Songa Offshore SE 2014 Standalone Financial Statements

Transcription

SONGA OFFSHORE SE
Annual report and financial statements
for the year ended 31 December 2014
CONTENTS
Board of Directors and other officers................................................................................................................................ 3
Report of the Board of Directors ...................................................................................................................................... 4
Statement of the members of the Board of Directors and other responsible persons of the Company for the financial
statements ....................................................................................................................................................................... 6
Independent Auditor's report ............................................................................................................................................ 7
Financial Statements ....................................................................................................................................................... 9
Statement of Income ................................................................................................................................................... 10
Statement of Comprehensive Income.......................................................................................................................... 11
Statement of Financial Position ................................................................................................................................... 12
Statement of Changes in Equity .................................................................................................................................. 13
Statement of Cash Flows ............................................................................................................................................ 14
Notes to the Financial Statements ............................................................................................................................... 15
Songa Offshore SE/ Financial Statements 2014
2
Board of Directors and other officers
Board of Directors:
Frederik W. Mohn - Chairman
Michael Mannering
Arnaud Bobillier
Christina Ioannidou (appointed 24 January 2014)
Johan Kr. Mikkelsen (appointed 18 February 2015)
Jon E. Bjorstad (appointed 24 January 2014, resigned 18 February 2015)
Steven James McTiernan (resigned 24 January 2014)
Nancy Erotocritou (Charalambous) (resigned 24 January 2014)
Company Secretary:
Orangefield Trust (Cyprus) Limited
Independent Auditors:
PricewaterhouseCoopers Limited.
Legal Advisers:
Harneys Aristodemou Loizides Yiolitis LLC
Registered Office:
Kanika International Business Center 6th Floor,
Profiti Ilia 4, Germasogeia
4046 Limassol, Cyprus
Bankers:
Nordea Bank (Norge ASA)
Nordea Bank (Finland Plc.)
Nordea Bank (Finland London)
Bank of Cyprus Public Company Ltd
Registration number:
SE 9
3
Report of the Board of Directors
The Board of Directors presents its report and audited financial statements of the Company for the year ended 31
December 2014.
Incorporation
Songa Offshore SE (‘Songa Offshore’ or the ‘Company) is a public limited liability company, subject to the Cyprus
Companies Law, Cap. 113. The Company, which was established in Norway in 2005, was converted into a European
Public Company Limited by shares (“Societas Europaea” or “SE”) on 12 December 2008.
With effect from 11 May 2009, the Company transferred its registered office to Cyprus. The Company’s shares have been
listed on the Oslo Stock Exchange since 26 January 2006 (Ticker: “SONG”).
Principal activities
The principal activities of the Company prior to its re-domiciliation (11 May 2009) to Cyprus comprised the provision of
offshore oil and gas drilling services as well as investment holding and financing. Subsequent to its re-domiciliation the
Company continues to be involved in investment holding, financing and also owns and rents to other members of the
Group a fleet of 2 semi-submersible rigs which all operate in the mid-water segment of the offshore oil and gas drilling
industry, in the Norwegian Continental Shelf.
Review of the development and current position of the Company and description of the major risks
and uncertainties.
The Company's development to date, financial results and position as presented in the financial statements are
considered satisfactory.
Songa Offshore is a group of companies, with Songa Offshore SE as the group parent company, whose principal
business is to construct, own and operate drilling rigs to be used in the exploration and development drilling. Songa
Offshore operates in the North Atlantic Basin oil service industry within offshore drilling, and owns a fleet of two semisubmersible rigs, all operating in the mid-water segment, in the Norwegian Continental Shelf. Drilling rigs, related
equipment and crews are generally contracted on a day rate basis to exploration and production companies.
All Songa Offshore’s drilling rigs are suitable for both exploration and development drilling and the Company normally
engages in both types of drilling activity. The drilling rigs are mobile and can be moved to new locations in response to
client’s demand. They are designed to operate away from port for extended periods and have living quarters for the crew
and helicopter landing facilities.
During 2014 the Company sold the Songa Mercur and Songa Venus rigs to Opus Offshore Group. The sale was
completed on 23 July 2014. The Songa Mercur and the Songa Venus, were from the same date operated through a 50%
owned Joint Venture established with Opus Offshore Group.
Songa Offshore enters 2015 with both rigs operational, a stronger sense of direction, a stronger commitment to
improvement, a humble and realistic view on future challenges – and, critically, with a team that is better fit for purpose.
The main risks and uncertainties faced by the Company and the steps taken to manage those risks are described in
Notes 3 to the financial statements.
Results
The Company's results for the year are set out on pages 10 and 11. The net loss for the year is carried forward.
Expected future developments of the Company
The Board of Directors does not expect major changes in the principal activities of the Company in the foreseeable future.
Existence of branches
To facilitate its operations the Company has established branches in Norway and Bermuda.
4
Dividends
The Board of Directors does not recommend the payment of a dividend.
Share capital
On 26 February 2014 the Company announced the completion of the subsequent share offering of 61 million shares at
NOK 2.50 per share, following the private placement in December 2013.
The total number of issued shares in the Company as at 31 December 2014 was 873,912,544.
Board of Directors
The members of the Company's Board of Directors at 31 December 2014 and at the date of this report are presented on
page 3.
There were no significant changes in the assignment of the responsibilities and remuneration of the Board of Directors.
In accordance with the Company's Articles of Association the Board Members are elected for one year at a time, by the
General Meeting.
Events after the balance sheet date
The material post balance sheet events, which have a bearing on the understanding of the financial statements, are
disclosed in Note 27.
Independent Auditors
The independent auditors, PricewaterhouseCoopers Limited, have expressed their willingness to continue in office and a
resolution authorising the Board of Directors to fix their remuneration will be submitted at the forthcoming Annual General
Meeting.
By order of the Board of Directors
.........................
Frederik W. Mohn
(Chairman)
Limassol, 29 April 2015
5
Statement of the members of the Board of
Directors and other responsible persons
of the Company for the financial
statements
In accordance with Article 9, sections (3) (c) and (7) of the Transparency Requirements (Securities for Trading on Regulated
Market) Law of 2007 (“Law”), we the members of the Board of Directors and the other responsible persons for the financial
statements of the Songa Offshore SE, and the businesses that are included in the standalone accounts as a total, for the year
ended 31 December 2014 confirm that, to the best of our knowledge:
(a) the annual financial statements that are presented in this report:
(i) were prepared in accordance with the International Financial Reporting Standards as adopted by the European Union, and in
accordance with the provisions of Article 9, section (4) of the Law, and
(ii) give a true and fair view of the assets and liabilities, the financial position and the profit or losses of Songa Offshore SE, and
the businesses that are included in the standalone accounts as a total, and
(b) the directors’ report gives a fair review of the developments and the performance of the business as well as the financial
position of Songa Offshore SE, and the businesses that are included in the standalone accounts as a total, together with a
description of the principal risks and uncertainties that they are facing.
Limassol, 29 April 2015
Frederik W. Mohn
(Chairman of the Board)
Michael Mannering
(Board Member)
Christina Ioannidou
(Board Member)
Arnaud Bobillier
(Board Member)
Johan Mikkelsen
(Board Member)
6
Independent Auditor's report
7
Independent Auditor's report
8
Financial Statements
9
Statement of Income
For the year ended 31 December
Amounts in USD ‘000
Note
2014
2013
Revenues
Dividend Income
5
21
111,485
39,814
159,168
88,983
Management fee
Operating expenses
General and administrative expenses
Other gain and loss
Depreciation and amortization
Impairment of rigs
Impairment of subsidiaries
Impairment losses on intercompany loans and receivables
Finance income
Finance cost
Other financial items
5
7
7
6
10
10
12
21
8
8
8
Loss before tax
Income tax expense
(7,183)
(7,660)
(6,037)
(66,651)
(64,699)
(1,288)
79,166
(96,783)
(11,453)
(31,290)
(3,264)
(8,051)
(7,490)
(444)
(91,095)
(92,261)
(17,752)
(7,784)
69,489
(133,365)
(751)
(44,617)
9
(12,700)
(17,011)
(43,990)
(61,627)
Loss for the year
The notes on pages 15 to 55 are an integral part of these financial statements.
10
Statement of Comprehensive Income
Note
Loss for the year
Other comprehensive income
Actuarial gain and losses
Tax effect
Items not potentially re-classifiable to profit and loss
23
Financial derivatives hedging effects - Bond Interest and Currency rate swap
FX forward discontinued hedge
Items potentially re-classifiable to profit and loss
Total other comprehensive income (net amount)
Total comprehensive loss for the year
2014
2013
(43,990)
(61,627)
(141)
38
(103)
(31)
(31)
1,764
(470)
1,294
1,191
26,557
570
27,127
27,097
(42,799)
(34,531)
11
Statement of Financial Position
ASSETS
Non-current assets
Rigs, machinery and equipment
Investment in subsidiaries
Loans to subsidiaries
Financial assets
Derivative financial instruments
Deferred tax assets
Total non-current assets
Current assets
Assets held for sale
Trade receivables
Tax refundable
Receivables from subsidiaries
Prepayments
Other assets
Cash and cash equivalents
Total current assets
Note
2014
2013
10
12
21
24
3
11
565,647
576,882
750,421
53,722
72,740
76,077
2,095,490
618,001
237,357
930,400
28,822
86,344
1,900,923
22
179
2,666
45,257
189
8,652
194,269
251,212
180,000
190
3,019
60,187
1,089
4,063
396,320
644,867
2,346,702
2,545,791
17
17
132,762
634,052
200,592
967,405
123,447
618,008
243,080
984,536
18
18
18
21
3
212,161
282,292
109,649
358,519
172,089
11,894
376
1,146,981
265,669
337,089
103,584
345,036
64,326
43,591
396
1,159,691
18
18
167,874
47
2,203
9,979
29,642
2,907
19,664
232,316
1,379,297
2,346,702
24,261
327,770
4,529
1,762
5,378
22,401
15,462
401,564
1,561,255
14
21
13
16
Total assets
EQUITY AND LIABILITIES
Capital and reserves
Issued capital
Share premium
Other equity
Total equity
Non-current liabilities
Bank loans and other facilities
Bond loans
Convertible bond
Loans from subsidiaries
Deferred revenue
Other long term liabilities
Total non-current liabilities
Current liabilities
Bank loan related to “assets held for sale”
Current portion of bank loans and other facilities
Trade payables
Tax payable
Payable to related parties
Deferred revenue
Other liabilities
Total current liabilities
Total liabilities
21
3
19
Total equity and liabilities
2,545,791
On 29 April 2015 the Board of Directors of Songa Offshore SE authorised these financial statements for issue.
...........................
Frederik W. Mohn
(Chairman)
...............................
Christina Ioannidou
(Board Member)
12
Statement of Changes in Equity
Share
Capital
Share
Premium
Other
reserves
(1)
Post
employment
benefit
reserve
Hedging
reserve
Retained
earnings
(2)
Total
equity
242,946
743,592
Balance as at 1 January 2013
31,191
474,301
15,585
(307)
Loss for the year
-
-
-
-
(20,124)
-
(61,627)
Total comprehensive loss for the
year
-
-
-
(31)
27,127
-
(61,627)
27,096
-
-
-
(31)
27,127
(61,627)
(34,531)
92,256
-
143,707
-
39,511
-
-
-
235,963
39,511
92,256
143,707
39,511
-
-
-
275,474
Balance as at 31 December 2013
123,448
618,008
55,096
(338)
7,003
181,319
984,535
Balance as at 1 January 2014
Loss for the year
Total comprehensive loss for the
year
123,448
-
618,008
-
55,096
-
(338)
(103)
7,003
1,294
181,319
(43,990)
-
984,535
(43,990)
1,191
-
-
-
(103)
1,294
(43,990)
(42,799)
9,314
16,043
(1)
-
-
-
25,356
-
-
312
-
-
-
312
9,314
16,043
311
-
-
-
25,668
132,762
634,052
55,407
(441)
8,297
137,328
967,405
Issue of share capital
Issue of convertible bond
Total transactions with owners,
recognised directly in equity
Employee long term incentive
program
Total transactions with owners,
recognised directly in equity
Balance as at 31 December 2014
(1)
(2)
Other reserves include USD 15,897 million (2013: USD 15,585 million) of equity settled share based payment
reserve and USD 39,511 million (2013: USD 39,511 million) of reserve that arose from the issuance of convertible
bond
This is the only distributable reserve
13
Statement of Cash Flows
Note
2014
2013
(31,290)
(44,617)
64,699
1,288
66,651
(79,166)
96,783
11,453
42
(39,814)
92,261
17,752
7,784
91,095
(69,489)
133,365
(44)
(88,983)
Movements in working capital:
Increase/ (decrease) in receivables
Increase in other liabilities
Decrease in other assets
Decrease in receivables from own subsidiaries
(Decrease)/ increase in payables
Increase/(Decrease) in payables to own subsidiaries
(Decrease) / Increase in deferred revenue
(Increase)/Decrease in restricted cash balances
Cash generated from operations
910
2,202
(2,589)
14,931
(4,483)
4,600
(24,636)
8,182
89,763
683
6,783
(3,204)
7,334
(2,930)
(11,087)
65,992
(8,530)
194,165
Taxes paid
Interest paid
Financing fees
Interest received
Net cash generated from operating activities
(1,602)
(50,509)
(671)
166
37,147
(276)
(60,154)
(21,370)
230
112,595
Cash flows from investing activities:
Purchase of property, plant and equipment
Loans repaid to subsidiaries
Advanced to subsidiaries
Proceeds from the sale of property, plant and equipment
Investment in subsidiaries
Investment in other companies, net of cash acquired
Net cash used in investing activities
(20,980)
(133,841)
112,500
(16)
(1,000)
(43,337)
(80,422)
469,247
388,825
Cash flows from financing activities:
Proceeds from issue of convertible bond
Convertible bond transaction costs
Proceeds from share issue
Share issuance transaction costs
Repayment of bonds and bank loans
Advancement of loans from subsidiary companies
Repayment of loans from subsidiary companies
Reduction in other long term liabilities
Net cash generated from financing activities
25,495
(126)
(235,662)
22,322
292
(187,679)
150,000
(6,847)
250,222
(14,575)
(369,162)
(127,261)
(275)
(117,898)
Net increase/(decrease) in cash and cash equivalents
Cash and cash equivalents at the beginning of the year
Unrestricted cash and cash equivalents at the end of the year
(193,869)
387,666
193,797
383,522
4,144
387,666
Cash flows from operating activities:
Profit (loss) before tax
Adjustment for:
Impairment in rig
Impairment in subsidiaries
Impairment on loan
Depreciation
Finance income
Finance costs
Share-based payment expense
Dividend income
10
12
21
10
8
8
8
21
16
14
Notes to the Financial Statements
Note 1: Incorporation and principal activities
Country of incorporation
Songa Offshore SE (‘Songa Offshore’ or the ‘Company’) is a public limited liability company, subject to the provisions of Cyprus
Companies Law Cap. 113. The Company which was established in Norway in 2005 was converted, following the merger of
Songa Offshore ASA and Songa Offshore Cyprus Plc., into a European Public Company Limited by shares ("Societas
Europaea" or "SE") on 12 September 2008. With effect from 11 May 2009, the Company transferred its registered office in
Cyprus. Its registered office is at Kanika International Business Center 6th Floor, Profiti Ilia 4, Germasogeia, 4046 Limassol,
Cyprus.
Principal activities
The principal activities of the Company prior to its re-domiciliation to Cyprus comprised the provision of offshore oil and gas
drilling services as well as investment holding and financing. Subsequent to its re-domiciliation the Company continues to be
involved in investment holding and financing and also owns and rents to other members of the group a fleet of two rigs all of
which operate in the mid-water segment of the offshore oil and gas drilling industry.
As of 31 December 2014 the Company had operations in the Norwegian Continental Shelf.
Note 2: Significant accounting policies
The principal accounting policies adopted in the preparation of these financial statements are set out below. These policies
have been consistently applied to all years presented in these financial statements unless otherwise stated.
Basis of preparation
The Company has prepared these parent Company financial statements for compliance with the requirements of the Cyprus
Income Tax Law and Oslo Stock exchange requirement.
As of the date of the authorisation of the financial statements, all International Financial Reporting Standards issued by the
International Accounting Standards Board (IASB) that are effective as of 1 January 2014 have been adopted by the EU through
the endorsement procedure established by the European Commission, with the exception of certain provisions of IAS 39
“Financial Instruments: Recognition and Measurement” relating to portfolio hedge accounting.
The financial statements have been prepared in accordance with International Financial Reporting Standards (IFRS) as
adopted by the European Union (EU) and the requirements of the Cyprus Companies Law Cap. 113. The financial statements
have been prepared under the historical cost convention, except for derivative financial instruments (note 3) and liabilities for
cash-settled share-based payments (note 20) which are measured at fair value.
The preparation of financial statements in conformity with IFRS requires the use of certain critical accounting estimates and
requires management to exercise its judgement in the process of applying the Company's accounting policies. It also requires
the use of assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and
liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting
period. Although these estimates are based on management’s best knowledge of current events and actions, actual results
may ultimately differ from those estimates.
New and amended standards and interpretations adopted by the Company
The Company adopted all the new and revised IFRS as adopted by the EU that are relevant to its operations and are effective
for accounting periods beginning on 1 January 2014. This adoption did not have a material effect on the accounting policies of
the Company with the exception of the following:
IAS 28 (revised), ‘Associates and joint ventures’, includes the requirements for joint ventures, as well as associates, to be
equity accounted following the issue of IFRS 11.
IFRS 10 ‘Consolidated financial statements’ build on existing principles by identifying the concept of control as the determining
factor in whether an entity should be included within the consolidated financial statements of the parent company. The standard
provides additional guidance to assist in the determination of control where this is difficult to assess.
IFRS 11 ‘Joint arrangements’ focuses on the rights and obligations of the parties to the arrangement rather than its legal form.
There are two types of joint arrangements: joint operations and joint ventures.
Joint operations arise where the investors have rights to the assets and obligations for the liabilities of an arrangement. A joint
operator accounts for its share of the assets, liabilities, revenue and expenses. Joint ventures arise where the investors have
rights to the net assets of the arrangement and are accounted for under the equity method. Proportional consolidation of joint
arrangements is no longer permitted.
15
IFRS 12 ‘Disclosures of interest in other entities’ includes the disclosure requirements for all forms of interest in other entities,
including joint arrangements, associates, structured entities and other off balance sheet vehicles.
IAS 27 ‘Separate Financial Statements’ was changed and its objective is now to prescribe the accounting and disclosure
requirements in subsidiaries, joint ventures and associates when an entity prepares separate financial statements.
New and amended standards and interpretations not yet adopted
At the date of approval of these financial statements a number of new standards and amendments to standards and
interpretations are effective for annual periods beginning after 1 January 2014, and have not been applied in preparing these
financial statements.
Adopted by the European Union
IFRIC 21 - Levies (issued on 20 May 2013 and effective for annual periods beginning 1 January 2014; EU effective date 1
January 2015). The interpretation clarifies the accounting for an obligation to pay a levy that is not income tax. The obligating
event that gives rise to a liability is the event identified by the legislation that triggers the obligation to pay the levy. The fact that
an entity is economically compelled to continue operating in a future period, or prepares its financial statements under the going
concern assumption, does not create an obligation. The same recognition principles apply in interim and annual financial
statements. The application of the interpretation to liabilities arising from emissions trading schemes is optional. The adoption
of IFRIC 21 is not expected to have any material impact on the financial statements.
Annual Improvements to IFRSs 2012 (issued in December 2013 and effective for annual periods beginning on or after 1 July
2014, unless otherwise stated below; EU effective date 1 January 2016). The improvements consist of changes to seven
standards. IFRS 2 was amended to clarify the definition of a ‘vesting condition’ and to define separately ‘performance condition’
and ‘service condition’; The amendment is effective for share-based payment transactions for which the grant date is on or after
1 July 2014. IFRS 3 was amended to clarify that (1) an obligation to pay contingent consideration which meets the definition of
a financial instrument is classified as a financial liability or as equity, on the basis of the definitions in IAS 32, and (2) all nonequity contingent consideration, both financial and non-financial, is measured at fair value at each reporting date, with changes
in fair value recognised in profit and loss. The Company is currently assessing the impact of the amendments on its financial
statements.
Amendments to IFRS 3 are effective for business combinations where the acquisition date is on or after 1 July 2014. IFRS 8
was amended to require (1) disclosure of the judgements made by management in aggregating operating segments, including
a description of the segments which have been aggregated and the economic indicators which have been assessed in
determining that the aggregated segments share similar economic characteristics, and (2) a reconciliation of segment assets to
the entity’s assets when segment assets are reported. The basis for conclusions on IFRS 13 was amended to clarify that
deletion of certain paragraphs in IAS 39 upon publishing of IFRS 13 was not made with an intention to remove the ability to
measure short-term receivables and payables at invoice amount where the impact of discounting is immaterial. IAS 16 and IAS
38 were amended to clarify how the gross carrying amount and the accumulated depreciation are treated where an entity uses
the revaluation model. IAS 24 was amended to include, as a related party, an entity that provides key management personnel
services to the reporting entity or to the parent of the reporting entity (‘the management entity’), and to require to disclose the
amounts charged to the reporting entity by the management entity for services provided. The Company is currently assessing
the impact of the amendments on its financial statements.
Annual Improvements to IFRSs 2013 (issued in December 2013 and effective for annual periods beginning on or after 1 July
2014; EU effective date 1 January 2015). The improvements consist of changes to four standards. The improvements consist
of changes to four standards. The basis for conclusions on IFRS 1 is amended to clarify that, where a new version of a
standard is not yet mandatory but is available for early adoption; a first-time adopter can use either the old or the new version,
provided the same standard is applied in all periods presented. IFRS 3 was amended to clarify that it does not apply to the
accounting for the formation of any joint arrangement under IFRS 11. The amendment also clarifies that the scope exemption
only applies in the financial statements of the joint arrangement itself. The amendment of IFRS 13 clarifies that the portfolio
exception in IFRS 13, which allows an entity to measure the fair value of a group of financial assets and financial liabilities on a
net basis, applies to all contracts (including contracts to buy or sell non-financial items) that are within the scope of IAS 39 or
IFRS 9. IAS 40 was amended to clarify that IAS 40 and IFRS 3 are not mutually exclusive. The guidance in IAS 40 assists
preparers to distinguish between investment property and owner-occupied property. Preparers also need to refer to the
guidance in IFRS 3 to determine whether the acquisition of an investment property is a business combination. The Company is
currently assessing the impact of the amendments on its financial statements.
Not yet adopted and not yet endorsed by the European Union
IFRS 9 “Financial Instruments: Classification and Measurement” (issued in July 2014 and effective for annual periods beginning
on or after 1 January 2018). Key features of the new standard are:
Financial assets are required to be classified into three measurement categories: those to be measured subsequently at
amortised cost, those to be measured subsequently at fair value through other comprehensive income (FVOCI) and those to be
measured subsequently at fair value through profit or loss (FVPL).
Classification for debt instruments is driven by the entity’s business model for managing the financial assets and whether the
contractual cash flows represent solely payments of principal and interest (SPPI). If a debt instrument is held to collect, it may
be carried at amortised cost if it also meets the SPPI requirement. Debt instruments that meet the SPPI requirement that are
held in a portfolio where an entity both holds to collect assets’ cash flows and sells assets may be classified as FVOCI.
Financial assets that do not contain cash flows that are SPPI must be measured at FVPL (for example, derivatives). Embedded
derivatives are no longer separated from financial assets but will be included in assessing the SPPI condition.
Investments in equity instruments are always measured at fair value. However, management can make an irrevocable election
to present changes in fair value in other comprehensive income, provided the instrument is not held for trading. If the equity
instrument is held for trading, changes in fair value are presented in profit or loss.
16
Most of the requirements in IAS 39 for classification and measurement of financial liabilities were carried forward unchanged to
IFRS 9. The key change is that an entity will be required to present the effects of changes in own credit risk of financial
liabilities designated at fair value through profit or loss in other comprehensive income.
IFRS 9 introduces a new model for the recognition of impairment losses – the expected credit losses (ECL) model. There is a
‘three stage’ approach which is based on the change in credit quality of financial assets since initial recognition. In practice, the
new rules mean that entities will have to record an immediate loss equal to the 12-month ECL on initial recognition of financial
assets that are not credit impaired (or lifetime ECL for trade receivables). Where there has been a significant increase in credit
risk, impairment is measured using lifetime ECL rather than 12-month ECL. The model includes operational simplifications for
lease and trade receivables.
Hedge accounting requirements were amended to align accounting more closely with risk management. The standard provides
entities with an accounting policy choice between applying the hedge accounting requirements of IFRS 9 and continuing to
apply IAS 39 to all hedges because the standard currently does not address accounting for macro hedging.
Accounting for Acquisitions of Interests in Joint Operations - Amendments to IFRS 11 (issued on 6 May 2014 and effective for
the periods beginning on or after 1 January 2016). This amendment adds new guidance on how to account for the acquisition
of an interest in a joint operation that constitutes a business.
Clarification of Acceptable Methods of Depreciation and Amortisation - Amendments to IAS 16 and IAS 38 (issued on 12 May
2014 and effective for the periods beginning on or after 1 January 2016). In this amendment, the IASB has clarified that the use
of revenue-based methods to calculate the depreciation of an asset is not appropriate because revenue generated by an
activity that includes the use of an asset generally reflects factors other than the consumption of the economic benefits
embodied in the asset.
IFRS 15, Revenue from Contracts with Customers (issued on 28 May 2014 and effective for the periods beginning on or after 1
January 2017). The new standard introduces the core principle that revenue must be recognised when the goods or services
are transferred to the customer, at the transaction price. Any bundled goods or services that are distinct must be separately
recognised, and any discounts or rebates on the contract price must generally be allocated to the separate elements. When the
consideration varies for any reason, minimum amounts must be recognised if they are not at significant risk of reversal. Costs
incurred to secure contracts with customers have to be capitalised and amortised over the period when the benefits of the
contract are consumed.
Sale or Contribution of Assets between an Investor and its Associate or Joint Venture - Amendments to IFRS 10 and IAS 28
(issued on 11 September 2014 and effective for annual periods beginning on or after 1 January 2016). These amendments
address an inconsistency between the requirements in IFRS 10 and those in IAS 28 in dealing with the sale or contribution of
assets between an investor and its associate or joint venture. The main consequence of the amendments is that a full gain or
loss is recognised when a transaction involves a business. A partial gain or loss is recognised when a transaction involves
assets that do not constitute a business, even if these assets are held by a subsidiary.
Annual Improvements to IFRSs 2014 (issued on 25 September 2014 and effective for annual periods beginning on or after 1
January 2016). The amendments impact 4 standards. IFRS 5 was amended to clarify that change in the manner of disposal
(reclassification from "held for sale" to "held for distribution" or vice versa) does not constitute a change to a plan of sale ore
distribution, and does not have to be accounted for as such. The amendment to IFRS 7 adds guidance to help management
determine whether the terms of an arrangement to service a financial asset which has been transferred constitute continuing
involvement, for the purposes of disclosures required by IFRS 7.
The amendment also clarifies that the offsetting disclosures of IFRS 7 are not specifically required for all interim periods, unless
required by IAS 34. The amendment to IAS 19 clarifies that for post-employment benefit obligations, the decisions regarding
discount rate, existence of deep market in high-quality corporate bonds, or which government bonds to use as a basis, should
be based on the currency that the liabilities are denominated in, and not the country where they arise. IAS 34 will require a
cross reference from the interim financial statements to the location of "information disclosed elsewhere in the interim financial
report”.
Disclosure Initiative Amendments to IAS 1 (issued in December 2014 and effective for annual periods on or after 1 January
2016). The Standard was amended to clarify the concept of materiality and explains that an entity need not provide a specific
disclosure required by an IFRS if the information resulting from that disclosure is not material, even if the IFRS contains a list of
specific requirements or describes them as minimum requirements. The Standard also provides new guidance on subtotals in
financial statements, in particular, such subtotals (a) should be comprised of line items made up of amounts recognised and
measured in accordance with IFRS; (b) be presented and labelled in a manner that makes the line items that constitute the
subtotal clear and understandable; (c) be consistent from period to period; and (d) not be displayed with more prominence than
the subtotals and totals required by IFRS standards.
The Board of Directors assesses the impact of new standards and interpretations at the point when these are endorsed by the
European Union. As a result the impact of the above new standards and interpretations that have not been endorsed by the
European Union has not been assessed.
There are no other IFRSs or IFRIC Interpretations that are not yet effective that would be expected to have a material impact
on the Company.
Consolidated financial statements
The Company has also prepared consolidated financial statements in accordance with International Financial Reporting
Standards as adopted by the EU and the requirements of the Cyprus Company Law Cap.113 for the Company and its
subsidiaries (the “Group”). The consolidated financial statements can be obtained from the Company’s website on
www.songaoffshore.com.
17
Users of the parent’s separate financial statements should read them together with the Group’s consolidated financial
statements as at the end of the year ended 31 December 2014 in order to obtain a proper understanding of the financial
position, the financial performance and the cash flows of the Company and the Group.
Investments in subsidiaries
Investments in subsidiary companies are stated at cost less provision for impairment in value, which is recognised as an
expense in the period in which the impairment is identified.
Joint arrangements
Investments in joint arrangements are stated at cost less provision for impairment in value, which is recognised as an expense
in the period in which the impairment is identified.
The Company has a contractual right to receive its share of profits in cash and has also provided a call option to the other 50%
venture to buy the group's share at the end of 31 October 2016 for a total of USD20 million. Due to the nature of the agreement
the Company considers that given the rights it has until the expiry of the option period it has joint control over the joint venture;
however its right to receive cash is a financial instrument which has been classified as an available for sale financial asset. This
financial asset has an effective interest rate of 21.5% and every time there is a revision in estimates of cash collection the
carrying amount will be adjusted to reflect actual and revised estimated cash flows. The adjustment is recognised in profit or
loss within "Other financial items". All disclosure requirements in relation to the joint venture are provided in note 24.
Revenue recognition
Revenue comprises the fair value of the consideration received or receivable for the sale of services in the ordinary course of
the Company’s activities. Revenue is shown net of value-added tax, returns, rebates and discounts.
Revenue derived from drilling contracts or other service contracts is recognised in the period that the services are rendered, at
the applicable rates in each specific contract.
In connection with drilling contracts, the Company may receive lump sum fees for the mobilisation of equipment and personnel.
Mobilisation fees received and costs incurred to mobilise a drilling unit are recognised gross in the profit or loss (operating
revenue and operating expense) on a straight line basis over the firm contract term of the related drilling contract.
Certain contracts include a contribution or fee from the client payable at the start of the contract to cover specific or general
upgrades or equipment. The contribution or fee is recognised as revenue (other income) on a straight line basis over the firm
contract period. These contracts might also include day rates from the client during the period the upgrades are carried out.
Such day rates are recognised as revenue during the period the upgrades carried out, in accordance with the contract terms.
Reimbursed expenses
Reimbursed expenses are expenses whereby the Company, according to the relevant provisions of client contracts, assumes
the risk and pay for the expenses, and then recharge these expenses to clients in accordance with the relevant provisions of
the contracts.
Amounts recharged to clients as described above are presented gross, as reimbursable revenue and reimbursable expenses.
Reimbursed expenses other than the ones described above are presented net in the profit or loss.
Borrowings
Borrowings are recognised initially at fair value, net of transaction cost incurred. Borrowings are subsequently carried at
amortised cost; any difference between the proceeds (net of transaction cost) and the redemption value is recognised in the
profit or loss over the period of the borrowings using the effective interest method.
Fees paid on the establishment of loan facility are recognised as transaction costs of the loan to the extent that is probable that
some or all of the facility will be drawn down. In this case, the fee is deferred until the draw down occurs. To the extent there is
no evidence that it is probable that some or all of the facility will be drawn down, the fee is capitalised as a pre-payment of
liquidity service and amortised over the period of the facility to which it relates.
Borrowing costs
Borrowing costs are recognised in the profit or loss when they are incurred. Borrowing costs are capitalised to the extent that
they are directly related to new-build projects. Interest costs incurred during the construction period, until the rig is substantially
prepared for its intended use are capitalised.
Foreign currency translation
Functional and presentation currency
Items included in the Company's financial statements are measured using the currency of the primary economic environment in
which the entity operates ("the functional currency"). The financial statements are presented in '000 of United States Dollars
(USD), which is the Company's functional and presentation currency.
18
Transactions and balances
Foreign currency transactions are translated into the functional currency using the exchange rates prevailing at the date of the
transaction. Foreign exchange gains and losses resulting from the settlement of such transactions and from the translation at
year-end exchange rates of monetary assets and liabilities denominated in foreign currencies are recognised in the statement
of comprehensive income.
Impairment of tangible assets
The carrying amounts of the Company's rigs, machinery and equipment, and new-builds are reviewed at each balance sheet
date to determine whether there is any indication of impairment. If any such indication exists, the asset’s recoverable amount is
estimated. When considering impairment indicators, the Company considers both internal (e.g. adverse changes in
performance) and external sources (e.g. adverse changes in the business environment). These are analysed by reviewing day
rates and broker valuations. The recoverable amount of an asset is the higher of its fair value less costs to sell and value in
use. The value in use is calculated as the present value of the expected future cash flows for the individual units. The fair value
is determined using the average of two broker valuations. An impairment loss is recognised if the carrying amount of the assets
exceeds the recoverable amount.
Share-based compensation
At the year end the Company operates a cash-settled share-based compensation plan and an equity settled plan for
management.
The cash settled share based compensation is in the form of synthetic options, or so called Stock Appreciation Rights (SAR),
meaning that the employee will not be given the right to subscribe for shares as such, but will be entitled to receive, in cash, the
difference between the exercise price and the strike price multiplied with the number of synthetic options exercised. Each
synthetic share option converts into the value of one ordinary share of Songa Offshore SE on exercise. No amounts are paid or
payable by the recipient on receipt of the SAR. The SARs carry neither rights to dividends nor voting rights.
The SARs are valued at fair value for each reporting period end. The SARs that are fully vested are recognised at fair value in
the statement of Financial Position, but for SARs not fully vested, only the portion which has been vested (using linear model) is
recognised in the balance sheet at fair value. Any changes in the fair value of the liability are recognised as personnel
expenses within general and administrative expenses in profit or loss. Further details on how the fair value of the SARs has
been determined are disclosed in note 20 to the financial statements.
The equity settled plan (Long Term Incentive Plan, or “LTIP”) is in the form of restricted share units (RSU). Each RSU gives the
right to receive one share up on vesting. The fair value of each RSU is calculated when the RSU is awarded to each employee
and recognised on a straight line basis over the vesting period.
Retirement plans
The Company has in place various pension schemes. The schemes are generally funded through payments to insurance
companies or investment houses.
A defined contribution plan is a pension plan under which the Company pays contributions into an insurance company,
investment house or state organized fund. The Company has no legal or constructive obligations to pay further contributions if
the fund does not hold sufficient assets to pay all employees the benefits relating to employee service in the current and prior
periods. A defined benefit plan is a plan which typically defines an amount of pension benefit that an employee will receive on
retirement, usually dependent on one or more factors such as age, year of service and compensation.
The liability recognised in the balance sheet in respect of defined benefit pension plans is the present value of the defined
benefit obligation at the balance sheet date less the fair value of plan assets, together with adjustments for actuarial gains or
losses and past service costs. The defined benefit obligation is calculated annually by independent actuaries.
Actuarial gains and losses arising from experience adjustments and changes in actuarial assumptions are charged or credited
to other comprehensive income in the period in which they arise.
Past service costs are recognised immediately in profit or loss, unless the changes in the pension plan are conditional on the
employees remaining in service for a specified period of time (the vesting period). In this case, the past-service costs are
amortised on a straight-line basis over the vesting period.
Employee benefits
The Company and the employees contribute to the Government Social Insurance Fund based on employees’ salaries. In
addition, the Company operates a defined contribution scheme the assets of which are held in a separate trustee administered
fund. The scheme is funded by payments from employees and by the Company. The Company's contributions are expensed
as incurred and are included in staff costs. The Company has no further payment obligations once the contributions have been
paid. Prepaid contributions are recognised as an asset to the extent that a cash refund or a reduction in the future payments is
available.
Taxation
Income tax expense comprises current and deferred tax. Income tax expense is recognised in profit or loss except to the extent
that it relates to items recognised directly in equity, in which case it is recognised in Statement of Comprehensive income.
Current tax is the estimated tax payable on the taxable income for the year, using tax rates enacted of substantively enacted at
the reporting date, and any adjustment to tax payable in respect of previous years.
19
Deferred tax is recognised on differences between the carrying amounts of assets and liabilities in the financial statements and
the corresponding tax basis used in the computation of taxable profit, and are accounted for using the balance sheet liability
method. Deferred tax liabilities are generally recognised for all taxable temporary differences, and deferred tax assets are
generally recognised for all deductible temporary differences to the extent that it is probable that taxable profits will be available
against which those deductible temporary differences can be utilised. Such assets and liabilities are not recognised if the
temporary difference arises from the initial recognition (other than in a business combination) of other assets and liabilities in a
transaction that affects neither the taxable profit nor the accounting profit.
The carrying amount of deferred tax assets is reviewed at each balance sheet date and reduced to the extent that it is no
longer probable that sufficient profits will be available to allow all or part of the asset to be recovered.
Deferred tax assets and liabilities are measured at the tax rates that are expected to apply in the period in which the liability is
settled or the asset realised, based on the tax rates (and tax laws) that have been enacted or substantively enacted at the
balance sheet date. The measurement of deferred tax liabilities and assets reflects the tax consequences that would follow
from the manner in which the Company expects, at the reporting date, to recover or settle the carrying amount of its assets and
liabilities.
Deferred tax assets and liabilities are offset when there is a legally enforceable right to set off current tax assets current tax
liabilities and when they relate to income taxes levied by the same taxation authority and the Company intends to settle its
current tax assets and liabilities on a net basis.
Rigs machinery and equipment
Rigs, machinery and equipment are stated at cost less accumulated depreciation and impairment losses.
Subsequent costs are capitalised when it is probable that they will give rise to future economic benefits. Other costs are
recognised in the profit or loss as incurred.
Depreciation is charged in the profit or loss on a straight-line basis over the estimated useful life of each component of property,
plant and equipment. The estimated useful lives, residual values and decommissioning costs are reviewed at each financial
year end.
No decommissioning costs have been recorded to date, and the presence of any obligations is reviewed at each financial year
end. There is no decommissioning liability on the drilling rigs as there is no legal or constructive obligation to dismantle or
restore the assets. In practice, assets of this nature are rebuilt, when no longer useful; laid up in dry dock or scrapped. For a
standard vessel, specialised demobilising yards pay for a vessel to be scrapped per light displacement tonne (ldt) of the vessel.
Any changes to the above are accounted for prospectively as a change in accounting estimates.
The estimated useful lives of the rigs, machinery and equipment are as follows:
o
Rigs, primary portion; 25 years
o
Rigs, other components;2.5 to 25 years
o
SPS; 5 years
o
IS; 2.5 years
o
Fixtures; 3 to 10 years
Where components of an item of property, plant and equipment have different useful lives, each component’s depreciation is
calculated separately.
The useful lives of the assets are reviewed by management at each year end. Costs for Special Periodic Surveys (SPS) and
Intermediate Surveys (IS) on offshore units required by regulatory bodies are capitalised and amortised over the anticipated
period between surveys, generally five years for SPSs and two and a half years for intermediate surveys. Other maintenance
and repair costs are expensed as incurred.
The most common method to estimate residual values for ships is to use the scrap price which is publicly noted by brokers in
USD per ldt (light displacement tonne) of a complete vessel with all normal machinery and equipment on board. Drilling rigs are
more complicated to scrap than ships and have less metal and scrap able/recoverable material due to their construction, design
and nature. The price that could be recovered from scrapping of drilling rigs is estimated to approximate the cost of extracting
this scrap metal. Therefore, no residual value is recorded given the assumption that if the assets were disposed at the end of
their useful life given their expected age and condition no material amount would be recovered.
In connection with the Company’s purchase of a rig, the Company may agree with the sellers that the parties agree to share the
risk of the uncertainties through a contingent payment as the value of the asset is uncertain. In such instances the seller has no
future performance obligations. The contingent payment is recognised by the Company as a financial liability established by
contract in accordance with IAS 32/39.
The re-measurement of the financial liability for the contingent price is included in the cost of the rig, when the re-measurement
of the contingent amount is considered to relate to the condition of the asset that existed at the purchase date. The contingency
is specific to the asset, and the amount payable does not include effects of changes relating to the subsequent performance of
asset.
Non-current assets (or disposal groups) held for sale
Non-current assets (or disposal groups) are classified as assets held for sale when their carrying amount is to be recovered
principally through a sale transaction and a sale is considered highly probable. They are stated at the lower of carrying amount
and fair value less costs to sell.
20
Trade receivables
Trade receivables are presented net of any allowance for bad debts. Estimates for allowance for bad debts are calculated
individually for each customer. When a trade receivable is uncollectible, it is written off against the provision account.
Subsequent recoveries of amounts previously written off are credited against the provision account. Changes in the carrying
amount of the provision account are recognised in profit or loss.
Financial liabilities and equity instruments
Debt and equity instruments are classified as either financial liabilities or as equity in accordance with the substance of the
contractual arrangement.
Equity instruments issued by the Company are recorded at the proceeds received, net of direct issue costs.
Other financial liabilities, including borrowings, are initially measured at fair value, net of transaction costs. Other financial
liabilities are subsequently measured at amortised cost using the effective interest method, with the interest expense
recognised on an effective yield basis. The effective interest method is a method of calculating the amortised cost of a financial
liability and of allocating interest expense over the relevant period. The effective interest rate is the rate that exactly discounts
estimated future cash payments through future payments through the expected life of the financial liability, or, where
appropriate, a shorter period.
Derivative financial instruments are initially recognised at fair value on the date a derivative con-tract is entered into and are
subsequently re-measured at their fair value at each reporting date. The resulting gain or loss is recognised in profit or loss
immediately.
Further details of derivative financial instruments are disclosed in note 3 to the financial statements.
Derivatives embedded in other financial instruments or other host contracts are treated as separate derivatives when their risks
and characteristics are not closely related to those of the host contracts and the host contracts are not measured at fair value
with changes in fair value recognised in profit or loss.
The component parts of compound instruments (convertible bonds) issued by the Company are classified separately as
financial liabilities and equity in accordance with the substance of the contractual arrangement. At the date of issue, the fair
value of the liability component is estimated using the prevailing market interest rate for a similar non-convertible instrument.
This amount is recorded as a liability on an amortised cost basis using the effective interest method until extinguished upon
conversion or at the instrument’s maturity date. The equity component is determined by deducting the amount of the liability
component from the fair value of the compound instrument as a whole. This is recognised and included in the Statement of
Comprehensive income, net of income tax effects, and is not subsequently re-measured.
Financial assets classified as available for sale
Available-for-sale financial assets are non-derivatives designated in this category. They are included in non-current assets
unless the investment matures or management intends to dispose of it within 12 months of the end of the reporting period.
Available-for-sale financial assets are subsequently carried at fair value.
Changes in the fair value of monetary and non-monetary securities classified as available for sale are recognized in the
consolidated statement of comprehensive income.
Interest on available-for-sale securities calculated using the effective interest method is recognized in the income statement as
part of finance income. Dividends on available-for-sale equity instruments are recognized in the income statement as part of
other income when the group’s right to receive payments is established.
The Company assesses at the end of each reporting period whether there is objective evidence that a financial asset or a
group of financial assets is impaired.
Financial assets classification
The Company classifies its financial assets in the following categories: at fair value through profit or loss, loans and
receivables, and available for sale. The classification depends on the purpose for which the financial assets were acquired.
Management determines the classification of its financial assets at initial recognition.
(a)
Financial assets at fair value through profit or loss
Financial assets at fair value through profit or loss are financial assets held for trading. A financial asset is classified in this
category if acquired principally for the purpose of selling in the short term. Derivatives are also categorised as held for trading
unless they are designated as hedges. Assets in this category are classified as current assets if expected to be settled within
12 months, otherwise they are classified as non-current.
(b)
Loans and receivables
Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active
market. They are included in current assets, except for maturities greater than 12 months after the end of the reporting period.
These are classified as non-current assets. The Company’s loans and receivables comprise ‘trade and other receivables’, and
‘loans to subsidiaries’ and ‘cash and cash equivalents’ in the balance sheet (notes 13 and 16).
21
(c)
Available-for-sale financial assets
Available-for-sale financial assets are non-derivatives that are either designated in this category or not classified in any of the
other categories. They are included in non-current assets unless the investment matures or management intends to dispose of
it within 12 months of the end of the reporting period.
Cash flow hedge
The effective part of changes in the fair value of a hedging instrument is recognised directly in Other Comprehensive Income
(OCI). The ineffective part of the hedging instrument is recognised directly in the profit or loss, within other gain/ (loss).
When a hedging instrument expires or is sold, terminated or exercised, or the enterprise cancels the hedging relationship
despite the fact that the hedged transaction is still expected to take place, the accumulated gains or losses at that time remain
in equity and are recognised in the statement of comprehensive income in accordance with the above guidelines when the
transaction takes place.
Should the hedging relationship no longer meet the criteria for hedge accounting as specified above, accumulated gains and
losses that are recognised in equity up to this date remain in equity and are recognised in the statement of comprehensive
income in accordance with the above guidelines only when the transaction takes place.
If the hedged transaction is no longer expected to take place, accumulated unrealised gains or losses on the hedging
instruments that have previously been recognised in the statement of comprehensive income are recognised in the statement
of income immediately.
Loans granted
Loans originated by the Company by providing money directly to the borrower are categorised as loans and are carried at
amortised cost. This is defined at the fair value of cash consideration given to originate those loans as is determined by
reference to market prices at origination date. All loans are recognised when cash is advanced to the borrower.
An allowance for loan impairment is established if there is objective evidence that the Company will not be able to collect all
amounts due according to the original contractual terms of loans. The amount of the provision is the difference between the
carrying amount and the recoverable amount, being the present value of expected cash flows including amounts recoverable
from guarantees and collateral, discounted at the original effective interest rate of loans.
Cash and cash equivalents include cash, bank deposits, collaterals, escrow accounts and other short-term highly liquid assets
that are readily convertible to known amounts of cash and which are subject to insignificant changes in value. For the purpose
of the cash flow statement, escrow accounts are not considered part of cash and cash equivalents. An analysis of cash and
cash equivalents and the respective carrying amounts at year end is presented in note 16 to the financial statements.
Trade payables
Trade payables are recognised initially at fair value and subsequently measured at amortised cost using the effective interest
method.
Share capital
Ordinary shares are classified as equity. The difference between the fair value of the consideration received by the Company
and the nominal value of the share capital being issued is taken to the share premium account.
Share premium is the difference between the fair value of the consideration receivable for the issue of shares and the nominal
value of shares. Share premium account can only be resorted to for limited purposes, which do not include the distribution of
dividends and is otherwise subject to provisions of the Cyprus Companies Law on reduction of share capital.
Provisions
Provisions are recognised when the Company has a present legal or constructive obligation as a result of past events, it is
probable that an outflow of resources will be required to settle the obligation, and the amount has been reliably estimated.
Provisions are not recognised for future operating losses.
Provisions are measured at the present value of the expenditures expected to be required to settle the obligation using a pretax rate that reflects current market assessments of the time value of money and the risks specific to the obligation. The
increase in the provision due to passage of time is recognised as interest expense.
Restructuring provisions comprise lease termination penalties and employee termination payments, and are recognised in the
period in which the Company becomes legally or constructively committed to payment. Costs related to the on-going activities
of the Company are not provided in advance. Provisions are not recognised for future operating losses.
Non-current liabilities
Non-current liabilities represent amounts that are due more than twelve months from the reporting date.
Events after the balance sheet date
New information on the Company’s position at the balance sheet date is taken into account in the annual financial statements.
Events after the balance sheet date that do not affect the Company’s position at the balance sheet date but which will affect the
Company’s position in the future are stated if significant.
22
Note 3: Financial risk management
Financial instruments
Categories of financial instruments:
2014
2013
Financial assets
Available-for-sale financial assets - non-current
Financial assets
53,722
-
Financial assets at fair value through profit or loss
72,740
28,822
Loans and receivables:
Receivables from own subsidiaries
Trade receivables and other receivables
750,421
45,257
8,831
194,269
930,400
60,187
4,252
396,320
Financial liabilities
Financial liabilities at fair value through profit or loss
174,996
64,326
27,250
1,132,936
19,992
1,416,919
Other liabilities at amortised cost:
Trade and other payables
Total borrowings
All line items above are carried at fair value except for loans and receivables and other liabilities that are carried at amortised
cost.
The Company monitors and manages the financial risks related to its operations through internal reports and analysis.
The Company seeks to manage these risks by using derivative financial instruments when appropriate. The use of financial
derivatives is monitored and approved by the board of directors. The Company does not enter into or trade financial
instruments, including derivative financial instruments, for speculative purposes.
Financial risk factors
Capital risk management
The Company manages its capital to ensure that it will be able to continue as a going concern while maximising the return to
stakeholders through an optimisation of the debt and equity balance.
The capital structure of the Company consists of debt, which includes borrowings (note 18), cash and cash equivalents (note
16) and equity attributable to equity holders of the Company, comprising issued capital, reserves and retained earnings.
The Company will balance its overall capital structure through the payment of dividends, new share issues and share buybacks as well as the issue of new debt or the redemption of existing debt. The Company’s overall financing strategy moves with
the changes in the financial markets.
For its internal and external communication needs, the Company calculates the equity ratio by dividing total equity by total
assets. The equity ratio of the Company in 2014 was 41.2% compared to 38.7% in 2013.
The equity ratios as at year end were as follows:
2014
2013
Total equity
Total assets
967,405
2,346,702
984,536
2,545,791
Equity ratio
41.2%
38.7%
23
The Company’s future capital requirements and level of expenses will depend on numerous factors, including but not limited to
the timing and terms on which drilling contracts and other contracts can be negotiated, trade of assets, the amount of cash
generated from operations, the level of demand for its services and general industry conditions.
The Company is further exposed to market risk, foreign currency risk, interest rate risk credit risk and liquidity risk arising from
its operations and the financial instruments that it holds.
Market risk management
The Company’s activities expose it primarily to the financial risks of changes in foreign currency exchange rates and interest
rates (see below). The Company enters into derivative financial instruments to manage its exposure to interest rate and foreign
currency risk, including but not limited to:
o
o
o
forward exchange contracts to hedge foreign currency payments related to operating expenses
interest rate swaps to mitigate the risk of rising interest rates
cross currency interest rate swaps to mitigate the risk of rising interest rates and fluctuations in currency rates
Foreign currency risk management
The Company is exposed to foreign currency (FC) risks related to its operations. The Company’s revenue is mainly in USD,
and the expenses are primarily in USD and Norwegian Krone (NOK). As such, the Company’s earnings are exposed to
fluctuations in the foreign currency market for NOK. The Company uses financial instruments to reduce risk associated with
fluctuations in foreign exchange rates. The following tables show the expenses, assets and liabilities in the foreign currency (FC
in tables below) and in USD, respectively.
Cost
2014
2013
Assets
2014
Liabilities
2014
2013
2013
Amounts in FC ‘000
European Currency (EUR)
Great British Pound (GBP)
Malaysian Ringgit (MYR)
Norwegian Krone (NOK)
Singapore Dollar (SGD)
661
77
6,180
33,128
102
2,829
80
19
22,776
-
4,029
222
27,320
25
81
208
36,507
25
Cost
2014
2013
Assets
2014
2013
882
127
1,935
5,287
82
3,841
129
6
3,846
-
4,794
344
3,664
19
1
2,203,232
65
1
2,131,191
65
Liabilities
2014
2013
Singapore Dollar (SGD)
112
342
5,934
19
297,644
48
348,381
50
Foreign currency sensitivity analysis
The Company is mainly exposed to the currency of Norway (NOK). In addition the Company is to a lesser extent exposed to
the currencies of European Union (EUR), Great Britain (GBP), Malaysia (MYR) and Singapore (SGD). The table below details
the Company's sensitivity to a 10 % increase/ decrease in the USD against the relevant foreign currencies with all other
variables held constant.
For assets and debt the analysis only includes monetary items stated in other currencies than USD. A negative number below
indicates a decrease in profit and loss after tax and a positive number below indicates an increase in profit and loss after tax
where the currency increases/ decreases 10% against the USD.
Impact on profit or loss in USD for working capital
Currency
2014
2013
+/-479
+/-34
+/-0
+/-29,398
+/-3
+/-407
+/-81
+/-1
+/-33,267
+/-1
24
Impact on profit or loss in USD for OPEX and G&A
Currency
2014
2013
+/-88
+/-13
+/-194
+/-529
+/-8
+/-103
+/-9
+/-1
+/-385
+/-0
During the year the Company has entered into forward foreign exchange contracts to cover foreign currency payments related
to operating expenses. Contracts are entered into when it is found to be in line with the overall currency risk strategy.
Interest rate risk management
Interest rate risk is the risk that the value of financial instruments will fluctuate due to changes in market interest rates. The
Company is exposed to interest rate risk in relation to its loans to and from the subsidiaries and bank borrowing. Balances
issued at variable rates expose the Company to cash flow interest rate risk. Balances issued at fixed rates expose the
Company to fair value interest rate risk. The risk is managed by maintaining an appropriate mix between fixed and floating rate
borrowings and by the use of financial instruments to reduce risk associated with fluctuations in interest.
Interest rate sensitivity analysis
The sensitivity analysis below has been determined based on the exposure to floating interest rates at the balance sheet date.
A 50 basis point increase or decrease is used and is considered as reasonably possible change in interest rates.
At 31 December 2014, if interest rates had been 50 basis points higher/lower and all other variables were held constant, the
Company’s profit or loss after tax for the year would decrease/increase by USD 2,4 million (2013: USD 2,4 million).This is
attributable to the Company’s exposure to floating interest rates on its bank facilities and bonds held during the year.
Cross currency interest rate swap contracts
In 2011 and 2012 the Company entered into cross currency interest rate swap contracts to partly hedge the senior unsecured
bond issue of NOK 1,400.0 million. In total NOK 1,347.8 million was swapped to USD 240.0 million at an average fixed rate of
11.48%.
As part of the refinancing in December 2013, the Company entered into a cross currency interest rate swap neutralising the
above swaps, by swapping USD 240.0 million at a fixed rate of 11.48% into NOK 1,347.8 million at a floating rate 6 month
NIBOR + 10%. The swap has a maturity date 17 November 2016.
Moreover, in December 2013 the Company entered into a new cross currency interest rate swap relating to the NOK 1,400.0
million unsecured bond. The bond has been fully swapped to USD 250.0 million at a fixed coupon of 7.73%. The swap matures
upon maturity of the bond on 17 May 2018.
In July 2012 the Company entered into a cross currency interest rate swap related to the 3 year senior unsecured bond issue of
NOK 750.0 million. The full amount was swapped to USD 124.7 million at a fixed coupon of 9.10%.
As part of the refinancing the above cross currency interest rate swap relating to the NOK 750.0 million was terminated in
December 2013, and the Company consequently entered into a new cross currency interest rate swap related to the NOK
750.0 million unsecured bond. The bond has been fully swapped to USD 124.7 million at a fixed coupon of 7.37%. The swap
matures upon maturity of the bond on 11 December 2018.
The counterparties to the above agreements are Swedbank AB (publ), Skandinaviska Enskilda Banken AS (publ) and Nordea
Bank Finland Plc.
The cross currency interest rate swaps qualify as cash flow hedge under IAS 39 and have been recognised under the
provisions of IAS 39. The swaps are split into a currency and interest derivative, each valued separately at fair value at
inception and subsequently at each reporting date. Any subsequent changes in fair value of the two derivatives are recognised
through Other Comprehensive Income (“OCI”).
Details of the cross currency interest rate swaps:
NOK 700.0 million swapped for USD 125 million, fixed rate 11.54%, maturing 17 November 2016.
The market value of the above swaps related to the NOK 1,400.0 million bond issue was at year-end 2014 negative with
(representing a liability) USD 72.7 million (2013: liability USD 28.3 million).
25
USD 240.0 million swapped for NOK 1,347.8 million, floating rate 6 month NIBOR +10%, maturing 17 November 2016.
The market value of the above swap related to the NOK 1,400.0 million bond issue was at the year-end 2014 positive with
(representing an asset) USD 72.7 million (2013: USD 28.3 million).
NOK 750.0 million swapped for USD 124.7 million, fixed rate 7.37%, maturing 11 December 2018.
The market value of the swap related to the NOK 750.0 million bond issue was at the year-end 2014 negative with
(representing a liability) USD 27.3 million (2013: USD 6.6 million).
NOK 1,400.0 million swapped for USD 250.0 million, fixed rate 7.73%, maturing 17 May 2018.
The market value of the above swap related to the NOK 1,400.0 million bond issue was at year-end 2014 negative with
(representing a liability) USD 71.9 million (2013: USD 29.5 million).
Credit risk management
Due to the nature of the Company’s operations, revenues and related receivables are typically concentrated amongst a
relatively small customer base of international oil and gas companies. The company continually evaluates the credit risk
associated with customers and, when considered necessary, requires certain guarantees, either in the form of parent company
guarantees, bank guarantees or escrow accounts. The maximum credit risk is equal to the capitalised value of trade
receivables and incurred revenue not billed. The trade receivables are pledged as security for the Company’s long term
borrowing. There is no history of material loss on trade receivables.
The Company’s short term investments are limited to reputable money market funds and cash deposits in the Company’s
relationship banks. The counterparties to derivative financial instruments are reputable financial institutions. Credit risk exists to
the extent that the counterparties are unable to perform under the contracts, but this risk is considered remote as the
counterparties are reputable financial institutions which have all provided loan finance to the Company and the derivative
financial instruments are related to those financing arrangements.
Liquidity risk management
Prudent liquidity risk management includes maintaining sufficient cash and cash equivalents, the availability of funding from an
adequate amount of committed credit facilities and the ability to close out market positions. Due to the dynamic nature of the
underlying businesses, the Company is seeking flexibility in funding by maintaining availability under committed credit lines.
The table below analyses the Company’s contractual undiscounted cash flows for all financial liabilities into relevant maturity
groupings based on the remaining period at the balance sheet date to the contractual maturity date. Derivative financial
instruments are included in the analysis if their contractual maturities are essential for an understanding of the timing of the
cash flows.
2014
2013
199,131
388,534
752,135
1,339,800
361,044
57,098
889,814
103,584
1,411,540
Up to 1 year
1 -2 years
2 – 5 years
More than 5 years
26
The tables below analyse the Company's interest obligations:
Up to 1 year
1 – 2 years
2 – 5 years
Over 5 years
Total
31 December 2014
Variable interest rate
10,861
9,677
8,849
-
29,387
Fixed interest rate
35,913
34,916
94,946
6,000
171,775
46,774
44,592
103,795
6,000
201,162
Up to 1 year
1 – 2 years
2 – 5 years
Over 5 years
Total
384,335
31 December 2013
Variable interest rate
20,773
9,677
353,885
-
Fixed interest rate
40,813
34,916
94,946
6,000
176,675
61,586
44,593
448,831
6,000
561,010
Out of the variable interest rate with maturity within one year USD 2.4 million was accrued at year end 2014, compared to USD
3.2 million in 2013. Out of the fixed interest rate with maturity within one year USD 12.3 million was accrued at year end 2014,
compared to USD 4.9 million in 2013.
Fair value estimation
The table below analyses financial instruments carried at fair value, by valuation method. The different levels have been
defined as follows:
o
Quoted prices (unadjusted) in active markets for identical assets or liabilities (Level 1).
o
Inputs other than quoted prices included within level 1 that are observable for the asset or liability, either directly (that
is, as prices) or indirectly (that is, derived from prices) (Level 2).
o
Inputs for the asset or liability that are not based on observable market data (that is, unobservable inputs) (Level 3)
The following table presents the Company’s financial assets and liabilities that are measured at fair value at 31 December
2014.
Carrying amount / fair value at 31 December 2014
Level 1
Level 2
Level 3
-
-
53,722
Derivatives
72,740
-
Financial liabilities:
Derivatives
-
(174,997)
-
Level 1
Level 2
Level 3
-
-
-
Derivatives
28,822
-
Financial liabilities:
Derivatives
-
(64,326)
-
Financial assets:
Financial assets
Carrying amount / fair value at 31 December 2013
Financial assets:
Financial assets
There were no transfers between levels 1, 2 and 3 during the year.
Level 1
Fair value is measured using list prices from active markets for identical financial instruments. No adjustment is made with a
view to these prices.
Level 2
The fair value of financial instruments not traded on an active market is determined using valuation methods which maximise
the use of observable data, where available, and rest as little as possible on the Company’s own estimates. Classification at
level 2 presupposes that all the significant data required to determine fair value are observable data.
Level 3
Fair value is not based on observable market data (that is, unobservable inputs).
27
The following table presents the changes in Level 3 instruments for the year ended 31 December 2014:
2014
2013
Opening balance
Additions of available for sale financial assets
Interest income
Revision of estimate of financial assets recognised in profit and loss
59,253
3,162
(8,693)
-
Closing balance
53,722
-
8,693
-
8,693
-
Revision of estimate of financial assets for the period included in
profit or loss for assets held at the end of the reporting period, under
‘Other financial items’
Change in unrealised gains or losses for the period included in
profit or loss for assets held at the end of the reporting period
The key unobservable input for the level 3 instruments is the discount rate and the assumption regarding the exercise of option
(see Note 27).
If the change in the discount rate would be shifted by +/– 5% the impact on profit or loss would be USD 3.5 million.
28
Note 4: Critical accounting estimates and judgments
In the application of the Company's accounting policies, which are described in note 2, management is required to make
judgements, estimates and assumptions about the carrying amounts of assets and liabilities that are not readily apparent from
other sources. The estimates and associated assumptions are based on historical experience and other factors that are
considered to be relevant. Actual results may differ from these estimates.
The estimates and underlying assumptions are reviewed on an on-going basis. Revisions to accounting estimates are
recognised in the period in which the estimate is revised if the revision affects only that period or in the period of the revision
and future periods if the revision affects both current and future periods.
The Company makes estimates and assumptions concerning the future. The resulting accounting estimates will, by definition,
rarely equal the related actual results. The following are the critical judgements and estimations, that management has made in
the process of applying the entity's accounting policies and that have the most significant effect on the amounts recognised in
the financial statements:
Re-domiciliation to Cyprus in 2009 - Exit tax.
The Company moved from Norway to Cyprus in May 2009. According to the Norwegian Tax Act Section 10-71 prevailing in
2009, a company that emigrates and ceases to be tax resident in Norway is subject to exit tax. In addition, assets and liabilities
that were taken out of the Norwegian area of taxation – notwithstanding an actual emigration – were governed by the
Norwegian Tax Act Section 9-14 prevailing in 2009, whereby payment of the assessed exit tax for certain assets and liabilities
could be deferred until the time of realization and the tax would be abolished if these assets and liabilities were not sold within
five years. Further, if these assets and liabilities were realised within this period, the actual realisation value would be used as
basis for the calculation of the final exit tax if this value was lower than the estimated value on time of exit.
The exit tax according to section 10-71 was calculated on any potential gain related to the assets that the exiting company
owned the day preceding the re-domiciliation. The capital gain/loss was calculated as if the assets were realized for tax
purposes at this time. No deferral was allowed. In contrast, capital gains on assets or shares of similar domestic transactions
are not taxable until they are realized.
The Company was advised that the Norwegian exit tax rules in 2009 in the Norwegian Tax Act Section 10-71 were in conflict
with the European Economic Area (the “EEA”) Agreement with respect to the principle of freedom of establishment. The
Company therefore filed a complaint with the EFTA Surveillance Authority (the “ESA”).
In the tax return for the income year 2009, the Company maintained the view that no immediate exit tax should apply. In the
event that the Group had to pay the exit tax, the Company estimated in the tax return for 2009 that the tax could be offset
against available losses. In 2010, the tax office notified the Company that it was considering to assess an exit tax.
On 2 March 2011, ESA sent a “reasoned opinion” to the Norwegian Ministry of Finance for failing to comply with its obligations
under Articles 31, 34 and 40 of the Agreement on the European Economic Area by imposing immediate taxation on companies
that transfer their seat or assets and liabilities to another EEA State and on the shareholders of such companies and for breach
of the SE regulation.
According to ESA, Norway is in breach of the EEA Agreement by imposing an immediate tax on companies, or the
shareholders of companies, that transfer their seat to another EEA State. The Authority considers that such immediate taxation
penalizes those companies that wish to leave Norway. It results in less favourable treatment compared to companies which
relocate or merge within Norway. The rules in question are, therefore, likely to dissuade companies from exercising their right of
freedom of establishment and, in certain circumstances, they also hinder the free movement of capital. As a result, these rules
constitute unlawful restrictions according to EEA law.
The Norwegian Government was requested to take the necessary measures to comply with the reasoned opinion within two
months. As a consequence, the tax rules in respect of exits to EEA countries were amended with effect from 2011. The tax
liability on owner and company level for companies relocating to normal tax countries within the EEA was dismantled. For
companies relocating to low tax countries within the EEA the exit tax rules will not apply if the company is effectively
established in the low tax country. Assets that are taken out of the Norwegian area of taxation will be governed by the existing
Tax Act Section 9-14, whereby a payment of the assessed tax for physical assets can be deferred.
In National Grid (C-371/10) of 29 November 2011 the ECJ found that the treaty provisions prohibits legislation of a Member
State which prescribes the immediate recovery of tax on unrealized capital gains relating to assets of a Group transferring its
place of effective management to another Member State at the very time of that transfer. The court further held that the
legislation of a Member State must provide a choice for the relocating Group to defer the payment for the capital gains taxation
until subsequent actual realization.
This view is upheld in the Arcade Drilling (Case E-15/11) where the EFTA Court stated that immediate recovery of exit tax is
precluded by article 31 EEA.
Based on the above, the Company is of the opinion that immediate taxation in the Tax Act section 10-71 is in breach with the
EEA-agreement. The Company is of the opinion that the Norwegian Tax Act Section 9-14 prevailing in 2009 is not in breach of
the EEA-agreement, and thus the Company has argued that it should be subject to exit tax pursuant to section 9-14.
On the 5 November 2014 the tax office delivered its exit tax decision in this case. The tax office found that the exit as such was
regulated by the Tax Act section 10-71 and further that section 9-14 was inapplicable.
Consequently, the tax office held that the exit tax does not allow a reduction of the estimated exit value based on actual
realisation and the exit tax is not terminated within a five year period. The tax office increased the taxable income of Songa
29
Offshore SE by NOK 1.8 billion and the tax office set off the increased income directly against the carry forward of losses.
Further the tax office did not refer the exit tax to the gain/loss account. Administratively the decision is final, and there is no
further latent exit tax.
The Company has decided to submit a writ on the matter. It will also be argued that section 10-71 (as it read in the 2009version) is in breach of EEA law, and that the exit tax should be regulated by section 9-14. If the court should find that section
9-14 is inapplicable, and rather apply section 10-71, the Company will argue that the exit tax nevertheless must be postponed
until the time of actual realisation, as immediate exit tax is in breach of the EEA agreement. Further the Company will argue
that the exit tax gain should be transferred to the company's gain/loss account.
Australian withholding tax
Withholding tax case
Upon review of the bareboat charter arrangements entered into between Songa Offshore entities on 11 May 2009, the
Commissioner of Taxation ("Commissioner") determined that Songa Offshore SE (“SOSE”) entered into or carried out the
arrangements for the sole or dominant purpose of obtaining a withholding tax benefit pursuant to Part IVA of the Income Tax
Assessment Act 1936.
To give effect to his determination, the Commissioner imposed an administrative penalty on Songa Offshore Pte Ltd (“SOPL”)
for A$31.1 m. The administrative penalty represents the withholding tax that the Commissioner purports should have been
withheld from lease payments paid by Songa Offshore Pte Ltd to Songa Offshore SE in the year ended 31 December 2009
("2010 tax year"). In addition, the Commissioner issued an amended assessment to Songa Offshore Pte Ltd for A$30.4m plus
short fall interest charge of A$4.3 m. The amended assessment represents the disallowance of deductions for the lease
payments during the 2010 tax year. The Commissioner has not imposed a shortfall penalty on Songa Offshore Pte Ltd.
The Commissioner also served a notice of withholding tax payable on Songa Offshore SE for A$31.1 m for the 2010 tax year.
The withholding tax payable by Songa Offshore SE is the same liability the subject of the administrative penalty imposed on
Songa Offshore Pte Ltd. It follows that the primary tax exposure of Songa Offshore is A$31.1m. The Commissioner also
imposed a scheme shortfall penalty on Songa Offshore SE for $7.8m for the 2010 tax year. Both the withholding tax and
scheme shortfall penalty are subject to general interest charge.
As at 31 December 2014, the total liability of Songa Offshore under the withholding tax case in respect of the 2010 tax year is
A$62.1 m, inclusive of penalties and interest.
It should be noted that the Commissioner has only issued notices of withholding tax payable and assessments for the 2010 tax
year at this stage. The bareboat charter arrangements were retained in both the 2011 and 2012 tax years.
Should the Commissioner proceed to issue notices and assessments for these years, we calculate that the total liability of
Songa Offshore under the withholding tax case would increase to approximately A$88.8m, inclusive of interest and penalties.
Songa Offshore strongly disputes the Commissioner's position that Part IVA applies to impose withholding tax in respect of the
bareboat charter arrangements. Songa Offshore has received a legal opinion from preeminent Senior Counsel which concludes
that it is not open to the Commissioner to make such a determination. The ATO General Anti-Avoidance Panel which
considered the matter has acknowledged that Songa Offshore has a reasonably arguable position. Under Australian tax law, a
reasonably arguable position is as likely to be correct as not correct. Songa Offshore's position in defending the withholding tax
case has been enhanced by the evidence filed which highlights the unreasonableness of the Commissioner's position and has
caused him to issue alternative assessments (discussed below).
Alternative case
In reply to the evidence filed by Songa Offshore, the Commissioner decided to pursue Songa Offshore on an alternative basis
(in addition to the withholding tax case). Under the alternative case, the Commissioner contends that Songa Offshore SE
entered into the bareboat charter arrangements for the dominant purpose of avoiding the inclusion of assessable income (and
resulting income tax). The Commissioner’s alternative case is predicated on the hypothesis that in the absence of the bareboat
charter arrangements, Songa Offshore SE would have continued to own and operate the Songa Venus and Songa Mercur rigs
in Australia post-11 May 2009 and therefore would have derived drilling income in Australia post-11 May 2009.
In order to give effect to the alternative case, on 25 August 2014 the Commissioner issued an alternative Part IVA
determination to Songa Offshore SE and on 26 August 2014 the Commissioner issued an alternative amended assessment to
Songa Offshore SE for $51.4m plus shortfall interest charge of A$17 .3m. The Commissioner also imposed a scheme shortfall
penalty on Songa Offshore SE for $12.8m. The ATO have advised that the scheme shortfall penalty will be reduced should it be
later determined that the income tax payable by Songa Offshore SE under the alternative case should be reduced by
compensating adjustments (discussed below).
It is important to note that the alternative amended assessment takes into account "primary" adjustments to include gross
drilling income that the Commissioner purports would have been derived by Songa Offshore SE in the absence of the bareboat
charter arrangements only. The amended assessment does not reflect operating, financing and other expenses that would be
deductions allowable to Songa Offshore SE under the alternative case. The ATO is of the view that these deductions can be
allowed as "compensating adjustments” to reduce Songa Offshore SE 's income tax liability at a later stage.
Another consequence of the ATO's alternative case is that income tax actually paid by Songa Offshore Pte Ltd under the
bareboat charter arrangements should also be refundable as compensating adjustments (on the basis Songa Offshore Pte Ltd
would not be subject to income tax under the alternative case).
30
Taking into account these compensating adjustments, it is estimated at a high level that the primary liability of Songa Offshore
for the 2010 tax year is approximately $15.1m before penalties and interest. As at 31 December 2014, the total liability of
Songa Offshore under the alternative case for the 2010 tax year is approximately A$24.8m, inclusive of penalties and interest.
Again, it should be noted that the Commissioner has only issued assessments for the 2010 tax year at this stage. We estimate
that the total liability of Songa Offshore under the alternative case for the entire 2010 - 2012 tax year period, taking into account
compensating adjustments, is approximately A$24.2m, inclusive of penalties and interest. This amount is significantly less than
the withholding tax liability of A$88.8 m for the same period.
Songa Offshore lodged objections with the Commissioner against the position of the ATO. The Commissioner advised that
Songa Offshore’s objection in relation to the alternative case was disallowed and consequently Songa Offshore filed an appeal
to Federal Court of Australia on 3 March 2015.
As both the withholding tax case proceedings and the potential proceedings relating to the alternative case will rely on the
same facts, the hearing date of the withholding tax case has been adjourned until 30 November 2015 to allow sufficient time for
the alternative tax case to proceed to appeal stage to permit the proceedings to be heard concurrently.
Any settlement outcome in respect of the Part IVA dispute would be offset by certain credits in Songa Offshore's favour.
Australian tax issue on transfer pricing and depreciation
The previous transfer pricing and depreciation disputes have now been settled. On 3 July 2014, Songa Offshore and the ATO
agreed to settle the dispute, including income tax, shortfall interest charge, penalties and general interest for A$1.818m. This
amount has been paid to the ATO in full.
Income taxes, deferred taxes and indirect taxes
The Company is subject to income taxes and indirect taxes according to the laws of the jurisdictions in which the Company is
operating. The rigs are operating in various territories and are from time to time subject to taxation in the relevant territory due
to permanent establishment taxation and subject to varying indirect tax laws. Significant judgement is required in determining
the worldwide provision for income taxes and charging and handling of indirect taxes. There are many transactions and
calculations for which the ultimate tax determination is uncertain. The Company recognises liabilities for anticipated tax audit
issues based on estimates of whether additional taxes will be due. Where the final tax outcome of these matters is different
from the amounts that were initially recorded, such differences will impact the income tax, indirect tax and deferred income tax
assets and liabilities in the period in which such determination is made.
Deferred tax assets are recognised for all unused tax losses to the extent that it is probable that taxable profit will be available
against which the losses can be utilised. To this respect deferred tax asset is based on the assessed profits from fixed contract
periods not including options to extend contract periods not yet exercised, as it cannot be assessed with reasonable certainty
whether it is probable that such options will be exercised. Significant management judgment is required to determine the
amount of deferred tax assets that can be recognised, based upon the likely timing and the level of future taxable profits
together with future tax planning strategies.
Impairment of rigs
At each balance sheet date judgement is used to determine whether there is any impairment of the Company's fleet of rigs. If
such an indication exists, the asset's recoverable amount is estimated. When considering impairment indicators, the Company
considers both internal (e.g. adverse changes in performance) and external sources (e.g. adverse changes in the business
environment). These are analysed by reviewing day rates and broker valuations. If an indicator of impairment is noted,
management estimate is required to determine the amount of impairment, if any.
In order to measure the potential impairment, the carrying amount of the rigs would be compared to the recoverable amount,
which is the higher of value in use or fair value less costs to sell. The value in use is calculated as the present value of the
expected future cash flows for the individual units, requiring significant management estimates of the proper discount rates as
well as the length and amounts of cash flows. Fair value is calculated as the mean of two independent brokers’ estimates on
the rig values. An impairment loss would then be recognised to the extent that the carrying amount exceeds the recoverable
amount.
Useful lives for depreciation of fixed assets
Depreciation of rigs and fixtures is computed using the straight line method over estimated useful lives. The cost of rigs has
been categorised separately by its main components, and useful lives have been determined for each component. The primary
portion of the rigs is depreciated over 25 years from the day of acquisition of the rig, while other components are depreciated
over their useful lives, ranging from 2.5 to 25 years. Costs which relate to special periodic surveys categorised as full are
amortised over a five year period respectively. Estimates of useful lives are reviewed at each financial year end, and adjusted if
appropriate. Any changes are accounted for prospectively as a change in accounting estimate. The estimated useful life of the
rigs could change, resulting in different depreciation amounts in the future.
31
Impairment of investments in subsidiaries and associates
The Company periodically evaluates the recoverability of investments in subsidiaries and associates whenever indications of
impairment are present. Indicators of impairment include such items as declines in revenues, earnings or cash flows or material
adverse changes in the economic or political stability of a particular country, which may indicate that the carrying amount of an
asset is not recoverable. If facts and circumstances indicate that investment in subsidiaries/associates may be impaired, the
estimated future undiscounted cash flows associated with these subsidiaries/ associates would be compared to their carrying
amounts to determine if a write-down to fair value is necessary.
Note 5: Revenue and management fee
2014
2013
79,345
32,139
111,485
110,759
19,279
29,131
159,168
Charter hire revenue (note 21)
Upgrade/ special periodic survey income (note 21)
Other income
Total revenue
The decrease in revenue in 2014 compared to 2013 is mainly due to the sale of Songa Mercur and Songa Venus on 23 July
2014.
Other income mainly relates to the recognition of revenue related to investments paid by clients.
Management fee
2014
2013
Management fee to Group companies (note 21)
7,183
3,264
Total management fee
7,183
3,264
2014
2013
-
(444)
-
(444)
Note 6: Other gain and loss
Disposal of fixed assets
32
Note 7: Operating and General and administrative expenses
The operating expenses are split as follows:
2014
2013
2,664
4,996
7,660
8,117
(66)
8,051
393
1,778
493
2,664
6,605
1,777
(266)
8,117
2,480
810
1,706
4,996
94
(160)
(66)
2014
2013
2,056
3,981
6,037
2,134
5,356
7,490
1,052
360
442
202
2,056
932
829
312
60
2,134
2,874
327
170
436
3,807
2,850
371
1,604
531
5,356
Total rig operating expenses
Total employee benefit expenses
Total operating expenses
Total rig operating expenses are split as follows:
Repair and maintenance
Other operating expenses
Miscellaneous and administrative
Total employee benefit expenses are split as follows:
Salary
Social security tax
Bonus and stock based compensation
General and administrative expenses are split as follows:
Total administrative expenses
Total employee benefit expenses
Total general and administrative expenses
Total administrative expenses are split as follows:
Legal and consulting fees
Other office costs
Travel expenses
Other expenses
Total employee benefit expenses are split as follows:
Salary
Social security tax
Bonus and stock based compensation
Director’s fee (Note 26)
Fees related to the Auditors PricewaterhouseCoopers Ltd, are included in Legal and consulting fees above. The fee is split as
follows (VAT is not included):
2014
2013
100
6
106
116
5
121
Statutory audit
Other assurance services
Tax consultant services
33
Note 8: Finance income, finance costs and other financial items
2014
2013
(75,838)
(3,329)
(79,166)
(69,259)
(230)
(69,489)
Finance cost
Interest expense to related parties (note 21)
Interest expense
Other finance expenses
Total finance costs
27,153
69,526
104
96,783
7,272
77,794
48,299
133,365
Other financial items:
Revision of estimate of financial assets
Net foreign exchange loss/ (gain)
Total other financial items
8,693
2,760
11,453
751
751
Finance income
Interest income from related parties (note 21)
Other Interest income
Total finance income
The interest expense decreased by USD 11.6 million mainly reflecting the positive effect of last years’ refinancing and in also
the repayment of Swedbank (USD 50 million) and Statoil (USD 110 million) loans.
Net finance costs in 2014 were USD 17.6 million compared to USD 63.9 million in 2013, a decrease of 72.9%. The decrease is
primarily explained by the absence of the refinancing accounting effects of USD 48.2 million incurred in the corresponding prior
year.
Other financial items worth USD 11.5 million were recognized in 2014. USD 8.7 million is attributable to the Songa Mercur sale,
where estimates for two earn-out arrangements that are now classified as financial assets have been reassessed in light of the
weaker drilling market. USD 2.8 million represents realized foreign exchange losses.
Note 9: Tax
2014
2013
2,396
10,305
12,700
428
16,583
17,011
2014
2013
(31,290)
(3,911)
3,409
8,248
(4,977)
9,931
12,700
(44,617)
(5,577)
11,821
14,725
(4,257)
5,110
7
21,802
(26,620)
17,011
Tax expense comprises:
Current tax expense in respect of current year
Changes in deferred tax
The tax expense for the year can be reconciled to the accounting profit as follows:
Loss before tax
Income tax expense calculated at applicable tax rate of Cyprus of 12.5%
Tax effect of expenses not deductible for tax purposes
Impairment charge
Tax effect of allowances and income not subject to tax
Impact of change in tax rate
10% penalty on low provisional
Provision for tax on assets held for sale
Taxes applicable to jurisdictions other than Cyprus
Tax expense recognised in statement of comprehensive income
The Company was subject to income tax on taxable profits at the rate of 10% up to 31 December 2012, and at the rate of
12.5% from 1 January 2013.
From 1 January 2009 onwards, under certain conditions, interest may be exempt from income tax and be subject only to
special contribution for defence at the rate of 10%; increased to 15% as from 31 August 2011, and to 30% as from 29 April
2013.
34
In certain cases dividends received from abroad may be subject to special contribution for defence at the rate of 15%,
increased to 17% as from 31 December 2011 increased to 20% as from 1 January 2012; reduced to 17% as from 1 January
2014.
Note 10: Rigs, machinery and equipment
Rigs
Fixture
Total
617,947
54
Year ended 31 December 2014
Opening net book amount
Additions
Machinery and equipment fully written off
Book value before depreciations
Total depreciation charge
Impairment
Closing net book amount
23,032
-
618,001
23,032
(4,047)
-
(4,047)
636,932
54
636,986
(66,649)
(2)
(66,651)
(4,688)
-
(4,688)
565,595
52
565,647
At 31 December 2014
Cost
Accumulated depreciation
Net carrying amount
978,311
865
979,175
(412,716)
(812)
(413,528)
565,595
52
565,647
Estimated lifetime
2.5-25 years
3-10 years
Depreciation rates
4%-40%
10%-33%
Depreciation method
Straight line
Straight line
Rigs
Fixture
Total
Year ended 31 December 2013
921,398
46
921,444
Additions
60,422
11
60,433
Disposals
(519)
-
(519)
(317,951)
-
(317,951)
Opening net book amount
Reclassification to asset held for sale
Book value before depreciations
663,351
57
663,408
Total depreciation charge
(91,093)
(3)
(91,096)
Reclassification to asset held for sale
137,951
-
137,951
Impairment
(92,261)
-
(92,261)
Closing net book amount
617,947
54
618,002
At 31 December 2013
Cost
Accumulated depreciation
Net carrying amount
964,014
865
964,879
(346,067)
(810)
(346,877)
617,947
54
618,002
Estimated lifetime
2.5-25 years
3-10 years
Depreciation rates
4%-40%
10%-33%
Depreciation method
Straight line
Straight line
Rigs include the Songa Dee and the Songa Trym. The rigs are pledged for USD 269.3 million to secure borrowings of the
Company.
The Company entered into an agreement for the sale of the Songa Venus and the Songa Mercur to Opus Offshore on 25 April
2014. The transaction was closed on 23 July 2014. Due to this, the two rigs were presented as ‘assets held for sale’ in the
statement of financial position until the handover date. Please also refer to note 22.
The additions in rigs in 2014 mainly relate to the upgrades of the Songa Dee during its yard stay. No borrowing costs have
been capitalised. Assets have been pledged to secure borrowings of the Company (see note 18).
35
Impairment
The Company has recognised USD 64.7 million (2013: USD 92.3 million) as impairment loss. The impairment is related to
the following assets:
2014
2013
Songa Mercur and Songa Venus "held for sale"
Impairment of fixed assets
60,652
60,652
92,261
92,261
Machinery and equipment fully written off
Total impairment
4,047
64,699
92,261
The impairment of USD 60.7 million is in relation to Songa Venus and Songa Mercur (2013: USD 92.3 million), consists of USD
4.7 million related to certain fixed assets of the two rigs that were on the rig when delivered to the buyer, USD 41.0 corresponds
to the two rigs’ EBITDA in the operational period of 2014 and USD 15.0 million relates to the valuation of the two rigs, both in
accordance with the accounting practice for Assets Held for Sale.
During 2014, a value in use assessment was performed for Songa Dee and Songa Trym. No impairment was recognised as the
value in use was higher that the book value for both rigs.
The main assumptions applied in the value in use calculations are:
o
Weighted average cost of capital (WACC): 8.75%
o
Revenue: In accordance with contract revenue for fixed contract period and option period. Thereafter the Group has
applied estimated contract revenue based on contracted values today for similar rigs.
o
Utilization: 97.00 %
Please note that the assumptions above are all subject to significant judgement and that there is uncertainty to the outcome of
these assumptions. Due to this uncertainty, Songa has performed sensitivity analysis of the main assumption for the two rigs
further below.
During 2013, an impairment assessment was performed for Songa Trym. No impairment was recognised as the value in use
was higher that the book value for the rig. Songa Offshore has performed sensitivity analyses of the main assumptions above
for two rigs. The main assumptions applied in the value in use calculations are the same as mentioned above.
Sensitivity analyses
An increase/ reduction in WACC with one percentage point, from 8.75 % to 9.75 % and 7.75%, would reduce/ increase the
value in use with USD 10.2 million and USD 38.9 million respectively.
A reduction of 5 % in revenue would reduce the value in use with USD 68.8 million.
A reduction of 2 percentage points in utilization, from 97.00 % to 95.00 %, would reduce the value in use with USD 20.4 million.
Note 11: Deferred tax
Deferred tax is calculated in full on all temporary differences under the liability method using the applicable tax rates (note 9).
Deferred tax assets and liabilities are offset when there is a legally enforceable right to set off current tax assets against current
tax liabilities and when the deferred taxes relate to the same fiscal authority.
Deferred tax assets are recognised only to the extent that they relate to foreseeable taxable profits as shown below:
2014
2013
76,077
76,077
86,344
86,344
Deferred tax assets and deferred tax liabilities
Gross deferred tax asset on total tax losses
Gross deferred tax and unrecognised tax losses
Net recognised deferred tax assets
As at 31 December 2014 the Company had tax losses carried forward of USD 234 million compared to USD 358 million in
2013. These losses carried forward relate mainly to Norwegian branches of the Company and have no expiry date. Deferred
tax assets are recognised only to the extent that they relate to foreseeable taxable profits.
36
Note 12: Investments in subsidiaries
2014
2013
237,357
340,813
(1,288)
576,882
253,337
1,772
(17,752)
237,357
Balance 1 January
Additions
Impairment charge
Balance at 31 December
The increase in 2014 is mainly due to the capitalisation of the loan of Songa Delta Ltd.
The impairment charge for the year 2014 of USD 1.3 million represents a reduction in the carrying value of the investment in
subsidiaries, Songa Management Inc of USD 0.9 million and Songa Eclipse Limited of USD 0.4 million to reflect their
recoverable amount at year end.
The impairment charge performed during the year 2013 of USD 17.8 million represents a reduction in the carrying value of the
investment in subsidiaries, Songa Management AS of USD 4.1 million, Songa Services AS of USD 1.5 million, Songa Offshore
Pte Limited of USD 4.9 million, Songa Management Inc of USD 5.6 million and Songa Management Limited of USD 1.7 million
to reflect their recoverable amount at year end.
Details of the subsidiaries are as follows:
Subsidiaries
Deepwater Driller Ltd
Pegasus Invest Pte Ltd
Songa Offshore Equipment Rental Ltd (previously
Shenga Trading Ltd)
Songa Offshore Equipment Rental AS
Songa Offshore T&P Cyprus Ltd
Songa Offshore T&P UK Ltd
Songa Offshore T&P Norway AS
Songa Offshore Delta Ltd
Songa Offshore Eclipse Ltd
Songa Offshore Eclipse Management Pte Ltd
Songa Offshore Enabler Ltd
Songa Offshore Encourage Ltd
Songa Offshore Endurance Ltd
Songa Offshore Equinox Ltd
Songa Offshore Management AS
Songa Offshore Management Inc
Songa Offshore Management Ltd
Songa Offshore Drilling Ltd
Songa Offshore Malaysia Sdn.Bhd
Songa Offshore Pte Ltd
Songa Offshore Pty Ltd
Songa Offshore Rig AS
Songa Offshore Rig 2 AS
Songa Offshore Saturn Ltd
Songa Offshore Saturn Chartering Pte Ltd
Songa Offshore Services AS
Songa Offshore Services International AS
Country of Incorporation
2014
2013
Cayman Islands
Singapore
Cyprus
100
100
100
100
100
100
Norway
Cyprus
United Kingdom
Norway
Cyprus
Cyprus
Singapore
Cyprus
Cyprus
Cyprus
Cyprus
Norway
USA
Cyprus
Cyprus
Malaysia
Singapore
Australia
Norway
Norway
Norway
Cyprus
Singapore
Norway
Norway
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
*
* Beneficiary owner
The shares of the Company in Songa Offshore Delta Ltd, Songa Offshore Pte Ltd, Songa Offshore Drilling Ltd and Songa
Offshore Rig AS are pledged as security for the borrowings of the Company (note 18).
37
Note 13: Other assets
2014
2013
1,481
2,000
1,788
3,383
8,652
319
971
2,773
4,063
Deposits
Other receivables
VAT receivables
Earned revenue
Other assets
The fair values of trade and other assets due within one year approximate to their carrying amounts as presented above.
Note 14: Current tax assets
2014
2013
2,666
3,019
2,666
3,019
2014
2013
795,678
1,454
797,132
990,587
333
990,920
194,253
16
194,269
396,302
18
396,320
2014
2013
193,797
387,666
193,797
102
370
194,269
387,666
124
8,530
396,320
Corporation tax
Note 15: Credit quality of financial assets
Fully performing other receivables
Group 1*
Group 2*
Cash at bank and short term bank deposits
Aa3
Caa3
*Group 1: Companies within the Group
*Group 2: Third Party Customers
Note 16: Cash and cash equivalents
Cash at the bank and in hand
Cash and cash equivalents for the purpose of the cash flow
statement
Escrow account regarding employee’s tax
Cash collateral
Total cash and cash equivalents
38
Note 17: Share capital and Share premium
Number of
shares (000)
Share
capital
Share
premium
Cost of share
capital
Total issued
capital
1 January 2013
31 December 2013
202,913
610,000
812,913
31,191
92,256
123,447
484,188
157,965
642,153
(9,887)
(14,258)
(24,145)
505,492
235,963
741,455
1 January 2014
31 December 2014
812,913
61,000
873,913
123,447
9,314
132,761
642,153
16,181
658,334
(24,155)
(126)
(24,281)
741,445
25,369
766,814
Issued capital
On 26 February 2014 the Company announced the completion of the subsequent offering of 61 million shares at NOK 2.50 per
share.
The total number of issued shares as at 31 December 2014 was 873,912,544, each with a par value of EUR 0.11.
On 23 December 2013 the Company announced the completion of the private placement dated 23 December 2013, directed
towards existing shareholders and new investors. The Private Placement was significantly over subscribed, and the Board of
Directors of the Company resolved the completion of the Private Placement. The Company allocated 610,000,000 new shares
at a price of NOK 2.50 per share in the private placement, with gross proceeds of NOK 1,525 million (USD 250.0 million).
Note 18: Borrowings
2014
2013
212,161
282,292
109,649
604,102
265,669
337,089
103,584
706,342
167,874
167,874
24,261
327,770
352,031
771,976
1,058,373
Non-current
Bond loans
Convertible bond
Current
Bank loan related to 'asset held for sale'
Total borrowings
As of 31 December 2014, total drawn and outstanding debt for the Company based on principal amounts, including cross
currency swaps, amounted to USD 913.3 million. Drawn and outstanding debt consisted of the following:
o
o
o
o
o
USD 277.8 million outstanding of the bank facility that the Company entered into in October 2010, with a LIBOR +
2.93% margin. The loan is repaid with quarterly instalments until final maturity in October 2016, on which date a
balloon payment of USD 177.9 million is due.
USD 183.9 million outstanding under the senior unsecured NOK 1,400 million bond issued in November 2011. The
NOK bond carries an 8.40% fixed interest. In December 2013 and following the restructuring the full NOK 1.400
million bond was swapped to USD 250.0 million at a fixed coupon of 7.73%. The swap matures with the maturity of
the NOK bond in May 2018. Upon maturity the bond will be repaid at 103.5% of par value.
USD 92.2 million outstanding under the senior unsecured NOK 750.0 million bond issued in June 2012. The NOK
bond carries a 7.50% fixed interest. In December 2013 and following the restructuring the full amount NOK 750
million bond was swapped to USD 124.7 million at a fixed coupon of 7.37%. The swap matures with the maturity of
the NOK bond in December 2018
USD 110.8 million outstanding under the Statoil credit facility established in June 2012. The interest rate is 3 months
LIBOR + 4.75%. The remaining balance shall be repaid equally upon delivery of each of the Cat D 1 and 2 from the
yard.
USD 150.0 million outstanding under the convertible bond issued in December 2013. USD 103.6 million of the
convertible bond is classified as a non-current liability, according to IAS 32: Financial Instruments: Presentation. The
balance of USD 43.5 million was according to the same accounting standard recognized as equity at initial
recognition. The convertible bond has a conversion price of USD 0.51032, semi-annual coupon payments at 4.00%
per annum and matures in December 2019.
39
On 31 December 2014 the cash balance in the Company was USD 194.3 million while the requirement in the Company’s loan
agreements is being no less than USD 50.0 million.
As of 31 December 2013 the Company has classified USD 24.3 million as bank loan related to ‘asset held for sale’ in relation to
the sale of Songa Venus and Songa Mercur to Opus Offshore.
Overview of carrying amount at year end
Carrying amount
2014
2013
Fair value
2014
2013
388.5
246.4
118.9
630.7
342.3
103.6
Amounts in USD million
Bank borrowings
Bond loans
Convertible bond
380.0
282.3
109.6
617.7
337.1
103.6
The fair value of bank borrowings equals their nominal amount. The bond borrowings are presented at fair value based on the
last observable closing price at 31 December. The fair values are within level 2 of the fair value hierarchy.
At 23 December 2013, the Company issued convertible bonds at a conversion price of USD 0.51032 with semi-annual coupon
payments at 4.00% per annum. The bonds mature five years from the issue date at their nominal value. The values of the
liability component and the equity conversion component were determined at the issuance of the bond.
The convertible bond recognised in the balance sheet is calculated as follows:
2014
2013
150,000
(39,538)
(6,878)
103,584
12,072
(6,000)
1
(8)
109,649
150,000
(39,538)
(6,878)
103,584
103,584
2014
2013
2.4
-
3.2
4.9
Face value of convertible bond issued on 23 December 2013
Equity component
Cost of issuance
Liability component on initial recognition at 23 December 2013
Interest expense
Interest paid
Fees expensed
Fees paid
Liability component at 31 December
Accrued interest split included in other liabilities
Amounts in USD million
Bank borrowings
Bond loans
Details regarding borrowings
Facility
Original
amount
Statoil
USD 110.8
Syndicate
USD 277.8
Bond loan
NOK 1,400.0
Bond loan
NOK 750.0
Convertible
bond
USD 103.6
Interest
3M Libor + 4.75%
margin
3M Libor + 2.93%
margin
Swapped to USD
250.0 and fixed
interest 7.73%
Swapped to USD
124.7 and fixed
interest 7.37%
Fixed 4%
Down
payment
Ballon
payment on
maturity
Quarterly
-
-
Upon Cat D 1 + 2
Delivery
Quarterly
USD 14.3
USD 177.9
20 October 2016
Semi-annual
-
-
17 May 2018
Semi-annual
-
-
11 December 2018
Semi-annual
-
-
23 December 2019
Interest pmt
frequency
Maturity date
40
Note 19: Other liabilities
2014
2013
1,501
234
1,064
2,439
4,515
9,911
19,664
2,903
257
4,170
3,239
4,892
15,462
Accrued Salaries Wages + Compensation
Withholding Tax
Accruals
Bank loan interest
Bond loan interest
Songa Venus BBC/Opex liability
Other liabilities
Total other liabilities
The Company has recognised an onerous obligation of USD 2.9 million for the payment of certain bareboat charter expense
and certain other administrative expenses of USD 1.6 million in relation the leaseback of the Songa Venus, since the
unavoidable costs of meeting the obligations under the contract exceed the economic benefits expected to be received under it.
Both obligations are presented in the above table under “Songa Venus BBC/Opex liability”. Amounts paid for these liabilities
during 2014 amounted to USD 2.6 million.
Note 20: Share based compensation
At year end 2014 the Company operates a cash-settled share-based compensation plan and an equity settled plan for
management.
Cash settled synthetic options – (SAR)
In 2009 the Company established a program based on cash settled synthetic options, also known as stock appreciation rights
(SAR). The synthetic shares have been granted by Songa Offshore SE and are based on the share price of the ultimate parent,
Songa Offshore SE, whereas the employees are in different subsidiaries. Settlement of the synthetic share options will be done
by funds from Songa Offshore SE, but actual payment will be done by each subsidiary/branch in order to comply with local tax
and reporting requirements. Synthetic share options are granted to directors and to selected employees. The exercise price of
the granted options is equal to the market price of the shares at the date the options are granted. Options are conditional on the
employee completing 36 months of service. “Vested” means that no rights are earned until after 12 months.
Further, any person leaving the Company may only exercise options fully vested at the time. Finally, all options are immediately
exercisable in case of a change of control or a successful offer for the Company.
The Option series are vested and exercisable as follows:
o
o
o
o
o
Options in Option series 1 (labelled 1 in table below) are vested at 31 December 2012. The options may be exercised
at any time over the following 36 months.
Options in Option series 2 (labelled 2 in the table below) are vested 31 December 2013. The options may be
exercised at any time over the following 36 months.
Options in Option series 3 (labelled 3 in the table below) will be fully vested 31 December 2014. The options may be
Options were priced using Black & Scholes option pricing model. Where relevant, the expected life used in the model has been
adjusted based on management’s best estimate for the effects of non-transferability, exercise restrictions, and behavioural
considerations.
Option series
06.2012 - 1
06.2012 - 2
01.2013 - 2
01.2013 - 3
01.2013 - 4
05.2013 - 3
05.2013 - 4
05.2013 - 5
Outstanding
options
Grant date
Expiry date
Exercise price
Weighted average
fair value at yearend 2014
48,754
24,377
139,762
16,251
16,251
270,857
270,859
270,859
01.06.2012
01.06.2012
08.01.2013
08.01.2013
08.01.2013
21.05.2013
21.05.2013
21.05.2013
31.12.2015
31.12.2016
31.12.2015
31.12.2016
31.12.2017
21.05.2016
21.05.2017
21.05.2018
NOK 18.30
NOK 18.30
NOK 7.54
NOK 7.54
NOK 7.54
NOK 6.05
NOK 6.05
NOK 6.05
NOK 0.0000
NOK 0.0151
NOK 0.0014
NOK 0.1117
NOK 0.2197
NOK 0.0380
NOK 0.2100
NOK 0.3173
41
Overview of carrying amount at year end
2014
2013
Weighted
average
exercise price
Options
Weighted
average
exercise price
Option activity
Options
Balance at beginning of year
Granted
Transferred in
Transferred out
Modification/ Dividends
Forfeited
Expired
Balance at year end
416,000
500,000
-75,000
525,749
-349,407
1,017,342
NOK 18.19
NOK 6.05
NOK 13.99
NOK 6.05
NOK 16.01
NOK 14.57
NOK 4.23
830,000
258,000
-432,000
-240,000
416,000
NOK 22.57
NOK 6.61
NOK 19.42
NOK 22.47
NOK 14.46
443,122
NOK 9.21
260,000
NOK 23.33
Vested options
Due to issuance of new shares 2013 and 2014 the options in all series were adjusted in order to maintain their value. The
adjustment was made according to rules set by the Oslo Stock Exchange.
Outstanding options
Vested options
Outstanding options
31 December 2014
Weighted average
remaining contractual
life
Weighted average
exercise price
Vested options 31
December 2014
Weighted average
exercise price
1,017,342
1.93
NOK 6.95
443,122
NOK 9.21
Out of the 1,017,342 outstanding options, nil options were exercisable. Fully vested options are not exercisable when the
market value of the share is below the exercise price.
The cost related to share options in Songa Offshore SE is related to the Songa Offshore SE NUF branch. The recording of the
share options related to the other subsidiaries, namely, Songa Management Ltd, Songa Management AS and Songa Offshore
Pte Ltd is shown as an investment and nothing is recorded to the statement of comprehensive income.
Equity settled long term incentive plan (LTIP)
The equity settled plan (Long Term Incentive Plan, or “LTIP”) is in the form of restricted share units (RSU) granted to directors
and to selected employees. Each RSU gives the right to receive one share upon vesting. The fair value of each RSU is
calculated when the RSU is awarded to each employee and recognised on a straight line basis over the vesting period. Any
person leaving the Company may only exercise RSU fully vested at the time.
Finally, all RSU are immediately exercisable in case of a change of control or a successful offer for the Company.
The RSUs series are vested and exercisable as follows:
o
o
RSU in series 1 are vested and exercisable at 1 July 2015
RSU in series 2 are vested and exercisable at 1 January 2016
All RSU were granted in 2014 at a fair value of NOK 1.95. RSU were priced using Black & Scholes pricing model.
RSU series
Outstanding RSU
Grant date
Vesting date
Fair value
11.2014 - 1
450,447
13.11.2014
01.07.2015
NOK 1.95
11.2014 - 2
450,448
13.11.2014
01.01.2016
NOK 1.95
42
Overview of RSU at year end
2014
RSU activity
Balance at beginning of year
Granted
Exercised
Modification/Dividends
Forfeited
Expired
Balance at year end
RSU
900,895
900,895
2013
Weighted
average fair
value
Options
Weighted
average fair
value
NOK 1.95
NOK 1.95
-
-
Out of the 900,895 outstanding RSU NIL were exercisable at 31 December 2014..
The Company has recognised a cost of USD 0.3 million in 2014 related to the RSU with corresponding credit in other
reserves..
Note 21: Related party transactions
The largest shareholder of Songa Offshore, Perestroika AS, a company controlled by the Chairman, Mr. Frederik W. Mohn,
holds (together with related parties) a total of 50.21% of the shares in the Company.
Related party transactions
Charter hire revenue
2014
2013
59,227
20,118
79,345
60,351
50,408
110,759
Songa Offshore Pte Limited
Management fee
The Company has not received any management fee from related parties during 2014 (2013: USD NIL million).
The Company paid USD 7.2 million in management fee to related parties during 2014 compared to USD 3.3 million in 2013.
Upgrade / Special Periodic Survey income
2014
2013
-
19,279
-
19,279
43
Upgrade / Special Periodic Survey expenses
2014
2013
-
6,498
-
6,498
2014
2013
8,839
7,670
928
615
21,762
39,814
22,201
3,864
6,367
1,655
54,897
88,983
2014
2013
7,597
29,672
1,132
3,809
1,629
5
704
710
45,257
23,275
35,775
1,132
5
60,187
Dividend income from subsidiaries
Songa Offshore Services International AS *
Songa Offshore Services AS *
Songa Offshore Management Inc
Songa Offshore Management AS *
Songa Offshore Rig AS *
*Dividend relates to group contribution in Norway.
Year – end Balances
Receivables from subsidiaries
During 2013, the Company impaired the receivable from Songa Offshore Pte Ltd by USD 7.8 million.
44
Subject to an interest calculation of 4.5% + 3MUSD libor.
2014
2013
155,181
166,957
164,508
162,399
23,300
15,169
115
45
36,686
324
1,731
80
320
167
9,312
9,286
4,842
750,421
141,825
194,478
119,638
120,372
337,311
7,263
5,364
4,125
23
930,400
2014
2013
3,406
6,427
90
56
9,979
3,406
1,898
75
5,378
2014
2013
151,687
22,874
6,625
89,393
69,098
8,840
9,222
781
358,519
137,572
35,775
8,798
52,232
69,287
8,567
4,895
7,468
19,835
608
345,037
Songa Offshore Malaysia Sdn. Bhd
Songa Offshore Equipment Rental Ltd
Songa Offshore T&P Norway AS
Payables to subsidiaries
Songa Offshore Malaysia Sdn. Bhd
Loans from subsidiaries
Subject to an interest calculation of 4.5% + 3MUSD libor.
Songa Offshore Saturn Chartering Pte Ltd
Songa Offshore Eclipse Ltd
Songa Management Inc
45
Inter Company Finance Income
2014
2013
18,793
13,576
16,805
9,117
8,623
1,646
381
90
219
21
9
140
98
1,681
9
42
4,578
5
4
75,838
2,558
13,726
14,222
6,681
6,330
1,238
578
497
86
22,509
782
18
33
69,259
2014
2013
269
1,366
504
1,503
285
8,940
1,596
1,890
1,499
3,032
5,958
60
250
27,153
2,070
2,140
396
1,174
499
757
212
24
7,272
Songa Offshore Malaysia Sdh Bhd
Songa Offshore Saturn Chartering Pte Ltd, EG Branch
Songa Offshore Equipment Rental Ltd
Songa Offshore Eclipse Management Pte Ltd
Inter Company Finance Expense
Songa Offshore Saturn Chartering Pte Limited
Songa Offshore Saturn Limited
46
Remuneration to key management and to the Board of Directors
Remuneration 2014:
Pension
Benefits
in kind
Severance
payment
Annual
Leave
Paid out of
options
exercised
Total
109
39
49
-
-
-
963
766
109
39
49
-
-
-
963
-
-
-
-
-
-
-
-
-
201
-
-
-
-
-
-
-
201
77
-
-
-
-
-
-
-
77
75
-
-
-
-
-
-
-
75
73
-
-
-
-
-
-
-
73
5
-
-
-
-
65
-
-
70
Director's
fee
Salary
Bonus
-
766
-
Amounts in USD '000
Executive management:
Jan Rune Steinsland - CFO
Total remuneration executive
management
Board of Directors:
Frederik W. Mohn - Chairman
(appointed 24 January 2014)
Michael Mannering board member
Arnaud Bobillier - board member
Jon E. Bjorstad - board member
Christina Ioannidou - board
member (appointed 24 January
2014)
Nancy Erotocritou - board member
(resiged 24 January 2014)
Steven James McTiernan
(resigned 24 January 2014)
Total remuneration Board of
Directors
5
436
65
-
-
70
-
-
130
-
-
566
Severance
payment
Annual
Leave
Paid out of
options
exercised
Total
Remuneration in 2013:
Director's
fee
Salary
Bonus
Pension
Benefits
in kind
-
325
1,117
12
66
-
-
-
1,520
-
346
204
-
4
926
81
-
1,561
-
671
1,321
12
70
926
81
-
3,081
143
-
-
-
-
-
-
-
143
Amounts in USD '000
Executive management:
Jan Rune Steinsland - CFO
(appointed 4 November 2013)
Geir Magne Karlsen - CFO
(resigned 4 November 2013)
Total remuneration executive
management
Board of Directors:
Michael Mannering - chairman
(appointed 06 June 2013)
Jens Wilhelmsen - chairman
(resigned 06 June 2013)
Arne Blystad - board member
(resinged 25 November 2013)
Frederik W. Mohn (appointed 06
June 2013)
Erik Østbye - board member
(resigned 06 June 2013)
Nancy Erotocritou - board member
(resiged 24 January 2014)
Arnaud Bobillier - board member
Steven James McTiernan
(resigned 24 January 2014)
Total remuneration Board of
Directors
44
63
44
-
-
-
-
-
-
-
63
40
35
40
-
-
-
-
-
-
-
35
70
70
70
-
-
-
-
-
-
-
70
68
-
-
-
-
-
-
-
68
533
-
-
-
-
-
-
-
533
Key executive management consists of Company executive management being: Chief Financial Officer - CFO, for whom
remuneration is disclosed separately above. Up to the date of his resignation, Mr Jens Wilhelmsen, Chairman of the Board and
interim CEO received a consultancy fee of USD 75,000 per month up to April 2013. From May 2013 up to September 2013 the
consultancy fee received from Mr Wilhelmsen was reduced to USD 50,000 per month. On September 2013 Mr Wilhelmsen
received a lump sum fee of USD 250,000 which was agreed between him and Songa as a final payment for his services.
The CFO is included in the defined benefit plan for qualifying employees of the Norwegian branch of Songa Offshore SE. Under
the plan, the employees are entitled to retirement benefits of 70% of final salary, limited to twelve times the national insurance
base amount (Folketrygdens grunnbeløp (G)), on attainment of a retirement age from 62 to 67. No other post-retirement
47
benefits are provided to the executive management (see note 23). On 4 November 2013, Mr Geir Karlsen resigned from his
position as a CFO. As a result Mr Karlsen has received the amount of USD 926 thousand as a severance payment.
The Company has one cash settled and one equity settled program per 31 December 2014 (see note 20).
The remuneration to the members of the Board is determined on an annual basis. The directors will be reimbursed for, inter
alia, travelling and other expenses incurred by them in attending meetings of the Board. A director who has been given a
special assignment beside the normal duties of a member of the Board may be paid such extra remuneration as the Board may
determine.
In addition to the directorship fees paid to Mrs Nancy Erotocritou and Mr James Mc Tiernan for 2013, both members also
received an amount of USD 70 as a compensation for loss of office.
No loans or guarantees are granted to the Chairman, member of the Board, CEO, employees, management, shareholders or
other related parties to any of these groups.
The executive management has not received any other remuneration from the Company other than what is disclosed above.
There has been no additional remuneration for any special services exceeding the normal work scope of executive
management.
Note 22: Asset held for sale
On 25 April 2014, the Company entered into an agreement with Opus Offshore Group (“Opus Offshore”) to sell the Songa
Mercur and the Songa Venus to Opus Offshore, and the establishment of a strategic joint venture drilling management
company (“the Songa-Opus JV”). The rigs were formally delivered to Opus Offshore on 23 July 2014.
The 2013 and 2014 financials were prepared in accordance with IFRS 5. The two rigs were classified as short term assets,
under “assets held for sale” until the rigs were delivered to Opus on 23 July 2014.
In accordance with the agreement the EBITDA earned from 1 January 2014 to the date of the disposal was for the benefit of
Opus Offshore (reduction of the acquisition price) therefore the revenue and operating expenses were recognised by the Group
till the disposal, and at the same time the “assets held for sale” value was reduced by the same amount with a corresponding
impairment expense presented in the income statement (see note 10).
The corresponding bank debt to be settled in connection with the delivery of the rig to Opus Offshore was presented as short
term bank debt related to ‘asset held for sale’. The difference between the net selling price and the carrying amount of the rig
has been recognised as impairment (see note 10).
Note 23: Retirement benefit plans
The Company operates both funded defined benefit plans and defined contribution plans. In a defined contribution plan the
Company is responsible for paying an agreed contribution to the employee’s pension assets. The employee bears the risk
related to the investment return on the pension assets. In a defined benefit plan, the company is responsible for paying an
agreed pension to the employee based on his or her final pay. The defined benefit plans of the Company are limited to
subsidiaries in Norway.
For the defined benefit plans the principal assumptions used for the purpose of the actuarial valuations were as follows:
2014
2013
2.30%
2.30%
2.75%
2.50%
0.0 %
4.10%
4.10%
3.75%
3.50%
0.60%
0-8%
IR02-level
K2013 BE
K2013 BE
0-8%
IR02-level
K2013 BE
K2013 BE
Economic assumptions
Discount rate
Expected return on plan assets
Expected rate of salary increase
Adjustment of base amount in national insurance (G)
Pension adjustment
Actuarial assumptions
Expected voluntary retirement before age of retirement
Withdrawal rates before retirement age
Disability rate
Death rate
Probability of marriage
48
Amounts recognised in profit or loss in respect of the defined benefit plans are:
2014
2013
56
2
1
7
67
74
10
(2)
11
93
2014
2013
97
141
238
(307)
(31)
(338)
Current service cost
Interest
Administration cost
Payroll tax
Total pension cost
Effect on equity due to transition to IAS 19R - Opening Balance (pr 1.1)
Re-measurements loss (gain) to OCI
Post-employment benefit reserve (pr 31.12)
The charge for the year is included in the General and administrative cost for the onshore based employees and in the
Operating expenses for the offshore based employees in the statement of comprehensive income.
Estimated pension cost for 2014 is USD 7.7 million. Estimated payment for 2015 is USD 12.2 million. The estimated cost is
converted from NOK to USD using the exchange rate at year end 2014.
2014
2013
Projected benefit obligation
Plan assets at market value
Funded status (underfunded)
447
150
(297)
471
211
(260)
Unrecognized net experience loss/(gain)
Payroll tax
Net liability for defined benefit obligations
(297)
(260)
Movements in the present value of the defined benefit obligations in the current period were as follows:
2014
2013
370
59
15
(14)
17
447
374
88
14
(14)
9
471
2014
2013
166
8
(124)
115
(14)
150
135
3
(22)
109
(14)
211
Opening defined benefit obligation
Current service cost
Interest cost
Payroll tax of employer contribution, assets
Actuarial loss (gain)
Closing defined benefit obligation - estimated
Movements in the present value of the plan assets in the current period were as follows:
Opening balance of plan assets
Expected return on plan assets
Actuarial loss
Employer contribution
Payroll tax of employer contribution, assets
Closing balance of plan assets - estimated
49
Major categories of plan assets were as follows:
2014
2013
7.2%
4.0 %
15.3%
23.5%
32.6%
14.2%
3.2%
100.0%
6.3 %
3.4 %
14.2 %
26.2 %
34.5 %
14.9 %
0.5 %
100.0%
17
124
141
9
22
31
Equities
Alternative investments
Bonds and other security
Cash / Money market
Bonds held to maturity
Properties and real estate
Other
Total
Experience adjustments on plan liabilities, loss/(gain)
Experience adjustments on plan assets, loss (gain)
Total
The sensitivity of the defined benefit obligation to changes in the weighted principal assumptions is:
Impact on defined benefit obligation
Change in
assumption
Increase in
assumption
Decrease in
assumption
Discount rate
Salary growth rate
Pension growth rate
0.5%-points
0.5%-points
0.5%-points
-12.1 %
2.2 %
8.6 %
19.3 %
-3.0 %
2.1 %
Life expectancy
1 year
Increase by 1 year in
assumption
Decrease by 1 year in
assumption
2.3 %
-2.2 %
The above sensitivity analysis is based on a change in assumption while holding all other assumptions constant. In practice,
this is unlikely to occur, and changes in some of the assumptions may be correlated. When calculating the sensitivity of the
defined benefit obligation to significant actuarial assumptions the same method has been applied as when calculating the
pension liability recognised within the statement of financial position.
In 2013 the Company implemented the amended standard IAS 19 Employee benefits from 1 January 2013, with full
retrospective application.
50
Note 24: Financial Assets
Overview of financial assets at 31 December
2014
2013
16,823
24,269
12,630
53,722
-
Investment in JV
Net Seller’s Credit
Songa Mercur Contract Coverage
At 31 December
Investment in JV
On 23 July 2014 the Company entered into a joint arrangement for the operation of the two rigs disposed with Opus Offshore
Group. The Company has in substance disposed 100% of the two rigs and 50% of its non-Norwegian business to Opus. Joint
arrangements are economic co-operations between two or more parties that are bound by a contractual agreement to share
control. Joint control is established by a contractual arrangement that requires unanimous agreement on decisions made on
relevant activities. The Company has provided an option to Opus Offshore to acquire Songa Offshore's 50% stake in the JV for
USD 20 million, exercisable only upon the expiry of thirty (30) months from 25 April 2014. After the expiry of thirty months (call
option commencement date), Opus is entitled to exercise the call option at any time within a period of twelve (12) months (call
option validity period) at a price of USD 20 million. If Opus exercises the call option after the call option validity period, the price
Opus shall pay for all Songa’s shares shall be fair market value. This option is not currently deemed substantive and therefore
does not indicate that the Company is not able to exercise joint control over the operations of the joint venture.
Management agreement
The JV has two management agreements in place for the operation of the Songa Mercur and the Songa Venus. Each
management agreement consist of two revenue elements, one fixed daily fee of USD 7,500 and a variable fee of 20% of the
two rig’s generated EBITDA.
Service agreement
JV has a service agreement with Songa Offshore SE with a fixed daily fee of USD 3,500 for each of the two rigs, with three
years duration. The service agreement will be terminated in the event that Opus Offshore exercises the call option.
JV Profit
The profit generated from the JV activities will be distributed in the form of annual dividends to the joint ventures, Songa
Offshore SE and Opus Offshore.
In addition in accordance with the JV agreement all the JV accounting profits should be distributed to the two 50% each
shareholders. The JV has been recognised by Songa at a fair value of US$15million, which is the estimated fair value using a
discount rate of 21,5% based on the projected cash flows given its right to receive cash out of this arrangement.
The entitlement of the Company to this minimum dividend distribution creates a financial asset for the Company, as the
Company has the contractual right to receive these dividends, the distribution of which is not at the discretion of the JV. The
management has assessed that the correct classification of this financial asset is as available-for-sale.
The following table presents the changes in Investment in JV for the year ended 31 December 2014
2014
2013
16,000
823
16,823
-
At 1 January
Additions
Interest income
At 31 December
The joint venture listed below has share capital consisting solely of ordinary shares, which is held directly by the group.
51
Nature of investment in joint ventures 2014:
Name of entity
Place of business/
country of
incorporation
% of ownership
interest
Nature of the
relationship
Measurement
method
Singapore
50
Joint venture
Available for sale
financial assets
Songa Opus Offshore
Drilling Pte Ltd
Summarised balance sheet
2014
2013
7,598
9,686
17,284
-
(2,425)
(10,844)
(13,269)
-
19
-
4,034
-
2014
2013
Current
Other current assets (excluding cash)
Total current assets
Financial liabilities (excluding trade payables)
Other current liabilities (including trade payables)
Total current liabilities
Non-current
Assets
Net assets
Summarised statement of comprehensive income
Revenue
Expenses
Depreciation and amortisation
Net foreign exchange loss
Profit (loss) before tax
Income tax (expense) credit
Profit (loss) for the year
4,072
(1,684)
(1)
(8)
2,379
(345)
2,034
-
Net Seller’s Credit
The Net seller's credit is part of the proceeds for the sale of Songa Venus. A deferred consideration of USD 34.2 million which
is payable to Songa Offshore on (or before) 31 December 2017 and structured as seller's credit secured with a 2nd priority
mortgage over Songa Venus and a Parent Company Guarantee from the Opus Offshore Group.
The fair value of the financial assets at 31 December was:
2014
2013
23,024
1,245
24,269
-
At 1 January
Additions
Interest income
At 31 December
52
Songa Mercur Contract Coverage
The Songa Mercur Contract Coverage is part of the proceeds of the sale of Songa Mercur. The earn out mechanism is up to
USD 21.7 million, to be paid proportionally to the Songa Offshore based on Songa Mercur employment between 1 January
2014 and commencement of SPS in 2015 and to be paid in 2015 or early 2016 depending on SPS criteria.
2014
2013
16,724
(4,999)
905
12,630
-
At 1 January
Additions
Revision of estimated receipt of cash flows
Interest income
At 31 December
-
Songa Mercur EBITDA upside
The Songa Mercur EBITDA upside is part of the proceeds of the sale of Songa Mercur where Songa Offshore is entitled to
receive from Opus Offshore 20% of the cumulative Songa Mercur EBITDA exceeding USD 105 million between 1 January 2014
and 31 May 2017, to be paid no later than 31 July 2017.
2014
2013
3,505
(3,694)
189
-
-
At 1 January
Additions
Revision of estimated receipt of cash flows
Interest income
At 31 December
-
Note 25: Contingent liabilities
Other than the possible tax exposures in Norway and Australia which are fully disclosed in note 4, a former shareholder and
former member of the board of the Company, initiated a litigation against the Company and certain subsidiaries in respect of
the “Songa” name, asking those companies to cease using the word “Songa” as part of their companies’ names. The court
proceeding in relation to this case has been scheduled on 13 October, 2015, in the Oslo City Court. The Company believes that
this claim is without merit, and so was confirmed by the opinion of external counsel. The Group does not expect the outcome
(even if negative) resulting from this litigation to have material adverse impact on the financial position and/or results of
operations of the Group. However, the Group cannot predict with certainty the outcome or effect of this matter.
The Group is also engaged in normal legal proceedings which are not expected to have a material impact on the financial
statements.
Note 26: Commitments
The Company's rigs are leased under operating leases to its subsidiaries.
The future minimum lease payments receivable under non-cancellable operating leases are as follows:
2014
2013
18,800
60,000
78,800
81,368
97,636
179,004
No later than 1 year
Later than 1 year and no later than 5 years
The Company had no capital or other commitments as at 31 December 2014.
53
Note 27: Significant events after the end of the financial year
Songa Offshore has agreed with Statoil to extend the exercise date for the first one-year Songa Trym option from 3 March 2015
to 3 September 2015.
In the Board meeting on 18 February 2015, Johan Kr. Mikkelsen was appointed as new Director. Jon Bjørstad resigned from
the BOD.
Note 28: Changes in presentation
During the year the foreign exchange forward hedge was discontinued. The change in mark to market valuations of foreign
exchange forward transactions are recognized through Other Financial Items, while before the change in mark to market
valuations were recognized to Other Comprehensive Income and reflected in Other Gains/Losses in the Statement of
Comprehensive Income when realized. This change reflects that the foreign exchange forward hedge is not regarded as a
Perfect Hedge.
In addition the Net foreign exchange gain /loss and the Currency element in currency and interest swaps, previously presented
under Other Gain/Loss in the Statement of Income, were presented under Other Financial Items in the Statement of Income.
The Company believes that the new presentation provides more relevant information, and it is in line with industry practise.
The Comparable figures for 2013 have been restated.
Impact on change of presentation:
For period
ended 31
December
2014
(previously
presentation)
Impact of
change in
presentation
For period
ended 31
December
2014 as
presented
Revenues
Dividend Income
111,485
39,814
111,485
39,814
Management fee
Operating expenses
Other gain and loss
Total Operating expenses
(7,183)
(7,660)
(6,037)
(2,760)
(23,640)
(7,183)
(7,660)
(6,037)
(20,880)
EBITDA
118,965
130,419
Impairment of rigs
(66,651)
(64,699)
(1,288)
-
(66,651)
(64,699)
(1,288)
-
(4,980)
(2,220)
79,166
(96,783)
(8,693)
(31,290)
79,166
(96,783)
(11,453)
(31,290)
EBIT
Finance income
Finance cost
Loss before tax
Income tax expense
Loss for the year
2,760
(2,760)
(12,700)
(12,700)
(43,990)
(43,990)
54
For period
ended 31
December
2013
(previously
presentation)
Impact of
change in
presentation
For period
ended 31
December
2013 as
presented
Revenues
Dividend Income
159,168
88,983
159,168
88,983
Management fee
Operating expenses
Other gain and loss
Total Operating expenses
(3,264)
(8,051)
(7,490)
(1,195)
(20,000)
(3,264)
(8,051)
(7,490)
(444)
(19,249)
EBITDA
228,151
228,902
Impairment of rigs
(91,095)
(92,261)
(17,752)
(7,784)
(91,095)
(92,261)
(17,752)
(7,784)
19,259
20,010
69,489
(133,365)
(44,617)
69,489
(133,365)
(751)
(44,617)
EBIT
Finance income
Finance cost
Loss before tax
Income tax expense
Loss for the year
751
(751)
(17,011)
(17,011)
(61,627)
(61,627)
55

Songa Offshore SE 2014 Standalone Financial Statements

Transcription

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