.
IMPAIRMENT OF GOODWILL. Goodwill is tested for impairment annually, and when circumstances indicate
that the carrying value may be impaired. Impairment is determined by assessing the recoverable amount
of each cash-generating unit to which the goodwill relates. When the recoverable amount is lower than the
carrying amount, the impairment loss is recognised in the income statement. Impairment losses related to
goodwill cannot be reversed in future periods.
INVENTORIES are valued at the lower of cost and net realisable value. Net realisable value is the estimated
selling price in the ordinary course of business less estimated costs necessary to make the sale.
32
FINANCIAL ASSETS
Initial recognition
Financial assets are classified as financial assets at fair value through profit or loss, loans and receivables or
as derivatives designated as hedging instruments in an effective hedge, as appropriate. Prosafe determines
the classification of its financial assets at initial recognition.
Financial assets are recognised initially at fair value plus directly attributable costs, with the exception of
assets measured at fair value through profit and loss.
Prosafe’s financial assets include cash and short-term deposits, trade and other receivables, financial
derivatives and shares.
Financial assets at fair value through profit and loss
Financial assets at fair value through profit and loss include financial assets held for trading. This category
also includes derivative instruments entered into that do not meet the hedge accounting criteria as defined
by IAS 39. Gains and losses on assets held for trading are recognised in the income statement. Financial
assets are classified as held for trading if they are acquired for the purpose of selling in the near future. This
category also includes derivative instruments entered into that do not meet the hedge accounting criteria as
defined by IAS 39. Financial assets at fair value through profit and loss are carried in the balance sheet at fair
value with gains and losses recognised in the income statement.
Loans and receivables
Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not
quoted in an active market. Such financial assets are carried at amortised cost using the effective interest
rate method. Gains and losses are recognised in the consolidated income statement when the loans and
receivables are derecognised or impaired, as well as through the amortisation process.
Derecognition
A financial asset is derecognised when:
• The rights to receive cash flows from the asset have expired.
• The Group has transferred its rights to receive cash flows from the asset or has assumed an obligation
to pay the received cash flows in full without material delay to a third party under a “pass-through”
arrangement; and either the Group has transferred substantially all the risks and rewards of the asset, or
the Group has neither transferred nor retained substantially all the risks and rewards of the asset, but has
transferred control of the asset.
Impairment of financial assets
The Group assesses at each reporting date whether there is any objective evidence that a financial asset
or a group of financial assets is impaired. A financial asset or a group of financial assets are deemed to be
impaired if, and only if, there is objective evidence of impairment as a result of one or more events that have
occurred after the initial recognition of the asset and that loss event has an impact on the estimated future
cash flows of the financial asset or the group of financial assets that can be reliable estimated.
Where there is evidence of impairment, the cumulative loss, measured as the difference between the
acquisition cost and the current fair value, less any impairment loss on the investment previously recognised
in the income statement, is removed from other comprehensive income and recognised in the income
statement.
33
FINANCIAL LIABILITIES
Initial regocnition
Financial liabilities within the scope of IAS 39 are classified as financial liabilities at fair value through profit
or loss, financial liabilities measured at amortised cost or as derivatives designated as hedging instruments
in an effective hedge, as appropriate. Prosafe determines the classification of its financial liabilities at initial
recognition.
Financial liabilities are recognised initially at fair value and, in case of loans and borrowings, net of directly
attributable costs.
Prosafe’s financial liabilities include trade and other payables, bank overdraft, loans and borrowings, financial
guarantee contracts and derivative financial instruments.
Financial liabilities at fair value through profit and loss
Financial liabilities at fair value through profit and loss include financial liabilities held for trading. Financial
liabilities are classified as held for trading if they are acquired for the purpose of selling in the near future.
This category also includes derivative instruments entered into that do not meet the hedge accounting
criteria as defined by IAS 39. Gains and losses on liabilities held for trading are recognised in the income
statement.
Derecognition
A financial liability is derecognised when the obligation under the liability is discharged or cancelled or
expires.
When an existing financial liability is replaced by another from the same lender on substantially different
terms, or the terms of an existing liability are substantially modified, such an exchange or modification is
treated as a derecognition of the original liability and the recognition of a new liability, and the difference in
the respective carrying amounts is recognised in the income statement.
FAIR VALUE OF FINANCIAL INSTRUMENTS
The fair value of financial instruments that are actively traded in organised financial markets is determined
by reference to quoted market bid prices at the close of business on the balance sheet date. For financial
instruments where there is no active market, fair value is determined using valuation techniques. Such
techniques may include using recent arm’s length market transactions, reference to the current fair value of
another instrument that is substantially the same, discounted cash flow analysis or other valuation models.
EMPLOYEE BENEFITS. Companies within the Group make contributions to pension schemes that are defined
contribution plans. The companies’ payments are recognised in the income statement for the year to which
the contribution applies.
SHARE-BASED PLANS. The Group has an option plan for key personnel which provides a cash settlement if an
option is exercised. The fair value of the options is expensed over the period until vesting with recognition of
a corresponding liability which also includes social security tax where relevant. This liability is remeasured at
each balance sheet date up to and including the settlement date with changes in fair value recognised in the
income statement.
34
EVENTS AFTER THE BALANCE SHEET DATE. New information on the Group’s positions at the balance sheet
date is taken into account in the annual financial statements. Events after the balance sheet date that do
not affect the position at the balance sheet date, but which will affect the position in the future, are stated if
significant.
BORROWING COSTS. Borrowing costs directly attributable to the acquisition, construction or production
of an asset that necessarily takes a substantial period of time to get ready for its intended use or sale are
capitalised as part of the cost of the respective assets. All other borrowing costs are expensed in the period
they occur. Borrowing costs consist of interest and other costs that an entity incurs in connection with the
borrowing of funds.
DERIVATIVE FINANCIAL INSTRUMENTS. Prosafe uses derivative financial instruments such as forward
currency contracts and interest rate swaps to hedge its foreign currency risks and interest rate risks
respectively. Such instruments are initially recognised at fair value on the date on which a derivative contract
is entered into and are subsequently remeasured at fair value. Derivatives are carried as financial assets
when the fair value is positive and as financial liabilities when the fair value is negative.
Any gains and losses arising from changes in fair value on derivatives during the year that do not qualify
for hedge accounting and the ineffective portion of an effective hedge, are taken directly to the income
statement.
The fair value of forward currency contracts is the discounted difference between the forward exchange rate
and the contract price. The fair value of interest rate swap contracts is determined by reference to market
price for similar instruments.
At the inception of a hedge relationship, Prosafe formally designates and documents the hedge relationship
to which the Group wishes to apply hedge accounting and the risk management objective and strategy
for undertaking the hedge. The documentation includes identification of the hedging instrument, the
hedged item or transaction, the nature of the risk being hedged and how the entity will assess the hedging
instrument’s effectiveness in offsetting the exposure to changes in the hedged item’s fair value or cash
flows attributable to the hedged risk. Such hedges are expected to be highly effective in achieving offsetting
changes in fair value or cash flows, and are assessed on an ongoing basis to determine that they actually
have been highly effective throughout the financial reporting periods for which they were designated.
Prosafe applies hedge accounting only for the interest rate swaps. Hedges which meet the strict criteria for
hedge accounting are accounted for as follows:
Cash flow hedges
At the inception of a hedge relationship, the Group formally designates and documents the hedge
relationship to which it wishes to apply hedge accounting and the risk management objective and
strategy for undertaking the hedge. The documentation includes identification of the hedging instrument,
the hedged item or transaction, the nature of the risk being hedged and how the entity will assess the
effectiveness of changes in the hedging instrument’s fair value in offsetting the exposure to changes in the
hedged item’s fair value or cash flows attributable to the hedged risk. Such hedges are expected to be highly
effective in achieving offsetting changes in fair value or cash flows and are assessed on an ongoing basis to
determine that they actually have been highly effective throughout the financial reporting periods for which
they were designated. The effective portion of the gain and loss on the hedging instrument is recognised
35
directly in other comprehensive income, while any ineffective portion is recognised immediately in the
income statement.
Amounts recognised as other comprehensive income are transferred to the income statement when the
hedged transaction affects profit and loss, such as when the hedged financial income or financial expense
is recognised or when a forecast sale occurs. When the hedged item is the cost of a non-financial asset or a
non-financial liability, the amounts recognised as other comprehensive income are transferred to the initial
carrying amount of the non-financial assets or liability.
Current versus non-current classification
Derivative instruments that are not a designated and effective hedging instrument are classified as current
or non-current or separated into a current and non-current portion based on an assessment of the facts and
circumstances.
When Prosafe holds a derivative as an economic hedge for a period beyond 12 months after the balance
sheet date or a derivative instrument is designated as an effective hedging instrument, the fair value of
the derivative instrument is classified as current or non-current consistent with the classification of the
underlying item. Economic hedges are not treated as hedging for accounting purposes.
TAXES in the income statement include taxes payable and changes in deferred tax. Deferred tax is calculated
on the basis of temporary differences between book and tax values that exist at the end of the period.
Deferred tax asset is recognised in the balance sheet when it is likely that the tax benefit can be utilised.
Deferred tax and deferred tax asset are measured at nominal value.
Income tax assets and liabilities for the current and prior periods are measured at the amount expected to
be recovered or paid to the taxation authorities.
Deferred tax liabilities are measured at the tax rates that are expected to apply in the year when the liability
is settled, based on tax rates that have been enacted or substantively enacted at the reporting date. Deferred
tax is provided using the liability method.
Deferred tax assets and liabilities are offset if a legally enforceable right exists to set off current tax assets
against current income tax liabilities and the deferred taxes relate to the same taxable entity and the same
taxation authority.
The carrying amount of deferred tax assets is reviewed at each reporting date and reduced to the extent
that it is no longer probable that sufficient taxable profit will be available to allow all or part of the deferred
tax asset to be utilised. Unrecognised deferred tax assets are reassessed at each reporting date and are
recognised to the extent that it has become probable that future taxable profits will allow the deferred tax
asset to be recovered.
CASH AND DEPOSITS comprise cash at banks and short-term deposits with a maturity of three months or
less, which are subject to an insignificant risk of changes in value.
DIVIDENDS are accrued as a current liability once it has been approved by the general meeting or the board
of directors.
36
SHAREHOLDER’S EQUITY. Any difference between the issue price of share capital and the nominal value is
recognised as share premium. The costs incurred attributable to the issue of share capital are deducted from
equity.
OWN SHARES. Own equity instruments which are reacquired are recognised at cost and deducted from
equity. No gain or loss is recognised in the income statement on the purchase, sale, issue or cancellation of
the Group’s own equity instruments.
37
2014
2013
322.8
342.5
0.0
165.2
60.7
548.7
0.0
175.3
5.7
523.5
NOTE 4: SEGMENT REPORTING
Prosafe has one segment, which is chartering and operation of accommodation vessels.
Operating revenues by geographical location
Europe excl. Cyprus
Cyprus
Americas
Australia/Asia
Total operating revenues
The revenue allocation is based on place of operation of the vessel.
Operating revenues from major customers situated in:
Europe4
Americas1
Europe5
Americas2
Europe2
Europe1
Europe3
1) Operating revenues in USD million
2) Percentage of total revenues
Total assets by geographical location
Europe excl. Cyprus
Cyprus
Americas
Australia/Asia
Total assets
NOTE 5: OTHER OPERATING REVENUES
Mobilisation/demobilisation income
Reimbursement revenues
Total other operating revenues
2014
1)
113.4
110.9
60.3
54.3
39.4
27.3
1.3
2)
21%
20%
11%
10%
7%
5%
0%
2013
1)
0.0
124.5
0.0
50.8
85.7
108.7
73.6
2)
0%
24%
0%
10%
16%
21%
14%
2014
2013
1 031.8
58.7
266.5
459.8
943.5
22.3
256.6
397.5
1 816.8
1 619.9
2014
2013
8.8
58.7
67.5
9.1
45.2
54.3
38
NOTE 6: QUARTERLY RESULTS
Operating revenues
Operating expenses
EBITDA
Depreciation
Operating profit
Net financial items
Profit before taxes
Taxes
Net profit
Q1
Q2
Q3
Q4
2014
91.7
(53.6)
38.1
(15.2)
22.9
(4.0)
18.9
(0.6)
18.3
133.4
(62.4)
71.0
(16.0)
55.0
(10.0)
45.0
(2.9)
42.1
169.5
(59.9)
109.6
(16.6)
93.0
(17.7)
75.3
(7.9)
67.4
154.1
(60.2)
93.9
(16.5)
77.4
(25.3)
52.1
(1.1)
51.0
548.7
(236.1)
312.6
(64.3)
248.3
(57.0)
191.3
(12.5)
178.8
NOTE 7: EMPLOYEE BENEFITS, MANAGEMENT REMUNERATION AND AUDIT FEE
Wages and salaries
Contract personnel
Pension expenses
Other remuneration
Change in share option provision
Social security taxes
Other personnel-related expenses
Total employee benefits
2014
2013
58.9
21.7
6.2
3.0
(0.4)
7.6
13.7
110.6
50.3
25.6
5.1
1.8
(0.2)
6.3
10.4
99.4
Bonus scheme
The Company’s bonus scheme embraces the executive management and the senior management teams.
The bonus depends on achieving defined results relating to earnings, the attainment of strategic goals and
HSE.
Share options
The corporate management and other key employees (in total 12 persons) are included in a synthetic share
option programme. The outstanding options were granted in 2011. When a synthetic option is exercised, the
option holder is paid a cash consideration corresponding to the difference between the share price at the
exercise date adjusted for any dividends paid during the period, and the share price at grant. All synthetic
options are capped at two times strike price. Net proceeds after tax shall be used to purchase shares in the
Company at market price. This plan has no dilution effect, since the shares will be purchased in the market.
The options are valued by using the Black-Scholes option pricing model. The right to exercise is subject to the
employee being employed during the vesting period.
Share price at 31 December (NOK)
Weighted average fair value (NOK) at 31 December
Provision at 31 December (USD million)
Options granted 2008
Options granted 2009
Options granted 2011
Forfeited in 2010
Exercised in 2011
Forfeited in 2011
Exercised in 2012
Forfeited in 2012
Exercised in 2013
Forfeited in 2013
Forfeited in 2014
Expired in 2014
Outstanding options at 31 December 2014
Exercisable at 31 December 2014
Vesting date in November 2015
Grant date
Exercise price at grant (NOK)
Exercise price at 31.12.2014 (NOK)
Vesting date
Expiry date
Lifetime closing balance
Volatility closing balance
Interest rate closing balance
Fair value closing balance (NOK)
Outstanding options at 31.12.2014
39
2014
2013
23.00
46.80
0.18
0.0
5.09
0.4
2 768 829
910 000
770 000
(917 524)
(70 000)
(20 000)
(673 000)
(2 036 305)
(32 000)
(70 000)
(30 000)
(315 000)
285 000
0
31.05.2011
58.21
45.71
30.11.2015
30.11.2015
0.92
0.40
0.01
0.18
285 000
The right to exercise is subject to the employee being employed during the vesting period.
Pension and severance pay
Certain members of the corporate management have agreements on severance pay. Under these agreements,
the Company guarantees a remuneration corresponding to the base salary received at the time of departure for
a period of up to two years after the normal six-month period of notice. With the exception of the agreement
with the CEO, these agreements specify that benefits received from new employers are deducted from the
remuneration due, unless the person concerned left as a result of an acquisition, sale or merger. The CEO has an
agreement on early retirement pension after the age of 60 and until the age of 67. With full earning of pension
entitlement, the annual early retirement pension will equal 24 times the Norwegian national insurance base rate.
In accordance with the code of practice for corporate governance recommended by the Oslo Stock Exchange,
remuneration for the corporate management and the board of directors is specified below.
40
Senior officers
(USD 1 000)
Karl Ronny Klungtvedt (CEO)
Robin Laird (Deputy CEO)
Sven Børre Larsen (CFO)
Karl Ronny Klungtvedt (CEO)
Robin Laird (Deputy CEO)
Sven Børre Larsen (CFO)
Year
Salary
Bonus 1) Pension 2)
Other
benefits
Value
of share
options 3)
2014
2014
2014
2013
2013
2013
619
561
381
636
558
392
354
329
220
383
344
239
181
84
44
184
84
35
36
264
58
38
255
50
0
0
0
69
52
52
1) Payment based on previous years’ achievements
2) For the CEO, the figures include increase in early retirement pension liability
3) Valuation based on the Black-Scholes option pricing model
Board of directors
(USD 1 000)
Ronny Johan Langeland (chair from May 2014)
Christian Brinch
Roger Cornish
Carine Smith Ihenacho
Nancy Ch. Erotocritou (from May 2014)
Tasos Ziziros (from May 2014)
Michael Raymond Parker (chair to May 2014)
Christakis Pavlou (to May 2014)
Michael Raymond Parker (chair)
Ronny Johan Langeland
Christian Brinch
Roger Cornish
Carine Smith Ihenacho
Christakis Pavlou
Year
Board fees 1)
2014
2014
2014
2014
2014
2014
2014
2014
2013
2013
2013
2013
2013
2013
159
122
112
95
59
59
68
38
165
147
105
103
88
93
1) If applicable, figures include compensation from audit committee and compensation committee.
Auditors’ fee
(USD 1 000)
Audit
Fees for other services
Total auditors' fee
Auditor’s fee is included in general and administrative expenses (note 8).
2014
2013
298
34
332
341
33
374
NOTE 8: OTHER OPERATING EXPENSES
Repair and maintenance
Other vessel operating expenses
General and administrative expenses
Total other operating expenses
NOTE 9: TANGIBLE ASSETS AND GOODWILL
41
2014
2013
28.5
53.1
43.9
125.5
33.5
47.6
36.4
117.5
New
Vessels
builds Equipment
Buildings
Goodwill
Total
1 434.3
135.6
4.4
7.4
226.7
1 808.5
113.4
(10.7)
1 537.0
146.4
(4.0)
113.3
0.0
248.9
62.9
0.0
1 679.4
311.8
538.0
(8.4)
60.6
590.1
(1.4)
63.4
652.1
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.5
(0.2)
4.7
1.2
0.0
5.9
3.3
(0.2)
0.5
3.6
0.0
0.1
3.7
0.0
0.0
7.4
0.5
0.0
7.9
3.2
0.0
0.5
3.7
0.0
0.9
4.6
0.0
0.0
227.2
(10.9)
226.7
2 024.8
0.0
0.0
211.0
(4.0)
226.7
2 231.8
0.0
544.5
0.0
(8.6)
0.0
0.0
61.5
597.4
0.0
(1.4)
0.0
0.0
64.3
660.4
1 027.3
311.8
2.2
3.4
226.7
1 571.5
946.9
248.9
1.2
3.7
226.7
1 427.4
Acquisition cost
31 December 2012
Additions
Disposals
Acquisition cost
31 December 2013
Additions
Disposals
Acquisition cost
31 December 2014
Accumulated depreciation
31 December 2012
Accumulated depreciation
on disposals
Depreciation for the year
Accumulated depreciation
31 December 2013
Accumulated depreciation
on disposals
Depreciation for the year
Accumulated depreciation
31 December 2014
Net carrying amount
31 December 2014
Net carrying amount
31 December 2013
Depreciation rate (%)
Economically useful life (years)
2-20
5-50
-
-
20-33
3-5
3-5
20-30
-
-
-
-
42
New builds include prepayment of 20 % of the yard cost for the four new builds, owner-furnished equipment
and other project costs incurred. For details, reference is made to note 24.
Tangible fixed assets and goodwill are initially recorded at cost. Subsequent to recognition, tangible fixed
assets are stated at cost less accumulated depreciation and any accumulated impairment losses. These assets
are depreciated on a straight line basis. The costs of upgrades and modification of vessels are capitalised, and
each vessel is accounted for as a single asset.
Borrowing costs are capitalised as part of the asset in accordance with revised IAS 23. As at 31 December 2014,
capitalised borrowing costs amount to USD 15.8 million (31 December 2013: USD 8.1 million).
Estimated useful life for the semi-submersible accommodation vessels is 30-50 years. Certain equipment on a
vessel is depreciated over a shorter period than the life of the vessel itself. The estimated scrap value is USD 3
million per vessel. This estimate is based on steel prices and is reviewed on an annual basis.
Management performed an annual impairment assessment of the fixed assets in line with IFRS. Management
looked at each individual vessel as a cash generating unit, and concluded that no impairment indicators exist
as per year-end.
The goodwill of USD 226.7 million relates to the acquisition of Consafe Offshore AB in 2006. Prosafe has only
one reporting segment comprising of all accommodation vessels which the goodwill has been allocated to. The
recoverable amount has been identified by calculating the value in use. The calculation is based on the present
value of the estimated cash flow. The discount rates applied reflect management’s estimate of the risks specific
to each unit. The present value of this cash flow exceeds the carrying value, and no need for a write-down is
indicated.
The present value of the estimated cash flows from the cash-generating unit, is based on the following inputs:
Revenues
- Current contracts portfolio and contract renewals reflecting current market conditions, remaining life of
asset, and historical utilisation rates
- Annual increase of operating revenues 3% (general sector inflation assumption)
Expenses
- Operating expenses and overheads reflecting current market conditions and historical utilisation rates
- Annual increase of operating expenses and overheads 3% (general sector inflation assumption)
Capital expenditures
- Life extension capex reflecting historical actuals and upgrade capex reflecting long-term capex
projections
- Annual increase of capital expenditures 3% (general sector inflation assumption)
Pre-tax discount rate 8%
Sensitivity: a 1% increase in the pre-tax discount rate or a reasonable change in other assumptions
would still give a present value of the cash flow well in excess of the carrying value.
NOTE 10: OTHER FINANCIAL ITEMS
Currency gain
Total other financial income
Fair value adjustment currency forwards
Amortisation of borrowing costs
Other financial expenses
Total other financial expenses
NOTE 11: FINANCIAL ITEMS - IAS 39 CATEGORIES
Loans and
receivables
Fair value
through
profit and loss
Financial
liabilities
measured at
amortised cost
Year ended 31 Dec 2014
Interest income
Fair value adjustment currency orwards
Currency gain 1)
Total financial income
Interest expenses
Fair value adjustment currency forwards
Amortisation of borrowing costs
Other financial expenses
Currency loss 1)
Total financial expenses
Net financial items
0.0
0.0
0.0
0.0
0.0
(83.4)
0.0
0.0
0.0
(83.4)
0.3
0.0
0.0
0.3
0.0
0.0
0.0
0.0
0.0
0.0
0.3
(50.3)
(133.7)
(83.4)
(50.3)
(57.0)
43
2014
2013
76.4
76.4
(83.4)
(5.3)
(7.7)
(96.4)
0.0
0.0
0.0
0.0
(37.3)
0.0
(5.3)
(7.7)
0.0
23.3
23.3
(19.0)
(4.6)
(8.2)
(31.8)
Total
0.3
0.0
76.4
76.7
(37.3)
(83.4)
(5.3)
(7.7)
0.0
44
Year ended 31 Dec 2013
Interest income
Fair value adjustment currency forwards
Currency gain 1)
Total financial income
Interest expenses
Fair value adjustment currency forwards
Amortisation of borrowing costs
Other financial expenses
Currency loss 1)
Total financial expenses
Net financial items
Loans and
receivables
Fair value
through
profit and loss
Financial
liabilities
measured at
amortised cost
0.0
0.0
0.0
0.0
0.0
(19.0)
0.0
0.0
0.0
(19.0)
0.0
0.0
0.0
0.0
(34.2)
0.0
(4.6)
(8.2)
0.0
(47.0)
Total
1.3
0.0
23.3
24.6
(34.2)
(19.0)
(4.6)
(8.2)
0.0
(66.0)
(19.0)
(47.0)
(41.4)
1.3
0.0
0.0
1.3
0.0
0.0
0.0
0.0
0.0
0.0
1.3
1) Currency effects (gain/loss) are excluded from the category break-down, but added to the total for net effect.
NOTE 12: TAXES
Taxes in income statement:
Taxes payable
Change in deferred tax
Total taxes in income statement
Temporary differences:
Exit from Norwegian tonnage tax system
Non-current assets
Current assets
Current liabilities
Basis for deferred tax
Recognised deferred tax
Deferred tax 1 January
Change in deferred tax in income statement
Translation difference
Deferred tax 31 December
Payable tax as at 31 December
2014
2013
15.8
(3.3)
12.5
48.5
(2.2)
0.0
3.3
49.7
13.4
20.1
(3.3)
(3.4)
13.4
17.3
10.3
(5.7)
4.6
74.1
(3.3)
(0.3)
3.9
74.5
20.1
28.1
(5.7)
(2.3)
20.1
18.3
45
The cumulated tax loss carried forward in Cyprus as at 31 December 2014 and 2013 amounts to
USD 63.1 million and USD 37.4 million respectively. The tax rate in Cyprus is 12.5%. No deferred tax asset is
recognised in respect of this tax loss carried forward. The tax loss for each year may be carried forward for
five years.
The majority of the Group’s vessels are subject to taxation based on the special rules for taxation of shipping
and offshore companies in Singapore. Profit from these charters is not taxable to Singapore, but the
company pays tax deducted at source in some of the countries in which it operates.
The deferred tax liability related to the enforced departure of the vessel business from the Norwegian
tonnage tax system effective 1 January 2006, was initially calculated to NOK 780 million equivalent to
USD 115 million applying the exchange rate prevailing on this date. This liability is paid at a rate of
20 per cent annually on the outstanding balance. The tax rate in Norway is currently 27%.
NOTE 13: EARNINGS PER SHARE
Earnings per share are calculated by dividing net profit by the weighted average number of ordinary shares
outstanding during the year. There are no dilutive share options.
Net profit
Weighted average number of outstanding shares (1 000)
Basic earnings per share
2014
2013
178.8
199.1
235 973
233 806
0.76
0.85
Weighted average number of outstanding and potential shares (1 000)
235 973
233 806
Diluted earnings per share
0.76
0.85
NOTE 14: DIVIDENDS
Dividend declared during the year
Total dividends declared
Dividends per share (NOK)
NOTE 15: SHARE CAPITAL AND SHAREHOLDER INFORMATION
Issued and paid number of shares at 31 December
Authorised number of shares at 31 December
Nominal value at 31 December
Number of shareholders at 31 December
2014
2013
125.8
125.8
139.6
139.6
3.29
3.47
2014
2013
235 973 059
235 973 059
275 924 148
275 924 148
EUR 0.25
EUR 0.25
4 335
4 447
46
On 15 March 2013, Prosafe completed a private placement of 13 000 000 new shares directed towards
Norwegian and international institutional investors. The placement was made at a subscription price of
NOK 58 per share. Net proceeds amounted to USD 128.9 million. The share capital was increased by
EUR 3.3 million.
On 14 May 2013, the general meeting approved the cancellation of 6 963 731 ordinary shares held by
Prosafe as treasury shares. After the cancellation, the issued share capital is made up of 235 973 059 shares
of EUR 0.25 each.
Largest shareholders/groups of shareholders at 31.12.2014
No of shares
Percentage
State Street Bank (nom.)
RBC Investor Services Trust (nom.)
State Street Bank (nom.)
Folketrygdfondet
FLPS
Pareto Aksje Norge
JP Morgan Chase Bank (nom.)
Clearstream Banking (nom.)
Pareto Aktiv
Lazard Freres Banque (nom.)
Nordnet Bank AB (nom.)
Schroder International Selection
BNP Paribas (nom.)
Six Sis AG (nom.)
JP Morgan Chase Bank (nom.)
State Street Bank (nom.)
KLP AksjeNorge Indeks
DNB Norge
State Street Bank (nom.)
47 075 587
17 896 658
15 023 778
9 585 958
9 383 800
8 262 534
5 969 541
5 446 943
3 510 837
2 699 319
2 501 164
2 388 198
2 384 260
2 307 701
2 274 698
2 234 641
2 159 279
2 139 254
1 749 524
19.9 %
7.6 %
6.4 %
4.1 %
4.0 %
3.5 %
2.5 %
2.3 %
1.5 %
1.1 %
1.1 %
1.0 %
1.0 %
1.0 %
1.0 %
0.9 %
0.9 %
0.9 %
0.7 %
Total 20 largest shareholders/groups of shareholders
144 993 674
61.4 %
NOTE 16: INTEREST-BEARING DEBT
As of 31 December 2014, Prosafe’s interest-bearing debt totalled USD 830.1 million. Loans secured by
mortgages (credit facility) accounted for USD 440.0 million of this total and unsecured bond loans accounted
for about USD 390.1 million.
47
Credit facility
Bond loans
Total interest-bearing debt
Debt in NOK
Debt in USD
Total interest-bearing debt
Long-term interest-bearing debt
Current interest-bearing debt
Total interest-bearing debt
2014
2013
440.0
390.1
830.1
390.1
440.0
830.1
830.1
0.0
830.1
418.0
361.6
779.6
361.6
418.0
779.6
779.6
0.0
779.6
USD 1 100 million credit facility
In August 2011, the company secured a new credit facility. The credit facility has a total availability of USD
1 100 million and a maturity of six years. After the sale of the Safe Esbjerg, the availability under the credit
facility is reduced semi-annually with USD 68 million. As of 31 December 2014, the availability under the
credit facility totalled USD 655 million (USD 215 million undrawn credit lines). The annual interest rate on
the credit facility is 1.875 per cent above 3-month LIBOR.
Financial covenants:
Liquidity: Minimum USD 65 million (including up to USD 25 million of total commitments available for
utilisation)
Leverage ratio: Total debt/EBITDA must not exceed 4.5
Value adjusted equity ratio: Minimum 35 per cent
Collateral maintenance: Market value vessels/total commitments above 175 per cent.
USD 420 million credit facility
In December 2012, the company secured a new credit facility. The credit facility, which has a maturity of
five years, consists of two tranches of USD 210 million (USD 420 million in total) that can be drawn upon
delivery of the two new builds, Safe Boreas and Safe Zephyrus. The availability under each tranche is reduced
quarterly with USD 4.375 million, starting 3 months after delivery of the tranche security. The annual
interest rate on the credit facility is 2.95 per cent above 3-month LIBOR.
Financial covenants:
Liquidity: Minimum USD 65 million (including up to USD 25 million of total commitments available for
utilisation)
Leverage ratio: Net debt/EBITDA must not exceed 4.5
Value adjusted equity ratio: Minimum 35 per cent
Collateral maintenance: Market value vessels/total outstanding loans above 135 per cent
48
USD 288 million credit facility
In May 2014, the company secured a new credit facility. The credit facility, which has a maturity of seven
years, consists of two tranches of USD 144 million (USD 288 million in total) that can be drawn upon delivery
of the two new builds, Safe Notos and Safe Eurus. The availability under each tranche is reduced quarterly
with USD 3 million, starting 3 months after delivery of the tranche security. The annual interest rate on the
credit facility is 2.25 per cent above 3-month LIBOR.
Financial covenants:
Liquidity: Minimum USD 65 million (including up to USD 25 million of total commitments available for
utilisation)
Leverage ratio: Net debt/EBITDA must not exceed 4.5
Value adjusted equity ratio: Minimum 35 per cent
Collateral maintenance: Market value vessels/total outstanding loans above 125 per cent.
Bond loans
The bond debt is divided into five loans of NOK 500 million maturing February 2016 (PRS07), NOK 500
million maturing February 2017 (PRS08), NOK 500 million maturing January 2020 (PRS09), NOK 700 million
maturing October 2018 (PRS10) and NOK 700 million maturing September 2019 (PRS11). All bonds are listed
on the Oslo Stock Exchange.
Loan
PRS07
PRS08
PRS09
PRS10
PRS11
Principal
Outstanding
NOK 500 million
NOK 500 million
NOK 500 million
NOK 500 million
NOK 500 million
NOK 500 million
NOK 700 million
NOK 700 million
NOK 700 million
NOK 700 million
Maturity
Feb 2016
Feb 2017
Jan 2020
Oct 2018
Sep 2019
Interest
Loan margin
3m Nibor
3m Nibor
3m Nibor
3m Nibor
3m Nibor
3.50%
3.75%
3.75%
2.95%
3.10%
Bond loans - Financial covenants
PRS 07/08/09/10/11
Value adjusted equity ratio: Minimum 30 per cent
Leverage ratio: Total debt/EBITDA must not exceed 5.0
As of 31 December 2014, the Group was in compliance with all covenants on interest-bearing debt.
3 month LIBOR is the basis for interests on the loans denominated in USD, whereas 3 month NIBOR is the
basis for interests on the loans denominated in NOK. On average, LIBOR interest fixings were higher and
NIBOR interest fixings were lower in 2014 compared to 2013.
NOTE 17: OTHER CURRENT LIABILITIES
Various accrued costs
Accrued interest costs
Deferred income
Public taxes
Provision share option costs
Other interest-free current liabilities
Total interest-free current liabilities
49
2014
2013
53.1
37.7
3.8
1.2
0.4
0.0
0.0
3.5
3.9
0.3
0.4
0.4
58.5
46.1
NOTE 18: MORTGAGES AND GUARANTEES
As of 31 December 2014, Prosafe’s interest-bearing debt secured by mortgages totalled USD 440 million.
The debt was secured by mortgages on shares in Prosafe Rigs Pte Ltd and Prosafe Offshore Pte Ltd, and the
accommodation vessels owned by these entities. The book value of the mortgaged fleet was
USD 1 027.3 million. Prosafe had issued parent company guarantees to customers on behalf of its
subsidiaries in connection with the award and performance of contracts.
As of 31 December 2013, Prosafe’s interest-bearing debt secured by mortgages totalled USD 418 million.
The debt was secured by mortgages on shares in Prosafe Rigs Pte Ltd, and the accommodation vessels
owned by this entity. The book value of the mortgaged fleet was USD 946.9 million. Prosafe had issued
parent company guarantees to customers on behalf of its subsidiaries in connection with the award and
performance of contracts.
50
NOTE 19: FINANCIAL ASSETS AND LIABILITIES
As of 31 December 2014, the group had financial assets and liabilities in the following categories:
Year ended 31 Dec 2014
Loans and
receivables
Fair value
through
profit and
loss
Financial
liabilities
measured at
amortised
cost
Book value
Fair value
Cash and deposits
Accounts receivable
Other current assets
Total financial assets
Credit facility 1100 million 1)
Bond loan PRS07 2)
Bond loan PRS08 3)
Bond loan PRS09 4)
Bond loan PRS10 5)
Bond loan PRS11 6)
Fair value interest swaps
Fair value currency forwards
Accounts payable
Other current liabilities
Total financial liabilities
122.4
83.9
32.4
238.7
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
39.0
87.9
0.0
0.0
0.0
0.0
0.0
0.0
122.4
83.9
32.4
238.7
122.4
83.9
32.4
238.7
440.0
440.0
432.0
67.3
67.3
67.3
94.2
94.2
0.0
0.0
18.6
56.9
67.3
67.3
67.3
94.2
94.2
39.0
87.9
18.6
56.9
66.6
65.4
59.2
84.7
89.8
39.0
87.9
18.6
56.9
126.9
905.8
1 032.7
1 000.1
1) Fair value reflects current market conditions with the assumption that the credit margin would increase
from the actual 187.5 basis points to 200 basis points. The net present value of the interest advantage,
discounted with USD 5-year swap rate, is around USD 8 million.
2,3,4,5,6) Fair value reflects current market conditions based on last trade prices as of 31 December 2014:
PRS07 99.000, PRS08 97.146, PRS09 87.955, PRS10 89.895, PRS11 95.313.
The management assessed the cash and deposits, accounts receivables, other current assets, accounts
payable and other current liabilities to approximate their carrying amounts largely due to the short-term
maturities of these instruments.
The Group enters into derivative financial instruments with various counterparties, principally financial
institutions with investments grade credit ratings. Derivatives valued using valuation techniques with
market observable inputs are mainly interest rate swaps and foreign exchange forward contracts. The most
frequently applied valuation techniques include forward pricing and swap models, using present
value calculations. The models incorporate various inputs including the credit quality of counterparties,
foreign exchange spot and forward rates, interest rate and forward rate curves. All derivative contracts are
fully cash collateralised.
51
Assets measured at fair value in the balance sheet
The Group uses the following hierarchy for determining and disclosing the fair value of financial instruments
by valuation technique:
Level 1 - Quoted prices (unadjusted) in active markets for identical assets or liabilities
Level 2 - Inputs other than quoted prices included within level 1 that are observable for assets or liabilities,
either directly (i.e. as prices) or indirectly (i.e. derived from prices)
Level 3 - Inputs for assets or liabilities that are not based on observable market data (unobservable inputs).
The currency forwards and interest swaps are valued based on current exchange rates and forward curves.
Year ended 31 Dec 2014
Fair value currency forwards
Fair value interest swaps
Total financial assets/liabilities
Total
(87.9)
(39.0)
(126.9)
Level 1
0.0
0.0
0.0
Level 2
(87.9)
(39.0)
(126.9)
Level 3
0.0
0.0
0.0
As of 31 December 2013, the group had financial assets and liabilities in the following categories:
Year ended 31 Dec 2013
Cash and deposits
Accounts receivable
Other current assets
Total financial assets
Credit facility 1100 million 1)
Bond loan PRS07 3)
Bond loan PRS08 4)
Bond loan PRS09
Bond loan PRS10
Fair value currency forwards
Fair value interest swaps
Accounts payable
Other current liabilities
Total financial liabilities
Loans and
receivables
Fair value
through
profit and loss
Financial
liabilities
measured at
amortised cost Book value
Fair value
113.4
55.2
20.0
188.6
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.9
6.5
0.0
0.0
7.4
0.0
0.0
0.0
0.0
113.4
55.2
20.0
188.6
113.4
55.2
20.0
188.6
418.0
418.0
414.0
82.2
82.2
82.2
82.2
82.2
82.2
84.3
84.9
84.0
115.1
115.1
115.1
0.0
0.0
4.7
41.6
826.0
0.9
6.5
4.7
41.6
833.4
0.9
6.5
4.7
41.6
836.0
1) Fair value reflects current market conditions with the assumption that the credit margin would increase from
the actual 187.5 basis points to 200 basis points. The net present value of the interest advantage, discounted with
USD 5-year swap rate, is around USD 4 million.
2,3,4,5) Fair value reflects current market conditions based on prices estimated by the Norwegian Securities
Dealers Association as of 31 December 2013: PRS07 102.50, PRS08 103.25, PRS09 102.25, PRS10 100.00.
52
Year ended 31 Dec 2013
Fair value currency forwards
Fair value interest swaps
Total financial assets/liabilities
Total
(6.5)
(0.9)
(7.4)
Level 1
Level 2
Level 3
0.0
0.0
0.0
(6.5)
(0.9)
(7.4)
0.0
0.0
0.0
NOTE 20: FINANCIAL RISKS AND DERIVATIVE FINANCIAL INSTRUMENTS
Prosafe operates on a global basis with cash flows and financing in various currencies. This means that
the Group is exposed to market risks related to fluctuations in exchange rates and interest rates. Prosafe’s
functional currency is USD, and financial risk exposure is managed with financial instruments.
Currency risk
Prosafe is exposed to currencies other than USD associated with operating expenditure, capital expenditure,
debt financing, tax liabilities and cash and deposits. Operating expenses are mainly denominated in GBP
and NOK, but depending on the country of operation and the nationality of the crew, operating expenses
can also be in EUR, USD and BRL. Capital expenditure in terms of general maintenance will typically be
denominated in GBP and NOK. Value enhancing investments, such as upgrades and/or refurbishment
programmes, will, depending on the origin of equipment and the location of the yard, tend to be in USD,
GBP and EUR. Debt financing consists of both USD and NOK denominated liabilities, while tax liabilities
predominantly consist of a NOK denominated deferred tax associated with the exit from the Norwegian
tonnage tax system effective 1 January 2006. Cash and deposits are mainly denominated in USD, GBP, EUR
and NOK.
Operating expenditure and maintenance related capital expenditure in other currencies than USD is
typically currency-hedged using forward contracts with a time horizon of 9-12 months, while planned
value enhancing capital expenditure is hedged independent of time horizon. Interest payments related to
debt financing in other currencies than USD are typically treated the same way, with a time horizon of 9-12
months, while downpayments are hedged independent of time horizon. Payable tax related to the deferred
tax liability is also currency-hedged with a time horizon of 9-12 months. Cash and deposits in currencies
other than USD, function as natural hedges for any GBP, EUR and NOK liabilities.
As of 31 December 2014, Prosafe had entered into the following forward exchange contracts:
- Forward purchase of NOK 3 980 million against USD 617 million at a weighted average of USDNOK 6.45
- Forward purchase of GBP 53 million against USD 82 million at a weighted average GBPUSD of 1.55
Fair value of forward exchange contracts are estimated using quoted market prices. The fair value estimates
the gain or loss that would have been realised if the contracts had been closed out at the balance sheet date.
As of 31 December 2014, the fair value and maximum credit risk exposure of forward exchange contracts
was USD 87.9 million negative.
Currency risk - sensitivity
The sensitivity analysis is based on a reasonably possible change in the relevant exchange rates and reflects
the main effects on profit or loss and equity assuming that the change had occurred at the balance sheet
date. A 10% strengthening/weakening of the USD against NOK and GBP will have the following effects.
Exposures to foreign currency changes for all other currencies are not material.
53
USD +10%
Re-valuation cash and deposits
Re-valuation currency forwards
Re-valuation NOK bonds
Total
USD -10%
Re-valuation cash and deposits
Re-valuation currency forwards
Re-valuation NOK bonds
Total
2014
2013
Income
statement effect
Equity
effect
Income
statement effect
Equity
effect
(5.0)
(60.0)
29.0
(36.0)
5.0
71.0
(35.0)
41.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
(2.5)
(35.0)
33.0
(4.5)
2.5
38.0
(39.0)
1.5
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
Interest rate risk
As of 31 December 2014, Prosafe’s interest-bearing debt totalled USD 830.1 million. Loans secured by
mortgages (credit facility) accounted for USD 440.0 million of this total and unsecured bond loans accounted
for USD 390.1 million.
Interest on debt is in principle floating, but has been hedged to reduce the variability of cash flows in the
interest payments through the use of interest rate swap agreements. Prosafe evaluates the hedge profile in
relation to the repayment schedule of its loans, the company’s portfolio of contracts, cash flow and cash in
hand. The proportion hedged will normally lie between 75 and 100 per cent for all loan terms.
Hedge accounting
The objective of the interest rate hedging is to reduce the variability of cash flows in the interest payments
for the floating-rate debt (i.e. cash flow hedging). Changes in the cash flows of the interest rate swaps are
expected to offset the changes in cash flows (i.e. changes in interest payments) attributable to fluctuations
in the benchmark interest rate on the part of the floating-rate debt that is hedged. At the inception of the
hedge and in subsequent periods, expected effectiveness during the subsequent quarter is demonstrated
based on a comparison of the change in fair value of the actual swap designated as the hedging instrument
and the change in fair value of a hypothetical swap (dollar offset). If the terms of the swap and debt differ
(notional amount, interest rate reset dates, maturity/expiration date, underlying index) or the counterparty’s
ability to honour its obligation under the swap change during the life of the hedge, the measurement
of hedge ineffectiveness will be based on a comparison of the change in fair value of the actual swap
designated as the hedging instrument and the change in fair value of a hypothetical swap (dollar offset).
Changes in fair value for interest swaps treated as effective hedges (hedge accounting) will affect other
comprehensive income, while interest swaps not treated as effective hedges (not hedge accounting) will
affect equity through the income statement. Interest swaps treated as effective hedges have been highly
effective, and no ineffectiveness has been recognised in the income statement.
As of 31 December 2014, Prosafe’s hedging agreements totalled USD 1 800 million (including
USD 750 million with forward start):
54
Notional amount
Fixed rate
Maturity
Swap type
Fair value
USD 100 million
USD 100 million
USD 100 million
USD 150 million
USD 150 million
USD 150 million
USD 150 million
USD 150 million
USD 150 million
USD 150 million
USD 150 million
USD 150 million
USD 150 million
Total
2.0450 %
2.0600 %
1.2650 %
1.7780 %
2.1000 %
1.6120 %
1.6624 %
1.3625 %
2.2325 %
2.7195 %
2.3265 %
3.6865 %
3.8620 %
2015
2015
2016
2017
2017
2017
2019
2018
2020
2020
2020
2021
2022
Bullet
Bullet
Bullet
Bullet
Bullet
Bullet
Bullet
Bullet
Bullet
Bullet
Bullet
Bullet
Bullet
(1.0) hedge accounting
(1.6) hedge accounting
(0.9) hedge accounting
(2.7) hedge accounting
(3.8) hedge accounting
(2.0) hedge accounting
0.5
0.7
hedge accounting
hedge accounting
(3.5) hedge accounting
(4.6) hedge accounting
(1.6) hedge accounting
(8.9) hedge accounting
(9.6) hedge accounting
(39.0)
Fair value of interest rate swap agreements are estimated using quoted market prices. The fair value
estimates the gain or loss that would have been realised if the contracts had been closed out at the balance
sheet date. As of 31 December 2014, the fair value and maximum credit risk exposure of interest rate swap
agreements was USD 39 million negative.
Interest rate risk - sensitivity
The sensitivity analysis is based on a reasonably possible change in the relevant forward curves and reflects
the main effects on profit or loss and equity assuming that the change had occurred at the balance sheet
date. A forward curve shift of ±100bps is applied in the analysis.
Forward curve +100bps
Re-valuation interest rate swaps
Total
Forward curve -100bps
Re-valuation interest rate swaps
Total
2014
2013
Income
statement effect
Equity
effect
Income
statement effect
0.0
0.0
0.0
0.0
60.1
60.1
(60.1)
(60.1)
0.0
0.0
0.0
0.0
Equity
effect
40.0
40.0
(40.0)
(40.0)
55
Changes in other comprehensive income related to financial instruments
As of 31 December 2014, the following changes in other comprehensive income were related to financial
instruments:
Re-valuation interest rate swaps
Ineffectiveness
Total
Change
2014
(37.1)
0.0
(37.1)
(38.0)
0.0
(38.0)
2013
(0.9)
0.0
(0.9)
Credit risk
The Gulf of Mexico contracts contain a cancellation clause allowing the ultimate customer, Pemex, to cancel
the agreement with 30 days notice without compensation, if the Mexican authorities annul financing of
the project. These clauses reflect the crisis that Mexico saw during the 1980s. Prosafe takes the view that
a cancellation on this basis is only likely if the Mexican economy suffers another deep and lengthy crisis.
Prosafe does not regard this as a realistic scenario, given the high present and planned levels of activity in
the Gulf of Mexico, and the importance of oil production to Mexico’s economic development.
In line with industry practice, other contracts normally contain clauses which give the customer an
opportunity for early cancellation under specified conditions. Providing Prosafe has not acted negligently,
however, the effect on results in such cases will normally be wholly or partly offset by a financial settlement
in the company’s favour. Following a potential notice of convenience termination, the customer will have to
pay Prosafe a substantial part of the remaining contract value.
Credit assessment of yards, sub-contractors and equipment suppliers is part of Prosafe’s project evaluations
and risk analyses.
The counterparty risk is in general limited when it comes to Prosafe’s clients, since these are typically major
oil companies and national oil companies with strong balance sheets and high credit ratings.
As of 31 December 2014, there is no objective evidence that accounts receivable is impaired, and no
impairment loss has been recognised in the income statement.
Liquidity risk
Under the existing credit facility agreements, the Group is required to maintain a minimum liquidity reserve
of USD 65 million (including up to USD 25 million of total commitments available for utilisation). Prosafe
makes active use of a system for planning and forecasting the development of its liquidity, and utilises
scenario analyses to secure stable and sound development.
56
As of 31 December 2014, the Group’s main financial liabilities had the following remaining contractual
maturities:
2015
2016
2017
2018
2019 →
Interest-bearing debt
(downpayments/credit facility reductions)
Interest-bearing debt
(interest including interest swaps)
Accounts payable and other current liabilities
Total
0.0
67.3
382.3
94.2
286.3
56.9
68.3
70.5
67.0
100.0
18.6
75.5
0.0
0.0
0.0
0.0
135.6
452.8
161.2
386.3
As of 31 December 2014, the availability under the credit facility secured in 2011 totalled USD 655 million
(USD 215 million undrawn credit lines), meaning that the first actual downpayment on the credit facility will
not occur until 2016.
As of 31 December 2013, the Group’s main financial liabilities had the following remaining contractual
maturities:
2014
2015
2016
2017
2018 →
Interest-bearing debt
(downpayments/credit facility reductions)
Interest-bearing debt
(interest including interest swaps)
Accounts payable and other current liabilities
Total
0.0
136.0
82.2
364.2
197.2
44.7
59.9
70.4
73.2
120.0
4.7
49.4
0.0
0.0
0.0
0.0
195.9
152.6
437.4
317.2
As of 31 December 2013, the availability under the credit facility totalled USD 791 million (USD 373 million
undrawn credit lines), meaning that the first actual downpayment on the credit facility will not occur until
2015.
Capital management
The primary objective of the Group’s capital management is to ensure that it maintains a healthy capital
structure in line with economic conditions. Prosafe manages the total of shareholder’s equity and long term
debt as their capital. Prosafe’s main tool to assess its capital structure is the leverage ratio, which is calculated
by dividing total interest-bearing debt (excluding debt related to newbuilds) including bank guarantees,
by EBITDA over the last 12 months. To stay in compliance with financial covenants, the leverage ratio is not
allowed to exceed 4.5. At 31 December 2014 (2013), the leverage ratio was 1.7 (1.7).
Credit facility
Bond loan PRS07
Bond loan PRS08
Bond loan PRS09
Bond loan PRS10
Bond loan PRS11
Total interest-bearing debt
Interest-bearing debt related to newbuilds
Bank guarantees
EBITDA last 12 months
Leverage ratio
57
2014
2013
440.0
418.0
67.3
67.3
67.3
94.2
94.2
830.1
311.8
0.0
312.6
1.7
82.2
82.2
82.2
115.0
0.0
779.6
248.9
0.0
306.6
1.7
Accounts receivables
31 December 2014
31 December 2013
Total
83.9
55.2
Not due
< 30 days 30 - 60 days
61-90 days
> 90 days
60.0
30.2
15.8
24.7
8.1
0.2
0.0
0.1
0.0
0.0
Tax risk
The accommodation vessel business is international by nature and therefore Prosafe is exposed to potential
tax changes in a number of jurisdictions.
NOTE 21: CASH AND DEPOSITS
Restricted cash deposits (withholding personal income tax)
Free cash and short-term deposits
Total cash and deposits
NOTE 22: OTHER CURRENT ASSETS
Receivables
Prepayments
Stock
Other current assets
Total other current assets
2014
2013
0.2
122.2
122.4
0.1
113.3
113.4
2014
2013
16.7
5.8
0.8
15.7
39.0
3.3
3.2
0.7
16.7
23.9
58
NOTE 23: RELATED PARTY DISCLOSURES
The financial statements comprise the parent company, Prosafe SE, and the subsidiaries listed below.
Company name
Prosafe AS
Prosafe Management AS
Prosafe Offshore AS
Prosafe (UK) Holdings Limited
Prosafe Rigs Limited
Prosafe Offshore Limited
Prosafe Rigs (Cyprus) Limited
Prosafe Holding Limited
Consafe Offshore AB
Prosafe Offshore Accommodation Ltd
Prosafe Rigs Pte. Ltd.
Prosafe Offshore Pte. Limited
Prosafe Offshore Employment Company Pte. Limited
Prosafe Offshore Services Pte. Ltd.
Prosafe Offshore Asia Pacific Pte. Ltd.
Prosafe Offshore S.a.r.l.
Prosafe Offshore Sp.zo.o.
Prosafe Offshore BV
Prosafe Services Maritimos Ltda
Country of
incorporation
Norway
Norway
Norway
United Kingdom
United Kingdom
United Kingdom
Cyprus
Cyprus
Sweden
Jersey
Singapore
Singapore
Singapore
Singapore
Singapore
Luxembourg
Poland
Netherlands
Brazil
Ownership
Voting share
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
Transactions and outstanding balances within the Group have been eliminated in full.
Shares owned by senior officers and directors at 31 December 2014:
(includes shares owned by wholly-owned companies)
Senior officers:
Shares
Synthetic options
Karl Ronny Klungtvedt - CEO
Robin Laird - Deputy CEO
Sven Børre Larsen - CFO
Ronny Johan Langeland - chair
Christian Brinch - deputy chair
Roger Cornish - director
Carine Smith Ihenacho - director
Nancy Ch. Erotocritou - director
Tasos Ziziros - director
40 000
30 000
30 000
72 500
58 000
21 000
35 000
0
7 000
0
0
0
59
NOTE 24: CONTINGENT LIABILITIES AND CAPITAL COMMITMENTS
On 14 December 2011, Prosafe announced that the company has entered into a turnkey contract for the
construction of a semi-submersible accommodation vessel at Jurong Shipyard Pte Ltd. in Singapore. The vessel,
Safe Boreas, was delivered from the yard in January 2015 and is currently in transit to Norway, where it will
commence a six-month contract with Lundin for support in connection with the hook-up and commissioning
of the Edvard Grieg platform in late April or early May 2015. 20 per cent of the yard cost was paid at signing of
the contract and is included within tangible assets (note 9), while the remaining 80 per cent was paid in January
2015.
On 19 November 2012, Prosafe announced that the company has entered into a turnkey contract for the
construction of a second semi-submersible accommodation vessel at Jurong Shipyard Pte Ltd. in Singapore. The
vessel, Safe Zephyrus, will be ready for operation in 2015. 20 per cent of the yard cost was paid at signing of the
contract and is included within tangible assets (note 9), while the remaining 80 per cent will be paid at delivery.
On 22 November 2013, Prosafe announced that the company has entered into a turnkey contract for the
construction of two semi-submersible accommodation vessels with COSCO (Qidong) Offshore Co., Ltd. in China.
The vessels are scheduled for operation in 2016. 20 per cent of the yard cost was paid at signing of the contract
and is included within tangible assets (note 9), while the remaining 80 per cent will be paid at delivery.
Safe Bristolia sustained damage to lifeboats after experiencing bad weather during work at the Everest field
in UK in early October 2014. Operations were suspended, and the vessel was brought to a shipyard in Norway
to carry out repair work. A provision of USD 7.5 million has been made in the fourth quarter accounts to cover
extra-ordinary expenses related to the Safe Bristolia incident.
NOTE 25: EVENTS AFTER THE BALANCE SHEET DATE
USD 1 300 million credit facility
In February 2015, the company secured a new credit facility for the refinancing of the existing USD 1 100
million and USD 420 million credit facilities. The credit facility, which has a maturity of seven years, consists of
two term loan tranches of USD 800 million (drawn on closing) and USD 200 million (drawn on delivery of the
Safe Zephyrus) and a revolver loan tranche of USD 300 million. The availability under the term loan tranches is
reduced semi-annually, starting 6 months after delivery of the tranche security, with an amount that reduces
the term loan commitments to zero by the final maturity. The annual interest rate on the credit facility is 1.90
per cent above 3-month LIBOR for the first five years and 2.15 per cent above 3-month LIBOR thereafter.
Financial covenants:
Liquidity: Minimum USD 65 million (including up to USD 25 million of total commitments available for
utilisation)
Leverage ratio: Net debt/EBITDA must not exceed 5.0 (4.5 after 3rd anniversary)
Value adjusted equity ratio: Minimum 35 per cent
Collateral maintenance: Market value vessels/total outstanding loans above 150 per cent
Delivery of Safe Boreas
The new build, Safe Boreas, was delivered from Jurong Shipyard in Singapore in January 2015. The vessel is
scheduled to commence a six-month contract with Lundin for support in connection with the hook-up and
commissioning of the Edvard Grieg platform in late April or early May.
60
ACCOUNTS
PROSAFE SE
INCOME STATEMENT - PROSAFE SE
(USD 1 000)
Operating revenues
Operating expenses
Depreciation
Operating profit
Income from investments in subsidiaries
Other financial income
Impairment of shares in subsidiaries
Other financial expenses
Net financial items
Profit before taxes
Taxes
Net profit
61
Note
2014
2013
2
3
5
4, 5
7
4, 5
5
6
0
0
(11 950)
(11 895)
(10)
(11 960)
739 646
140 817
(483 609)
(198 649)
198 205
186 245
(1)
(14)
(11 909)
24 773
73 385
0
(128 161)
(30 004)
(41 912)
(3)
186 244
(41 916)
Attributable to the owners of the company
186 244
(41 916)
STATEMENT OF COMPREHENSIVE INCOME - PROSAFE SE
(USD 1 000)
Net profit for the year
Other comprehensive income to be reclassified to profit or loss in
subsequent periods
Net gain/loss on cash flow hedges
Re-measurement losses on defined benefit plan
Income tax effect on components of comprehensive income
Net other comprehensive income to be reclassified to profit or
loss in subsequent periods
2014
2013
186 244
(41 916)
(38 043)
0
0
35 358
(1 380)
0
(38 043)
33 978
Total comprehensive income for the year, net of tax
148 201
(7 938)
Attributable to the owners of the company
148 201
(7 938)
62
STATEMENT OF FINANCIAL POSITION - PROSAFE SE
(USD 1 000)
ASSETS
Tangible assets
Shares in subsidiaries
Intra-group long-term receivables
Total non-current assets
Cash and deposits
Other current assets
Total current assets
Total assets
EQUITY AND LIABILITIES
Share capital
Share premium reserve
Total paid-in equity
Retained earnings
Total retained earnings
Total equity
Interest-bearing long-term debt
Intra-group long-term debt
Derivatives
Interest-free long-term liabilities
Total long-term liabilities
Derivatives
Intra-group current liabilities
Other interest-free current liabilities
Total current liabilities
Total equity and liabilities
Larnaca, 17 March 2015
Note
31/12/14
31/12/13
3
7
27
32
2 335 450
2 499 033
12, 14
547 320
135 999
14
8, 14
9
2 882 797
2 635 063
17 285
13 747
31 032
9 414
14 362
23 776
2 913 829
2 658 839
65 894
745 109
811 003
952 836
952 836
65 894
745 109
811 003
930 409
930 409
1 763 839
1 741 412
10
830 142
779 622
12, 15
14
14, 15
0
10 003
38 980
2 081
937
2 533
871 203
793 095
14
74 675
6 505
12, 14, 15
11, 14, 15
197 838
112 026
6 275
5 800
278 787
124 332
2 913 829
2 658 839
Ronny J. Langeland
Non-executive Chairman
Christian Brinch
Non-executive Deputy Chairman
Roger Cornish
Non-executive Director
Carine Smith Ihenacho
Non-executive Director
Tasos Ziziros
Non-executive Director
Nancy Ch. Erotocritou
Non-executive Director
CASH FLOW STATEMENT - PROSAFE SE
(USD 1 000)
Note
2014
2013
63
Cash flow from operating activities
Profit before taxes
Unrealised currency loss / (gain) on long-term debt
Depreciation
Impairment shares in subsidiaries
Interest income
Interest expenses
Change in working capital
Taxes paid
Other items from operating activities
Net cash flow from operating activities
Cash flow from investing activities
Acquisition of shares
Acquisition of tangible fixed assets
Change in intra-group balances
Interest received
Net cash flow from investing activities
Cash flow from financing activities
Proceeds from issue of share capital
New interest-bearing long-term debt
Repayment of interest-bearing long-term debt
Dividends paid
Interest paid
Net cash flow from financing activities
Net cash flow
Cash and deposits at 1 January
Cash and deposits at 31 December
3
6
3
12
9
10
10
186 245
(83 701)
10
483 609
(5 974)
45 309
1 090
(1)
67 704
694 292
(320 018)
0
(335 514)
5 974
(649 558)
(41 912)
(27 050)
14
0
(5 223)
38 836
3 578
(3)
20 090
(11 672)
0
(2)
50 040
5 223
55 261
0
332 220
128 880
404 100
(198 000)
(407 800)
(125 774)
(139 634)
(45 309)
(36 863)
(38 836)
(53 290)
7 871
9 414
17 285
(9 700)
19 114
9 414
64
STATEMENT OF CHANGES IN EQUITY - PROSAFE SE
(USD 1 000)
Share
capital
Own
shares
Share
premium
Retained
earnings
Cash flow
hedges
Total
equity
Equity at 31 December 2012
63 903
(48 901)
620 496 1 151 883
(27 277) 1 760 104
Net profit
Other comprehensive income
Total comprehensive income 1)
Dividends
0
0
0
0
Issue of share capital
4 267
0
0
0
0
0
0
0
0
0
(41 916)
(1 380)
(43 296)
(139 634)
124 613
0
Cancellation of own shares
(2 276)
48 901
0
(46 625)
0
(41 916)
35 358
35 358
0
0
0
33 978
(7 938)
(139 634)
128 880
0
Equity at 31 December 2013
65 894
Net profit
Other comprehensive income
Total comprehensive income 1)
Dividends
0
0
0
0
Equity at 31 December 2014
65 894
0
0
0
0
0
0
745 109
922 328
8 081
1 741 412
0
0
0
0
186 244
0
186 244
0
(38 043)
(38 043)
186 244
(38 043)
148 201
(125 774)
0
(125 774)
745 109
982 798
(29 962) 1 763 839
1) Total comprehensive income is attributable to the owners of the company
65
NOTES - PROSAFE SE
All figures in USD 1 000 unless otherwise stated.
NOTE 1: ACCOUNTING POLICIES
The financial statements have been prepared in accordance with the International Financial Reporting
Standards (IFRS) endorsed by the European Union (EU) and the requirements of the Cyprus Companies
Law, Cap 113. The accounting policies applied to the consolidated accounts have also been applied to the
parent company, Prosafe SE. The notes to the consolidated accounts provide additional information to the
parent company’s accounts which is not presented here separately. The company’s financial statements are
presented in US dollars (USD). Investments in subsidiaries are measured at historic cost, unless there is any
indication of impairment. In case of impairment, an investment is written down to recoverable amount.
NOTE 2: OPERATING EXPENSES
Services from subsidiaries
Salaries and management bonus
Pension expenses
Share option costs
Other remuneration
Payroll taxes
Directors’ fees
Auditors' audit fees
Auditors' other fees
Other operating expenses
Total operating expenses
2014
2013
8 203
8 772
620
(69)
(403)
75
46
731
167
109
622
87
(171)
71
44
724
74
12
2 471
11 950
1 658
11 895
66
NOTE 3: TANGIBLE ASSETS
Acquisition cost 31.12.12
Additions
Disposals at acquisition cost
Acquisition cost 31.12.13
Additions
Disposals at acquisition cost
Acquisition cost 31.12.14
Accumulated depreciation 31.12.12
Accumulated depreciation on disposals
Depreciation for the year
Accumulated depreciation 31.12.13
Accumulated depreciation on disposals
Depreciation for the year
Accumulated depreciation 31.12.14
Carrying value 31.12.14
Carrying value 31.12.13
Depreciation rate (%)
NOTE 4: OTHER FINANCIAL ITEMS
Interest receivable from subsidiaries
Other interest receivable
Loan from subsidiary written off
Currency gain
Total other financial income
Interest payable to subsidiaries
Interest expenses
Currency loss
Fair value adjustment derivatives
Other financial items
Total other financial expenses
Equipment
Total
204
2
0
206
5
0
211
160
0
14
174
0
10
184
27
32
20-30
204
2
0
206
5
0
211
160
0
14
174
0
10
184
27
32
-
2014
2013
5 917
57
8 407
126 437
140 817
(123)
(45 186)
(72 047)
(68 170)
(13 123)
5 147
76
0
68 162
73 385
(189)
(38 647)
(55 796)
(20 126)
(13 404)
(198 649)
(128 161)
67
NOTE 5: FINANCIAL ITEMS - IAS 39 CATEGORIES
Year ended 31 Dec 2014
Interest income
Currency gain 1)
Loan from subsidiary written off
Dividend
Total financial income
Interest expenses
Currency loss 1)
Fair value adjustment derivatives
Impairment of shares in subsidiaries 1)
Other financial expenses
Total financial expenses
Loans and
receivables
Fair value
throug
profit and loss
Financial
liabilities
measured at
amortised cost
5 974
0
0
0
5 974
0
0
0
0
0
0
0
0
0
0
0
0
0
(68 170)
0
0
(68 170)
0
0
8 407
0
8 407
(45 309)
0
0
0
(13 123)
(58 432)
Total
5 974
126 437
8 407
739 646
880 464
(45 309)
(72 047)
(68 170)
(483 609)
(13 123)
(682 258)
Net financial items
5 974
(68 170)
(50 025)
198 205
Year ended 31 Dec 2013
Interest income
Currency gain 1)
Dividend
Total financial income
Interest expenses
Currency loss 1)
Fair value adjustment derivatives
Other financial expenses
Total financial expenses
Loans and
receivables
Fair value
through
profit and loss
Financial
liabilities
measured at
amortised cost
5 223
0
0
5 223
0
0
0
0
0
0
0
0
0
0
0
(20 126)
0
(20 126)
Total
5 223
68 162
24 773
98 158
0
0
0
0
(38 836)
0
0
(13 404)
(52 240)
(38 836)
(55 796)
(20 126)
(13 404)
(128 162)
Net financial items
5 223
(20 126)
(52 240)
(30 004)
1) Excluded from the category breakdown, but added to the total for net effect.
68
NOTE 6: TAXES
Profit/loss before taxes
Permanent differences
Change in tax loss carried forward
Tax base
Taxes
Temporary differences:
Loss carried forward
Basis for deferred tax liability (+)/benefit (-)
Deferred tax liability (+)/benefit (-)
Taxes payable at 31 December
2014
2013
532 245
(506 554)
(25 691)
0
1
(41 912)
27 036
14 876
0
3
(63 093)
(63 093)
(37 402)
(37 402)
0
0
0
0
No deferred tax asset has been recognised in respect of the tax loss carried forward.
Tax losses for each year are carried forward for 5 years. The tax rate in Cyprus is 12.5%.
NOTE 7: SHARES IN SUBSIDIARIES
(Share capital and carrying value in 1 000).
Company
Prosafe AS
Prosafe Offshore AS
Prosafe Management AS
Prosafe (UK) Holdings Ltd
Prosafe Offshore Pte Ltd
Consafe Offshore AB
Prosafe Offshore Services Pte Ltd
Marzouka Investments Ltd
Prosafe Rigs Pte Ltd
Total carrying value
NOK
NOK
NOK
GBP
USD
SEK
USD
USD
USD
Share capital
Carrying
value 2014
Carrying
value 2013
Ownership
100
100
100
11 000
10 000
27 786
10
10
69 316
69 316
270
15
9 826
320 037
4 371
150
0
270
15
22 826
10
141 974
150
8
2 500 040
1 931 464
2 335 450
2 264 464
2 499 033
100%
100%
100%
100%
100%
100%
100%
100%
91%
Consafe Offshore AB is in the process of liquidation which is scheduled for completion in 2015.
In the income statement for 2014, the following impairment charges have been made:
Consafe Offshore AB USD 137.6 million, Prosafe Rigs Pte Ltd USD 333 million and Prosafe (UK) Holdings Ltd
USD 13 million.
In Prosafe Offshore Pte Ltd, a capital increase of USD 320 million was made to fund an internal transfer of assets.
There are mortgages on the shares in Prosafe Rigs Pte Ltd and Prosafe Offshore Services Pte Ltd. Please refer to note 13.
NOTE 8: OTHER CURRENT ASSETS
Current receivables from group companies
Other current assets
Total other current assets
69
2014
2013
81
13 666
13 747
36
14 326
14 362
The main part of other current assets consists of capitalised borrowing costs.
NOTE 9: SHARE CAPITAL
Authorised ordinary shares as of 31 December
Issued and paid number of shares as of 31 December
Holding of own shares as of 31 December
Nominal value
2014
2013
275 924 148
235 973 059
0
275 924 148
235 973 059
0
EUR 0.25
EUR 0.25
On 15 March 2013, Prosafe completed a private placement of 13 000 000 new shares directed towards Norwegian
and international institutional investors. The placement was made at a subscription price of NOK 58 per share.
Net proceeds amounted to USD 128.9 million. The share capital was increased by EUR 3.3 million.
On 14 May 2013, the general meeting approved the cancellation of 6 963 731 ordinary shares held by Prosafe as
treasury shares. After the cancellation, the issued share capital is made up of 235 973 059 shares of EUR 0.25 each.
NOTE 10: INTEREST-BEARING DEBT
As of 31 December 2014, Prosafe SE’s interest-bearing debt totalled about USD 830,1 million. Loans
secured by mortgages (credit facility) accounted for USD 440 million of this total and unsecured bond loans
accounted for about USD 390.1 million.
2014
2013
Credit facility
Bond loans
Total interest-bearing debt
Debt in NOK
Debt in USD
Total interest-bearing debt
Long-term interest-bearing debt
Current interest-bearing debt
Total interest-bearing debt
For further information, see note 16 of the consolidated accounts.
440 000
390 142
830 142
390 142
440 000
830 142
830 142
0
830 142
418 000
361 622
779 622
361 622
418 000
779 622
779 622
0
779 622
70
NOTE 11: OTHER INTEREST-FREE CURRENT LIABILITIES
Accrued interest costs
Provision share-based payments
Other current liabilities
Total other interest-free current liabilities
NOTE 12: INTRA-GROUP BALANCES
NOK loan to Prosafe AS
USD loan to Prosafe Offshore Pte Ltd
Intra-group long-term receivables
SEK loan from Consafe Offshore AB
Intra-group long-term debt
2014
2013
3 776
7
2 493
6 275
3 482
410
1 908
5 800
2014
2013
66 028
135 999
481 292
547 320
0
135 999
0
0
10 003
10 003
Loan agreements with subsidiaries are made at market prices using 3M NIBOR (NOK loan) and 3M LIBOR
(USD loan) interest rates and a margin of 2.00%. Outstanding balances at year-end are unsecured, and settlement
normally occurs in cash. The loan from Consafe Offshore AB was written off during 2014. For the year ended
31 December 2014, the Company has not recorded any impairment of receivables relating to amounts owed by
subsidiaries.
Transactions with related parties
2014
2013
Transactions
Administrative services from subsidiaries
Interest income
Interest expenses
Dividend
(8 203)
5 917
(123)
739 646
(8 772)
5 147
(189)
24 773
Prosafe AS and Prosafe Management AS are performing services on behalf of Prosafe SE relating to management,
corporate activities, investor relations, financing and insurance. The services are invoiced on monthly basis and paid
on market terms. Please refer to note 7 to the consolidated accounts for disclosure of remuneration to directors.
Year-end balances
Current receivables of the ultimate parent to subsidiaries
Intra-group long-term receivables
Current payables from the ultimate parent to subsidiaries
Loans from subsidiaries of the ultimate parent
2014
81
547 320
197 838
0
2013
36
135 999
112 026
10 003
Current receivables and payables are not subject to any interest calculation. The balances will be settled on
ordinary market terms.
71
NOTE 13: MORTGAGES AND GUARANTEES
As of 31 December 2014, Prosafe’s interest-bearing debt secured by mortgages totalled USD 440 million.
The debt was secured by mortgages on shares in Prosafe Rigs Pte Ltd and Prosafe Offshore Pte Ltd, and the
accommodation/service vessels owned by these entities. The book value of the mortgaged fleet was USD
1 027.3 million. Prosafe had issued parent company guarantees to customers on behalf of its subsidiaries
in connection with the award and performance of contracts.
As of 31 December 2013, Prosafe’s interest-bearing debt secured by mortgages totalled USD 418 million.
This debt is secured by mortgages on shares in Prosafe Rigs Pte Ltd, and the accommodation/service fleet
owned by this entity. Book value of the fleet is USD 946.9 million. In line with industry practice, Prosafe has
issued parent company guarantees to customers on behalf of its subsidiaries in connection with the award
and performance of contracts.
NOTE 14: FINANCIAL ASSETS AND LIABILITIES
As of 31 December 2014, Prosafe SE had financial assets and liabilities in the following categories:
Year ended 31 Dec 2014
Intra-group long-term receivable
Cash and deposits
Other current assets
Total assets
Credit facility
Bond loan PRS07
Bond loan PRS08
Bond loan PRS09
Bond loan PRS10
Bond loan PRS11
Fair value derivatives
Interest-free long-term liabilities
Intra-group current liabilities
Other interest free current liabilities
Total liabilities
Loans and
receivables
Fair value
through
profit and loss
Financial
liabilities
measured at
amortised cost
Book value
547 320
17 285
13 747
578 352
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
547 320
17 285
13 747
578 352
440 000
440 000
67 266
67 266
67 266
94 172
94 172
67 266
67 266
67 266
94 172
94 172
113 654
0
113 654
0
0
0
2 081
2 081
197 838
197 838
6 275
6 275
113 654
1 036 336
1 149 990
72
As of 31 December 2013, Prosafe SE had financial assets and liabilities in the following categories:
Year ended 31 Dec 2013
Intra-group long-term receivable
Cash and deposits
Other current assets
Total assets
Credit facility
Bond loan PRS07
Bond loan PRS08
Bond loan PRS09
Bond loan PRS10
Intra-group long-term debt
Fair value derivatives
Interest-free long-term liabilities
Intra-group current liabilities
Other interest free current liabilities
Total liabilities
Loans and
receivables
Fair value
through
profit and loss
Financial
liabilities
measured at
amortised cost
Book value
135 999
9 414
14 362
159 775
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
7 442
0
0
0
0
0
0
0
135 999
9 414
14 362
159 775
418 000
418 000
82 187
82 187
82 187
82 187
82 187
82 187
115 062
115 062
10 003
10 003
0
2 533
7 442
2 533
112 026
112 026
5 800
5 800
7 442
909 985
917 427
For further information, see note 19 of the consolidated accounts.
NOTE 15: MATURITY PROFILE LIABILITIES
As of 31 December 2014, Prosafe SE’s main financial liabilities had the following remaining contractual
maturities:
Year ended 31 Dec 2014
2015
2016
2017
2018
2019 →
Interest-bearing debt
(downpayments)
Interests incl interest swaps
Intra-group current liabilities
Interest-free long-term liabilities
Other interest-free current liabilities
0
67 300
382 300
94 200
286 300
56 900
197 838
0
6 275
68 300
70 500
67 000
100 000
0
2 081
0
0
0
0
0
0
0
0
0
0
Total
261 013
137 681
452 800
161 200
386 300
As of 31 December 2014, the availability under the credit facility secured in 2011 totalled USD 655 million
(USD 215 million undrawn credit lines), meaning that the first actual downpayment on the credit facility will
not occur until 2016.
73
As of 31 December 2013, Prosafe SE’s main financial liabilities had the following remaining contractual
maturities:
Year ended 31 Dec 2013
2014
2015
2016
2017
2018 →
Interest-bearing debt
(downpayments)
Interests incl interest swaps
Intra-group long-term debt
Intra-group current liabilities
Interest-free long-term liabilities
Other interest-free current liabilities
0
136 000
82 200
364 200
197 200
44 700
0
112 026
0
5 800
59 900
10 003
0
2 533
0
70 400
73 200
120 000
0
0
0
0
0
0
0
0
0
0
0
0
Total
162 526
208 436
152 600
437 400
317 200
NOTE 16: EVENTS AFTER THE BALANCE SHEET DATE
USD 1 300 million credit facility
In February 2015, the company secured a new credit facility for the refinancing of the existing USD 1 100
million and USD 420 million credit facilities. The credit facility, which has a maturity of seven years, consists
of two term loan tranches of USD 800 million (drawn on closing) and USD 200 million (drawn on delivery
of the Safe Zephyrus) and a revolver loan tranche of USD 300 million. The availability under the term loan
tranches is reduced semi-annually, starting 6 months after delivery of the tranche security, with an amount
that reduces the term loan commitments to zero by the final maturity. The annual interest rate on the credit
facility is 1.90 per cent above 3-month LIBOR for the first five years and 2.15 per cent above 3-month LIBOR
thereafter.
Financial covenants:
Liquidity: Minimum USD 65 million (including up to USD 25 million of total commitments available for
utilisation)
Leverage ratio: Net debt/EBITDA must not exceed 5.0 (4.5 after 3rd anniversary)
Value adjusted equity ratio: Minimum 35 per cent
Collateral maintenance: Market value vessels/total outstanding loans above 150 per cent.
74
INDEPENDENT
AUDITORS’
REPORT
75
TO THE MEMBERS OF PROSAFE SE
REPORT ON THE CONSOLIDATED FINANCIAL
STATEMENTS AND THE SEPARATE FINANCIAL
STATEMENTS OF PROSAFE SE
We have audited the accompanying consolidated financial
statements of Prosafe SE and its subsidiaries (“the Group”),
and the separate financial statements of Prosafe SE (“the
Company”), which comprise the consolidated statement
of financial position and the statement of financial
position of the Company as at 31 December 2014, and the
consolidated statements of income, comprehensive income,
changes in equity and cash flows, and the statements of
income, comprehensive income, changes in equity and
cash flows of the Company for the year then ended, and
a summary of significant accounting policies and other
explanatory information.
Board of Directors’ Responsibility for the Financial
Statements
The Board of Directors is responsible for the preparation
of consolidated and separate financial statements of the
Company that give a true and fair view in accordance with
International Financial Reporting Standards as adopted by
the European Union and the requirements of the Cyprus
Companies Law, Cap. 113, and for such internal control as
the Board of Directors determines is necessary to enable
the preparation of consolidated and separate financial
statements that are free from material misstatement,
whether due to fraud or error.
Auditor’s Responsibility
Our responsibility is to express an opinion on these
consolidated and separate financial statements of the
Company based on our audit. We conducted our audit
in accordance with International Standards on Auditing.
Those Standards require that we comply with ethical
requirements and plan and perform the audit to obtain
reasonable assurance about whether the consolidated
and separate financial statements are free from material
misstatement.
An audit involves performing procedures to obtain audit
evidence about the amounts and disclosures in the
financial statements. The procedures selected depend
on the auditor’s judgment, including the assessment of
the risks of material misstatement of the consolidated
and separate financial statements, whether due to
fraud or error. In making those risk assessments, the
auditor considers internal control relevant to the entity’s
preparation of consolidated and separate financial
statements that give a true and fair view 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 entity’s internal control. An audit also
includes evaluating the appropriateness of accounting
policies used and the reasonableness of accounting
estimates made by the Board of Directors, as well as
evaluating the overall presentation of the consolidated and
separate financial statements.
We believe that the audit evidence we have obtained is
sufficient and appropriate to provide a basis for our audit
opinion.
Opinion
In our opinion, the consolidated financial statements and
the separate financial statements give a true and fair view
of the financial position of the Group and the Company as
at 31 December 2014, and of their financial performance
and their cash flows for the year then ended in accordance
with International Financial Reporting Standards as
adopted by the European Union and the requirements of
the Cyprus Companies Law, Cap. 113.
REPORT ON OTHER LEGAL REQUIREMENTS
Pursuant to the additional requirements of the Auditors
and Statutory Audits of Annual and Consolidated Accounts
Laws of 2009 and 2013, we report the following:
• We have obtained all the information and explanations
we considered necessary for the purposes of our audit.
• In our opinion, proper books of account have been kept
by the Company, so far as appears from our examination
of those books.
• The consolidated and the separate financial statements
are in agreement with the books of account.
• In our opinion and to the best of our information and
according to the explanations given to us, the
consolidated and the separate financial statements give
the information required by the Cyprus Companies Law,
Cap. 113, in the manner so required.
• In our opinion, the information given in the report of the
Board of Directors is consistent with the consolidated and
the separate financial statements.
OTHER MATTER
This report, including the opinion, has been prepared
for and only for the Company’s members as a body in
accordance with Section 34 of the Auditors and Statutory
Audits of Annual and Consolidated Accounts Laws of 2009
and 2013 and for no other purpose. We do not, in giving
this opinion, accept or assume responsibility for any other
purpose or to any other person to whose knowledge this
report may come to.
Stavros Pantzaris
Certified Public Accountant and Registered Auditor
for and on behalf of
Ernst & Young Cyprus Limited
Certified Public Accountants and Registered Auditors
Nicosia, 17 March 2015
76
FLEET OVERVIEW
Prosafe is the leading player within the global market
for semi-submersible accommodation vessels for the oil
and gas industry.
77
SAFE NOTOS
Ready for North Sea operations in 2016
Built, converted:
GustoMSC’s Ocean 500
Design:
500
No of beds:
Gangway:
38.0m +/- 7.5m
Power generation: 28 800 kW (6 diesel generator sets)
Station keeping: DP3
Thrusters:
Mooring system: 10 x 612 t chain
6 x 3 700 kW azimuthing
SAFE EURUS
Ready for North Sea operations in 2016
Built, converted:
GustoMSC’s Ocean 500
Design:
500
No of beds:
Gangway:
38.0m +/-7.5m
Power generation: 28 800 kW (6 diesel generator sets)
Station keeping: DP3
Thrusters:
Mooring system: 10 x 612 t chain
6 x 3 700 kW azimuthing
SAFE BOREAS
Built, converted : Ready for North Sea operations in 2015
GVA 3000 E
Design:
450
No of beds:
Gangway:
38.0m +/- 7.5m
Power generation: 30 000 kW (6 diesel generator sets)
Station keeping: DP3
Thrusters:
Mooring system: 12-point wire winches
6 x 4 000 kW azimuthing
SAFE ZEPHYRUS
Built, converted : Ready for North Sea operations in 2015
GVA 3000 E
Design:
450
No of beds:
38.0m +/- 7.5m
Gangway:
Power generation: 30 000 kW (6 diesel generator sets)
Station keeping: DP3
Thrusters:
Mooring system: 12-point wire winches
6 x 4 000 kW azimuthing
78
REGALIA
Built, converted:
1985
Upgraded:
2003/2009 (refurbishment)
Design:
GVA 3000 – enhanced
No of beds:
306 (NCS: 282)
38.0m +/- 7.5m
Gangway:
Power generation: 19 560 kW (6 diesel generator sets)
Station keeping: NMD3
Thrusters:
Mooring system: 4-point wire winches
6 x 2 640 kW azimuthing
SAFE SCANDINAVIA
1984
Built, converted:
2003/2005/2014 (refurbishment)
Upgraded:
Aker H-3.2E
Design:
583 (NCS: 292)
No of beds:
Gangway:
36.5m +/- 6.0m
Power generation: 9 339 kW (4 diesel generator sets)
Station keeping : Moored
Mooring system: 12-point chain winches
SAFE CALEDONIA
Built, converted : 1982
2004/2012 (refurbishment)
Upgraded:
F+G Pacesetter
Design:
454
No of beds:
36.5m +/- 5.5m
Gangway:
Power generation: 15 900 KW (6 diesel generator sets)
Station keeping: DP2, Posmoor ATA
Thrusters:
Mooring system: 10-point wire winches
4 x 2 400 kW azimuthing
SAFE BRISTOLIA
1983, 2006
Built, converted:
2008
Upgraded:
Earl & Wright Sedco 600
Design:
587
No of beds:
Gangway:
35m +/- 6.0m
Power generation: 6 240 kW (4 diesel generator sets)
Station keeping: Moored
Mooring system: 8-point wire winches
79
SAFE CONCORDIA
Built, converted: 2005
Keppel Deepwater Technology Group
Design:
461
No of beds:
Gangway:
29.5m +/- 5.0m
Power generation: 17 950 kW (5 diesel generator sets)
Station keeping: DP2
Thrusters:
Mooring system: 4-point wire winches
4 x 2 500 kW azimuthing
SAFE ASTORIA
Built, converted: 1983, 2005
2012
Upgraded:
Earl & Wright Sedco 600
Design:
349
No of beds:
Gangway:
36.5m +/- 6.0m.
Power generation: 6 350 kW (4 diesel generator sets)
Station keeping: Moored
Mooring system: 8-point wire winches
SAFE BRITANNIA
Built, converted: 1980
1987/2003
Upgraded:
F+G Pacesetter - enhanced
Design:
812
No of beds:
36.5m +/- 6.0m
Gangway:
Power generation: 13 895 kW (7 diesel generator sets)
Station keeping: DP2
Thrusters:
Mooring system: 9-point wire winches
4 x 2 400 kW azimuthing, 2 x 1 500 kW fixed
SAFE REGENCY
Built, converted: 1982
2003/2008
Upgraded:
F+G Pacesetter
Design:
780
No of beds:
Gangway:
36.5m +/- 6.0m
Power generation: 12 960 kW (6 diesel generator sets)
Station keeping: DP2
Thrusters:
Mooring system: 8-point wire winches
4 x 2 400 kW azimuthing
80
SAFE LANCIA
Built, converted:
1984
Upgraded:
2003
Design:
GVA 2000
No of beds:
605
27.5m +/- 5.5m
Gangway:
Power generation: 14 500 kW (6 diesel generator sets)
Station keeping: DP2 / Posmoor
Thrusters :
Mooring system: 7-point wire winches
4 x 2 400 kW azimuthing
JASMINIA
1982
Built, converted:
2002
Upgraded:
GVA 2000
Design:
535
No of beds:
Gangway:
Rigid, simple span 34.0m +/-3.0m
Power generation: 7 070 kW (3 diesel generator sets)
Station keeping: Moored
Thrusters:
Mooring system: 8-point wire winches
2 x 2 400 kW azimuthing
SAFE HIBERNIA
1977
1991/1994/2006
Aker H-3 (modified)
632
36.0m +/- 6m
Built, converted:
Upgraded:
Design:
No of beds:
Gangway:
Power generation: 6 320 (4 diesel generator sets)
Station keeping: Moored
Thrusters:
Mooring system: 12-point wire winches
2 x 3 300 HP Propulsion (Aft)
81
82
Accommodating
the Offshore
Industry
Prosafe SE
Stadiou 126
CY-6020 Larnaca, Cyprus
Telephone:
Fax:
mail@prosafe.com
www.prosafe.com
+357 2462 2450
+357 2462 2480
Design: Olavstoppen. Photo: Sverre Skjold, Tom Haga og Kjetil Alsvik. Print: Gunnarshaug Trykkeri.