Covenants
The following key financial covenants apply to the RCF as agreed with the respective lenders on February 13, 2019, and unless stated otherwise, relate to the Company’s consolidated financial statements:
- Solvency: Consolidated IFRS Tangible Net Worth divided by Consolidated IFRS Tangible Assets must be > 25%;
- Interest Cover Ratio: Consolidated Directional Underlying EBITDA divided by Consolidated Directional Net Interest Payable must be > 4.0.
The Lease Backlog Cover Ratio (LBCR) is used to determine the maximum funding availability under the RCF. The maximum funding availability is determined by calculating the net present value of the future contracted net cash after debt service of a defined portfolio of operational offshore units in the directional backlog. The maximum theoretical amount available under the RCF is then determined by dividing this net present value by 1.5. The actual availability under the RCF will be the lower of this amount and the applicable Facility Amount. As at December 31, 2022 additional headroom above the US$1 billion capacity under the RCF exceeded US$650 million.
For the purpose of covenants calculations, the following simplified definitions apply:
- IFRS Tangible Net Worth: Total equity (including non-controlling interests) of the Company in accordance with IFRS, excluding the marked-to-market valuation of currency and interest derivatives undertaken for hedging purposes by the Company through other comprehensive income, dividends declared, value of intangible assets and deferred taxes.
- Consolidated IFRS Tangible Assets: The Company's total assets (excluding intangible assets) in accordance with the IFRS consolidated statement of financial position less the marked-to-market valuation of currency and interest derivatives undertaken for hedging purposes by the Company through other comprehensive income.
- Consolidated Directional Underlying EBITDA: Consolidated profit of the Company adjusted for net interest payable, tax and depreciation of assets and impairments, any exceptional or extraordinary items, and by adding back (i) the annualized production EBITDA for units which started operations during the financial year, and (ii) the acquisition annualized EBITDA for units acquired during the financial year.
- Consolidated Directional Net Interest Payable: All interest and other financing charges paid up, payable (other than capitalized interest during a construction period and interest paid or payable between wholly owned members of the Company) or incurred by the Company less all interest and other financing charges received or receivable by the Company, as per Directional reporting.
Covenants
2022 | 2021 | ||
|---|---|---|---|
IFRS Tangible Net Worth | 4,494 | 3,780 | |
Consolidated IFRS Tangible Assets | 15,161 | 13,079 | |
Solvency ratio | 29.6% | 28.9% | |
Adjusted (Directional) Underlying EBITDA | 1,0361 | 9352 | |
Consolidated Directional Net Interest Payable | 190 | 170 | |
Interest cover ratio | 5.5 | 5.5 |
- 1 No exceptional items impact 2022 EBITDA. Adjusted Directional Underlying EBITDA includes the annualized production EBITDA for FPSO Liza Unity
- 2 Exceptional items restated in 2021 Consolidated Directional Underlying EBITDA were mainly related to the US$77 million anticipated revenue recognition following the early redelivery of the Deep Panuke MOPU. In addition, the 2021 Consolidated Directional Underlying EBITDA did not include the US$8 million relating to the penalty order against the Company issued by Swiss public prosecutor in November 2021.
The Leverage ratio based on reported Directional figures, is used to determine the pricing only.
The Company monitors its financial and non-financial covenants for borrowings which are included in the consolidated financial statement continously throughout the year. None of the borrowings in the statement of financial position were in default as at the reporting date or at any time during the period.