Prosafe Offshore Pte Ltd Annual Report 2020

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FY2020 Annual Report · Prosafe Offshore Pte Ltd

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A N N U A L R E P O R T
2 0 2 0

CONTENTS

About Prosafe

Main events in 2020

Key figures

Corporate Governance

Directors’ report

Declaration by the Board
of Directors and the CEO

Consolidated accounts

Parent company accounts

101

Independent auditor’s report

107

Environmental, Social
and Governance report

ABOUT PROSAFE

Prosafe is a leading owner and operator of semi-submersible
accommodation vessels.

At year-end, Prosafe owned and operated seven
semi-submersible accommodation, safety and
support vessels and one Tender Support Vessel
(TSV). In the beginning of 2021, the Regalia
was sold for recycling with commencement
of recycling in the first quarter of 2021.

The Company’s versatile fleet of five
dynamically positioned, one anchor moored
and one passive position moored vessels
are capable of operating in the
most demanding offshore
environments. In addition,
Prosafe has an agreement
with COSCO shipyard for
flexible delivery terms
and long-term financing
of two new build vessels:
Safe Nova and Safe
Vega. These vessels are
completed and ready for
operations.

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 related
to the support of the lifecycle of
offshore installations such as maintenance and
modification of installations on fields already
in production, hook-up and commissioning of
new fields, tie-backs to existing infrastructure
and decommissioning.

Prosafe’s vessels have accommodation
capacity for 159-500 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 safely walk to work.

Prosafe has a long track record from
demanding operations world-

wide, with leading 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.

MAIN EVENTS IN 2020

• Covid-19 impacted our business significantly,

• Constructive discussions with the lenders

with a view to ensure a long-term financial
solution were initiated in December 2019
and continued throughout 2020 with
support from a majority of lenders while
lenders reserve their rights. Although a
final solution has not been agreed yet, it is
anticipated that there will be a significant
equitization of debt which is likely to result
in minimal or no recovery for current share-
holders.

• The appeal hearings regarding the Stavanger
City court’s judgement in favour of Prosafe
in the dispute between Westcon and Prosafe
were concluded in the second and final
instance (Gulating Lagmannsrett) on 27
November 2020. Judgement is expected in
the first half of 2021.

however, the company successfully
implemented proper safety measurements
at workplaces and vessels to protect people
and assets.

• To support its customers to mitigate the

consequences of Covid-19 and the oil price
collapse, Prosafe agreed with its clients to
move two contracts from 2020 to 2021 and
temporarily suspend and defer two others
during parts of 2020, thereby protecting its
order book.

• The fleet utilisation for the year was 20.4%

(2019: 50.9%).

• Prosafe secured new contracts for the Safe
Boreas or Safe Zephyrus in Norway, for Safe
Concordia in Trinidad and Tobago, and a
contract extension for Safe Notos in Brazil.

•

In February 2020, due to financial
uncertainty and process risks, Prosafe
and Floatel International Ltd agreed to
discontinue the merger process that had
been initiated in June 2019.

KEY FIGURES

Profit

Operating revenues

EBITDA

Operating profit

Net profit

Earnings per share
(fully diluted)

Note

2020

2019

2018 2017

2016

MUSD

56.7

(9.5)

225.4

97.1

330.8

166.6

283.0

122.9

(864.3)

(342.6)

53.0

(578.2)

474.0

253.2

52.8

(950.1)

(399.9)

(114.5)

(647.1)

172.6

USD

(10.80)

(4.54)

(1.30)

(7.35)

8.36

Balance sheet

Total assets

Interest-bearing debt

MUSD

Net interest-bearing debt

MUSD

NOK

Book equity

Book equity ratio

Liquidity reserve

Net cash flow

Net working capital

Valuation

Market Capitalisation
at year-end

Share Price

Operations

Fleet utilisation rate

587.7

1 480.2

1 736.8

1 947.0

2 686.9

1 509.4

1 397.9

1 243.0

1 347.7

1 390.8

1 349.1

1 199.8

1 102.7

1 115.8

1 185.1

(948.5)

(161.4)%

160.3

(37.8)

2.4

0.2%

198.1

57.8

400.2

23.0%

277.3

(91.6)

497.6

1 129.5

26.0%

231.9

26.2

42.0%

205.7

148.6

(1 279.3)

(1 158.2)

58.7

221.3

142.5

10.4

1.08

19.7

2.11

126.7

118.1

13.4

306

20.4%

50.9%

47.3%

38.4%

43.2%

Notes

1. Operating profit before depreciation and impairment

2. Net profit / Average number of outstanding and potential shares.

EPS restated to reflect reverse split in 2016.

3. Interest-bearing debt - Cash and deposits

4. (Book equity / Total assets) * 100

5. Cash and deposits + available liquidity reserve balance under a committed revolving credit facility

6. Currents Assets-Current Liabilities

CORPORATE
GOVERNANCE

Prosafe’s system of corporate governance forms the basis for
a transparent business model with clear segregation of roles,
responsibilities and accountabilities between shareholders,
the Board of directors, Executive Management and the
organisation.

NORWEGIAN CODE OF PRACTICE
Prosafe SE is a European public company (Societas Europaea) listed on the Oslo Stock Exchange.

Corporate governance in the Company follows the principles contained in the Norwegian Code of
Practice for Corporate Governance in its latest version of 17 October 2018 (the “Corporate Governance
Code”). The Company is committed to ensuring that high standards of corporate governance are
maintained and is in compliance with the Corporate Governance Code.

The corporate governance principles and practices as required by the Accounting Act Section 3-3b and
the details of how Prosafe complies with the Norwegian Code of Practice for Corporate Governance
are accounted for in this report on Corporate Governance.

1. IMPLEMENTATION AND REPORTING

ON CORPORATE GOVERNANCE

The Norwegian Code of Practice for Corporate Governance covers 15 topics which are designed to
ensure that the division of roles between shareholders, the Board of directors and the Company’s
Executive Management is regulated in a way that strengthens confidence among shareholders,
employees, the capital market and other interested parties to ensure control and compliance, equal
treatment of shareholders and maximum value creation over time.

The Company has accordingly implemented sound corporate governance. The Directors' Report, which
is published annually, specifically refers to a comprehensive Corporate Governance Report included
in the annual report and published on Prosafe’s website at https://www.prosafe.com/investor-
information/corporate-governance/

2. THE BUSINESS

Prosafe’s Articles of association together with its vision, strategy, goals and reporting provide the
necessary information which enables shareholders to understand, monitor and anticipate the scope
of its activities.

The objectives for which Prosafe is established are set out in Article 3 of its Articles of association
which can be accessed on Prosafe’s website.

Prosafe’s vision is to be a leading and innovative provider of technology and services in selected niches
of the global oil and gas industry.

Prosafe’s strategy is to be the preferred provider of high end semi-submersible accommodation
vessels globally.

In order to achieve the strategic ambition, Prosafe reviews and assesses risk in the following
categories: strategic, commercial, operational, compliance and legal, financial and IT/Cyber security
risks. These risk categories and the associated internal control measures are described in more detail
at https://www.prosafe.com/investor-information/corporate-governance/risk-management/

The Company’s strategy, commercial outlook, operations, risks, financial status, business plans and
forecasts as well as clearly defined focus areas are regularly reviewed by the Board on the basis of
a defined annual wheel related to regular Board meetings. These are supplemented by ongoing
dialogue between the Board and management, monthly reporting and ad hoc / weekly reporting and
updates of all significant matters.

Prosafe’s Code of Conduct sets out its corporate values which are reflected in its ethical guidelines
and the corporate social responsibilities which it undertakes. Prosafe is committed to transparency,
respect for employee and human rights and has a zero tolerance policy towards bribery and
corruption. This is reflected in the various Prosafe policies and procedures, including Prosafe’s
Corporate Social Responsibility (CSR) Policy. Prosafe’s Code of Conduct and CSR Policy can be accessed
on Prosafe’s website.

3. EQUITY AND DIVIDENDS

Prosafe’s consolidated shareholder’s equity was negative as at 31 December 2020 following
impairments made in the year as a consequence of reassessment of the industry outlook. The
Company is in constructive dialogue with its lenders to agree a sustainable financial solution as soon
as possible.

The Company continues its efforts towards creating a sustainable balance sheet. The process and
creditor discussions remain constructive and lenders in general maintain their support for the
company to continue to operate on a going concern basis and seek a long-term financial solution
while reserving their rights. Although it is too early to say what a final solution may look like, it is,
however, expected that a significant equalization of debt will be required to create a sustainable
solution.

Pending conclusion of the discussions, the company continues to operate on a business as usual basis
to protect and create value through challenging market conditions.

The Company will also continue to defer making payments of scheduled instalments and interest
under both of its bank facilities. Payment of the final instalment owed and due under the seller credit
to Cosco for the Safe Notos remains subject to ongoing discussions.

No dividends have been paid and no equity buy-backs have been declared or undertaken during 2020.

The following part conversion of bonds (with reference to the date of the related announcements) in
respect of the equity of the Company occurred during 2020 based on conversion notices received:

Nominal
value
(NOK)

No. of
new
ordinary
shares

Con-
version
price per
share

Remaining
out-
standing
principles
(NOK)

No. of
out-
standing
shares

Nominal
value
(Euro)

Convertible
bonds ISIN

001077102.5 15,000,000

600,000

35,706,341

82,464,212

0.1

Date

14
Sept.
2020

Prosafe has currently two outstanding 5 year convertible bonds (zero coupon), which were issued in
2016. ISIN NO 0010771025 has a conversion price NOK 25 and the remaining outstanding principal of
the convertible bonds under this ISIN is NOK 35,706,341. ISIN NO 0010781008 has a conversion price
of NOK 30 and the remaining outstanding principal of the convertible bonds under this ISIN is NOK
122,836,000.

Outstanding warrants is 3,435,982, each of which gives right to subscribe for one new share in the
company at a subscription price of NOK 21.37. The warrants relate to a potential delivery of Safe Nova
and Safe Vega, where the lenders have elected either margin increase or warrants in connection with
the delivery of the mentioned newbuilds.

As at 31 December 2020, the authorised share capital of Prosafe is EUR 9,142,298.4 divided into
91,422,984 shares of EUR 0.10. The issued share capital increased from 81,864,212
ordinary shares of EUR 0.10 each to 82,464,212 ordinary shares of EUR 0.10
each following part conversion of bonds.

Mandates and authorities for different purposes such as
increase of share capital or share buy-backs are considered
separately at each annual general meeting (“AGM”)
and are generally limited in time and valid to the
date of the next AGM. Authority for issuance
of shares relating to conversions of
convertible bonds are valid for a longer
period to ensure, to the extent
permissible by law, that they are
in place for the entire loan period.

4. EQUAL TREATMENT OF SHAREHOLDERS AND
TRANSACTIONS WITH CLOSE ASSOCIATES

Prosafe has one class of shares in issue and all shares are equal in all respects. Each share carries
one vote. The nominal value of each share is EUR 0.10. The company treats all shareholders in a
non-discriminatory manner ensuring that all relevant information and the proposed resolutions are
distributed in the call for the general meeting to allow the shareholders adequate time to prepare for
the meeting.

Except as referred to in this report, no transactions took place in 2020 between the Company and
its shareholders, directors, senior officers or the close associates of any of these. There are no group
companies with minority shareholders.

TRANSACTIONS IN TREASURY SHARES
There have been no share capital increases in the Company in recent years except for shares issued
in connection with the Company's convertible bonds. Should the Board wish to propose that the
AGM depart from the pre-emptive right of existing shareholders relating to any capital increase, such
a proposal will be justified by the common interest of the Company and the shareholders, and the
reasons for the proposal will be presented in the notice of the AGM as well as publicly disclosed in a
separate stock exchange announcement.

There were no material transactions with related parties in 2020, but any transaction with close
associates is required to be conducted on market terms. Information about transactions with related
parties is also disclosed in note 11 of the parent company accounts.

Prosafe has implemented rules and procedures to ensure that directors and senior officers report
to the Board if they themselves or their closely related parties have a significant interest, directly or
indirectly, in any agreement concluded by the Company. The Board must approve any agreement
between the company and a member of the Board or the chief executive officer. The Board must
also approve any agreement between the company and a third party in which a member of the
Board or the chief executive officer may have a special interest. Each member of the Board shall also
continually assess whether there are circumstances which could undermine the general confidence in
a Board member's independence.

Potential conflicts of interest have been declared by Alf C. Thorkildsen (Director of the Board) through
his indirect ownership in North Sea Strategic Investments AS, a key shareholder in the Company. In the
event of any potential conflict of interest, appropriate action has been taken to protect against such
potential conflicts which includes e.g. the individual not participating in the relevant part of the Board
meeting and/or abstaining from voting on the relevant matter.

5. SHARES AND NEGOTIABILITY

Prosafe’s articles of association place no restrictions on negotiability.

6. GENERAL MEETINGS

The general meeting secures the participation of shareholders in the Company’s highest decision-
making meeting. All shareholders are entitled to attend, speak and vote at general meetings. The
company’s Articles of Association are adopted by the general meeting. Shareholders holding at least 5
per cent of the issued and voting shares are entitled to submit matters for inclusion on the agenda of
an AGM.

The AGM must be held by 30 June every year. In 2021, it is scheduled to take place on 5 May. Written
notice of an AGM and a meeting calling for adoption of a special resolution is sent out not later than
twenty-one days before the scheduled meeting unless special notice is required by law. Written notice
of a meeting other than an AGM or a meeting calling for adoption of a special resolution is sent out
not later than fourteen clear days before the meeting. The resolutions and supporting information are
sufficiently detailed, comprehensive and specific to allow shareholders to form a view on all matters
to be considered at the meeting. Both these and any recommendations of the Nomination Committee
enabling shareholders to take an informed position on all matters to be discussed are made available
within the relevant timeframe on the Company’s website.

Shareholders wishing to attend the general meeting must notify the company of this intention before
the deadline stipulated in the notice. As the Board wishes to facilitate the attendance of as many
shareholders as possible, it aims at setting the deadline for notification of attendance as close as
possible to the meeting date.

Shareholders who cannot attend the meeting in person are encouraged to appoint a proxy. Prosafe
prepares proxy forms and conducts the voting arrangements at the meeting in a form and manner, to
the extent possible, which allows the shareholder to vote separately on each matter to be considered
by the meeting and for each of the candidates nominated for election to the Board. Prosafe also
allows the possibility for shareholders who cannot attend the meeting in person to cast votes
electronically by correspondence (without appointing a proxy). The relevant forms for this are included
in the notice to the general meeting.

Traditionally, at least the Chairman (or in exceptional circumstances, another member of the Board),
the auditor and at least the Board representative to the Nomination Committee are present at annual
general meetings. Prosafe wishes to facilitate a dialogue with shareholders at the general meeting,
and therefore encourages all Board members to attend.

The annual general meeting shall discuss and decide upon the following:
(i) Approval of the annual accounts and annual report, including distribution of dividends.
(ii) Any other matters that according to applicable laws or the Articles of Association are to be

decided upon by the general meeting.

7. NOMINATION COMMITTEE

Pursuant to article 8 of its articles of association, Prosafe has a Nomination Committee comprising
two to three members. The majority of the members shall be independent in relation to the board
members and the Company management. The general meeting will elect the members of the
nomination committee, including the chairperson, for a term of up to two years.

In addition, the Board appoints one of its members as a representative to the Nomination Committee.
The Board representative participates in the meetings and discussions, but may not vote on any
matter. The members are elected by the general meeting for a term of two years unless otherwise
agreed by the general meeting. At the 2020 AGM, the members of the Nomination Committee were
appointed for a period of one year. The instructions for the Nomination Committee were approved at
the AGM that was held on 7 May 2020.

The Nomination Committee submits its recommendations for membership of the Nomination
Committee and the Board to shareholders, together with the notice of general meeting and
recommends the fees to be paid to directors and members of the Nomination Committee.

The shareholders at the AGM also elect the Chairman of the Nomination Committee, approve the
Committee’s remuneration and may decide to approve any applicable guidelines.

Relevant deadlines for submitting proposals for candidates to be appointed to the Board or the Nomi-
nation Committee are published on the company’s website in due time before the AGM takes place.

The Nomination Committee held five meetings in 2020. Average meeting attendance was 100 per cent.

Name

Thomas Raaschou

Role

Chair

Annette Malm Justad

Member

Date first
appointed

May 2011

May 2016

Date due for
re-election

Meeting
attendance (%)

May 2021

100

The Chair and other members of the Committee are independent of the Company’s Board.

Glen Ole Rødland was appointed Board representative to the Nomination Committee at a Board
meeting held on 8 February 2017.

8. BOARD OF DIRECTORS:
COMPOSITION AND INDEPENDENCE

The Board currently consists of four directors. The directors have been appointed to ensure that
a broad base of appropriate skills, expertise and experience is reflected on the Board. Working
constructively together with its Committees and the Company’s administration, the Board oversees
the strategic direction, targets, reporting, management and control of the Company.

Based on the proposal of the Nomination Committee, the General Meeting elects the Directors and
the Chairman, and decides on their remuneration. Currently, the directors are appointed for one year
and all directors are due for re-election in 2021.

The Board held 20 Board meetings in 2020. Average meeting attendance was 91 per cent.

Name

Glen Ole Rødland

Role

Chair

Date first
appointed

Date due for
re-election/ date
of resignation

Meeting
attendance
(%)

March 2016

May 2021

Svend Anton Maier

Director

November 2016

Resigned May 2020

Kristian Johansen

Director

March 2017

Resigned May 2020

Birgit Aagaard-Svendsen

Director

March 2017

Nina Udnes Tronstad

Alf C. Thorkildsen

Director

May 2019

May 2020

May 2021

100

At each general meeting at which resignations and appointments occur, the Nomination Committee
will provide its recommendations for Board composition to shareholders. All newly elected directors
are provided with a thorough briefing on the Company’s history, business, status and challenges.

The Board members are independent of the Company’s executive personnel and material business
contacts, and save for Alf C. Thorkildsen also independent of the Company's main shareholders.
Directors are encouraged to own shares in the Company. Details of share ownership can be found on
each director’s profile on the Prosafe website.

The Board has implemented various policies and procedures to avoid conflicts of interest between
directors, senior officers, their close associates and external third parties with whom the Company
collaborates.

The Board also seeks to ensure that directors possess broad based and in-depth expertise and skill-
sets relevant to the Company’s business and the different market segments served internationally.

Information about each Board director is available on Prosafe’s website, including whether they hold
other directorships, their age, skills and experience, and when they are due for re-election.

The requirement to establish a corporate assembly does not apply to the Company as it has less than
200 employees in Norway.

9. THE WORK OF THE BOARD

The Board has ultimate responsibility for managing the Company and for monitoring day-to-day
management and the Company’s business activities. This means that the Board is responsible for
organisation, strategy, planning, reporting, and establishing of control systems. Further the Board is
responsible for ensuring that Prosafe operates in compliance with laws and regulations, with Prosafe’s
Code of Conduct, as well as in accordance with the shareholders’ expectations of good corporate
governance. The Board emphasises the safeguarding of the interests of all shareholders, but also the
interests of Prosafe’s other stakeholders.

The Board has adopted a generic annual plan for its work which is revised with regular intervals.
Recurrent items on the Board’s annual plan are health, safety and quality issues, the company’s
operations, corporate strategy issues, business planning, forecasting and contingencies, approval
of annual and quarterly results, monthly performance reports, annual reporting, management
compensation issues, leadership assessment and succession planning, people and organisational
strategy, special project reviews, risk evaluation, review of the company’s governing documentation,
annual Board evaluation and reviews relating to special topics. At the end of all Board meetings, the
Board has a closed session with only Board members attending the discussions and evaluating the
meeting.

The Board is responsible for making decisions related to inter alia company values and standards,
strategy and objectives, overall budgets, corporate and capital structure, financial reporting and
internal controls, investments and material transactions.

The Board has drawn up separate instructions for management and a job description and annual
targets for the chief executive officer (CEO) and deputy executive officer & chief financial officer
(DCEO&CFO) specifying their respective duties, authority and responsibilities in relation to the
business. The CEO has a particular responsibility for ensuring that the Board receives precise, relevant
and timely information enabling it to discharge its duties.

Scheduled Board meetings are normally held six to eight times a year, but the work schedule is
flexible and otherwise adaptable so as to take into account relevant commercial, operational and
strategic circumstances. Internal segregation of responsibilities and duties between the Board and
management is established in a number of various corporate documents including corporate policies
and procedures, approval matrices and delegated authorities, Board approvals for budgets and specific
investments, and the grant of specific powers of attorney in respect of particular transactions.

The Chairman has a particular responsibility for ensuring that the Board’s work is well organised and
efficiently conducted. The Chairman of the Board encourages an open and constructive debate within
the Board and with management.

AUDIT COMMITTEE
The Board established an Audit Committee in 2010. The Audit Committee operates on the basis
of a generic annual plan and undertakes an examination and evaluation of the adequacy and
effectiveness of the organisation's governance, risk management, and internal controls, monitors the
financial reporting process and prepares the Board’s follow up on such issues. The Audit Committee is
tasked from time to time with the carrying out of special investigations designed to assess the overall
risk management system within the Group.

The Audit Committee is a sub-committee
of the Board of Directors, and its objective is to act as a
preparatory body in connection with the Board's supervisory roles with
respect to financial reporting and the effectiveness of the company's internal control system. It also
attends to other tasks assigned to it in accordance with the instructions for the Audit Committee
adopted by the Board of directors.

The Audit Committee meets six to eight times a year and holds closed sessions with the
appointed auditor on at least an annual basis without the Company’s management being present.
The appointed auditor participates at all Audit Committee meetings.

Proper internal control is ensured through various forms of segregation of duties, guidelines and
approval procedures. The company’s internal financial transactions are subject to special control
systems and routines. Financial risk is managed by the Group’s finance function which during
2019 has provided regular financial and liquidity forecasts and updates to the Board as well as
comprehensive forecasts at each Board meeting.

At present, the Audit Committee comprises two members from the Board. The Audit Committee held
six meetings in 2020. Average meeting attendance was 100 per cent.

Name

Birgit Aagaard-Svendsen

Kristian Johansen

Glen O. Rødland

Role

Chair

Member

Date first time
appointed

Date due for
re-election

Meeting
attendance (%)

May 2017

May 2021

Nov 2017

Resigned May 2020

May 2020

May 2021

100

COMPENSATION COMMITTEE
A Compensation Committee was established in 2006 to prepare proposals related to the remuneration
of senior officers.

At present, the Compensation Committee comprises of two members. The Compensation Committee
held four meetings in 2020. Average meeting attendance was 88.9 per cent.

Name

Nina Udnes Tronstad

Glen O. Rødland

Svend Anton Maier

Alf C. Thorkildsen

Role

Chair

Member

Date first time
appointed

Date due for
re-election

Meeting
attendance (%)

May 2019

May 2020

May 2016

Resigned May 2020

Feb 2017

Resigned May 2020

May 2020

May 2021

100

SAFETY, SUSTAINABILITY AND ETHICS COMMITTEE
Prosafe has established a Safety, Sustainability and Ethics Committee which maintains and further
develops Prosafe’s Code of Conduct and policies, which include guidance on illegal and unethical
issues. Concerns about possible breaches of the code or any policy can be reported to the Committee
by ordinary mail (addressed to the Ethics Committee, Prosafe AS, P.O. Box 39, N-4031 Stavanger,
Norway) or e-mail (conduct@prosafe.com) on a confidential basis. The Committee ensures that
alleged breaches are investigated thoroughly and fairly and reported as appropriate to the Board.

THE BOARD OF DIRECTORS’ EVALUATION OF ITS OWN WORK
The Board has traditionally undertaken an annual self-evaluation of its own performance and
expertise, working methods, composition and the manner in which the directors’ function, both
individually and collectively, in relation to the goals set for their work. In this context, the Board
also assesses itself in relation to corporate governance. The assessment is made available to the
Nomination Committee as a tool for continuous improvement.

10. RISK MANAGEMENT AND INTERNAL CONTROL

The Board is responsible for ensuring that sound internal control and risk management systems that
are appropriate for the extent and nature of the Company’s activities are in place.

The Audit Committee assesses the integrity of Prosafe’s accounts and follows up on behalf of the
Board on issues related to financial review and external audit of Prosafe’s accounts.

Furthermore, the Board and the Audit Committee supervise and verify that effective internal control
systems are in place, including systems for risk management and financial reporting, and satisfactory
routines for following up adherence to the Company’s ethical guidelines.

Prosafe focuses strongly on regular and relevant management reporting of both operational and
financial matters, both in order to ensure adequate information for decision making and to quickly

respond to changing conditions. Evaluation and approval procedures for major capital expenditure
and significant treasury transactions are established.

Prosafe’s conduct and development of its business are mainly subject to the following categories of
risk: strategic, commercial, operational, compliance and legal, financial, and IT/Cyber security risk.
These risks and associated sensitivities as well as internal control measures are described in more
detail at https://www.prosafe.com/investor-information/corporate-governance/risk-management/
and in a separate Risk Management Policy.

In addition to the ongoing reviews by Executive Management, continuous reviews are also carried out
by the Board in respect of risk management and internal control arrangements. The risk management
methodology applied by management and the Board is in accordance with industry and market
practices generally and as implemented in Prosafe over several years. The risk and opportunity
register forms the basis for the action plan. All key risks and opportunities are appropriately discussed
and followed up by management and the Board in the form of strategies and mitigating actions.
Specifically, with regards to the internal controls related to the accounting process, this is mitigated by
a combination of organisation and segregation of duties, procedures and authority matrix, reporting
and analytical controls and continuous reporting and reviews with the Audit Committee.

The Board of Directors has systems in place to assess that the CEO exercises appropriate and effective
management. Further, the Board and the Audit Committee take steps to ensure that the Company’s
internal control functions are working as intended and that necessary measures are taken to reduce
extraordinary risk exposure. The Company’s Audit Committee oversees the Company’s routines for
financial risk management and internal control which includes documentation for internal control
and financial reporting procedures, hereunder verifies that effective control mechanisms are in place.
Neither Prosafe’s Executive Management nor its Audit Committee reported any material weaknesses
in the related internal control systems at 31 December 2020.

11. REMUNERATION OF THE BOARD

The AGM determines directors’ fees based on recommendation from the Nomination Committee.
Remuneration of the Board reflects its responsibilities, expertise, commitment of time, and the
complexity of Prosafe’s activities. Directors’ fees are not related to the Company’s performance
and none of the current Board directors have a pension scheme or agreement concerning pay after
termination of their office nor have they received any share options.

Board

Chair

USD 110,000

Deputy Chair

USD 84,000*

Directors

USD 68,000

*There is currently no Deputy Chair on Prosafe’s Board of Directors

In addition, a fee of USD 1,500 is payable for directors, Board Committee members and Board
representatives to the Nomination Committee attending Board or Committee meetings held away
from their home country.

Information relating to the total remuneration for the Board for 2020 is set out in note 6 to the
consolidated accounts.

The fees payable to the members of the Board Committees are as follows:

Committee

Chair

Members and Board
representatives

Nomination Committee

Compensation Committee

Audit Committee

USD 7,500

USD 15,000

USD 20,000

USD 5,000

USD 10,000

Other

Additional USD
850 per meeting

N/A

No director or company with which any director is associated (except as disclosed below) takes on
specific assignments for the Company in addition to their appointment as a director.

12. REMUNERATION OF EXECUTIVE PERSONNEL

The terms of employment of the CEO and the Executive Management are determined by the Board,
based on a detailed annual assessment of their salary and other remuneration.

Prosafe aims at providing a competitive total package for Executive Management. The basis for
comparison is other listed service companies in the oil and gas sector in the geographic areas where
Prosafe pursues its operations. The total remuneration package for the Executive Management
comprises three principal elements – base pay, variable pay and other benefits such as pension.

The variable pay of the Executive Management is performance related and linked to the operations
and development of the company for the purpose of value creation for shareholders. It is aligned to
the Company’s strategy, as set by the Board and subject to the ethical guidelines and values of the
company. The Board reserves the right to reduce or even cancel any variable pay should unforeseen
events damage the Company’s reputation and/or safe operating record. It is also subject to an
absolute limit.

For further details relating to remuneration paid to Executive Management, see note 6 to the
consolidated accounts and the Declaration of Executive Remuneration as presented by the
Compensation Committee and attached to the notice for the AGM in May 2021.

13. INFORMATION AND COMMUNICATION

Prosafe’s calendar for interim financial reporting and the general meeting for shareholders can be
found on Prosafe’s website at https://www.prosafe.com/investor-information/financial-calendar/

Prosafe presents preliminary annual accounts in early February every year. Complete accounts, the
directors’ report and annual report are provided to shareholders and other stakeholders. In addition,
interim accounts are provided on a quarterly basis. Investor presentations in the form of audiocast
or webcast are held in connection with the reporting of annual and interim results. The chief
executive officer and/or the DCEO&CFO use these occasions to review the results and comment
on operations, markets, prospects and outlook. The presentation material is available on Prosafe’s
website.

An ongoing dialogue is otherwise maintained with analysts and investors. In order to ensure equal
treatment of shareholders, Prosafe aims to provide clear, up-to-date and timely financial and other
information about the company’s operations to the financial market. The Company places the
greatest emphasis on treating all shareholders and analysts equally.

All information distributed to the Company's shareholders is published on Prosafe's website at the
same time as it is made available to the shareholders.

Guidelines regarding who is entitled to speak on behalf of the Company in respect of certain
matters, as well as a contingency plan for managing information so as to respond to certain events
are contained in the various corporate procedures.

Information available to shareholders is only available in English. As an international company with
a broad shareholder base, English is regarded as the most applicable common language.

14. TAKE-OVERS

Prosafe’s Articles of Association do not contain any defence
mechanisms against take-over bids, nor has the company
implemented other measures limiting the opportunity to
acquire shares in the company.

If an offer is made for the Company’s shares,
the Board will issue a statement evaluating
the offer and make a recommendation
as to whether shareholders should
or should not accept such offer. In
such a situation, Prosafe will act
professionally and in accordance
with the applicable principles for
good corporate governance.

15. AUDITOR

The Company’s appointed registered public accounting firm is independent in relation to Prosafe
and is elected by the general meeting of shareholders. The appointed auditor’s fee must be
approved by the general meeting of shareholders.

KPMG has been the appointed auditor of the Company since May 2015. The auditor always attends
Board meetings where the annual accounts are considered. In 2020, auditors’ fees for the Group
amounted to USD 377,000 and consultancy fees paid to KPMG amounted to USD 13,000. These
consultancy fees relate to compliance and pre-liquidation stage services.

The Audit Committee is responsible for ensuring that the company is subject to independent and
effective external and internal controls. The appointed auditor participates in the Audit Committee
meetings and presents a review of the company’s internal control environment and assessment
of the key judgements/accounting issues at least once a year. In addition, a meeting is held
between the appointed auditor and the Board at least once a year (which is not attended by the
chief executive officer or any other member of management). Use of the appointed auditor by the
company for services other than audit is limited, however, guidelines have been established to
govern such use.

25 March 2021

The Board of Directors of Prosafe SE

Glen Ole Rødland
Non-executive Chairman

Birgit Aagaard-Svendsen
Non-executive Director

Alf C. Thorkildsen
Non-executive Director

Nina Udnes Tronstad
Non-executive Director

Jesper K. Andresen
Chief Executive Officer

DIRECTORS’ REPORT

The directors present their annual report of Prosafe SE
(the “Company” or the “Parent Company”) and its subsidiaries
(the Company and its subsidiaries referred to as the “Group”
or “Prosafe”) together with the Group’s and the Parent
Company’s audited financial statements for the year ended
31 December 2020.

PRINCIPAL ACTIVITY
Prosafe is a leading owner and operator of
semi-submersible accommodation, safety and
support vessels.

Prosafe’s vessels are primarily serving energy
companies on various offshore projects in
global offshore oil and gas areas. Traditionally,
the majority of the work has been related
to existing producing fields (‘brownfield’),
whereas the remainder has been related
to hook-up and commissioning of new
developments (‘greenfield’). Accommodation
vessels may also be used for decommissioning
of offshore installations.

The main geographical markets for semi-
submersible accommodation vessels have
typically been the North Sea, Brazil and Mexico.
Occasionally semi-submersible accommodation
vessels have also been employed in the US Gulf,
West Africa, Australia and other areas.

The vessels are normally provided on a time
charter basis where Prosafe mans and operates
the vessels directly.

The Parent Company, Prosafe SE, is legally
domiciled in Norway and is the ultimate owner
of all Group companies.

FINANCIAL RESULTS,
FINANCING AND
FINANCIAL POSITION
OF THE GROUP

(The figures in brackets correspond to the 2019
comparatives)

INCOME STATEMENT
Operating revenues totalled USD 56.7 million
in 2020 (2019: USD 225.4 million), with fleet
utilisation1) decreasing to 20.4 per cent (50.9
per cent). The decrease in utilisation reflects a
significant reduction in oil and gas companies’
investments and spending following a lower oil
price and Covid-19.

The decrease in operating revenues is generally
due to a shift in the market and the way the
industry operates which impacts utilization
and day rates, as well as oil and gas companies’
reduced spending and deferment of contracts
in 2020 due to Covid-19.

Operating expenses decreased to USD 66.2
million (USD 128.3 million), which was mainly
driven by low activity and cost reduction
measures.

Depreciation, amortization and impairment
amounted to USD 854.8 million (USD 439.7
million) including an impairment charge of
USD 810.3 million (USD 346.2 million). As
the general recovery across the exploration
and production value chain continues to
be delayed, the demand for Prosafe vessels
remains weak. Management performed an
impairment assessment of the Company’s
vessels in accordance with IFRS. As a
result, an impairment charge was made in
2020. For further information relating to
the assumptions used in the impairment
assessment, refer to note 8 of the consolidated
accounts.

1) Utilisation = actual vessel days in operation in the period / possible vessel days in the period x 100 for 100% owned vessels

The operating loss amounted to USD 864.3
million (loss of USD 342.6 million).

Interest expenses totalled USD 61.8 million
(USD 34.6 million). Lower interest expenses in
2019 were mainly contributed by a one-off and
non-cash positive adjustment to amortised
cost of interest-bearing debt in the amount
of USD 28.7 million. For further information,
refer to note 10 and note 15 of the 2020
consolidated accounts.

Financial items other than interest expenses
amounted to USD 21.6 million negative (USD
17.9 million negative).

Taxes for 2020 in the amount of USD 2.4
million (USD 4.8 million) were mainly relating
to operations in Brazil.

Net loss amounted to USD 950.1 million (net
loss of USD 399.9 million), resulting in earnings
per share of USD 10.8 negative (USD 4.54
negative). Fully diluted earnings per share were
USD 10.8 negative (USD 4.54 negative).

FINANCIAL POSITION
Total assets amounted to 587.7 million
(USD 1,480.2 million) at the end of 2020.
Investments in tangible assets totalled USD
2.9 million (USD 77.5 million). The investments
in 2020 mainly relate to the five-yearly Special
Periodic Survey (SPS) costs for Safe Concordia,
Safe Notos and Safe Zephyrus as well as
certain equipment replacements on the Safe
Caledonia.

As of year-end 2020, the Group had a total
liquidity reserve in the form of liquid assets
(cash and deposits) of USD 160.3 million (USD
198.1 million). Total restricted cash at year-end
2020 was USD 9.8 million (USD 9.7 million).

As a consequence of low activity and a net
loss of USD 950.1 million largely due to
impairments of USD 810.3 million, total
shareholders’ equity amounted to USD 948.5
million negative (USD 2.4 million positive),
resulting in an equity ratio of 161.4 per cent
negative (0.2 per cent positive).

Interest-bearing debt amounted to USD 1,509.4
million (USD 1,397.9 million) at year-end.
Repayments of debt totalled USD 2 million
(USD 37.9 million). The increase in interest-
bearing debt was mainly a consequence of
accumulated interests and termination of three
swaps during 2020.

The interest-bearing debt agreements are
subject to termination, repayment or buy back
clauses in the event of a change of control of
the Group (as control is defined in the relevant
agreements). The only applicable financial
covenant at year-end 2020 was minimum
cash of USD 65 million and the Group was in
compliance with a cash position of USD 160.3
million at year end 2020.

Please refer to the Financing section below and
note 15 of the 2020 consolidated accounts for
further information about the loans, financial
covenants and financial status of the Company.

Net cash flow in 2020 was USD 37.8 million
negative (USD 57.8 million positive). Net cash
flow from operating activities amounted to
USD 33.1 million negative (USD 86.6 positive).
Total cash investment in tangible assets for
2020 amounted to USD 2.9 million.

FINANCING
The Group’s consolidated book equity turned
negative in early 2020, a development that was
anticipated following impairment charges of
USD 341.4 million in late 2019. In consideration
of the outlook and the financial implications
including anticipated breach of the facilities
agreements, the Board of Directors initiated
a dialogue with its lenders in December 2019
with a view to ensure sufficient financial
flexibility for the longer term. In Q1 2020, the
Group concluded on a revised business plan
and announced further impairment charges of
USD 810.5 million. The dialogue with lenders
has continued in a constructive manner
throughout the year with a majority of lenders
providing their support to the Group and the
process to agree on a sustainable financial
solution while reserving their rights.

As part of the dialogue with lenders, the Group
has continued to defer making payments of
scheduled instalments and interests under
its USD 1,300 million and USD 144 million
facilities2). Similarly, payment of the final
instalment owed and due under the seller
credit to Cosco for the Safe Notos remains as
reported on 14 April 2020 subject to ongoing
discussions with Cosco and the lenders.

Total net liabilities for the year amounted
to USD 850.8 million (USD 93.3 million).
The company’s equity was negative as at 31
December 2020 following impairments made
in the year as a consequence of reassessment
of the industry outlook. The company is in
constructive dialogue with its lenders to agree
a sustainable financial solution as soon as
possible.

The Group’s goal remains to agree a
sustainable financial solution on a consensual
and cost-efficient basis as soon as possible. It
is still unclear what a final solution may look
like, but as reported previously, a significant
equitization of debt is anticipated, which in
turn is likely to result in minimal or no recovery
for current shareholders.

FINANCIAL RESULTS AND FINANCIAL
POSITION OF THE PARENT COMPANY
The net loss for the year amounted to USD
944.0 million (USD 412.6 million), which
included impairment charges relating to
investments in subsidiaries of USD 713.3
million (USD 393.2 million). Net financial loss
amounted to USD 231.9 million (USD 37.8
million).

2) USD 144 million credit facility

(previously known as the “USD 288 credit facility”)

OPERATIONS
AND PROJECTS

As at year-end, the fleet comprised eight fully
owned vessels plus options for two completed
new builds at a yard in China. In August 2018,
Prosafe reached an agreement with Cosco
allowing for flexible delivery and long-term
financing of Safe Eurus, Safe Nova and Safe
Vega. The Safe Eurus was delivered in 2019
against a long-term contract in Brazil while the
Safe Nova and Safe Vega remain in strategic
stacking mode with Cosco in China until
Prosafe takes delivery.

Seven vessels have been sold by Prosafe for
recycling since mid-2016. An eighth unit has
been sold for recycling in the beginning of
2021, thereby reducing the fleet to seven fully
owned vessels plus the options for the two
completed new builds at a yard in China.

Specifications for each of the vessels and
details of the current vessel contracts can be
found on the Company’s website https://www.
prosafe.com/fleet/vessels/

Prosafe and EnQuest agreed on a settlement of
the cancelled contract for the Safe Zephyrus in
2020 with EnQuest paying Prosafe an adequate
compensation. The Safe Zephyrus completed
her five-yearly special periodic survey in
Norway at the start of 2021 and commenced
operations of the 145-day contract at the
Shearwater platform for Shell in the UK in late
February 2021. In addition, Shell retains the
option to extend the contract after the firm
duration by up to 30 days.

Safe Caledonia is currently laid up in the UK.
The vessel is scheduled to commence a 162-day
contract with a 30-day option for Total at the
Elgin platform in the UK from late March 2021.

Safe Eurus has been providing safety and
maintenance support to Petrobras during a
three-year contract since November 2019.
As a consequence of Covid-19 the vessel was
on standby rate from early August 2020 and
resumed operation on 24 September 2020.

The original three-year and 222-day firm
contract for the Safe Notos that was due to
complete in July 2020 was suspended for 120
days at zero rate from April 2020. The vessel
was back on standby rate in early August 2020
and resumed operations in early October 2020.
The Safe Notos was off-hire for the most part
of January 2021 conducting her five-yearly
special periodic survey and resumed operations
in February 2021 continuing through until
mid-November 2021.

Safe Concordia was in early January 2021
awarded a contract in Trinidad and Tobago. The
vessel is now preparing for this contract which
is scheduled to commence in June/July 2021.

Safe Scandinavia, Safe Boreas and Regalia
were idle in the year and are laid up in Norway.
Regalia has been sold for recycling with
commencement of recycling in Q1 2021.

Although the impact from Covid-19 on the
macro environment has been challenging,
the company has successfully implemented
proper safety measurements at workplaces
and vessels to protect people and assets, as
well as several cost-saving initiatives to protect
liquidity.

The Company does not undertake specific
Research & Development activities. However,
the Company is increasing its efforts in the
area of energy management to adapt to the
global ambition to achieve energy efficiency,
reduced emissions and compliance with
ISO 50001. Prosafe is currently adapting to
ISO 50001 while undertaking feasibility studies
together with third parties in search for energy
efficiencies and emissions reductions.

TOTAL ORDER BACKLOG

Total order backlog3) as of 31 December 2020
amounted to USD 162 million (USD 154
million) of which USD 144 million relates to firm
contracts and USD 18 million relates to options.
Secured utilisation for 2021 is 45.3 per cent. For
2022, secured utilisation is currently 17.3 per
cent.

WESTCON DISPUTE

On 8 March 2018, the Stavanger City Court
issued its judgement in favour of Prosafe in
respect of the dispute between Westcon Yards
AS (Westcon) and Prosafe Rigs Pte. Ltd. relating
to the conversion of the Safe Scandinavia into
a tender support vessel. The Court decided
in favour of Prosafe ordering Westcon to pay
Prosafe NOK 344 million plus interest and NOK
10.6 million legal costs. Westcon filed an appeal
and Prosafe filed a counter appeal on 28 May
2018.

The appeal hearings were concluded in
the second and final instance (Gulating
Lagmannsrett) on 27 November 2020.
Judgement is expected in the first half of 2021.
The Group has treated its claim as a contingent
asset in the notes to the accounts. Meanwhile,
Prosafe has pursued the best possible security
for its claim.

DISCONTINUATION
OF MERGER PROCESS
WITH FLOATEL
INTERNATIONAL LTD.

On 2 January 2020, Prosafe announced that
Prosafe and Floatel International Ltd have
agreed to extend the long stop date in the share
purchase agreement from 31 December 2019
until 30 June 2020. On 13 February 2020, the

parties regrettably decided to discontinue the
merger process due to financial uncertainty and
process risks leading to the conclusion that any
near-term completion of the merger seemed
unlikely.

CORPORATE SOCIAL
RESPONSIBILITY AND
ESG REPORTING

Prosafe views Corporate Social Responsibility
(CSR) as an integral part of being an effective
and a value-creating business. Prosafe is
committed to maintaining high ethical, social,
environmental and governance standards, and
creating sustainable values for the benefit of its
stakeholders and the society at large wherever
the Company operates.

In 2020, the Group further increased its focus
on CSR by amongst others setting clear,
quantitative targets for Environmental, Social
and Governance key performance indicators.
Prosafe’s targets, action plans and progress
reports are included in a separate ESG report
that has also been included in this annual
report.

OUTLOOK

GENERAL
The oil and gas industry which the offshore
accommodation industry is part of is
characterized by high cyclicality and continuous
changes which impact activity levels, price
levels and planning horizons, requiring
continuous risk and opportunity management
and adaptability.

During the downcycle in recent years, many
service segments have seen a significant
reduction in activity and that includes
demand for offshore accommodation vessels.

3) Order backlog = amount of contracted revenue not recognised in income statement yet

In addition, there have been structural
shifts driven by new ways of working and
maintaining and developing offshore fields,
in Norway in particular. The effect is lower
manpower intensive work processes, a trend
that is expected to continue.

Near-term, developments in macro factors
like Covid-19 in 2020 have had severe impact
on activity levels and earnings through 2020
and the expected growth of the renewable
industry will add uncertainty about the longer-
term developments. Although such risks and
negative impacts have been partially mitigated
by governments globally through various
support packages and incentives to support
viable business and activity, the longer-term
effects of the pandemic and such incentives,
and the energy transition remain to be seen.

GEOGRAPHICAL MARKETS
The Brazilian market has remained relatively
stable in terms of activity and the Group has
had three vessels working for parts of the
year, although day rates are under continued
pressure. Still, the Brazilian market is expected
to offer some opportunities and long-term
contracts also in the future although pricing,
the cost of moving vessels to the region

and any alternative
opportunities elsewhere will impact the
attractiveness of this region.

Activity in the North Sea is expected to improve
for semi-submersible offshore accommodation
vessels in the near years in 2021 and 2022
driven by a combination of contracts being
deferred from 2020 due to Covid-19, the award
of long expected hook-up work for Equinor
on the Johan Sverdrup field and other recent
contracts, as well as further prospects still to
be concluded. However, despite the increase
in near-term opportunities, day rates remain
under pressure and the activity increase in the
short term does in our opinion not reflect any
change to the fundamental shift in the way
that the industry works in the North Sea, in
Norway in particular, and which led the Group
to reassess the outlook in early 2020 and realize
significant impairments.

The Mexican market, which used to be a key
market for many years, cancelled all require-
ments for non-Mexican accommodation
equipment in early 2016.

last few years, this has now shifted from
focus to action with increased strength. For
Prosafe this will provide both opportunities and
threats and the Group is actively evaluating
how to manoeuvre through this transition both
strategically and operationally. Specifically, the
Group is consequently increasing its efforts in
the area of energy management and emissions
reduction to adapt to the global ambition to
achieve energy efficiency and reduced emis-
sions.

Prosafe’s view is that these efforts over time –
although they will require investments – will
provide competitive edge and new business
opportunities.

STRATEGY AND GOALS
The Group’s strategy remains to be the preferred
supplier of offshore accommodation vessels.

Despite the changing landscape and increased
uncertainty, Prosafe continues to operate under
the assumption that there will be a need for
accommodation vessels and a gradual move
towards a sustainable market. The Group is,
however, of the opinion that the supply side in
the industry is too fragmented and in need of a
significant reduction of the fleet.

The situation remains generally unchanged to
date. Despite this, the production ambitions of
the new Mexican administration are high, and
it is positive that contracts have been awarded
to non-Mexican companies in other segments
such as drilling. Prosafe continues its efforts in
Mexico to be well positioned when opportuni-
ties may again arise in the accommodation
segment.

Demand for semi-submersible offshore
accommodation units in other geographical
markets is historically more sporadic and
opportunities are monitored and pursued on
an opportunistic basis.

SUPPLY SIDE
The supply side has seen a positive develop-
ment since 2016 with a reduction in the
number of available units, largely supported by
Prosafe, which following the sale of the Regalia
in January 2021 has sold eight vessels for
recycling. By early 2021, two competitors had
sold one unit each for recycling .

More recycling of vessels and consolidation
activities are anticipated and needed over the
coming years, while no further newbuilding
activity is currently anticipated given the
weak status and outlook of the offshore
accommodation industry.

ENERGY TRANSITION
The energy transition is accelerating on the
back of Covid-19. Although there has
been a steady increase in attention
from the capital markets
on ESG over the

Meaningful consolidation and continued
scrap ping are needed to contribute to a faster
normalization of the return in our industry. In
this perspective, Prosafe will continue to be
active in further consolidation of the offshore
accommodation industry to protect and create
value.

Please refer to “Going Concern” on page 32 and
“Events after the period end” on page 33 in this
annual report.

RISK

Prosafe categorises its primary risks under the
following headings: strategic, commercial,
operational, compliance and legal, financial
and IT/Cyber security related. The Group’s
Board and senior officers manage these risk
factors through continuous risk assessments,
reporting and periodic reviews in Management
and Board meetings, and as part of the rolling
strategy and planning processes.

The Group 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 opera-
tional, financial and compliance related risk
through proper operating routines, the use of
financial instruments and insurance policies.

Commercial risk comprises macro factors such
as oil price and industry specific factors such as
supply/demand balance, competitive position,
new development solutions and new ways of
executing offshore projects.

Demand for accommodation units is among
others sensitive to oil price fluctuations
and changes in exploration and production
spending. Demand is also sensitive to impacts
from the energy transition which may pose
both opportunities and threats. In addition, the
demand for accommodation units is sensitive
to other incidents that may impact the general
state of the world economy, general activity

and spend levels, and demand for natural
resources. Global incidents like pandemics with
a material impact on capital markets and the
oil price may negatively impact activity in the
oil and gas industry, and thereby also demand
for accommodation services.

The Group is exposed to financial risks such as
currency risk, interest rate risk, financing and
liquidity risk and credit and counterparty risk.

Prosafe reports in USD and generates income
primarily in USD, whereas a large part of its
operating costs is in other currencies such as
GBP, Brazilian Real and NOK. The currency mix
will, however, vary with areas of operation.
This exposure as identified based on rolling
forecasts is hedged according to the Group’s
Finance Policy. The interest rate risk is normally
hedged by the use of interest rate swaps or cap
structures for usually 70 – 100 per cent of the
debt. Due to the current financial status of the
Group and the ongoing process with lenders,
the hedging level is currently significantly
reduced pending normalization once a sustain-
able financial solution is in place.

The Group carries out credit checks on clients
as part of its tendering processes and has a
history of minimal loss from debtors. There are
no material overdue receivables as of year-end.
Further information on financial risk manage-
ment is provided in note 19 to the consolidated
financial statements.

An account of the main features of Prosafe’s
risk management process is available on its
website at https://www.prosafe.com

INTERNAL CONTROLS

Internal control is ensured in accordance with
Prosafe’s policies and procedures which aim to
ensure the effectiveness and efficiency of its
operations, reliability of its financial reporting
and compliance with applicable laws and
regulations. These policies and procedures are
designed, inter alia, to safeguard assets and
protect from accidental loss or fraud.

In addition, the policies and procedures are
reinforced by the organisation and the
competence of its personnel, segregation of
duties, regular risk assessments and internal
reporting, Management meetings, Board
meetings and the Audit Committee, together
with external audit and public reporting and
communication.

In respect of internal controls relating to the
preparation of financial statements, the Board
of Directors demonstrates independence from
Management and exercises oversight of the
development and performance of internal
control. Management establishes, with Board
oversight, structures, reporting lines, and
appropriate authorities and responsibilities
in the pursuit of objectives. In addition to the
ongoing reviews by the senior officers, annual
reviews and assessments are carried out which
are approved by the Board in respect of risk
management and internal controls. The risk
and opportunity register forms the basis for
the action plan which further represents a
main and continuous agenda item for both
Management and the Board to ensure that all
key risks and opportunities are appropriately
discussed and followed up by Management
and the Board in the form of strategies and
mitigating actions.

Prosafe is committed to attract, develop, and
retain competent individuals in alignment
with its objectives. The Group holds individuals
accountable for their internal control
responsibilities in the pursuit of its objectives.

The Group identifies and analyses risks which
may potentially affect the achievement of its
objectives and how these should be managed.
It also considers the potential for fraud and
identifies and assesses changes that could
significantly affect the system of internal
control.

The Group selects, develops and deploys
controls for the mitigation of risks related to
the achievement of its financial reporting
objectives, including controls over technology.

It deploys these controls through policies and
procedures and reporting.

The Group carries out regular reviews to
ascertain whether the internal controls are
present and functioning, and evaluates and
communicates any internal control deficiencies
in a timely manner to those parties responsible
for taking corrective action, including senior
management and the Board of Directors, as
appropriate. Audits carried out by external
parties like the financial auditor, clients and
regulatory authorities and the reporting and
follow-up of these are important elements to
ensure continuous focus on and improvement
of internal controls.

HEALTH, SAFETY AND
THE ENVIRONMENT (HSE)

Robust HSE performance is fundamental to
all of Prosafe’s operations and is therefore
reflected in its core values. Consequently,
Prosafe works proactively and systematically to
reduce incidents, injuries and absence.

In 2020, Prosafe recorded zero incidents
classified as a Lost Time Injury (LTI) (2019: 0),
i.e. those injuries resulting in an employee
being absent from the next work shift due to
the injury. 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.

Prosafe operates a zero-accident mind-set
philosophy which means that no accidents or
serious incidents are acceptable. A number
of initiatives have been implemented over
the years in order to further strengthen the
safety culture. These and new initiatives will
be continuously developed in order to improve
safety performance further.

Sick leave was 0.46 per cent in 2020, a
reduction from 2.26 per cent in 2019.

around the world. The overall voluntary
employee turnover in the Group was 8.06 per
cent in 2020, compared with 19.2 per cent in
2019.

Prosafe 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 2020, women
accounted for 25.8. per cent of all employees,
compared with 26.0 per cent in 2019. Onshore
the proportion of women was 41.7 per cent, as
compared to 36.6 per cent in 2019.

Prosafe had no accidental discharges to the
natural environment in 2020 and continues to
actively reduce emissions by modernizing and
adapting its fleet and operating procedures
and practices.

Women constituted 24.4. per cent of the
managers as at 31 December 2020, compared
with 26.8 per cent at the end of 2019. Women
account for 50 per cent of Prosafe´s Board of
Directors.

In 2020, Prosafe decided to further increase
focus on the energy management side of
environmental management and started a
process to implement the requirements of ISO
50001 Energy Management with the intention
to have the system fully implemented in 2021.

The impact to the external environment from
Prosafe’s operations is reported in detail in the
ESG report, which is included in this annual
report.

HUMAN RESOURCES
AND DIVERSITY

Prosafe had 99 employees at the end of 2020
(average 111), compared with 150 in the
previous year (average 313). This reduction
in the number of employees reflects the
adjustment of the organisation, operating
model and ways of working in response
to a shift in the market and a consequent
reassessment of the outlook.

Prosafe’s global presence was reflected in the
fact that its employees came from 15 countries

Prosafe aims to offer the same opportunities to
all and there is no discrimination with respect
to recruitment, remuneration or promotion,
age, disability, gender, marriage and civil part-
nership, pregnancy and maternity, nationality,
religion or belief, and sexual orientation. More
detailed information can be found in the ESG
report included in this annual report.

CORPORATE
GOVERNANCE

Corporate governance in the Group is based on
the principles contained in the Norwegian Code
of Practice for Corporate Governance of 17
October 2018. There are no deviations between
the Code of Practice and the way it has been
implemented during 2020. The Group’s full
corporate governance report is available in a
separate section in this annual report.

Corporate governance is a key focus for the
Group in order to strengthen confidence in
Prosafe among shareholders, the capital market
and other interested parties, and to help ensure
maximum value creation over time in the best

interest of shareholders, employees and other
stakeholders.

At the Annual General Meeting held on 7 May
2020, Alf C. Thorkildsen was elected new Board
member replacing Kristian Johansen and Svend
A. Maier. All other members of the Board were
re-elected. Glen Ole Rødland was re-elected as
chairman. The remuneration of the members of
the Board of Directors is disclosed in note 6 to
the financial statements.

As at 31 December 2020, the only director
(including associated parties) who held shares
in Prosafe was Birgit Aagaard-Svendsen,
owning 3,000 shares. Glen Ole Rødland has
an indirect ownership interest in Prosafe
through his ownership interest in HitecVision
VII, L.P. and Alf C. Thorkildsen has an indirect
ownership interest in Prosafe through his
ownership interest in HitecVision VI, L.P and
HitecVision VII, L.P.

GOING CONCERN

The Board of Directors confirms that the
accounts have been prepared under the
assumption that the Company is a going
concern. The going concern assumption is
considered to be appropriate as it is based on
the Board’s view that obtaining a long term
and sustainable financial solution should be
achievable by taking into consideration the facts
and circumstances described below.

Year-end book equity in the parent company
and the Group turned negative in early 2020,
a development that was anticipated following
an impairment charge in the consolidated
accounts of USD 341.4 million in late 2019. In
consideration of the outlook and the financial
implications including anticipated breach the
facilities agreements, the Board of Directors
initiated a dialogue with its lenders in December
2019 with a view to ensure sufficient financial
flexibility for the longer term. In Q1 2020, the
Group concluded on a revised business plan
and announced further impairment charges of

USD 810.5 million. Dialogues with lenders have
continued in a constructive manner throughout
the year with a majority of lenders providing
their support to the Group and the process to
agree on a sustainable financial solution while
reserving their rights.

As part of the dialogue with lenders, the Group
has continued to defer making payments of
scheduled instalments and interests under its
USD 1,300 million and USD 144 million facilities.
Similarly, payment of the final instalment owed
and due under the seller credit to Cosco for the
Safe Notos remains as reported on 14 April 2020
subject to ongoing discussions with Cosco and
the lenders.

The Group’s goal remains to agree a sustainable
financial solution with its lenders on a
consensual and cost-efficient basis as soon as
possible. It is still unclear what a final solution
may look like, but as reported previously, a
significant equitization of debt is anticipated
which in turn is likely to result in minimal or no
recovery for current shareholders.

SHAREHOLDERS
AND SHARE CAPITAL

According to the shareholder register as at 31
December 2020, the 20 largest shareholders
held a total of 69.26 per cent of the issued
shares. The number of shareholders was 3,663.
North Sea Strategic Investments AS was the
largest shareholder with a holding of 18.77 per
cent of the issued shares.

Significant shareholdings as at 31 December
2020 are presented in note 14 to the financial
statements and are bi-weekly updated on the
Company’s website at https://www.prosafe.
com/investor-information/shareholder-
information/largest-stakeholders/

As at 31 December 2020, Prosafe had an issued
share capital of 82,464,212 ordinary shares.

In addition, there are 5,522,790 shares to be
issued under convertible bond agreements and
3,435,982 shares to be issued under warrant
agreements. All at a nominal value of EUR 0.10
each.

There are no share incentive schemes or
shareholder agreements in place in the
Company.

The Company’s loan agreements include
change of control clauses.

Further information on the share capital and
changes thereon are shown in note 14 to the
consolidated financial statements.

DIVIDENDS

Prosafe’s longer term ambition is to secure
its shareholders a competitive return on their

shares through a combination of share price
appreciation and a direct return in the form of
dividends.

Due to the reduction in industry activity levels
and challenging market conditions, no dividend
has been paid since August 2015. In 2016, the
Company and the Lenders agreed that the
Group will not declare any dividends until
deferred bank instalments have been prepaid
or cancelled and a 12-month financial forecast
has been provided which confirms compliance
with the financial covenants.

EVENTS AFTER THE
PERIOD END

Reference is made to note 25 to the
consolidated accounts for a description of
events after the reporting date.

25 March 2021

The Board of Directors of Prosafe SE

Glen Ole Rødland
Non-executive Chairman

Birgit Aagaard-Svendsen
Non-executive Director

Alf C. Thorkildsen
Non-executive Director

Nina Udnes Tronstad
Non-executive Director

Jesper K. Andresen
Chief Executive Officer

DECLARATION BY THE
BOARD OF DIRECTORS AND
CHIEF EXECUTIVE OFFICER

The Board of Directors and the Chief Executive Officer have today considered and approved the annual
report and financial statements for the Prosafe Group and its parent company Prosafe SE for the 2020
calendar year ended on 31 December 2020.

This declaration is based on reports and statements from the Chief Executive Officer, Deputy CEO
& Chief Financial Officer and on the results of the Group’s business as well as other essential
information provided to the Board of Directors to assess the position of the parent company and
the Group.

TO THE BEST OF OUR KNOWLEDGE:
The 2020 financial statements for the parent company and the Group have been prepared in
accordance with all applicable accounting standards.

The information provided in the financial statements gives a true and fair portrayal of the parent
company’s and the Group’s assets, liabilities, financial position and results taken as a whole as of
31 December 2020.

The Board of directors’ report for the parent company and the Group provides a true and fair overview
of the development, performance, outlook and financial position of the parent company and the
Group taken as a whole, and the most significant risks and uncertainties facing the parent company
and the Group.

25 March 2021

The Board of Directors of Prosafe SE

Glen Ole Rødland
Non-executive Chairman

Birgit Aagaard-Svendsen
Non-executive Director

Alf C. Thorkildsen
Non-executive Director

Nina Udnes Tronstad
Non-executive Director

Jesper K. Andresen
Chief Executive Officer

CONSOLIDATED ACCOUNTS

CONSOLIDATED INCOME STATEMENT

(USD million)

Charter revenues
Other operating revenues
Operating revenues
Employee benefits
Other operating expenses
Operating (loss)/profit before depreciation and impairment
Depreciation
Impairment
Operating loss
Interest income
Interest expenses
Other financial expenses
Net financial items
Share of loss of equity accounted investees
Loss before taxes
Taxes
Net loss

Attributable to equity holders of the parent

Earnings per share (USD)
Diluted earnings per share (USD)

Note

4
4, 5

6
7

8
8, 13

10
10
9
10
13

12
12

2020

54.3
2.4
56.7
(30.8)
(35.4)
(9.5)
(44.5)
(810.3)
(864.3)
0.5
(61.8)
(22.1)
(83.4)
0.0
(947.7)
(2.4)
(950.1)

2019

192.0
33.4
225.4
(68.8)
(59.5)
97.1
(93.5)
(346.2)
(342.6)
2.1
(34.6)
(19.2)
(51.7)
(0.8)
(395.1)
(4.8)
(399.9)

(950.1)

(399.9)

(10.80)
(10.80)

(4.54)
(4.54)

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

(USD million)

Net loss for the year

Note

2020

(950.1)

2019

(399.9)

Other comprehensive (loss)/income to be reclassified
to profit or loss in subsequent periods

Foreign currency translation
Other comprehensive (loss)/income to be reclassified
to profit or loss in subsequent periods

Other comprehensive loss that will not be reclassified
to profit or loss in subsequent periods

Pension remeasurement
Other comprehensive loss that will not be reclassified
to profit or loss in subsequent periods

(0.8)

2.2

(0.1)

Total comprehensive loss for the year, net of tax

(951.0)

(397.8)

Attributable to equity holders of the parent

(951.0)

(397.8)

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

(USD million)

Note

capital

bonds

Con-

vertible

Foreign

currency

War-

rants

Other

equity

trans-

lation

Total

equity

Equity at 31 December 2018

Net loss

Other comprehensive income

Total comprehensive loss

Conversion of
convertible bonds

Cancellation of warrants

Equity at 31 December 2019

Net loss

Other comprehensive loss

Total comprehensive loss

Conversion of
convertible bonds

Equity at 31 December 2020

9.0

0.0

9.0

0.0

0.1

9.1

20.8

0.0

(0.2)

0.0

20.6

0.0

(1.8)

18.8

6.4

0.0

(6.4)

0.0

334.0

(399.9)

(0.1)

(400.0)

0.2

6.4

30.0

400.2

0.0

2.2

0.0

(399.9)

2.1

(397.8)

0.0

2.4

(59.4)

32.2

(950.1)

(0.1)

(950.2)

0.0

(950.1)

(0.8)

(0.9)

(951.0)

1.8

0.0

0.1

(1,007.8)

31.4

(948.5)

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, capital reduction reserve and retained earnings.

Note

31/12/2020

31/12/2019

412.3

1,204.6

CONSOLIDATED STATEMENT OF FINANCIAL POSITION

(USD million)

ASSETS

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

Convertible bonds

Other equity

Total equity

Interest-bearing non-current liabilities

Derivatives

Other non-current liabilities

Total non-current liabilities

Interest-bearing current debt

Accounts payable

Taxes payable

Other current liabilities

Total current liabilities

Total equity and liabilities

8, 23

18, 20

18, 19

18, 21

15, 18, 19

18, 19

1.1

2.1

415.5

160.3

6.9

5.0

172.2

587.7

9.1

18.8

(976.4)

(948.5)

78.7

3.7

2.3

84.7

60.7

1.9

1,267.2

198.1

8.0

6.9

213.0

1,480.2

9.0

20.6

(27.2)

2.4

76.7

27.6

2.3

106.6

1,321.2

3.1

13.3

33.6

1,371.2

1,480.2

15, 18, 19

1,430.7

16, 18

1.4

9.0

10.4

1,451.5

587.7

On 25 March 2021, the Board of Directors of Prosafe SE approved and authorised these financial
statements for issue.

Glen Ole Rødland
Non-executive Chairman

Birgit Aagaard-Svendsen
Non-executive Director

Alf C. Thorkildsen
Non-executive Director

Nina Udnes Tronstad
Non-executive Director

Jesper K. Andresen
Chief Executive Officer

CONSOLIDATED CASH FLOW STATEMENT

(USD million)

Note

2020

2019

CASH FLOW FROM OPERATING ACTIVITIES

Loss before taxes

Loss/(Gain) on sale of non-current assets

Depreciation and impairment

Interest income

Interest expenses

Share of loss of equity accounted investee

Taxes paid

Change in working capital

Other items from operating activities

Net cash (used in)/provided by operating activities

CASH FLOW FROM INVESTING ACTIVITIES

Net (payments)/proceeds from sale of tangible assets

Acquisition of tangible assets

Interest received

Net cash used in investing activities

CASH FLOW FROM FINANCING ACTIVITIES

Proceeds from new interest-bearing debt

Repayments of interest-bearing debt

Interest paid

Net cash used in financing activities

Net cash flow

Cash and deposits at 1 January

Cash and deposits at 31 December

(947.7)

0.4

854.8

(0.5)

61.8

0.0

(6.7)

(22.0)

26.8

(33.1)

(0.3)

(2.9)

0.5

(2.7)

0.0

(2.0)

0.0

(2.0)

(37.8)

198.1

160.3

(395.1)

(0.2)

439.7

(2.1)

34.6

0.8

(6.2)

(0.5)

15.6

86.6

0.2

(77.5)

2.1

(75.2)

155.0

(37.9)

(70.7)

46.4

57.8

140.3

198.1

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1: CORPORATE INFORMATION AND PRINCIPAL ACTIVITY
Prosafe SE (the 'Company') is a public limited company domiciled in Norway. The registered office of
the Company is Forusparken 2, 4031 Stavanger, Norway. The Company is a leading owner and operator
of offshore accommodation vessels. 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 2020 were approved and
authorised for issue in accordance with a resolution of the board of directors on 25 March 2021.

NOTE 2: STATEMENT OF COMPLIANCE AND BASIS OF PREPARATION
The consolidated financial statements have been prepared in accordance with International Financial
Reporting Standards ('IFRS') endorsed by the European Union. The consolidated financial statements
have been prepared on a historical cost basis, except for derivative financial instruments which are
measured at fair value through profit or loss.

The consolidated financial statements are presented in US dollars (USD), and all amounts have
been rounded to the nearest millions, unless otherwise indicated. Adding up rounded figures and
calculating percentage rate of changes may result in slight differences compared with totals arrived at
by adding up component figures which have not been rounded.

The accounting policies adopted are consistent with those in the previous financial years.

CRITICAL JUDGEMENTS, ESTIMATES AND ASSUMPTIONS
The preparation of the Group’s consolidated financial statements requires Management to make
critical 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.

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 are as
follows:

GOING CONCERN. The Board of Director confirms that the accounts have been prepared under the
assumption that the Group is a going concern. The going concern assumption is considered to be
appropriate as it is based on the Board’s view that obtaining a long term and sustainable financial
solution should be achievable by taking into consideration the facts and circumstances described
below.

Due to a prolonged downturn and weaker outlook in the North Sea in particular, an impairment of
USD 341 million was made to book value of vessels in 2019, which resulted in the Group’s book equity
being marginalised at year end and being anticipated to turn negative early 2020 which would result

in a breach of the facilities agreements. In consideration of the outlook and the financial implications,
the Board of Directors initiated a dialogue with its lenders with a view to ensure sufficient financial
flexibility for the longer term. The dialogue was formally initiated in December 2019. In Q1 2020, the
Group concluded on a revised business plan and announced further impairment charges of USD 810.5
million resulting in a significant negative book equity. Throughout 2020 the dialogue with lenders has
continued in a constructive manner with support from a majority of lenders while they have reserved
their rights.

As part of this, the Group has continued to defer making payments of scheduled instalments and
interests under its USD 1,300 million and USD 144 million facilities. Similarly, payment of the final
instalment owed and due under the seller credit to Cosco for the Safe Notos remains as reported on
14 April 2020 subject to ongoing discussions with Cosco and the lenders.

The Group’s target remains to agree a sustainable financial solution with its lenders on a consensual
and cost-efficient basis as early as possible. It is still unclear what a final solution may look like, but as
previously reported in press releases a significant equitization of debt is anticipated which in turn is
likely to result in minimal or no recovery for current shareholders.

Please see note 19 and note 25 for further information.

DEPRECIATION. Estimated useful life of the Group's accommodation/service vessels is set at 35 years
or less dependent on the age at the time of acquisition and subsequent refurbishments and as the
economic life varies for the various components on a vessel. Individual components may, however, be
depreciated over shorter periods of time. Please refer to note 8.

IMPAIRMENT / REVERSAL OF IMPAIRMENT OF NON-FINANCIAL ASSETS. Management monitors the
performance indicators on an ongoing basis. Every vessel is seen as an individual cash generating
unit (CGU) as they generate cash inflows that are largely independent of those from other assets or
groups of assets. At each reporting date, management reviews and determines whether there is any
indication of impairment or impairment reversal of the CGU. If any such indication exists, or when
annual impairment testing for an asset is required, the asset’s recoverable amount is estimated.
Changes in the circumstances or expectations of future performance of an individual asset may
be an indicator that the asset is impaired, requiring the carrying amount to be written down to its
recoverable amount. Impairments are reversed if conditions for impairment are no longer present.
Evaluating whether impairment indicators are present, if an asset is impaired or if an impairment
should be reversed requires a high degree of judgement and estimates of recoverable amounts may to
a large extent depend upon the selection of key assumptions about the future.

Where recoverable amounts are based on estimated future cash flows, reflecting the Group’s or
market participants’ assumptions about the future and discounted to their present value, the
estimates involve complexity. Impairment testing requires long-term assumptions to be made
concerning several economic factors such as future vessel day rates, operating costs, utilisation rate
and discount rates, in order to establish relevant future cash flows and their discounted amounts.
Long-term assumptions for major economic factors are made at a group level. There is a high degree
of reasoned judgement involved in establishing these assumptions, in determining other relevant
factors such as vessel day rates and long-term growth rates, and in determining the residual value for
computation of the ultimate terminal value of an asset.

IMPAIRMENT OF SHARES IN SUBSIDIARIES. The recoverable amount of non-financial assets mentioned
above impacts the estimated value of shares in vessel-owning subsidiaries. Hence, impairment of
shares in subsidiaries is a significant estimate required for the preparation of the parent company
accounts.

MODIFICATION OF LIABILITIES MEASURED AT AMORTISED COST. Under a non-substantial loan
modification that does not require de-recognition of the financial liability, the amortised cost of the
financial liability is recalculated as the present value of the estimated future contractual cash flows.
If there is a change in the timing or amount of estimated cash flows, the amortised cost of the
financial liability is adjusted in the period of change to reflect the revised actual and estimated cash
flows, with a corresponding income or expense being recognised in profit or loss.

In 2019, some of the warrants issued previously to lenders contingent upon delivery of the Nova and
Vega vessel were cancelled and replaced with the conditional increase of the applicable margin of the
loan. The terms of the loans have consequently been modified. The recalculated amortised cost of
the liability resulted in a gain recognised in the profit and loss statement. See note 15 for details on
the assumptions and cash flow estimate. Based on a qualitative and quantitative assessment of the
changes in contractual cash flows, the change is accounted for as a non-substantial loan modification
and not an extinguishment.

CHANGES IN SIGNIFICANT ACCOUNTING POLICIES
Changes to the Standards and interpretations of Standards that are required to be adopted in annual
periods beginning on 1 January 2020 did not have any impact on the amounts recognised in prior
periods and are not expected to have any significant impact to the current or future periods.

Standards issued but not yet effective, which the Group has not yet adopted
A number of new standards are effective for annual periods beginning after 1 January 2020 and
earlier application is permitted; however, the Group has not early adopted the new or amended
standards in preparing these consolidated financial statements. The Group’s assessment is that such
new standards and interpretations are not expected to have a material impact to the Group in the
current or future reporting periods or on foreseeable future transactions upon adoption except as
follows:

Interest Rate Benchmark Reform – Phase 2 (Amendments to IFRS 9, IAS 39, IFRS 7) - The amendments
address issues that might affect financial reporting as a result of the reform of an interest rate
benchmark, including the effects of changes to contractual cash flows arising from the replacement
of an interest rate benchmark with an alternative benchmark rate. The amendments provide
practical relief from certain requirements in IFRS 9, IAS 39, IFRS 7 relating to changes in the basis
for determining contractual cash flows of financial assets, financial liabilities and lease liabilities.
The amendments will require an entity to account for a change in the basis for determining the
contractual cash flows of a financial asset or financial liability that is required by interest rate
benchmark reform by updating the effective interest rate of the financial asset or financial liability.
If there are other changes to the basis for determining the contractual cash flows, then a company
first applies the practical expedient to the changes required by IBOR reform and then other applicable
requirements of IFRS 9.

At 31 December 2020, the Group has interest bearing liabilities of USD 1,509.4 million, which are US
LIBOR secured loans and these will be subject to interbank Offered Rates (IBOR) reform. The lenders
are actively involved in the transition with regulators, central banks and industry bodies and have

not as of this date informed the Group on the details of the transition. Once the transition details are
available, the Group will assess the impact and consider where there are any modification gains or
losses arising as a result of updating the effective interest rate of the loans.

The impact on the Group leases is not significant and the Group does not adopt hedge accounting.

The transition in the interest rate benchmark for the parent company floating rate liabilities will be
adopted in the intercompany floating rate loans.

The phase 2 amendments are applied for the annual period beginning on 1 January 2021 and applied
retrospectively. However, there is no impact to the Group as the transition change in the interest rate
benchmark has not yet been agreed with the lenders.

NOTE 3: SIGNIFICANT ACCOUNTING POLICIES

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. Associates are
those entities in which the Group has significant influence, but not control or joint control, over the
financial and operating policies. Interests in associates are accounted for using the equity method
and are initially recognised at cost. Subsequent to initial recognition, the consolidated financial
statements include the Group’s share of the profit or loss and other comprehensive income of equity-
accounted investees, until the date on which significant influence ceases.

All intra-group balances, income and expenses, unrealised gains and losses and dividends resulting
from intra-group transactions are eliminated in full. The Group’s interest in equity-accounted
investees comprises interests in an associate. Unrealised gains arising from transactions with equity-
accounted investees are eliminated against the investment to the extent of the Group’s interest in the
investee. Unrealised losses are eliminated in the same way as unrealised gains, but only to the extent
that there is no evidence of impairment.

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 related 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.

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
reporting date, and the currency difference is recognised in the profit and loss account. Non-monetary
items in currencies other than the functional currency are translated at the exchange rate at the
transaction date.

When consolidating companies with a functional currency other than 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 reporting date. Translation differences are recognised in 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/service vessels. For geographical information,
reference is made to note 4.

REVENUE RECOGNITION

Type of Product/
Service

Charter Income/
Mobilisation
Income/
Demobilisation
Income/
Lump Sum Fee

Nature and timing of satisfaction
of performance, including
significant payment terms

The Group charters the
accommodation vessels to
customers for an agreed period.
The Group does not convey the
right to control the use of the
asset to the customers and none
of the contracts are accounted for
as a lease. The invoices are issued
on a monthly basis or based on
the contractual terms and are
normally payable within 30 days.

Management, crew
services, catering
and other related
income

The Group provides optional
services upon request from the
customer. The invoices are issued
on a monthly basis or based on
the contractual terms and are
payable normally within 30 days.

Revenue recognition

The activities giving rise to mobilisation,
demobilisation and re-phasing are not a
distinct performance obligation in itself
and are highly interdependent on the
charter activities. These activities are
necessary for the Group to perform its
service in providing the accommodation
vessels to the customer.

These incomes, together with charter
income and bareboat income, are
considered as a single performance
obligation and the revenue are collectively
recognised over the charter period. In
addition, any additional fees arising from
suspension or deferment of contracts
will be deferred and amortised over the
charter period when the performance
obligations are met.

The deferred revenue is included in the
contract liabilities.

These incomes are recognised over time
when performance obligations are met.
The related costs are recognised in profit
or loss when they are incurred.

The Group has reviewed its contracts with customers and concluded that these contracts do not
contain a lease. If another conclusion determined that these contracts contain a lease, there will not
be any significant difference in the accounting of revenue.

Interest income
Interest income is recognised on a time-proportion basis using the effective interest method. Interest
income is included in financial items in the income statement.

Dividend income
Dividend income is recognised when the right to receive 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
the Group 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.

For onerous contracts, provisions are made when unavoidable cost of meeting the obligations under the
contract exceed the economic benefit to be received under the contract. The unavoidable costs under
the contract are the lower of the cost of fulfilling the contract and any compensation or penalties arising
from failure to fulfil the contract. Unavoidable cost are costs that would not incur for the entity if it did
not have the contract.

TANGIBLE ASSETS are recognised at cost less cumulative depreciation and accumulated impairment
losses, if any. Assets are depreciated on a straight-line basis over their estimated useful lives, with
account taken of their estimated residual value. Management makes annual assessments of residual
value, methods of depreciation and the remaining useful 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 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 asset.

Tangible fixed assets are depreciated on a straight-line basis over their useful lifetime as follows:
• Semi-submersible vessels:
– Superstructure: 35 years
– Living quarters and other equipment: 5 to 35 years
– Periodic maintenance: 5 years
• 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. Every vessel is seen as an individual CGU.
Where the carrying amount of an asset or CGU 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 post-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.

The Group bases its impairment calculation on a detailed forecast calculation which is prepared for
the Group’s cash generating units. The forecast calculation is generally covering a period of five years.
In 2019, a long-term terminal growth rate of 1.7% was calculated and applied to projected future cash
flows after the fifth year. In 2020, the growth rates were revised as below.

Growth rate until
the end of 2039

6.6%

Reflects the Group’s assumptions of a gradual normalization of return
to reflect newbuilding parity in 2039 as a result of an anticipated
gradual reduction in supply.

Growth rate after
2039

2.0%

After a rebalanced market, the growth rate applied is the long-term
average growth rate appropriate to the assets of 2%.

For non-financial assets except 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, the Group estimates the asset’s recoverable amount. A previously
recognised impairment loss is reversed only if there has been a significant change in the assumptions
used to determine the asset’s recoverable amount since the last impairment loss was recognised.
The impairment loss is reversed only to the extent that the asset's carrying amount does not exceed
the carrying amount that would have been determined, net of depreciation or amortisation, if no
impairment loss had been recognised.

FINANCIAL ASSETS

Initial recognition
Trade receivables are initially recognised when they are originated. All other financial assets are
initially recognised when the Group becomes a party to the contractual provision of the instrument.

A financial asset (unless it is a trade receivable without a significant financing component) is initially
measured at fair value plus, for an item not at fair value through profit or loss ("FVTPL"), transaction
costs that are directly attributable to its acquisition or issue. A trade receivable without a significant
financing component is initially measured at the transaction price.

Classification and measurement
On initial recognition, a financial asset is classified as measured on following basis: 1) financial assets
at amortised cost; and 2) financial assets at fair value through profit or loss "FVTPL".

Financial assets are not reclassified subsequent to their initial recognition unless the Group changes
its business model for managing financial assets, in which case all affected financial assets are
reclassified on the first day of the first reporting period following the changes in the business model.

1) Financial assets at amortised cost
A financial asset is measured at amortised cost if it meets both of the following conditions and is not
designated as at FVTPL:
-

It is held within a business model whose objective is to hold assets to collect contractual cash
flows; and
Its contractual terms give rise on specified dates to cash flows that are solely payments of principal
and interest on the principal amount outstanding.

2) Financial assets at FVTPL
All financial assets not classified as measured at amortised cost or FVOCI as described above are
measured at FVTPL. This includes all derivative financial assets. On initial recognition, the Group may
irrevocably designate a financial asset that otherwise meets the requirements to be measured at
amortised cost of a FVOCI as at FVTPL if doing so eliminates or significantly reduces an accounting
mismatch that would otherwise arise.

Derivative financial instruments
The Group uses derivative financial instruments such as forward currency contracts, interest rate caps,
and interest rate swaps to hedge its foreign currency risk and interest rate risk. 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.

The derivative financial instruments are mainly used in economic hedges where the changes in fair
value are taken directly through profit or loss. 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 caps and swaps contracts are calculated using inputs that are from observable market
prices.

Gains or losses arising from changes in fair value of derivative financial instruments that do not
qualify for hedge accounting are taken to the profit and loss account. For cash flow hedges, the
effective portion of the gains or losses on the hedging instrument is recognised directly in other
comprehensive income and accumulated in the hedging reserve, while the ineffective portion
is recognised in the profit and loss account. Amounts taken to other comprehensive income are
reclassified to the profit and loss account when the hedged transaction affects the profit and loss
account. For fair value hedges, changes in the fair value of the designated hedging instruments are
recognised in the profit and loss account. The hedged item is adjusted to reflect change in its fair
value in respect of the risk hedged, with any gain or loss recognised in the profit and loss account.

The Group documents at the inception of the transaction the relationship between the hedging
instruments and hedged items, as well as its risk management objective and strategies for
undertaking various transactions. The Group also documents its assessment, both at hedge inception
and on an ongoing basis, of whether the derivatives designated as hedging instruments are highly
effective in offsetting changes in fair value or cash flows of the hedged items. There are currently no
hedged items in the periods covered within this financial statement.

Current versus non-current classification
Derivative instruments that are not designated and effective hedging instruments 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 the Group 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.

Subsequent measurement and gains and losses

1) Financial assets at amortised cost
These assets are subsequently measured at amortised cost using the effective interest method. The
amortised cost is reduced by impairment losses. Interest income, foreign exchange gains and losses
and impairment are recognised in profit or loss. Any gain or loss on derecognition is recognised in
profit or loss.

2) Financial assets at FVTPL
These assets are subsequently measured at fair value. Net gains and losses, including any interest or
dividend income, are recognised in profit or loss.

Derecognition
A financial asset is derecognised when the contractual rights to the cash flows from the financial
asset expire or it transfers the rights to receive the contractual cash flows in a transaction which
substantially all of the risks and rewards of ownership of the financial asset are transferred or in
which the Group neither transfers nor retains substantially all of the risks and rewards of ownership
and it does not retain control of the financial asset.

Impairment of financial assets

The Group recognises loss allowances for expected credit losses on:
- Financial assets measured at amortised cost

Loss allowances for trade receivables and assets are always measured at an amount equal to lifetime
expected credit losses.

When determining whether the credit risk of a financial asset has increased significantly since
initial recognition and when estimating expected credit losses, the Group considers reasonable and
supportable information that is relevant and available without undue cost of effort. This includes both
quantitative and qualitative information and analysis, based on the Group's historical experience and
informed credit assessment and including forward-looking information.

The Group considers a financial asset to be in default when:
- The borrower is unlikely to pay its credit obligations to the Group in full, without recourse by the

Group to actions such as realising security (if any is held); or

- The financial asset is more than 90 days past due.

Measurement of expected credit losses:
- For trade receivables, the Group applies the simplified method of credit reserves, i.e. the reserve will
correspond to the expected loss over the whole life of the trade receivable. In order to measure the
credit losses, trade receivables are grouped based on credit risk characteristics of its customer. The
Group applies forward-looking variables for expected credit losses.

- Expected credit losses are a probability-weighted estimate of credit losses. Credit losses are

measured as the present value of all cash shortfalls (i.e. the difference between the cash flows due
to the entity in accordance with the contract and the cash flows that the Group expects to receive).

- Expected credit losses are discounted at the effective interest rate of the financial asset.

At each reporting date, the Group assesses whether financial assets carried at amortised cost are
credit-impaired, which is when one or more events that have a detrimental impact on the estimated
future cash flow of the financial asset have occurred.

Evidence that a financial asset is credit-impaired includes the following observable data:
- Significant financial difficulty of the borrower or issuer;
- A breach of contract such as default or being more than 90 days past due;
- The restructuring of a loan or advance by the Group on terms that the Group would not consider

otherwise;

It is probable that the borrower will enter bankruptcy or other financial reorganisation; or

-
- The disappearance of an active market for a security because of financial difficulties.

Loss allowances of expected credit losses for financial assets measured at amortised cost are
deducted from the gross carrying amount of the assets as in the statement of financial position.

Derecognition of financial assets
The gross carrying amount of a financial asset is written off when the Group has no reasonable
expectations of recovering a financial asset in its entirety or a portion thereof. For customers, the
Group individually makes an assessment with respect to the timing and amount of write-off based
on whether there is reasonable expectation of recovery. The Group expects no significant recovery
from the amount written off. However, financial assets that are written off could still be subject to
enforcement activities in order to comply with the Group's procedures for recovery of amount due.

FINANCIAL LIABILITIES

Initial recognition
Financial liabilities within the scope of IFRS 9 are classified as financial liabilities at fair value
through profit or loss and financial liabilities measured at amortised cost. The Group 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. The Group’s
financial liabilities include non-derivative financial instruments (trade and other payables, loans and
borrowings, financial guarantee contracts) and derivative financial instruments.

Subsequent measurement and gains and losses
Financial liabilities at fair value through profit and loss are measured at fair value and net gains and
losses, including any interest expense, are recognised in profit or loss. Other financial liabilities are
subsequently measured at amortised cost using the effective interest method. If there is a change in
the timing or amount of estimated cash flows, the amortised cost of the financial liability is adjusted
in the period of change to reflect the revised actual and estimated cash flows, with a corresponding
income or expense being recognised in profit or loss. Interest expense and foreign exchange gains and
losses are recognised in profit or loss. Any gain or loss on derecognition is also recognised in profit or
loss.

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.

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. Capitalised borrowing costs are
calculated using the effective interest method.

LEASES. A lease is defined as a contract that conveys the right to control the use of an identified asset
for a period in exchange for consideration. For each contract that meets this definition, the lessees
will recognise a right-of-use asset and a lease liability in the balance sheet with certain exemptions
for short term and low value leases. Lease payments are to be reflected as interest expense and a
reduction of lease liabilities, while the right-of-use assets are to be depreciated over the shorter of
the lease term and the assets useful life. The portion of lease payments representing payments of
lease liabilities and interest expense shall be classified in line with the policy elected for other interest
payments in the statement of cash flows.

Lease liabilities are measured at the present value of remaining lease payments, discounted using
the incremental borrowing rate. At initial recognition, right-of-use assets are measured at an amount
equal to the lease liability.

Major lease liabilities for the Group comprise of leases of chartered-in vessels, office buildings,
warehouses, transportation, logistics assets and other IT infrastructure and office equipment. The
Group separately expenses variable expense services and other non-lease components embedded in
lease contracts for office buildings and warehouses. For leases of other assets, the Group capitalises
non-lease components subject to fixed payments as part of the lease.

The Group applies the general short-term exemption for leases of chartered-in vessels, office
buildings, warehouses, transportation, logistics assets and other IT infrastructure and office
equipment. Leases with a lease term of 12 months or less that do not contain a purchase option are
expensed as short-term leases.

The Group also applies the general low value exemption for leases of office equipment. This applies
for all leases where the value of the underlying asset is below USD 5,000. These low value leases of
such assets will not be capitalised and that lease payments are expensed in profit or loss.

INCOME TAXES in the income statement include taxes payable and changes in deferred tax. Deferred
tax is calculated based on temporary differences between book and tax values that exist at the end of
the period. Deferred tax asset is recognised in the statement of financial position when it is probable
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 tax 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 tax 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 an original maturity of
three months or less, which are subject to an insignificant risk of changes in value.

DIVIDEND distribution to the shareholders is recognised in the financial statements on the date on
which the shareholders' right to receive payment is established.

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. Zero coupon convertible bonds and warrants that will be settled by the
Company by delivering a fixed number of its own equity instruments in exchange for a fixed amount
of cash are equity instruments and recognised in equity. The translation reserve comprises all foreign
currency differences arising from the translation of the financial statements of foreign operations.

NOTE 4: SEGMENT REPORTING AND CONTRACT BALANCES

The Group has one segment, which is chartering and operation of accommodation/service vessels.

Operating revenues by geographical location

2020

2019

Europe

South America

Others

Total operating revenues

The revenue allocation is based on place of operation of the vessel.

2020
1)

0.0

44.4

11.2

0.0%

78.3%

19.8%

Operating revenues by major customers:

Europe 1

Europe 2

South America 1

South America 2

1) Operating revenues in USD million
2) Percentage of total revenues

Total assets by geographical location

Europe

South America

Asia

Total assets

1.1

55.6

0.0

56.7

2019
1)

84.7

45.0

54.0

0.0

153.2

69.4

2.8

225.4

37.6%

20.0%

24.0%

0.0%

2020

2019

177.4

236.7

1.4

847.5

561.7

71.0

415.5

1,480.2

Contract balances

Trade receivables from charters

Contract assets

Contract liabilities

2020

2019

6.9

4.2

3.6

8.0

0.0

2.6

The contract assets relate to deferred charter incentive as a result of contract modification. The contract
assets are recognised as a deduction of revenue over the performance obligation of the contract.
The contract liabilities relate to deferral fees or upfront consideration received from customers.
The contract liabilities are recognised as revenue over the performance obligation of the contract.

Significant changes in the contract assets and the contract liabilities during the year are as follows:

Revenue recognised from the opening balance

Consideration received during the year not
recognised as revenue

Contract incentive as a result of contract
modifications

2020

2019

2020

2019

Contract assets

Contract liabilities

0.0

4.2

0.0

(2.6)

(6.8)

3.6

0.0

The following table includes the Group's firm order book, consisting of performance obligations that
are unsatisfied or partially satisfied as of the end of the reporting period.

Chartering and operation

of accommodation vessel

31 December 2020

31 December 2019

2020

95.5

2021

98.0

26.6

2022

40.3

24.0

2023

6.1

0.0

Total

144.4

146.1

Variable considerations that are constrained and therefore not considered in the transaction price are
excluded from the table above.

NOTE 5: OTHER OPERATING REVENUES

(Loss)/Gain on sale of non-current assets

Management, crew services, catering and other related income

Total other operating revenues

2020

2019

(0.4)

2.8

2.4

0.2

33.2

33.4

NOTE 6: EMPLOYEE BENEFITS AND MANAGEMENT REMUNERATION

Wages and salaries

Contract personnel

Other personnel-related expenses

Social security taxes

Pension expenses

Other remuneration

Total employee benefits

2020

2019

13.0

13.1

2.2

1.8

0.4

0.3

30.8

36.0

19.8

6.0

4.0

2.3

0.7

68.8

Number of employees
The average number of employees in the Group for 2020 was 111 (2019: 313). The average number of
employees by legal entity was as follows.

2020

2019

Prosafe Offshore Employment Company Pte. Limited

Prosafe Offshore Limited

Prosafe Services Maritimos Ltda

Prosafe AS

Prosafe Offshore Holdings Pte. Ltd.

Prosafe SE

Prosafe Management AS

Prosafe Offshore Accommodation Ltd

Total average number of employees

188

111

313

Bonus scheme
The CEO, DCEO/CFO and COO hold incentive agreements which may lead to a bonus payment. The
bonus depends on achieving defined targets relating to stretch target for earnings, cost efficiency
targets, long-term strategic targets, operational performance and HSE performance.

Severance pay
For the CEO and the CFO, the Company guarantees a remuneration corresponding to the base salary
received at the time of departure for a period of 5 months beyond a 4 month notice period and with
a set off for the 5 months against any other income received. For the COO, the Company guarantees
a remuneration corresponding to the base salary received at the time of departure for a period of 12
months beyond a 6 month notice period.

In accordance with the code of practice for corporate governance recommended by the Oslo Stock
Exchange, remuneration for Executive Management and the board of directors is specified below and
in a separate report from the compensation committee.

Senior officers
(USD 1 000)

Year

Salary

Bonus Pension

benefits

Total

Other

Jesper Kragh Andresen -CEO

Stig Harry Christiansen - DCEO / CFO

Ryan Duncan Stewart - COO

Jesper Kragh Andresen -CEO

Stig Harry Christiansen - DCEO / CFO

Jens Einar Opstad Berge - COO
(Resigned in April 2019)

2020

2019

334

317

284

419

399

116

100

485

466

487

495

155

Ryan Duncan Stewart - CCO

2019

253

170

100

551

Board of directors
(USD 1 000)

Glen Ole Rødland (chairman)

Birgit Aagaard-Svendsen

Nina Udnes Tronstad

Alf C. Thorkildsen (from May 2020)

Svend Anton Maier (until May 2020)

Kristian Johansen (until May 2020)

Total fees

Glen Ole Rødland (chairman)

Roger Cornish (until May 2019)

Nina Udnes Tronstad (from May 2019)

Birgit Aagaard-Svendsen

Svend Anton Maier

Kristian Johansen

Total fees

Year

Board fees 1)

2020

2019

120

401

128

101

491

1) If applicable, figures include compensation from the audit committee and compensation committee.

NOTE 7: OTHER OPERATING EXPENSES

Repair and maintenance

Other vessel operating expenses
General and administrative expenses 1)

Total other operating expenses

2020

10.1

18.9

6.4

35.4

2019

14.4

35.1

10.0

59.5

1) Auditors' fees are included in general and administrative expenses. Fees for non-audit services of USD
13,000 (2019: USD 26,000) were related to compliance and pre-liquidation stage services offered to
the group companies by the statutory auditor.

Auditors' fees
(USD 1 000)

Audit

Fees for non-audit services

Total auditors' fees

NOTE 8: TANGIBLE ASSETS

Cost as at 31 December 2018

Transfer

Additions

Disposals

Cost as at 31 December 2019

Additions

Disposals

Cost as at 31 December 2020

Accumulated depreciation and
impairment 31 December 2018

Depreciation for the year

Disposals

Impairment for the year

Accumulated depreciation and
impairment 31 December 2019

Depreciation for the year

Disposals

Impairment for the year

Accumulated depreciation and
impairment 31 December 2020

Net carrying amount
31 December 2020

Net carrying amount
31 December 2019

2020

377

390

2019

349

375

Vessels

2,927.8

202.1

14.1

(1.2)

3,142.8

2.7

(232.3)

2,913.2

1,505.2

92.8

(1.2)

341.4

1,938.2

44.0

(232.2)

750.9

New

builds

125.8

(202.1)

137.0

0.0

60.7

0.0

60.7

0.0

59.6

Equip-

ment

Buildings

Total

3.8

0.0

0.4

(0.2)

4.0

0.0

(0.2)

3.8

2.4

0.3

(0.2)

0.0

2.5

0.2

(0.1)

0.0

7.9

0.0

0.1

(0.7)

7.3

0.5

(0.3)

7.5

6.8

0.4

(0.7)

0.4

6.9

0.3

(0.4)

(0.2)

3,065.3

0.0

151.6

(2.1)

3,214.8

3.2

(232.8)

2,985.2

1,514.4

93.5

(2.1)

341.8

1,947.6

44.5

(232.7)

810.3

2,500.9

59.6

2.6

6.6

2,569.7

412.3

1.1

1.2

0.9

415.5

1,204.6

60.7

1.5

0.4

1,267.2

Depreciation rate (%)

Economically useful life (years)

3-20

5-35

20-33

3-5

20-30

New builds include prepayment to the yard, owner-furnished equipment and other project costs incurred. In
November 2019, Safe Eurus started its maiden gangway connection in Brazil after completing its transit from
the yard in China. The carrying vessel value of USD 202.1 million was reclassified from new builds to vessel
category. See note 23 for details on capital commitments relating to new builds.

Estimated useful life for the semi-submersible accommodation vessels is set at 35 years or less dependent
on the age at the time of the acquisition and subsequent refurbishments as the economic life varies for the
various components on a vessel. Individual components may, however, be depreciated over shorter periods
of time than the life of the vessel itself. The management has re-assessed the Group's vessels residual value
to USD 4.2 million (2019: USD 31 million) based on the latest assumptions and factors from past scrap
transactions. This estimate is primarily based on steel prices and costs associated with scrapping and is
reviewed on an annual basis.

A reversal of impairment of USD 0.2 million (2019: impairment charge of USD 0.4 million) is charged to a
property held in Aberdeen based on the latest market valuation.

As a result of the impact from the Covid-19 pandemic, oil price collapse, structural shifts and oversupply in the
market, the activity level has deteriorated. Near term, the activity has dropped to all time low and uncertainty
related to the longer term has increased significantly. Consequently, management performed an impairment
assessment of its vessels in accordance with IFRS. Each individual vessel is considered to be a cash generating
unit. As a result, total impairment charges of USD 810.5 million (2019: 341.4 million) were made relating to
the vessels and new builds.

The recoverable amounts have been identified by calculating the valuation-in-use (“VIU”). Impairments have
been made in the accounts for vessels with VIU lower than their net book value. The Group also considered
the use of broker estimates as a basis for fair value calculation, but this was not applied due to the lack of
transactions and liquidity in the market for the Group's vessels.

The VIU calculations are based on an updated long-term forecast for 2020-2024 and until the end of each
vessel’s useful life. The main assumptions used in the computations are charter rates, utilisation, operating
expenses and overheads, capital expenditures, discount rate and long-term growth rate. In consideration of
the projected weak and oversupplied market till the end of 2024, management has also reviewed the VIU
calculation model and revised the terminal value calculation in two stages to reflect the return to sustainable
earnings. The key changes to the value in use calculation model are as follows:

- In the first stage, from 2025 until the end of 2039, a growth rate of 6.6% is applied to arrive at cash flows

reflecting sustainable earnings / mid-point of the cycle. The growth rate is determined to accurately reflect
the Group's assumptions of a gradual normalisation of return to reflect newbuilding parity in 2039 as a
result of an anticipated gradual reduction in supply.

- In the second stage, the growth rate applied is the long-term average growth rate appropriate to the assets

of 2%.

The effects of the Covid-19 pandemic and the oil price collapse make short-term planning as well as long-
term forecasting extremely challenging and the uncertainty is regarded even higher than it has been in the
past, in particular as far as utilisation and day rates are concerned. Therefore, a higher interval is also applied
to the sensitivities shown.

The present value of the estimated cash flows from the cash-generating units is based on the following
inputs:

Utilisation
- Average utilisation is assumed to increase from 20% or less in 2020 to 50% in 2021, to approximately 65%
in 2022 – 2025, and thereafter stabilise at approximately 55% (2019 forecast: 30% in 2020 to 80% in 2024
and thereafter).

Revenues
- From 2020-2024, the assumption is based on current contracts portfolio including assumptions related to

the outcome of ongoing commercial discussions with clients combined with a best effort view on potential
prospects.

- From 2025, assumptions are applied factoring in the changed industry dynamics, demand/supply balance,
pricing and the Group’s anticipated market share in the global market. The main factors include estimated
cash flow and EBIDTA per vessel, current market data on average day rates, contract lengths for the different
regions and anticipated market share.

Expenses
- Operating expenses and overheads were reduced between 10% and 50% compared to the prior year to

reflect the current market conditions, cost reduction measures and activity plan.

Capital expenditures
- Capex is based on SPS plans (5-year special periodic survey) and activity plan. Capex spend will be deferred

whenever possible, including SPS plans if a vessel is laid up with no order backlog.

- Capex is generally reduced to a minimum although sustainable level sufficient to upkeep the vessels.

Discount rate of 9% (2019: 9%)
- Discount rate is derived from weighted average cost of capital after tax of the Group.

Long-term growth rate
- There is a revised terminal value calculation in two stages to reflect the return to sustainable earnings as
mentioned above. In the first stage, from 2025 until the end of 2039, the growth rate of 6.6% is applied to
arrive at cash flows reflecting sustainable earnings / mid-point of the cycle. The growth rate is determined
to accurately reflect the Group’s assumptions of a gradual normalisation of return to reflect newbuilding
parity in 2039 as a result of an anticipated gradual reduction in supply. After 2039, the growth rate applied
is the long-term average growth rate appropriate to the assets of 2 % (2019: 1.7% from 2024).

Sensitivity
- A 1% increase in the discount rate would have led to an increase of impairment of USD 36 million.
- A 10% increase / decrease in the utilisation rate would have led to a decrease / increase of impairment of

USD 91 million / USD 112 million.

- A 10% increase / decrease in the day rate would have led to a decrease / increase of impairment of USD 84

million / USD 87 million.

- A 2% decrease in the long-term growth rate would have led to an increase of impairment of USD 56 million.

NOTE 9: OTHER FINANCIAL ITEMS

Fair value adjustment interest rate swaps

Fair value adjustment interest rate caps

Currency loss
Other financial expenses 1)

Total other financial expenses

2020

2019

(12.9)

0.0

(0.1)

(9.1)

(22.1)

(12.6)

(1.3)

(2.6)

(2.7)

(19.2)

1) In 2020, other financial expenses largely arose from costs relating to refinancing process.

See further details in note 15 relating to refinancing.

Financial
assets
measured at
amortised
cost

Fair value
through
profit and
loss

Financial
liabilities
measured at
amortised
cost

0.0

(12.9)

0.0

(12.9)

0.0

(5.9)

(0.6)

(55.3)

(61.8)

0.0

(9.2)

(71.0)

Total

0.5

(5.9)

(0.6)

(55.3)

(61.8)

(12.9)

(9.2)

(83.9)

(12.9)

(71.0)

(83.4)

0.5

0.0

0.5

NOTE 10: FINANCIAL ITEMS

Year ended 31 December 2020

Interest income

Total financial income

Amortisation of borrowing costs

Amortisation of amortised costs

Interest expenses

Subtotal

Fair value adjustment interest rate swaps

Other financial expenses

Total financial expenses

Net financial items

Year ended 31 December 2019

Interest income

Total financial income

Amortisation of borrowing costs
Modification of amortised cost 1)

Amortisation of the modification of
amortised costs

Interest expenses

Subtotal

Fair value adjustment interest rate swaps

Fair value adjustment interest rate caps

Other financial expenses

Total financial expenses

Net financial items

Financial
assets
measured at
amortised
cost

Fair value
through
profit and
loss

Financial
liabilities
measured at
amortised
cost

0.0

(12.6)

(1.3)

0.0

(13.9)

0.0

(6.4)

28.8

13.3

(70.3)

(34.6)

0.0

(5.3)

(39.9)

Total

2.1

(6.4)

28.8

13.3

(70.3)

(34.6)

(12.6)

(1.3)

(5.3)

(53.8)

(13.9)

(39.9)

(51.7)

2.1

0.0

2.1

1) Refer to note 15 relating to modification of amortised costs in 2019.

NOTE 11: TAXES

Income tax expenses

Taxes in income statement:

Taxes payable

Total taxes in income statement

Reconciliation of effective tax rate (IAS 12.81)

Tax rate in Norway (parent company tax jurisdiction)

Loss before taxes

Tax based on applicable tax rate

Tax effect of non-deductible expenses

Tax effect due to changes in unrecognized deferred tax assets

Effect of tax in other jurisdictions

Total taxes in income statement

2020

2019

2.4

4.8

22.0%

(947.7)

(208.5)

(1.5)

210.0

2.4

22.0%

(395.1)

(86.9)

0.8

86.1

4.8

Deferred tax - Specification and movements

2020

2019

Temporary differences:

Exit from Norwegian tonnage tax system

Long-term liabilities

Vessel tax base exceeds net book value

Tax loss carried forward

Loss account for deferral

Basis for deferred tax

Recognised deferred tax asset

Deferred tax liability 1 January and 31 December

Tax payable as at 31 December

The corporate tax rate in Norway for 2020 is 22% (2019 is 22%).

11.1

0.0

(893.4)

(828.2)

(122.9)

13.9

(6.5)

(558.0)

(419.5)

(31.0)

(1,833.4)

(1,001.1)

0.0

9.0

0.0

13.3

Deferred income tax assets and liabilities are offset as all the temporary differences are within the
Norway tax resident entities that comprise a tax group. Within the tax group there is a legally enforceable
right to set off current tax assets against current tax liabilities. There is no expiry date on the temporary
differences and tax loss carried forward.

The value of the deferred tax assets is not recognised in the accounts as the probability of having
sufficient future taxable profit to utilise the deferred tax assets as tax deductions cannot be established.

The total tax payable in the income statement and as at 31 December resulted from the Group's
operations in other parts of the world which were subjected to tax in jurisdictions other than Norway.

NOTE 12: EARNINGS PER SHARE

Earnings per share are calculated by dividing net profit by the weighted average number of ordinary
shares outstanding during the year including convertible bonds. Diluted earnings per share are
calculated by dividing net profit by the weighted average number of ordinary shares plus the number
of potential shares relating to warrants. However, the warrants were anti-dilutive and not included in
the calculation.

Net loss
Weighted average number of outstanding shares (1 000) 1)

Basic earnings per share

Weighted average number of outstanding and potential shares (1 000)

Diluted earnings per share

2020

2019

(950.1)

87,987

(10.80)

87,987

(10.80)

(399.9)

87,987

(4.54)

87,987

(4.54)

1) In 2020, the weighted average number of outstanding shares includes the average share capital
of 82,164,000 and mandatory convertible bonds of 5,823,000 (2019: average share capital of
81,824,000 and mandatory convertible bonds of 6,163,000).

NOTE 13: INVESTMENTS IN ASSOCIATED COMPANIES

In 2019, the Group fully disposed its 25% shareholding in Dan Swift (Singapore) Pte. Ltd. to a third
party for a nominal consideration. Prior to disposal, the Group recognised an impairment of USD 4.4
million on its investment in associate and a loss of USD 0.8 million in the share of loss of investment
in associate. The impairment loss was included as part of impairment in the consolidated income
statement.

The following table reconciles the summarised financial information to the carrying amount of the
Group’s interest in Dan Swift (Singapore) Pte. Ltd as at 31 December 2019.

Carrying amount of interest in associate

Operating revenue (100%)

Net loss (100%)

Group's share of net loss in income statement (25%)

2019

0.0

(3.3)

(0.8)

NOTE 14: SHARE CAPITAL, SHAREHOLDER INFORMATION CONVERTIBLE BONDS AND WARRANTS

2020

2019

Issued and paid up number of ordinary shares at 31 December

82,464,212

81,864,212

Shares to be issued under convertible bond agreements

Shares to be potentially issued under warrants agreement with lenders

Total authorised number of shares at 31 December

Nominal value at 31 December

Number of shareholders at 31 December

5,522,790

3,435,982

6,122,790

3,435,982

91,422,984

EUR 0.10

3,663

4,706

Largest shareholders as at 31 December 2020

No of shares

Percentage

North Sea Strategic Investments AS

HV VI Invest Sierra Malta Ltd

State Street Bank And Trust Comp

Nordea Bank ABP

State Street Bank And Trust Comp

Nordnet Bank AB

Helmer AS

Skandinaviska Enskilda Banken AB

The Northern Trust Comp, London BR

Teir, Maged Elabd Soliman ABU

Nordnet Livsforsikring AS

Saxo Bank A/S

Danske Bank A/S

Brønmo, Bjarte

Gruer, Gunnar Godtfred

Holme Holdings AS

UBS Switzerland AG

Avanza Bank AB

Skandinaviska Enskilda Banken AB

UBS Switzerland AG

15,479,410

8,657,609

6,972,694

6,894,110

3,849,160

3,416,737

2,000,000

1,225,074

1,107,548

1,000,000

832,061

795,504

721,914

690,135

675,000

660,000

581,802

571,854

546,326

436,575

18.8 %

10.5 %

8.5 %

8.4 %

4.7 %

4.1 %

2.4 %

1.5 %

1.3 %

1.2 %

1.0 %

0.9 %

0.8 %

0.7 %

0.5 %

Total 20 largest shareholders/groups of shareholders

57,113,513

69.3 %

All ordinary shares rank equally. Holders of these shares are entitled to one vote per share at general
meetings of the Company.

Convertible bonds

2020

2019

No. of shares
convertible

Value

Opening balance as at 31 December

Conversion of convertible bonds

Closing balance as at 31 December

6,122,790

(600,000)

5,522,790

20.6

(1.8)

18.8

6,202,790

(80,000)

6,122,790

Value

20.8

(0.2)

20.6

The convertible bonds allow the bond holders to convert into shares at a conversion price of NOK 25
or NOK 30 per share. There is no contractual obligation to deliver cash or another financial asset as
the conversion feature can only be settled through the issuance of a fixed amount of shares. Hence,
the convertible bonds have been classified entirely as equity.

Warrants
As part of the USD 1,300 million credit facility refinancing concluded in 2018, the Group has issued
the warrants to those lenders having elected to receive such instead of increased margins. The
warrants give right to subscribe for one new share in the Group at a subscription price of NOK 21.37.
The warrants are conditional inter alia on the Group taking delivery of Safe Nova and Safe Vega. The
warrants will be exercisable any time from and subject inter alia to the Group taking delivery of Safe
Nova and/or Safe Vega and the next 3 years from such respective delivery dates, however so that any
duration exceeding 5 years from the date of the Extraordinary General Meeting will be subject to
approval of such extension by a subsequent general meeting. The warrants are expected to be subject
to certain customary adjustment mechanisms, including upon a failure to timely provide extension
approval in which case the subscription price will be set to nominal value.

In November 2019, Prosafe has issued letters to lenders to reconsider the election of warrants
with the conditional increase in the applicable margin. This modification was at the request of the
lenders. Out of the 9,779,993 warrants issued in 2018, 6,344,011 of the warrants have been cancelled
and replaced with the conditional increase of the applicable margin of the loan. The balance of
warrants remaining is 3,435,982. The difference between the opening balance in equity and the fair
value of the liability at the reclassification was recognised directly in equity on derecognition. The
remaining warrants were reclassified to financial liabilities. No profit or loss was recognised on the
reclassification. The warrants were measured at fair value but were severely out of the money and the
amount was not material as at 31 December 2019.

In 2020, there was no movement in the warrant and the fair value was not material as at
31 December 2020.

NOTE 15: INTEREST-BEARING DEBT

Credit facilities

Sellers' credits

Modification of the amortised cost - credit facilities & sellers credit

Unamortised borrowing costs

Swaps termination

Unpaid interest on interest rate swap

Lease liabilities

Total interest-bearing debt

Non-current interest-bearing debt
Current interest-bearing debt 1)

Total interest-bearing debt

2020

2019

1,378.8

1,314.1

115.7

(16.2)

(6.8)

36.7

0.8

0.4

113.1

(16.8)

(12.7)

0.0

0.2

1,509.4

1,397.9

78.7

1,430.7

1,509.4

76.7

1,321.2

1,397.9

1) Refer to the loan classification section at the end of this note for further details.

Reconciliation of movements of interest-bearing debt

to cash flows arising from financing activities

2020

2019

Interest-bearing debt at 1 January

1,397.9

1,243.0

Changes from financing cash flows

- Proceeds from new interest-bearing debt

- Repayments of interest-bearing debt

- Interest paid

Total changes from financing cash flows

Other liability-changes

- Non-cash movement in interest bearing debt

- Interest paid

- Interests unpaid

- Non-cash increase in sellers' credits arising from fixed asset acquisition

- Unpaid interest on interest rate swap
- Swaps termination 1)

- New finance leases

Total liability-related changes

0.0

(2.0)

0.0

(2.0)

6.5

0.0

69.3

0.0

0.8

36.7

0.2

155.0

(37.9)

(70.7)

46.4

(61.9)

70.7

0.0

99.5

0.0

0.2

113.5

108.5

Interest-bearing debt at 31 December

1,509.4

1,397.9

1) Three interest rate swaps were terminated by the swap banks during 2020 and were included as

part of interest-bearing debt.

USD 1,300 million credit facility
The credit facility of USD 1,300 million consists of two term loan tranches of USD 800 million and USD 200
million and a revolving credit facility of USD 300 million. As of 31 December 2020, there was no availability
under the revolving credit facility. Initially the term loan tranches were reduced semi-annually by USD 55
and USD 10 million, respectively. In August 2018 the amortisation profile and covenants relating to this
facility were amended.

The book equity turned negative in early 2020, a development that was anticipated following impairment
charges of USD 341.4 million in late 2019. In consideration of the outlook and the financial implications
including anticipated breach of the facilities agreements, the Board of Directors initiated a dialogue with
its lenders in December 2019 with a view to ensure sufficient financial flexibility for the longer term. In Q1
2020, the Group concluded on a revised business plan and announced further impairment charges of USD
810.5 million. Dialogues with lenders have continued in a constructive manner throughout the year with a
majority of lenders providing their support to the Group and process while retaining their rights.

As part of the dialogue with lenders, throughout 2020 and until a new agreement is reached, the Group
has and will continue to defer making payments of scheduled instalments and interests under its USD
1,300 million and USD 144 million facilities. Similarly, payment of the final instalment owed and due
under the seller credit to Cosco for the Safe Notos remains as reported on 14 April 2020 subject to ongoing
discussions with Cosco and the lenders.

The Group’s goal remains to agree a sustainable financial solution with its lenders on a consensual and
cost-efficient basis as early as possible. It is still unclear what a final solution may look like, but as reported
previously, a significant equitisation of debt is anticipated, which is likely to result in minimal or no recovery
for current shareholders.

Modification of amortised cost - USD 1,300 million credit facility
When a debt instrument is restructured and the terms have been modified, it is necessary to assess
whether the new terms are considered to have been substantially modified, and thereby conclude on
the accounting treatment relating to the loan recognition (IFRS 9).

2020
No debt instrument has been restructured nor any terms have been modified. The refinancing
process, which was initiated in December 2019, is ongoing and remains constructive with a majority
of lenders providing their support to the Group and process while retaining their rights. The Group
anticipates a successful debt restructuring will result in derecognition of financial liabilities. On
this basis, the incurred costs related to the debt restructuring have been expensed in 2020 as other
financial expenses.

2019
As mentioned under the Warrants section above, a portion of the earlier issued warrants had
been cancelled and replaced with the conditional increase of the applicable margin of the loan.
The terms of the loans had been modified and Prosafe had assessed that the debt modification
was a non-substantial loan modification that does not require de-recognition based qualitative
and quantitative assessments under IFRS 9. Under a non-substantial loan modification that does
not require de-recognition of the financial liability, the amortised cost of the financial liability was
recalculated as the present value of the estimated future contractual cash flows. To reflect the new
net present value of the loan, an adjustment of USD 28.8 million was deducted from the carrying
value of the loan and the same amount of financial costs was recognised in the profit or loss. See note
10 on modification of the amortised cost - loan recognised as financial expenses. The adjustment
made in the loan amount was mainly the effect from the changes in estimate of the following:

1) the timing of the new build deliveries which will affect the drawdown timing of the USD 1,300

million facility and the interest rate margin applicable;

2) the timing of future repayments of debt;
3) the cancellation of warrants under the revised term

The assumption also includes that the new builds will be delivered after the finance debt matures in
February 2022 and the one year credit facility extension is not exercised.

Any future change in estimate of the assumptions of the delivery of the new builds, the timing of
future repayments of debts and credit facility extension will have an impact on the modification of
modified cost of the USD 1,300 million facility.

The adjustment in the loan amount will be amortized over the remaining loan periods.

USD 144 million credit facility (previously known as the 'USD 288 million credit facility')
This credit facility, which has a maturity of seven years, consists of one tranche of USD 144 million.
The tranche was drawn upon delivery of Safe Notos in February 2016, and initially there was a second
available tranche (Safe Eurus). This tranche was cancelled in 2018, when financing for Safe Eurus was
agreed with Cosco. In September 2016 the amortisation profile relating to this facility was amended.
Prior to the amendment, the term loan tranches were reduced quarterly by USD 3 million, starting
three months after delivery of the tranche security. The maturity of this credit facility is in May 2021.

As mentioned above, the dialogue with lenders was initiated by the Board of Directors in December
2019 and has continued in a constructive manner throughout the year, with a majority of lenders
providing their support to the Group and process while retaining their rights. As part of this dialogue,
the Group has and will continue to defer making payments of scheduled instalments and interests
under its USD 1,300 million and USD 144 million facilities. Similarly, payment of the final instalment
owed and due under the seller credit to Cosco for the Safe Notos remains as reported on 14 April 2020
subject to ongoing discussions with Cosco and the lenders.

The Group’s goal remains to agree a sustainable financial solution with its lenders on a consensual
and cost-efficient basis as early as possible. It is still unclear what a final solution may look like, but as
reported previously, a significant equitisation of debt is anticipated, which is likely to result in minimal
or no recovery for current shareholders.

Financial covenants as per amendment in August 2018:
Minimum liquidity:

USD 65 million at all times

Minimum value:

On the USD 1,300 million facility, no minimum market value requirement
shall apply until 1 January 2022; thereafter ensure that the aggregate
market value of the collateral vessels is at least 100% of the facilities
outstanding on the relevant market test dates, on at least one out of every
two consecutive annual test dates.

On the USD 144 million (Safe Notos) facility, covenant is set at 110% of the
loan on the relevant market value test date on at least one out of every two
consecutive market value test dates. There will be a step up in market value
requirement in March 2021 to 125%. The Group is not in compliance with
the minimum market value requirement at 31 December 2020, but the
Group was in compliance with the minimum market value requirement at
31 December 2019 and as such the Group has not breached the minimum
market value requirement on two consecutive test dates.

Leverage ratio: 1)

Leverage ratio to be negotiated, with first testing date on 31 March 2021.

Interest coverage: 2)

Interest coverage ratio 1.00x from 1 July 2020 until 31 March 2021;
1.50x from 1 April 2021 thereafter

There is also a maximum capital expenditure covenant which is agreed before the start of each
financial year.

There are cross default clauses between the USD 144 million and USD 1,300 million credit facilities.
The Group’s loan agreements include change of control clauses.

1) Leverage ratio = net borrowings/adjusted EBITDA
2) Interest coverage ratio = adjusted EBITDA/net interest expenses

Interest on bank facilities
Interest is USD LIBOR plus margin. Margin on outstanding amounts are as follows.

Applicable leverage ratio

USD 1,300 million facility

USD 144 million facility

Cash margin

Less than or equal to 3.0:1

Above 3.0:1 and less than 4.0:1

Above 4.0:1 and less than 5.0:1

Above 5.0:1 and less than 5.5:1

Above 5.5:1

2.60 %

2.75 %

2.90 %

3.10 %

3.35 %

2.25 %

2.30 %

2.50 %

2.75 %

As at 31 December 2020, the applicable leverage ratio is above 5.5:1 (2019: above 5.5:1).

For the USD 1,300 million facility, there was an increase in margin from the refinancing in August
2018 compared to the previous margin under the USD 1,300 million facility agreement by 0.6% p.a.
This additional 0.6% margin will be cash interest if minimum liquidity remains above USD 155 million
at any time. However, to protect liquidity if cash falls below USD 155 million, the additional interest
will be payment-in-kind (PIK) and added to the final maturity instalment (“PIK toggle”).

In addition and as part of the amendments agreed in August 2018, subject to delivery of the Safe
Nova and Safe Vega, and the USD 1,300 million facility being outstanding at the time of delivery, the
USD 1,300 million facility lenders (only) may elect to receive either:
i. An additional margin of 0.225% p.a. for each of Safe Nova and Safe Vega from when they are
delivered. The increase in margin in connection with delivery will also be subject to the PIK toggle
mechanism, which also applies from February 2022 to February 2023 (assuming the extension option
is exercised); or ii. Warrants for up to 6.52 million shares per vessel, and up to a maximum of 9.78
million shares in aggregate.

In November 2019, Prosafe has issued letters to lenders to reconsider the election of warrants with
the conditional increase in the applicable margin. This is due to the accounting treatment of warrants
which adversely affect the outstanding amount of the lender’s book. Out of the 9,779,993 warrants
issued in 2018, 6,344,011 of the warrants have been cancelled and replaced with the conditional
increase of the applicable margin of the loan. The balance of warrants remaining was 3,435,982.

Financial covenants as of 31 December 2020

Cash and deposits

Restricted cash

Liquidity (Liquidity covenant: minimum USD 65 million)

160.3

(9.8)

150.5

Cash sweep mechanism
There is a cash sweep mechanism with testing on 31 March and 30 September. Any excess cash over
USD 155 million threshold shall be shared between lenders (90%) and the company (10%), adjusted
for restricted cash and funding for newbuilds. Any new shareholder contributions shall be subtracted
from excess cash, and not swept. The cash sweep was tested on 31 March and 30 September 2020
and there was no cash sweep at those testing dates.

Interest coverage ratio
The 12-month EBITDA of the Group was negative USD 9.5 million. The Net Interest Expenses of the
Group was USD 61.3 million. Thus, the Group was not in compliance with the Interest Coverage Ratio,
which is required to be minimum 1.0 at 31 December 2020.

Sellers' credits
In January 2016, Cosco (Qidong) Offshore Co. Ltd. granted a sellers’ credit of around USD 29 million as
a reduction on the final delivery instalment of the Safe Notos. In August 2016, further amendment
was made to the existing payment schedule. It was agreed that the first instalment of USD 2.3 million
was to be paid in October 2016 and thereafter USD 0.3 million monthly until December 2019, except
August 2018 instalment of USD 0.7 million. The remaining balance of the sellers’ credit amount
together with the annual interest of 4.35% was due to be repaid in a single payment on or before
December 2019. The Group’s final payment of approx. USD 18.5 million (final instalment and accrued
interest) owed and due under the sellers credit to Cosco for the Safe Notos has not been made. This
payment is subject to certain contractual subordination and coordination arrangements with the
financial lenders, and discussions with Cosco on this payment are ongoing.

Cosco (Qidong) Offshore Co. Ltd. granted a sellers’ credit of USD 99.4 million on the final delivery
instalment of the Safe Eurus in 2019. The Group is paying Cosco the minimum instalments under the
Safe Eurus sellers' credit. At 31 December 2020, USD 96.4 million was outstanding.

Modification of amortised cost - Sellers Credits
In 2019, Prosafe took delivery of Safe Eurus and issued a promissory note with a principal amount of
USD 99.4 million to COSCO Shipping (Qidong) Offshore Co. Ltd. As the partial payment for the vessel
is deferred beyond normal credit terms, the cost of the vessel is the cash price equivalent at the
recognition date. The Safe Eurus promissory note is initially recognised at fair value and subsequently
measured at amortised cost. The fair value of the below-market loan is measured as the present value
of the expected future cash flows, discounted using an appropriate market related rate. The applicable
discounting rate is similar to the rate charged by the credit facilities lenders of 3-months USD Libor
plus 3.35% per annum. The difference between the cash price equivalent and the principal amount of
the promissory note is determined to be USD 25.4 million. This amount will be recognised as interest
over the period of credit. The repayment schedule and interest expense on the promissory note
depends on the financial performance of the vessel. The final expected maturity date is December
2027.

Loan Classification
A liability that is repayable on demand, if loan conditions have been breached and the waiver does not
provide a period of grace ending at least 12 months after the reporting date, is classified as current
(IAS 1.75).

In 2019, there were certain provision agreements which may provide the lenders with the right to
repayment on demand. Although the Group was granted a temporary waiver from lenders in 2019, it
does not have sufficient grace period ending at least 12 months after the reporting date. As such, the
loan was classified as current.

In 2020, the loan continues to be classified as current as the Group is in default both due to
non-payment of interest and instalments. Furthermore, the Group is not in compliance with financial
covenants under the loan facilities.

NOTE 16: OTHER CURRENT LIABILITIES

Various accrued costs

Accrued interest costs

Net contract (assets)/ liabilities

Total interest-free current liabilities

2020

2019

10.6

0.4

(0.6)

10.4

17.3

13.7

2.6

33.6

NOTE 17: MORTGAGES AND GUARANTEES

2020
As of 31 December 2020, the Group’s interest-bearing debt secured by mortgages totalled USD
1,378.8 million. The debt was secured by mortgages on the accommodation/service vessels Safe
Caledonia, Safe Concordia, Safe Scandinavia, Regalia, Safe Boreas, Safe Zephyrus and Safe Notos (net
carrying value USD 308.5 million). Regalia is sold for recycling in 2021. Negative pledge clauses apply
on shares in the vessel owning subsidiaries. Earnings accounts are pledged as security for the credit
facilities, but cash will only be restricted if a continuing event of default occurs and the bank sends
notice on that.

A bank guarantee has been issued on behalf of Prosafe Rigs Pte. Ltd. in favour of Westcon Yards
AS, amounting to NOK 245 million at 31 December 2020. This bank guarantee is secured by a cash
deposit of USD 5 million and a counter bank guarantee of USD 30 million issued under the USD 1,300
million facility.

As of 31 December 2020, the Group had issued parent company guarantees to clients and vendors
on behalf of its subsidiaries in connection with the award and performance of contracts totalling
approximately USD 151 million and a parent company guarantee and indemnity relating to the bank
guarantee referred to above. The amounts specified with regard to parent company guarantees reflect
the sum of the estimated capped liability under the relevant agreements.

2019
As of 31 December 2019, the Group’s interest-bearing debt secured by mortgages totalled USD
1,314.1 million. The debt was secured by mortgages on the accommodation/service vessels Safe
Bristolia, Safe Caledonia, Safe Concordia, Safe Scandinavia, Regalia, Safe Boreas, Safe Zephyrus and
Safe Notos (net carrying value USD 1,002.6 million). Safe Bristolia was sold for recycling in 2020.
Negative pledge clauses apply on shares in the vessel owning subsidiaries. Earnings accounts are
pledged as security for the credit facilities, but cash will only be restricted if a continuing event of
default occurs.

A bank guarantee has been issued on behalf of Prosafe Rigs Pte. Ltd. in favour of Westcon Yards
AS, amounting to NOK 245 million at 31 December 2019. This bank guarantee is secured by a cash
deposit of USD 5 million and a counter bank guarantee of USD 30 million issued under the USD 1,300
million facility.

As of 31 December 2019, the Group had issued parent company guarantees to clients and vendors
on behalf of its subsidiaries in connection with the award and performance of contracts totalling

approximately USD 183.5 million and a parent company guarantee and indemnity relating to the
bank guarantee referred to above. The amounts specified with regard to parent company guarantees
reflect the sum of the estimated capped liability under the relevant agreements.

NOTE 18: FINANCIAL ASSETS AND LIABILITIES

As of 31 December 2020, the Group had financial assets and liabilities in the following categories:

Financial
assets
measured at
amortised
cost

Fair value
through
profit and
loss

Financial
liabilities
measured at
amortised
cost

Carrying
value

Fair value

160.3

6.9

5.0

172.2

0.0

3.7

0.0

3.7

0.0

160.3

6.9

5.0

6.9

5.0

172.2

1,509.4

0.0

1.4

10.4

2.3

3.7

1.4

10.4

2.3

3.7

1.4

10.4

2.3

1,523.5

1,527.2

Year ended 31 Dec 2020

Cash and deposits

Accounts receivable

Other current assets

Total financial assets

Interest-bearing debt 1)

Fair value interest rate swaps

Accounts payable

Other current liabilities

Other non-current liabilities

Total financial liabilities

1) Refer to note 15 for detailed breakdown of interest-bearing debt.

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. The interest rate swaps, and interest
rate caps are valued using valuation techniques with market observable inputs. 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 and
interest rate and forward rate curves. All the interest rate swaps and caps are secured under the USD
1,300 million credit facilities.

Year ended 31 Dec 2020

Fair value interest rate swaps

Total financial liabilities

Total

(3.7)

Level 1

Level 2

Level 3

0.0

(3.7)

0.0

As of 31 December 2020, the fair value of the interest rate caps amounted to less than
USD 0.1 million of the financial assets and is not material for further disclosure.

As of 31 December 2019, the Group had financial assets and liabilities in the following
categories:

Financial
assets
measured at
amortised
cost

Fair value
through
profit and
loss

Financial
liabilities
measured at
amortised
cost

Carrying
value

Fair value

198.1

8.0

6.9

213.0

0.0

27.6

0.0

198.1

8.0

6.9

8.0

6.9

213.0

1,397.9

0.0

3.1

33.6

2.3

27.6

3.1

33.6

2.3

27.6

3.1

33.6

2.3

27.6

1,436.9

1,464.5

Year ended 31 Dec 2019

Cash and deposits

Accounts receivable

Other current assets

Total financial assets

Interest-bearing debt 1)

Fair value interest rate swaps

Accounts payable

Other current liabilities

Other non-current liabilities

Total financial liabilities

1) Refer to note 15 for detailed breakdown of interest-bearing debt.

Year ended 31 Dec 2019

Fair value interest rate swaps

Total financial liabilities

Total

(27.6)

Level 1

Level 2

Level 3

0.0

(27.6)

0.0

Assets measured at fair value in the consolidated statement of financial position

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)
Inputs for assets or liabilities that are not based on observable market data (unobservable inputs).

Level 3 -

The currency forwards and interest swaps are valued based on current exchange rates and forward curves.

NOTE 19: FINANCIAL RISKS AND DERIVATIVE FINANCIAL INSTRUMENTS

The Group 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.
The Group's presentation currency is USD, and financial risk exposure is managed with financial
instruments in accordance with internal policies and standards approved by the board of directors.

Currency risk
The Group is exposed to currencies other than USD associated with operating expenditure, capital
expenditure, tax, cash and deposits. Operating expenditure, capital expenditure and tax are mainly
denominated in GBP, BRL and NOK. Cash and deposits are mainly denominated in USD, GBP and NOK.

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. OCI
in the table below refers to Other Comprehensive Income.

Pre-tax effects on income statement

USD +10%

Re-valuation cash and deposits

Total

USD -10%

Re-valuation cash and deposits

Total

2020

(0.9)

0.9

2019

(1.2)

1.2

Interest rate risk
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 and interest rate cap agreements.
The Group evaluates the hedge profile in relation to the repayment schedule of its loans, the Group’s
portfolio of contracts, cash flow and cash in hand. The interest rate risk is largely hedged by the use of
interest rate swaps or cap structures for normally 70-100% of the debt. Due to the current financial
status of the Group and the ongoing process with lenders, the hedging level is currently significantly
reduced pending normalisation once a sustainable financial solution is in place.

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 ±50bps (2019: ±50bps) is applied in the analysis.

Pre-tax effects on income statement

Forward curve +50bps (2019: +50bps)

Re-valuation interest rate swaps

Re-valuation interest rate caps

Total

Forward curve -50bps (2019: -50bps)

Re-valuation interest rate swaps

Re-valuation interest rate caps

Total

2020

2019

0.4

0.0

0.4

(0.4)

0.0

(0.4)

5.3

0.1

5.4

(5.4)

0.0

(5.4)

Credit risk
In line with industry practice, other contracts normally contain clauses which give the customer an
opportunity for early cancellation under specified conditions. Providing the Group 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 Group’s favour.

Credit assessment of financial institutions issuing guarantees in favour of the Group, yards, sub-
contractors and equipment suppliers is part of the Group’s project evaluations and risk analyses. The
counterparty risk is in general limited when it comes to the Group’s clients, since these are typically
major oil companies and national oil companies.

For trade receivables, the Group applies the simplified method of credit reserves, i.e. the reserve will
correspond to the expected loss over the whole life of the trade receivable. In order to measure the
credit losses, trade receivables are grouped based on credit risk characteristics of its customers. The
Group applies forward-looking variables for expected credit losses. As at 31 December 2020, no credit
reserve has been recorded as the Group's clients are typically major oil companies and national oil
companies and the receivables are usually received within 3 months. The expected credit loss is not
material.

Accounts receivables

Total

Not due

< 30 days 30 - 60 days

61-90 days

> 90 days

31 December 2020

31 December 2019

6.9

8.0

6.9

5.7

0.0

0.1

0.0

1.7

0.0

0.5

0.0

Liquidity risk
Prosafe manages liquidity and funding on a group level. Prosafe is exposed to liquidity risk in a
scenario when the Group’s cash flow from operations is insufficient to cover payments of financial
liabilities. The continued challenging environment in the oil and gas industry has increased the risk of
reduced charter revenues in the short and mid term. Liquidity risk has become the most significant
risk for the Group. Due to the impact of the Covid-19 pandemic, expected prolonged downturn
and weaker outlook in the North Sea in particular, it has led to a major impact on future earnings
and backlog, and therefore on expected future cash reserves. The Group monitors the liquidity
development and the risk of insufficient capital by rolling cash flow forecasts to determine whether
the Group's liquidity position is above the minimum cash covenant as per the loan agreements.

Most of the Group's mortgaged debt has been renegotiated during the last few years and the Group
is now in discussions with lenders, which was initiated in December 2019, to find a long-term
sustainable financial solution. The discussions with lenders remained constructive throughout 2020.
As part of this dialogue, the Group has and will continue to defer making payments of scheduled
instalments and interests under its USD 1,300 million and USD 144 million facilities. Similarly,
payment of the final instalment owed and due under the seller credit to Cosco for the Safe Notos
remains as reported on 14 April 2020 subject to ongoing discussions with Cosco and the lenders. The
majority of lenders provide their support to the Group and this process while retaining their rights.

As of 31 December 2020, Prosafe had an unrestricted liquidity reserve totalling USD 150.5 million.
Under the existing credit facility agreements, the Group is required to maintain minimum liquidity of
USD 65 million. The Group is anticipated to be able to stay above the minimum cash covenant level
for the next 12 months based on currently known information and commitments and subject that
the Group will continue to have support from the lenders to defer making payments of scheduled
instalments and interest into 2022.

As of 31 December 2020, the Group's main financial liabilities had the following remaining contractual
maturities 1):

Per year
Interest-bearing debt (repayments) 2)
Interests incl. outstanding interest rate swaps 3)

Taxes

Accounts payable and other current liabilities

Total

2021

2022

2023

2024

2025 →

158.5

1,283.0

47.2

9.0

11.8

3.8

0.0

226.5

1,286.8

6.0

0.0

6.0

0.0

6.0

78.4

0.0

78.4

1) Currently the Group is not paying scheduled instalments and interest under the bank facilities.

Based on current contractual maturities, it is assumed that the USD 144 million facility matures in
May 2021 together with the seller credit on Safe Notos and the USD 1,300 million facility matures in
February 2022 together with the outstanding interest swap debt. The exception is that the Group is
paying the minimum instalments agreed with Cosco under the Safe Eurus seller credit.

2) Interest-bearing debt includes credit facilities and seller credits from Cosco, in addition to the
outstanding interest swap debt (three interest rate swaps were terminated by the swap banks
during 2020).

3) Interest on credit facilities and seller credits. Based on swap rate, USD 3m LIBOR as of 1 February

2021 and current agreed credit margin.

If the lenders are to require accelerated repayment, the maturities of the interest-bearing debt will be
as follows:

Per year
Interest-bearing debt (repayments) 1)

2021

1,437.5

2022

4.0

2023

6.0

2024

2025 →

6.0

78.4

The Group has ongoing dialogue with lenders on a long-term financial solution.

1) It is assumed all outstanding bank debt, Safe Notos seller credit and interest swap debt mature,
if lenders accelerate under these agreements due to default. The Group is paying the minimum
instalments under the Safe Eurus seller credit and therefore this is not assumed accelerated but
following the scheduled repayment profile.

As of 31 December 2019, the Group's main financial liabilities had the following remaining
contractual maturities (assuming the extension option for the USD 1,300 million facility is not
exercised and excluding any lender's right to accelerated repayment as a consequence of breaches to
the loan agreement):

Per year
Interest-bearing debt (repayments) 1)
Interests incl. outstanding interest rate swaps 2)

Taxes

Accounts payable and other current liabilities

Total

2020

2021

2022

2023

2024 →

33.4

71.7

13.3

36.7

143.2

1,160.4

63.8

0.0

5.1

0.0

155.1

207.0

1,165.5

6.0

0.0

6.0

84.4

1.0

0.0

85.4

1) Interest-bearing debt includes credit facilities and seller credits from Cosco.
2) Interest on credit facilities and seller credits. Based on average swap rate, 3m LIBOR as of mid-February

2020 and current agreed credit margin.

If the lenders are to require accelerated repayment, the maturities of the interest-bearing debt will be
as follows:

Per year
Interest-bearing debt (repayments) 1)

2020

1,330.9

2021

2.1

2022

4.0

2023

2024 →

6.0

84.4

The Group has ongoing dialogue with lenders on a long-term financial solution. This might include further
amendments to interest and instalments in the coming years.

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. The Group manages the total of shareholders'
equity and long-term debt as their capital. Normally the Group's main tool to assess its capital
structure is the leverage ratio, which is calculated by dividing net interest-bearing debt including
bank guarantees, by Group gross profit before depreciation and impairment over the last 12 months.
Note that the Group is currently in dialogue with its lenders about a long-term financial solution in
response to the severe downcycle in the industry and weakened market outlook. Although it is still
too early to conclude what the financial solution may look like, it is anticipated that the solution will
improve the capital structure of the Group.

NOTE 20: CASH AND DEPOSITS

Restricted cash deposits

Free cash and short-term deposits

Total cash and deposits

2020

9.8

150.5

160.3

2019

9.7

188.4

198.1

Under the existing credit facility agreements, the Group is required to maintain a minimum liquidity
of USD 65 million. See note 15 for details on financial covenants.

NOTE 21: OTHER CURRENT ASSETS

Other receivables

Prepayments

Stock

Other current assets

Total other current assets

2020

2019

1.2

1.7

1.2

0.9

5.0

1.9

2.1

1.7

1.2

6.9

NOTE 22: RELATED PARTY DISCLOSURES

The financial statements comprise the parent company, Prosafe SE, and the subsidiaries listed below.

Company name

Prosafe Services Maritimos Ltda

Prosafe Holding Limited

Prosafe Rigs (Cyprus) Limited

Prosafe Offshore Accommodation Ltd

Prosafe Offshore BV

Prosafe AS

Axis Nova Singapore Pte. Ltd.

Axis Vega Singapore Pte. Ltd.

Prosafe Offshore Holdings Pte. Ltd.

Prosafe Offshore Pte. Limited

Prosafe Rigs Pte. Ltd.

Safe Eurus Singapore Pte. Ltd.

Prosafe (UK) Holdings Limited

Prosafe Offshore Limited

Prosafe Rigs Limited

Country

of incorporation Ownership

Brazil

Cyprus

Jersey

Netherlands

Norway

Singapore

United Kingdom

100 %

Transactions and outstanding balances within the Group have been eliminated in full.

Shares owned by senior officers and directors at 31 December 2020:
(includes shares owned by close family/relatives and wholly-owned companies)

Senior officers:

Jesper Kragh Andresen - CEO

Stig Harry Christiansen - DCEO and CFO

Ryan Duncan Stewart - COO

Directors:
Glen Ole Rødland - Chairman 1)
Alf C. Thorkildsen - Director 2)

Birgit Aagaard-Svendsen - Director

Voting

100 %

84,067

54,000

45,260

3,000

1) Mr Rødland has an indirect ownership interest in Prosafe due to his ownership interest in

HitecVision VII, L.P.

2) Mr Thorkildsen has an indirect ownership interest in Prosafe due to his ownership interest in

HitecVision VI, L.P and HitecVision VII, L.P.

NOTE 23: CAPITAL COMMITMENTS

New builds
As at 31 December 2020, the Group had two (2019: two) undelivered completed new builds residing
at COSCO's Qidong shipyard in China; Safe Nova and Safe Vega.

Safe Nova and Safe Vega
If the Group gives notice to COSCO within 5 years from August 2018 to take delivery of the vessels, the
Group is committed to pay USD 25 million each upon delivery of the vessel and the reminder of the
costs will be financed by COSCO. The repayment of COSCO financing and interest rates are linked to
respective vessel future earnings and day rate.

NOTE 24: CONTINGENT ASSETS

On 8 March 2018, Stavanger City Court made a favourable decision in the court case regarding the
dispute with Westcon Yards AS (Westcon). The dispute between Westcon and the Group was related
to a substantial cost overrun of Westcon's price estimate for the conversion of the Safe Scandinavia
to a tender support vessel. Westcon claimed an additional compensation of approx. NOK 306 million
plus interest, whereas the Group disputed Westcon's claim and claimed a substantial repayment.
The Court decided in favour of the Group that Westcon must repay the Group NOK 344 million
plus interest and NOK 10.6 million of legal costs. In April 2018, Westcon has filed an appeal against
Stavanger City Court judgement and the Group has filed a counter appeal.

The appeal hearings were concluded in the second and final instance (Gulating Lagmannsrett) on
27 November 2020. Judgement is expected in the first half of 2021.

While awaiting the final outcome of the dispute, the Group considers the amount payable by Westcon
to be a contingent asset under IAS 37, and has therefore not recognised the amount per 31 December
2019 and 31 December 2020.

NOTE 25: EVENTS AFTER THE REPORTING DATE

Status financing
The book equity turned negative in early 2020, a development that was anticipated following impairment
charges of USD 341.4 million in late 2019. In consideration of the outlook and the financial implications
including anticipated breach of the facilities agreements, the Board of Directors initiated a dialogue with
its lenders in December 2019 with a view to ensure sufficient financial flexibility for the longer term.
In Q1 2020, the Group concluded on a revised business plan and announced further impairment charges
of USD 810.5 million. Dialogues with lenders have continued in a constructive manner throughout the year
with a majority of lenders providing their support to the Group and process while retaining their rights.

As part of the dialogue with lenders, the Group has continued to defer making payments of scheduled
instalments and interests under its USD 1,300 million and USD 144 million facilities. Similarly, payment of
the final instalment owed and due under the seller credit to Cosco for the Safe Notos remains as reported
on 14 April 2020 subject to ongoing discussions with Cosco and the lenders.

Pending outcome of the process, the Group continues to operate on a business as usual basis to protect
and create value through challenging market conditions. As such, the going concern assumption is
considered appropriate as it is based on the Board’s view that obtaining a long term and sustainable
financial solution should be achievable.

PARENT COMPANY ACCOUNTS

INCOME STATEMENT - PROSAFE SE

(USD 1 000)

Note

2020

2019

Income from investments in subsidiaries

Impairment of shares in subsidiaries and associate

Results of investing activities

Operating expenses

Operating loss

Interest income

Interest expenses

Other financial income

Other financial expenses

Net financial items

Loss before taxes

Taxes

Net loss

5,181

(713,300)

(708,119)

(3,962)

28,020

(393,250)

(365,230)

(9,573)

(712,081)

(374,803)

10,697

(58,803)

4,378

(188,163)

(231,891)

(943,972)

15,655

(36,679)

(16,815)

(37,839)

(412,642)

(1)

(943,972)

(412,643)

Attributable to equity holders of the company

(943,972)

(412,643)

STATEMENT OF COMPREHENSIVE INCOME - PROSAFE SE

(USD 1 000)

Net loss

2020

2019

(943,972)

(412,643)

Other comprehensive loss that will not be reclassified
to profit or loss in subsequent periods

Pension remeasurement

(127)

(151)

Total comprehensive loss for the year, net of tax

(944,099)

(412,794)

Attributable to equity holders of the company

(944,099)

(412,794)

STATEMENT OF FINANCIAL POSITION - PROSAFE SE

(USD 1 000)

ASSETS

Shares in subsidiaries

Intra-group receivables

Derivatives

Total non-current assets

Cash and deposits

Other current assets

Total current assets

Total assets

EQUITY AND LIABILITIES

Share capital

Share premium reserve

Share capital reduction reserve

Total paid-in equity

Retained earnings

Convertible bonds

Warrants

Total equity

Intra-group non-current liabilities

Derivatives

Interest-free long-term liabilities

Total long-term liabilities

Interest-bearing current debt

Accounts payable

Intra-group current liabilities

Other interest-free current liabilities

Total current liabilities

Total equity and liabilities

Note

11, 13

7, 11, 13

11, 13

9, 13, 14

13, 14

11, 13, 14

10, 13 ,14

2020

2019

412,236

131,786

1,089,036

274,693

544,022

1,363,745

73,696

516

74,212

90,900

5,629

96,529

618,234

1,460,274

9,097

9,030

1,039,317

1,037,584

71,846

1,120,260

1,118,460

(1,989,827)

(1,045,728)

18,769

20,569

(850,798)

93,301

33,057

3,715

2,297

39,069

27,617

2,287

29,904

1,413,130

1,308,127

263

14,954

1,616

457

17,502

10,983

1,429,963

1,337,069

618,234

1,460,274

On 25 March 2021, the Board of Directors of Prosafe SE approved and authorised these financial
statements for issue.

Glen Ole Rødland
Non-executive Chairman

Birgit Aagaard-Svendsen
Non-executive Director

Alf C. Thorkildsen
Non-executive Director

Nina Udnes Tronstad
Non-executive Director

Jesper K. Andresen
Chief Executive Officer

CASH FLOW STATEMENT - PROSAFE SE

(USD 1 000)

Note

2020

2019

Cash flow from operating activities

Loss before taxes

Unrealised currency (gain)/loss on long-term debt

Expected credit loss

Impairment shares in subsidiaries

Interest income

Interest expenses

Change in working capital

Taxes paid

Other items from operating activities

Net cash flow (used in)/provided by operating activities

Cash flow from investing activities

Acquisition of shares in subsidiaries

Change in intra-group balances

Interest received

Net cash flow (used in)/provided by investing activities

Cash flow from financing activities

Repayment of interest-bearing debt

Proceeds from interest-bearing debt

Interest paid

Net cash flow provided by financing activities

Net cash flow

Cash and deposits at 1 January

Cash and deposits at 31 December

(943,972)

(412,642)

(4,521)

168,456

713,300

(10,697)

58,803

4,973

12,742

(916)

(3,500)

(13,306)

397

(16,409)

120

(17,204)

90,900

73,696

1,261

393,250

(15,655)

36,679

(4,869)

(1)

13,766

11,790

(18,500)

18,600

15,655

15,755

(33,400)

155,000

(74,269)

47,331

74,876

16,024

90,900

STATEMENT OF CHANGES IN EQUITY - PROSAFE SE

(USD 1 000)

Note

capital

reduction

Retained

Convert-

premium

reserve

earnings

ible Bonds

War-

rants

Total

equity

Capital

Equity at 31
December 2018

Net loss

Other compre-
hensive income

Total compre-
hensive income1)

Conversion of
convertible bonds

Warrants
cancellation

Equity at 31
December 2019

Net loss

Other compre-
hensive income

Total compre-
hensive income 1)

Conversion of
convertible bonds

Equity at 31
December 2020

9,021

1,037,353

71,846

(639,395)

20,809

6,461

506,095

231

(412,643)

(151)

(412,794)

(412,643)

(151)

0 (412,794)

(240)

6,461

(6,461)

9,030

1,037,584

71,846

(1,045,728)

20,569

(943,972)

(127)

(944,099)

93,301

(943,972)

(127)

(944,099)

1,733

(1,800)

9,097

1,039,317

71,846

(1,989,827)

18,769

(850,798)

1) Total comprehensive income is attributable to the owners of the company.

Nature and purpose of reserves
Share premium: The difference between the issue price of the shares and their nominal value.
The share premium account can only be resorted to for limited purposes, which do not include the
distribution of dividends, and is otherwise subject to the provisions of the Norwegian Accounting Act
on reduction of share capital.

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 Norwegian
Accounting Act. The accounting policies applied to the consolidated accounts have also been applied
to the parent company, Prosafe SE. The accounting policies adopted are consistent with those in the
previous financial years. The parent company financial statements should be read in conjunction with
the consolidated accounts. The notes to the consolidated accounts provide additional information to
the parent company's accounts which is not presented here separately. Specifically, note 2 and note
25 of the consolidated accounts describe further details relating to going concern, refinancing status
and subsequent events. The Company's functional currency is US dollars (USD), and the financial
statements are presented in USD. Investments in subsidiaries and in an associate 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

Directors’ fees

Salaries and management bonus

Other remuneration

Payroll taxes

Pension expenses

Auditors' audit fees

Auditors' other fees

Legal fees

Other operating expenses

Total operating expenses

Board of directors

Glen Ole Rødland (Chairman)

Birgit Aagaard-Svendsen

Nina Udnes Tronstad

Alf C. Thorkildsen (from May 2020)

Svend Anton Maier (until May 2020)

Kristian Johansen (until May 2020)

Total fees

2020

2019

1,307

401

1,148

197

(44)

161

690

3,962

2,914

491

971

235

(17)

109

4,106

711

9,573

Year

Board fees 1)

2020

120

401

Board of directors

Year

Board fees 1)

Glen Ole Rødland (Chairman)

Roger Cornish (until May 2019)

Nina Udnes Tronstad (from May 2019)

Birgit Aagaard-Svendsen

Svend Anton Maier

Kristian Johansen

Total fees

2019

128

101

491

1) If applicable, figures include compensation from the audit committee and compensation

committee.

Number of employees
The average number of employees in the Company for 2020 was 2 (2019: 1).

NOTE 3: OTHER FINANCIAL ITEMS

Currency gain

Total other financial income

Fair value adjustment interest rate swaps

Fair value adjustment interest rate caps

Currency loss
Expected credit loss 1)
Other financial expenses 2)

Total other financial expenses

2020

2019

4,378

(12,852)

(12,553)

(16)

(168,455)

(6,840)

(188,163)

(1,294)

(1,088)

(1,880)

(16,815)

1) For further information, see note 11 relating to allowance of expected credit loss of receivables from

subsidiaries.

2) In 2020, other financial expenses largely arose from costs relating to refinancing process. For further

information, see note 15 of the consolidated accounts.

NOTE 4: FINANCIAL ITEMS

Year ended 31 December 2020

Interest income
Currency gain1)

Total financial income

Interest expenses

Amortisation of borrowing costs

Fair value adjustment interest rate swaps

Fair value adjustment interest rate caps

Amortisation of amortised cost

Subtotal

Expected credit loss

Other financial expenses

Total financial expenses

Financial
assets
measured at
amortised cost

Fair value
through
profit and
loss

Financial
liabilities
measured at
amortised
cost

Total

10,697

4,378

15,075

(56,056)

(5,928)

3,181

(5,928)

(12,852)

(16)

3,181

10,697

(12,852)

(16)

(12,868)

(58,803)

(71,671)

(168,455)

(6,840)

(168,455)

(12,868)

(65,642)

(246,966)

Net financial items

(157,758)

(12,868)

(65,642)

(231,891)

Year ended 31 December 2019

Financial
assets
measured at
amortised cost

Fair value
through
profit and
loss

Financial
liabilities
measured at
amortised
cost

Total

Interest income

Total financial income

15,655

Interest expenses

Amortisation of borrowing costs

Fair value adjustment interest rate swaps

Fair value adjustment interest rate caps
Currency loss 1)
Modification of amortised cost 2)

Amortisation of amortised cost

Subtotal

Other financial expenses excluding
currency loss

Total financial expenses

(12,553)

(1,294)

15,655

(74,609)

(5,921)

28,763

15,089

(5,921)

(12,553)

(1,294)

(1,088)

28,763

15,089

(13,847)

(36,679)

(51,614)

(1,880)

(13,847)

(38,559)

(53,494)

Net financial items

15,655

(13,847)

(38,559)

(37,839)

1) Excluded from the category breakdown but added to the total for net effect.
2) For further information, see note 15 of the consolidated accounts relating to modification of

amortised cost

NOTE 5: TAXES

Taxes

Total taxes in income statement

Temporary differences:

Loss carried forward

Basis for deferred tax liability (+)/benefit (-)

Deferred tax liability (+)/benefit (-)

Taxes payable at 31 December

2020

2019

(298,355)

(182,900)

The corporate tax rate in Norway for 2020 was 22% (2019: 22%).

Reconciliation of effective tax rate (IAS 12.81)

Tax rate

Loss before taxes

Tax based on applicable tax rate

Tax effect of non-deductible expenses

Tax on income not taxable in determining taxable profit

Tax effect due to unrecognized deferred tax assets

Tax charge

2020

2019

22.0 %

(943,972)

(207,674)

193,661

(1,140)

15,153

22.0 %

(412,642)

(90,781)

84,060

(996)

7,717

NOTE 6: SHARES IN SUBSIDIARIES

(Share capital, carrying value and total equity in 1 000)

2020

Ownership

Investment

carrying

Equity at

carrying

& Voting

No of

value at 31

31 Dec.

value at 31

Companies

Dec. 2020

2020

Dec. 2019

Prosafe AS1)
Prosafe Offshore AS 1)
Prosafe Management AS 1)
Prosafe (UK) Holdings Limited 2)
Prosafe Offshore Pte. Limited 3)
Prosafe Offshore Services Pte. Ltd. 3)
Prosafe Offshore Asia Pacific Pte. Ltd. 3)
Prosafe Rigs Pte. Ltd. 3)
Prosafe Offshore Holdings Pte. Ltd. 3)
Dan Swift (Singapore) Pte. Ltd. 4)

Total

100 %

1,100

59,188

59,778

58,904

100 %

2,000

646,050

100 %

2,781

21,700

9,826

1,400

2,039

2,111

270

9,826

72,643

150

341,822

336,785

925,521

412,236

(67,220)

21,700

1,089,036

The registered address of the subsidiaries and associated company are as follows:
1) Forusparken 2, N-4031 Stavanger, Norway
2) 1st Floor, 10 Temple Back Bristol BS1 6FL , United Kingdom
3) 1 International Business Park, #09-03 The Synergy, Singapore 609917
4) 1 Harbourfront Avenue, #16-08, Keppel Bay Tower, Singapore 098632

In 2020, Prosafe Offshore AS (POAS) and Prosafe Management AS (PMAS) were merged with Prosafe
AS and the carrying values of POAS and PMAS were combined with Prosafe AS. Also, in the same
year, Prosafe Offshore Services Pte Ltd (POSPL) and Prosafe Offshore Asia Pacific Pte Ltd (POAPL) were
merged with Prosafe Offshore Pte Ltd and the carrying values of POSPL and POAPL were combined
with Prosafe Offshore Pte Ltd.

In 2020, the Company has bought 9% of shares in Prosafe Rigs Pte Ltd from Prosafe Holding Limited
for a loan consideration of USD 33 million. As of 31 December 2020, the Company owns 100% of
Prosafe Rigs Pte Ltd.

In 2020, the Company has increased the investment in Prosafe Offshore Holdings Pte. Ltd by USD 3.5
million.

In 2019, the Company invested an additional approximately USD 1.2 million into its associated
company, Dan Swift (Singapore) Pte Ltd. In the same year the Company fully disposed its 25%
shareholding in Dan Swift (Singapore) Pte Ltd to a third party for a nominal consideration.

In 2019, the Company increased the investment in Prosafe AS by offsetting the amount due from
Prosafe AS.

In 2019, Prosafe Rigs Pte Ltd returned USD 101.4 million to the Company as a reduction in capital. The
reduction of capital was settled by offsetting the amount due to Prosafe Rigs Pte Ltd.

Based on management's assessment of impairment indicators, there were triggers which indicated
that the expected recoverable amount was less than the investment carrying value of the following
subsidiaries. The expected recoverable amount was estimated based on the fair value of the
subsidiaries. The determination of vessels valuation (as disclosed in note 8 of the consolidated
accounts) has a direct impact on the fair value of the Company's shares in particular for subsidiaries
holding offshore contracts and vessels. As a result, the following impairment charges were made:

Dan Swift (Singapore) Pte. Ltd.

Prosafe Rigs Pte. Ltd.

Prosafe Offshore Pte. Limited

Prosafe Offshore Holdings Pte. Ltd.

Total

2020

2019

616,700

71,400

25,200

713,300

11,157

232,636

149,457

393,250

There are mortgages on the shares in Prosafe Rigs Pte Ltd and Prosafe Offshore Pte Ltd. Please refer to
note 12.

NOTE 7: OTHER CURRENT ASSETS

Current receivables due from subsidiaries

Other current assets

Total other current assets

NOTE 8: SHARE CAPITAL, CONVERTIBLE BONDS AND WARRANTS

2020

2019

516

5,065

564

5,629

2020

2019

Issued and paid up number of ordinary shares at 31 December

82,464,212

81,864,212

Shares to be issued under convertible bond agreements

Shares to be potentially issued under warrants agreement with
lenders

5,522,790

3,435,982

6,122,790

3,435,982

Total authorised number of shares at 31 December

91,422,984

Nominal value at 31 December

Number of shareholders at 31 December

EUR 0.10

3,663

4,706

Ordinary shares

In issue at 1 January

81,864,212

81,784,212

Issued in connection with conversion of convertible bonds

600,000

80,000

In issue at 31 December fully paid up

82,464,212

81,864,212

Convertible bonds

2020

2019

No. of shares
convertible

Value

Opening balance as at 31 December

6,122,790

Conversion of convertible bonds

(600,000)

Ending balance as at 31 December

5,522,790

20,569

(1,800)

18,769

6,202,790

(80,000)

6,122,790

For further information, see note 14 of the consolidated accounts.

Value

20,809

(240)

20,569

Warrants
As part of the USD 1,300 million credit facility refinancing concluded in 2018, the Company has
issued the warrants to those lenders having elected to receive such instead of increased margins. In
November 2019, Prosafe has issued letters to lenders to reconsider the election of warrants with the
conditional increase in the applicable margin. This modification was at the request of the lenders. Out
of the 9,779,993 warrants issued in 2018, 6,344,011 of the warrants have been cancelled and replaced
with the conditional increase of the applicable margin of the loan. The balance of warrants remaining
is 3,435,982.

In 2020, there was no movement in the warrant and the fair value was not material as at 31
December 2020.

For further information, see note 14 of the consolidated accounts.

NOTE 9: INTEREST-BEARING DEBT

Credit facilities

Swaps termination

Modification of the amortised cost - credit facilities

Unamortised borrowing costs

Unpaid interest on interest rate swap

Total interest-bearing debt

Current interest-bearing debt

Total interest-bearing debt

For further information, see note 15 of the consolidated accounts.

2020

2019

1,378,787

1,314,103

36,755

3,552

(6,779)

815

6,731

(12,707)

1,413,130

1,308,127

1,413,130

1,308,127

Reconciliation of movements of interest-bearing debt

to cash flows arising from financing activities

2020

2019

At 1 January

1,308,127

1,223,997

Changes from financing cash flows

- Proceeds from new interest-bearing debt

- Repayments of interest-bearing debt

- Interest paid

Total changes from financing cash flows

Other liability-changes

- Non-cash movement in interest bearing debt

- Interests paid

- Interests unpaid

- Unpaid interest on interest rate swap
- Swaps termination 1)

Total liability-related changes

2,749

64,684

815

36,755

105,003

155,000

(33,400)

(74,269)

47,331

(37,974)

74,269

504

36,799

At 31 December

1,413,130

1,308,127

1) Three interest rate swaps were terminated by the swap banks during 2020 and were included as

part of interest-bearing debt.

NOTE 10: OTHER INTEREST-FREE CURRENT LIABILITIES

Accrued interest costs

Other current liabilities

Total other interest-free current liabilities

2020

2019

391

1,225

1,616

9,802

1,181

10,983

NOTE 11: INTRA-GROUP BALANCES

Year-end long-term balances

2020

2019

NOK loan to Prosafe AS

USD loan to Prosafe Offshore Holdings Pte. Ltd.

USD loan to Safe Eurus Singapore Pte. Ltd.

Less: Allowance for credit loss

Intra-group long-term receivables

USD loan from Prosafe Holding Limited

Intra-group long-term payables

111,786

68,251

120,204

(168,455)

131,786

33,057

93,725

65,765

115,203

274,693

Loan agreements with subsidiaries are based on market prices using 3M NIBOR (NOK loan) and 3M LI-
BOR (USD loan) interest rates plus a margin of 2.15% (2019: 2.15%) and 2.43-3.70% (2019: 3.25-3.70%)
per annum respectively. Outstanding balances at year-end are unsecured, and settlement normally
occurs in cash or via share capital injection. In 2020, the Company has assessed the recoverability of
its receivables from subsidiaries and has provided allowance for credit loss of USD 168,455,000 based
on assessments of their projected future cashflows.

Loan agreement with a related party, Prosafe Holding Limited is based on market prices using 3M
LIBOR (USD loan) interest rates plus a margin of 3.4% per annum.

Year-end current balances

2020

2019

Current receivables due from subsidiaries

Current payables due to subsidiaries

(14,954)

5 065

(17,502)

Current receivables are not subject to any interest calculation. The short-term payables to subsidiaries
are subject to interest rates from 3M LIBOR (USD loan) interest rates plus a margin of 3.2% per
annum. (2019: 3M LIBOR (USD loan) interest rates plus a margin of 3.2% per annum). The balances
will be settled on ordinary market terms.

Transactions with related parties

2020

2019

Transactions

Purchase of investment in subsidiary from Prosafe Holding Limited

Administrative expenses due to subsidiaries

Interest income

Interest expenses

Group contribution from subsidiaries

Dividends from subsidiaries

(33 000)

(1 307)

10 299

(644)

5 181

(2 914)

12 427

(3 291)

23 491

4 529

Prosafe AS (2019: 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 a monthly basis and paid on market terms. Please refer to note 6 to the
consolidated accounts for disclosure of remuneration to directors.

NOTE 12: MORTGAGES AND GUARANTEES

2020
As of 31 December 2020, the Company’s interest-bearing debt secured by mortgages totalled USD
1,378.8 million. The debt was secured by mortgages on the accommodation/service vessels Safe
Caledonia, Safe Concordia, Safe Scandinavia, Regalia, Safe Boreas, Safe Zephyrus and Safe Notos (net
carrying value USD 308.5 million). Regalia is sold for recycling in 2021. Negative pledge clauses apply
on shares in the vessel owning subsidiaries. Earnings accounts are pledged as security for the credit
facilities, but cash will only be restricted if a continuing event of default occurs and the bank sends
notice on that.

As of 31 December 2020, the Company had issued parent company guarantees to clients and vendors
on behalf of its subsidiaries in connection with the award and performance of contracts totalling
approximately USD 151 million and a parent company guarantee and indemnity relating to the bank
guarantee referred to above. The amounts specified with regard to parent company guarantees reflect
the sum of the estimated capped liability under the relevant agreements.

2019
As of 31 December 2019, the Company’s interest-bearing debt secured by mortgages totalled USD
1,314.1 million. The debt was secured by mortgages on the accommodation/service vessels Safe
Bristolia, Safe Caledonia, Safe Concordia, Safe Scandinavia, Regalia, Safe Boreas, Safe Zephyrus and
Safe Notos (net carrying value USD 1,002.6 million). Safe Bristolia was sold for recycling in 2020.
Negative pledge clauses apply on shares in the vessel owning subsidiaries. Earnings accounts are
pledged as security for the credit facilities, but cash will only be restricted if a continuing event of
default occurs.

As of 31 December 2019, the Company had issued parent company guarantees to clients and vendors
on behalf of its subsidiaries in connection with the award and performance of contracts totalling
approximately USD 183.5 million and a parent company guarantee and indemnity relating to the
bank guarantee referred to above. The amounts specified with regard to parent company guarantees
reflect the sum of the estimated capped liability under the relevant agreements.

NOTE 13: FINANCIAL ASSETS AND LIABILITIES

Year ended 31 Dec 2020

Financial
assets
measured at
amortised
cost

Fair value
through
profit
and loss

Financial
liabilities
measured at
amortised
cost

Intra-group long-term receivables
Cash and deposits 1)

Other current assets

Total financial assets

131,786

73,696

516

205,998

Interest-bearing debt 2)

Intra-group non-current liabilities

Fair value interest rate swaps

Accounts payable

Interest-free long-term liabilities

Intra-group current liabilities

Other interest free current liabilities

Total financial liabilities

Carrying
value

131,786

73,696

516

205,998

3,715

1,413,130

33,057

263

2,297

14,954

1,616

3,715

263

2,297

14,954

1,616

3,715

1,465,317

1,469,032

1) Included in cash and deposits were USD 2.2 million of restricted cash deposits.
2) Refer to note 9 for detailed breakdown of interest-bearing debt.

Year ended 31 Dec 2019

Intra-group long-term receivables
Cash and deposits 1)

Other current assets

Fair value interest rate caps

Total financial assets

Interest-bearing debt 2)

Fair value interest rate swaps

Accounts payable

Interest-free long-term liabilities

Intra-group current liabilities

Other interest free current liabilities

Total financial liabilities

Financial
assets
measured at
amortised
cost

Fair value
through
profit
and loss

Financial
liabilities
measured at
amortised
cost

274,693

90,900

5,629

371,222

Carrying
value

274,693

90,900

5,629

371,238

1,308,127

27,617

457

2,287

17,502

10,983

27,617

457

2,287

17,502

10,983

27,617

1,339,356

1,366,973

1) Included in cash and deposits were USD 2.1 million of restricted cash deposits.
2) Refer to note 9 for detailed breakdown of interest-bearing debt.

For further information, see note 18 of the consolidated accounts.

NOTE 14: MATURITY PROFILE LIABILITIES

As of 31 December 2020, the Company is not paying scheduled instalments and interest under the
interest-bearing debts. As of 31 December 2020, the Company's main financial liabilities had the
following remaining contractual maturities (assuming the USD 144 million facility matures in May
2021 and the USD 1,300 million facility matures in February 2022 together with the outstanding
interest swap debt):

Year ended 31 December 2020

2021

2022

2023
onwards

Interest-bearing debt (repayments) 1)

137,200

1,279,000

Interests including outstanding interest rate swaps

Intra-group current liabilities

Accounts payable

Other interest-free current liabilities

Total

47,200

14,954

263

1,616

3,800

201,233

1,282,800

1) If the lenders are to require accelerated repayment, the maturities of the interest-bearing debt will

be brought forward entirely to year 2021.

The Company has ongoing dialogue with lenders on a long-term financial solution. For further
information, see note 19 of the consolidated accounts.

As of 31 December 2019, the Company's main financial liabilities had the following remaining
contractual maturities (assuming the extension option for the USD 1,300 million facility is not
exercised and excluding any lender's right to accelerated repayment as a consequence of breaches to
the loan agreement):

Year ended 31 December 2019

2020

2021

2022

Interest-bearing debt (repayments) 1)

Interests including outstanding interest rate swaps

Intra-group current liabilities

Accounts payable

Other interest-free current liabilities

16,600

71,700

17,502

457

10,983

140,500

1,157,003

63,800

5,100

Total

117,242

204,300

1,162,103

2023
onwards

1) If the lenders are to require accelerated repayment, the maturities of the interest-bearing debt will

be brought forward entirely to year 2020.

NOTE 15: FINANCIAL RISKS

Interest rate risk
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 and interest rate cap agreements. The
Company evaluates the hedge profile in relation to the repayment schedule of its loans, the subsidiaries'
portfolio of contracts, cash flow and cash in hand. The interest rate risk is largely hedged by the use
of interest rate swaps or cap structures for normally 70 – 100 per cent of the debt. Due to the current
financial status of the Company and the ongoing process with lenders, the hedging level is currently
significantly reduced pending normalisation once a sustainable financial solution is in place.

As of 31 December 2020, the following hedging instruments are as below:

Notional amount

USD 120 million

Total

Fixed rate

1.5330 %

Maturity

Swap type

(USD 1 000)

Fair value

2022

Bullet

(3,715)

As of 31 December 2020, the Company has interest rate caps with notional amount of USD 80 million
and USD 120 million, capped rate of 3.0000% and maturity years of 2021 and 2022 respectively. The
fair value of these interest rate caps amounted to less than USD 1,000 and is not material for further
disclosure.

Fair value of interest rate swap and interest cap 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.

In 2020, the following hedging instruments were terminated. The terminated amount has not
been paid to the counterparties as part of the refinancing agreement. The terminated amount is
reclassified to the interest-bearing debt.

Notional amount

USD 225 million

USD 135 million

USD 120 million

Sub total

Terminated

value

Fixed rate

Maturity

Swap type

(USD 1 000)

2.4440 %

2.3630 %

2.1280 %

2022

Bullet

(19,492)

(9,813)

(7,450)

(36,755)

In 2020, the following interest rate caps have been terminated at value of less than USD 1,000:

Capped rate

Maturity

3.0000 %

2021

2022

Terminated

value

(USD 1 000)

(36,755)

Notional amount

USD 80 million

USD 120 million

Sub total

Total

Pre-tax effects on income statement

Forward curve +50bps (2019: +50bps)

Re-valuation interest rate swaps

Re-valuation interest rate caps

Total

Forward curve -50bps (2019: -50bps)

Re-valuation interest rate swaps

Re-valuation interest rate caps

Total

2020

356

(359)

2019

5,294

110

5,404

(5,361)

(15)

(5,376)

Currency risk
The Company's operating expenses are primarily denominated in NOK, and the operating result is
therefore exposed to currency risk relating to fluctuations in the NOK exchange rates versus the USD.
The Company is exposed to currencies other than USD associated with interest-bearing debt, cash
and deposits. Cash and deposits are mainly denominated in USD, GBP, EUR and NOK and the interest-
bearing debt to Prosafe AS in NOK.

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, EUR and GBP will have
the following effects. Exposures to foreign currency changes for all other currencies are not material.

Pre-tax effects on income statement

2020

2019

USD +10%

Re-valuation cash and deposits

Re-valuation NOK Loan to Prosafe AS

Total

USD -10%

Re-valuation cash and deposits

Re-valuation NOK Loan to Prosafe AS

Total

253

10,571

10,824

(253)

(10,571)

(10,824)

300

9,084

8,784

(300)

(9,084)

(8,784)

Credit risk
The Company is exposed to credit risk in relation to the inter-company loan to three subsidiaries,
Prosafe AS, Prosafe Offshore Holdings Pte Ltd & Safe Eurus Singapore Pte Ltd. See note 11 for details
about the intra-group loan.

Liquidity risk
The Company is exposed to liquidity risk in a scenario when the Company’s cash flow from operations
is insufficient to cover payments of financial liabilities. The Company manages liquidity and funding
on a group level. In order to mitigate the liquidity risk, the Group monitors the liquidity development
and the risk of insufficient capital by rolling cash flow forecasts to determine whether the Group's
liquidity position is above the minimum cash covenant as per the loan agreements.

Most of the Company's mortgaged debt has been renegotiated during the last few years and the
Company is in discussions with lenders, which was initiated in December 2019, to find a long-term
sustainable financial solution. The discussions with lenders remained constructive throughout
2020. As part of this dialogue, the Company will continue to defer making payments of scheduled
instalments and interests under its USD 1,300 million and USD 144 million facilities. The majority of
lenders provide their support to the Company and this process while retaining their rights.

As of 31 December 2020, the Group had an unrestricted liquidity reserve totalling USD 150.5 million.
Under the existing credit facility agreements, the Group is required to maintain minimum liquidity of
USD 65 million. The Group is anticipated to be able to stay above the minimum cash covenant level
for the next 12 months based on currently known information and commitments and subject that
the Group will continue to have support from the lenders to defer making payments of scheduled
instalments and interest into 2022.

Capital management
The primary objective of the Company's capital management is to ensure that it maintains a healthy
capital structure in line with economic conditions. This is managed on a group level as disclosed in
note 19 of the consolidated accounts.

NOTE 16: GOING CONCERN

The Board of Directors confirms that the Company is a going concern. The Company’s equity was
negative as at 31 December 2020 following impairments made in the year as a consequence of
reassessment of the industry outlook. The Company is in constructive dialogues with its lenders to
agree on a sustainable financial solution as soon as possible.

For information relating to going concern, please refer to note 2 and note 25 of the consolidated
accounts.

100

INDEPENDENT
AUDITOR'S REPORT

101

To the General Meeting of Prosafe SE

REPORT ON THE AUDIT OF THE FINANCIAL STATEMENTS

Opinion
We have audited the financial statements of Prosafe SE, which comprise:

• The financial statements of the parent company Prosafe SE (the Company), which comprise the
statement of financial position as at 31 December 2020, the income statement, statement of
comprehensive income, statement of changes in equity and cash flow statement for the year
then ended, and notes to the financial statements, including a summary of significant accounting
policies, and

• The consolidated financial statements of Prosafe SE and its subsidiaries (the Group), which
comprise the consolidated statement of financial position as at 31 December 2020, the
consolidated income statement, consolidated statement of comprehensive income, consolidated
statement of changes in equity and consolidated cash flow statement for the year then ended, and
notes to the financial statements, including a summary of significant accounting policies.

In our opinion:

• The financial statements are prepared in accordance with the law and regulations.

• The accompanying financial statements give a true and fair view of the financial position of the
Company as at 31 December 2020, and its financial performance and its cash flows for the year
then ended in accordance with International Financial Reporting Standards as adopted by the EU.

• The accompanying consolidated financial statements give a true and fair view of the financial

position of the Group as at 31 December 2020, and its financial performance and its cash flows for
the year then ended in accordance with International Financial Reporting Standards as adopted by
the EU.

Basis for opinion
We conducted our audit in accordance with laws, regulations, and auditing standards and
practices generally accepted in Norway, including International Standards on Auditing (ISAs). Our
responsibilities under those standards are further described in the Auditor’s Responsibilities for the
Audit of the Financial Statements section of our report. We are independent of the Company and the
Group as required by laws and regulations, and we have fulfilled our other ethical responsibilities
in accordance with these requirements. We believe that the audit evidence we have obtained is
sufficient and appropriate to provide a basis for our opinion.

Material Uncertainty Related to Going Concern
We draw attention to Note 2 in the consolidated financial statements and the Board of Directors’
report, which describes that the equity turned negative early 2020. The Group incurred a net loss
of USD 950,1 million during the year ended December 31, 2020 and, as of that date, the Group's
liabilities exceeded its total assets by USD 948,5 million. The Company incurred a net loss of USD
944,0 million during the year ended December 31, 2020 and, as of that date, the Company's liabilities

102

exceed its total assets by USD 850,8 million. Furthermore, the Company has deferred making
payments of scheduled instalments and interests under its USD 1,300 million and USD 144 million
credit facilities. These conditions, along with other matters as set forth in the liquidity section of
note 19 and note 25 of the consolidated financial statements and the Board of Directors’ report,
indicate that a material uncertainty exists that may cast significant doubt on the Company’s ability
to continue as a going concern. Our opinion is not modified in respect of this matter.

Key Audit Matters
Key audit matters are those matters that, in our professional judgment, were of most significance
in our audit of the financial statements of the current period. These matters were addressed in the
context of our audit of the financial statements as a whole, and in forming our opinion thereon, and
we do not provide a separate opinion on these matters. In addition to the matter described in the
Material Uncertainty Related to Going Concern section, we have determined the matters described
below to be the key audit matters to be communicated in our report.

The key audit matter

How the matter was addressed in our audit

There is a risk that the Group is not
able to recover the carrying amount of
Property Plant and Equipment, specifically
vessels (“PPE”), due to the continued weak
demand in key markets.

An impairment assessment was carried
out by the Group by assessing the value in
use of the Group’s cash generating units
(“CGUs”).

Calculating the value in use requires
significant assumptions about future
developments to forecast and discount
the future cash flows that are the basis of
the assessment of the value in use.

Due to the inherent uncertainty,
especially under present market
conditions, and the subjectivity involved
in forecasting and discounting future
cash flows, this area involves auditor
judgment to be applied when assessing
this key judgmental area

The above mentioned impairment risk
has a direct impact on the valuation of
the Company’s significant investment in
subsidiaries and the expected credit loss
on receivables from subsidiaries.

Our audit procedures in this area included;

• Assessing and challenging the Group’s valuation
model, including key assumptions, key inputs
and calculations such as utilization rates,
operating revenues/expenses, expected lifetime
of the vessels, annual capital expenditure and
terminal value, in light of previous estimates and
our knowledge of the industry.

• Evaluating the historical accuracy of

management’s budgets and forecasts in order to
challenge management on the current year cash
flow forecasts;

• Assessed the mathematical and methodological
integrity of management's impairment models
and the discount rate applied with reference to
market data;

• Compared the value of shares and in subsidiaries

and receivables from subsidiaries with the
calculated value of the vessels to assess if
impairments of shares and the expected credit
loss on receivables are consistent with the
calculated value of the vessels

• Evaluating the adequacy of the financial

statement disclosures, including disclosures of
key assumptions, judgements and sensitivities.

103

Other information
Management is responsible for the other information. The other information comprises information
in the annual report, except the financial statements and our auditor's report thereon.

Our opinion on the financial statements does not cover the other information and we do not express
any form of assurance conclusion thereon.

In connection with our audit of the financial statements, our responsibility is to read the other
information and, in doing so, consider whether the other information is materially inconsistent with
the financial statements or our knowledge obtained in the audit or otherwise appears to be materially
misstated.

If, based on the work we have performed, we conclude that there is a material misstatement of this
other information, we are required to report that fact. We have nothing to report in this regard.

Responsibilities of the Board of Directors and the Managing Director for the Financial Statements
The Board of Directors and the Managing Director (Management) are responsible for the preparation
in accordance with law and regulations, including a true and fair view of the financial statements
in accordance with International Financial Reporting Standards as adopted by the EU, and for such
internal control as management determines is necessary to enable the preparation of financial
statements that are free from material misstatement, whether due to fraud or error.

In preparing the financial statements, management is responsible for assessing the Company’s and
the Group’s ability to continue as a going concern, disclosing, as applicable, matters related to going
concern and using the going concern basis of accounting unless management either intends to
liquidate the Company or the Group to cease operations, or has no realistic alternative but to do so.

Auditor’s Responsibilities for the Audit of the Financial Statements
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole
are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report
that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee
that an audit conducted in accordance with laws, regulations, and auditing standards and practices
generally accepted in Norway, including ISAs will always detect a material misstatement when it
exists. Misstatements can arise from fraud or error and are considered material if, individually or in
aggregate, they could reasonably be expected to influence the economic decisions of users taken on
the basis of these financial statements.

As part of an audit in accordance with laws, regulations, and auditing standards and practices
generally accepted in Norway, including ISAs, we exercise professional judgment and maintain
professional skepticism throughout the audit. We also:

• identify and assess the risks of material misstatement of the financial statements, whether due
to fraud or error. We design and perform audit procedures responsive to those risks, and obtain
audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not
detecting a material misstatement resulting from fraud is higher than for one resulting from error,
as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of
internal control.

104

• obtain an understanding of internal control relevant to the audit in order to design audit

procedures that are appropriate in the circumstances, but not for the purpose of expressing an
opinion on the effectiveness of the Company's or the Group's internal control.

• evaluate the appropriateness of accounting policies used and the reasonableness of accounting

estimates and related disclosures made by management.

• conclude on the appropriateness of management’s use of the going concern basis of accounting

and, based on the audit evidence obtained, whether a material uncertainty exists related to events
or conditions that may cast significant doubt on the Company and the Group's ability to continue
as a going concern. If we conclude that a material uncertainty exists, we are required to draw
attention in our auditor’s report to the related disclosures in the financial statements or, if such
disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence
obtained up to the date of our auditor’s report. However, future events or conditions may cause the
Company and the Group to cease to continue as a going concern.

• evaluate the overall presentation, structure and content of the financial statements, including

the disclosures, and whether the financial statements represent the underlying transactions and
events in a manner that achieves a true and fair view.

• obtain sufficient appropriate audit evidence regarding the financial information of the entities
or business activities within the Group to express an opinion on the consolidated financial
statements. We are responsible for the direction, supervision and performance of the group audit.
We remain solely responsible for our audit opinion.

We communicate with the Board of Directors regarding, among other matters, the planned scope and
timing of the audit and significant audit findings, including any significant deficiencies in internal
control that we identify during our audit.

We also provide the Board of Directors with a statement that we have complied with relevant ethical
requirements regarding independence, and to communicate with them all relationships and other
matters that may reasonably be thought to bear on our independence, and where applicable, related
safeguards.

From the matters communicated with the Board of Directors, we determine those matters that were
of most significance in the audit of the financial statements of the current period and are therefore
the key audit matters. We describe these matters in our auditor’s report unless law or regulation
precludes public disclosure about the matter or when, in extremely rare circumstances, we determine
that a matter should not be communicated in our report because the adverse consequences of doing
so would reasonably be expected to outweigh the public interest benefits of such communication.

REPORT ON OTHER LEGAL AND REGULATORY REQUIREMENTS

Opinion on the Board of Directors’ report
Based on our audit of the financial statements as described above, it is our opinion that the
information presented in the Board of Directors’ report and in the statements on Corporate
Governance and Corporate Social Responsibility concerning the financial statements, the going
concern assumption and the proposed allocation of the result is consistent with the financial
statements and complies with the law and regulations.

105

Opinion on Registration and Documentation
Based on our audit of the financial statements as described above, and control procedures we have
considered necessary in accordance with the International Standard on Assurance Engagements
(ISAE) 3000, Assurance Engagements Other than Audits or Reviews of Historical Financial Information,
it is our opinion that management has fulfilled its duty to produce a proper and clearly set out
registration and documentation of the Company’s accounting information in accordance with the
law and bookkeeping standards and practices generally accepted in Norway.

Bergen, 25 March 2021
KPMG AS

Anfinn Fardal

State Authorised Public Accountant

106

ENVIRONMENTAL,
SOCIAL AND
GOVERNANCE REPORT

107

CONTENTS

109

About this report

111

Governance

115

Social

124

Environment

130

List of abbreviations

108

ABOUT THIS REPORT

In this Environmental, Social and Governance (ESG) Report,
Prosafe will communicate to its stakeholders how the Company
integrates environmental, social and governance factors into
its business model and strategy, risk management, decisions
and operations in order to ensure long-term sustainable
development and profitability.

CONTENT

The Company will describe Prosafe’s ESG focus areas and results, focusing on how we respond to
climate change, how we treat our people and how we responsibly manage and conduct our business
for the benefit of all stakeholders and society at large.

Prosafe complies with governmental laws and rules and regulations applicable to its business.
The Company adheres to international recognised principles and guidelines such as the Universal
Declaration of Human Rights, the key conventions of the International Labour Organisation, the OECD
Guidelines for Multinational Enterprises and the principles of the United Nations Global Compact.

This report has been prepared based on the Corporate Social Responsibility (CSR) requirements of the
Norwegian Accounting Act section 3-3c, the Norwegian Shipowners’ Association’s guidelines for ESG
reporting in Maritime Industries, UN Global Compact’s requirements for communication on progress,
and the Norwegian Code of Practice for Corporate Governance.

ESG GOVERNANCE
ESG is embedded in Prosafe’s Core Values, Code of Conduct, principles for Corporate Governance and
Corporate Social Responsibility Policy.

In 2020, the Board of Directors and Executive Management decided to further increase the Company’s
efforts on ESG and ESG is now an integral part of the Company’s strategy. To reflect this, “Strengthen
ESG profile and compliance” was included as one of the Company’s key goals and various initiatives
are ongoing, including adapting to ISO 50001. Consequently, several quantitative environmental,
social and governmental KPI targets have been set to drive development.

Prosafe’s Safety, Sustainability and Ethics Committee assists the Board of Directors in its supervision
of the Company’s ESG performance. This includes regular reviews of ESG issues, including climate-
related business risks and opportunities, anti-corruption, personnel safety, human rights, cyber
security and ESG performance. When necessary, the Committee will consult with internal and
external expert resources.

UN GLOBAL COMPACT’S GLOBAL GOALS FOR SUSTAINABLE DEVELOPMENT
Prosafe has been a participant of the UN Global Compact since 2008. The company is committed to
integrating the UN Global Compact’s ten principles in the areas of human rights, labour, environment
and anti-corruption into our strategy, policies, culture and operations.

109

Prosafe supports UN’s Sustainable Development Goals (SDGs) and shares the view that its business
has a key role to play in the implementation of the goals. The company aims to align its own
responsibility goals with the following SDGs that can be influenced by Prosafe: SDG 3: Good health
and wellbeing; SDG 8: Decent work and economic growth; SDG 13: Climate action; SDG 14: Life below
water.

Selected SDGs

2020 milestones

Potential impacts and risks (examples)

SDG 3:
Health and
wellbeing

SDG 8:
Decent work and
economic growth

Lost time incident frequency of
zero

+ Providing good workplaces, with
safety as our first priority

No fatalities

- Potential safety incidents
- High absence level

Mandatory human rights training
and anti-corruption training

+ Increased awareness

- Exposure to human rights risks
related to our activities and supply
chain

+ Exploring emissions reductions

- Emissions from operations and
supply chain

SDG 13:
Climate action

Ongoing “Emissions reduction
project”

“Strengthen ESG profile and
compliance” was included as one
of the Company’s key goals for
2020

SDG 14:
Life below water

No accidental emissions to sea

+ Managing environmental impacts

No non-regulatory release of
ballast water

- Risk of potential spills

The Company recognizes that its business activities may have both positive and negative impacts on
the SDGs. However, Prosafe seeks to minimize negative impacts and contribute positively to the goals,
and to be transparent about its impacts.

COMMITMENT TO STAKEHOLDERS
Prosafe’s ESG focus is based on transparency, stakeholder dialogue and integrity in the conduct of our
business.

The Company’s main stakeholders in this perspective are its employees, customers, suppliers,
investors and the communities where the Company operates. Prosafe will ensure that its stakeholders
at all times are in possession of correct, clear and timely information about the Company’s operations
and status.

Dialogue with stakeholders is essential for identifying risks, opportunities and trends, creating realistic
expectations and securing confidence in the Company. Prosafe interacts with its key stakeholders
among others through the annual general meeting, customer surveys, employee surveys, town hall
meetings and online investor presentations.

110

GOVERNANCE

Prosafe is committed to complying with all applicable laws,
including fair competition and antitrust, anti-corruption and
anti-bribery, and insider trading.

CODE OF CONDUCT
Prosafe's Code of Conduct provides the framework for what Prosafe considers to be responsible
conduct, but is not exhaustive. If laws and regulations in a country are more stringent than Prosafe's
Code of Conduct, local rules shall apply.

The Code of Conduct imposes an obligation to report possible violations of the Code or other
unethical conduct. Managers are required to take their control responsibilities seriously to prevent,
detect and respond to ethical issues. Employees are encouraged to discuss concerns with their
immediate supervisor or other Managers. Concerns may also be raised with the Safety, Sustainability
and Ethics Committee and through the whistleblower system.

Promoting integrity and transparency
Prosafe’s Whistleblowing Policy encourages a culture of openness within Prosafe and describes the
internal process for whistleblowing aiming at detecting, preventing and combating corrupt and/or
unethical behaviour in Prosafe and to set out the relevant guidelines as to how to report concerns and
how such matters are handled.

All such reporting will be handled with discretion and in a professional manner, with no retaliation
imposed on those who report suspected or unethical behaviour, and the individual may remain
anonymous.

The Company’s Performance Management Procedure shall ensure that an employee’s grievance is
treated in a fair, consistent and responsive manner, together with providing a channel for the hearing
of the grievance and a fair resolution. All grievances raised under this procedure shall be treated
confidentially.

Prosafe’s Safety, Sustainability and Ethics Committee is responsible for:
• Maintaining and further developing Prosafe’s Code of Conduct;
• Ensuring that disclosures are dealt with as quickly as possible and as near to the point of origin

as possible;

• Where appropriate, give recommendations and advice on dealing with ethical dilemmas;
• Ensuring that alleged breaches are investigated thoroughly and fairly;
• Reporting at least annually and otherwise when needed, to Prosafe’s Audit Committee and Board

of Directors.

ANTI-CORRUPTION AND FACILITATION PAYMENTS
Prosafe’s principles regarding anti-bribery and anti-corruption are crystal clear – the company has
zero tolerance. This is also described in the Company’s Code of Conduct and in the Anti-bribery and
Anti-corruption policy.

111

Prosafe is against all forms of corruption, including facilitation payments, and endeavours to ensure
that it does not occur in the company's business activities. Prosafe will not offer customers, potential
customers, governments, agencies, or any representatives of such entities, or any other third party any
rewards or benefits in violation of either applicable law or reasonable and generally accepted business
practices.

It is Prosafe’s policy that no contributions shall be given to political parties, political committees or to
individual politicians.

Any breaches or suspicion of breaches of the Code of Conduct must be flagged. If in doubt, employees
must consult their manager or the Safety, Sustainability and Ethics Committee.

SUPPLIER FOLLOW-UP
Prosafe encourages suppliers, consultants and other business partners within its sphere of influence
to observe the company’s Core Values, Code of Conduct and its standards for corporate social
responsibility, health and safety, the environment, quality assurance and training and competence.

ESG is focused upon throughout the procurement process and in supplier audits. The main tool
for ensuring ESG implementation in the supply chain is the Prosafe Approved Supplier Verification
Questionnaire, which requests suppliers to sign and commit themselves to following Prosafe’s ESG
principles.

Suppliers are subject to the same standards as used by Prosafe within its Integrated Management
System. Through planned, scheduled and follow-up efficacy monitoring and audit activities, Prosafe
will review and verify that defined standards and requirements are met.

Suppliers are expected to:
• respect all individuals and basic human rights standards
• comply with applicable laws and regulations
• conduct their business without bribery or corruption
• engage in fair competition
• uphold labour standards and prevailing trade union agreements (if applicable)
• uphold and support Prosafe’s Core Values and Code of Conduct

Prosafe has not conducted any supplier audits in 2020 due to low activity and restrictions caused by
the Covid-19 pandemic. Normally, these audits include focus on Environment, Social and Governance,
including self-assessment status, measures in place, objectives, ambitions and targets.

The Company’s supplier audits planned for 2020 would have involved increased focus on ESG
including self-assessment status, measures in place, objectives, ambitions and targets.

PERSONAL DATA (GDPR)
Prosafe takes its responsibilities seriously with regards to management of personal data and
complies with the EU General Data Protection Regulation (GDPR). Consequently, the company has
the necessary data protection procedures in place to ensure the highest standards of protection of
personal data and that the privacy of our people and stakeholders is safeguarded in accordance with
the requirements in the regulation.

112

OUR ACTIONS
Ensuring integrity is a continuous project. New employees are given a thorough introduction of
Prosafe’s history, operations, vision, core values and Code of Conduct. They are also offered the
necessary training in the company’s policies and procedures.

In 2020, Prosafe conducted several e-learning programs that are mandatory for employees,
consultants and agency personnel.

At year-end, the rate of completion for these e-learning programs was as follows:
• UN – the fight against corruption: 88 per cent, an increase from 78 per cent in 2019
• Cyber security awareness: 91 per cent, an increase from 59 percent in 2019

Management has set clear targets to have 100% of the employees complete
the programs. Management will remind and encourage employees to complete
the courses in order to ensure compliance.

113

RESULTS IN 2020

Parameters

2020

2019

2018

Comment

Anti-corruption training:
Completed Training Ratio

Cyber attacks or similar
incidents resulting in loss
of data, loss of integrity or
other loss

88%

78%

N/A

As part of our Security
Framework we have
implemented a set
of procedural and
organisational controls
in addition to several
protective measures. In
close co-operation with our
global IT service partner we
utilize a centralized service
desk based on ITIL where all
incidents are registered.

Cyber attacks or similar
incidents resulting in
downtime of critical IT
systems

Investigations or lawsuits in
relation to ESG issues

Number of whistleblowing
cases

No. of supplier audits
that include auditing of
governance issues

No. of supplier audits that
include governance auditing

No. of Integrity Due
Diligence processes related
to other business partners

As above

There were not conducted
any audits in 2020 due to
covid-19

As above

2020
KPI target

100%

Zero

> 3

100%
of new
suppliers

100%
of new
business
connections

114

SOCIAL

OUR PEOPLE

Prosafe’s success depends upon the combined capabilities and
contributions of its employees. Their motivation, knowledge
and competence are fundamental to the company’s further
sustainable development.

The Company is committed to offering its employees a safe and stimulating working environment
where everyone is treated fairly and with respect.

KEY STAFF NUMBERS
Prosafe had 99 employees1) at the end of 2020 (average 111), compared with 150 in the previous year
(average 313). This reduction in the number of employees reflects the adjustment of the organisation,
operating model and ways of working in response to a permanently lower activity level and weaker
market outlook. As a result, the overall voluntary employee turnover in the group was 8.06 per cent in
2020, compared with 19.2 per cent in 2019.

The Company’s global presence was reflected in the fact that its employees came from 15 countries
around the world.

Due to the nature of the company’s business, characterized by short contracts and vessels moving
from one country to another when starting a new contract, Prosafe employs an increased number
of agency personnel offshore, often only engaged for a short time. Adherence to Prosafe’s Code of
Conduct, policies and procedures is amongst others ensured through an introduction program for
new employees, continuous management focus and e-learning programs.

1) Workforce data in this report covers employees in our direct employment.

Temporary employees are not included.

115
115

DIVERSITY AND EQUALITY
The Company believes that strength lies in
differences and complementary traits, not in
similarities. Attracting, developing and retaining
the best employees, regardless of gender, age,
nationality, cultural background or religion, gives
the Company access to new ideas, promotes
better decision making, and creates a workforce
that mirrors our clients and the world at large.

Prosafe 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 2020, women accounted for 27.3
per cent of all employees, compared with 26.0 per
cent in 2019. Onshore the proportion of women
was 41.7 per cent, an increase from 36.6 per cent
in 2019.

Women constituted 24.4 per cent of the managers
as at 31 December 2020, compared with 26.8 per
cent at the end of 2019. Women account for 50
per cent of Prosafe´s Board of Directors.

Prosafe aims to offer the same opportunities to all
and does not accept discrimination with respect
to recruitment, remuneration or promotion
due to age, disability, gender, marriage and civil
partnership, pregnancy and maternity, nationality,
religion or belief and sexual orientation

RECRUITMENT AND COMPENSATION
Prosafe wants to be a preferred employer and
aims to attract and retain employees by offering
them challenging and motivating tasks, and
by providing attractive working conditions and
possibilities for personal development and career
growth.

All employees shall have a salary that is seen as
fair, competitive and in accordance with industry
standards. Only relevant qualifications such as
education, experience, performance and other
professional criteria shall be considered when
appointing new employees, making performance
evaluations and settling remuneration, and
awarding promotion.

2020

27.3%

72.7%

TOTAL
EMPLOYEES

2020

41.7%

58.3%

ONSHORE
EMPLOYEES

2020

24.4%

75.6%

MANAGEMENT

116

WHISTLEBLOWING
Prosafe encourages its employees to report any breaches of its Code of Conduct through the
established whistleblowing channels. This will ensure that the company when necessary can rectify,
learn and prevent re-occurrence.

RESPECTING HUMAN RIGHTS
Prosafe supports the principles set out in the Universal Declaration of Human Rights. The Company
endeavours to ensure that its operations and those of its suppliers are conducted in accordance with
basic human rights standards. This statement of support can also be found in Prosafe’s CSR Policy.
Furthermore, the obligation to respect human rights is addressed in Prosafe’s Code of Conduct.

Human Rights related risks
Prosafe operates in the international oil and gas industry, which is a strictly regulated industry within
which there is a strong presence of trade unions.

Prosafe requires that human rights are respected within its own operations and within those of its
suppliers and partners.

Prosafe’s approach to respecting human rights starts with the company’s commitment to its
workforce. This includes ensuring that staff are treated fairly and without discrimination and have a
healthy, safe and secure working environment, and by respecting their right to freedom of association
and right to negotiate and cooperate through relevant representative bodies.

Prosafe does not accept any breaches of human rights or labour standards when recycling older
vessels. In all cases, Prosafe will act diligently and adhere to relevant conventions (2009 Hong Kong
Convention, 1989 Basel Convention), always adopt best practise, provide financial guarantees and
appoint independent recycling yard representation where necessary, until the asset is completely
recycled.

Response to Human Rights violations
No legal claims have been received from any employee in respect of any violation of human rights,
and no breaches of the Code of Conduct have been observed in relation to human rights in 2020.

RESPECTING LABOUR STANDARDS
Prosafe respects and promotes the four fundamental principles and rights at work as described in the
International Labour Organisation Core Conventions:

• freedom of association and the effective recognition of the right to collective bargaining
• elimination of all forms of forced or compulsory labour
• effective abolition of child labour
• elimination of discrimination in respect of employment and occupation

These principles are also described in the Company’s Code of Conduct and in the Corporate Social
Responsibility Policy.

117

Labour rights related risks
Prosafe operates in the international oil and gas industry, which is a strongly regulated industry with
a strong presence of trade unions. The knowledge and training required in order to be allowed to work
offshore and the application of national tariff agreements largely eliminate the possibility for using
child labour.

Prosafe aims to ensure compliance with labour laws, rules and regulations in all the geographical
areas and jurisdictions it operates in. It is Prosafe’s understanding that the International Labour
Organisation Core Conventions are respected within its own operations and within the operations of
its suppliers, consultants and other business partners.

Employee Representation and Engagement
Employees in all geographical locations have the right to be heard and represented, and to form and
join trade unions of their own choice. This is part of Prosafe’s commitment to human and labour
rights.

Prosafe encourages employee involvement and keeps its employees updated through emails, regular
intranet updates and town hall meetings with Q&A sessions.

For organisational changes that affect the company’s employees, Prosafe observes national legislation
on the minimum requirements of notification period in the countries where the company operates.

Prosafe conducted two global surveys in 2020 to gauge employee engagement. Based on the feedback
received, management evaluates which improvement areas to focus on in the following year.

Collective bargaining
The following Collective Bargaining Agreements were in force during 2020:
• Norwegian Maritime Unions
• Norwegian Ship Owners Association
• Industri Energi

These agreements have been renewed and will continue to operate during 2021.

Response to Labour Standards violations
There have not been any reported possible breaches of labour standards since Prosafe became a
participant of the UN Global Compact in October 2008.

There were not made any legal claims against the company by any employee regarding a breach of
labour standards in 2020.

OUR ACTIONS
In September 2019, Prosafe introduced a mandatory e-learning program for human rights and labour
standards to be completed by all employees, consultants and agency personnel. At year-end 2020, the
rate of completion was 78 per cent, compared to 44 per cent at the end of 2019.

Management has set clear targets to have 100% of the employees complete this program.
Management will remind and encourage employees to complete the courses in order to ensure
compliance.

118

RESULTS IN 2020

Parameter

2020

2019

2018

Comment

Number of employees
at year-end

150

417

In order to adjust the size
of the organisation to the
weaker market outlook
and reduced demand for
Prosafe’s services; a number
of employees were offered
voluntary redundancy
packages in the end of 2019.

Employee turnover ratio

8.06% 19.2%

8.5%

As above

Share of women in the
workforce – overall

27.3% 26.0% 11.3%

This is a result of the
voluntary redundancy,
where a larger number of
male employees left the
organisation

Share of women in the
workforce – onshore

41.7% 36.6% 40.6 % As above

Share of women in
management

Human rights and
labour standards
training

No. of supplier audits
that include social issues
auditing (human rights,
labour rights, etc.)

24.4% 26.8%

25%

78%

44%

Not
started
yet

There were not conducted
any audits in 2020 due to
Covid-19

2020 KPI
target

< 10%

Strive to
increase the
share over
and above
current levels

100%

119

HEALTH AND SAFETY

Prosafe endeavours to offer its employees a good and safe
working environment in physical and psychosocial terms. It is
our objective that nobody should suffer work-related illnesses
or strain injuries as a consequence of working for Prosafe.

Prosafe operates an integrated management system in accordance with ISO 45001 and has in 2020 con-
ducted a continuous improvement project to ensure compliance and suitability. The project has resulted
in a significantly simplified system providing the company with a transparent and easy to use system.

WORK-LIFE BALANCE
All employees should have a good balance between work requirements, individual opportunity for
control and participation, and support from colleagues and managers.

Sick leave was 0.46 per cent in 2020, a reduction from 2.26 per cent in 2019. We believe that a good
working environment and a close follow-up of employees on sick leave are prerequisites for achieving
the lowest possible sickness absence rate.

The company monitors and manages all areas of absence (actual and potential) closely and takes the
appropriate actions. Prosafe also takes steps to enable employees to return to work on light duties,
either in the office or on shorter vessel trips to re-assimilate the employee’s return to work.

Special attention is paid to employees exposed to certain hazards such as high noise environments,
exposure to chemicals and other conditions that may be harmful to health. The company carries out
regular occupational health assessments for this purpose.

Sick leave in %

2.5

2.0

1.5

1.0

0.5

2017

2018

2019

2020

Sick leave in %

2017

2.53%

2018

2.07%

2019

2.26%

2020

0.46%

120

Reducing sick leave is significant to the well-being of the individual employee and also has a positive
financial effect on the company and society as a whole.

SAFETY CULTURE – ZERO MINDSET
Safety is a core value in Prosafe. We look upon the objective of zero incidents as a goal to work towards
and a way of thinking. We are committed to working actively to avoid injuries and accidents.

Systematic preventive health, safety and environment work is a line management responsibility
in Prosafe. Involvement by management and Shipboard Management, strong leadership and
commitment, and close cooperation with the organisation onshore and offshore, including employee
representatives and safety delegates, are key factors in achieving our goal of operating without
accidents. It is about visibility, walking the talk and caring about each other and the values we
manage on behalf of our owners and clients.

We continually look ahead and focus on the implementation of preventive measures and initiatives
to further strengthen our safety culture. We encourage our employees to identify and assist in the
development of new systems and procedures which deliver improved safety results.

In 2020, Prosafe recorded zero incidents classified as a Lost Time Injury (LTI), i.e. those injuries resulting
in an employee being absent from the next work shift due to the injury. This is on the same level as
in 2019, when there were also not recorded any LTIs. 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. It reflects
the effectiveness of the robust induction and vessel familiarisation of agency crew undertaken by
Shipboard Management.

The Total recordable injury frequency rate (TRIFR) is calculated by multiplying the number of
all injuries requiring medical treatment by 1 million and dividing this with the total number of
man-hours worked. In 2020, the TRIFR was 1.81, an increase from 0.82 in 2019.

HSE Comparison

LTI

LTIF

TRIFR

2017

2018

2019

2020

LTI (Lost Time Injuries)

LTIF (Lost Time Injury Frequency)

TRIFR (Total Recordable Injury Frequency)

2017

2018

2019

2020

2.00

1.50

1.00

0.85

2.54

0.00

0.82

0.00

1.81

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All injuries and serious incidents are unacceptable to Prosafe. Where such events occur, we ensure
that suitably resourced investigations are undertaken to identify root causes and introduce risk-
reducing measures aimed at preventing recurrence. The findings of these investigations are conveyed
to the rest of the organisation to ensure a transfer of experience. These are important measures for
reaching the company’s goal of zero injuries and incidents.

Continuously supporting safety awareness
Prosafe continues to promote and support a zero mindset with our employees and sub-contractors. In
order to achieve this, a number of activities and management tools are facilitated. These are described
in more detail on Prosafe’s website at https://www.prosafe.com/fleet/hsseq/safety/ where you can
also find a description of the continuous preventive work and improvement efforts.

Contingency plans
Prosafe has established contingency plans to limit harm to people, the environment and material
assets. These plans will ensure that correct, relevant and timely information is provided to the outside
world if and when required.

We carry out regular emergency response training and exercises in cooperation with our customers
and third parties to ensure that we are as well prepared as possible to deal with a potential crisis.

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RESULTS IN 2020

Parameters

Sick leave

Lost time injuries (LTI)

Fatalities

TRIF (Total Recordable
Injury Frequency)

2020

0.46%

1.81

2019

2.26%

2018

Comment

2.07%

0.82
Target <4

2.54
Target <4

LTIF (Lost Time Injury
Frequency)

MTC (Number of Medical
Treatment Case)

RWC (Number of Restricted
Work Case)

FAC (Number of First Aid
Cases)

HOC (Number of Hazard
Observation Card)

0.85

6,443

14,690

11,947

2020
KPI target

< 3%

Zero

New 2020 - within
10% range of industry
body benchmarks
(IMCA & RNNP)

Zero

New 2020 - within
10% range of industry
body benchmarks
(IMCA & RNNP)

As above

6 per day per vessel
on contract.
4 per day per vessel
in yard

Emergency drills performed

282

307

434

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ENVIRONMENT

Care for the environment is one of Prosafe’s core values and
forms an integral part of the Company’s business planning.
Prosafe’s goal is zero accidental discharges to the sea and
zero accidental emissions to the air, which is in line with its
principles for sustainable development.

Prosafe owns and operates a fleet of accommodation vessels that supports installations in the
offshore oil and gas industry. The oil and gas industry is an industry with a strong focus on protecting
the natural environment.

National authorities require companies operating in their waters to demonstrate compliance with
strict rules and regulations. In addition to complying with national laws, Prosafe has internal policies
and guidelines for risk management based on international standards.

ENVIRONMENTAL MANAGEMENT
Prosafe operates an integrated management system in accordance with ISO 14001 and has
implemented systematic improvement process related to same.

In 2020, Prosafe decided to further increase focus on the energy management side of environmental
management and started a process to implement the requirements of ISO 50001 Energy
Management with the intention to have the system fully implemented in 2021.

Prosafe’s goal is zero accidental discharges to the sea and zero accidental emissions to the air, which
is in line with our principles for sustainable development. Prosafe actively pursues and commits to
reducing direct emissions from its vessel operations in collaboration with its clients and respective
industry body organisations.

Prosafe produces Environmental Impact Assessments for each of the vessels the Company manages
or operates. The assessments take into account the mode of operation of the vessel together with
generic geographical considerations. Local assessments are typically performed with the clients who
will usually be operating under the terms of an operator’s permit.

Moreover, the Company cooperates actively with customers and suppliers to set in-house goals, make
continuous improvements to its own routines and shape attitudes towards protecting the natural
environment from pollution by its operations. All accidental discharges and emissions are reported
and followed up in the same way as injuries and material damage.

GREENHOUSE GAS (GHG) EMISSIONS
Prosafe calculates the emissions of CO2, CO, NOx, SO2, CH4 and VOC for the fleet based on the fleet’s
diesel consumption. Prosafe’s fleet carries low sulphur marine diesel with a maximum sulphur
content of 0.1%, thereby exceeding the requirement within MARPOL Annex VI Regulation 14.1
prohibiting the carriage of fuel oil with sulphur content exceeding 0.5%.

124

It is important to note that the amount of diesel consumed, and thereby also the amount of
emissions, will vary largely depending on:
• the number of vessels being operated throughout the year
• the fleet utilisation (i.e. the amount of time that the vessels have been operating)
• the vessels’ operation mode - dynamic positioned (DP) vessels maintain their position by means of
thrusters and will therefore use far more diesel and thereby also have substantial higher emissions,
than vessels that maintain station by moorings

The number of vessels that uses DP and the number of days that these vessels keep their position
by using DP will vary from year to year. This implies that the amounts of emissions per year are not
directly comparable.

Prosafe calculates its Greenhouse Gas (GHG) emissions according to the GHG protocol. The calculated
emission data for vessels operated by Prosafe were as follows for the years 2016 - 2020:

Calculated
2020 total
(tonnes)

Calculated
2019 total
(tonnes)

Calculated
2018 total
(tonnes)

Calculated
2017 total
(tonnes)

Calculated
2016 total
(tonnes)

17,836

57,075

280

1,059

40,858

35,486

33,250

42,872

130,746

113,555

106,400

137,190

641

2,427

163

557

2,108

142

522

1,975

133

673

2,547

171

Consumed diesel

CO2

NOx

SO2

CH4

VOC

The Company actively monitors and manages staff travel and reports on global CO2 emissions.
Prosafe’s employees are encouraged to limit travelling to the extent possible and use telephone
or video conference when possible.

REDUCING OUR ECOLOGICAL FOOTPRINT
The Company is seeking solutions to reduce emissions
in order to reduce its impact upon the environment.
Environmental considerations are an important
aspect when planning vessel refurbishments and
upgrades, e.g. when shifting to more fuel-efficient
equipment and by continuous improvement in
operating procedures.

Prosafe cooperates with clients and authorities to
reduce the impact of its operations on the natural
environment. An example of this is a contract where
Prosafe receives incentives when the daily diesel
consumption is reduced.

2020
Calculated total
(tonnes)

57,075

125

The Company’s vessels have International Air Pollution Prevention (IAPP) certificates, International
Oil Pollution Prevention (IOPP) certificates and International Sewage Pollution Prevention (ISPP)
certificates. These certificates are all issued under the International Convention for the Prevention of
Pollution from Ships (MARPOL) and are subject to periodic survey.

FACILITATING IMPROVEMENT OVER TIME
In 2009, Prosafe joined the Confederation of Norwegian Enterprise's (NHO's) Environmental
Agreement on NOx. By signing the Agreement, Prosafe committed itself to prevent and reduce
environmental problems caused by emissions of nitrogen oxides in its offshore operations.

Refurbishment projects of vessels have included the replacement of older engines with low NOx
engines resulting in a reduction of diesel and lub oil consumption, thereby contributing to a reduced
environmental impact. The replacement of old tonnage has resulted in seven older vessels being
replaced with four new built vessels throughout 2016-2020 with more efficient diesel engines,
producing less NOx emissions.

It is noted that the 2020 average direct GHG emissions Standard scope 1 is slightly higher than in
2019. The main reason for this is the difference in number and types of vessels in operation in 2020
compared to 2019. The value is derived from dividing the Company’s total GHG value with the total
number of days on contract which makes it sensitive to both number and types of vessels because of
their different load and combustion characteristics. Different contract durations and other factors as
weather conditions also influence the fuel consumption.

Going forward, the Company will continue to gradually implement new technology and refurbish
equipment in order to further reduce emissions.

SPILLS
Prosafe had no reportable discharges to the natural environment in 2020. The Company’s vessels take
proactive measures to mitigate the potential for any spills and regularly conduct exercises to test its
Oil Prevention Emergency Response & Spill contingency plans.

126

RESPONSIBLE RECYCLING
Prosafe continues to high-grade its fleet by selling the oldest and most inefficient vessels for recycling
at certified ship recycling yards. Seven vessels have been sold for recycling since mid-2016. An eighth
vessel was sold for recycling in Q1 2021.

In all cases, Prosafe will adhere to relevant conventions (2009 Hong Kong Convention, 1989 Basel
Convention), always adopt best practise, provide financial guarantees and appoint independent
recycling yard representation where necessary, until the asset is completely recycled, and conduct
extensive diligence when recycling of any asset.

USE OF CHEMICALS AND HAZARDOUS SUBSTANCES
Prosafe has an approved Chemicals list that is based on a risk assessment matrix and hierarchy of
controls. All chemical and hazardous substances are subject to an evaluation which identifies a
‘Hazard Categorisation’ to the substance.

The categorisation of the product takes consideration of the impact and effect the substance may
have on health and the natural environment. Substances are assigned either a High, Medium or Low
category for the representative hazard to health and the environment. The Hazard categorisations are
maintained and updated within the Company’s online chemical management system.

Where High Hazard chemicals are identified, it is general practice for Prosafe to seek to substitute
these chemicals with lower Hazard chemicals.

The Company continues to conduct further evaluations to identify safer/greener substitutes in for
current high/ medium risk substances.

WASTE MANAGEMENT
When a Prosafe vessel operates alongside an offshore installation, it will come under the umbrella
of the host installation's operating permits. Prosafe and its client's management systems are cross-
referenced within interface documents, and responsibilities are clearly defined.

All Prosafe vessels are subject to MARPOL requirements and have implemented a waste management
system that is documented in the Garbage Management Manual. The plan includes assessments
of all potential waste products originating on board together with the requirements for waste
segregation for transportation ashore.

Prosafe manages waste produced locally whilst monitoring third party’s waste disposal performance.

BALLAST WATER
Ballast water management for the Company’s vessels is controlled within the confines of the
International Maritime Organisation (IMO) regulation.

Prosafe’s vessels have International Ballast Water Management (IBWM) certificates. These certificates
are all issued under the International Convention for the Control and Management of Ship’ Ballast
Water and Sediments and are subject to periodic survey. There has not been any accidental or
non-regulatory release of ballast water.

DISCHARGE OF SEWAGE
The discharge of sewage is controlled within the confines of IMO regulation. All vessels within the
fleet have been subject to International Sewage Pollution Prevention (ISPP) surveys and have been
issued certification in accordance with MARPOL Annex IV by the relevant Flag.

127

RESULTS IN 2020

Parameters

2020

2019

2018

Comment

Direct GHG
emissions (GHG
Protocol Corporate
Standard Scope 1)
(per contract day in
CO2 tonnes)

Energy indirect
GHG emissions
(GHG PCS Scope 2
in CO2 tonnes)

47.4

71.43

58.92

Based on fuel consumption of
the fleet in total and calculated
per contract day in CO2 tonnes

145

156.5

162.8

Data collated from total energy
consumption for onshore site
offices located in UK, Norway
Brazil and Singapore

1,785

3,193

2,657

Other indirect
GHG emissions
(GHG PCS Scope 3
in CO2 tonnes)

Data collated from all air travel
booked through the company’s
travel agent for on and offshore
personnel including agency
personnel in UK, Norway, Brazil
and Singapore

NOX (tonnes
per year)

1,059

2,427

2,108

Energy
consumption
(kWh) onshore

Energy
consumption
reduction
rate onshore
(percentage)

Fuel used
(1,000 litres)

261,253 541,063 641,881

Energy consumed by global
offices in UK, Norway, Brazil
and Singapore

51.71

15.7

12.91

19,994

48,639

42,246

Reflects the low fleet utilization
rate in 2020.

2020
KPI target

CO2e for each
vessel per
contract day
(5%reduction
from 2014-to-
2018 average)

No target set,
but should see a
visible reduction
from energy
consumption
targets (onshore
only)

No target
set, need to
understand
better our
supplier/
sub-contractor
supply chain
emissions data

NOXe for each
vessel per
contract day (5%
reduction from
2014-to-2018
average)

5% reduction
based on
previous year

As above

New metric m3
per vessel per
contract day
(5% reduction
from 2014-to-18
average

128

Parameters

Fuel consumption
reduction rate
(percentage)

Unplanned spills
/ emissions to
ground / sea / air

Total waste
Onshore/Offshore
(tonnes)

2020

58.9

2019

-15.7

2018

Comment

- 9.7

6,36 /
959

9,2 /
2,609

13,5 /
1,086

Improved reporting require-
ments were implemented in
2019. The level of activity and
generation of waste on board
the vessels have increased due
to the preparation of a number
of vessels for lay-up and the
SPS of Safe Concordia

Recycling ratio
(percentage)

0 / 8

51 / 61

49 / 56

Hazardous waste

245

N/A

Tracking introduced in Q4 2019

2020
KPI target

New metric m3
per vessel per
contract day
(5% reduction
from 2014-to-18
average

Zero

N/A

50% onshore /
30% offshore.
To be reviewed
during 2020

Target to be
evaluated during
2020.

Waste reduction
rate (percentage)

Total water use
offshore (1,000
litres)

No. of supplier
audits that include
environmental
auditing

-47

N/A

Tracking introduced in Q4 2019.

As above

44,289 108,798 119,691

All water
consumed
offshore plus
onshore where
data available

There were not conducted any
audits in 2020 due to Covid-19

2 onshore / 2
offshore per year

129

LIST OF ABBREVIATIONS

Abbreviation

Definition

CSR

ESG

GDPR

GHG

Corporate Social Responsibility

Environment, Social and Governance

General Data Protection Regulation

Greenhouse Gas Emissions

GHG emissions – scope 1

Direct GHG emissions from operations that are owned and/or
controlled by the company

GHG emissions – scope 2

Indirect GHG emissions from energy purchased from third parties
for e.g. heating or cooling and consumed within the company

GHG emissions – scope 3

All other indirect GHG emissions from activities of the company
occurring from sources that the company does not own or
control, i.e. business travel, procurement, waste and water

Hazardous waste

Waste is considered to be hazardous waste according to the
regulations under which the activity operates or where the
waste can pose a substantial hazard to human health and/or the
environment when improperly managed

IMO

KPI

LTI

LTI frequency

MARPOL

International Maritime Organisation

Key Performance Indicator

Lost Time Injury, which means the employee was absent from the
next work shift because of the injury

The Lost Time Injury (LTI) frequency is calculated by multiplying
the number of LTIs by 1 million and dividing this by the total
number of man-hours worked

The International Convention for the Prevention of Pollution from
Ships

SDG

The United Nations’ Sustainable Development Goals

Sickness absence

The total number of sickness absence hours as a percentage of
planned working hours (Prosafe employees)

Total recordable injury
frequency (TRIF)

Number of fatal accidents, lost-time injuries, injuries involving
substitute work and medical treatment injuries per million hours
worked

130

Accommodating
the Offshore
Industry

www.prosafe.com

Photo: Tom Haga & iStock

131