Statement of Financial Position − Directional
in millions of US$ | 2022 | 2021 |
|---|---|---|
Total equity | 1,078 | 604 |
Net debt1 | 6,082 | 5,401 |
Net cash | 615 | 1,059 |
Total assets | 10,769 | 9,690 |
Solvency ratio2 | 29.6 | 28.9 |
- 1 Net debt is calculated as total borrowings (including lease liabilities) less cash and cash equivalents.
- 2 Solvency ratio is calculated in accordance with the definition provided in section 4.3.24 Covenants
Shareholders’ equity increased by US$474 million from US$604 million at year-end 2021 to US$1,078 million at year-end 2022, mostly due to the following items:
- An increase of the hedging reserves of US$510 million;
- A positive net result of US$115 million in 2022; and
- Dividend distributed to the shareholders decreasing equity by US$180 million;
The movement in hedging reserve is mainly caused by the increase of the marked-to-market value of the interest rate swaps due to increasing market interest rates during the year.
It should be noted that under Directional policy, the contribution to profit and equity of the FPSOs program under construction will largelly materialize in the coming years at Company's share ownership in lessor-related SPV's, subject to project execution performance, in line with the generation of associated operating cash flows.
Net debt increased by US$681 million to US$6,082 million at year-end 2022. While the Lease and Operate segment continues to generate strong operating cash flow, the Company drew on project finance facilities for FPSO Liza Unity, FPSO Prosperity, FPSO ONE GUYANA and FPSO Sepetiba to fund continued investment in growth on these FPSOs under construction. With regards to FPSO Almirante Tamandaré and FPSO Alexandre de Gusmão, for which 2021 bridge loans were fully drawn in advance of investments in growth, the associated excess of financing cash flow (approximately US$800 million generated as at December 31, 2021), was consumed as a result of progress with construction and the partial 45% divestment to partners, which resulted in the derecognition of a commensurate share of the related cash and debt.
The majority of the Company’s debt as at December 31, 2022 consisted of non-recourse project financing (US$3.7billion) in special purpose investees. This non-recourse balance includes the project loan related to FPSO Liza Unity for which the pre-completion company guarantee was released on June 2, 2022. The remainder (US$3 billion) comprised of borrowings to support the on-going construction of five FPSOs, which will become non-recourse following project execution finalization and release of the Parent Company Guarantee. The Company’s Revolving Credit Facility (RCF) was undrawn at year-end and the net cash balance stood at US$615 million (December 31, 2021: US$1,059 million). Lease liabilities totaled US$47 million (December 31, 2021: US$57 million).
Total assets increased to US$10.8 billion as at December 31, 2022, compared with US$9.7 billion at year-end 2021. This resulted from the substantial investments in property, plant and equipment (mainly FPSO Prosperity , FPSO Sepetiba, FPSO Almirante Tamandaré, FPSO Alexandre de Gusmão and FPSO ONE GUYANA) and the increase in the derivative assets over the period due to increased marked-to-market value of interest rate swaps compared with year-end 2021, which mainly arose from increasing US market interest rates.
The relevant covenants (solvency ratio and interest cover ratio) applicable for the Company’s RCF, undrawn as at year-end 2022, were all met at December 31, 2022. In line with previous years, the Company had no off-balance sheet financing.
The Company’s financial position has remained strong as a result of the cash flow generated by the fleet, as well as the positive contribution of the turnkey activities.