Prosafe Offshore Pte Ltd Annual Report 2021

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FY2021 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 1

CONTENTS

Key figures

About Prosafe

Main events in 2021

CEO letter

Corporate Governance

Directors’ report

Declaration by the Board of Directors
and the CEO

Consolidated accounts

Parent company accounts

104

Independent auditor’s report

110

Environmental, Social and
Governance report

KEY FIGURES

Profit

Operating revenues

EBITDA

Operating profit (loss)

Net profit (loss)

Earnings per share
(fully diluted)

Balance sheet

Total assets

Interest-bearing debt

Net interest-bearing debt

Book equity

Book equity ratio

Liquidity reserve

Net cash flow

Net working capital

Valuation

Market Capitalisation
at year-end

Share Price

Operations

Note

2021

2020

2019

2018

2017

MUSD

141.1

24.9

(49.8)

927.9

56.7

(9.5)

(864.3)

(950.1)

225.4

97.1

(342.6)

(399.9)

330.8

166.6

53.0

(114.5)

283.0

122.9

(578.2)

(647.1)

USD

2, 7

263.3

(10,798.2)

(4,540.0)

(1,300.0)

(7,350.0)

MUSD

NOK

492.8

423.3

349.4

36.3

7.4

73.9

(86.4)

587.7

1,509.4

1,349.1

(948.5)

(161.4)

160.3

(37.8)

1,480.2

1,397.9

1,199.8

2.4

0.2

198.1

57.8

61.7

(1,279.3)

(1,158.2)

1,736.8

1,243.0

1,102.7

400.2

23.0

277.3

(91.6)

58.7

1,947.0

1,347.7

1,115.8

497.6

26.0

231.9

26.2

221.3

158.0

158.4

10.4

19.7

126.7

118.1

1,080.0

2,110.0

13,400.0

12,000.0

Fleet utilisation rate

54.5

20.4

50.9

47.3

38.4

Employees

Number of employees
at year-end

Employees
in direct
employment

HSSE

Lost time
injuries

Total recordable
injury frequency

Direct
GHG emissions

Sick
leave

Per million
worked hours

Per contract day
in CO2 tonnes

% of total

working hours

103

150

417

430

1.81

0.82

2.54

1.52

65.0

47.4

71.4

58.9

0.27

0.46

2.26

2.07

2.53

Notes: 1. Operating profit before depreciation and impairment

2. Net profit / Average number of outstanding and potential shares.
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
7. On 27 January 2022, Prosafe completed a 1,000:1 reverse split of the Company's shares. As a result, the calculation of the
earnings per share and share price for current and prior year presented/restated was based on the new number of shares

ABOUT PROSAFE

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

At year-end, Prosafe owned and operated six
semi-submersible accommodation, safety and
support vessels and one Tender Support Vessel
(TSV). In addition, the Company is in dialogue
with COSCO about extending the options to
take delivery of Safe Nova and Safe Vega.

The company’s versatile fleet of four
dynamically positioned, two anchor
moored and one passive
position moored vessels are
capable of operating in the
most demanding offshore
environments.

Prosafe’s vessels are
primarily serving energy
companies on various
offshore projects in global
offshore oil and gas areas.
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

has experience

from operations offshore

Norway, UK, Mexico, USA,

Brazil, Denmark, Tunisia, West

Africa, North-West and South

Australia, the Philippines

and Russia.

services, deck cranes and lifesaving and
firefighting equipment.

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.

Prosafe has experience from
operations offshore Norway, UK,
Mexico, USA, Brazil, Denmark,
Tunisia, West Africa, North-
West and South Australia, the
Philippines and Russia.

The vessels are normally provided
on a time charter basis where Prosafe

mans and operates the vessels directly.

Prosafe is listed on the Oslo Stock Exchange
with ticker code PRS.

The vessels are operated in dynamic
positioning (DP) mode by use of own engines
and thrusters or in a moored mode, while being
gangway connected via a telescopic gangway
to the client’s installation so that personnel
can safely walk to work.

Prosafe’s vessels have
accommodation capacity for
159-500 people and offer
high quality welfare and
catering facilities, storage,
workshops, offices,
a cinema, medical

MAIN EVENTS IN 2021

• Prosafe increased its efforts in the area of
energy management in order to reduce its
energy consumption and emissions.

• The Gulating Court of Appeal in 2021

decided that Prosafe had to pay Westcon
NOK 465 million related to the conversion
of the Safe Scandinavia at Westcon yard
in 2016. As part of the financial restruc-
turing, Prosafe paid the secured part of the
Westcon claim, NOK 245 million, to Westcon
in October 2021. The remaining part of
the claim was converted into 3 per cent of
the shares in Prosafe SE on a fully diluted
basis following the implementation of the
financial restructuring in December 2021.

• A substantial financial restructuring and

conversion of debt resulted in a significant
de-leveraging of the balance sheet with ca.
75 per cent debt reduction, a corresponding
reduction in annual debt service, about USD
70 million in cash at year-end 2021 and in
sum a significantly improved balance sheet
and improved financial flexibility.

• Also in 2021, Covid-19 impacted our
business significantly. The company
continued and further developed earlier
implemented safety measurements at
workplaces and vessels to protect people
and assets.

• Good health, safety and environmental
results with zero Lost Time Injuries and
zero accidental discharges to the natural
environment.

• Prosafe further increased its focus on energy

management and started a process to
implement the requirements of ISO 50001
Energy Management. All formal audits were
successfully concluded during 2021 and the
company received formal ISO 50001 certifi-
cation in January 2022.

• High operational uptime.

• The fleet utilisation for the year was 54.5
per cent (2020: 20.4 per cent), the highest
utilisation rate since 2015.

• Prosafe secured new contracts for Safe

Boreas in Norway, for Safe Zephyrus and
Safe Caledonia in the UK, for Safe Concordia
in Trinidad and Tobago, and a contract
extension for Safe Notos in Brazil.

CEO LETTER
2021 – THE END
OF THE BEGINNING

Prosafe has a
clear strategy of
being a leading
provider of offshore
accommodation
vessels globally.

As we leave 2021 behind, Prosafe is set for a
fresh start. Some key points to highlight:
• We managed to protect our organisation,

assets, backlog and client relations
throughout the pandemic

• We operated through challenging times with
good Health, Safety and Environment (HSE)
performance

• We strengthened our order backlog and

secured an increasing activity level and an
improved earnings basis for 2022

• We closed the financial restructuring with

unanimous support from our lenders which
leaves the company in a much improved
financial situation

• We embarked on a set of energy

management measures to improve our
energy efficiency and emissions footprint
in the years ahead and achieved ISO 50001
certification

DECISIVE ACTION TO ADDRESS A RAPID
CHANGE IN ENVIRONMENT
Prosafe has over the last years continuously
refined a cost-efficient operating model based
on a lean and focused organisation with a
flexible cost structure which works in tandem
with professional partners.

At the tail end of 2019, Prosafe proactively
read the market development and engaged
in dialogue with lenders about a sustainable
financial solution. This resulted in the successful
closing of a fundamental financial restructure
at the very end of 2021.

The energy transition has been happening at an
accelerating speed since the Paris agreement
in 2015, and we will be part of the solution by
harnessing our several decades of competence
with the technology and ways of working of

tomorrow. Our vessels are the main driver
behind the emission reduction targets, and the
baseline is each vessel’s operations without
any energy efficiency measures. Prosafe is
targeting a 50 per cent lower fuel consumption
by 2030 and believes that this is achievable
without compromising safety. We have set
out a roadmap to reduce emissions and are
evaluating new solutions and ways of working
with the support from customers.

OPERATIONS AND HSEQ
We had 6 of our 7 vessels working for all or
parts of the year in respectively UK, Trinidad &
Tobago and Brazil. We are pleased and proud
to confirm that we recorded zero incidents
classified as a Lost Time Injury (LTI). Gangway
uptime was high across the fleet, leading
to high productivity for our client’s project
execution. We look upon the objective of zero
incidents as a goal to work towards and a way
of thinking.

When it comes to safety, Prosafe promotes
and supports a zero-mindset 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.

Prosafe had no accidental discharges to the
natural environment in 2021, and we are
increasing our efforts in the area of energy
management to adapt to the global ambition to

achieve energy efficiency and reduce emissions.
Prosafe was recently accredited according to
ISO 50001 while undertaking feasibility studies
together with third parties in search for energy
efficiencies and emissions reductions on a
continuous improvement basis.

ESG
In 2021, we further increased our focus on
Corporate Social Responsibility (CSR) by
amongst others setting clear, quantitative
targets for Environmental, Social and
Governance (ESG) 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. Specifically, we are consequently
increasing our efforts in the area of energy
management and emissions reduction to
adapt to the global ambition to achieve energy
efficiency and reduced emissions. Prosafe’s view
is that these efforts over time – although they
will require investments and customer support/
engagement – will provide competitive edge
and new business opportunities.

COMPETENCE AND ORGANISATION
Prosafe was quick at introducing remote
working practices and measures onshore and
on our vessels, thereby limiting the level of
Covid-19 cases across our organisation. These
measures largely remain in place as we move
forward. Flexibility and remote collaboration
have come to stay.

The employees of Prosafe have proven their
stamina and integrity, and ensured safe and
efficient operations throughout the pandemic
and the lengthy financial turmoil leading up to
the financial restructuring. Going forward, we
will leverage our core competence and these
organisational traits to explore how to best
develop the company and position ourselves
in a changing landscape. I want to express my
sincere appreciation to our employees for their
dedication and hard work throughout 2021.

INDUSTRY STRUCTURE
There are still around 30 semi-submersible
offshore accommodation vessels available for
operation globally. There used to be more than
40 vessels, and Prosafe has taken a leading role
to drive this number down and high grade the
fleet by responsibly recycling 8 vessels since
2016. We remain the leading player with 7
vessels on water and options on another two
completed vessels for worldwide operations
currently stacked with Cosco in China. The
remaining global fleet is dispersed among
a series of owners. For reasons of energy
efficiency, quality, safety and sustainability,
we need to see a continuation
of the high-grading of the
world fleet. Therefore,
we remain of the
opinion that
the industry
needs further
consolidation and
vessel recycling,
and we anticipate
this to occur in the
years ahead.

We remain the

leading player with 7

vessels on water and options

on another two completed

vessels for worldwide

operations currently stacked

with Cosco in China.

A CLEAR STRATEGY
TARGETING OPTIMISED
RETURNS
Prosafe has a clear strategy of being a leading
provider of offshore accommodation vessels
globally. On this basis, the focus is to optimize
earnings from opportunities as they arise in
core markets such as the North Sea and Brazil,
potentially supplemented with opportunities
appearing in other regions. The strategy is
enhanced with ongoing initiatives in the area
of energy management to reduce energy
consumption and emissions.

OUTLOOK
Energy transition is not only desirable but also
inevitable. However, the energy systems and
infrastructure that have been built over the last
150 years will be complex and time consuming
to substitute. As the energy conversion is
likely to take time, we need continuous sprints
to drive us through this marathon. Carbon
capture, energy management, alternative fuels,
electrification and ways of working – and more
– must likely all be addressed in tandem.

Prosafe expects energy consumption to
continue to increase as the world population is
growing and the need for energy grows with it
to support better ways of living. Through this
transition, oil and gas will remain important
parts of the energy mix. In addition, the oil price
has recovered from the low levels triggered by
the pandemic. With a higher oil price, Prosafe
expects the oil and gas companies to increase
their investments in their oil and gas activities
with focus on enhanced oil recovery and
portfolio high-grading combined with its efforts
to reduce their carbon footprint. It is therefore
likely that there will be high activity in oil and
gas which will provide many opportunities for
the oil service industry in the years ahead.

In the short term, the activity level for 2022
will be good with at least 6 of 7 vessels
being on contracts for all or parts of the
year, and significantly improved earnings.
However, beyond 2022, visibility remains
low, which is in line with a historic trend
in the offshore accommodation industry.
Hence, we will rely on the macro view as
outlined above and assume activity will drive
demand to varying degrees in the years ahead.

Finally, I would like to thank our shareholders
and lenders for their confidence in and
continued support of Prosafe over the years
and not least through the recent downcycle
and financial restructuring. Against the
achievements through 2021 and our improved
position on that basis, we are confident in
our ability to benefit from opportunities
and thereby protect and create value for all
stakeholders in the years ahead.

Stay safe,

Jesper Kragh Andresen, CEO

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 and executive management.

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 14 October 2021 (the “Corporate Governance
Code”). The company is committed to ensuring that high standards of corporate governance
are maintained to ensure the greatest possible value creation over time in the best interests of
shareholders, employees and other stakeholders.

In this report on Corporate Governance, Prosafe accounts for 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.

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’s Corporate Governance Report that covers every section of the Code of Practice is
included in the annual report and published on Prosafe’s website at https://www.prosafe.com/
investor-information/corporate-governance/

GOVERNANCE STRUCTURE
Prosafe’s governance structure is set out below.

Nomination Committee

External Auditor

SHAREHOLDERS

BOARD OF DIRECTORS

Compensation Committee

Audit Committee

MANAGEMENT

Safety, Sustainability and Ethics Committee

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.

Prosafe’s objective is to own and operate vessels and other offshore tonnage, related to oil and gas
activities, as well as conduct any activity related to ownership and operation related to this. Prosafe SE
may invest in companies within the same or other sectors.

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

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

The company’s objectives, strategy, commercial outlook, operations, risks, financial status, business
plans, forecasts and clearly defined focus areas are regularly and at least yearly reviewed by the Board
on the basis of an Annual wheel related to the Board meetings. In these reviews, the sustainability
of the company’s objectives, strategy and risk profiles is considered in order to ensure that they are
closely linked with the company’s activities and create value for shareholders in a sustainable manner.
The reviews are supplemented by ongoing dialogue between the Board and executive management,
monthly reporting and ad hoc / weekly reporting and updates of all significant matters.

Prosafe’s Code of Conduct which is published on Prosafe’s website gives guidelines about the
company’s 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 further reflected in Prosafe’s policies and procedures, including
Prosafe’s Corporate Social Responsibility (CSR) Policy.

3. EQUITY AND DIVIDENDS

Prosafe’s consolidated equity was positive as at 31 December 2021, after the restructuring was
completed and fully implemented in December 2021.

The following conversion of bonds in respect of the equity of Prosafe occurred during 2021 after
the company on 6 August 2021 exercised its right to convert the outstanding amounts under the
convertible bonds to shares:

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

ISIN NO
0010771025

ISIN NO

Date

23
Aug
2021

35,706,341 1,428,253

0010781008 122,836,000

4,094,533

83,892,465

0.1

87,986,998

0.1

After the conversion in August 2021, Prosafe has zero outstanding convertible bonds. All previous
outstanding warrants were cancelled as part of the restructuring in December 2021.

In the financial restructuring that was completed in December 2021, a significant de-leveraging
of the balance sheet took place. In step 1, the conversion of USD 996 million of debt in return for
7,894,088,600 shares in Prosafe SE to creditors was implemented. After the step 1 conversion, the
aggregate amount of 7,894,088,600 shares were issued at a conversion rate of EUR 0.1116.

In step 2, USD 91 million debt was converted in return for 816,624,191 shares to creditors. The
conversion rate was EUR 0.1113, and EUR 0.0884 for two creditors with separate agreements.

After finalization of the step 1 and the step 2 conversions, including original share capital, the
aggregate amount of 8,798,699,789 shares of nominal value EUR 0.05 was outstanding and the share
capital was EUR 439,934,989.45 at 31 December 2021.

The restructuring required the issuance of a large number of shares with a dilution effect that led to
a significant reduction in the share price in the market. According to continuing obligations for listed
issuers of shares, the market value of the issuer’s shares shall not be lower than NOK 1. After the
restructuring, the market value of Prosafe SE's shares was lower than the minimum requirement.

On 25 January 2022, an Extraordinary General Meeting therefore resolved a reverse stock split in
the ratio 1,000:1 to reduce the number of outstanding shares in the market. Existing shares were
consolidated into fewer and proportionally more valuable shares. The company's share capital is
EUR 439,934,950 divided into 8,798,699 shares each with a nominal value of EUR 50.

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.

Prosafe's long-term objective is to provide shareholders with a competitive, risk-adjusted yield on
their shares through a combination of share price appreciation and direct return in the form of
dividend. The company has not paid dividends since 2015. Under the latest amended and restated
facility agreements, i.e. following the restructuring in December 2021, dividend may only be paid after
obtaining prior written consent of the majority lenders.

As the company in relation to a reverse share split has resolved to reduce the share capital for
coverage of loss that cannot be covered otherwise without notice to the creditors, a resolution to
distribute dividends may not be adopted until three years have elapsed from the registration in the
Register of Business Enterprises on 26 January 2021, unless the share capital subsequently has been
increased by an amount at least equal to the reduction of EUR 39.45.

4. EQUAL TREATMENT OF SHAREHOLDERS AND

RELATED PARTY TRANSACTIONS

Prosafe has one class of shares in issue and all shares are equal in all respects. Each share carries one
vote. 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.

Should the Board wish to propose that the AGM departs 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.

Prosafe SE holds 195,972,167 shares in Prosafe SE. These shares, which were issued in December 2021
as part of the conversion of debt towards Cosco, are owned by Cosco and held in temporary escrow by
Prosafe SE.

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.

5. SHARES AND NEGOTIABILITY

Prosafe SE’s shares are listed on the Oslo Stock Exchange. The company’s Articles of Association place
no limitations on voting or restrictions on any party’s ability to own, trade of vote for shares in the
company. The company has one class of shares and all shares carry equal rights. Each share is entitled
to one vote at the general meeting.

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 a general meeting.

The Annual General Meeting (AGM) must be held by 30 June every year. In 2022, it is scheduled
to take place on 11 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.

Prosafe prepares proxy forms and conducts the voting arrangements at the meeting in a form and
manner which allows shareholders to vote separately on each matter to be considered by the meeting
and for each of the candidates nominated for election.

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

The AGM 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 members are independent of the Board members and the company’s
management. The general meeting will elect the members of the Nomination Committee, including
the chairperson, normally for a term of up to two years.

At the 2021 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 the AGM 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 and approve the Committee’s remuneration.

The company’s general meeting has adopted instructions governing the duties of the Nomination
Committee. According to these guidelines, the Nomination Committee may contact shareholders,

members of the Board, management and external advisers in its work. Shareholders shall be given the
opportunity to propose Board member candidates to the Nomination Committee. The Nomination
Committee shall give considerable weight to the wishes of the shareholders when making its
recommendations and reflect the interests of shareholders in general. The Nomination Committee
shall also give weight to the proposed candidates’ experience, qualifications and their capacity to
serve as officers of the company in a satisfactory manner. Emphasis must also be given to ensuring
independence of the Board in relation to the company.

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

The Nomination Committee held nine meetings in 2021. Average meeting attendance was 94.4 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 2022

100

88.9

All members of the Committee are independent of the company’s Board.

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 2022.

The Board held 22 Board meetings in 2021. Average meeting attendance was 98.9 per cent.

Name

Glen Ole Rødland

Role

Chair

Birgit Aagaard-Svendsen

Director

Nina Udnes Tronstad

Alf C. Thorkildsen

Director

Director*

Date first
appointed

Date due for
re-election

Meeting
attendance (%)

March 2016

March 2017

May 2019

May 2020

May 2022

100

95.5

100

* Alf C. Thorkildsen became Vice Chair in February 2022.

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, executive management, 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 DUTIES OF THE BOARD
The Board has ultimate responsibility for managing the company and 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, ESG related risk and opportunities, strategy, business planning, forecasting and
contingencies, approval of annual and quarterly results, monthly performance reports, annual
reporting, executive management compensation, 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 policies, strategy and
objectives, overall budgets, Group 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.

INSTRUCTIONS FOR THE BOARD
Prosafe has Instructions for the Board, which give an overview of function, duties and responsibility
of the Board, including procedures for Board meetings. The Board shall determine the vision, values
and long-term objectives of the company. The Board shall also contribute with external expertise and
experience to the company's management.

The Board shall define clear objectives, strategies and risk profiles for the company's business
activities such that the company creates value for shareholders in a sustainable manner. When
carrying out this work, the Board shall take into account financial, social and environmental
considerations.

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.

THE BOARD’S EVALUATION OF ITS OWN WORK
The Board undertakes an annual assessment 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.

AGREEMENTS WITH RELATED PARTIES
Any transactions, agreements or arrangements between the company's shareholders, members of
the Board, members of the executive management team or close associates of any such parties may
only be entered into as part of the ordinary course of business and on arm's length market terms. All
such transactions shall, where relevant, comply with the procedures set out in the Norwegian Public
Limited Liability Companies Act and the Norwegian Code of Practice for Corporate Governance.

The Board shall arrange for a valuation to be obtained from an independent third party for
transactions with related parties, including agreements that are considered immaterial. The Board's
annual directors' report shall provide information about any transactions with related parties. The
Board will when required or otherwise deemed appropriate arrange for a valuation to be obtained
from an independent third party.

Board members shall immediately notify the Board and members of the executive management team
shall immediately notify the CEO (who, where relevant, will notify the Board) if they have any material
direct or indirect interest in any transaction entered into by the company.

Prosafe has entered into an engagement letter with OMP Management AS for the purpose of
providing advice and support in regard to industry analysis and potential M&A transactions. OMP
Management AS is a Norwegian company that is controlled by HitecVision VI Invest Sierra, a major
shareholder in the company.

Prosafe has entered into a framework agreement with Global Maritime. Under the framework
agreement, the company has ordered Global Maritime to undertake projects on emission reduction
initiatives for two of the company's vessels. Global Maritime is majority-owned by HitecVision, which
through one or more entities is a major shareholder of the company. For more information about
these related parties transactions, refer to note 21 of the concolidated accounts.

CONFLICTS OF INTEREST AND DISQUALIFICATION
Members of the Board and executive management cannot consider items in which they have a special
and prominent interest, cf. the rules on disqualification in the Public Companies Act.

Directors and executive personnel must notify the Board if they have any material direct or indirect
personal interest in any agreement concluded by the group. Neither the Board members nor the chief
executive officer shall participate in the preparation, deliberation, or resolution by the Board of any
matters that are of such special importance to themselves or any of their related parties that the
person in question is deemed to have a prominent personal or financial interest in these matters. The
relevant Board member or the chief executive officer shall raise the issue of his or her independence
whenever there may be cause to question it, and is the primary responsible for adopting the correct
decision as to whether he or she should step down from participating in the discussion of the matter
at hand.

Potential conflicts of interest have been declared by Alf C. Thorkildsen (Deputy Chairman) through
his indirect ownership in HitecVision VI Invest Sierra. 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.

AUDIT COMMITTEE
Prosafe has an Audit Committee comprising of two members of the Board of directors who are both
independent of the company: Birgit Aagaard-Svendsen (chair) and Glen Ole Rødland.

At least one of the members shall have either formal qualifications within accounting or auditing, or
relevant experience and skills within the same. Birgit Aagaard-Svendsen and Glen O. Rødland have
such experience and expertise.

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.

Internal controls related to the accounting process are 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. No individual may enter and approve
payments or make commitments individually. Approval procedures are implemented in a seamless
system as per Board approved authority matrix and payments are subject to two-point controls.

Financial risk is managed by the Group’s finance function which during 2021 has provided regular
financial and liquidity forecasts and updates to the Board as well as comprehensive forecasts at each
Board meeting.

The Audit Committee held six meetings in 2021. Average meeting attendance was 100 per cent.

Name

Birgit Aagaard-Svendsen

Role

Chair

Glen O. Rødland

Member

Date first time
appointed

Date due for
re-election

Meeting
attendance (%)

May 2017

May 2020

May 2022

100

COMPENSATION COMMITTEE
Prosafe has a Compensation Committee comprising of two members of the Board who are both
independent of the company’s executive management: Nina Udnes Tronstad (chair) and Alf
C. Thorkildsen. The Committee is a sub-committee of the board and its objective is to act as a
preparatory body for the Board’s work relating to employment terms and performance review for the
chief executive officer as well as strategy and principles for remuneration of executive management.
The Compensation Committee operates on the basis of a generic annual plan.

The Compensation Committee held four meetings in 2021. Average meeting attendance was 100 per
cent.

Name

Nina Udnes Tronstad

Role

Chair

Alf C. Thorkildsen

Member

Date first time
appointed

Date due for
re-election

Meeting
attendance (%)

May 2019

May 2020

May 2022

100

SAFETY, SUSTAINABILITY AND ETHICS COMMITTEE
Prosafe has established a Safety, Sustainability and Ethics Committee which consists of the CEO,
DCEO&CFO and Senior Manager Exec. Support & Communication. The Committee 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 on the whistleblowing channel IntegrityLog – https://prosafe.integrity.complylog.com by
ordinary mail or by 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.

10. RISK MANAGEMENT AND INTERNAL CONTROL

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. 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.

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 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 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.

Management maintains a risk and opportunity register that includes all risks of material significance
for the company. This register is reviewed regularly in Board meetings and is followed up by
management and the Board in the form of strategies and mitigating actions. The Board conducts also
an annual review of all risk areas and the internal control system.

All significant tenders and projects are reviewed by the company’s Bid Committee. The scope of the
reviews includes all aspects which may impact the financial results and good reputation of Prosafe.
The Bid Committee acts to safeguard and support tender processes to ensure client tenders have an
acceptable balance between risk and reward, and that awarded projects are driving risk mitigating
measures in order to meet quality, delivery and financial targets. The committee has an advisory role
towards the tender and subsequent project teams within authorities provided by the Board.

Prosafe’s consolidated financial statements are prepared in accordance with the International
Financial Reporting Standards (IFRS) and management conducts day-to-day follow-up of financial
management and reporting. Management has established a structured approach to ensure that
the system/procedure for Internal Control over Financial Reporting (“ICFR”) is effective and provides
reasonable assurance that the company’s financial statements are prepared in accordance with IFRS.
ICFR includes identification and assessment of all material financial reporting risks, identifying and
documenting relevant controls to address these risks, and monitoring that controls are implemented
and performed. For controls that are identified not operationally effective for each reporting period,
their potential financial exposure and impact on the consolidated financial statements are evaluated.
Control procedures over these areas are also reviewed and remedied.

11. REMUNERATION OF THE BOARD

The AGM resolves directors’ fees based on the recommendation from the Nomination Committee.
The remuneration of the Board reflects its responsibilities, expertise, time commitment and the
complexity of the business.

The remuneration of the Board is not linked 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

USD 110,000

USD 84,000

Chair

Deputy Chair

Directors

USD 68,000

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 2021 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

Based on the need for directors to be independent of the company’s executive personnel, none of
the directors has any specific assignments for Prosafe beyond their role as director.

12. REMUNERATION OF EXECUTIVE PERSONNEL

The terms of employment of the CEO and executive management are determined by the Board,
based on a detailed annual assessment of their salary and other remuneration. The guidelines on
the salary and other remuneration for executive management are clear and easily understandable,
and contribute to the company’s commercial strategy, long-term interest and financial viability.

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 executive management
comprises three principal elements – base pay, variable pay and other benefits such as pension.

The variable pay of executive management is performance related and linked to the
operations and development of the company for the purpose of sustainable
value creation for shareholders. The remuneration arrangements
contribute to ensuring that executive management and
shareholders have convergent interests and are subject to an
absolute limit. They are aligned with 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.

For further details relating to
remuneration paid to executive
management, see note 6 to the
consolidated accounts and the Report
on Executive Remuneration as
presented by the Board that will be
attached to the Notice of the AGM
in May 2022 and made available
on the company´s website.

13. INFORMATION AND COMMUNICATION

Prosafe has adopted an investor relations policy which covers guidelines for the company’s contact
with shareholders and the financial community. In order to ensure equal treatment of shareholders
for the purpose of creating a good basis for a fair and correct pricing of the company’s financial
instruments, Prosafe aims to provide clear, up-to-date and timely financial and other information
about the company’s operations to the financial market. This shall take place through the timely
distribution of price-sensitive information to the market, at all times handled in compliance with
applicable market rules and practices.

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 its unaudited Q4 and full year result in early February every year. Complete
annual 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.

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.

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. The Board will ensure that all shareholders are treated equally and seek to prevent
disruptions to, or interference with, company operations to the extent possible. In the event of
a takeover bid, the Board will, in accordance with its overall responsibilities and good corporate
governance, act in the best interest of shareholders and ensure that they are given sufficient
information in the matter.

If an offer is made for the company’s shares, the Board will, prior to the expiry of the offer period,
issue a statement evaluating the offer and make a recommendation as to whether shareholders
should or should not accept the 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 Audit Committee shall support the Board in the administration and exercise of its responsibility
for supervision of the work of the independent auditor, who shall keep the Board informed of all
aspects of its work for Prosafe. This duty includes submission of an annual plan for the audit of
Prosafe.

The auditor attends all Audit Committee meetings and at least once a year meets with the Audit
Committee without the presence of management. Company policies govern the use of the auditor’s
services. Use of the auditor for services other than the audit of Prosafe requires pre-approval by the
Audit Committee.

The independent auditor meets with the full Board at least once a year in connection with the
preparation of the annual financial statements and, at least once a year, presents a review of
Prosafe’s financial reporting and internal control procedures for financial reporting. At least once
a year, the independent auditor meets with the Board without the presence of any member of
executive management.

Fees payable to the auditor split on auditing and other services are specified in the Auditor Fees
note to the consolidated financial statements of the company. Remuneration paid to the auditor for
mandatory and other audit services will be reported to the AGM for approval.

30 March 2022

The Board of Directors of Prosafe SE

(original signed)

Glen Ole Rødland
Non-executive Chairman

Alf C. Thorkildsen
Non-executive Deputy Chairman

Birgit Aagaard-Svendsen
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
2021.

INTRODUCTION

improvement and cashflow to improve further
in 2022.

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

In December 2021 the company concluded
a financial restructuring that has been in
process since tail end 2019. This restructuring
follows two earlier although less onerous
financial restructurings in respectively 2016
and 2018 triggered by the general downturn
in oil and gas as well as structural changes
to our industry. Throughout these processes
there has been support from both lenders
and shareholders which eventually led to a
consensual and sustainable financial solution.
The board of directors expect the current
balance sheet to be sustainable and we expect
the company to be able to refinance its debt on
market terms by 2025.

In parallel over these years, the company has
been adapting its operating model, rightsizing
its organisation globally and enhancing its fleet
while at the same time ensuring commercial
optimization and safe and efficient operations.
Prosafe is thankful for the support from
lenders, shareholders, clients and employees
throughout the downturn in our industry. Our
vessel utilization bottomed in 2020 and we saw
an improvement during 2021 and based on
the firm contracts we expect the operational

Against the aforesaid, it is motivating to note
that 2022 will be characterized by high fleet
activity for Prosafe and improving order backlog
and financial results from its operations.

FINANCIAL RESULTS,
FINANCING AND
FINANCIAL POSITION
OF THE GROUP

(The figures in brackets correspond to the 2020
comparatives)

INCOME STATEMENT
Operating revenues totalled USD 141.1 million
in 2021 (2020: USD 56.7 million), with fleet
utilisation1) increasing to 54.5 per cent (20.4
per cent). The increase in utilisation reflects
a combination of contracts being deferred
from 2020 due to Covid-19, new contracts and
extensions.

Operating expenses increased to USD 116.2
million (USD 66.2 million), which was mainly
driven by higher activity.

Depreciation, amortization and impairment
amounted to USD 74.7 million (USD 854.8
million). The reduced depreciation and
amortization reflect impairments made in
2020.

The operating loss amounted to USD 49.8
million (loss of USD 864.3 million).

Interest expenses totalled USD 37.9 million
(USD 61.8 million). Lower interest expenses
were mainly due to the company was going
through the financial restructuring and
stopped accruing interests in August until the
process was fully completed and implemented.
For further information, refer to note 10 and
note 14 of the 2021 consolidated accounts.

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

Financial items other than interest expenses
amounted to USD 1,018.7 million positive (USD
21.6 million negative). The positive financial
items other than interests were mainly due to
a one-off financial gain of USD 1,030.5 million,
arising from the completion of restructuring
process and followed by the substantial
modification of debt. (Refer to note 9 and note
14 of the 2021 consolidated accounts for more
details).

Taxes for 2021 in the amount of USD 3.1
million (USD 2.4 million) were mainly relating
to operations in Brazil, Trinidad and UK.

Net profit amounted to USD 927.9 million
(net loss of USD 950.1 million), resulting in
earnings per share of USD 263.27 positive (USD
10,798.19 negative). Fully diluted earnings per
share were USD 263.7 positive (USD 10,798.19
negative). In January 2022, Prosafe completed
a 1,000:1 reverse split of the company's
shares to satisfy the minimum requirement to
market value of the issuer’s shares for listed
companies. Due to the reverse share split after
the reporting period but before the financial
statements were authorised for issue, the
calculations of the basic and diluted earnings
per share for current and prior year presented/
restated were based on the new number of
shares.

FINANCIAL POSITION
Total assets amounted to 492.8 million (USD
587.7 million) at the end of 2021. Investments
in tangible assets totalled USD 17.3 million
(USD 2.9 million). The investments in 2021
mainly relate to the five-yearly Special Periodic
Survey (SPS) costs for Safe Boreas, Safe
Zephyrus and Safe Notos as well as certain
equipment replacements on Safe Caledonia
and Safe Concordia.

As at year-end 2021, the Group had a total
liquidity reserve in the form of liquid assets
(cash and deposits) of USD 73.9 million (USD
160.3 million). Total restricted cash at year-end
2021 was USD 2.4 million (USD 9.8 million).

Total shareholders’ equity amounted to USD
36.3 million positive (USD 948.5 negative),
resulting in an equity ratio of 7.4 per cent
positive (161.4 per cent negative).

Interest-bearing debt amounted to USD 423.3
million (USD 1,509.4 million) at year-end. About
USD 1.1 bn of debt was converted to equity as
part of the financial restructuring in Q4 2021.
Please refer to separate section below under
Financing for further information.

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 2021 was minimum
cash of USD 18 million. The Group was in
compliance with a cash position of USD 73.9
million at year-end 2021.

Please refer to the Financing section below and
note 14 of the 2021 consolidated accounts for
further information about the loans, financial
covenants and financial status of the company.

Net cash flow in 2021 was USD 86.4 million
negative (USD 37.8 million negative). Higher
net cash outflow in 2021 was mainly due to
repayments to lenders as part of financial
restructuring process partially offset by the

improvement in cashflow from operating
activities. Net cash flow from operating
activities amounted to USD 23.4 million
positive (USD 33.1 negative). Total cash
investment in tangible assets for 2021
amounted to USD 17.3 (USD 2.9 million).

FINANCING
A substantial financial restructuring and
de-leveraging of the balance sheet was
completed in December 2021, leaving the
company with a significantly improved balance
sheet and improved financial flexibility.

The below provides a full summary of the
financial restructuring implemented and its
effects;
Following occurrence of the Transaction
Effective Date, the conversion of USD 996
million of debt (the "Step 1 Conversion") in
return for 7,894,088,600 shares in Prosafe SE
(the "Tranche 1 Shares") was implemented.
After the Step 1 conversion, the aggregate
amount of 7,894,088,600 shares was issued
at a conversion rate of EUR 0.1116. The total
number of outstanding shares was thereafter
7,982,075,598 and the share capital was
EUR 399,103,779.90. The share capital and
the shares were registered in the Register of
Business Enterprises (“Foretaksregisteret”) on
16 December 2021.

On 20 December 2021, a Step 2 Conversion
(the "Step 2 Conversion") of the remaining
USD 91 million debt was converted as part of
the restructuring in return for 816,624,191
shares (the "Tranche 2 Shares") The conversion
rate was EUR 0.1113 and EUR 0.0884 for two
creditors with separate agreements.

After finalization of the Step 1 Conversion and
Step 2 Conversion, including original share
capital, the aggregate amount of 8,798,699,789
shares was issued and the share capital was
EUR 439,934,989.45.

Following finalization of the conversion
of the debt contemplated by the Schemes
and the Norwegian restructuring plan, the
restructuring has resulted in in a significant
de-leveraging of the balance sheet with ca.
75 per cent debt reduction, a corresponding
reduction in annual debt service, ca. USD 60
million in cash per year-end 2021 and in sum
a significantly improved balance sheet and
improved financial flexibility.

Highlights of the completed financial
restructuring:
• Significant de-leveraging: ca. USD 1,100

million of total debt reduction. Reinstated
debt of USD 343 million plus Safe Eurus
• Significant runway and financial flexibility:

No mandatory debt maturities until
December 2025. Only cash-sweep above USD
66 million

• Reduced interest costs: ca. USD 9 million in
annual debt servicing costs post-transaction
• Liquidity headroom: Liquidity well in excess

of agreed minimum cash covenant of USD 18
million through 2022, increasing to USD 28
million in 2024

• Positive book equity
• Equitization and shareholders: Ca. USD 1,100
million of debt has been equitized into 99 per
cent of Prosafe SE equity

FINANCIAL RESULTS AND FINANCIAL
POSITION OF THE PARENT COMPANY
The net gain for the year amounted to USD
803.9 million (USD 944.0 million loss). Net
financial gain amounted to USD 944.0 million
(USD 231.9 million loss).

Total net assets for the year amounted to USD
12.3 million (USD 850.8 million net liabilities).
The company’s equity was positive as at 31
December 2021 following the implementation
of the financial restructuring.

connected operations supporting the Buzzard
platform complex in the UK sector of the North
Sea. The firm duration of the contract which
commenced mid-April 2021 was 100 days with
three 30-day options. On 9 July 2021, CNOOC
Petroleum Europe Limited exercised two of the
three 30-day options available to them, thereby
extending the Safe Boreas at the Buzzard
platform complex in the UK sector of the North
Sea until end-September 2021. The contract
was later further extended till 14 October 2021,
after which the vessel was taken to a yard
in Norway to prepare for the ConocoPhillips
contract at Ekofisk starting in Q2 2022.

Safe Caledonia commenced a 162-day contract
with a 30-day option for Total at the Elgin
platform in the UK in late March 2021. The
contract was subsequently extended until
end-October 2021. On 20 October 2021,
Prosafe was awarded a new contract by
TotalEnergies E&P UK Limited for the Safe
Caledonia to provide accommodation support
at the Elgin complex in the UK sector of the
North Sea. The firm duration of the contract
commencing mid-March 2022 is 270 days
with one 30-day option. The vessel remained
in-field over the winter period between the two
contracts on a stand-by day rate.

OPERATIONS
AND PROJECTS

As at year-end, the fleet comprised seven fully
owned vessels, plus options for two completed
new builds, the Safe Nova and the Safe Vega,
at a yard in China. The company is in dialogue
with COSCO about extending the options to
take delivery of Safe Nova and Safe Vega. Since
2016, eight vessels have been sold by Prosafe
for recycling.

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/

Safe Zephyrus completed her five-yearly special
periodic survey (SPS) at Averøy yard in Norway
before mobilizing to the Shearwater platform
in the UK where she conducted a 175-day
contract for Shell from 27 February 2021.
Upon completion of the contract, the vessel
was in lay up in Norway. In late September
2021, BP Exploration Operating Company
Limited chartered the Safe Zephyrus to provide
gangway connected operations to support the
Seagull project at the ETAP central processing
facility in the UK North Sea. The firm duration
of the contract is 10 months with up to four
months of options. The vessel commenced the
contract in late January 2022.

On 27 February 2021, Prosafe signed a contract
with CNOOC Petroleum Europe Limited
for the charter of the Safe Boreas
to provide gangway

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
vessel will remain on the current contract till
early 2023.

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 most of January
2021 conducting her five-yearly special periodic
survey and resumed operations in February
2021 continuing through until mid-November
2021. On 5 November 2021, Prosafe signed
a further contract extension with Petrobras
Netherlands B.V. taking the firm operational
period through to mid-July 2022.

Safe Concordia was in early January 2021
awarded a contract in Trinidad and Tobago.
The vessel commenced the contract early July
2021 and remained on contract till mid-March
2022. Prosafe was awarded a 160-day contract
with BP in direct continuation of this contract,
such that the Safe Concordia will continue
to operate offshore Trinidad through to and
including 31 August 2022. In addition, there are
up to four weeks of options.

The Regalia was sold for recycling in April 2021.

Safe Scandinavia was idle in the year and is laid
up in Norway.

Although the impact from Covid-19 on the
macro environment has been challenging,
Prosafe 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.

Prosafe 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. All formal
audits were successfully concluded during
2021 and the company awaits formal receipt of
its ISO 50001 certification in early 2022.

TOTAL ORDER BACKLOG

Total order backlog2) as of 31 December 2021
amounted to USD 152 million (USD 162 million)
of which USD 126 million relates to firm
contracts and USD 26 million relates to options.
Secured utilisation for 2022 is 51.6 per cent,
while secured utilisation for 2023 was 3.2 per
cent at year-end.

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.

On 15 April 2021, the Gulating Court of Appeal
decided that Prosafe had to pay Westcon NOK
302,510,457 plus interest and legal costs, in
total about NOK 465 million. The judgement
implied full payment to Westcon of the amount
claimed.

As part of the financial restructuring, Prosafe
paid the secured part of the Westcon claim,
NOK 245 million, to Westcon in October 2021.
The remaining part of the claim was converted
into 3 per cent of the shares in Prosafe SE on a
fully diluted basis following the implementation
of the financial restructuring in December 2021.

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

CORPORATE SOCIAL
RESPONSIBILITY AND
ESG REPORTING

Prosafe views Corporate Social Responsibility
(CSR) as an integral part of being an efficient
and 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 2021, Prosafe further increased its focus
on Corporate Social Responsibility (CSR) by
amongst others setting clear, quantitative
targets for Environmental, Social and
Governance (ESG) 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. Specifically, we are consequently
increasing our efforts in the area of energy
management and emissions reduction to
adapt to the global ambition to achieve energy
efficiency and reduced emissions. Prosafe’s
view is that these efforts over time – although
they will require investments and customer
engagement –– will provide competitive edge
and new business opportunities.

OUTLOOK

GENERAL
Most of the company’s contracts for 2020
were postponed to 2021 due to the Covid-19
pandemic, resulting in healthy utilisation and
improved earnings in 2021. In addition, Prosafe
has been able to develop its order book during
2021 by adding both contract extensions to
existing contracts and new contracts covering
both 2021 and 2022.

In the short term, the activity level for 2022
will be good with at least 6 of 7 vessels
being on contracts for all or parts of the year.

However, beyond 2022, visibility remains low, in
particular in the North Sea, which is in line with
a historic trend in the offshore accommodation
industry.

Demand for offshore accommodation rigs is
mainly driven by maintenance, modification
and life extension of existing oil and gas
infrastructure. The focus of the oil and gas
industry on electrification and other carbon
footprint reducing investments offshore, and
the emerging market for Carbon Capture and
Storage are expecting to be positive for the
demand for offshore accommodation longer
term. Further, the number of turret moored
FPSOs and other floating offshore installations
are increasing relatively to fixed installations
and floating oil production are requiring
modern DP3 semi-submersible rigs that can
“follow target”. Prosafe is a large operator of
the most advanced DP3 semi-submersible rigs.
The energy transition will gradually change
the market for the energy service industry
including Prosafe.

Given the complexity of the global energy
system and the world economy’s dependence
on energy for growth and prosperity, the
transition to a renewable world is likely to take
time. It is therefore assumed that there will be
high activity in oil and gas industry also in the
foreseeable future while investments in energy
management and efforts to reduce carbon
intensity and emissions will occur in parallel.

It is uncertain how the situation in Ukraine may
affect Prosafe. There are no immediate effects,
but there may be ripple effects.

GEOGRAPHICAL MARKETS

North Sea: Norway and UK
The North Sea (UK and Norway) remains a key
market for semi-submersible accommodation
vessels. In 2022, Prosafe will have two vessels
operating in the UK and one vessel operating
in Norway. Beyond 2022, the company has
little firm visibility. However, the large number

of fields in production combined with energy
management initiatives and high energy prices
are assumed to provide basis for activity also in
the foreseeable future.

Brazil
The main bulk of demand in Brazil has been
maintenance and modification work on
aging assets in the Campos Basin with semi-
submersibles remaining the preferred design
for long charter contracts with Petrobras.
In addition, other international operators
have required vessel support on both newer
installations such as Equinor’s Peregrino and
aging assets owned and leased out by Modec,
SBM and Shell. Petrobras has increased its
spending guidance in recent announcements
and has a revised outlook on spend and
green initiatives. In addition, Petrobras has
announced a plan for installation of a large
number of additional FPSOs in the years ahead
and several new long-term tenders for offshore
accommodation units. It is therefore assumed
that Brazil will remain an important market in
the years ahead.

owned vessels replacing foreign owned units.
Pemex’ oil production growth ambitions had
shown signs of maintenance and modification
recovery after a period of decline in investment
and political uncertainty. Following the
Covid-19 pandemic and the subsequent
oil price crash, Pemex has made significant
spending cuts following trends globally.

Recently, however, the oil price has increased
and cashflow is significantly improved. In
addition, a gradual normalization of society,
despite the pandemic will increase demand
and need for energy to support development.
Pemex’ oil and gas production is vital to the
Mexican economy. As such the company
remains optimistic that opportunities will
present themselves in Mexico in the future.

Rest of the world
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.

Mexico
The level of offshore activity in Mexico has been
relatively high since 2016 although at lower
levels than prior to 2016 with Mexican / Pemex

SUPPLY SIDE
The supply side has seen a positive
development 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. Over this time period,
two competitors have sold one unit each for
recycling.

Globally, there are still around 30 semi-
submersible offshore accommodation vessels
available for operation. The company expects
a bifurcation of the market where the high
end modern DP3 vessels will show better
performance/cashflow over time. The market
for high end vessels is currently about 13
vessels.

Prosafe has recycled 8 accommodation units
since the peak in 2016 and has substantially
renewed its fleet. The company remains the
leading player with 7 vessels on water including
a Tender Support Vessel (TSV) and options on
another two completed vessels for worldwide
operations currently stacked with Cosco in
China. Prosafe’s main competitor has 5 vessels
while the remaining fleet is generally dispersed
among a series of owners.

Prosafe remains of the opinion that the
industry needs further consolidation and vessel
recycling, and we anticipate that this will occur
in the years ahead.

ENERGY TRANSITION
Energy transition is desirable to prevent further
global warming, and inevitable due to the finite
nature of fossil fuel. However, there has been
built a massive system over the last 150 years,
and it is imperative to realize that the process
of adapting to the energy transition will be
complex and time consuming. Therefore,
carbon capture, energy management, alterna-
tive fuels, electrification and ways of working
must all be addressed in tandem. We anticipate
that there will be high activity in the oil and
gas industry also in the foreseeable future,
while investments in energy management and
efforts to reduce carbon intensity and emis-
sions will occur in parallel.

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

STRATEGY AND GOALS
The Group’s strategy remains to be the
preferred supplier of high-end offshore accom-
modation vessels globally.

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. Meaningful
consolidation and continued recycling are
needed to contribute to a faster normalization
of the return in our industry.

While optimizing its existing fleet and core
business, Prosafe is increasing its efforts in
the area of ESG and energy management
in order to reduce its energy consumption
and emissions and to comply with laws and
regulations.

RISK

Prosafe categorises its primary risks under the
following headings: strategic, commercial,
operational, compliance and legal, financial
and 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 maintains an active overview of - and

relation with – debt markets and lenders as
well as the equity market and investors to
secure a best possible access to capital markets
if and when needed.

Prosafe is exposed to liquidity risk, which is
the risk that Prosafe will not be able to meet
obligations of financial liabilities when they
become due. Liquidity risk sources include
but are not limited to contract cancellations,
customers not paying charter rate under
contracts and low demand for accommodation
vessel in the future. Prosafe manages liquidity
at Group level as per Board approved Finance
Policy. The Group monitors the liquidity
development and the risk of insufficient capital
by rolling cash flow forecasts. Liquidity is
managed on a low risk and highly liquid basis,
primarily in deposits with its main lending
banks.

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
Board approved Finance Policy. The interest
rate risk is normally unhedged following the
financial restructuring that was completed in
December 2021, although the need for hedging
is being reviewed on a regular basis.

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 at year-end.

It is uncertain how the situation in Ukraine may
affect Prosafe. There are no immediate effects,
but there may be ripple effects.

Further information on financial risk
management 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

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, 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.

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 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.

HEALTH, SAFETY AND
THE ENVIRONMENT (HSE)

HUMAN RESOURCES
AND DIVERSITY

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.

Prosafe operates a zero-accident mindset
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.

In 2021, Prosafe recorded zero incidents
classified as a Lost Time Injury (LTI) (2020: 0), i.e.
those injuries resulting in an employee being
absent from the next work shift due to the
injury.

Sick leave was 0.27 per cent in 2021, an
improvement from 0.46 per cent in 2020.

Prosafe had no accidental discharges to the
natural environment in 2021 and continues to
actively reduce emissions by modernizing and
adapting its fleet and operating procedures
and practices.

In 2021, 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. All formal audits
were successfully concluded during 2021 and
the company awaits formal receipt of its ISO
50001 certification in early 2022.

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.

Prosafe had 103 employees at the end of 2021
(average 97), compared with 99 in the previous
year (average 111). This reflects the adjustment
of the organisation and its operating model
whereby a significant number of activities were
outsourced to external providers 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 25 countries
around the world. The overall voluntary employee
turnover in the Group was 11.23 per cent in
2021, compared with 8.06 per cent in 2020.

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 2021, women
accounted for 26.2 per cent of all employees,
compared with 27.3 per cent in 2020. Onshore
the proportion of women was 40.3 per cent, as
compared to 41.7 per cent in 2020.

Women constituted 26.3 per cent of the
managers as at 31 December 2021, compared
with 24.4 per cent at the end of 2020. Women
account for 50 per cent of Prosafe’s Board of
Directors. As at 31 December 2021, the average
hourly pay for female employees in Prosafe
was USD 34, while it was USD 69 for male
employees.

Prosafe aims to offer the same opportunities to
all and there is no discrimination with respect
to recruitment, remuneration or pro motion, age,
disability, gender, marriage and civil partnership,
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 14
October 2021. There are no deviations between
the Code of Practice and the way it has been
implemented during 2021. 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.

As at 31 December 2021, 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 North Sea Strategic
Investments. and Alf C. Thorkildsen has an
indirect ownership interest in Prosafe through
his ownership interest in North Sea Strategic
Investments and HitecVision VI Invest Sierra.

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 the Company
successfully completed its overall financial
restructuring process in 2021, and the Board is
of the view that the agreed financial solution is
robust and sustainable beyond the near term.

SHAREHOLDERS
AND SHARE CAPITAL

According to the shareholder register as at 31
December 2021, the 20 largest shareholders
held a total of 98.11 per cent of the issued
shares. The number of shareholders was 4,850.
DNB Bank ASA was the largest shareholder
with a holding of 14.31 per cent of the issued
shares.

At the Annual General Meeting held on 5
May 2021, all members of the Board were
re-elected. Glen Ole Rødland was re-elected as
chairman. The remuneration of the members of
the Board is disclosed in note 6 to the financial
statements.

Significant shareholdings as at 31 December
2021 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/

The company has a Directors & Officers liability
insurance that covers Directors and executive
management. The total limit of the coverage is
USD 32.5 million.

As at 31 December 2021, Prosafe had an issued
share capital of 8,798,699,789 ordinary shares,
all at a nominal value of EUR 0.05 each.

An EGM was held on 25 January 2022 where it
was resolved to affect a 1,000:1 reverse share
split of the company's shares to satisfy the
minimum requirement to market value of the
issuer’s shares for listed companies. This was
effective on 27 January 2022.

There are currently 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

Under the latest amended and restated facility
agreements, i.e. following the restructuring
in December 2021, dividend may only be paid
after obtaining prior written consent of the
majority lenders.

As the company has resolved to reduce the
share capital for coverage of loss that cannot
be covered otherwise without notice to the
creditors, a resolution to distribute dividends
may not be adopted until three years have
elapsed from the registration in the Register
of Business Enterprises in December 2021,
unless the share capital subsequently has been
increased by an amount at least equal to the
reduction.

EVENTS AFTER THE
PERIOD END

It is uncertain how the situation in Ukraine will
affect Prosafe. There are no immediate effects,
but there may be ripple effects.

Reference is made to note 23 to the 2021
consolidated accounts for a description of other
relevant events after the reporting date.

30 March 2022

The Board of Directors of Prosafe SE

Glen Ole Rødland
Non-executive Chairman

Alf C. Thorkildsen
Non-executive Deputy Chairman

Birgit Aagaard-Svendsen
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 2021
calendar year ended on 31 December 2021.

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 2021 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 at
31 December 2021.

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.

30 March 2022

The Board of Directors of Prosafe SE

Glen Ole Rødland
Non-executive Chairman

Alf C. Thorkildsen
Non-executive Deputy Chairman

Birgit Aagaard-Svendsen
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 profit/(loss) before depreciation and impairment
Depreciation
Impairment
Operating loss
Interest income
Interest expenses
Other financial income
Other financial expenses
Net financial items
Profit/(Loss) before taxes
Taxes
Net profit/(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

10
9
9
10

12
12

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

(USD million)

Net profit/(loss) for the year

Other comprehensive income

2021

121.8
19.3
141.1
(50.6)
(65.6)
24.9
(33.0)
(41.7)
(49.8)
1.0
(37.9)
1,051.8
(34.1)
980.8
931.0
(3.1)
927.9

2020

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

927.9

(950.1)

263.3
263.3

(10,798.2)
(10,798.2)

2021

927.9

2020

(950.1)

Items to be reclassified to profit or loss in subsequent periods:
Foreign currency translation

(2.3)

(0.8)

Items that will not be reclassified to profit or loss in subsequent periods:
Pension remeasurement

(0.1)

Other comprehensive loss for the year, net of tax

(2.4)

(0.9)

Total comprehensive income/(loss) for the year attributable
to equity holders of the parent

925.5

(951.0)

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

(USD million)

Note

capital

bonds

Con-

vertible

Equity at 31 December 2019

Net loss

Other comprehensive loss

Total comprehensive loss

Conversion of convertible bonds

Equity at 31 December 2020

Net profit

Other comprehensive loss

Total comprehensive income

Conversion of convertible bonds

Share issuance through debt
conversion

Share capital reduction

Equity at 31 December 2021

9.0

0.0

0.1

9.1

0.0

0.6

492.6

(4.8)

497.5

Other

equity

(59.4)

(950.1)

(0.1)

(950.2)

20.6

0.0

Foreign

currency

trans-

lation

32.2

0.0

(0.8)

0.0

Total

equity

2.4

(950.1)

(0.9)

(951.0)

0.1

(1.8)

1.8

18.8

(1,007.8)

31.4

(948.5)

0.0

(18.8)

0.0

927.9

(0.1)

927.8

18.2

(433.3)

4.8

0.0

(2.3)

0.0

(490.3)

29.1

927.9

(2.4)

925.5

0.0

59.3

0.0

36.3

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.

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

Note

31/12/2021

31/12/2020

8, 16

8, 22

17, 19

17, 18

17, 20

14, 17, 18

17, 18

14, 17, 18

15, 17

397.0

412.3

0.0

2.2

399.2

73.9

14.1

5.6

93.6

492.8

497.5

0.0

(461.2)

36.3

422.4

0.0

2.2

424.6

0.9

1.8

10.7

18.5

31.9

492.8

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

1,430.7

1.4

9.0

10.4

1,451.5

587.7

On 30 March 2022, the Board of Directors of Prosafe SE approved and authorised these financial
statements for issue.

Glen Ole Rødland
Non-executive Chairman

Alf C. Thorkildsen
Non-executive Deputy Chairman

Birgit Aagaard-Svendsen
Non-executive Director

Nina Udnes Tronstad
Non-executive Director

Jesper K. Andresen
Chief Executive Officer

CONSOLIDATED CASH FLOW STATEMENT

(USD million)

Note

2021

2020

CASH FLOW FROM OPERATING ACTIVITIES

Profit/(Loss) before taxes

Net gain from extinguishment of debt

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

Depreciation and impairment

Interest income

Interest expenses

Taxes paid

Change in working capital

Other items from operating activities

Net cash provided by/(used in) operating activities

CASH FLOW FROM INVESTING ACTIVITIES

Net proceeds/(payments) from sale of tangible assets

Acquisition of tangible assets

Interest received

Net cash used in investing activities

CASH FLOW FROM FINANCING ACTIVITIES

Repayments of interest-bearing debt

Refinancing costs

Net cash used in financing activities

Net cash flow

Cash and deposits at 1 January

Cash and deposits at 31 December

931.0

(1,030.5)

(1.0)

74.7

(1.0)

37.9

(1.3)

14.6

(1.0)

23.4

1.6

(17.3)

1.0

(14.7)

(77.6)

(17.5)

(95.1)

(86.4)

160.3

73.9

(947.7)

0.0

0.4

854.8

(0.5)

61.8

(6.7)

(22.0)

26.8

(33.1)

(0.3)

(2.9)

0.5

(2.7)

(2.0)

0.0

(2.0)

(37.8)

198.1

160.3

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 2021 were approved and
authorised for issue in accordance with a resolution of the board of directors on 30 March 2022.

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 and regular 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 Company is a going concern. The going concern assumption is considered to be
appropriate as the Company successfully completed its overall financial restructuring process in 2021,
and the Board is of the view that the agreed financial solution is robust and sustainable beyond the
near term.

MODIFICATION OF DEBT. The Company fully implemented and completed a financial restructuring in
2021 whereby the majority of external debt was refinanced. The renegotiation of the terms of certain
financial liabilities included issuing equity instruments to creditors to extinguish all or part of the
liability.

Management has identified loans that qualify for extinguishment and the recognition of the
reinstated debt as a new liability. Management has assessed that the financial restructuring resulted
in a substantial modification of debt due to substantially different terms. The terms are substantially
different if the discounted present value of the cash flows under the new terms, including any fees
paid net of any fees received and discounted using the original effective interest rate, is at least 10%
different from the discounted present value of the remaining cash flows of the original financial
liability. In addition, other qualitative factors such as changes in the type of interest rate and change
in covenants are also considered.

Substantial modifications are treated as an extinguishment, and derecognition of the existing liability
and recognition of a new liability at fair value based on the new contractual terms. Determining the
fair value of the shares issued to creditors and the recognition of the reinstated debt requires the use
of judgement and estimates. The methods applied for fair value calculations include estimations that
are based on publicly available data and managements own assumptions. The fair value of long-
term debt is calculated by determining the net present value of estimated cash flows applying an
estimated market rate for the Group at initial recognition. The market rate estimate was determined
by observing publicly available terms and conditions of relevant peers’ for similar loans and adjusted
for known differences from the Group’s agreed credit facility terms, as well as the Group’s new
capitalization and value of the vessels. The basis for this estimated market rate, to which the fair
value is sensitive, is not based on observable input and therefore the fair value of the debts are level 3
estimates.

Upon derecognition of debt, the difference between the carrying amount of the original liability
and the consideration paid is recognised in profit or loss. The consideration paid includes equity
instruments, cash transfers and the reinstated debt. Costs or fees incurred are also recognised within
profit and loss as part of the gain or loss on extinguishment.

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.

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 2021 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.

Interest Rate Benchmark Reform – Phase 2 (Amendments to IFRS 9, IAS 39, IFRS 7 and IFRS 16) -
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 standards relating to changes in the basis
for determining contractual cash flows of financial assets, financial liabilities and lease liabilities.
The amendments 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 2021, the Group has interest bearing liabilities of USD 423.3 million. Of which, USD
343.4 million 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 are
adopted in the intercompany floating rate loans when adopted for the Group.

The phase 2 amendments should be applied for the annual period beginning on 1 January 2021 and
applied retrospectively. However, since the Group had no transactions for which the benchmark rate
had been replaced with an alternative benchmark rate as at 31 December 2020, there is no impact on
the opening equity balance as a result of retrospective application. During the year, there is also no
impact to the Group as the transition change in the interest rate benchmark has not yet been agreed
with the lenders.

STANDARDS ISSUED BUT NOT YET EFFECTIVE, WHICH THE GROUP HAS NOT YET ADOPTED
A number of amendments and improvements to standards have been issued and are effective
for annual periods beginning after 1 January 2022 and earlier application is permitted; however,
the Group has not adopted the new or amended standards in preparing these consolidated
financial statements earlier. The Group’s assessment is that such new or amended 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.

Onerous contracts – Cost of Fulfilling a Contract (Amendments to IAS 37) - The amendments specify
which costs an entity includes in determining the cost of fulfilling a contract for the purpose of
assessing whether the contract is onerous. The amendments apply for annual reporting periods
beginning on or after 1 January 2022 to contracts existing at the date when the amendments are
first applied. At the date of initial application, the cumulative effect of applying the amendments is
recognised as an opening balance adjustment to retained earnings or other components of equity, as
appropriate. The comparatives are not restated. The Group has determined that all contracts existing
at 31 December 2021 are not onerous.

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 or less
– Living quarters and other equipment: 5 to 35 years
– Periodic maintenance: 5 years
• Buildings: 20 to 30 years
• Right-of-use assets (office leases): 3 to 5 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 and a
terminal value. In 2020, the growth rates applied were as below. In 2021, there was no valuation-in-use
calculation as there were no impairment indicators.

Growth rate assumptions applied in the value-in-use calculation performed in 2020:

Growth rate until
the end of 2039

6.6%

Reflects 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.

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. Management has not identified any indicators for reversal of
impairment as at 31 December 2021.

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 cap,
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 between the carrying amount
extinguished and the consideration paid (including any non-cash assets transferred or liabilities
assumed) is recognised in profit or loss.

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

Defined contribution plans
Companies within the Group make contributions to pension schemes that are defined contribution
plans. The companies’ payments are recognised in the income statement for the year to which the
contribution applies.

Share-based payment arrangements
The grant-date fair value of equity-settled share-based payment arrangements granted to employees
is generally recognised as an expense, with a corresponding increase in equity, over the vesting period
of the awards. The amount recognised as an expense is adjusted to reflect the number of awards for
which the related service and non-market performance conditions are expected to be met, such that
the amount ultimately recognised is based on the number of awards that meet the related service
and non-market performance conditions at the vesting date. For share-based payment awards with
non-vesting conditions, the grant-date fair value of the share-based payment is measured to reflect
such conditions and there is no true-up for differences between expected and actual outcomes.

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 share options 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

2021

2020

Europe

South America

Total operating revenues

77.9

63.2

141.1

1.1

55.6

56.7

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

Operating revenues by major customers:

Europe 1

Europe 2

Europe 3

South America 1

South America 2

South America 3

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

Total assets by geographical location

Europe

South America

Asia

Total assets

Contract balances

Trade receivables from charters

Contract assets

Contract liabilities

2021
1)

31.5

25.9

19.6

43.6

0.0

19.6

22.3%

18.4%

13.9%

30.9%

0.0%

13.9%

2020
1)

0.0

44.4

11.2

0.0

0.0%

78.3%

19.8%

0.0%

2021

2020

173.9

225.0

0.3

399.2

177.4

236.7

1.4

415.5

2021

2020

14.1

0.3

1.1

6.9

4.2

3.6

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 from recognition of
the opening balance

Revenue deduction from recognition
of the opening balance

Consideration received during the year
not recognised as revenue

Contract incentive as a result of
contract modifications

2021

2020

2021

2020

Contract assets

Contract liabilities

0.0

(4.2)

0.0

0.3

0.0

4.2

(3.6)

(2.6)

0.0

1.1

0.0

3.6

0.0

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

Chartering and operation

of accommodation vessels

31 December 2021

31 December 2020

2021

98.0

2022

119.9

40.3

2023

6.1

Total

126.0

144.4

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

NOTE 5: OTHER OPERATING REVENUES

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

Management, crew services, catering and other related income

Total other operating revenues

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

2021

2020

1.0

18.3

19.3

(0.4)

2.8

2.4

2021

2020

13.4

29.8

3.9

2.9

0.4

0.2

50.6

13.0

13.1

2.2

1.8

0.4

0.3

30.8

Number of employees
The average number of employees in the Group for 2021 was 97 (2020: 111). The average number of
employees by legal entity was as follows.

2021

2020

Prosafe Offshore Employment Company Pte. Limited

Prosafe Offshore Limited

Prosafe Services Maritimos Ltda

Prosafe AS

Prosafe Offshore Holdings Pte. Ltd.

Prosafe SE

Prosafe Offshore Accommodation Ltd

Safe Eurus Singapore Pte. Ltd.

Total average number of employees

111

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 DCEO/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 Board.

Share options
See note 23 on subsequent events for details on a long-term incentive program for the Executive
Management team.

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

Ryan Duncan Stewart - COO

2021

2020

396

376

378

334

317

284

290

284

179

100

740

712

597

485

466

Board of directors
(USD 1 000)

Glen Ole Rødland (Chair)

Birgit Aagaard-Svendsen

Nina Udnes Tronstad

Alf C. Thorkildsen
Total fees 1)

Glen Ole Rødland (Chair)

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 1)

Year

2021

2020

Board fees

122

375

120

401

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

Auditors' fees
(USD 1 000)

Audit

Fees for non-audit services

Total auditors' fees

2021

22.7

38.4

4.5

65.6

2021

374

154

528

2020

10.1

18.9

6.4

35.4

2020

377

390

1) Auditors' fees are included in general and administrative expenses. Fees for non-audit services of USD
154,000 were mainly related to other assurance and audit-related services provided in relation to the
financial restructuring (2020: USD 13,000 related to compliance and pre-liquidation stage services)
offered to the group companies by the statutory auditor.

NOTE 8: TANGIBLE ASSETS

New

Equip-

Vessels

builds

ment Buildings

Right-

of-use

assets

Cost as at 31 December 2019

3,142.8

60.7

Additions

Disposals

Cost as at 31 December 2020
Additions 1)

Disposals

Cost as at 31 December 2021

Accumulated depreciation and
impairment 31 December 2019

Depreciation for the year

Disposals

Impairment for the year

Accumulated depreciation and
impairment 31 December 2020

Depreciation for the year

Disposals

Impairment for the year

Accumulated depreciation and
impairment 31 December 2021

Net carrying amount
31 December 2021

Net carrying amount
31 December 2020

4.0

0.0

(0.2)

3.8

0.2

(0.3)

3.7

2.5

0.2

(0.1)

0.0

2.6

0.5

(0.2)

0.0

7.3

0.1

(0.3)

7.1

0.0

(7.1)

0.0

6.9

0.3

(0.4)

(0.2)

6.6

0.0

(6.6)

0.0

0.4

0.0

0.4

1.4

0.0

1.8

0.0

0.4

0.0

Total

3,214.8

3.2

(232.8)

2,985.2

59.0

(375.2)

2,669.0

1,947.6

44.5

(232.7)

810.3

2,569.7

33.0

(374.6)

41.7

2.7

(232.3)

2,913.2

57.4

(367.8)

2,602.8

1,938.2

44.0

(232.2)

750.9

0.0

60.7

0.0

60.7

0.0

59.6

2,500.9

59.6

32.1

(367.8)

40.6

0.0

1.1

2,205.8

60.7

2.9

0.0

0.4

2,269.8

397.0

0.0

0.8

0.0

1.4

399.2

412.3

1.1

1.2

0.5

0.4

415.5

Depreciation rate (%)

Economically useful life (years)

3-20

5-35

20-33

3-5

20-33

3-5

20-30

3-5

1) Additions during the year include non-cash transactions of USD 40.6 million relating to the Westcon

judgement (see below under Vessels for further information) and USD 1.1 million of right-of-use assets
addition.

New builds
New builds include prepayment to the yard, owner-furnished equipment and other project costs
incurred. As at 31 December 2021, the Group had two (2020: two) undelivered completed new builds
residing at COSCO's Qidong shipyard in China; Safe Nova and Safe Vega. See note 22 for details on
capital commitments relating to new builds.

The Group has the option right to exercise whether to take delivery of the undelivered completed
vessels till August 2022 for one vessel and the other till August 2023. The recoverable amount of each
vessel is determined based on the option value and is calculated using the Black Scholes model. The
main inputs used in the computations were the current expected recoverable value of a similar vessel,
strike price of the option (expected costs to be incurred to delivery of the vessel), time to maturity of
the option, volatility based on implied oil price volatility and risk-free interest rate. As the time value of
the options has decreased compared to prior year, the value of the contracts are considered to be close
to zero and as such written off.

Buildings
In 2020, a reversal of impairment of USD 0.2 million was charged to a property held in Aberdeen
based on the latest market valuation. In 2021, the building was disposed of.

Vessels
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
assessed the Group's vessels residual value to remain the same as prior year at USD 4.2 million based
on the latest assumptions and factors from past recycling transactions. This estimate is primarily
based on steel prices and costs associated with scrapping and is reviewed on an annual basis.

The management has performed an impairment assessment of its vessels in accordance with IAS 36.
Each individual vessel is considered to be a cash generating unit. In 2020, total impairment charges
of USD 810.5 million were made relating to the vessels and new builds based on the valuation-in-use
calculation used in 2020 as below. As of 31 December 2021, the Group expects energy consumption
to continue to increase in the longer term, with oil and gas remaining an important part of the
energy mix. In addition, the oil price has recovered from the low levels triggered by the pandemic.
The Group expects that in the short term, there will be increased capital investment focusing on
existing fields and the activity level will be relatively high. However, the energy transition may take
longer time and be more complicated than most observers believe. Beyond 2024, visibility remains
low, which is in line with a historic trend in the offshore accommodation industry. The industry needs
further consolidation and vessel recycling and management anticipates this to occur in the years
ahead. Management has not identified any impairment indicators, nor any indicators for reversal of
impairment as at 31 December 2021 and hence no value-in-use calculation was performed.

In April 2021, the Gulating Court of Appeal decided that Prosafe shall pay full payment to Westcon
of the amount claimed. As a result, the Group has recognised USD 40.6 million as a fixed asset
acquisition cost and consequently recognised an impairment loss of USD 40.6 million based on the
valuation-in-use calculation as below.

Valuation-in-use (applied in 2020)
The recoverable amounts were identified by calculating the valuation-in-use (“VIU”). Impairments
were 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.

In 2020, the VIU calculations below were 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 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 were as follows:

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

cash flows reflecting sustainable earnings / mid-point of the cycle. The growth rate was 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 was 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 was 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 was also applied to the sensitivities shown.

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

Utilisation
- Average utilisation was 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%.

Revenues
- From 2020-2024, the assumption was 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 were 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
included 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 was 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 was generally reduced to a minimum although sustainable level sufficient to upkeep the

vessels.

Discount rate of 9%
- Discount rate was derived from weighted average cost of capital after tax of the Group.

Long-term growth rate
- There was 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% was applied to arrive at cash flows reflecting sustainable earnings / mid-point of the
cycle. The growth rate was 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 was the long-term average growth rate
appropriate to the assets of 2 %.

Sensitivity (2020)
- 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

Currency gain
Gain from extinguishment of debt 1)

Other financial income

Total other financial income

Fair value adjustment interest rate swaps

Currency loss
Other financial expenses 2)

Total other financial expenses

2021

2020

1.8

1,048.0

2.0

1,051.8

(0.2)

0.0

(33.9)

(34.1)

0.0

(12.9)

(0.1)

(9.1)

(22.1)

1) In 2021, there was a gain from extinguishment of debt as a result of the completion of the financial

restructuring process. See further details in note 14.

2) As a result of the financial restructuring process, USD 17.5 million (2020: USD 6.8 million) of

refinancing costs were incurred and included in other financial expenses. See further details in
note 14 relating to financial restructuring.

NOTE 10: FINANCIAL ITEMS

Year ended 31 December 2021

Interest income (a)

Currency gain 1)

Gain from extinguishment of debt
Other financial income 1)
Total other financial income (b)

Amortisation of borrowing costs

Amortisation of amortised costs

Debts interest expenses
Total interest expenses (c)

Fair value adjustment interest rate swaps
Other financial expenses 2),3)
Total other financial expenses (d)

Financial
assets
measured at
amortised
cost

Fair value
through
profit and
loss

Financial
liabilities
measured at
amortised
cost

1.0

0.0

(0.2)

0.0

(0.2)

Total

1.0

1.8

0.0

1,048.0

0.0

2.0

1,048.0

1,051.8

(5.4)

(0.9)

(31.6)

(37.9)

0.0

(16.4)

(5.4)

(0.9)

(31.6)

(37.9)

(0.2)

(33.9)

(34.1)

Net financial items (a)+(b)+(c)+(d)

1.0

(0.2)

993.7

980.8

1) Excluded from the category breakdown but added to the total for net effect.
2) In April 2021, the Gulating Court of Appeal decided that Prosafe shall pay full payment to Westcon of
the amount claimed. As a result, the Group recognised USD 13.8 million as other financial expenses.
3) USD 17.5 million of refinancing costs were excluded from the category breakdown but added to the

total for net effect.

Year ended 31 December 2020

Financial
assets
measured at
amortised
cost

Fair value
through
profit and
loss

Financial
liabilities
measured at
amortised
cost

Total

Interest income (a)

0.5

Amortisation of borrowing costs

Amortisation of amortised costs

Debts interest expenses
Total interest expenses (b)

Fair value adjustment interest rate swaps

Other financial expenses
Total other financial expenses (c)

0.0

(12.9)

0.0

(12.9)

0.0

0.5

(5.9)

(0.6)

(55.3)

(61.8)

0.0

(9.2)

(5.9)

(0.6)

(55.3)

(61.8)

(12.9)

(9.2)

(22.1)

Net financial items (a)+(b)+(c)

0.5

(12.9)

(71.0)

(83.4)

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)

Profit/(Loss) before taxes

Tax based on applicable tax rate

Tax on income not taxable in determining taxable profit

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

2021

2020

3.1

2.4

22.0%

931.0

204.8

(226.7)

1.3

20.6

3.1

22.0%

(947.7)

(208.5)

(1.5)

210.0

2.4

Deferred tax - Specification and movements

2021

2020

Temporary differences:

Exit from Norwegian tonnage tax system

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 2021 is 22% (2020: 22%).

8.9

(725.3)

(949.7)

(259.2)

11.1

(893.4)

(828.2)

(122.9)

(1,925.3)

(1,833.4)

0.0

10.7

0.0

9.0

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. Due to the reverse share split (note 23) after the reporting
period but before the financial statements are authorised for issue, the calculation of the basic and
diluted earnings per share for current and prior year presented/restated shall be based on the new
number of shares.

Net profit/(loss)
Weighted average number of outstanding shares 1)

Basic earnings per share
Weighted average number of outstanding shares 1)

Diluted earnings per share

2021

927.9

3,524,542

2020

(Restated)

(950.1)

87,987

263.27

(10,798.19)

3,524,542

87,987

263.27

(10,798.19)

1) In 2021, the weighted average number of outstanding shares includes the average share capital
of 3,524,542 (2020: average share capital of 82,164 and mandatory convertible bonds of 5,823).

NOTE 13: SHARE CAPITAL, SHAREHOLDER INFORMATION, CONVERTIBLE BONDS AND WARRANTS

2021

2020

Issued and paid up number of ordinary shares at 31 December 1)

8,798,699,789

82,464,212

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 2)

Number of shareholders at 31 December

5,522,790

3,435,982

8,798,699,789

91,422,984

EUR 0.05

EUR 0.10

4,850

3,663

1) In 2021, the financial restructuring process was fully implemented and completed. As a result of

conversion of convertible bonds during the year and equitisation of debts, the outstanding number of
shares increased by 5,522,786 and 8,710,712,791 respectively. See note 14 for details on the financial
restructuring.

2) In 2021, the Company reduced the nominal value of its shares from EUR 0.10 to EUR 0.05 per share.
As a result, there was a reduction in share capital by USD 4.8 million and a corresponding increase in
other equity.

Subsequent to year end, there was a reverse share split. See note 23 for further information.

Largest shareholders as at 31 December 2021

No of shares

Percentage

DNB Bank ASA

North Sea Strategic Investments AS

Nordea Bank ABP, FIL

Skandinaviska Enskilda Banken AB

HV VI Invest Sierra Malta Ltd

Swedbank Norge

Sparebank 1 SR-Bank ASA

Clearstream Banking S.A.

The Bank Of New York Mellon

Citibank, N.A.

Westcon Yards AS

Citibank Europe PLC

Citigroup Global Markets Inc.

Prosafe SE (shares owned by Cosco held in temporary escrow)

Citibank Europe PLC

Deutsche Bank Aktiengesellschaft

Citibank, N.A.

The Export-Import Bank Of China

Nordnet Bank AB

1,258,729,149

1,233,540,580

1,072,474,347

851,254,616

788,168,009

626,548,040

481,078,313

430,789,171

306,246,086

280,386,239

263,499,162

228,050,177

225,002,106

195,972,167

141,075,461

95,963,706

75,517,414

48,447,846

20,293,123

9,644,793

14.3 %

14.0 %

12.2 %

9.7 %

9.0 %

7.1 %

5.5 %

4.9 %

3.5 %

3.2 %

3.0 %

2.6 %

2.2 %

1.6 %

1.1 %

0.9 %

0.6 %

0.2 %

0.1 %

Total 20 largest shareholders/groups of shareholders

8,632,680,505

98.1 %

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

Convertible bonds

2021

2020

No. of shares
convertible

Value

Opening balance as at 31 December

Conversion of convertible bonds

Closing balance as at 31 December

5,522,790

(5,522,790)

18.8

(18.8)

0.0

6,122,790

(600,000)

5,522,790

Value

20.6

(1.8)

18.8

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. All outstanding convertible bonds were
converted during the year as part of the financial restructuring process and there is no convertible
bond as at year end.

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.

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

In 2021, these warrants were cancelled as part of the financial restructuring and there are no
warrants outstanding as of 31 December 2021. See further details in note 14 relating to financial
restructuring.

NOTE 14: INTEREST-BEARING DEBT

Credit facilities - face value

Sellers' credits - face value

Difference between face value and fair value at initial
recognition - 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

2021

2020

343.4

94.4

(15.9)

0.0

1.4

1,378.8

115.7

(16.2)

(6.8)

36.7

0.8

0.4

423.3

1,509.4

422.4

0.9

423.3

78.7

1,430.7

1,509.4

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

2021

2020

Interest-bearing debt at 1 January

1,509.4

1,397.9

Changes from financing cash flows

- Repayments of interest-bearing debt

- Refinancing costs paid

Total changes from financing cash flows

Other liability-changes

- Non-cash movement in interest bearing debt

- Extinguishment of debt

- Westcon claim

- Debt equitized for shares

- Interests unpaid

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

- New finance leases

Total liability-related changes

(77.6)

(17.5)

(95.1)

0.1

(1,030.5)

55.0

(59.3)

37.9

0.0

4.7

1.1

(2.0)

0.0

(2.0)

6.5

0.0

69.3

0.8

36.7

0.2

(991.0)

113.5

Interest-bearing debt at 31 December

423.3

1,509.4

1) One (2020: three) interest rate swaps which were terminated by the swap banks were included as

part of interest-bearing debt.

Modification of debt
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 extinguishment of the existing liabilities and recognition of
the modified liabilities (IFRS 9).

2021
On 20 December 2021, the financial restructuring process was fully implemented and completed.
Management has assessed that the financial restructuring resulted in a substantial modification
of debt due to substantially different terms. The terms are substantially different if the discounted
present value of the cash flows under the new terms, including any fees paid net of any fees
received and discounted using the original effective interest rate, is at least 10% different from the
discounted present value of the remaining cash flows of the original financial liability. In addition,
other qualitative factors such as changes in the type of interest rate and change in covenants are also
considered.

The fair value of long-term debt is calculated by determining the net present value of estimated cash
flows applying an estimated market rate for the Group at initial recognition. The market rate estimate
was determined by observing publicly available terms and conditions of relevant peers for similar
loans and adjusted for known differences from the Group’s agreed credit facility terms, as well as the
Group’s new capitalization and value of the vessels. The basis for this estimated market rate, to which
the fair value is sensitive, is not based on observable input and therefore the fair value of the debts
are level 3 estimates. Upon derecognition of debt, any difference is recognised as a gain or loss within
profit or loss. Costs or fees incurred are also recognised within profit or loss as part of the gain or loss
on extinguishment. A financial net gain of USD 1,030.5 million has been reflected in the Consolidated
Income Statement as shown below.

Balance before
financial
restructuring

Cash
payments

Equitized to
shares 1)

Balance after
financial
restructuring

USD 1,300 million credit facility

USD 144 million credit facility

Westcon claim

Interest rate swap claim

Safe Notos Cosco sellers credit

1,269.6

139.6

55.0

42.0

19.6

(38.0)

(9.0)

(28.5)

0.0

(981.6)

(37.6)

(26.5)

(42.0)

(19.6)

250.0

93.0

0.0

1,525.8

(75.5)

(1,107.3)

343.0

1) The Company has issued 8,710,712,791 shares (representing 99% of equity) as part of the financial

restructuring. Based on valuation done by an independent financial advisor, management has
assessed that the fair value of the equity instrument issued on 20 December 2021 is USD 59.3
million. The outstanding number of shares after the financial restructuring is 8,798,699,789.

The net gain arising from the substantial modification of debt is as follows:

Equitization of shares

Fair value of shares

Gain from extinguishment of debt (Note 9)

Refinancing costs (Note 9)

Net gain from extinguishment of debt

(1,107.3)

59.3

(1,048.0)

17.5

(1,030.5)

2020
No debt instrument has been restructured nor any terms have been modified. The financial
restructuring process, which was initiated in December 2019, was still ongoing in 2020 and only
completed in December 2021. The incurred costs related to the debt restructuring were expensed in
2020 as other financial expenses.

USD 250 million credit facility
The credit facility of USD 1,300 million was restructured in December 2021. USD 250 million was
reinstated and an amount of USD 38 million was paid to lenders and the remaining outstanding amount
was converted to equity in December 2021. The USD 250 million facility matures in 2025.

USD 93 million credit facility
This credit facility, which previously consisted of one tranche of USD 144 million (Safe Notos) was
restructured in December 2021. The facility has USD 93 million outstanding. USD 9 million was paid to
lenders in December 2021 and the remaining outstanding amount was converted to equity. The USD 93
million facility matures in 2025.

Financial covenants as per amendment in December 2021:

Minimum liquidity
The Borrower shall procure that the Minimum Liquidity of the Group (for the avoidance of doubt,
excluding the New Group (Safe Eurus Singapore Pte. Ltd., Axis Nova Singapore Pte. Ltd. and Axis Vega
Singapore Pte. Ltd.) calculated on each quarter date does not fall below (i) USD 18 million to and
including 31 December 2022; (ii) USD 23 million from and including 1 January 2023 to and including
31 December 2023 and (iii) USD 28 million from and including 1 January 2024 and thereafter.

Interest on credit facilities
Interest is USD 3-month LIBOR plus margin of 2.50% on both credit facilities, the USD 250 million and
the USD 93 million facilities.

Excess cash sweep
There is an excess cash sweep with testing on 31 December each year. The cash sweep was tested
on 31 December 2021 and there was no excess cash sweep at that testing date. The excess cash
sweep amount means the amount that is equal to the lowest of the excess cash amount on the
relevant testing date and any of the coming four quarter dates (based on the Group’s firm liquidity
forecast), subject always to a minimum of zero on each of those dates. Excess cash means, the sum
of: unrestricted cash less the cash sweep threshold (USD 66 million) less cash interest payable on the
next interest payment date less any new shareholder contributions.

Sellers' credits
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. As at 31 December 2021, USD 94.4 million (2020: USD 96.4 million) gross
was outstanding.

The Safe Notos seller credit (2nd priority) granted from Cosco was part of the restructuring that was
completed in December 2021. There is nothing outstanding on the Safe Notos seller credit as of
31 December 2021, as Cosco has been granted shares as part of the equitisation of debt in December
2021.

Difference between face value and fair value at initial recognition - 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 was deferred beyond normal credit terms, the cost of the vessel was the cash price equivalent
at the recognition date. The Safe Eurus promissory note was initially recognised at fair value and
subsequently measured at amortised cost. The fair value of the below-market loan was measured as
the present value of the expected future cash flows, discounted using an appropriate market related
rate. The initial applicable discounting rate was similar to the rate charged by the credit facilities
lenders of 3-months USD Libor plus 3.35% per annum in 2019. The difference between the cash price
equivalent and the principal amount of the promissory note was 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 2020, the loan was classified as current as the Group was in default both due to non-payment of
interest and instalments. Furthermore, the Group was not in compliance with financial covenants
under the loan facilities. In 2021, the financial restructuring was completed. The new refinanced loan
was not in default and matures in 2025 and was therefore classified as non-current.

NOTE 15: OTHER CURRENT LIABILITIES

Various accrued costs

Accrued interest costs
Contract liabilities 1)

Total interest-free current liabilities

1) In 2020, the USD 0.6 million was shown as net contract assets.

2021

2020

17.4

0.0

1.1

18.5

10.6

0.4

(0.6)

10.4

NOTE 16: MORTGAGES AND GUARANTEES

2021
As at 31 December 2021, the Group’s interest-bearing debt secured by mortgages totalled USD 343.4
million. The debt was secured by mortgages on the accommodation/service vessels Safe Caledonia,
Safe Concordia, Safe Scandinavia, Safe Boreas, Safe Zephyrus and Safe Notos (net carrying value USD
298.2 million). 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 2021, the Group had issued parent company guarantees to clients on behalf of
its subsidiaries in connection with the award and performance of contracts and vendors totalling
approximately USD 174 million. The amounts specified with regard to parent company guarantees
reflect the sum of the estimated capped liability under the relevant agreements.

2020
As at 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 was 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.

NOTE 17: FINANCIAL ASSETS AND LIABILITIES

As at 31 December 2021, the Group had financial assets and liabilities in the following categories:

Year ended 31 Dec 2021

Cash and deposits

Accounts receivable

Other current assets

Total financial assets

Interest-bearing debt 1)

Accounts payable

Other current liabilities

Other non-current liabilities

Total financial liabilities

Financial
assets
measured at
amortised
cost

73.9

14.1

5.6

93.6

Financial
liabilities
measured at
amortised

cost Carrying value

Fair value

0.0

423.3

1.8

18.5

2.2

445.8

73.9

14.1

5.6

93.6

423.3

1.8

18.5

2.2

445.8

73.9

14.1

5.6

93.6

423.3

1.8

18.5

2.2

445.8

1) Refer to note 14 for details on 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.

As at 31 December 2021, the fair value of the interest rate caps amounted to less than USD 0.1 million
of the financial assets and was not material for further disclosure.

As at 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 14 for detailed breakdown of interest-bearing debt.

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 were secured under the USD
1,300 million credit facilities.

Year ended 31 Dec 2020
Fair value interest rate swaps 1)

Total financial liabilities

Total

(3.7)

Level 1

Level 2

Level 3

0.0

(3.7)

0.0

1) Interest rate swaps were terminated in 2021, realizing a loss of USD 4.7 million.

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

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

NOTE 18: 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

USD -10%

Re-valuation cash and deposits

2021

(1.8)

2020

(0.9)

1.8

0.9

Interest rate risk
Interest on debt is in principle floating but had 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. Due to the current unfavourable pricing of the
interest rate swap and short maturity of the interest bearing debt, the Group has decided not to
hedge the floating interest rate.

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 was applied in the sensitivity analysis and there is
no material impact to the outstanding interest rate cap in 2021 and 2020.

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 2021, 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

31 December 2021

31 December 2020

Total

14.1

6.9

Not due

< 30 days

30-60 days

61-90 days

> 90 days

13.7

6.9

0.4

0.0

Liquidity risk
As at 31 December 2021, Prosafe had an unrestricted liquidity reserve of USD 71 million. Under the
existing credit facility agreements, the Group is required to maintain minimum liquidity of USD 18
million to and including 31 December 2022. 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.

As at 31 December 2021, the Group's main financial liabilities had the following remaining
contractual maturities:

Per year
Interest-bearing debt (repayments) 1)
Interests 2)

Taxes

Accounts payable and other current liabilities

Total

2022

4.0

10.0

10.7

20.3

45.0

2023

6.0

13.0

0.0

2024

6.0

15.8

0.0

2025

2026 →

349.5

17.5

0.0

71.9

4.0

0.0

19.0

21.8

367.0

75.9

1) Interest-bearing debt includes credit facilities and seller credit from Cosco. The credit facilities
mature in 2025. Assuming only the firm contracts, there will be no cash sweep under the credit
facilities prior to maturity. The Group is paying the minimum instalments agreed with Cosco under
the Safe Eurus seller credit which matures approximately in 2029.

2) Interest on credit facilities and seller credits. Based on current agreed credit margin plus USD 3M
LIBOR forward curve as at 31 December 2021 and the expected cash flows under the seller credit
terms.

As at 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) The Group was not paying scheduled instalments and interest under the bank facilities. Based on
current contractual maturities, it was 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 at 1 February

2021 and current agreed credit margin.

If the lenders were 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

1) It was assumed that 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.

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. As
a result of the completion of the financial restructuring process in 2021, the capital structure of the
Group has improved. There was a significant de-leveraging of the balance sheet with approximately
75 per cent of debt reduction, a corresponding reduction in annual debt service, and in sum a
significantly improved balance sheet and improved financial flexibility.

NOTE 19: CASH AND DEPOSITS

Restricted cash deposits

Free cash and short-term deposits

Total cash and deposits

2021

2.4

71.5

73.9

2020

9.8

150.5

160.3

Under the existing credit facility agreements, the Group is required to maintain a minimum liquidity
of USD 18 million to and including 31 December 2022. See note 14 for details on financial covenants.

NOTE 20: OTHER CURRENT ASSETS

Other receivables

Prepayments

Stock

Other current assets

Contract assets

Total other current assets

2021

2020

1.6

1.4

0.7

1.6

0.3

5.6

1.2

1.7

1.2

0.9

0.0

5.0

NOTE 21: RELATED PARTY DISCLOSURES

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

Company name

Prosafe Services Maritimos Ltda

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

Netherlands

Norway

Singapore

United Kingdom

100 %

Voting

100 %

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

Shares owned by senior officers and directors at 31 December 2021:
(includes shares owned by close family/relatives and wholly-owned companies)

Directors:

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

Birgit Aagaard-Svendsen - Director

Nina Udnes Tronstad - Director

3,000

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

North Sea Strategic Investments.

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

North Sea Strategic Investments and HitecVision VI Invest Sierra.

Related party transactions
In 2021, the Company has entered into an engagement letter with OMP Management AS for
the purpose of providing advice and support in regards to industry analysis and potential M&A
transactions. OMP Management AS is a Norwegian company that is controlled by HitecVision VI
Invest Sierra, which together with another HitecVision fund (North Sea Strategic Investments) are
major shareholders in the Company. The fee payable by the Company is USD 17,500 per month and a
success fee if a transaction, as defined in the engagement letter, should occur with the involvement
of OMP Management AS. The success fee shall be calculated on the basis of the enterprise value
of the company or asset(s) acquired and be between 0.75%-1.25% of the total enterprise value,
depending on the size of the transaction. The success fee shall furthermore in all circumstances be
capped at USD 3.5 million in any single transaction. In 2021, the transacted amount was USD 0.2
million.

In 2021, the Company also entered into a framework agreement with Global Maritime. Under the
framework agreement, the Company has engaged Global Maritime to undertake projects for the
Company's vessels. Global Maritime is majority-owned by HitecVision, which through one or more
entities is a major shareholder of the Company. The Global Maritime projects value is about USD 1.7
million, of which USD 0.7 million was transacted during the year and the outstanding balance of USD
0.4 million were due and payable under normal payment terms.

NOTE 22: CAPITAL COMMITMENTS

New builds
As at 31 December 2021, the Group had two (2020: 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 23: EVENTS AFTER THE REPORTING DATE

Reverse share split
On 27 January 2022, Prosafe completed a 1,000:1 reverse split of the Company's shares to satisfy the
minimum requirement to market value of the issuer’s shares for listed companies. After the reverse
share split, 1,000 shares with a nominal value of EUR 0.05 give 1 new share with a nominal value of
EUR 50.00.

The number of outstanding shares in the Company after the reverse split is 8,798,699.

Long-term incentive program for Executive Management team
On 11 February 2022, the Board of Directors initiated a long-term incentive program for the Executive
Management team in Prosafe SE, respectively Jesper Kragh Andresen, CEO, Stig Harry Christiansen,
DCEO/CFO and Ryan Duncan Stewart, COO.

The main terms of the program, which is subject to formal approval by the general meeting on
11 May 2022, are as follows: 150,000 options for CEO, 100,000 options for DCEO/CFO and 100,000
options for COO, with strike price being the closing price on 10 February 2022 of NOK 83. The options
will vest with 1/3 after 24 months, 1/3 after 36 months and 1/3 after 48 months. Any options not
exercised at the date 60 months after 10 February 2022 will be cancelled.

The situation in Ukraine
It is uncertain how the situation in Ukraine may affect Prosafe. There are no immediate effects,
but there may be ripple effects.

PARENT COMPANY ACCOUNTS

INCOME STATEMENT - PROSAFE SE

(USD 1 000)

Note

2021

2020

Income from investments in subsidiaries

Impairment of shares in subsidiaries

Results of investing activities

Operating expenses

Operating loss

Interest income

Interest expenses

Other financial income

Other financial expenses

Net financial items

Profit/(Loss) before taxes

Taxes

Net profit/(loss)

(135,888)

(4,210)

5,181

(713,300)

(708,119)

(3,962)

(140,098)

(712,081)

8,152

(34,134)

1,047,899

(77,899)

944,018

803,920

10,697

(58,803)

4,378

(188,163)

(231,891)

(943,972)

803,920

(943,972)

Attributable to equity holders of the company

803,920

(943,972)

STATEMENT OF COMPREHENSIVE INCOME - PROSAFE SE

(USD 1 000)

Net profit/(loss)

2021

2020

803,920

(943,972)

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

Pension remeasurement

(145)

(127)

Total comprehensive income/(loss) for the year, net of tax

803,775

(944,099)

Attributable to equity holders of the company

803,775

(944,099)

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

Total equity

Intra-group non-current liabilities

Interest-bearing long-term debt

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

6, 12

11, 13

7, 11,13

11, 13

9, 13,14

9,13,14

13,14

11,13,14

10, 13,14

2021

2020

276,348

21,646

297,994

19,382

42,485

61,867

359,861

412,236

131,786

544,022

73,696

516

74,212

618,234

497,505

624,154

71,846

9,097

1,039,317

71,846

1,193,505

1,120,260

(1,181,205)

(1,989,827)

18,769

12,300

(850,798)

33,057

343,000

2,182

345,182

438

637

1,237

2,379

3,715

2,297

39,069

1,413,130

263

14,954

1,616

1,429,963

359,861

618,234

On 30 March 2022, the Board of Directors of Prosafe SE approved and authorised these financial
statements for issue.

Glen Ole Rødland
Non-executive Chairman

Alf C. Thorkildsen
Non-executive Deputy Chairman

Birgit Aagaard-Svendsen
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

Profit/(Loss) before taxes

803,920

(943,972)

Gain from extinguishment of debt

(1,030,532)

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

Expected credit loss

Impairment shares in subsidiaries

Interest income

Interest expenses

Change in working capital

Other items from operating activities

Net cash flow used in operating activities

Cash flow from investing activities

Acquisition of shares in subsidiaries

Change in intra-group balances

Interest received

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

Cash flow from financing activities

Repayment of interest-bearing debt

Refinancing costs

Proceeds from interest-bearing debt

3,216

56,869

135,888

(8,152)

34,134

(8,864)

310

(13,211)

43,628

8,152

51,780

(75,517)

(17,367)

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

(92,884)

(4,521)

168,456

713,300

(10,697)

58,803

4,973

12,742

(916)

(3,500)

(13,306)

397

(16,409)

120

Net cash flow

Cash and deposits at 1 January

Cash and deposits at 31 December

(54,314)

73,696

19,382

(17,204)

90,900

73,696

STATEMENT OF CHANGES IN EQUITY - PROSAFE SE

(USD 1 000)

Share
capital

Share
premium

Note

Capital
reduction
reserve

Retained
earnings

Convertible
Bonds

Total
equity

Equity at 31 December
2019

Net loss

Other comprehensive
loss

Total
comprehensive loss 1)

Conversion of
convertible bonds

Equity at
31 December 2020

Net profit

Other comprehensive
loss

Total comprehensive
income 1)

Conversion of
convertible bonds

Share issuance through
debt conversion 2)

9,030

1,037,584

71,846

(1,045,728)

20,569

93,301

1,733

(943,972)

(127)

(944,099)

(943,972)

(127)

(944,099)

(1,800)

9,097

1,039,317

71,846

(1,989,827)

18,769

(850,798)

597

18,172

492,658

(433,335)

803,920

(145)

803,775

4,847

803,920

(145)

803,775

(18,769)

59,323

12,300

Share capital reduction 8

(4,847)

Equity at 31 December
2021

497,505

624,154

71,846

(1,181,205)

1) Total comprehensive loss/income is attributable to the owners of the company
2) See note 14 of the consolidated accounts for details.

Nature and purpose of reserves
Share premium: The difference between the issue price of the shares and their nominal value.

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. 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

2021

2020

871

375

1,451

192

(36)

212

999

4,210

1,307

401

1,148

197

(44)

161

690

3,962

Board of directors

Year

Board fees

Glen Ole Rødland (Chairman)

Birgit Aagaard-Svendsen

Nina Udnes Tronstad

Alf C. Thorkildsen
Total fees 1)

2021

122

375

Board of directors

Year

Board fees

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 1)

2020

120

401

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 2021 was 2 (2020: 2).

NOTE 3: OTHER FINANCIAL ITEMS

Currency gain
Gain from extinguishment of debt 1)

Total other financial income

Fair value adjustment interest rate swaps

Fair value adjustment interest rate caps

Currency loss
Expected credit loss 2)
Other financial expenses 3)

Total other financial expenses

2021

2020

1,047,899

(169)

(3,217)

(56,869)

(17,644)

(77,899)

4,378

(12,852)

(16)

(168,455)

(6,840)

(188,163)

1) In 2021, there was a gain from extinguishment of debt as a result of the completion of the financial

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

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

subsidiaries.

3) In 2021 and 2020, other financial expenses largely arose from costs relating to the financial
restructuring process. For further information, see note 14 of the consolidated accounts.

NOTE 4: FINANCIAL ITEMS

Year ended 31 December 2021

Financial
assets
measured at
amortised
cost

Fair value
through
profit and
loss

Financial
liabilities
measured at
amortised
cost

Total

Interest income (a)

8,152

Gain from extinguishment of debt
Total other financial income (b)

Interest expenses

Amortisation of borrowing costs

Amortisation of amortised cost
Total interest expenses (c)

Fair value adjustment interest rate swaps

Expected credit loss
Other financial expenses 1)
Currency loss 2)
Total other financial expenses (d)

(56,869)

8,152

1,047,899

(31,611)

(5,426)

2,903

(5,426)

2,903

(34,134)

(169)

(276)

(169)

(56,869)

(17,644)

(3,217)

(56,869)

(169)

(276)

(77,899)

Net financial items (a)+(b)+(c)+(d)

(48,717)

(169)

1,013,489

944,018

1) USD 17.4 million of refinancing costs were excluded from the category breakdown but added to the

total for net effect.

2) Excluded from the category breakdown but added to the total for net effect.

Year ended 31 December 2020

Financial
assets
measured at
amortised
cost

Fair value
through
profit and
loss

Financial
liabilities
measured at
amortised
cost

Interest income (a)

10,697

Currency gain 1)
Total other financial income (b)

Interest expenses

Amortisation of borrowing costs

Amortisation of amortised cost
Total interest expenses (c)

Fair value adjustment interest rate swaps

Fair value adjustment interest rate caps

Expected credit loss

Other financial expenses
Total other financial expenses (d)

(168,455)

Total

10,697

4,378

(56,056)

(5,928)

3,181

(5,928)

3,181

(58,803)

(12,852)

(16)

(12,852)

(16)

(168,455)

(6,840)

(168,455)

(12,868)

(6,840)

(188,163)

Net financial items (a)+(b)+(c)+(d)

(157,758)

(12,868)

(65,642)

(231,891)

1) Excluded from the category breakdown but added to the total for net effect.

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

2021

2020

(310,502)

(298,355)

The corporate tax rate in Norway for 2021 was 22% (2020: 22%).

Reconciliation of effective tax rate (IAS 12.81)

Tax rate

Profit/(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

NOTE 6: SHARES IN SUBSIDIARIES

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

2021

2020

22.0 %

803,920

176,862

43,670

(226,673)

6,141

22.0 %

(943,972)

(207,674)

193,661

(1,140)

15,153

2021

Ownership

Investment

carrying

Equity at

carrying

& Voting

No of

value at 31

31 Dec.

value at 31

Companies

Dec. 2021

2021

Dec. 2020

Prosafe AS1)
Prosafe (UK) Holdings Limited 2)
Prosafe Offshore Pte. Limited 3)
Prosafe Rigs Pte. Ltd. 3)
Prosafe Offshore Holdings Pte. Ltd. 3)

Total

100 %

1,100

2,000

646,050

2,781

21,700

(50,654)

59,188

9,826

1,400

2,045

11,859

9,826

1,400

265,122

258,230

341,822

(69,460)

276,348

412,236

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 6099177

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.

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:

Prosafe Rigs Pte. Ltd.

Prosafe Offshore Pte. Limited

Prosafe Offshore Holdings Pte. Ltd.

Prosafe AS

Total

2021

2020

76,700

59,188

135,888

616,700

71,400

25,200

713,300

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

2021

2020

41,352

1,133

42,485

516

2021

2020

Issued and paid up number of ordinary shares at 31 December 1)

8,798,699,789

82,464,212

Shares to be issued under convertible bond agreements

Shares to be potentially issued under warrants agreement with
lenders

5,522,790

3,435,982

Total authorised number of shares at 31 December
Nominal value at 31 December 2)

Number of shareholders at 31 December

8,798,699,789

91,422,984

EUR 0.05

EUR 0.10

4,850

3,663

1) In 2021, the financial restructuring process was fully implemented and completed. As a result of

conversion of convertible bonds during the year and equitisation of debts, the outstanding number
of shares increased. See note 14 of the consolidated accounts for details.

2) In 2021, the Company has reduced the nominal value of its shares from EUR 0.10 to EUR 0.05 per
share. As a result, there was a reduction in share capital by USD 4.8 million and a corresponding
increase in retained earnings.

Subsequent to year end, there was a reverse share split. See note 23 of the consolidated accounts for
further information.

Ordinary shares

In issue at 1 January

Issued in connection with conversion of convertible bonds

Issued in connection with the debt conversion

In issue at 31 December fully paid up

2021

2020

82,464,212

81,464,212

5,522,786

600,000

8,710,712,791

8,798,699,789

82,064,212

Convertible bonds

2021

2020

No. of shares
convertible

Value

Opening balance as at 31 December

5,522,790

18,769

6,122,790

Conversion of convertible bonds

(5,522,790)

(18,769)

(600,000)

Ending balance as at 31 December

5,522,790

For further information, see note 13 of the consolidated accounts.

Value

20,569

(1,800)

18,769

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. The
warrants give right to subscribe for one new share in the Group at a subscription price of NOK 21.37.

In 2020, there was no movement in the warrants and the fair value was not material as at 31
December 2020. In 2021, these warrants were cancelled as part of the financial restructuring and
there are no warrants outstanding as of 31 December 2021.

For further information, see note 14 of the consolidated accounts relating to financial restructuring.

NOTE 9: INTEREST-BEARING DEBT

Credit facilities - face value

343,438

1,378,787

2021

2020

Difference between face value and fair value at initial
recognition - credit facilities

Unamortised borrowing costs

Swaps termination

Unpaid interest on interest rate swap

Total interest-bearing debt

Current interest-bearing debt

Non current interest-bearing debt

Total interest-bearing debt

3,552

(6,779)

36,755

815

343,438

1,413,130

438

1,413,130

343,000

343,438

1,413,130

For further information, see note 14 of the consolidated accounts relating to financial restructuring.

Reconciliation of movements of interest-bearing debt

to cash flows arising from financing activities

2021

2020

At 1 January

1,413,130

1,308,127

Changes from financing cash flows

- Repayments of interest-bearing debt

- Refinancing Cost

Total changes from financing cash flows

Other liability-changes

- Non-cash movement in interest bearing debt

- Debts transferred from a subsidiary

- Extinguishment of debt

- Debts equitized for shares

- Interests unpaid

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

Total liability-related changes

(75,517)

(17,367)

(92,884)

286

75,206

(1,030,532)

(59,323)

32,855

4,700

(976,808)

2,749

64,684

815

36,755

105,003

At 31 December

343,438

1,413,130

1) Interest rate swaps which were terminated by the swap banks during 2021 and 2020 were included

as part of interest-bearing debt.

NOTE 10: OTHER INTEREST-FREE CURRENT LIABILITIES

Accrued interest costs

Current payables due to subsidiaries

Other current liabilities

Total other interest-free current liabilities

2021

2020

1,237

1,304

391

1,225

1,616

NOTE 11: INTRA-GROUP BALANCES

Year-end long-term balances

2021

2020

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

52,301

70,328

124,343

111,786

68,251

120,204

(225,325)

(168,455)

21,646

131,786

33,057

Loan agreements with subsidiaries are based on market prices using 3M NIBOR (NOK loan) and
3M LIBOR (USD loan) interest rates plus a margin of 2.15% (2020: 2.15%) and 2.43-3.70% (2020:
2.43-3.70%) per annum respectively. Outstanding balances at year-end are unsecured, and settlement
normally occurs in cash or via share capital injection. The Company has assessed the recoverability
of its receivables from subsidiaries and has provided allowance for credit loss of USD 225,325,000
(2020: 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. In 2021, the loan is offset against
Prosafe AS loan as part of the settlement of liquidation of Prosafe Holding Limited.

Year-end current balances

2021

2020

Current receivables due from Prosafe Rigs Pte Ltd

Current payables due to subsidiaries

41,352

(67)

(14,954)

In 2021, the current receivables and payables are not subject to any interest calculation. In 2020, the
short-term payables to subsidiaries were subject to interest rates from 3M LIBOR (USD loan) interest
rates plus a margin of 3.2% per annum. The 2020 short-term payables were settled in 2021 with the
same interest terms as in 2020.

Transactions with related parties

2021

2020

Transactions

Transfer of third party debts from Prosafe Rigs Pte Ltd as part of
debt conversion

Purchase of investment in subsidiary from Prosafe Holding Limited

Administrative expenses due to subsidiaries

Interest income

Interest expenses

Group contribution from subsidiaries

(75,206)

(871)

8,150

(464)

(33,000)

(1,307)

10,299

(644)

5,181

Prosafe 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 quarterly basis
and paid on market terms. Please refer to note 6 to the consolidated accounts for disclosure of
remuneration to directors.

In 2021, the Company has entered into an engagement letter with OMP Management AS for
the purpose of providing advice and support in regards to industry analysis and potential M&A
transactions. OMP Management AS is a Norwegian company that is controlled by HitecVision VI
Invest Sierra, which together with another HitecVision fund (North Sea Strategic Investments) are
major shareholders in the Company. The fee payable by the Company is USD 17,500 per month and a
success fee if a transaction, as defined in the engagement letter, should occur with the involvement of
OMP Management AS. The success fee shall be calculated on the basis of the enterprise value of the
company or asset(s) acquired and be between 0.75%-1.25% of the total enterprise value, depending
on the size of the transaction. The success fee shall furthermore in all circumstances be capped at
USD 3.5 million in any single transaction. In 2021, the transacted amount was USD 218,500 and the
outstanding balance of USD 21,875 were due and payable under normal payment terms.

NOTE 12: MORTGAGES AND GUARANTEES

2021
As at 31 December 2021, the Company’s interest-bearing debt secured by mortgages totalled USD
343.4 million. The debt was secured by mortgages on the accommodation/service vessels Safe
Caledonia, Safe Concordia, Safe Scandinavia, Safe Boreas, Safe Zephyrus and Safe Notos (net carrying
value USD 298.2 million). 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 2021, the Company had issued parent company guarantees to clients on behalf
of its subsidiaries in connection with the award and performance of contracts and vendors totalling
approximately USD 174 million. The amounts specified with regard to parent company guarantees
reflect the sum of the estimated capped liability under the relevant agreements.

2020
As at 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 was 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.

NOTE 13: FINANCIAL ASSETS AND LIABILITIES

Year ended 31 Dec 2021

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

21,646

19,382

42,485

83,513

Carrying
value

21,646

19,382

42,485

83,513

Interest-bearing debt 2)

Accounts payable

Interest-free long-term liabilities

Intra-group current liabilities

Other interest free current liabilities

Total financial liabilities

343,438

637

2,182

1,237

637

2,182

1,237

347,561

1) Included in cash and deposits were USD 2.1 million of restricted cash deposits.
2) Refer to note 14 of the consolidated accounts for details on fair value of the interest-bearing debt.

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.

100

NOTE 14: MATURITY PROFILE LIABILITIES

Year ended 31 December 2021

2022

2023-2024

2025
onwards

Interest-bearing debt (repayments) 1)

Interests on interest bearing debts

Intra-group current liabilities

Accounts payable

Other interest-free current liabilities

Total

1) The interest-bearing debt matures in 2025.

10,000

637

1,237

11,941

28,000

343,000

16,000

28,000

359,000

Year ended 31 December 2020

2021

2022

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

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 2021. As at 31 December 2020, the Company's main financial
liabilities had remaining contractual maturities as per the above table (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).

NOTE 15: FINANCIAL RISKS

Interest rate risk
Interest on debt is in principle floating but had 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. Due to current unfavourable pricing of the interest
rate swap and short maturity of the interest bearing debt, the Company has decided not to hedge the
floating interest rate.

As at 31 December 2021, the Company has interest rate caps with notional amount of USD 120 million,
capped rate of 3.0000% and mature in Feb 2022. (As at 31 December 2020, the Company had 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 in both years
amounted to less than USD 1,000 and is not material for further disclosure.

The interest rate caps with notional amount of USD 80 million matured in 2021 with zero value.

101

Fair value of 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.

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

Notional amount

2021

USD 120 million

2020

USD 225 million

USD 135 million

USD 120 million

Total

Fixed rate

Maturity

Swap type

Terminated
value
(USD 1 000)

1.5330 %

2022

Bullet

(4,700)

2.4440 %

2.3630 %

2.1280 %

2022

Bullet

(19,492)

(9,813)

(7,450)

(36,755)

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

Notional amount

USD 80 million

USD 120 million

Total

Capped rate

Maturity

3.0000 %

2021

2022

Terminated
value
(USD 1 000)

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. There is no material sensitive analysis impact to the outstanding interest cap in
2021 and 2020 with a forward curve shift +/- 50 bps applied.

Currency risk
The Company's operating expenses are primarily denominated in NOK and GBP, and the operating
result is therefore exposed to currency risk relating to fluctuations in the NOK and GBP 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 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.

102

Pre-tax effects on income statement

2021

2020

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

368

5,230

5,598

(368)

(5,230)

(5,598)

253

10,571

10,824

(253)

(10,571)

(10,824)

Credit risk
The Company is exposed to credit risk in relation to the inter-company loan to four subsidiaries,
Prosafe Rigs Pte Ltd, 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.

As at 31 December 2021, Prosafe had an unrestricted liquidity reserve of USD 71 million. Under the
existing credit facility agreements, the Group is required to maintain minimum liquidity of USD 18
million to and including 31 December 2022. 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.

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 18 of the consolidated accounts.

NOTE 16: EVENTS AFTER THE REPORTING PERIOD

On 27 January 2022, the Company completed a 1,000:1 reverse split of the Company's shares.

On 11 February 2022, the Board of Directors initiated a long-term incentive programme to the
Executive Management team in Prosafe SE. For further information, see note 23 of the consolidated
accounts.

103

INDEPENDENT
AUDITOR'S REPORT

104

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
balance sheet as at 31 December 2021, the income statement, statement of comprehensive
income, statement of changes in equity and statement of cash flows for the year then ended, and
notes to the financial statements, including a summary of significant accounting policies, and

• The consolidated financial statements of Prosafe SE and its subsidiaries (the Group), which
comprise the balance sheet as at 31 December 2021, the income statement, statement of
comprehensive income, statement of changes in equity and statement of cash flows for the year
then ended, and notes to the financial statements, including a summary of significant accounting
policies.

In our opinion:

• the financial statements comply with applicable statutory requirements,

• the financial statements give a true and fair view of the financial position of the Company as at
31 December 2021, and its financial performance and its cash flows for the year then ended in
accordance with International Financial Reporting Standards as adopted by the EU, and

• the financial statements give a true and fair view of the financial position of the Group as at

31 December 2021, and its financial performance and its cash flows for the year then ended in
accordance with International Financial Reporting Standards as adopted by the EU.

Our opinion is consistent with our additional report to the Audit Committee.

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

To the best of our knowledge and belief, no prohibited non-audit services referred to in the Audit
Regulation (537/2014) Article 5.1 have been provided.

We have been the auditor of the Company for 3 years from the election by the general meeting of the
shareholders on 8 May 2019 for the accounting year 2019.

105

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.

1. Fair value at initial recognition of reinstated debt

Reference is made to Note 2 Statement of Compliance and basis of preparation paragraph “Going
Concern” and Modification of Debt”, note 14 Interest-bearing debt and the Board of Directors report
paragraph “Financing” and “Highlights of the completed Financial Restructuring”.

The key audit matter

How the matter was addressed in our audit

The Prosafe Group completed a comprehensive
financial restructuring in December of 2021 that
included
• Substantial modification of the terms, leading
to an extinguishment of the existing debt
instruments

• Reinstated debt accounted for as a new debt
instrument measured at fair value on initial
recognition

On derecognition of the existing debt instruments,
the difference between the carrying amount
of the original liability and the consideration
paid were recognised in profit or loss as a net
financial income of $ 1 030,5 million. In addition
to cash payments the consideration paid included
equity instruments issued to creditors and the
assumption of new modified financial liabilities
referred to as the reinstated debt.

Management applied the guidance in IFRS 9 and
determined that the modification of terms met
the derecognition conditions set out therein.

Management involved an external expert to assist
in the fair value measurement of the reinstated
debt on the date of initial recognition. The key
assumption applied in determining the fair value
of reinstated debt were estimated market-based
interest rate margin for the debt instruments.
The estimate is largely based on publicly available
data for debt issued with similar characteristics
including time to maturity, debtor credit rating
and collateral value.

Our audit procedures in this area included:

Extinguishment of existing debt:
• Inspecting all relevant documents from
the financial restructuring process
including the revised loan agreements
with lenders

• Evaluating management’s accounting
assessment of the modification of
financial liabilities, including comparing
the terms, conditions and present
values of cash flows under the existing
terms and the terms set out in the new
loan agreements.

Fair value measurement of reinstated debt:
• Assessing, with support from our
internal valuation specialist, the
mathematical and methodological
integrity of management's fair value
calculation model and the discount rate
applied

• Evaluating the competence, objectivity
and independence of the specialist
engaged by management

• Assessing the methodologies applied in
determining the market rate estimate
with support from our internal
valuation specialist

• Assessing the debt spreads used by

obtaining observable spreads for peers
from publicly available sources such as
financial statements and implicit rates
for traded debt instruments

106

There is significant inherent estimation
uncertainty in the calculation of the fair value
of the reinstated debt. The recognised amount
of debt has a potentially material effect on both
the income statement and statement of financial
position for the Group. On this basis we have
determined that the fair value measurement of
reinstated debt on initial recognition is a key audit
matter.

Note disclosures:
• Evaluating the adequacy of the financial

statement disclosures, including
disclosures of key assumptions and
judgements.

Other information
The Board of Directors and the Managing Director (management) are responsible for the information
in the Board of Directors’ report and the other information accompanying the financial statements.
The other information comprises information in the annual report, but does not include the financial
statements and our auditor’s report thereon. Our opinion on the financial statements does not
cover the information in the Board of Directors’ report nor the other information accompanying the
financial statements.

In connection with our audit of the financial statements, our responsibility is to read the Board of
Directors’ report and the other information accompanying the financial statements. The purpose is
to consider if there is material inconsistency between the Board of Directors’ report and the other
information accompanying the financial statements and the financial statements or our knowledge
obtained in the audit, or whether the Board of Directors’ report and the other accompanying
information otherwise appears to be materially misstated. We are required to report if there is a
material misstatement in the Board of Directors’ report or the other information accompanying the
financial statements. We have nothing to report in this regard.

Based on our knowledge obtained in the audit, it is our opinion that the Board of Directors’ report

• is consistent with the financial statements and

• contains the information required by applicable legal requirements.

Our opinion on the Board of Director’s report applies correspondingly to the statements on Corporate
Governance and Corporate Social Responsibility.

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

In preparing the financial statements, management is responsible for assessing the Company’s 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 Group or to cease operations, or has no realistic alternative but to do so.

107

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

As part of an audit in accordance with ISAs, we exercise professional judgment and maintain
professional scepticism throughout the audit. We also:

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

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

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

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

estimates and related disclosures made by management.

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

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

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

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

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

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

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

108

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

REPORT ON OTHER LEGAL AND REGULATORY REQUIREMENTS

REPORT ON COMPLIANCE WITH REGULATION ON EUROPEAN SINGLE ELECTRONIC FORMAT (ESEF)

Opinion
We have performed an assurance engagement to obtain reasonable assurance that the financial
statements with file name “2138001LK2Z2HSER4U15-2021-12-31-en” have been prepared in
accordance with Section 5-5 of the Norwegian Securities Trading Act (Verdipapirhandelloven) and the
accompanying Regulation on European Single Electronic Format (ESEF).

In our opinion, the financial statements have been prepared, in all material respects, in accordance
with the requirements of ESEF.

Management’s Responsibilities
Management is responsible for preparing, tagging and publishing the financial statements in the
single electronic reporting format required in ESEF. This responsibility comprises an adequate process
and the internal control procedures which management determines is necessary for the preparation,
tagging and publication of the financial statements.

Auditor’s Responsibilities
Our responsibility is to express an opinion on whether the financial statements have been prepared
in accordance with ESEF. We conducted our work in accordance with the International Standard
for Assurance Engagements (ISAE) 3000 – “Assurance engagements other than audits or reviews of
historical financial information”. The standard requires us to plan and perform procedures to obtain
reasonable assurance that the financial statements have been prepared in accordance with the
European Single Electronic Format.

As part of our work, we performed procedures to obtain an understanding of the company’s processes
for preparing its financial statements in the European Single Electronic Format. We evaluated the
completeness and accuracy of the iXBRL tagging and assessed management’s use of judgement.
Our work comprised reconciliation of the financial statements tagged under the European Single
Electronic Format with the audited financial statements in human-readable format. We believe that
the evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

Bergen, 30 March 2022
KPMG AS

Anfinn Fardal

State Authorised Public Accountant

109

ENVIRONMENTAL,
SOCIAL AND
GOVERNANCE REPORT

110

CONTENTS

112

About this report

115

Governance

119

Social

128

Environment

135

List of abbreviations

111

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

We 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 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 Shipping and Offshore Industries published in November 2021 where relevant for the
company, UN Global Compact’s requirements for communication on progress, and the Norwegian
Code of Practice for Corporate Governance published in October 2021.

ESG GOVERNANCE
ESG is embedded in Prosafe’s Board approved Core Values, Code of Conduct, principles for Corporate
Governance and Corporate Social Responsibility Policy and is an integral part of the company’s
strategy.

The Board and executive management regularly discuss ESG opportunities, risks and goals to ensure
that they are integrated into the operations, culture, values, incentives and business practices of
Prosafe. Consequently, several quantitative environmental, social and governance KPI targets have
been set to drive development.

Prosafe’s Safety, Sustainability and Ethics Committee assists the Board 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.

112

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 Board and executive management have
been involved in the assessment of the company’s impact on ESG development 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.

In 2021, progress has especially been made on SDG 3 with a very low sickness absence and no lost
time injuries during the year, and on SDG 13 where a number of initiatives have been kicked off to
reduce GHG emissions.

Selected SDGs

2021 milestones

Potential impacts and risks (examples)

SDG 3:
Health and
wellbeing

Lost time incident frequency of
zero

+ Providing good workplaces, with
safety as our first priority

No fatalities

Low sickness absence (0.27%)

- Potential safety incidents
- High absence level

SDG 8:
Decent work and
economic growth

Continued focus on raising
human rights and anti-corruption
awareness

SDG 13:
Climate action

Ongoing “Emissions reduction
project”

“Strengthen ESG profile and
compliance” was included as one
of the Company’s key goals for
2021

+ Increased awareness

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

+ Exploring emissions reductions

- Emissions from operations and
supply chain

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 where the company still has need for improvement.

COMMITMENT TO STAKEHOLDERS
Prosafe’s ESG focus is based on transparency, stakeholder dialogue and integrity in the conduct of its
business. The company’s main stakeholders in this perspective are its employees, customers, suppliers,
investors and shareholders, lenders, and the local communities where we operate. Prosafe will ensure

113

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 investor presentations.

MATERIALITY ANALYSIS
To better understand stakeholders’ expectations and the risk factors and opportunities they perceive
as important to the company’s long-term value creation, Prosafe has prepared a materiality analysis
based on findings from stakeholder dialogue, internal fact-finding and research. We have sought to
identify the indicators of highest concern of interest to our stakeholders and those with the largest
impact on value creation for Prosafe over time. Our goal is to focus our efforts where we have the
highest impact and can make the most difference.

The Board and executive management have been actively involved in this process and the material
indicators on which this report is focused were discussed and selected during Board and management
meetings.

s
r
e
d
o
h
e
k
a
t
s
o
t
e
c
n
a
t
r
o
p
m

h
g
H

m
u
d
e
M

Social Aspects
Environmental Aspects
Governance Aspects

Emissions to sea

GHG emissions

Health
and
safety

Anti-corruption

Energy management
Business ethics

Human and labour rights

Corporate governance

Waste management & recycling

Cyber-security

Diversity

People development

Medium

High

Importance to Prosafe

The Environmental, Social and Governance sections of this report summarize Prosafe’s actions on
each of these material indicators.

The results of the materiality analysis are in accordance with material issues highlighted by the
Norwegian Shipowners Association’s guidelines for ESG reporting in the shipping and offshore
industries.

As “Governance” is the foundation for how Prosafe manages ESG, we have moved this section to the
start of the report.

114

GOVERNANCE

Prosafe is committed to complying with all applicable laws,
rules and regulations in every country in which it operates and
to conduct business in a fair, ethical and transparent manner.

Prosafe's Code of Conduct provides the framework for what Prosafe considers to be responsible
conduct. It addresses important principles and sets clear rules and expectations for behaviour and
ethical standards for all employees. If laws and regulations in a country are more stringent than
Prosafe's Code of Conduct, local rules shall apply.

PROMOTING INTEGRITY AND TRANSPARENCY
Prosafe encourages its employees to report any breaches or suspected breaches of its Code of
Conduct, governing policies or laws and regulations. through the established whistleblowing
channels. This will ensure that the company when necessary can rectify, learn and prevent
re-occurrence.

Prosafe’s Whistleblowing Policy describes the internal process for whistleblowing aiming at detecting,
preventing and combating corrupt and/or unethical behaviour in Prosafe and describes the relevant
guidelines as to how to report concerns and how such matters are handled.

The company has a number of whistleblowing channels in place. In 2021, an online reporting tool
that allows safe, anonymous reporting of business integrity concerns was implemented.

All reported concerns and whistleblower reports 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.

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.

Prosafe’s Code of Conduct explicitly prohibits all forms of corruption, including facilitation payments
and contributions to political parties or to individual politicians on behalf of the company. 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. Any breaches or suspicion of breaches of
business ethics must be flagged. If in doubt, employees must consult their manager or the Safety,
Sustainability and Ethics Committee.

Neither Prosafe nor any of its employees faced criminal action related to corruption in 2021. The
company is not aware of any ongoing investigation or any legal actions pending for anti-competitive,
anti-trust or monopoly violations where Prosafe is identified as a participant or suspect, nor were any
such legal actions completed during 2021.

115

In 2021, none of Prosafe’s revenues were derived from projects located in the 20 countries ranked
lowest by Transparency International in its Corruption Percentage Index.

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 reviews and verifies
that defined standards and requirements are met.

116

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’s supplier audits include focus on Environment, Social and Governance, including self-
assessment status, measures in place, objectives, ambitions and targets.

PERSONAL DATA (GDPR)
Prosafe 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.

CYBER-SECURITY
Prosafe has a number of procedural and organisational controls and protective measures in place
to ensure that its data and systems are safe. The company is continuously evaluating options to
improve cyber-security protective measures, to improve control of remote access to IT (Information
Technology) and OT (Operational Technology) systems and to improve mail security.

Through awareness campaigns employees are informed and educated about best practices
for working from home, including ensuring Prosafe’s information remained secure in
a remote environment.

In 2021, Prosafe did not experience any loss of data, loss of integrity or
other loss. Further, there were no incidents of downtime of critical
IT systems due to cyber-attacks or similar incidents.

PLANNED ACTIONS IN 2022
• Ensuring integrity is a continuous project. The company
will continue to increase employees’ knowledge and
raise awareness through e-learning programs,
regular intranet updates and town hall meetings
with Q&A sessions.

• Continue to give new employees a thorough
introduction of Prosafe’s history, operations,
vision, core values and Code of Conduct.
All employees shall obtain the necessary
training in the company’s policies and
procedures.

• Continue the mandatory e-learning program

for anti-corruption and anti-bribery.
• Continue the mandatory e-learning

program for Cyber-security awareness

GOVERNANCE RESULTS IN 2021

Topic

2021

2020

2019

2021
KPI target

Status

Comment

Corruption risk
(Net revenue from
operations located in
the 20 countries ranked
lowest by Transparency
International in its
Corruption Percentage
Index)

Cyber-attacks resulting
in loss of data, loss of
integrity or other loss

None of Prosafe’s revenues
derived from operations
located in the 20 countries
ranked lowest by
Transparency International
in its Corruption Percentage
Index.

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 resulting
in downtime of critical IT
systems

P As above

Number of
whistleblowing cases

A well-
functioning
whistle-
blowing
system

Prosafe has a whistle-
blowing policy and an
online whistleblowing
channel that allows
anonymous reporting
of concerns. Since there
traditionally are reported
few concerns, the available
systems for whistleblowing
are regularly highlighted in
town hall meetings, on the
intranet, etc.

Political contributions

Facilitation payments

Monetary fines and
number of non-monetary
sanctions for
non-compliance with
laws and/or regulations

Political involvement is
regulated by our Code of
Conduct. Prosafe does not
make political contributions

P As above

118

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 103 employees1) at the end of 2021 (average 97), compared with 99 in the previous year
(average 111). This reflects the adjustment of the organisation and its operating model whereby a
significant number of activities were outsourced to external providers. Prosafe operates on an activity
driven method, where headcount will increase and decrease as contracts dictate, and the majority
of these peaks and troughs are now managed via the external suppliers, most evidently the crewing
provider. The overall voluntary employee turnover in the group was 11.23 per cent in 2021, compared
with 8.06 per cent in 2020.

The company’s global presence was reflected in the
fact that its employees came from 25 countries
around the world. The average age of Prosafe
employees is 44.

Due to the nature of the company’s business,
characterized by a mix of long and 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.

2021

3,9%
36,9%
35,0%
23,3%
1,0%

20-29
30-39
40-49
50-59
60-69

AGE
DISTRIBUTION

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

Temporary employees are not included.

119

DIVERSITY AND EQUALITY
Prosafe 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 society 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 at
31 December 2021, women accounted for 26.2
per cent of all employees, compared with 27.3 per
cent in 2020. Onshore the proportion of women
was 40.3 per cent, as compared to 41.7 per cent
in 2020.

Women constituted 26.3 per cent of the
managers as at 31 December 2021, an increase
from 24.4 per cent at the end of 2020. Women
account for 50 per cent of Prosafe’s Board of
Directors.

As at 31 December 2021, the average hourly pay
for female employees in Prosafe was USD 34,
while it was USD 69 for male employees.

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.

2021

26.2%

73.8%

TOTAL
EMPLOYEES

2021

40.3%

59.7%

ONSHORE
EMPLOYEES

2021

26.3%

73.7%

MANAGEMENT

120

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.

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 and
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. In preparation for the Norwegian Transparency Act that will enter into force
on 1 July 2022, Prosafe will in the course of 2022 carry out due diligence assessments related to
fundamental human rights and decent working conditions, not limited to own operations, but also to
supply chains and business partners in line with the OECD Guidelines.

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, in addition to 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 in relation to human rights have been
observed in 2021.

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.

121

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 employee engagement surveys in 2021.The surveys consisted of
questions categorised into the following subject areas: Employee Engagement, Strategic Leadership,
People Leadership, Performance, Communication, Growth & Development, Reward & Recognition,
Improvement/Changes, Covid-19 and Remote Working Practices.

The average 2021 score for each subject area was compared against the average 2020 score to identify
if there had been a positive or negative change between the surveys. In general, across the majority
of survey subject areas there has been a positive change in what has been a challenging year for the
company. However, this change has been small and there is room for further improvement.

Based on the feedback received, management evaluates which improvement areas to focus on in the
following year.

122

Collective bargaining
The following Collective Bargaining Agreements were in force during 2021:
• Norwegian Maritime Unions
• Norwegian Ship Owners Association
• Industri Energi

These agreements have been renewed and will continue to operate during 2022.

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 2021.

PLANNED ACTIONS IN 2022
• Continue the mandatory e-learning program for human rights and labour rights
• Continue to conduct Employee Engagement Surveys in order to gain insight on what is
engaging (and disengaging) our employees and be able to initiate the required actions

• Finalize a Human Rights Policy
• Finalize a Diversity & Equality Policy

SOCIAL RESULTS IN 2021

Parameters

2021

2020

2019

2021
KPI target

Status

Comment

Number of employees at
year-end

103

150

Employee turnover ratio

11.2% 8.06% 19.2%

< 10%

Share of women in the
workforce – overall

26.2% 27.3% 26.8%

Share of women in the
workforce – onshore

Share of women in
management

40.3% 41.7% 36.6%

> 30%

26.3% 24.4% 26.8%

> 20%

Prosafe operates on an
activity driven method,
where headcount will
increase and decrease as
contracts dictate.

Higher than the KPI,
probably due to uncertainty
related to Covid-19
and a lengthy financial
restructuring process.

Male employees have
traditionally made up
a greater proportion of
the recruitment base for
offshore operations.

26.3% of management
positions are held by
women.

123

HEALTH AND SAFETY

Prosafe endeavours to offer its employees a safe and healthy
working environment in both 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.

Policies, procedural requirements and safe working practices are defined within the company’s
integrated management system. Our management system complies with ISO standards 9001; 14001;
45001 and 50001. Employee engagement and their valued contributions ensure our management
system remains effective, simple in its use, compliant and accessible for all.

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 0.27 per cent in 2021, a reduction from 0.46 per cent in 2020, partly due to Covid-19
precautions. 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.

Sick leave in %

2.5

2.0

1.5

1.0

0.5

2017

2018

2019

2020

2021

Sick leave in %

2.53%

2.07%

2.26%

0.46%

0.27%

2017

2018

2019

2020

2021

124

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.

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.

MANAGING COVID-19
Prosafe has monitored developments closely since the outbreak of the Covid-19 pandemic and has
taken prompt and proactive actions to manage the situation as it affects our business and employees.
We work closely with our industry network and clients to ensure we have the best situational
awareness and response.

Prosafe operates in compliance with national and international governmental requirements whilst
dovetailing these with supplementary requirements of the marine and oil and gas industry sectors.
Restrictions on travel, periods of quarantine and isolation impact on our ability to maintain traditional
labour standards, triggering the need for change. New ways of working, initiatives to attract and
retain personnel, introduction of remote work activities, flexible working hours and working from
home are some examples of such change. The physical and mental health of our workforce is integral
to our corporate culture to ensure a safe and healthy working environment at all times.

To ensure the safety of our employees and business continuity through the pandemic, we have
implemented strict protocols to prevent an outbreak of Covid-19 in our offices and in particular
on our vessels. All personnel travelling to a Prosafe vessel must comply and adhere to all necessary
quarantine and Covid-19 testing protocols before their arrival onboard.

Prosafe’s employees have proven their stamina and integrity and ensured safe and efficient operations
throughout the pandemic. Prosafe has experienced some isolated cases onboard our operational
vessels. In close coordination with our clients, these occurrences have been managed effectively.
Preventive measures incorporating robust and frequent Covid-19 testing regimes are integral to our
business operations allowing us to either mitigate or contain successfully any outbreaks within our
own operations.

SAFETY CULTURE – ZERO MINDSET 2)
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 focus on best practice, seek continual improvement, share experience and
actively learn from such occurrences. Our mindset reflects that we commit to work at the highest
quality possible at the time it is being done. It is our ambition that everyone working for Prosafe
understands their responsibilities and is empowered to act. Zero-mindset establishes perfection as a
consistent goal to strive for.

Systematic preventive health, safety and environment work is a line management responsibility
in Prosafe. Strong leadership, commitment and close cooperation with our employees, their
representatives and other stakeholders are key factors in achieving our goals.

2) Safety data are reported for our operated assets and include marine crew (both employees and temporary

agency personnel). Contractors (third party vendors) are not included.

125

In 2021, Prosafe recorded zero incidents classified as a Lost Time Injury (LTI) incidents, i.e. those
incidents where injuries are sustained resulting in an employee being absent from the next work shift
due to the injury. This equals our performance in 2020 when there were also no LTIs recorded. The LTI
frequency, which is calculated by multiplying the number of LTIs by 1 million and dividing this by the
total number of man-hours worked, was also zero.

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 by the total number of man-hours
worked. In 2021, the TRIFR was zero, an improvement from 1.81 in 2020.

HSE Comparison

LTI

LTIF

TRIFR

2017

2018

2019

2020

2021

Number of Lost Time Injuries (LTI)

Lost Time Injuries Frequency (LTIF)

Total Recordable Injury Frequency Rate (TRIFR)

2017

2018

2019

2020

2021

2.00

1.50

1.00

0.85

2.54

0.00

0.82

0.00

1.81

0.00

Where injuries of significant severity occur, we ensure that suitably resourced investigations are
undertaken to identify root causes and introduce risk-reducing measures aimed at preventing
recurrence. We share the learnings from such investigations within the fleet and understand their
contributory influence on our ability to achieve our injury free goals.

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 well prepared to deal with a potential crisis.

126

PLANNED ACTIONS IN 2022
• Promote safe, reliable and sustainable operations and offer our employees a safe and healthy

working environment

• Internal campaign to increase HSSE awareness and the non-compliance mindset

SAFETY RESULTS IN 2021

Parameters

2021

2020

2019

2021
KPI target

Status

Comment

Sick leave

0.27% 0.46% 2.26%

< 3%

Lost time injuries (LTI)

Fatalities

TRIF (Total Recordable
Injury Frequency)

1.81

0.82

1.53 –
1.87*

LTIF (Lost Time Injury
Frequency)

MTC (Number of
Medical Treatment
Case)

RWC (Number of
Restricted Work Case)

HOC (Number of
Hazard Observation
Card)

10,142 6,443 14,690

KPI: 6 per day per
vessel on contract
4 per day per
vessel in yard.
Actual:
5.8 per day

Our good safety per -
formance for the year
2021 resulted in zero
recordable injuries
to our marine crew
thus exceeding the
benchmark parameters
set.

Prosafe’s KPI for all
injuries is zero. The
industry benchmark
10% range for 2020 is
0.23 – 0.34.

Our operational
contract vessel
performance averaged
5.8. cards per day.

* Showing the 10% range +/- of the industry benchmark indicator (IMCA & RNNP)

127

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 actively pursues and commits to reducing direct emissions from its vessel operations in
collaboration with its clients and other stakeholders.

ENVIRONMENTAL MANAGEMENT
Prosafe’s integrated management system is accredited to ISO 14001 and the company has
implemented a systematic improvement process related to same.

Environmental Impact Assessments are maintained for each of the company’s operational vessels.
The assessments take into account the mode of operation of the vessel together with generic
geographical considerations and environmental requirements of the operator’s operating permit.

All accidental discharges and emissions are reported and followed up in the same way as injuries and
material damage. In 2021, there were no accidental discharges to the sea and no accidental emissions
to the air.

ENERGY MANAGEMENT
In 2021, Prosafe further increased its 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 secure ISO 50001 accreditation.

All formal audits were successfully concluded during 2021 and the company received formal
ISO 50001 certification in January 2022.

128

GREENHOUSE GAS (GHG) EMISSIONS
Prosafe calculates its Greenhouse Gas (GHG) emissions according to the GHG protocol. The
emissions of CO2, CO, NOx, SO2, CH4 and VOC for the fleet are calculated based on the fleet’s diesel
consumption. Prosafe’s fleet carries low sulphur marine diesel with a maximum sulphur content
of 0.1 per cent, which is better than the requirement within MARPOL Annex VI Regulation 14.1
prohibiting the carriage of fuel oil with sulphur content exceeding 0.5 per cent.

2019

40,858

2018

35,486

2017

33,250

130,746

113,555

106,400

522

1,975

133

641

2,427

163

557

2,108

142

2021
tonnes

Tonnes pr. year

Consumed diesel

CO2

NOx

SO2

CH4

VOC

2021

31,461

100,678

493

1,868

125

2020

17,836

57,075

280

1,059

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.

100,678

Prosafe’s offices saw a reduction in emissions in 2021, due in large part to the remote working
environment created by the Covid-19 pandemic, and partly due to the relocation of the Aberdeen
office from a large old building to newer and smaller premises.

The company actively monitors and manages staff business travel and encourages its employees to
limit travelling to the extent possible and use telephone or video conference when possible.

REDUCING OUR ECOLOGICAL FOOTPRINT
Prosafe is seeking solutions to reduce emissions in order to reduce its impact upon the environment.
The dominant part of the emissions is linked to fuel consumption. The company is targeting a 50
per cent lower fuel consumption by 2030 and believes that this is achievable without compromising
safety.

129

Several initiatives were started in 2021 with initial focus on two vessels, the Safe Zephyrus and Safe
Boreas:

• Implementation of a “2+1” split on the engines, meaning that the 3-split on the engines are

modified so that we can reduce the number of running engines from 3 to 2. This is expected to
reduce fuel consumption by 10 – 15 per cent by improving the efficiency of the engines.

• Finalized ISO 500001 certification, including mapping and monitoring of the energy consumption in

real-time.

• Implemented advisory software tools to help the crews to reduce energy consumption.
• Built a roadmap of additional measures that can be implemented over the coming years. Several
ideas are currently being evaluated and will be put forward for decision in the first half of 2022.

The initiatives will be rolled forward to other vessels over the next years.

Prosafe’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.

SPILLS
Prosafe had no reportable discharges to the natural environment in 2021. 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.

130

RESPONSIBLE RECYCLING
Prosafe continues to high-grade its fleet by selling the oldest and most inefficient vessels for recycling
at certified ship recycling yards. In 2021, the Regalia was sold for recycling. In total, eight vessels have
been sold for recycling since 2016.

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 Hazardous Substance list in operation. Where High Risk Hazardous
substances or chemicals are identified, the company will seek to substitute these chemicals with
lower Hazardous products.

WASTE MANAGEMENT
When a Prosafe vessel operates alongside an offshore installation, it co-operates with the waste
management requirements within the operator’s operational permits.

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.

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

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 in 2021.

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.

PLANNED ACTIONS IN 2022
• Continue to monitor and assess opportunities to improve on energy efficiencies thorough

Green Energy options for our onshore sites (low carbon products)

• Continue the implementation of a “2+1” split on the engines which is expected to reduce

fuel consumption by 10 – 15 per cent by improving the efficiency of the engines

• Liaise with office building owners to monitor and assess opportunities to improve on energy
efficiencies as a tenant of a multi-occupancy buildings at our onshore sites and to improve
the data base for calculating our GHG Scope 2 emissions

• Initiate collaboration with our supply chain to address our Scope 3 emissions resulting from

our operations

• Roadmap to GHG reduction

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ENVIRONMENTAL RESULTS IN 2021

Parameters

2021

2020

2019

2021
KPI target

Status Comment

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

47.4

71.43

73.92

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

0.6

145

156.5

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

1,965

1,785

3,193

Energy
consumption
(kWh) onshore

92,738 261,253 541,063

248,191

KPI : a 5% reduction from
the 2015-2019 average in
CO2 tonnes for the fleet per
contract day, based on fuel
consumption. In 2021, Prosafe
developed a long-term
ambition roadmap on how
to reduce emissions on our
vessels;
- Started the implementation

of a “2+1” split on the
engines which is expected
to reduce fuel consumption
by 10 – 15 % by improving
the efficiency of the engines

- Implemented advisory

software tools to help the
crews to reduce energy
consumption.

Data collated from total
energy consumption for
onshore site offices located
in UK, Norway Brazil and
Singapore. The office in
Norway uses 100% renewable
energy. The reduction in
emissions is largely due to the
remote working environment
created by the Covid-19
pandemic.

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

KPI: a 5% reduction from the
previous year.
Energy consumed by offices
in UK, Norway, Brazil and
Singapore. The number has
been substantially reduced
due to the relocation to newer
and smaller premises in the
UK and employees working
from home.

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Parameters

2021

2020

2019

2021
KPI target

Status Comment

Energy consump-
tion reduction
rate onshore
(percentage)

75.8

51.71

15.7

Fuel used (tonnes)

31,461

17,836

40,858

KPI: 23,1 tonnes/
contract day

Actual:
20,3 tonnes/
contract day

Fuel consumption
reduction rate
(percentage)

-87.3

58.9

-15.7

NOx (tonnes)

1,868

1,059

2,427

SO2 (tonnes)

125

CH4 (tonnes)

VOC (tonnes)

Unplanned spills
or emissions to
ground / sea / air

163

Total waste
(tonnes)

2,959

965.4

2,618.2

Hazardous waste

186

245

KPI: 1,37 tonnes/
contract day

Actual:
1,21 tonnes/
contract day

KPI: a 5% reduction from
2015-2019 average in tonnes
of fuel per vessel per contract
day.
Prosafe’s fleet carries low
sulphur marine diesel with a
maximum sulphur content
of 0.1 per cent, thereby
exceeding the requirement
within MARPOL Annex VI
Regulation 14.1 prohibiting
the carriage of fuel oil with
sulphur content exceeding 0.5
per cent.

NOXe for each vessel per
contract day (5% reduction
from 2015-2019 average)

In 2021, the level of activity
and generation of waste
on board the vessels have
increased due to the
pre paration of a number of
vessels for lay-up and the
Special Periodic Survey of
Safe Concordia.

133

Parameters

2021

2020

2019

2021
KPI target

Status Comment

Waste reduction
rate (percentage)

-208

-47

Total water use
offshore (1 000
litres)

94,236

44,289 108,798

Due to the preparation
of a number of vessels to
re-assume operations and a
higher number of vessels in
operations throughout the
year, there was an increase
in the amount of waste
compared to the previous
year.

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LIST OF ABBREVIATIONS

Abbreviation

Contractors

Definition

Third party vendors

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

Marine crew

MARPOL

SDG

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

Includes employees and temporary agency personnel. Contractors
(third party vendors) are not included

The International Convention for the Prevention of Pollution from
Ships

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

135

Accommodating
the Offshore
Industry

www.prosafe.com

136