EXMAR

  1. 0
  1. 9

FINANCIAL

OVER-

VIEW

CONSOLIDATED

International Financial

Management reporting based

KEY FIGURES

Reporting Standards (IFRS 11)

on proportionate consolidation

(Note 1)

(Note 2)

31/12/2019

31/12/2018

31/12/2019

31/12/2018

(*)

(*)

CONSOLIDATED STATEMENT OF PROFIT OR LOSS (IN MILLION USD)

Turnover

EBITDA

Depreciations and impairment losses Operating result (EBIT)

Net finance result

Share in the result of equity accounted investees (net of income tax) Result before tax

Tax

Consolidated result after tax of which group share

136.7

87.7

225.0

171.6

47.3

27.5

100.9

67.4

-31.9

-19.0

-66.5

-45.4

15.4

8.5

34.4

22.0

-26.0

-21.0

-43.3

-36.6

1.7

-1.6

0.2

0.6

-8.9

-14.2

-8.7

-14.0

-4.3

-1.9

-4.5

-2.1

-13.2

-16.1

-13.2

-16.1

-13.2

-15.9

-13.2

-15.9

INFORMATION PER SHARE (IN USD PER SHARE)

Weighted average number of shares of the period

EBITDA

EBIT (operating result)

Consolidated result after tax

INFORMATION PER SHARE (IN EUR PER SHARE)

57,226,737

57,045,439

57,226,737

57,045,439

0.83

0.48

1.76

1.18

0.27

0.15

0.60

0.39

-0.23

-0.28

-0.23

-0.28

Exchange rate

1.1213

1.1838

1.1213

1.1838

EBITDA

0.74

0.41

1.57

1.00

EBIT (operating result)

0.24

0.13

0.54

0.33

Consolidated result after tax

-0.21

-0.24

-0.21

-0.24

Note1: The figures in these columns have been prepared in accordance with IFRS as adopted by the EU.

Note2: The figures in these columns show joint ventures applying the proportionate consolidation method instead of applying the equity method. The amounts in these columns correspond with the amounts in the 'Total' column of Note 2 Segment Reporting in the Financial Report per 31 December 2019. A reconciliation between the amounts applying the proportionate method and the equity method is shown in Note 3 in the Financial Report per 31 December 2019.

  1. The Group has initially applied IFRS 16 at 1 January 2019, using the modified retrospective method. Under this approach, comparative information is not restated and the impact on retained earnings is determined as zero. We refer in this respect to the accounting policies section E and to note 31.

Key ratio's

in MUSD on 31.12.2019 (based on proportionate consolidation method)

363.2

MARKET CAP

1,229.6

TOTAL ASSETS

100.9

EBIDTA

563.6

NET DEBT

36.51%

EQUITY RATIO

CONTENT

#01

PANO-

RAMA 2019

Colophon

p. 4

Mission Statement

p. 5

Letter to our

p.6

shareholders

Information for our

p. 7

shareholders

EXMAR in the world

p. 8

#03

CARE FOR TODAY,

RESPECT FOR

TOMORROW

Our business principles

p.28

People - our most

p.29

valuable asset

Environment and safety

p.30

#05

GLOSSARY

#02

ACTIVIT Y

REPORT

Shipping

p. 12

Infrastructure

p. 16

Supporting services

p.20

#04

FINANCIAL

REPORT

Corporate Governance Statement

p. 39

Annual report of the Board of Directors

p. 54

Consolidated financial statements

p. 60

Statutory financial statements

p. 126

Glossary p.130

IN 1

MEMORIAM

BARON PHILIPPE BODSON

After three weeks of fighting COVID-19, Baron Philippe Bodson, Chairman of the Board of Directors of EXMAR, passed away in Brussels on the 4th of April 2020. He was born in Liège on the 2nd of November 1944.

He obtained a degree in Civil Engineering in Liège and a Master's in Business Administration (MBA) at INSEAD in Fontainebleau / France.

In 1977, Philippe Bodson joined Glaverbel where he was Managing Director and Chairman from 1980 till 1989. As from 1989 till 1999, he was Managing Director of Tractebel and Chairman of Electrabel and Distrigaz. From 1999 till 2003, he was senator in the Belgian Senate.

Thereafter and until last week, Philippe continued his impressive career.

He was Chairman of the Board of Directors of Floridienne and Hamon, Chairman of Free Fair Post Initiative (NGO), member of the Board of Directors of AEI (Houston), Bluesky, Cobepa and advisor of Credit Suisse, and Chairman of the International Polar Foundation.

Since 2002 he was member of the Board of EXMAR and in 2005 he was appointed Chairman of the Board of Directors of EXMAR.

Philippe was at his best in crisis and difficult situations. Baron Bodson liked to walk in the Hautes Fagnes (Ardennes), often alone. It gave him strength and inspiration.

At EXMAR Philippe understood and inspired the company. He was a great supporter of innovation, both in technical solutions and operational processes. Our Chairman did not need explanations, he was thinking with the company.

In the years where EXMAR had some financial difficulties (bankruptcy of PRE), he brought serenity to the table.

Baron Philippe Bodson was an exceptional personality, admired and loved for his unconditional dedication to life, and to the EXMAR Group.

The human, Baron Philippe Bodson, was a man made of granite. An enormous concentration of human qualities in one human being, his enthusiasm, was contagious.

With Philippe people became better, stronger, provoking, with a touch of humour. Bringing consensus without obligating.

Philippe was impetuous but also had the ability to listen to others.

Baron Bodson has left us with a great legacy. We shall continue to promote his wisdom and love for the entrepreneurship in innovation.

On a personal note, I have lost a great and dear friend, an example and a source of inspiration. I shall continue to be inspired by his life and shall always follow his drive to find solutions to problems and be an innovative and cost-efficient shipowner.

Nicolas Saverys

EXMAR 2019REPORT

2

#01

PANO-

RAMA 2019

EXMAR 2019REPORT

4

Colophon

Board of Directors

Baron Philippe Bodson - Chairman († 4 April 2020)

Nicolas Saverys - Executive Chairman

Francis Mottrie

Jalcos NV - represented by Ludwig Criel

Wouter De Geest

Michel Delbaere

Ariane Saverys

Barbara Saverys

Pauline Saverys

Baron Philippe Vlerick

Isabelle Vleurinck

Executive Committee

Francis Mottrie -CEO

EXMAR NV

Patrick De Brabandere - Chief Financial Officer

Jonathan Raes - Executive Director Infrastructure

De Gerlachekaai 20

Jens Ismar - Executive Director Shipping

2000 Antwerp

The Dutch version of

Carl-Antoine Saverys - Secretary to the Executive Committee

Tel: +32(0)3 247 56 11

this financial report must

Nicolas Saverys

Fax: +32(0)3 247 56 01

be considered to be

Auditor

Business registration number: 0860.409.202

the official version.

RPR Antwerp - section Antwerp

Deloitte Auditors

Website: www.exmar.be

Represented by Mr. Gert Vanhees

E-mail:corporate@exmar.be

MISSION 5 STATEMENT

EXMAR is a provider of floating solutions for the operation, transportation and transformation of gas. EXMAR's mission is to serve customers with innovations in the field of offshore extraction, trans- formation, production, storage and transportation by sea of liquefied natural gases, petrochemical gases and liquid hydrocarbons.

EXMAR creates economically viable and sustainable energy value chains in long-term alliances with first class business partners. EXMAR designs, builds, owns, leases and operates specialized, floating maritime infrastructure for this purpose. As well as it aims for the highest standards in performing commercial, technical, quality assurance and administrative management for the entire maritime energy industry.

EXMAR 2019REPORT

6

LETTER TO OUR

SHAREHOLDERS

Dear shareholder,

This annual report is marked by the loss of our chairman Baron Philippe Bodson, unexpectedly deceased at the age of 75 of COVID-19. The Board of directors pays tribute to this exceptional personality, admired and loved for his unconditional dedication to life, and to the EXMAR Group.

The world faces an unprecedented public health crisis. COVID-19 will induce a devastating economic crisis which causes a high level of uncertainty.

After some stormy years, EXMAR successfully concluded various challenges resulting in stability for

the Group. EXMAR is doing well, in this turbulent period. All our assets are performing as per contract. Several operational measures on-shore and on-board have been taken to ensure the safety and wellbeing of our personnel and continuity of our operations.

The Board of Directors has appointed Nicolas Saverys as Executive Chairman of the Board. Francis Mottrie has been co-opted as Member of the Board and has been appointed CEO of EXMAR.

2019 has also been a transformational year for EXMAR. At corporate level, a simplified business unit structure has been set-up:EXMAR Shipping and EXMAR Infrastructure. EXMAR also has a new Executive Committee:

Francis Mottrie,

CEO and Chairman of the Executive Committee

Patrick De Brabandere,

CFO

Jens Ismar,

Managing Director Shipping

Jonathan Raes,

Managing Director Infrastructure

Carl-Antoine Saverys,

Secretary to the Executive Committee

Nicolas Saverys

The growth in US LPG production and export, improved the freight for both VLGCs and midsize tonnage throughout the year. Despite the Corona-crisis, the 2020 prospects remain stable.

In 2019, the TANGO FLNG was commissioned and started a ten-year contract with YPF. Four LNG cargos were exported out of Argentina in 2019. The performance is well above design capacity. All other Infrastructure assets have been performing as per contract.

We would like to thank all those involved in EXMAR - on shore and at sea - for their contribution and hard work.

We wish you a pleasant reading of our annual report.

Nicolas Saverys

Francis Mottrie

INFORMATION FOR OUR 7

SHAREHOLDERS

SHARE INFORMATION

The EXMAR share is listed on Euronext Brussels and is a part of the BEL Small Index (EXM). Reference shareholder is Saverex NV.

Participation as per 31 December 2019:

FREEFLOAT

47.03%

SAVEREX

44.28%

Cobas Asset

Management

S.G.I.I.C. SA

5.002%

EXMAR

3.82%

FINANCIAL CALENDAR

30 April 2020

Results 1st quarter 2020

Annual shareholders meeting

19 May 2020

Final results 1st semester 2020

11 September 2020

Results 3rd quarter 2020

29 October 2020

TOTAL :

59,500,000

SHARES

Contact

  • All EXMAR press releases can be consulted on the website: www.exmar.be
  • Questions can be asked by telephone at +32(0)3 247 56 11 or by e-mail to corporate@exmar.be,
    for the attention of Patrick De Brabandere (CFO) or Mathieu Verly (secretary).
  • In case you wish to receive our printed annual or half year report please mail: annualreport@exmar.be

EXMAR REPORT 2019

EXMAR

IN THE

8

WORLD

CREW AT SEA

20 nationalities at sea

American, Argentinean, Australian, Belgian,

Bengalese, Chinese, Croatian, French, Greek,

Indian, Irish, Jamaican, Latvian, Netherlander,

Nigerian, Polish, Singaporean, Spanish, Ukrainian,

Venezuelan

HEADQUARTERS PERSONNEL BY

GENDER AND AGE

MEN

8

20-30 years

total

total

37

30-40 years

101

95

18

40-50 years

Average age

30

50-60 years

(all):

40

  • 60-64years

EMPLOYEES LOCATED AT EXMAR

HEADQUARTERS

malefemale

51.53% 48.47%

WOMEN

11 20-30 years

32 30-40 years

21 40-50 years

24 50-60 years

  • 60-64years

9

Houston

USA

Kingston

JAMAICA

Buenos Aires

ARGENTINA

Duisburg

Antwerp

GERMANY

BELGIUM

THE NETHERLANDS

LUXEMBURG

SOUTH-KOREA

London

UK

Paris

FRANCE

Shanghai

CHINA

HONG KONG

Lagos

NIGERIA

Livorno

ITALY

Pointe-Noir

SINGAPORE

CONGO

Limmasol

CYPRUS

Mumbai

Luanda

INDIA

ANGOLA

HEADQUARTERS

OFFICES

BRANCHES

EXMAR REPORT 2019

10

#02

ACTIVIT Y

REPORT

EXMAR REPORT 2019

12

SHIPPING

SHIPPING PORTFOLIO

21

MIDSIZE GAS CARRIERS

2

NEWBUILDS

VLGC JIANGNAN H2667

owned

VLGC JIANGNAN H2668

owned

10

PRESSURIZED

SABRINA ANNE

bareboat bareboat

HELANE ANGELA

bareboat bareboat

FATIME JOAN

bareboat bareboat

ELISABETH MARIANNE

bareboat bareboat

MAGDALENA DEBBIE

bareboat bareboat

TOURAINE

WAASMUNSTER

KAPRIJKE

KOKSIJDE

joint venture

joint venture

joint venture

joint venture

EUPEN

WARISOULX

KNOKKE

SYLVIE

joint venture

joint venture

joint venture

time chartered

LIBRAMONT

WARINSART

KONTICH

WEPION

joint venture

joint venture

joint venture

joint venture

SOMBEKE

WAREGEM

KORTRIJK

joint venture

joint venture

joint venture

BRUSSELS

KALLO

joint venture

joint venture

BASTOGNE

KRUIBEKE

joint venture

joint venture

ANTWERPEN

KAPELLEN

time chartered

joint venture

1

SEMI-

REFRIGERATED

1

TEMSE

1

joint venture

VERY LARGE

GAS CARRIER

LNG CARRIER

EXCALIBUR

BW TOKYO

joint venture

time chartered

13

Total per

Total per

31/12/2019

31/12/2018 (*)

RESULTS 2019 - PROPORTIONATE CONSOLIDATION (IN MILLION USD)

Turnover

122.4

114.4

EBITDA

60.4

68.0

REBITDA (**)

60.4

36.2

Operating result (EBIT)

14.5

37.9

Consolidated result after tax

-7.2

18.9

Vessels (including vessels under construction)

520.5

492.9

Financial debts

437.0

393.7

  1. The Group has initially applied IFRS 16 at 1 January 2019, using the modified retrospective method. Under this approach, comparative information is not resta­ ted and the impact on retained earnings is determined as zero. We refer in this respect to the accounting policies section E and to note 31. The right-of-use assets and the right-of-use liabilities as a consequence of the implementation of IFRS 16 are included in the above reported vessels and financial debts per 31/12/2019.
  1. REBITDA: recurring earnings before interests, taxes, depreciations and amortizations (including impairment). Following items are excluded from EBITDA in 2018: sale COURCHEVILLE (Shipping: USD 0.9 million) and sale Excelsior (Shipping: USD 30.9 million).

EBIT for the Shipping Business Unit in the full year 2019 was USD 14.5 million compared to USD 37.9 million for the full year 2018 (including a capital gain of USD 0.9 million on the sale of the COURCHEVILLE and including a capital gain of USD 30.9 million on the sale of the company EXCELSIOR).

EXMAR Shipping is a leading shipowner and operator in the transportation of liquefied gas products such as Liquid Petroleum Gas (LPG, butane, propane and a mixture of both), anhydrous ammonia and petrochemical gases. EXMAR trades worldwide for the fertilizer, clean energy fuel and petrochemical industry. As a prominent midsize LPG owner-operator, EXMAR benefits from long-

term contracts with first class customers.

HIGHLIGHTS 2019 AND OUTLOOK VERY LARGE GAS CARRIERS (VLGC) Buoyed by increasing LPG export volumes out of the US, VLGC rates surged during the second quarter to about USD 1.3 million per month in the period freight market. The United States managed to export record LPG volumes of nearly 40 million tonnes, seven million more than last year. This puts the US on a par with the Middle East in terms of LPG exports. The US resurgence has taken place due to the confluence of low commodity prices, more loading slots thanks to infra-

structure upgrades combined with an overall improvement in US LPG export capacity.

With increased demand for cargo destined for Far Eastern destinations-with China reaching record breaking LPG imports of 19 million tonnes - additional ton-miles were generated. This had a strong bearing on vessel availability as of the second quarter of 2019, with spot earnings consequently averaging around USD 1,800k/month.

The influx of VLGC newbuild deliveries scheduled during the course of 2020 and the effect of COVID-19 will have a negative influence on the freight rates and increase future uncertainties but healthy fundamentals, more LPG supplies globally and a persistent regime of long-haul volume distribution would result in a market recovery. Moreover, the increased capacity of the Mar- cus Hook terminal on the US East Coast will ensure cargoes not only head to Asian ports, but also to European off-takers.

EXMAR REPORT 2019

14

EXMAR has currently only one vessel employed in the VLGC segment, the 84,000 m³ BW TOKYO, which benefited from the rise in the Baltic Gas Index and was secured -at the end of 2019 for a period charter with a longterm partner.

MIDSIZE GAS CARRIERS (MGC)

Driven by prosperous LPG markets, the midsize segment has seen a boost in the freight rates during the second half of 2019. For the first time since 2016, Time Charter Equivalent (TCE) levels in excess of USD 800,000 per month were reached on a modern 38,000 m³ vessel.

The main products carried remain split between LPG (65%) and Ammonia (35%). EXMAR maintains its strong position in both segments with 14 vessels trading LPG and seven vessels trading Ammonia. Three decades in the midsize market has meant that EXMAR has been able to enter into long-term commercial

relationships with blue chip customers. This remains the case today. The EXMAR fleet profile is young with an average age of nine years for the owned fleet of 17 MGC carriers.

With a total global midsize fleet of 97 vessels and a limited order book (OB) for seven vessels at year-end of 2019, the future looks promising. With the upward trend in long-haul business and the impact of scale, EXMAR's share of 21 vessels in the midsize market means that the Company is well-placed to service the market in the coming years.

Global growth in demand for LPG volumes is expected to continue to support the midsize market. For exam- ple, Africa and Latin-America is expected to receive additional butane out of the United States. Developing countries switching to lower-priced LPG to satisfy their energy needs will positively support further growth in the MGC segment.

MGC 1 year timecharter rate

(x 1,000 $/month)

1,200.00

1,000.00

35,000 m3 Vessel

38,000 m3

Vessel

800.00

600.00

Source: Clarkson Research

400.00

Services Limited 2020

200.00

0.00

Jan-2010

Jan-2011

Jan-2012

Jan-2013

Jan-2014

Jan-2015

Jan-2016

Jan-2017

Jan-2018

Jan-2019

Jan-2020

15

The previous trend for stable ammonia seaborne volumes during the last few years is likely to change looking ahead to future years. A volume growth of about 1.6% per annum between 2019 and 2022 is foreseen thanks to new ammonia capacity coming online and markets opening up in China and Turkey. According to Argus, China's import growth now makes it the sixth largest ammonia import market, evolving from 203,000 to 1 million tonnes between 2014 and 2019.

EXMAR has managed to benefit from stronger freight markets and as such been able to attract better overall contract freight agreements compared to 2018. With a diverse customer portfolio and a fleet coverage of 81% for 2020, EXMAR continues to maintain its strong foothold in this segment.

PRESSURIZED

The pressurized market has remained stable both East and West of Suez. The middle of 2019 saw buoyant freight markets thanks to significant LPG redistribution and occasional seasonal spikes in market demand. These vessels serve as small-scale LPG suppliers given their ability to access shallow draft and smaller ports. At the same time pressurized vessels can be flexibly deployed as workhorses to open up new energy markets.

EXMAR has a fleet of 10 vessels: seven have a capacity of 3,500 m3 and three vessels have a capacity of 5,000 m3. The trading area of the fleet is equally divided, with five vessels engaged in European coastal trades, while five are deployed in the Far East.

LNG SHIPPING

The LNG/c carrier EXCALIBUR is under long time charter contract until early 2022.

Million tonnes

40

35

30

25

20

15

10

5

0

2009

2010

2011

2012

2013

2014

2015

2016

2017

2018

2019

US LPG

(million tonnes)

Source: IHS Waterborne LPG

EXMAR REPORT 2019

16

INFRA- STRUCTURE

The mission of EXMAR Infrastructure is to provide innovative floating infrastructure solutions to the Oil & Gas industry covering the complete lifecycle starting from engi-

neering, construction supervision and moving into ownership, leasing and operations & maintenance.

Backed by decades of maritime and gas handling expertise within the EXMAR Group and a registered

INFRASTRUCTURE PORTFOLIO

production semisubmersible design, our fully-fledged engineering and project development teams specialize in the design and development of Floating Production Systems (FPS) at a very competitive total cost.

Our operations & maintenance people take care of the day-to-day operations and maintenance of the floating infrastructure assets entrusted to as per highest quality and sustainability standards.

1

FLNG BARGE

1

TANGO FLNG

FSRU BARGE

owned

ASSETS

2

FSRU S-188

owned

ACCOMMODATION

BARGES

NUNCE

joint venture

WARIBOKO

ENGINEERING

joint venture

1

OPTI-EX DESIGN

17

Total per

Total per

31/12/2019

31/12/2018 (*)

RESULTS 2019 - PROPORTIONATE CONSOLIDATION (IN MILLION USD)

The EBIT for the Infrastructure Business Unit for the full year 2019 was USD 2.0

Turnover

EBITDA

REBITDA (**)

Operating result (EBIT)

Consolidated result after tax

Vessels (including vessels under construction) Financial debts

71.832.1

20.60.7

19.1-2.7

2.0-13.4

-45.2-49.3

466.1469.7

248.1300.6

million compared to USD -13.4 million for the full year 2018. This increase in the Infrastructure segment is mainly due to invoicing towards Gunvor for the FSRU which started in the last quarter of 2018. The standby revenues generated by TANGO FLNG since May 2019 are only

  1. The Group has initially applied IFRS 16 at 1 January 2019, using the modified retrospective method. Under this approach, comparative information is not restated and the impact on retained earnings is determined as zero. We refer in this respect to the accounting policies section E and to note 31. The right-of- use lease liabilities as a consequence of the implementation of IFRS 16 are included in the above reported financial debts per 31/12/2019.
  1. REBITDA: recurring earnings before interests, taxes, depreciations and amortizations (including impairment). Following items are excluded from EBITDA in 2019: license fee (Infrastructure: USD 1.5 million). Following items are excluded from EBITDA in 2018: license fee (Infrastructure: USD 3.4 million).

recognised in P&L as from start of operations in September 2019 (in accordance with IFRS 15).

HIGHLIGHTS 2019

2019 has been an important year for the EXMAR Infrastructure business unit. We have delivered the main target for the EXMAR Group, being the startup of the TANGO FLNG for commercial operations in Argentina. TANGO FLNG is EXMAR's largest and most complex investment to date. This milestone has been achieved in a record time and in a very safe way due to an excellent cooperation between our technical and operational teams on one side and our customer on the other. Now the unit is fully operational and performing above expectation and is expected to contribute significantly to the revenue and cash flow of our Group in the coming years.

In order to implement our strategy and the solutions we offer to our customers in a successful way, our teams at various locations in the world, have to join forces more than ever before. In order to take advantage of the synergies existing both in engineering, project development and effective operations, both LNG and Offshore infrastructure activities have been consolidated into "EXMAR Infrastructure." With the new structure and in cooperation with EXMAR supporting services, the Infrastructure business unit covers a strong global network and a unique range of solutions and expertise for the commercialization of our existing assets and new prospects.

FLOATING LIQUEFACTION

TANGO FLNG is now fully operational, receives natural gas from the Vaca Muerta gas field in Bahia

Blanca Argentina and is forecasted to produce 500,000 tonnes of LNG per annum for export purposes. After having signed the charter agreement with YPF for the deployment in November 2018, 2019 commenced with the mobilization to and the commissioning of the unit in Bahia Blanca. The performance acceptance test met contract obligations foreseen within less than four months from arrival. The acceptance of the unit by YPF triggered monthly standby revenue, while operations prepared effective startup and operations after the Argentinian winter period.

On 14 September 2019 the 10-year term of the contract effectively commenced. As of today, 475,000 m³ LNG have been delivered, already resulting in four shipments by YPF.

With TANGO FLNG now providing monthly revenues, the financiers of the unit have approved the release of approximately USD 40 million from the cash collateral under the loan facility.

The TANGO FLNG is the third commercially operational FLNG worldwide. The unit has attracted interest from other parties in EXMAR's floating liquefaction solutions. Leveraging EXMAR's unique expertise in the field of floating liquefaction, several other projects are under study.

FLOATING REGASIFICATION

FSRU S188, EXMAR's barge-based floating regasification unit, has been performing in line with

EXMAR REPORT 2019

18

it's ongoing 10-year charter. In September 2019, Gunvor gave notice of dispute under the Charter and has commenced arbitration. Meanwhile the charter remains in full force.

The envisaged sale and lease back of the barge by CSSC shipping announced last year was not completed.

FLOATING ACCOMMODATION

Since July 2019, NUNCE has been continuously under contract to SONANGOL, offshore Angola. It remains employed until June 2022 and is contributing as anticipated to EXMAR's result.

ENGINEERING

EXMAR's engineering office in Houston, US, has registered high engineering utilization levels in 2019, and has contributed positively to the Group result.

EXMAR Offshore Company (EOC) has been working on a third semisubmersible floating production system using EXMAR's proprietary OPTI® design for the KING's QUAY project of Murphy Oil. Murphy Oil Corporation is one of the top five producing operators in the Gulf of Mexico and has acquired this unit under construction from the LLOG group in June 2019. Hull engineering and construction supervision services are being performed successfully. The unit will be deployed in the Gulf of Mexico, where also the two other existing OPTI designs are performing as per expectations.

Beyond the KING's QUAY project, EOC has performed additional early engineering work on potential new OPTI projects in the Gulf of Mexico. EOC expects that these studies and additional work related to its OPTI design will continue in 2020.

DESIGN

BUILD

OWN

COMMISSION

19

OPERATE

DVO

For DV Offshore (DVO), our independent firm of consulting engineers specialized in all the technical aspects of marine engineering and operations, 2019 has confirmed to be a transition year with registered engineering levels in line with expectations and a growing focus on renewables.

OUTLOOK

EXMAR Infrastructure strives to be the preferred business partner of oil & gas exploration and production companies in the valorization of their existing or discovered oil & gas reserves.

The significant advantages of independent leasing and operation of oil & gas infrastructure assets has been proven to the industry over the past decades. Indeed, it allows the customer to focus on the monetization of the molecule, while enabling them

at the same time to reduce the required upfront investment and the technical risk on the project development.

After having been a pioneer in the development of ship based floating regasification, the (re) deployment of TANGO FLNG as the third FLNG in operation in the world has confirmed EXMAR's capabilities to successfully deliver innovative, fast track and cost competitive floating oil and gas infrastructure projects.

For new FLNG projects we are confident that we can leverage on the experience of our competent and motivated experts from the various domains and on the lessons learned of TANGO FLNG to provide a well performing floating liquefaction solution at a competitive life cycle cost and backed by appropriate financing.

The same goes for floating infrastructure opportunities we are working with LNG regasification and storage, oil production and storage, or in other aspects of the value chain.

The opportunities that match the globally ongoing energy transition and the technology for this purpose are very much existing. We strongly believe that the challenge in floating infrastructure projects is in tailoring this existing technology into quick to market one stop-shop solutions and that at the same time are a best fit for the specific project and location.

EXMAR, with its in-house project development and operational resources and expertise, is perfectly geared to take full responsibility of such projects, coordinating modifications, upgrades or any re-deployment tailored to the project in a fast track way. And our continued involvement in the ownership and operations and maintenance after delivery and start of operations is a commitment for performance as per expectations.

Floating infrastructure solutions being capital intensive, we are constantly developing our network of financiers and equity partners to support the prospects and projects in our portfolio. Here again EXMAR's 40 years of experience and track record in project development and execution is of key importance.

EXMAR REPORT 2019

20

SUPPORTING SERVICES

In addition to its core business activities, EXMAR has business interests in a variety of companies in the fields of ship management, specialized travel and supplies to the marine and offshore industry.

Total per

Total per

31/12/2019

31/12/2018 (*)

RESULTS 2019 - PROPORTIONATE CONSOLIDATION (IN MILLION USD)

The EBIT for the Supporting Services in the full year 2019 was USD 18.0 million compared to USD -2.5 million for the full year 2018. On June 29, 2019, EXMAR signed an agreement with Compagnie Maritime

Turnover

EBITDA

REBITDA (**)

Operating result (EBIT)

Consolidated result after tax

Vessels (including vessels under construction)

Financial debts

42.337.9

19.9-1.3

0.9-1.3

18.0-2.5

39.214.3

0.00.0

24.79.7

Belge ("CMB") for the sale of its 50% share in RESLEA. The sale resulted in a gain of USD 19.2 million.

  1. The Group has initially applied IFRS 16 at 1 January 2019, using the modified retrospective method. Under this approach, comparative information is not restated and the impact on retained earnings is determined as zero. We refer in this respect to the accounting policies section E and to note 31. The right-of- use lease liabilities as a consequence of the implementation of IFRS 16 are included in the above reported financial debts per 31/12/2019.
  1. REBITDA: recurring earnings before interests, taxes, depreciations and amortizations (including impairment). Following items are excluded from EBITDA in 2019: sale RESLEA and BIM (Services: USD 19 million).

EXMAR SHIP MANAGEMENT

XMAR Ship Management provides high quality ship management and related services to LPG carriers, fruit juice carriers, bulk carriers, FLNGs, FSRUs, FSUs, FSOs

and accommodation barges.

The past decade EXMAR Ship Management has matured from an in-house ship management services provider to a known Operations and

Maintenance (O&M) services provider in niche segments in the oil and gas industry. In alignment with the EXMAR Group, during 2019 the O&M activities of EXMAR Ship Management have been grouped into two distinct Business Units: (i) Ship- ping, and (ii) Infrastructure. This new organizational structure improves the flexibility and customer focus of the fleet teams and enables operational teams to efficiently align with international industry standards and best practices.

Industry requirements

A major contributing factor to the overall improvement in ship management operations and safety over the last three decades has been the gradual tightening of oil major requirements through stringent vetting regimes and the Tanker Manager Self-Assessment (TMSA) declaration. TMSA was developed by the Oil Companies Marine International Forum (OCIMF) to assist ship managers in assessing their safety management systems (SMS), required under the International Safety Management (ISM) Code. Using TMSA, owners can measure and improve upon any aspect in their SMS that might be sub-standard or weak. EXMAR Ship Management continuously maintains an updated TMSA that is reviewed regularly by different oil majors.

As our seafarers are the cornerstone to the success of the EXMAR Group, one of the action items is to further strengthen the good relationship between shore- and sea-based employees. The developed action plan includes a variety of updated targets ranging from increased vessel visits by shore personnel to more coaching on board of the vessels. For many years, our global crew conferences have been hosted in order to spread the Company values, to start a dialogue with our seafarers, to train our crew on industry best practices and to inform them on latest developments in the industry and EXMAR Group. These confe­ rences are organized on a global scale and will remain a very strong element in building a constructive, safe and performing work environment.

21

SHIP TO SHIP

TRANSFER

SUMMARY LPG STS OPERATIONS 2019

3,079 m3

4,331 m3

57,226 m3

425,086 m3

651,236 m3

421,725 m3

LOADED

DISCHARGED

485,391 m3

1,077,292 m3

TOTAL

145

Butane

TRANSFERS

Propane

LPG Mix

1,562,683 m3

EXMAR Ship Management has always had a varied portfolio of vessel and infrastructure owners active in the oil and gas industry. 2019 has been a challenging year for the shipping division with four newbuild VLGCs and one MGC entering into management. The Infrastructure division commenced commercial operations of TANGO FLNG in Argentina. The unit was commissioned by the customer in June 2019, with commercial operations commencing in mid-September and the first LNG cargo being transported by mid-November. This fast track solution is unique and a great achievement by all parties involved, especially the O&M team ashore and on board of the unit.

2020 will be another interesting year with the preparations for the management of two VLGCs ordered by EXMAR at the Jiangnan shipyard in China and the start of AEX LNG Management.

EXMAR and Anglo-Eastern Univan Group joined forces and established a joint-venture named AEX LNG Management. The start-up will be dedicated to LNG newbuilding supervision and vessel management of LNG carriers for third-party owners. Based in Singapore and combining the LNG expertise of EXMAR Ship Management with the global scale and systems of Anglo-Eastern, AEX LNG Management successfully completed its first interim Document of Compliance audit in December 2019. In 2020, focus will turn to bringing the first LNG conventional carrier into management and subsequently expanding its scope of business.

Excelerate Energy announced in 2019 the launch of their own ship management division Excelerate Technical Management. They plan to transition their entire fleet to this division before the end of 2020.

EXMAR REPORT 2019

22

2

NEWBUILDS

VLGC JIANGNAN H2667

owned

VLGC JIANGNAN H2668

owned

5

PRESSURIZED

ELISABETH JOAN

bareboat bareboat

MAGDALENA MARIANNE

bareboat bareboat

ANGELA

bareboat

1

FSU

(VESSEL-BASED)

PORTOVYY

managed

20

MIDSIZE GAS CARRIERS

TOURAINE

SOMBEKE

KAPRIJKE

KOKSIJDE

joint venture

joint venture

joint venture

joint venture

EUPEN

WAASMUNSTER

KNOKKE

WEPION

joint venture

joint venture

joint venture

joint venture

LIBRAMONT

WARISOULX

KONTICH

JUNGFRAU

joint venture

joint venture

joint venture

EXPLORER

WARINSART

KORTRIJK

managed

joint venture

joint venture

WAREGEM

KALLO

joint venture

joint venture

BRUSSELS

KRUIBEKE

joint venture

joint venture

BASTOGNE

KAPELLEN

joint venture

joint venture

1

SEMI-

REFRIGERATED

2

TEMSE

ACCOMMODATION

joint venture

BARGES

1

NUNCE

joint venture

WARIBOKO

FSRU BARGE

joint venture

FSRU S-188

owned

23

1

1

FSO

MULTIPURPOSE

SUPPLY VESSEL

10

NKOSSA II

1

GEO OCEAN II

managed

managed

FSRU

(VESSEL-BASED)

FLNG BARGE

TANGO FLNG

EXCELLENCE

EXPEDIENT

FSRU TOSCANA

managed

managed

managed

owned

EXCELSIOR

EXPLORER

SUMMIT LNG

11

managed

managed

managed

EXEMPLAR

EXPRESS

EXPERIENCE

managed

managed

managed

VERY LARGE

EXQUISITE

GAS CARRIERS

managed

LEVANT

BREEZE

EIGER

5

managed

managed

EXPLORER

PASSAT

MISTRAL

managed

managed

managed

MATTERHORN

FRUIT JUICE CARRIERS

SIROCCO

MONSOON

EXPLORER

managed

managed

managed

WEISSHORN

AVANCE

DOM

EXPLORER

managed

EXPLORER

CARLOS

PREMIUM DO

managed

managed

FISCHER

BRASIL

managed

managed

1

CITRUS VITA

SOL DO

BRASIL

BRASIL

managed

managed

OURO DO

LNG CARRIER

BRASIL

managed

EXCALIBUR

joint venture

EXMAR REPORT 2019

24

BEXCO

BEXCO is a leading European manufacturer of synthetic mooring, towing and lifting ropes, made-to-measure for offshore, oil and gas, marine and industrial applications.

In 2019, BEXCO had its largest order ever intake for deep water mooring rope, with DeepRope tender wins for exploration projects reaching final investment decision (FID). BEXCO was also able

to successfully deliver its first DeepRope project in China for national offshore producer CNOOC.

BEXCO significantly grew its market share in synthetic slings for offshore heavy lift operations, with notable reference gains for offshore wind installations. It also delivered specialized HMPE rope for FLNG jetty mooring and FSRU shallow water seabed mooring. Both these markets are expected to grow in demand during 2020.

25

BEXCO also consolidated its market share in Single Point Mooring solutions.

In the marine market, BEXCO retained its recurring mooring business with two of the world's leading liner shipping owners for their existing fleets as well winning tenders for their ultra-large containership newbuild programmes. BEXCO also made inroads into the cruise liner sector, having developed a specialized mooring solution

for the segment. BEXCO will expand its activities in both LNG shipping and towing in 2020.

BEXCO expanded its presence in the US, with strong showings in the order book for inland marine and local offshore mooring, towing and heavy lift applications. In 2020, BEXCO will also esta­ blish direct representation in Australia.

January 2020 saw the appointment of Chief Commercial Officer Rudi Labeau as the new Chief Executive Officer of BEXCO.

TRAVEL PLUS

Travel PLUS is Belgium's largest independent travel agency, located in Antwerp. It differentiates by offering a high level of personal care towards its business and leisure travellers, combining tailor -made itineraries with exceptional after-sales service.

The revenue split of 70/30 between respective business and leisure segments is as per the previous year.

The result from 2019 is also in line with the previous year thanks to a decent performance in bookings from both existing and new clients.

Travel PLUS aims at retaining and further growing its clientele base by centralizing all its bookings onto a single platform and by focusing on profitable organic growth in 2020. The company has also entered into an exclusive partnership with the Travel Leaders Network, a community of travel professionals representing approximately 5,700 travel agency locations across the United States and Canada. This will provide access for the company to corporate travel whilst maintaining its PLUS Service value proposition (Professional Loyal Unbeatable Service).

It is expected that COVID-19 will have an impact on the results of 2020.

EXMAR YACHTING

With a fleet of luxury vessels under management, EXMAR Yachting assists both experienced and first-time owners in building, refitting, maintaining and chartering their luxury yachts. The team of highly experienced captains, technical superinten- dents, crewing managers and operations staff are on hand to provide a dedicated and personal service for each vessel.

EXMAR REPORT 2019

26

#03

CARE FOR TODAY,

RESPECT

FOR TOMORROW

EXMAR REPORT 2019

28

As a global energy supply chain solutions provider, EXMAR operates in an ever-changing world. Our business is to develop specialized solutions for clients

who are looking to find innovative means of storing, transporting and transhipping hydrocarbons in

both liquefied and gaseous states. In all activities we give the upmost priority to the health, safety and well-being of our people at sea and ashore, the quality of our assets and the protection of the envi- ronment. We want to demonstrate to the world "we care today because we respect tomorrow".

Our business principles

We do business with respect for the world in which we operate and we recognize that our operations impact our colleagues, customers, suppliers, partners and society as a world-class global provider of specialized services to the oil and gas industry.

  • We respect the fundamental human rights and freedoms. We do not tolerate discrimi- nation of any kind on grounds of race, colour, sex, language, religion, political or other opin- ion, national or social origin, property, birth or other status.
  • We undertake to be open, honest and accountable in our relationships with everyone we work with and with each other. This means that we will not tolerate any form of bribery, facilitation payments or fee- based recruitments made in the course of business or services related to our Company.
  • We apply a zero-tolerance for modern slavery in our supply chain. This includes but is not limited to child labour, human trafficking and forced or bonded labour. Furthermore, we subscribe to fundamen- tal labour rights: the ability to enter into employment and terminate it freely and voluntarily as per relevant collective agreements; freedom of association and collective bargaining; and access to information on rights and obligations during employment.
  • We encourage and promote processes in our supply chain that minimize the impact on our natural resources, that reduce the release of greenhouse gasses and that have no negative consequences to the environment.
  • We insist on maintaining the highest safety standards throughout our operations, our supply chain and in the services provided to us.

PEOPLE - OUR MOST VALUABLE ASSET 29

EXMAR employees are the key to our success: their skills, commitment and motivation make EXMAR competitive and fit for the future.

EXMAR places great importance on a healthy, competitive working environment and a well- defined organisational structure, and to the sense of belonging, motivation and team spirit of its employees, on every level.

All staff members are given the opportunity to extend their knowledge and experience further via courses and training, with participation in internal and external seminars and conferences.

SOCIAL RESPONSIBILITY INITIATIVES EXMAR is also a patron to VZW ZachteKracht, which is a charity located at the Royal Yacht Club at the Belgian coast town of Nieuwpoort and which offers opportunities to young people with special needs to sail on a yacht at sea for a day. EXMAR staff organizes an annual fairtrade breakfast in recent years and distributed Saint Nicholas chocolate which support the charity OXFAM.

TRANSITION OFFICE

Early 2019 an internal EXMAR survey took place. Up to 50 managers and employees from different business units in Antwerp Headquarters as well as from the Houston office were interviewed to give open feedback on the current status of the Company and the potential areas of improvement. The findings provided very useful input and resulted in a report with action points to prepare EXMAR for the future. A Transition Office team was installed to facilitate the implementation of the plan. Four focus areas were identified: the business model, organizational struc- ture, financial performance management and the Company culture. This has led to a series of changes and initiatives which include:

  • an adapted organisational structure
  • increased interaction between the business units
  • internal communication engagement with several information sessions, internal workshops and an EXMAR Conference for all staff
  • HR policies for the various companies in the EXMAR Group were compared and prepared for alignment.

EXMAR REPORT 2019

30

ENVIRONMENT AND

SAFET Y

SUSTAINABLE SHIPPING

The shipping sector has always been subject to increasing international, regional and local regulatory pressure for sustainable shipping and more lately an increased focus has been placed on improving efficiency and reducing CO2 and greenhouse gas emissions.

As a ship manager, EXMAR Ship Management (ESM) aims to operate the vessels in compliance with all international regulations and requirements. Our ESM management system obtained external certifications such as ISO 14001 (environmental care), ISO 50001 (energy efficiency) and OHSAS 18001 (health and safety). ESM supports sustainability initiatives and is part of the Environmental Committee of Intertanko.

The commitment to lower emissions and to optimize fuel consumption is monitored via annual objectives. All energy efforts and fuel efficiency targets are also continuously monitored via technology that is supported by a leading classification society. EXMAR Ship Management voluntarily participates in the

Environmental Ship Index system (ESI) whereby basic vessel emission data is submitted resulting in an ESI score per vessel.

ENVIRONMENTAL PERFORMANCE

In 2019 there were no overboard spills reported. In total there were six oil spills on board of which two took place on deck during lifting operations. Each case was thoroughly investigated, with corrective and preventive actions taken.

One of our main focus points is improving the energy efficiency of the EXMAR fleet. The Energy Efficiency Operational Indicator (EEOI) is a monitoring tool for managing ship and fleet efficiency over time. The average EEOI for EXMAR's LPG fleet was 40,5 in 2019.

Thanks to our efforts by staff at sea and on shore, the EXMAR midsize LPG fleet had a year-on-year average reduction of 14,75% on fuel consumed per nautical mile sailed. As a result, EXMAR achieved a 10,80% reduction in CO2 emitted per nautical mile sailed.

In 2019, the EXMAR Fully Pressurized fleet completed the second special survey dry dock. Maintenance works on the engines, hull and propeller performed during these technical stops, lead to a fuel efficiency increase as per following graphs.

-22%

-22%

2019

-20%

-20%

2018

-18%

-18%

Di…erence(%)

-16%

-16%

-14%

-14%

-12%

-12%

-10%

-10%

-8%

-8%

-6%

-6%

-4%

-4%

-2%

-2%

0%

0%

Fuel consumed

CO2 emitted

per nautical

by distance

mile (kg/NM)

(kg)NM)

Pre DD Group avg

Post DD Group avg

Saving %

-17.51%

-16.74%

-13.81%

-10.81%

-5.89%

11

12

13

14

15

Speed (km)

31

SAFETY PERFORMANCE

In 2019 the frequency of lost time injuries (LTI) for the total fleet managed by EXMAR Ship Management decreased to 0.81, a reduction of 37% compared to last year. Taking into account the significant expansion of both the owned and managed fleet, we are very proud of this result. Looking at the EXMAR LPG fleet, the safety performance in 2019 was the best so far with 0.31 lost time injuries per 1 million working hours.

EXMAR is not only looking into preventive measures for lost time injuries, but also into the root causes of restricted work, medical treatment, first aid cases or serious near misses. Examples of initiatives taken in 2019: new scaffolding material, reviewed procedure for safe lifting operations and working at height, new Personal Protective Equipment (PPE) for the prevention of eye injuries, and a vertical life line system to safely climb on deck ladders with a height of more than two meters.

Launch of the generic risk assessment library The overall goal of our Safety Management System is to control the risks related to a job. Based on the input from our crew, proper risk management is often time consuming and very challenging given the vessels' busy schedule with short port calls, increased administration etc. EXMAR's HSEQ department is continuously looking into ways to optimize the process and improve the Company's safety performance.

In 2019 we launched a digital generic risk assessment library on board the fleet. The library includes generic risk assessments for the jobs that frequently take place on board. Each risk assessment is the result of a team effort between ves- sels, marine, technical and HSEQ department. The crew on board uses the generic risk assessment as a basis to start from and adds situation and job specific risks to it.

Third parties: their safety is our business

Based on analysis of safety statistics third parties working on board our fleet were identified as a high risk, both to our crew as to third party workers' own safety.

Their safety is our business and needs a structured approach, below tools were implemented:

01 A new policy on the EXMAR HSEQ standard and requirements towards third parties. The policy is to be acknowledged by the third party when signing the contract.

02 A new tool to manage safety during third party interventions with a focus on

  • joint job preparation
  • open communication and close follow-up

03 New evaluation system for third parties

Safety campaign posters

Besides systems and tools, safety awareness and communication are crucial. The initiative of bi-monthly safety campaign posters was launched. Here's an overview of the 2019 campaigns:

01 Safety is in your hands:

8 measures to prevent hand injuries

02 Know how to beat the heat with tips and

tricks on how to avoid heat strokes

03 Lift the value of safety: safety during lifting operations

04 Get on board with safety: safe transfer by launch

05 Don't be toxic to safety: safely working with chemicals

Taking

the Safety LEAD update

U s w

F e

M

B

g

y

s

p

c

u

g

EXMAR REPORT 2019

32

RESEARCH & DEVELOPMENT (R&D)

With the R&D group within EXMAR, efforts are being made to look beyond hydrocarbons and work towards a less hydrocarbon- intensive economy. One of the possible cornerstones for an economy which might be less carbon intensive could be hydrogen. In this respect, EXMAR has multiple R&D projects running to anticipate the possible shift from a hydrocarbon economy to a hydrogen economy.

The hydrogen coalition

Together with six other leading players EXMAR signed a cooperation agreement to research on hydrogen and the establishment of an end-to-end supply of hydrogen as an energy and fuel source.

The climate target to reduce CO2 emissions in Belgium by 80% by 2050 compared to 2005 levels is a major challenge. Hydrogen could have an important role to play in the mix of solutions to achieve results. The coalition includes DEME, ENGIE, EXMAR, Fluxys, Port of Antwerp, Port of Zeebrugge and WaterstofNet.

A joint study will serve as a basis to coordinate delivery of concrete projects that shape the production, transport and storage of hydrogen. Hydrogen is an important carrier for renewable energy to be used for electricity and heat production, for mobility, for fuel production and as a raw material for industrial production. Crucial in the viability of a hydrogen economy is the generation of sufficient renewable electricity for the production of hydrogen.

As in Belgium wind and solar energy are not sufficiently available, part of the renewable energy will need to be imported. However, efficient and economic­ solutions for the production, transport, import and storage of hydrogen require specific expertise. The seven major industrial players and public stakeholders will bring their expertise together in a coordinated way taking steps towards a hydrogen-based economy in Belgium.

The partners will make a joint analysis of the entire hydrogen import and transport chain. The aim is to map the financial, technical and regulatory aspects of the various components in the logistics chain: production, loading and unloading and transport by sea and via pipelines. The outcome of the analysis will be a roadmap that indicates the best way to transport hydrogen for the various applications in the energy and chemical sector. The results of this analysis, which is expected to be ready in approximately one year, will form the bridge towards concrete projects.

HyMethShip

EXMAR is part of the HyMethShip Consortium which has been granted EUR 9 million fund under the EU Horizons 2020 programme.

The goal of the research project is to design an emission -free commercial vessel, using e-methanol as fuel source.

The HyMethShip system innovatively combines a membrane reactor, a CO2 capture system, a storage

OFF-SHOREON-SHORE

H2O

RENEWABLE

ENERGY SOURCES

O2

ELECTRICITY

H2

CO2

REFORMER 1

HYMETSHIP SYSTEM BOUNDARY

METHANOL AIR CLEAN EXHAUST GAS

N2 O2 H2O

SOX, PM

NOX IMO Tier III

METHANOL-TANK

PERFORMER 2

H2

CO2 TANK

33

system for CO2 and methanol as well as a hydrogen -fueled internal combustion engine into one system (Figure page 32).

The proposed solution converts methanol to hy- drogen, which is then burned in a conventional reciprocating engine that has been upgraded to burn multiple fuel types and especially optimized for hydrogen use.

The HyMethShip system is expected to significantly reduce emissions and improve the efficiency of wa- terborne transport at the same time. The concept allows for more than 90% reduction in CO2 emissions and will practically eliminate sulphur oxide and particulate matter emissions.

It is envisaged that NOx emissions will be reduced by more than 80%, significantly below the IMO Tier

  1. limit. This system will be developed, validated, and demonstrated on-shore with an engine in the range of 1-2 MW typical for marine applications. Ultimate- ly the HyMethShip concept could become a nega- tive greenhouse gas (GHG)-emission contributor.

Hydrogen-driven yachts

The Dutch naval architecture and design studio Diana Yacht Design has unveiled a brand new, radical superyacht concept for the 2019 Monaco Yacht

Show: the 36-metre Blue Angel superyacht. With hydrogen propulsion providing the yacht's power, Diana Yacht Design and the Belgian company EXMAR Yachting prove the eco-credentials within the superyacht industry can be so much more than surface level. Blue Angel is aesthetically appealing; she is clean and athletic with modern exterior lines, and, above all, realistic in the design.

The idea behind this ecological yacht began with EXMAR Yachting, which has been closely following the development of technology for creating a hydrogen-powered yacht. After some creative meetings with the Dutch studio, sketches of the first of three yacht concepts were made: the 'Ecological' Blue Angel concept.

The concept is based on meeting the needs of a hard-working, modern family who are looking to make the most of their leisure time, enjoy a luxury lifestyle and explore the world but who also care deeply about the environment.

When Blue Angel is running on hydrogen as its sole fuel, this allows for silent and clean cruising with zero emissions. The fuel cells to be used to generate the propulsion power are completely silent, vibration, smoke and smell free. This perfectly combines the advantages for the environment with an increased experience on board of the yacht.

EXMAR REPORT 2019

34

NEWBUILD VESSELS

In 2019, EXMAR has placed an order for two state- of-the-art VLGCs at the Jiangnan shipyard in China. Compared to their peers, when delivered these VLGCs will be considered as a Super-ECO design with a significantly lower environmental footprint.

Environmental

Less consumption/lower carbon footprint

All best available technology will be combined to increase the efficiency of the vessels.

The power needed to sail the vessels through the water will be minimized as far practically possible through a smart combination of following features:

  • Hull line optimization using powerful Computational Fluid Dynamics software comparing hundreds of dif- ferent hull forms and selecting the one hull form which has the best performance for the intended service
  • Selection of a premium anti-foaling coating on the underwater hull to minimize the resistance through

the water, while keeping the operating profile of the vessel in the equation

  • Installation of a propeller with the lowest possible surface roughness, which can be made with the current machinery available in combination with a well-designed propeller boss cap fin. Both signifi- cantly boost propeller performance
  • Providing the crew with trim optimization software and tools to ensure the vessel is always sailing on the trim giving the least resistance
  • Fitting of a full spade rudder which reduces the total rudder surface and hence also has a positive effect on the total vessel resistance.

Reducing the power requirements is only one step of the effort. The next step is to ensure that the power to propel the vessel will be generated in the most efficient way. EXMAR has succeeded in this by radically opting for a completely different marine fuel: LPG. While LPG has been used for a long time already in the automotive industry, it never made its introduction in the maritime industry up until now.

Percentage

105

M/E specific consumption

Propulsion power

Ship's fuel consumption

100

95

90

85

80

75

70

65

60

2014

2015

2018

2006

Year of dilivery

35

With this novel idea, the CO2 emissions of the vessel decrease in one step with 15%, which brings with it a major reduction of the carbon footprint of a VLGC. Additionally the latest engine design has been adopted to give lower consumption and a shaft generator will be fitted. Using the shaft generator during sailing, the 4-stroke auxiliary engines can simply be switched off and all onboard electrical power can be generated using LPG as fuel as well with a more efficient 2-stroke engine.

All these efforts are finally being translated into the Energy Efficiency Design Index (EEDI), which is an IMO Key Performance Indicator (KPI) on the performance of newbuild vessels. The new VLGCs will easily reach an EEDI level 3. Such a level is only mandatory as from 2025 onwards, which means the EXMAR VLGCs being delivered in 2021 will already be compliant with the energy requirements of the future.

Less pollution

As an important additional benefit of EXMAR's choice to use LPG as fuel, the air emissions of harmful components are being drastically lowered as well (compared to standard HFO):

  • The SOx emissions are lowered with 97%, easily complying with the IMO limit of 0.5% Sulphur in the fuel
  • The NOx emissions are lowered with 15% while sailing worldwide. In the NOx ECA zones the NOx emissions are further reduced by using a Selective Catalytic Reduction unit, lowering the NOx lev- els from the exhaust gas below the IMO Tier III limiations
  • The Particulate Matter content in the exhaust gas is lowered with 50%.

Apart from the direct air emissions from the machin- ery, significant efforts and investments have been done to tackle as well other possible harmful substances.

  • The refrigerant in the cooling systems used on board of the vessels will be R407C, which is much less ozone depleting compared to other products available on the market. Additional to this, leak detectors will be fitted around refrigerating equip- ment to quickly be warned in case of any leakage.
  • The firefighting substances which will be deployed include CO2, nitrogen, dry power and water spray; i.e. no substances which are damage the ozone layer.
  • An UV-type ballast water treatment plant compli- ant with IMO D-2 and with USCG type approval will be installed.
  • In order to segregate the oil better from the bilge water a primary bilge settling/cascade tank will be fitted. The oily water separator will be fitted with a 5 ppm oil in water detector on the overboard line. This means that the water is much cleaner compared to the industry standard where regulations allow 15ppm oil in water concentration for discharging bilge water.
  • Clean condensate water from the main engine air cooler and the air-handling unit will be collected in a separate tank to avoid oil contamination of the same.
  • A garbage management plan will be implemented, all garbage will be separated and a garbage com- pactor will be installed to reduce the waste volume.
  • The vessels will be equipped with a sewage treatment plant compliant with the latest international standards. The grey water (coming from the showers) will also be led to this sewage treatment plant. A grey water holding tank with

sufficient capacity will be installed in the vessel.

  • The vessels will comply with the anti-fouling con- vention and use no harmful components like TBT that leach into the seawater and kill marine life.
  • Grease for open gears and cables of deck machinery shall be an environmentally acceptable lubricant.
  • An air chamber sealing system will be installed in the stern tube.
  • The vessels will hold and maintain an Inventory of Hazardous Materials.
  • Last but not least will the liquefaction plants of the vessels be equipped with an ECO condenser to reduce the emission of hydrocarbons in cargo liquefaction operations.

Social

The vessels will be fully compliant with the Maritime Labour Convention. Additional investments have been made to improve the accommodation and equipment installed inside to improve the welfare of the crew.

The galley equipment was upgraded and the design of the galley was made in consultation with a galley coach.

The ships office will have an "open office" setup, increasing the social interaction. For the same reason a common mess room was selected instead of the usual separate setup between officers and crew.

A dedicated smoking room with proper extraction fan is foreseen where smoking is allowed. In all other places in the accommodation smoking will be forbidden.

EXMAR REPORT 2019

36

#04

FINANCIAL

REPORT

EXMAR REPORT 2019

38

FINANCIAL

CONTENT

CORPORATE GOVERNANCE STATEMENT 39

ANNUAL REPORT OF THE BOARD OF DIRECTORS 54

CONSOLIDATED STATEMENT OF FINANCIAL POSITION 61

CONSOLIDATED STATEMENT OF PROFIT

OR LOSS AND CONSOLIDATED STATEMENT OF

OTHER ­COMPREHENSIVE INCOME 62

CONSOLIDATED STATEMENT OF CASH FLOWS 63

CONSOLIDATED STATEMENT OF CHANGES IN EQUIT Y 64

NOTES:

#1.

Accounting policies

66

#20.

Trade and other receivables

97

#2.

Segment reporting

76

#21.

Tax assets and liabilities

98

#3.

Reconciliation segment reporting

79

#22. Restricted cash and cash and cash

99

#4.

Operating income

81

equivalents

#5.

Vessel expenses

82

#23. Share capital and reserves

99

#6.

General and administrative expenses

83

#24. Earnings per share

100

#7.

Personnel expenses

83

#25. Borrowings

101

#8.

Finance income/expenses

83

#26. Share based payments

104

#9.

Income taxes

84

#27. Employee benefits

105

#10. Disposal of an equity accounted

85

#28. Provisions

107

investee

#29. Trade and other payables

107

#11.

Vessels

87

#30. Financial risks and financial

108

#12.

Other property, plant and equipment

88

instruments

#13.

Intangible assets

89

#31.

Leases

112

#14. Right-of-use assets

90

#32. Capital commitments

114

#15. Equity accounted investees

90

#33. Contingencies

114

#16. Financial information equity

91

#34. Related parties

115

accounted investees

#35. Group entities

118

#17.

Borrowings to equity accounted

96

#36. Major exchange rates used

119

investees

#37. Fees statutory auditor

119

#18. Non-current assets held for sale

96

#38. Subsequent events

120

#19. Other investments

97

SIGNIFICANT JUDGMENTS AND ESTIMATES 120

STATEMENT ON THE TRUE AND FAIR VIEW 121

REPORT OF THE STATUTORY AUDITOR 122

STATUTORY FINANCIAL STATEMENTS 126

CORPORATE GOVERNANCE 39 STATEMENT

Corporate Governance aims to define several rules and behaviours according to which companies are properly managed and con- trolled, with the objective to increase trans-

parency. It's a system of checks and balances between the shareholders, the Board of Directors, the Chief Executive Officer and the Excecutive Committee.

GOVERNANCE MODEL

EXMAR NV is governed by the Belgian Code of Companies and Associations and the 2009 Belgian Corporate Governance Code. The key features are:

  • A Board of Directors, which defines EXMAR's general policy and strategy and supervises the op- erational management;
  • An Audit Committee, a Nomination and Remu- neration Committee and an Executive Committee created by the Board of Directors;
  • A Chief Executive Officer (CEO) who takes pri- mary responsibility for operational management.

DESIGNATION APPLICALBE 2009 CODE ON CORPORATE GOVERNANCE

This Corporate Governance Statement is covered by the provisions of the Belgian 2009 Corporate Governance Code. The Royal Decree of 6 June 2010 recognized the Code of 2009 as the only applicable Code. This Code is published in the Belgian Official Gazette (Moniteur Belge/Belgisch Staatsblad) on 23 April 2010 (www.staatsblad.be), as well as on the website www.corporategovernancecommittee.be.

As a result of the publication of the 2009 Belgian Corporate Governance Code ("Code 2009"), EXMAR has Code 2009 as a reference code.

PRINCIPLES CODE 2009

Pursuant to article 3:6 of the Belgian Code of Companies and Associations, EXMAR follows the principles of the 2009 Belgian Code on Corporate Governance:

  1. The Company adopts a clear governance structure;
  2. The Company has an effective and efficient Board of Directors that will make decisions in the interest of the Company;
  3. All directors show integrity and dedication;
  4. The Company has a rigorous and transparent pro- cedure for the appointment and the evaluation of its Board and the members thereof;
  5. The Board of Directors creates specialized Committees;
  6. The Company develops a clear structure for executive management;
  1. The Company compensates the directors and the members of the Executive Management in a fair and responsible manner;
  2. The Company enters into a dialogue with share- holders and potential shareholders, based on mutual understanding of each other's objectives and expectations;
  3. The Company guarantees suitable disclosure of its Corporate Governance.

CORPORATE GOVERNANCE CHARTER AND CORPORATE GOVERNANCE STATEMENT As a Belgian-headquartered Company with a commitment to the highest standards of corporate governance, the Board of Directors adopted a Corporate Governance Charter.

EXMAR's Corporate Governance Charter was approved by the Board on 31 March 2010 and updated and approved by the Board of Directors on 2 September 2016. This Charter is also applicable to all affiliates of EXMAR.

The Corporate Governance Charter contains a summary of the rules and principles on which EXMAR's Corporate Governance is organized and is based on the provisions of EXMAR's Articles of Association, the Belgian Code of Companies and Associations and the most recent version of the Belgian Corporate Governance Code.

The Belgian Corporate Governance Code is based on a 'comply or explain' principle.

The Company aims to comply with most provisions of the Belgian Corporate Governance Code, but the Board is of the opinion that deviation from provisions may be justified in the light of the Company's specific situation. If applicable, an explanation is provided in the Corporate Governance Statement about the deviations during the past financial year on specific provisions of the Code in accordance with the 'comply or explain' principle.

The Corporate Governance Charter describes the Company's profile, capital shares and shareholders and the applied principles related to the shareholders' meetings.

EXMAR REPORT 2019

40

The roles and responsibilities of the different organs within the Company are described:

  • The power, responsibilities and functioning of the Board are elaborated. The Corporate Gover- nance Charter defines the rules in operation of the Board, dealing with Conflicts of Interest, remuner- ation and evaluation.
  • The functioning of the Audit Committee and Nomination and Remuneration Committee, set up in delegation of the Board is described in detail.
  • The roles and rules in the organization of the day- to-day management, the power and responsibili- ties of the Chief Executive Officer and Executive Committee are elaborated.

This Corporate Governance Statement describes the measures taken by EXMAR to ensure compliance with laws and regulations relating to insider trading, corruption, money-laundering practices, competition, sanctions and suchlike.

The Corporate Governance Charter and Corporate Governance Statement of EXMAR can be consulted on the website (http://exmar.be/en/in- vestors/corporate-governance).

NEW BELGIAN CORPORATE GOVERANCE CODE 2020

The new Belgian Corporate Governance Code 2020 ("Code 2020") was presented on 9 May 2019 as a new reference code for Belgian listed companies.

Code 2020 attaches great importance to sustainable value creation and long-term vision. The new code, which replaces the versions previously published in 2004 and 2009, is also structured under a number of principles. Listed companies are expected to comply with the principles unless an adequate explanation for deviating from a provision is provided.

The Code 2020 applies as from financial year 2020. EXMAR will reflect on its current governance struc- ture; an amended Corporate Governance Charter will be drafted, discussed and adopted by the EXMAR Board including all elements required by law and the statements how the Code is applied. The EXMAR code will be aligned with the new Code of Companies and Associations and the new Articles of Association which will be discussed and presented to the Shareholders later in 2020 for approval.

1. General information

about the Company

1.1 DATE OF ESTABLISHMENT AND AMEND- MENTS TO THE ARTICLES OF ASSOCIATION TheCompanywasestablishedbynotarialdeedon20June 2003, published in the appendix to the Belgian Official Gazette of 30 June thereafter, reference 03072972, and of 4 July thereafter, reference 03076338.

The Articles of Association were amended several times and for the last time by deed executed before civil law notary Benoit De Cleene in Antwerp, replacing his colleague notary Patrick Van Ooteghem in Temse, on 15 May 2018, published in the appendix to the Belgian Official Gazette of 17 September thereafter, reference 18139021.

1.2 REGISTERED OFFICE

De Gerlachekaai 20, 2000 Antwerp, Belgium.

VAT BE0860.409.202.

Company Registration Antwerp - section Antwerp.

1.3 ISSUED CAPITAL

The issued capital amounts to USD 88,811,667, is fully paid-up and is represented by 59,500,000 shares without nominal value. For the application of the provisions of the the Belgian Code of Companies and Asso- ciations, the reference value of the capital is set at EUR 72,777,924.85.

No changes in capital occurred during the course of 2019.

1.4 AUTHORIZED CAPITAL

Pursuant to the Belgian Code of Companies and As- sociations, the Board of Directors may be authorized by the shareholders, during a five years period, to increase the capital up to a defined amount and within certain limits.

By decision of the Extraordinary General Meeting of Shareholders held on 16 May 2017, the Board of Directors was authorized to increase the share capital of the Company once or several times, in the manner and at conditions to be determined by the Board of Directors, within a period of five years with effect from the date of publication of such a decision, by a maximum amount of USD 12,000,000, the reference value of EUR 7,703,665.66 for application of the provisions of the Belgian Code of Companies and Associations. The special report of the Board of Directors was drawn up in accordance with the provisions of Section 7:199 of the Belgian Code of Companies and Associations.

1.5 ARTICLES OF ASSOCIATION, GENERAL MEETINGS, PARTICIPATION, AND EXERCISING OF VOTING RIGHTS

The Annual General Meeting takes place on the third Tuesday of May at 2.30 p.m.

The rules governing the convening, the participation, the conducting of the meeting, the exercising of the voting rights, amendments to the Articles of Asso- ciation, nomination of the members of the Board of Directors and its Committees can be found in the coordinated Articles of Association and the Corporate Governance Charter of the Company, both of which are available on the Company's website under "Investor Relations". (http://exmar.be/en/investors/re- ports-and-downloads/articles-association)

1.6 PURCHASE OF OWN SHARES

On 15 May 2018, the Extraordinary General Meeting of Shareholders authorized the Board of Directors of EXMAR for a period of five years to acquire the Com- pany's own shares within a well-defined price range.

The number of treasury shares as at 31 December 2019

amounted to 3.82%, which represents 2,272,900 shares.

FREEFLOAT

SAVEREX

47.03%

44.28%

COBAS ASSET

EXMAR

MANAGEMENT S.G.I.I.C. SA

5.002%3.82%

1.7 SHARES AND SHAREHOLDERS Shareholding as per 31 December 2019:

The EXMAR share is listed on Euronext Brussels and is part of the Bel Small index (Euronext: EXM).

During the course of 2019 and till the date of this report, EXMAR NV received three notifications in the

context of the Transparency Act of 2 May 2007.

The latest notifications received by the Company as

notified to the FSMA are as follows:

• On 18 July 2019 EXMAR NV announced that Cobas

41

Asset Management S.G.I.I.C. S.A. crossed a downward threshold (from 5.02% to 4.98%).

• On 8 August 2019 EXMAR NV announced that Cobas Asset Management S.G.I.I.C. S.A. crossed a threshold of 5% due to an acquisition of shares.

• On 30 October 2019 EXMAR NV announced that Saverex NV disclosed that due to the sale of 500,000 voting rights the threshold of 50% was crossed.

In accordance with Section 74§6 of the law on public takeover bids of 1 April 2007, Saverex NV notified the FSMA on 15 October 2007, updated on 30 August 2019, that it holds more than 30% of the securities with voting rights in EXMAR NV, a listed Company.

The statutory information is published on the website (www.exmar.be).

The Company has no knowledge of any agreements made between shareholders.

The Articles of Association impose no restrictions on the transfer of shares.

2. Composition and functioning of the Board, management and controlling bodies

2.1 BOARD OF DIRECTORS 2.1.1 Composition

On 31 December 2019 the Board of Directors consist- ed of 10 members, appointed by the Annual General Meeting of Shareholders and is composed of members from diverse professional backgrounds and who repre- sent a wide range of experience; it consists of a suffi- cient number of directors to ensure proper operation,

taking into account the specificness of the Company.

Mr. De Geest however was co-opted as independent director as per 29 January 2020 to replace Mrs. Eisbrenner who passed away on 9 May 2019. The appointment of Mr. De Geest will be submitted for approval to the General Meeting of Shareholders of EXMAR of Tuesday 19 May 2020.

Functions and terms of office of the Directors on the Board per 31 December 2019:

Name - Function

Number of attended meetings

Beginning of mandate

Last renewal

End of mandate

BOARD OF DIRECTORS

BARON PHILIPPE BODSON

• Chairman Board of Directors

7/7

20 June 2003

15 May 2018

2021

• Non-executive director

• Member Audit Committee

• Chairman Nomination- and Remuneration Committee

NICOLAS SAVERYS

7/7

20 June 2003

15 May 2018

2021

• Executive director

• Chief Executive Officer (CEO)

MICHEL DELBAERE

7/7

17 May 2016

21 May 2019

2022

• Independent director

• Member Nomination- and Remuneration Committee

JALCOS NV REPRESENTED BY LUDWIG CRIEL

7/7

16 May 2017

2020

• Non-executive director

• Chairman Audit Committee

ARIANE SAVERYS

7/7

15 May 2012

15 May 2018

2021

• Non-executive director

PAULINE SAVERYS

7/7

15 May 2012

15 May 2018

2021

• Non-executive director

EXMAR REPORT 2019

42

BARON PHILIPPE VLERICK

  • Non-executivedirector
  • Member Audit Committee

BARBARA SAVERYS

  • Non-executivedirector
    ISABELLE VLEURINCK
  • Independent director
  • Member Nomination- and Remuneration Committee
  • Member of the Audit Committee
  • Appointed since 21 May 2019

KATHLEEN EISBRENNER (†)

  • Independent director
  • Co-optedby Mr. Wouter De Geest as per 29 January 2020

JENS ISMAR

  • Independent director
  • Member of the Audit Committee
  • Member Nomination- and Remuneration Committee
  • Appointed since 10 October 2019 as member of the Executive Committee (Executive Director Shipping)

7/7

20 June 2003

16 May 2017

2020

7/7

19 May 2015

15 May 2018

2021

4/4

21 May 2019

2022

2/2

15 May 2018

2019

5/5

18 May 2010

21 May 2019

2019

2.1.2 Position and mandate

The Board of Directors is the ultimate decision-making body of the Company. The powers and the operation of the Board are described extensively in the Corporate Governance Charter. The Board has all the powers with the exception of matters reserved by the Belgian Code of Companies and Associations or the coordinated Articles of Association for the General Meeting of Shareholders.

The Board of Directors strives for the success of the Company in the long-term, provides the necessary leadership for this, and ensures that risks can be identified and managed. It is responsible for the overall strategy and values of EXMAR, based on the social, economic and ecological responsibility, gender di- versity, and diversity in general. The directors will be provided in good time with a file containing all the information for the deliberations on the agenda items. Decisions are taken at Board of Directors meetings in accordance with Article 22 of the Articles of Associ- ation, which includes the stipulation that the Chair- man's vote is decisive in the event of a tied vote. To date, such a tied vote has never occurred.

2.1.3 Activities

During 2019 the Board held seven meetings; all the meetings were held under the chairmanship of Mr. Bodson, each in the presence of all members.

In addition to exercising the powers provided by law, the Articles of Association and the Corporate Governance Charter, the Board of Directors deals with reviewing and deciding on the long-term strat- egy, key policies and structure of the Company and closing the accounts and financial statements of the Group. Other topics were:

  • Financial position - Action plan
  • Going concern
  • VLGC newbuildings
  • Prepare for the Future
  • Corporate Governance

2.2 AUDIT COMMITTEE 2.2.1 Composition

The Audit Committee is founded by the Board of Directors.

Article 7:99 of the Belgian Code of Companies and Associations and the EXMAR Corporate Governance Charter stipulate that at least one member be independent; the Board of Directors confirms that the composition of the Audit Committee meets the purpose of the law.

2.2.2 Position and mandate

The Board of Directors has granted the Audit Committee the broadest powers of investigation within its area.

The Audit Committee assists the Board of Directors with the fulfilment of its supervisory task and to ensure monitoring in the broadest sense. It is the main point of liaison for the Internal Auditor and the External Au- ditor. All the members of the Audit Committee possess the necessary expertise concerning accounting and auditing, and are familiar with financial reporting, accounting standards and risks, because of their qual- ifications, their careers in various multinational groups and their current professional activities.

With the entry into force of the EU General Data Protection Regulation 2016/679 (GDPR) as of 25 May 2018, a Data Protection Committee (DPC) is appointed.

The role of the DPC is to propose the changes to the Company's policies and procedures as required by the GDPR, coordinate and oversee their implementation and monitor compliance with GDPR.

The DPC will report to the Risk Committee.

2.2.3 Activities

The specific responsibilities of the Audit Committee are set out in an Audit Charter, approved by the Board of Directors on 31 March 2011 and modified on 25 March 2015.

In 2019, five meetings were held each in the presence of all members.

The Statutory and the Internal Auditor were present during two meetings.

The Audit Committee deliberated on specific financial matters that arose during the year, made

recommendations to the Board of Directors, other agenda items included:

  • Compliance and Risks
  • Going concern

The Compliance policies confirm EXMAR's commitment to comply with applicable laws and rules.

A specific Risk Committee is set up with the task of continuously supervising the effective functioning of the Compliance Model and respect of the applicable legislation.

The EXMAR Risk Committee performs these tasks for all entities within the EXMAR group, reporting to the Audit Committee.

The Risk Committee shall at least once per year submit to the Audit Committee a report on the risk assessment carried out by the Key Risk Officers who are instructed and authorized to assess the risks as set out in the Compliance Model and on complaints or questions received by the Risk Committee. At least once per year the Risk Committee shall report on non-compliance complaints it has received in the form requested and within the appropriate timeframe. It will also report the action taken to the Audit Committee (unless the complaint concerns a member of the Audit Committee in which case the complaint shall be directed to the Chairman of the Board). The Audit Committee will report to the Board on the functioning of the Risk Committee at least once a year.

2.3 NOMINATION AND REMUNERATION COMMITTEE

2.3.1 Composition

The Nomination and Remuneration Committee op- erates in compliance with Article 7:100 of the Bel- gian Code of Companies and Associations:

• Composed out of a majority of independent directors

• Chaired by the Chairman of the Board of Directors

• Other members are non-executive

The Nomination and Remuneration Committee was composed of three members on 31 December 2019 and reports to the Board of Directors.

Mrs. Isabelle Vleurinck was appointed as a new independent director of the Company. She is also a member of the Nomination and Remuneration Committee and of the Audit Committee.

2.3.2 Position and mandate

All the members of the Nomination and Remuneration Committee possess the necessary expertise in the area of remuneration policy based on exercising their positions during their careers.

The Committee assists the Board of Directors with the exercising of its responsibilities concerning the determination of the Company's remuneration policy and the nomination procedures.

2.3.3 Activities

The specific responsibilities have been set out in a Nomination and Remuneration Committee Charter, approved by the Board of Directors on 29 November 2011. The Board of Directors also approved the procedure for the nomination and

reappointment of directors and members of the Executive Committee.

The Nomination and Remuneration Committee met three times during the past year; all the members were present at each meeting.

With respect to remuneration, the following items were discussed:

  • Remuneration package for 2020
  • Remuneration report

With respect to the nominations, the following items were discussed:

• Composition of the Board of Directors

2.4 EXECUTIVE COMMITTEE - CEO 2.4.1 Composition as per 31 December 2019

The Board of Directors delegated its management powers to an Executive Committee in accordance with article 524bis of the (old) Belgian Code of Companies.

Under the 2020 Corporate Governance Code, EXMAR shall make an explicit choice regarding its Governance Structure and the delegation of the daily management to the Executive Committee.

Since 1 February 2020, Mr. De Brabandere is CFO of the Company. No new COO was appointed. The tasks of the COO are entrusted to the deputy CEO.

EXCO 2019

EXCO 2020

NICOLAS SAVERYS

NICOLAS SAVERYS

• Executive director

• Executive director

• Chief Executive Officer (CEO)

• Chief Executive Officer (CEO)

PATRICK DE BRABANDERE

FRANCIS MOTTRIE

• Chief Operating Officer (COO)

• Deputy CEO

MIGUEL DE POTTER

PATRICK DE BRABANDERE

• Chief Financial Officer (CFO)

• Chief Financial Officer (CFO)

PIERRE DINCQ

JENS ISMAR

• Managing Director Shipping

• Executive Director Shipping

JONATHAN RAES

JONATHAN RAES

• Managing Director LNG Infrastructure

• Executive Director Infrastructure

DAVID LIM

• Managing Director EXMAR OFFSHORE

MARC NUYTEMANS

• CEO EXMAR Shipmanagement

EXMAR REPORT 2019

44

2.4.2 Position and mandate

The Executive Committee is responsible for the day-to-day management of EXMAR and the EXMAR group, under supervision of the Board of Directors.

The operating rules of the Executive Committee are set out in a Charter, approved by the Board of Directors on 29 November 2011.

The Executive Committee meets on a regular basis. The CEO is the chairman of the Executive Commit- tee.

The role of the Executive Committee consists of leading EXMAR according to the values, strategies, policies, schedules and budgets set by the Board of Directors.

3. Policy regarding gender diversity

3.1 LEGISLATION

The Board of Directors took note of the Belgian law of 28 July 2011 regarding to gender diversity on the level of the Board of Directors, the members of the Executive Committee and persons entrusted with the daily management of the Company.

In accordance with provision 2.1 of the Belgian Corporate Governance Code (provision 3.3 of the

Code 2020), the Board of Directors needs to be composed based on gender diversity and diversity in general.

3.2 CURRENT SITUATION

The Board of Directors consists of four female members out of a total of 10 members and this complies with the gender diversity rules.

4. Performance Evaluation

In order to function effectively, it is required for the Board to have a transparent means by which it can measure and review its performance with a clear potential path for renewal and improvement.

The Belgian Corporate Governance Code and EXMARS's Corporate Governance Charter foresee this requirement by periodically requesting Board members to complete an evaluation.

EXMAR's Board, under the guidance of its Chairman, first introduced the evaluation process in 2011 (renewed in 2014) and during the course of 2017 the decision was

taken to implement a new Board evaluation in 2018.

The evaluation has the main objective of improving the added value of the Board. It should reinforce the values of the Company, increase efficiency also potentially assist in detecting and proactively dealing with any potential problems.

Following the evaluation, feedback by the members results in fine-tuning the functioning of the Board and committees where required.

5. Supervision

5.1 EXTERNAL AUDIT

By decision of the Annual General Meeting of 16 May 2017, on the basis of the proposal formulated by the Board of Directors and in line with the recommendation and preference of the Audit Committee, Deloitte Belgium was appointed as Statutory Auditor of the Company for a period of three years, represented by Mr. Gert Vanhees.

The auditor conducts the external audit of both the consolidated and statutory figures of EXMAR. The Audit Committee in its meeting of 1 September 2017 proposed to the Board of Directors and the Board agreed to no longer review the half-year results, in line with other listed compa- nies' policies. The auditor however was requested to review the updated version of the interim condensed consolidated financial statements to ensure consistency with the adjustments proposed by the Committee.

5.2 INTERNAL AUDIT

EY has been appointed to assist the Company in the conducting of its internal audit activities. The internal auditor was reappointed for a new term of three years ending at the meeting of the Audit Committee in March 2022.

5.3 SECRETARY

Mr. Mathieu Verly, Secretary, appointed since 1 July 2015.

The Secretary shall ensure that Board procedures are complied with and that the Board acts in accordance with its statutory obligations and its obligations under the Articles of Association. He shall advise the Board on all governance matters and assist the Chairman of the Board in fulfilling his duties as detailed above, as well as in the logistics associated with the affairs of the Board (information, agenda, etc.).

5.4 COMPLIANCE OFFICER

Mr. Patrick De Brabandere, Compliance officer, appointed on the recommendation of the Audit Committee, by the Board of Directors on 25 March 2015 with effect from 1 July 2015.

6. Guberna

EXMAR joined Guberna as institutional member, because EXMAR believes in the merits of corporate governance principles and is keen on further developing its corporate governance structure. Guberna is a knowledge centre promoting corporate governance in all its forms and offers a platform for the exchange of experiences, knowledge and best practices.

He is responsible for the implementation of and the supervision on compliance with the Dealing Code and the tasks described in the Compliance Model as member of the Risk Committee.

45

Guberna organizes several activities such as workshops, round tables and seminars. EXMAR promotes directors and management of the Company to participate in these activities.

The training "Director effectiveness" focusses on competences and knowledge needed for a director to fulfil.

7. Rules

and procedures

7.1 CONFLICTS OF INTEREST

Each member of the Board of Directors and of the Executive Committee is encouraged to organize his mandate as efficiently as possible and their personal and business interests in such a way that there is no direct or indirect Conflict of Interest with the Company.

Transactions, if any, between EXMAR or an affiliated company and a Board member will take place at arm's length. The same applies for transactions between the Company or an Affiliate and a person closely related to a member of the Board.

The provisions of the Belgian Code of Companies and Associations and the Corporate Governance Charter will apply in the event of a Conflict of Interest.

7.2 TRANSACTIONS

EXMAR has no knowledge of any potential Conflicts of Interest among the members of the Board of Directors and the members of the Executive Committee in the meaning of articles 7:96 or 7:115, except those that may be described in the Annual Report from the Board of Directors.

Currently Saverbel NV and Saverex NV, companies controlled by Mr. Nicolas Saverys, CEO, provide administrative services to the EXMAR Group. These services are invoiced and are at arm's length conditions.

8. Political contributions

EXMAR did not make contributions or payments or otherwise give any endorsement, directly or in- directly, to political parties or committees or to individual politicians.

The employees of EXMAR may not make any political contribution on behalf of EXMAR or through the use of corporate funds or resources.

EXMAR REPORT 2019

STRATEGIC RISKS

46

International control and

risk management systems - assesment

Description of risk

Potential impact

Limiting factors and control

MARKET RISKS

The overall gas and oil market and the worldwide

A decline in the overall oil and gas market could

Diversified client base and a significant coverage

market for the transportation of gas is cyclical.

impact the freight rates for transportation of gas

with a mix of long-term and short-term charters.

and would affect our income and cash flows and

The value of our fleet is continuously

monitored

could affect the value of our fleet.

and assessed by using internal and external

information.

Lower demand for gas carriers, as well as other

A lower demand would impact the freight rates

A significant part of our fleet is secured on long-

floating assets including our LNG infrastructure

and the number of off-hire days of our fleet. This

term charters. Geographical diversification and a

assets.

would impact our business and cash flows as well

qualitative client portfolio and network through

as the value of our fleet and our financial position.

integration in the markets thanks to years of

experience. We are a flexible shipping

Company

aiming for structural quality and durability for our

clients.

POLITICAL ENVIRONMENT IN FOREIGN COUNTRIES

Deterioration of the economic, legal and political

Changes to economic, legal and or political

circumstances in countries, including political, civil

circumstances could affect the trading

patterns

and military conflicts. Such changes will from time

of LPG and LNG and could affect our

fleet,

to time result in attacks on ships, disruption of

our result of operations and our ability to obtain

waterways, piracy, terrorism and other activities.

financing. Instability could result in a reduced

demand for our services. It could also expose us

to increased, additional or unexpected expenses

to comply with changed laws and regulations and

could affect our insurance expense or

policy.

Continuous assessment and monitoring of eco- nomic, political and legal circumstances in order to anticipate, limit or avoid any possible impact. Gathering information from authoritative and or industry organisations as well as from specialised consultants. Our insurance policy is regularly updated and includes among others protection and indemnity, hull and machinery and loss of income at insured values deemed to be appropriate to cover anticipated losses.

COMPETITION

Competitors investing in LPG carriers, FSRUs

The process of obtaining a charter is highly

Defining a strategy with a long-term vision and

or other floating assets through consolidation,

competitive. Increased competition may cause

consistent management of ongoing trends in the

acquisitions of second hand or newbuildings.

greater price competition for price charters and

industry. Experience of our management team

might impact the price of vessels or other floating

and our Board of Directors. Investing in a variety

assets. This could have a material effect

on

our

of factors such as the quality of our operations,

results and cash flows and the value of

our

fleet.

technical abilities and reputation, quality and

experience of our crew and relationships within

the industry.

OPERATIONAL RISKS

Description of risk

Potential impact

Limiting factors and control

RISKS ENTAILED IN THE OPERATION OF VESSELS AND OTHER FLOATING ASSETS

47

Environmental accidents, work, epidemic diseas- es, interruptions caused by mechanical defects, human error, war, terrorism, political actions in various countries, strikes and bad weather. Vessels not meeting certain performance standards.

Any such event would harm our reputation as reliable shipping company and would result in increased costs and an increase of the number of off-hire days. The cost of urgent repairs are more unpredictable and can be very high. In case performance standards are not met the charterer could withhold a portion of the hire.

Our experience within the industry and our policies and procedures such as our maintenance, HSEQ and training programme should limit or avoid certain risks inherent in our business. All our vessels and assets are covered by adequate insurance.

INCREASED OPERATING EXPENSES

Operating expenses and maintenance expenses

Operating expenses and drydock capital expen-

Proactive in-house ship management and a

can be volatile.

ditures depend on a variety of factors which are

continuous internal and external inspection of our

outside our control and affect the entire shipping

assets. Our maintenance policy is updated and

industry. Drydocking of vessels can also result in

improved on a day-to-day basis with the objective

loss of income.

to maintain the highest quality levels.

FLEET AGE PROFILE

As a ship ages class requirements become more stringent and compared to new modern ships the vessel will be less competitive and more expensive to operate.

We must make substantial capital expenditure to maintain the operational capacity of our fleet. These expenditures could vary significantly and can increase as a result of customer requirements, competitive standards and regulations or organizations standards.

The average age of our fleet is monitored and our strategy includes regular investments in new vessels to keep our fleet competitive. Our in-house ship manager and commercial team have many years of experience to assess the operational and commercial performance. All our vessels are certified as "in class" by a classification society which is also a requirement for insurance coverage. Inspections of our fleet are carried out on a day-to-day basis at sea or in port. Based on these inspections the continual maintenance plan of each vessel is created, updated and implemented.

ASSETS UNDER CONSTRUCTION

Specific risks apply to our assets under construction and include the solvency of our contractor as well as the delivery of the asset in accordance with all specifications and securing all required permits.

Failure by the shipyard to construct or deliver our assets under construction or bankruptcy by the shipyard would have a substantial impact on our financial position and our results. In the event the shipyard does not perform and we are not able to enforce the refund guarantee we might lose all or part of our investment. Additionally we might fail to comply with our obligations towards the charterer.

Advance payments are made to the shipyards and these payments are secured by refund guaran- tees. Progress of the construction and compliance with all technical and regulatory specifications is closely monitored by our technical teams at the shipyards.

EMPLOYMENT

Vessels or other floating assets remain off-hire for a substantial period or charters are not renewed or terminated early.

In case we cannot enter into profitable long-term charters for our existing fleet or our floating assets under construction our result and cash flows might be substantially affected. We would be subject to a short-term or spot market or charters based on changing market prices. In addition it might be more difficult to obtain financing for such assets at reasonable terms.

Our management team and our commercial team have many years of experience and have an extensive network in the market. Our charter portfolio is very diversified. The commercial strategy is to remain flexible in the market by having a good balance between long-term and short-term charters.

REGULATIONS

New regulation could come into force. Environ-

Regulatory changes could impact our ability to

Continuous monitoring and anticipation of

mental law changes can also be implemented by

charter our vessels or floating assets and might

changes in legislation and applicable requirements.

public or other authorities.

increase expenditure to be made to comply with

Our in-house ship manager and our management

all requirements and legislation.

team have many years of experience and an

extensive network within the industry to monitor

ongoing trends and changes.

EXMAR REPORT 2019

Description of risk

Potential impact

Limiting factors and control

INFORMATION TECHNOLOGY SYSTEMS

48

Information technology systems change rapidly and are fundamental for the day-to-day opera- tions.

The failure of key information technology systems or processes could adversely affect the operations or lead to data breaches. Cyber-attacks, ransom- ware or other security breaches could make information technology systems unavailable, interrupt our vessel operations and result in a loss of hire.

A dedicated IT team monitors continuously the information technology changes and exposures. Several measures such as firewalls, anti-virus software and separated networks etc are in place. An information technocogy risk assessment is performed on a regular basis. Policies and procedures are in place and include a disaster recovery plan, an incident response plan and a business continuity plan.

OUTBREAK OF A PANDEMIC DISEASE

Our seafarers as well as the supplies are crucial for

An outbreak of a pandemic virus in any region or

Specific and strict policies and procedures are

our operations, an outbreak of a pandemic virus or

on a global scale would impact our operations.

in place for an isolated outbreak on board of an

contagious disease can complicate operations.

Local or international measures such as but not

asset and our people are specifically trained on

limited to travel bans, limited or no port access

how to deal with such event. Events and risks are

or quarantine measures following such outbreak,

continuously monitored by our operational teams

could complicate supplies for our floating assets

who also participate in local and international

and complicate embarking or even suspend the

associations and industry organisations to align

possibility for seafarer to embark. Such events

with changes in requirements, ongoing guidelines

could result in the asset to be off-hire and a loss

and measures.

of income for the asset or part of our fleet.

Our operations are very diversified and our assets

are deployed on a global scale, our seafarer are

also sourced globally and neither dependent on

one nationality or a specific region. Planning

of our seafarer is flexible and contracts can be

extended if needed in case replacement is not

immediately possible or available. A business

continuity plan is available to respond to such

event and the measures foresee the possibility to

have all our shore based teams working remotely

or even isolated. In case operations need to be

stopped, some of our commercial agreements

include clauses covering force majeure and in case

of an off-hire event exceeding a specific number

of days, our insurance policies cover temporary

the loss of income.

FINANCIAL RISKS

Description of risk

Potential impact

Limiting factors and control

COUNTERPARTY RISKS

Dependency on a limited number of clients, we

Deterioration of the financial viability of one of

Obligations of clients under long-term charters

receive a considerable part of our income from a

our significant clients would lead to a significant

can be secured by guarantees or other securities.

limited number of clients.

loss of income and cash flows.

Most of our significant clients have been client of

EXMAR for many years, our management team

has the necessary experience and knows how to

assess the operations and financial viability of

our

clients.

Charterers can be in default or can become

In case of the loss of a client our income and cash

Our customer base is diversified and consists

of

bankrupt.

flows would be impacted. The costs of rechar-

major companies active in the oil and gas market.

tering the vessel can be high and the market

Extensive credit checks are performed for new

conditions can be unfavorable.

clients and additional securities or guarantees will

be requested if deemed necessary. Charter hire is

in most cases payable in advance.

Description of risk

Potential impact

Limiting factors and control

FINANCING

49

EXMAR is subject to restrictions on credit

The existing financing arrangements for our fleet

Our cash flows and our financial position, includ-

agreements, such as financial covenants and re-

are secured by the vessels and parent company

ing the requirements under the financing agree-

strictions for EXMAR and its subsidiaries to take

guarantees and contain restrictions and other

ments, are continuously monitored. Our financing

on further debts, distribute dividends, undertake

covenants that may restrict our business and

strategy aims for a diversification of financing re-

certain investments, sell part of its business with-

financing activities. Any default could result in

sources and a spread of maturity dates. A dialogue

out the consent of its lenders

the acceleration of the maturity date and lenders

is maintained with different investors and financial

could call on the guarantees of these facilities.

partners in order to build a long-term relationship.

As of 31 December 2019, all applicable financial

covenants under the financing arrangements are

complied with.

Financing to be obtained for assets under con-

Impossibility to finance or refinance our assets

Financing is inherent to our activities and invest-

struction, operational assets and existing financing

under construction and our existing fleet

would

ments. Our management team has numerous

arrangements to be refinanced at maturity date.

have a substantial impact on our financial

position.

contacts and support of different financing

The financing possibilities and the cost of

financ-

partners and has many years of experience in

ing can be volatile and dependent on the overall

obtaining financing for a variety of activities and

economic circumstances.

investments.

INTEREST AND EXCHANGE RATES

A significant portion of our financing arrangements has a variable interest rate. Our operations are in USD but certain costs are in EUR, a portion of our financial debt is in NOK.

An increase of the interest rates on the international financial markets would negatively impact our cash flows and could negatively impact the fair value of financial instruments used to hedge the interest rate exposure. A weakening of the USD compared to the EUR would negatively influence our results. Some of our financial instruments require a cash collateral for the fair value of the financial instrument. Additional cash guarantees might be required.

The interest rate exposure and the foreign currency exposure are actively managed and various instruments will be used to cover an appropriate part of the exposure. Fluctuations in the fair value of hedging instruments represent a non-realizednon-cash item.

IMPAIRMENT

Negative variations in the fair market value of our fleet and other floating assets.

A significant decline in the fair value of our fleet could lead to an impairment loss to be recognized and would have a significant impact on our financial position and result. The ratio of the fair value of our fleet compared to the outstanding debt is a financial covenant in our financing arrangements. Our activities tend to be cyclical resulting in changes in the overall fair value of the fleet on the short-term. A significant decline could trigger an event of default under such arrangements

The value of our fleet is continuously monitored using internal and external information and at least on each reporting date our fleet is tested for impairment. Testing is done by comparing the carrying amount of our fleet to appraisals of independent shipping brokers and to the net present value of the expected operating cash flows. The operating cash flows are based on internal information and a sensitivity analysis is performed on each assumption.

Based on the testing performed as of 31 Decem- ber 2019 it is concluded that the carrying amount of our fleet is recoverable and that all financial covenants under our financing arrangements are complied with.

LIQUIDITY RISK

Financial obligations and working capital require-

Our cash generating activities can be cyclical

Liquidity is managed on a continuous basis to en-

ments can vary depending upon a number of

and dependent upon market circumstances while

sure that sufficient

funds are available to meet our

factors.

our outgoing cash flows can relate to operating,

financial obligations

when due under normal and

investing or financing activities. Any failure to

stressed conditions. Based on our known con-

meet our financial obligations could have material

tractual rights & obligations and using estimates

consequences for our operations and could trig-

or assumptions if needed, a monthly cash flow

ger events of default under certain arrangements.

forecast is prepared and monitored per segment

and for at least the subsequent 12 months.

Our sources of operating income as well as our

sources of financing are diversified. Payments

relating to investing activities and our maturities

of bank and other loans are also spread over

different years.

EXMAR REPORT 2019

50

REMUNERATION REPORT

1. General

The Remuneration Report describes EXMAR's remuneration policy as provided for in the legislation of 6 April 2010 in relation to Corporate Governance.

The remuneration policy and the individual scheme for members of the Board of Directors and members of the Executive Committee is in line with the aforementioned legislation.

EXMAR strives for remuneration which will attract, retain and motivate the members of the Board of

Directors, members of the Executive Committee and management and which will guarantee and promote the Company's interests in the medium and longer term.

With this policy, EXMAR attempts to ensure that the members of the Board of Directors, the members of the Executive Committee and management do not act in their own interests, and do not take risks that do not fit in with the Company's strategy and risk profile.

2. Description of the procedures to develop the remuneration policy as well as to determine the remuneration of individual directors

and members of the Executive Committee

The Nomination and Remuneration Committee is responsible for deciding the procedure for developing a remuneration policy.

The Remuneration Committee checked at the meeting of 6 December 2019 the remuneration amounts for compliance with market practices and no changes were recommended.

The nature and the amounts of the remuneration awarded to executive directors and the members of the Executive Committee are decided by the Board of Directors on the basis of recommendations from the Nomination and Remuneration Committee.

The Board of Directors decides on the plans for granting stock options, on the basis of recommendations from the Nomination and Remuneration Committee.

3. Remuneration policy for

executive and non-executive Directors

The remuneration of non-executive directors consists of a fixed non-performance-related annual remuneration which is linked to the director's position and positions on the various committees, in accordance with the Company's remuneration policy. Non-executive directors do not receive any variable remuneration and do not benefit from additional pension plans or share-related incentives. The Nomination and Remuneration Committee regularly checks the remuneration of non-executive directors for compliance with market practices.

3.1 BOARD OF DIRECTORS

The non-executive directors receive a fixed annual remuneration of EUR 50,000. Because of his role and responsibility, the Chairman receives an annual fixed remuneration of EUR 100,000. No variable remu- nerations, share options, additional pension plans, loans or advance payments were granted to the non-executive and independent directors.

3.2. AUDIT COMMITTEE

The members of the Audit Committee receive a

51

fixed annual remuneration of EUR 10,000. The chairman receives a remuneration of EUR 20,000.

3.3 NOMINATION AND REMUNERATION COMMITTEE

The members of the Nomination and Remuneration Committee receive a fixed annual remuneration of EUR 10,000.

3.4 EXECUTIVE DIRECTORS

The mandate of executive directors who are members of the Executive Committee is remunerated according to the remuneration criteria for the Executive Committee following recommendations from the Nomination and Remuneration Committee.

OVERVIEW OF THE REMUNERATION OF THE MEMBERS OF THE BOARD OF DIRECTORS FOR 2019

(IN EUR)

Fixed

Audit Commitee

Remuneration

Committee

Total

Remuneration

Remuneration

remuneration

OVERVIEW OF THE REMUNERATION OF THE MEMBERS OF THE BOARD OF DIRECTORS FOR 2019

Baron Philippe Bodson

Chairman

100,000

10,000

10,000

120,000

Nicolas Saverys

CEO

0

Jalcos nv*

non-executive Director

50,000

20,000

70,000

Michel Delbaere

non-executive Director

50,000

10,000

60,000

Isabelle Vleurinck** (as from 21 May 2019)

non-executive Director

30,738

6,148

6,148

43,033

Kathleen Eisbrenner (till 21 May 2019)

non-executive Director

19,262

19,262

Jens Ismar (till his nomination as EXCO

non-executive Director

35,600

3,852

3,852

43,305

member)

Baron Philippe Vlerick

non-executive Director

50,000

10,000

60,000

Pauline Saverys

non-executive Director

50,000

50,000

Barbara Saverys

non-executive Director

50,000

50,000

Ariane Saverys

non-executive Director

50,000

50,000

TOTAL

485,600

50,000

30,000

565,600

* Represented by Ludwig Criel

** Appointed at General Assembly 19 May 2019

4. Remunerations policy for

the Executive Committee

The remuneration of the members of the Executive Committee including the CEO consists of:

4.1 FIXED ANNUAL SALARY

The scale of the fixed remuneration for members of the Executive Committee, including the executive directors, is linked to the function performed by the person concerned, his responsibilities and compe- tencies.

The remuneration is determined on the basis of the remunerations of a reference group consisting of a number of comparable enterprises in the maritime industry. The Nomination and Remuneration Committee can, if necessary, call on an independent external consultant.

Once a year the various compensation components for the members of the Executive Committee

EXMAR REPORT 2019

52

(including the CEO) are evaluated by the Nomination and Remuneration Committee and tested against conditions in the market.

4.2 VARIABLE REMUNERATION

The short-term variable remuneration (annual bonus) rewards members of the Executive Committee for achieving performance criteria and the amount is expressed as a percentage of the fixed annual remuneration. The evaluation period is the financial year.

The variable payment depends on the Company's results, as well as on other factors such as the performance of the individual, future prospects, the market situation, exceptional contribution(s) and/or special projects.

The variable remuneration is linked to developments in the results and to the specific evaluation and the performance of each individual.

The Board of Directors can deviate from this and decide to award a bonus to a member of the Executive Committee on the basis of other objective criteria.

The Extraordinary Shareholders' Meeting held on 17 May 2011 decided on the application of the provision of article 7:91 of the Belgian Code of Companies and Associations and waived the staggering of the payment of the variable remuneration of the members of the executive com- mittee.

The decision on the application of this dispensation was delegated by the Shareholders' Meeting to the Board of Directors.

If the result deviates substantially from the basis on which the variable remuneration of the

members of the Executive Committee is calcu- lated, the Board of Directors can decide to revise the variable part of the remuneration and if need be to reclaim that part.

4.3 LONG TERM INCENTIVE (LTI)

EXMAR works towards creation of sustainable economic value by means of long-term remu- neration. This ensures that the interests of the members of the Executive Committee are more in line with those of shareholders and that they remain bound to the Company.

The long-term remuneration consists of a share option plan for existing EXMAR shares.

The options can only be exercised after a period of 3 years.

In the event that a member of the Executive Committee resigns or is dismissed for compelling reasons by EXMAR the right to exercise the options lapses.

The amounts of share options offered are every year approved by the Board of Directors upon recommendation of the Remuneration and Nomination Committee. The granting of stock options is not linked to pre-determined and objectively quantifiable performance criteria.

4.4 INSURANCE PACKAGE

The members of the Executive Committee with self-employed or employed status benefit from group insurance (type individual pension benefits for the self-employed) as well as guaranteed income insurance, accident insurance, hospitalisa- tion insurance and travel insurance.

4.5 OTHER COMPENSATION COMPONENTS

The members of the Executive Committee receive a company car, a cell phone and meal cheques.

5. Remuneration

of the chairman

and the other

of

members

the Executive

Committee (CEO)

5.1 OVERVIEW

2019

2018

2019

2018

CEO: Nicolas Saverys

EXCO: 6,16

EXCO: 6

REMUNERATION OF THE CHAIRMAN AND THE OTHER MEMBERS OF THE EXECUTIVE COMMITTEE (CEO)

Basic salary

€823,385

€823,385

€ 2,227,895

€ 2,033,153

Variable remuneration

€ 0

€ 1,100,000

€ 0

€ 625,000

Share Options (taxable base)

€ 0

€ 0

€ 0

€ 0

Insurance Package*

€ 174,956

€ 174,161

€ 265,042

€ 332,948

Other benefits**

p.m.

p.m.

p.m.

p.m.

TOTAL

€ 998,341

€ 2,097,546

€ 2,492,937

€ 2,991,101

  • Individual pension benefit, guaranteed income insurance, accident insurance, hospitalisation insurance, travel insurance
  • Car, cell phone and meal cheques

During 2019, an amount of KEUR 122 was invoiced to Mr. Nicolas Saverys as a consequence of private expenses to be recharged. The relating outstanding amount per 31 December 2019 is KEUR 5.5.

The ratio between the fixed and variable part of the remuneration for members of the Executive Committee in 2019 was as follows:

53

CHAIRMAN OF THE EXECUTIVE COMMITTEE (CEO)

Basic salary

Variable remuneration

OTHER MEMBERS OF THE EXECUTIVE COMMITTEE

Basic salary

Variable remuneration

5.2 SHARE OPTIONS

On the basis of the recommendations of the

The members of the Executive Committee ben-

Nomination and Remuneration Committee the

efit from the share option plans as previously ap-

Board of Directors decided not to award share

proved by the Board of Directors.

options for the year 2019.

100%

0%

100%

0%

Outstanding as per

Expired during 2019

Exercised in 2019

Granted 2019

Outstanding as per

31/12/2018

31/12/2019

SHARE OPTIONS

Nicolas Saverys

227,553

28,929

-

-

198,624

Patrick De Brabandere

156,160

21,696

-

-

134,464

Miguel de Potter

90,000

-

-

-

90,000

Pierre Dincq

108,982

8,135

-

-

100,847

David Lim

104,464

7,232

-

-

97,232

Marc Nuytemans

90,000

-

-

-

90,000

Jonathan Raes

2,500

-

-

-

2,500

779,659

65,992

-

-

713,667

5.3 SHARES

No EXMAR shares are granted to the Members of the Executive Committee.

5.4. TERMINATION ARRANGEMENTS Following members of the Executive Committee having self-employed status:

Nicolas Saverys (CEO) Patrick De Brabandere (CFO)

Pierre Dincq (appointment as EXCO member terminated 6 December 2019)

Marc Nuytemans (appointment as EXCO member terminated 6 December 2019) and have no enti- tlement to any form of redundancy payment in the event of termination of their appointment.

FLX Consultancy BVBA, represented by Mr. Jonathan Raes would be entitled to a compensation equivalent of nine months' salary in the event of termination.

Chirmont NV, represented by Mr. Miguel de Potter would be entitled to a compensation equivalent to three months' salary in the event of termination.

Lisann AS , represented by Mr. Jens Ismar would be entitled to a compensation equivalent to three month's salary in the event of termination. (appoint- ment as EXCO member as per 10 October 2019).

David Lim has an employment agreement under United States law and has no contractual notice period. (appointment as EXCO member terminated 6 December 2019).

  1. CHANGES TO REMUNERATION POLICY No significant changes were made to the remu- neration policy in 2019.
  2. REMUNERATION POLICY 2020-2021 The Remuneration Policy will be aligned accord- ing to the new dispositions of the Belgian Code on Corporate Governance (Code 2020) on Ex- ecutive pay.

EXMAR REPORT 2019

54

ANNUAL REPORT OF THE BOARD OF DIRECTORS

Dear shareholders,

The Board of Directors submits for your approval the statutory and consolidated financial statements of EXMAR NV (the "Company") for the year ended 31 December 2019. It's drawn up in accordance with article 3:6 and 3:6§2 of the new Belgian Code of Companies and Associations.

Under the provisions of the Royal Decree of 14 November 2017 regarding the duties of issuers of financial instruments admitted to trading on the Belgian regulated market, the Company is required to publish its annual financial report.

The elements that are applicable to the Company as provided by the regulations mentioned above, as well

as in the Code of Companies and Associations, are addressed in the present financial statements, and also in this annual report under the Corporate Governance Statement.

This annual report should be read together with EXMAR's report on 2019.

The Coronavirus COVID-19 is causing a high level of uncertainty in the world and will impact the global econ- omy. Several operational measures on-shore and onboard have been taken by EXMAR to ensure the safety and wellbeing of our personnel and continuity of our business operations. The majority of our ships are currently operating under medium to long-term contracts. EXMAR however is subject to certain risks with respect to market dynamics and contractual counterparties.

1. The statutory accounts prepared in accordance with

the Belgian GAAP

SHARE CAPITAL

The share capital of the Company amounts to USD 88,811,667 and is represented by 59,500,000 no- par-value shares. All shares have been paid up in full. The capital has not changed during the previous financial year.

Notwithstanding the provisions laid down in article 3:42 of the Code of Companies and Associations, the capital and the accounting are expressed in US dollars. This derogation was granted by the Ministry of Economic Affairs and was confirmed in writing on 2 July 2003. The Board of Directors believes that the reasons for which this derogation was requested still apply to the financial statements for the period under discussion.

During the past financial year, no capital changes have occurred that must be reported in accordance with article 7:203 of the Code of Companies and Associations.

COMMENTARY ON THE FINANCIAL STATEMENTS

The statutory result for the financial year amounts to USD 44.9 million (USD 10.2 million in 2018).

Operating expenses decreased compared to 2018 with USD 0.5 million.

Financial income increased with USD 33.6 million in comparison with 2018, this is mainly due to the sale of joint-venture Reslea end of June 2019 to Compagnie Maritime Belge ("CMB").

Financial expenses decreased compared to 2018 with USD 1.8 million, mainly due to the fact that no share options have been exercised in 2019. Conse- quently, no costs are registered in the statement of profit or loss in this respect.

At the end of 2019, the total assets amounted to USD 823.3 million (USD 736.8 million at the end of 2018), including USD 702.8 million financial fixed assets (USD 619.2 million in 2018).

55

Shareholder's equity amounted to USD 704.1 million at the end of 2019 (USD 659.2 million in 2018). The increase of USD 44.9 million is the effect of the profit of the financial year 2019 for the same amount.

Total liabilities at the end of 2019 amounted to USD

  1. million (USD 77.3 million at the end of 2018), of which USD 118.9 million short-term debt (USD
  1. million short-term debt at the end of 2018). The increase in the debt can be mainly explained by increased short term bank financing.

The 2019 statutory annual accounts show a profit of USD 44.9 million. Including the results carried forward from the previous financial years and the transfer from reserves not available for distribution, an amount of USD 321.3 million can be carried forward.

APPROPRIATION OF THE RESULT

The Board will propose to the General Shareholders' Meeting to appropriate the result for the year as follows:

Profit

brought forward: USD 274,177,783.01

Profit

of the period: USD

44,885,407.34

Transfer from the

reserves not available

for distribution: USD 2,234,508.42

Result to be carried forward: USD 321,297,698.77

Following this appropriation, the shareholders' equity of USD 704,115,046.69 will be composed as follows:

Capital: USD 88,811,667.00

Issue premium: USD 209,901,923.77

Reserves: USD 84,103,757.15

Retained earnings: USD 321,297,698.77

2. The consolidated financial statements, prepared in accordance with

the International Financial Reporting Standards (IFRS)

Below commentary on the consolidated financial statements is based on the consolidated financial statements using the equity method.

In 2019, EXMAR Group achieved a consolidated result of USD -13.2 million (USD -16.1 million in 2018).

Revenue increased in comparison with 2018 (USD 49.0 million).

The increase in total revenue is mainly situated in the infrastructure and services segment. The increase in the Infrastructure segment is mainly due to invoicing towards Gunvor for the FSRU which started in the last quarter of 2018. The standby revenues generated by TANGO FLNG since May 2019 are only recognised in P&L as from start of operations in September 2019 (in accordance with IFRS 15). The increase in the Services segment is amongst others explained by the new contract for the management of the Floating Storage and Offloading (FSO) LPG unit NKOSSA II in Congo.

The capital gain on the sales of assets amounted to USD 19.2 million and mainly relates to the sale of joint-venture Reslea end of June 2019 to Compag- nie Maritime Belge ("CMB").

The other operating income decreased compared to 2018 with USD 6.4 million. This decrease can be mainly explained by the registered settlement fee in 2018 between EXMAR and PT JAWA SATU POWER as a consequence of the parties' inability to agree on the terms of EXMAR's involvement as FSRU partner and FSRU ship manager. Another explanation for the decrease is a license fee which was granted and which represents the right to use the EXMAR design for the construction, delivery, ownership and operation of an EXMAR OPTI® -11,000Semi-Submersible Hull as an oil & gas floating production unit. The major part of this license fee in recognized in the second semester of 2018, the remaining part is recognized in 2019.

Operating expenses increased compared to 2018

EXMAR REPORT 2019

56

with USD 23.9 million, as a consequence of on the one hand increased vessel expenses for the FSRU and TFLNG following the increased revenues registered for both barges and on the other hand increased depreciations as a consequence of the application of IFRS 16. Additionally, as a consequence of the registration of a purchase obligation of an aircraft, an impairment loss of USD 4.7 million has been registered in the statement of profit or loss to reflect the current market value of the asset.

The net finance result for 2019 amounted to USD -26 million (2018: USD -21 million). The movement can be mainly explained by by the implementation of IFRS 16 and the full impact of the interests paid on the TANGO FLNG facility. In 2018, a part of these interests was paid by Wison.

The share of result of equity accounted investees amounted to USD 1.8 million (USD -1.6 million in 2018).

The vessels amounted to USD 576.6 million and comprise the LPG pressurized fleet, the TFLNG, the FSRU and advance payments made relating to two VLGCs with LPG as fuel.

The investment in equity accounted investees amounted to USD 95.6 million (2018: USD 104.5 million) and consists of our share in the different joint ventures and associates. The decrease can

amongst others be explained by the sale of Reslea per end of June 2019.

Borrowings to equity accounted investees amounted to USD 49.5 million (2018: USD 49.3 million) and comprise the shareholder loans granted to our equity accounted investees.

The cash position on 31 December 2019 amounted to USD 119.9 million (USD 107.1 million in 2018). The restricted cash relates to credit facilities and amounted to USD 67.3 million per 31 December 2019. On 26 February 2020, the Bank of China released USD 40 million of the restricted cash or debt service reserve account (DSRA). The balance of the DSRA will be released pro rata the repayment of the outstanding debt.

Total equity amounted to USD 448.9 million on 31 December 2019 (2018: USD 462.8 million). This decrease in 2019 is mainly caused by the loss of 2019.

The financial debt amounted to USD 405.4 million on 31 December 2019 and increased by USD

18.6 million compared to 2018. The financial debt increased as a consequence of amongst others the partial refinancing of the LPG pressurized fleet and other new debts (eg. bridge loan to temporally in- crease the liquidity position of the company, straight loan and MAP loan for the pre-delivery financing of the two VLGCs under construction).

3. Risk factors

The risks and uncertainties including the impact and control of pandemic risks are described in the Corporate Governance Statement.

4. Continuity statement

In view of the fact that the consolidated income statement shows a loss for the financial year for two consecutive years, there is a need to justify the application of the going-concern accounting principle in accordance with article 3:6 of the Code of Companies and Associations.

The Board of Directors would like to make reference to section "significant judgements and estimates" of EXMAR's financial report where the use of the going concern principle is justified.

The Board is confident that management will be able to maintain sufficient liquidities to meet its commitments and therefore it has an appropriate basis for the use of the going concern assumption. In the

event that the assumptions are not timely met, there is a material uncertainty whether the Company will have sufficient liquidities to fulfil its obligations of at least 12 months from the date of authorising these financial statements.

The Company has met all its financial covenants as at December 31, 2019 and the next testing date with respect to the financial position as at the end of June 2020 is in September 2020. EXMAR believes that based on forecasts for the remaining of the year, and more in particular thanks to the revenue to be generated by TFLNG and the FSRU barge, all covenants will be met as per June 2020 and De- cember 2020.

5. Non-financial information

Description activities

Strategic Objectives

Goals

Measures

57

• Lost Time

injury Frequency

(LTIF)

• Define 10 Golden safety rules

< 0.8 Total Recordable Cases Fre-

• Behavioural Based Safety programme

Social & Personnel

Improve Safety Standard

quency (TRCF) < 4

• Populate safety campaigns

• No major incidents

• Implement safety management sys-

tem

• Retention Rate officer >90%

& rat-

• Maintain high retention rate

ings >85%

• Include KPI in job description to set

• Retention

Rate

personnel

office

expectations & growth path

Optimize Ship and Shore personnel

>80%

• Improve coordination from office

competences

• 100% compliance

with mandatory

• Develop a KPI per fleet for Seagoing

training matrix Seafarer

Experience

• Zero rejections due to Oil Major

Crew Experience matrix

Maintain DOC & ISO standards

• Zero non conformities on the SMS

• Perform internal office audits

• Zero Oil Spill overboard

• Replace all hydraulic hoses on deck

• Zero accidental cargo releases

every five years

• Increase energy efficiency

• Impose stringent reporting

Minimize Environmental impact of oper-

• Reduce emission to the atmosphere

• Perform SEEMP review and define

Environment

• Track the amount of garbage pro-

bench line for the nm/fuel

ations & optimize energy efficiency

duced on board

• Close follow up of the KPI's per type

of vessel

• Sensitise crew on garbage reduction

with a focus on plastic

• Full compliance with the Maritime

• No Maritime Labour Conference re-

Human Rights and

Doing business with respect for the

Labour Conference and applicable

lated remarks during Port state Con-

laws

trol inspections

Bribery

world in which we operate

• Ensuring a sustainable supply chain to

• Communicating our expectations to

our services

suppliers and controlling them

6. Supplementary information

RESEARCH AND DEVELOPMENT

The activities carried out or planned in the area of research and development are described in the first part of this report and should be read together.

STAFF EMPLOYED

On 31 December 2019, EXMAR employed 2,416 people worldwide, including 2,124 seagoing staff (2018: 2,084 of which 1,784 are seagoing personnel).

ACQUISITION OF OWN SHARES

The authorization to acquire shares was granted to the Board of Directors by decision of the Extraordinary Shareholders' Meeting held on 16 May 2017, renewing the authorization of the Board of Directors to proceed, in case of a takeover bid for the securities of EXMAR NV, to a capital increase in accordance to the provisions and within the limits of article 7:202 of the Code of Companies and Associations. The Board of Directors is authorised to apply these measures if the notice of a takeover bid is given by the Financial Services and Markets Authority to the Company, not later than three years after the date of the abovementioned Extraordinary General Meeting.

On 31 December 2019, EXMAR held 2,273,263 own shares, representing 3.82% of the total number of issued shares.

STOCK OPTION PLAN

So far, the Board of Directors has decided on 10 occasions to offer options on existing shares to a number of employees of the EXMAR Group.

Plan 1, 2, 3, 5, 6 and 7 have been removed from below table as the plans matured. Plan 5 matured at the end of 2016, plans 1 and 6 matured at the end of 2017, plans 2 and 7 matured at the end of 2018 and plan 3 matured at the end of 2019.

EXMAR REPORT 2019

58

Date of offer

Number of Outstanding Options

Exercise period

Exercise Price in Euros

PL 4 04.12.2007

212,958

Between 01.01.2011 and

14,641

15.10.2020 (*)

PL 8 03.12.2013

437,600

Between 01.01.2017 and

10,54

02.12.2021

PL 9 02.12.2014

374,100

Between 01.01.2018 and

10,54

02.12.2022

PL 10 04.12.2015

371,500

Between 01.01.2019 and

9,62

03.12.2023

(*) The Board of Directors meeting of 23 March 2009 decided to extend the original exercise period for the first four option plans by five years, by virtue of the decision by the Belgian Government to extend the Act of 26 March 1999, in particular regarding stock option plans.

1 As a result of the capital increase of November 2009, the dilution protection and extra dividend of May 2012, the number and exercise price of the stock options was modified.

JUSTIFICATION OF THE ACCOUNTING PRINCIPLES

The accounting principles applied at the closing of the annual financial statements do not differ from the accounting principles that were applied in the previous financial year. The summary of the accounting principles is attached to the annual financial statements.

For the consolidated financial statements, we refer to the section accounting policies of the consolidated financial statements. More specifically, the change in accounting policy is explained in section E as a consequence of the first time application of IFRS 16.

EVENTS AFTER BALANCE SHEET DATE

The significant events occurred after the closing of the financial year 2019 are disclosed in note 38 of the consolidated financial statements.

OFFICES AND BRANCHES

Besides the Head Office in Antwerp (Belgium), EXMAR has offices in Hong Kong, Houston, London, Limassol, Luxembourg, Mumbai, Paris, Singapore, the Netherlands, Duisburg, Kingston, Livorno and Argen- tina.

EXMAR has branches in Shanghai, Pointe Noir, Angola and South-Korea.

ADDITIONAL ACTIVITIES OF THE STATUTORY AUDITOR

The Statutory Auditor did not carry out any exceptional activities or special assignments during the past financial year.

USE OF FINANCIAL INSTRUMENTS

The long-term vision, that is typical of EXMAR's activi- ties, is accompanied by long-term financing and therefore EXMAR's activities are also exposed to floating interest rates. EXMAR actively manages this exposure and if deemed appropriate could cover itself for rising interest rates for a part of its debt portfolio by means of various instruments.

The Group's currency risk is historically mainly affected by the EUR/USD ratio for manning its fleet, paying salaries and all other personnel-related expenses. EXMAR

Netherlands BV has completed a new unsecured bond issue of NOK 650 million in 2019. In order to monitor the currency risk, the Group uses a range of foreign currency rate hedging instruments if deemed neces- sary. As per 31 December 2019, no financial instrument contracts were outstanding to cover the EUR/USD exposure or the NOK/ USD exposure.

APPLICATION OF ARTICLE 7:96 OF THE CODE OF COMPANIES AND ASSOCIATIONS

There were no conflicts of interest as far as the Executive Committee is concerned.

Conflict of interest Board of Directors.

During the meeting of the Board of Directors held on 6 September 2019, four of the Board members declared that they had a conflict of interest (Nicolas Saverys, Barbara Saverys, Pauline Saverys and Ariane Saverys who are directors and shareholders of Saverex NV). They do not take part in the discussion and the decision making regarding this topic.

Extract of the minutes of meeting:

... With respect to the related party transaction the Board members are referred to the advice from external counsel distributed earlier regarding potential liability of the Board members for unpaid invoices by Nicolas Sav- erys / Saverex NV that could be considered as "abuse of corporate goods" which is criminally sanctioned. These transactions are also disclosed in the half-year report.

The Board has the duty to safeguard the interests of the Company and its stakeholders. Measures must be taken by the Board with respect to certain invoices of EXMAR Shipmanagement NV still being outstanding by Saverex NV, the owner of the yacht Douce France in a total amount of €755,378.70 at the end of August 2019, and certain invoices of the Company still being outstanding by Nicolas Saverys in a total amount of €513K as at 30 June 2019. The Audit Committee, having received the assurance from Saverex NV and related parties that it will proceed with a sale of EXMAR shares to repay the invoices, recommends, with respect to these outstanding invoices, granting an extension by the Company for payment of the invoices until 31 De- cember 2019. For the future, the Audit Committee

recommends that EXMAR Shipmanagement NV no longer acts as an intermediary whereby it pays the sup- plier's invoice and then needs to seek reimbursement from the owner but instead acts as agent to owners, like it does for instance for the Company's LPG fleet: suppliers invoice the owner directly. The Board fully agrees with these recommendations and decides to proceed as

such. It is added that the corporate jet will be sold but that the Company will rent approx. 100 flight hours.

Remark of the Board

All outstanding amounts mentioned above were settled

at the end of 2019.

59

OUTLOOK 2020

SHIPPING

Despite the influx of VLGC new-build deliveries scheduled during the course of 2020, freight rates are expected to remain strong. The two 88,000 m³ next generation dual fuel newbuildings with a long- term charter to Equinor are progressing according to schedule with expected delivery second and third quarter 2021.

With a total global midsize fleet of 97 vessels and a limited order book for seven vessels at year-end of 2019, the future looks promising. With the upward trend in long-haul business and the impact of scale, EXMAR's share of 17 vessels in the midsize market means that the Company is well-placed to service the market in the coming years.

With a diverse customer portfolio and a fleet coverage of 81% for 2020, EXMAR continues to maintain its strong foothold in this segment.

INFRASTRUCTURE

After having been a pioneer in the development of ship based floating regasification, the (re)deployment of TANGO FLNG as the third FLNG in operation in the world has confirmed EXMAR capabilities to successfully deliver innovative, fast track and cost competitive floating oil and gas infrastructure projects.

For new FLNG projects, EXMAR is confident that we can leverage on the experience of our competent and motivated experts from the various domains and on the lessons learned of TANGO FLNG to provide

a well performing floating liquefaction solution at a competitive life cycle cost and backed by appropriate financing.

EXMAR is confident about the outcome of the arbitration procedure with Gunvor; meanwhile the charter remains in full force and effect.

SUPPORTING SERVICES

2020 will be another interesting year with the preparations for the management of two VLGCs ordered by EXMAR and the start of the joint-venture AEX LNG Management.

The impact of the corona crisis on the results of 2020 is difficult to assess at present.

The majority of our ships are currently operating under medium to long-term contracts.

The Board will however closely monitor the situation and will respond adequately to the times of crisis in order to safeguard the company and to ensure continued operations.

All information which pursuant to Article 3:8 of the Code of Companies and Associations must be included in the present annual report of the Board of Directors, more particularly the Corporate Governance Statement and the requirements of Article 34 of the Royal Decree of 14 November 2007, is shown under the chapter 'Corporate Governance Statement', under the chapter 'Risk Factors', and by reference thereto included in the present annual report.

7. Approval of financial statements and discharge

We request the General Meeting of Shareholders to approve the financial statements for the year ended 31 December 2019 in their entirety, and to appropriate the result as provided in this report. We also

request the meeting to grant discharge to the directors and the Statutory Auditor for the performance of their mandates during the above-mentioned financial year.

8. Appointments

The following mandates come to an end on the occasion of the General Meeting:

  • Jalcos NV, represented by Mr. Ludwig Criel
  • Baron Philippe Vlerick

Both directors are available for re-election.

The Board of Directors

26 March 2020

EXMAR REPORT 2019

60

CONSOLIDATED FINANCIAL STATEMENTS

61

CONSOLIDATED STATEMENT OF FINANCIAL POSITION

Note

31/12/2019

31/12/2018 (*)

(IN THOUSANDS OF USD)

ASSETS

NON-CURRENT ASSETS

729,745

720,677

Vessels

576,605

564,423

Vessels

11

561,135

564,423

Vessels under construction - advance payments

11

15,470

0

Other property, plant and equipment

12

1,797

2,032

Intangible assets

13

195

405

Right-of-use assets (*)

14

6,111

0

Investments in equity accounted investees

15

95,557

104,490

Borrowings to equity accounted investees

17

49,479

49,328

CURRENT ASSETS

180,022

183,664

Non-current assets held for sale

18

11,000

0

Other investments

19

4,170

4,022

Trade and other receivables

20

43,603

72,345

Current tax assets

21

1,353

190

Restricted cash

22

67,270

67,270

Cash and cash equivalents

22

52,626

39,837

TOTAL ASSETS

909,767

904,341

EQUITY AND LIABILITIES

TOTAL EQUITY

448,940

462,763

Equity attributable to owners of the Company

448,730

462,786

Share capital

23

88,812

88,812

Share premium

23

209,902

209,902

Reserves

23

163,235

179,985

Result for the period

23

-13,219

-15,913

Non-controlling interest

210

-23

NON-CURRENT LIABILITIES

325,179

225,376

Borrowings

25

323,582

221,209

Employee benefits

27

1,597

4,166

CURRENT LIABILITIES

135,649

216,203

Borrowings

25

81,851

165,657

Trade and other payables

29

48,681

48,183

Current tax liability

21

5,116

2,362

TOTAL LIABILITIES

460,828

441,578

TOTAL EQUITY AND LIABILITIES

909,767

904,341

The notes are an integral part of these consolidated financial statements.

  1. The Group has initially applied IFRS 16 at 1 January 2019, using the modified retrospective method. Under this approach, comparative information is not restated and the impact on retained earnings is determined as zero. We refer in this respect to the accounting policies section E and to note 31.

EXMAR REPORT 2019

62

CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND

12 months

12 months

CONSOLIDATED STATEMENT OF OTHER COMPREHENSIVE INCOME

Note

ended

ended

(IN THOUSANDS OF USD)

31/12/2019

31/12/2018 (*)

STATEMENT OF PROFIT OR LOSS

Revenue

4

136,726

87,699

Gain on disposal

4

19,205

30,942

Other operating income

4

2,315

8,754

OPERATING INCOME

158,245

127,395

Vessel expenses (**)

5

-46,928

-33,780

General and administrative expenses (**)

6

-30,345

-32,922

Personnel expenses

7

-33,131

-34,294

Depreciations & amortisations

11/12/13/14

-26,771

-19,019

Impairment losses

14

-5,139

0

Provisions

27

0

2,360

Loss on disposal

-524

-1,272

RESULT FROM OPERATING ACTIVITIES

15,407

8,467

Interest income

8

4,430

3,043

Interest expenses

8

-26,611

-21,241

Other finance income

8

3,816

6,999

Other finance expenses

8

-7,670

-9,810

NET FINANCE RESULT

-26,034

-21,009

RESULT BEFORE INCOME TAX AND SHARE OF RESULT

-10,627

-12,542

OF EQUITY ACCOUNTED INVESTEES

Share of result of equity accounted investees (net of income tax)

15

1,757

-1,603

RESULT BEFORE INCOME TAX

-8,870

-14,145

Income tax expense

9

-4,332

-1,925

RESULT FOR THE PERIOD

-13,202

-16,070

Attributable to:

Non-controlling interest

16

-157

Owners of the Company

-13,219

-15,913

RESULT FOR THE PERIOD

-13,202

-16,070

BASIC EARNINGS PER SHARE (IN USD)

24

-0.23

-0.28

DILUTED EARNINGS PER SHARE (IN USD)

24

-0.23

-0.28

STATEMENT OF COMPREHENSIVE INCOME

RESULT FOR THE PERIOD

-13,202

-16,070

Items that are or may be reclassified to profit or loss

Equity accounted investees - share in other comprehensive income

8

-3,555

204

Foreign currency translation differences

8

409

-878

-3,146

-674

Items that will never be reclassified to profit or loss

Employee benefits - remeasurements of defined benefit liability/asset

27

2,305

247

OTHER COMPREHENSIVE INCOME FOR THE PERIOD (NET OF INCOME TAX)

-841

-427

TOTAL COMPREHENSIVE INCOME FOR THE PERIOD

-14,044

-16,497

Attributable to:

Non-controlling interest

13

-158

Owners of the Company

-14,057

-16,339

TOTAL COMPREHENSIVE INCOME FOR THE PERIOD

-14,044

-16,497

The notes are an integral part of these consolidated financial statements.

(*)The Group has initially applied IFRS 16 at 1 January 2019, using the modified retrospective method. Under this approach, comparative information is not restated and the impact on retained earnings is determined as zero. We refer in this respect to the accounting policies section E and to note 31.

  1. The Group has further detailed the former "goods and services" and the former "other operating expenses" on the face of the consolidated profit or loss statement into "vessel expenses" and "general and administrative expenses".

CONSOLIDATED STATEMENT OF CASH FLOWS

12 months

12 months

(IN THOUSANDS OF USD)

Note

ended

ended

31/12/2019

31/12/2018 (*)

OPERATING ACTIVITIES

63

Result for the period

-13,202

-16,070

Share of result of equity accounted investees (net of income tax)

15

-1,757

1,603

Depreciations and amortisations

11/12/13

23,071

19,019

Depreciations IFRS 16

14

3,700

0

Impairment loss

14

5,139

0

Profit or loss effect equity securities measured at FVTPL

8

-92

2,385

Net interest expenses/ (income)

8

22,181

18,198

Income tax expense/ (income)

9

4,332

1,925

Net gain on sale of assets

-18,681

-29,670

Dividend income

8

-259

-113

Unrealised exchange difference

8

3,930

-5,049

Equity settled share-based payment expenses (option plan)

26

0

578

GROSS CASH FLOW FROM OPERATING ACTIVITIES

28,362

-7,194

(Increase)/decrease of trade and other receivables (**)

-3,550

1,092

Increase/(decrease) of trade and other payables

-1,202

2,125

Increase/(decrease) in provisions and employee benefits

-186

-2,570

CASH GENERATED FROM OPERATING ACTIVITIES

23,424

-6,547

Interests paid

-23,890

-13,315

Interests paid IFRS 16

-1,392

0

Interests received

4,457

4,431

Income taxes paid

-2,742

-226

NET CASH FROM OPERATING ACTIVITIES

-143

-15,657

INVESTING ACTIVITIES

Acquisition of vessels and vessels under construction (***)

11

-5,684

-46,732

Acquisition of other property, plant and equipment

12

-336

-443

Acquisition of intangible assets

13

-122

-34

Proceeds from the sale of vessels and other property, plant and equipment (incl held for sale)

0

81

Disposal of equity accounted investees, net of cash disposed of

10

18,667

44,438

Dividends received from equity accounted investees

15

5,000

2,000

Other dividens received

8

259

113

Borrowings to equity accounted investees

17

0

0

Repayments from equity accounted investees

17

1,000

4,350

NET CASH FROM INVESTING ACTIVITIES

18,783

3,773

FINANCING ACTIVITIES

Proceeds from treasury shares and share options exercised

0

1,135

Proceeds from new borrowings

25

169,393

69,584

Repayment of borrowings

25

-169,306

-57,505

Repayment of lease liabilities IFRS 16

25

-2,600

0

Payment for banking fees/ debt transaction costs

25

-2,857

-2,295

Increase in restricted cash

22

0

0

Decrease in restricted cash

22

0

164

NET CASH FROM FINANCING ACTIVITIES

-5,370

11,083

NET INCREASE /( DECREASE) IN CASH AND CASH EQUIVALENTS

13,270

-801

RECONCILIATION OF NET INCREASE/(DECREASE) IN CASH AND CASH EQUIVALENTS

Net cash and cash equivalents at 1 January

39,837

41,824

Net increase/(decrease) in cash and cash equivalents

13,270

-801

Exchange rate fluctuations on cash and cash equivalents

-481

-1,186

NET CASH AND CASH EQUIVALENTS AT 31 DECEMBER

22

52,626

39,837

The notes are an integral part of these consolidated financial statements.

  1. The Group has initially applied IFRS 16 at 1 January 2019, using the modified retrospective method. Under this approach, comparative information is not restated and the impact on retained earnings is determined as zero. We refer in this respect to the accounting policies section E and to note 31.
  1. The movement on the trade and other receivables has been corrected with the recovered amount from the Korean Development Bank. This amount was recorded per 31/12/2018 as other receivable. See also (***).
  1. The acquisition of vessels and vessels under construction has been corrected with the recovered amount from the Korean Development Bank in respect of advance payments made for 2 VLGC's (see also note 32) and acquisitions not yet paid per 31 December 2019.

EXMAR REPORT 2019

64

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

(IN THOUSANDS OF USD)

Note

Share capital

Share premium

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY AS PER 31 DECEMBER 2018

OPENING EQUITY PER 1 JANUARY 2018

88,812

209,902

COMPREHENSIVE RESULT FOR THE PERIOD

RESULT FOR THE PERIOD

Foreign currency translation differences

8

Foreign currency translation differences - share equity accounted investees

8

Net change in fair value of cash flow hedges - hedge accounting - share equity accounted investees

8

Employee benefits - remeasurements of defined benefit liability/asset

27

TOTAL OTHER COMPREHENSIVE RESULT

0

0

TOTAL COMPREHENSIVE RESULT FOR THE PERIOD

0

0

TRANSACTIONS WITH OWNERS OF THE COMPANY

Dividends paid

23

Share-based payments

26

Share options exercised

Treasury shares

Share based payments transactions

TOTAL TRANSACTIONS WITH OWNERS OF THE COMPANY

0

0

31 DECEMBER 2018

88,812

209,902

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY AS PER 31 DECEMBER 2019

OPENING EQUITY AS PREVIOUSLY REPORTED PER 1 JANUARY 2019

88,812

209,902

RECLASSIFICATION WITHIN EQUITY AS CONSEQUENCE OF IFRS 2 (*)

ADJUSTMENT ON INITIAL APPLICATION OF IFRS 16 (NET OF TAX) (**)

ADJUSTED BALANCE AT I JANUARY 2019

88,812

209,902

COMPREHENSIVE RESULT FOR THE PERIOD

RESULT FOR THE PERIOD

Foreign currency translation differences

8

Foreign currency translation differences - share equity accounted investees

8

Net change in fair value of cash flow hedges - hedge accounting - share equity accounted investees

8

Employee benefits - remeasurements of defined benefit liability/asset

27

TOTAL OTHER COMPREHENSIVE RESULT

0

0

TOTAL COMPREHENSIVE RESULT FOR THE PERIOD

0

0

TRANSACTIONS WITH OWNERS OF THE COMPANY

Contributions & distributions

Dividends paid

23

Share-based payments

26

Changes in ownership interests

Acquisition of NCI without a change in control

TOTAL TRANSACTIONS WITH OWNERS OF THE COMPANY

0

0

31 DECEMBER 2019

88,812

209,902

The notes are an integral part of these consolidated financial statements.

(*) The Group has reclassified USD 3.9 million within equity as a consequence of expired options.

(**)The Group has initially applied IFRS 16 at 1 January 2019, using the modified retrospective method. Under this approach, comparative information is not restated and the impact on retained earnings is determined as zero. We refer in this respect to the accounting policies section E and to note 31.

Retained

Reserve for

Translation

Hedging

Share-based

Non-controlling

payments

Total

Total equity

earnings

treasury shares

reserve

reserve

interest

reserve

65

218,373

-48,486

-5,666

2,901

11,571

477,407

135

477,542

-15,913

-15,913

-157

-16,070

-877

-877

-1

-878

-403

-403

-403

607

607

607

247

247

247

247

0

-1,280

607

0

-426

-1

-427

-15,666

0

-1,280

607

0

-16,339

-158

-16,497

0

0

72

4,137

-3,069

1,140

1,140

0

0

578

578

578

72

4,137

0

0

-2,491

1,718

0

1,718

202,779

-44,349

-6,946

3,508

9,080

462,786

-23

462,763

202,779

-44,349

-6,946

3,508

9,080

462,786

-23

462,763

3,942

-3,942

0

0

0

0

206,721

-44,349

-6,946

3,508

5,138

462,786

-23

462,763

-13,219

-13,219

16

-13,202

412

412

-3

409

-69

-69

-69

-3,486

-3,486

-3,486

2,305

2,305

2,305

2,305

0

343

-3,486

0

-838

-3

-841

-10,914

0

343

-3,486

0

-14,057

13

-14,044

0

0

0

0

0

220

220

0

0

0

0

0

0

220

220

195,808

-44,349

-6,603

22

5,138

448,730

210

448,940

EXMAR REPORT 2019

66

1. ACCOUNTING POLICIES

  1. REPORTING ENTITY

EXMAR nv ("the Company") is a company domiciled in Belgium whose shares are publicly traded (Euronext - EXM). The consolidated financial statements of the Group comprise the Company, its subsidiaries, and the Group's interest in associates and joint arrangements (referred to as "The Group"). The Group is active in the industrial shipping business.

B. BASIS OF PREPARATION

The consolidated financial statements have been prepared in accordance with International Financial Reporting Standards (IFRS) issued by the International Accounting Standards Board (IASB) as adopted by EU on 31/12/2019.

The group has adopted the following new standards issued by the International Accounting Standards Board (IASB) with a date of initial application of 1 January 2019.

• IFRS 16 Leasing

We refer to section E Changes in accounting policies.

The Group has applied a number of amendments to IFRS Standards and Interpretations issued by the International Accounting Standards Board (IASB) that are effective for an annual period that begins on or after 1 January 2019. Their adoption has not had any material impact on the disclosures or on the amounts reported in these financial statements.

  • IFRIC 23 Uncertainty over Income Tax Treatments
  • Amendments to IFRS 9 Prepayment features with negative compen- sation
  • Long-terminterest in Associates and Joint Ventures (Amendments to IAS 28)
  • Amendments to IAS 19 Plan Amendment, Curtailment or Settlement
  • Annual improvements to IFRS Standards 2015-2017 Cycle

A number of new standards, amendments to standards and interpretations are not yet effective for the year ended 31 December 2019, and have not been applied in preparing these consolidated financial statements. The following new or amended standards or interpretations are not expected to have a significant impact on the Group's consolidated financial statements.

  • Sale or Contribution of Assets between an Investor and its Associate or Joint Venture (Amendments to IFRS 10 and IAS 28).
  • IFRS 17 Insurance Contracts
  • Amendments to References to the Conceptual Framework in IFRS Standards
  • Amendments to IFRS 3 Business combinations

• Amendments to IAS 1 and IAS 8 Definition of Material

The IASB issued Interest Rate Benchmark Reform (Amendments to IFRS 9, IAS 39 and IFRS 7) on 26 September 2019. There are hedges of interest rate risk at equity accounted investees (Hedge reserve of KUSD 22 as per year end 2019 and KUSD 3.486 net change in fair value of cash flow hedges recognized in other comprehensive income in 2019). These amendments permit continuation of hedge accounting even if in the future the hedged benchmark interest rate may no longer be separately identifiable. However, this relief does not extend to the requirement that the designated interest rate risk component must continue to be reliably measureable. If the risk component is no longer reliably measureable, the hedging relationship would be discontinued.

The consolidated financial statements were approved and were autho- rised for issue by the Board of Directors on March 26, 2020.

C. FUNCTIONAL AND PRESENTATION CURRENCY

The consolidated accounts are presented in USD in accordance with the deviation granted by the Financial Services and Markets Authority (FSMA) by letter of 2 July 2003, and all values are rounded to the nearest thousand. USD is the Company's functional currency. They are prepared on the historical cost basis except for the following material assets and liabilities that have been measured on an alternative basis on each reporting date: derivative financial instruments, equity securities at FVTPL and the net defined benefit liability. Assets held for sale are stated at the lower of carrying amount and fair value less cost to sell.

D. USE OF JUDGEMENTS AND ESTIMATES

The preparation of the consolidated financial statements in accordance with IFRS requires management to make judgments, estimates and assumptions that affect the application of the accounting policies and the reported amounts of assets and liabilities, income and expenses. The estimates and related assumptions are based on historical experience and various other factors that are believed to be reasonable under the circum- stances. Actual results may differ from these estimates.

The estimates and the underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised if the revision only affects that period, or in the period of the revision and future periods, if the revision affects both current and future periods.

Preparing the consolidated financial statements, the Group has made judgements, estimates and assumptions regarding the fair value for the share options, the employee benefit plans, provisions and contingencies and the classification of new lease commitments and time charter agreements. On a yearly basis the residual value and the useful life of the vessels is reviewed.

The carrying values of the vessels may not represent the fair market value at any point in time since the market prices of second-hand vessels tend to fluctuate with changes in charter rates and the cost of new buildings. Historically, both charter rates and vessel values tend to be cyclical. The carrying amounts of each specific fleet are reviewed for potential impairment whenever events or changes in circumstances indicate that the carrying amount of a specific fleet may not be fully recoverable. The recoverable amount is the highest of the fair value less cost to sell and the value in use. The fair value less cost to sell is determined based upon independent valuation reports. The value in use is based upon future cash flows discounted to their present value. In developing estimates of future cash flows, we must make assumptions about future charter rates, ship operating expenses, the estimated remaining useful lives of the fleet and the WACC. These assumptions are based on historical trends as well as future expectations. Although management believes that the assumptions used to evaluate potential impairment are reasonable and appropriate, such assumptions are highly subjective.

A number of the Group's accounting policies and disclosures require the measurement of fair values, for both financial and non-financial assets and liabilities. When measuring the fair value, the Group uses observable market data as far as possible. Fair values are categorized into different levels in a fair value hierarchy based on the inputs used in the valuation techniques:

  • Level 1: quoted prices (unadjusted) in active markets for identical assets or liabilities.
  • Level 2: inputs other than quoted prices included in Level 1 that are ob- servable for the assets or liability, either directly (i.e. as prices) or indi- rectly (i.e. derived from prices).
  • Level 3: inputs for the asset or liability that are not based on observable market data (unobservable inputs).

At this moment, we are confronted with the COVID-19 outbreak. It is almost impossible to predict the consequences of this outbreak, so the impact hasn't been included in the 2019 financial statements.

E. CHANGES IN ACCOUNTING POLICIES

IFRS 16, the Group recognises right-of-use assets and lease liabilities for

The Group has initially applied IFRS 16 from 1 January 2019. IFRS 16

most leases - i.e. these leases are on-balance sheet.

introduced a single, on-balance sheet accounting model for lessees.

As a result, the Group, as a lessee, has recognised right-of-use assets

At inception or on reassessment of a contract that contains a lease com-

representing its rights to use the underlying assets and lease liabilities

ponent, the Group allocates the consideration in the contract to each

representing its obligation to make lease payments. Lessor accounting

lease and non-lease component on the basis of their relative stand-alone

67

remains similar to previous accounting policies.

prices.

The Group has applied IFRS 16 using the modified retrospective approach,

At transition, for leases classified as operating leases under IAS 17, lease

under which the cumulative effect of initial application is recognised in

liabilities were measured at the present value of the remaining lease

retained earnings at 1 January 2019. The impact on retained earnings is

payments, discounted at the Group's incremental borrowing rate as at 1

determined as zero. Accordingly, the comparative information presented

January 2019. Right-of-use assets are measured at an amount equal to

for 2018 has not been restated - i.e. it is presented, as previously

the lease liability, adjusted by the amount of any prepaid or accrued lease

reported, under IAS 17 and related interpretations. The details of the

payments.

changes in accounting policies are disclosed below.

The Group has tested its right-of-use assets for impairment on the date

Definition of a lease

of transition and has concluded that there is no indication that the right-

Previously, the Group determined at contract inception whether an

of-use assets are impaired.

arrangement was or contained a lease under IFRIC 4 determining

whether an arrangement contains a lease. The Group now assesses

The Group used the following practical expedients when applying IFRS 16

whether a contract is or contains a lease based on the new definition of a

to leases previously classified as operating leases under IAS 17:

lease as explained further under "Leases".

• Did not recognise right-of-use assets and liabilities for low value assets

On transition to IFRS 16, the Group elected to apply the practical expe-

• Excluded initial direct costs from measuring the right-of-use asset at

dient to grandfather the assessment of which transactions are leases. It

the date of initial application.

applied IFRS 16 only to contracts that were previously identified as leases.

Leases as a lessor

Contracts that were not identified as leases under IAS 17 and IFRIC 4

were not reassessed. Therefore, the definition of a lease under IFRS 16

The Group leases out a significant part of its vessels. The Group has classi-

has been applied only to contracts entered into or changed on or after 1

fied these leases as operating leases. The accounting policies applicable to

January 2019.

the Group as a lessor are not different from those under IAS 17.

Leases as a lessee

Impacts on financial statements

The Group leases many assets, including properties, motor vehicles

On transition to IFRS 16, the Group recognised additional right-of-use

and IT equipment. As a lessee, the Group previously classified leases as

assets and additional lease liabilities, recognising the difference in retained

operating or finance leases based on its assessment of whether the lease

earnings. The impact on retained earnings is determined as zero. The im-

transferred substantially all of the risks and rewards of ownership. Under

pact on transition is summarised below.

IMPACT ON TRANSITION

01/01/2019

IMPACT ON FINANCIAL STATEMENTS

Right-of-use assets

13,026

Lease liabilities

13,026

Property

Motor vehicles

IT equipment

Total

(including aircraft)

RIGHT OF USE ASSETS

BALANCE AT 1 JANUARY 2019

5,529

6,901

596

13,026

When measuring lease liabilities for leases that were classified as

operating leases, the

Group discounted lease payments using its incremental borrowing

rate at 1 January 2019. The weighted-average rate applied is 3.85%.

01/01/2019

OPERATING LEASE COMMITMENTS

Operating lease commitments as disclosed in annual report 31/12/2018

14,340

Discounted using the incremental borrowing rate at 1 January 2019

13,029

Recognition exemption for leases of low value assets

-3

Lease liabilities recognised at 1 January 2019

13,026

EXMAR REPORT 2019

68

F. SIGNIFICANT ACCOUNTING POLICIES a) Basis of consolidation

Business combinations

The Group accounts for business combinations using the acquisition method when control is transferred to the Group.

A business is an integrated set of activities and assets that is capable of being conducted and managed to provide a return to investors (or other owners, members or participants) by way of dividends, lower costs or other economic benefits. A business generally consists of inputs, processes applied on those inputs and the ability to create outputs. This can for instance be the case when the acquisition also contains the transfer of current contracts in respect of chartering, crew,…

The consideration transferred in the acquisition is generally measured at fair value, as are the identifiable net assets acquired. Any goodwill that arises is tested annually for impairment. Any gain on a bargain purchase is recognised in profit or loss immediately. Transaction costs are expensed as incurred, except if related to the issue of debt or equity securities.

The consideration transferred does not include amounts related to the settlement of pre-existing relationships. Such amounts are generally recognised in profit or loss.

Any contingent consideration is measured at fair value at the date of ac- quisition. If an obligation to pay contingent consideration that meets the definition of a financial instrument is classified as equity, then it is not remeasured and settlement is accounted for within equity. Otherwise, other contingent consideration is remeasured at fair value at each reporting date and subsequent changes in fair value are recognised in profit or loss.

Subsidiaries

Subsidiaries are those entities controlled by the Group. The group controls an entity when it is exposed to, or has rights to, variable returns from its involvement with the entity and has the ability to affect those returns through its power over the entity.

The financial statements of subsidiaries are included in the consolidated financial statements from the date on which control commences until the date on which control ceases. All intra-Group balances, income and expenses, unrealized gains and losses and dividends resulting from intra-Group transactions are eliminated in full.

Loss of control

Upon the loss of control, the Group derecognizes the assets and liabilities of the subsidiary, and non-controlling interests and the other components of equity related to the subsidiary. Any surplus or deficit arising on the loss of control is recognized in profit and loss. If the Group retains any interest in the previous subsidiary, then such interest is measured at fair value at the date the control is lost.

Interests in equity-accounted investees

The Group's interest in equity accounted investees comprises interests in associates and joint ventures.

Associates are those entities in which the Group has significant influence, but not control or joint control, over the financial and operating policies. Significant influence is presumed to exist when the Group holds between 20% and 50% of the voting power. A joint venture is an arrangement in which the Group has joint control, whereby the Group has rights to the net assets of the arrangement, rather than rights to its assets and obligations for its liabilities.

Investments in associates and joint ventures are accounted for using the equity method and are recognised initially at cost. The cost of the investment includes transaction costs. Subsequent to initial recognition,

the consolidated financial

statements include the Group's share of the

profit or loss and OCI of

equity accounted investees, from the date that

significant influence or joint control commences until the date that significant influence or joint control ceases.

When the share of the Group in the losses exceeds its interest in an equity accounted investee, the carrying amount of that interest is reduced to zero, and the recognition of future losses is discontinued, except to the extent that the Group has an obligation or has made payments on behalf of the investee. In such case the negative investment in equity accounted investees is deducted from other components of the investor's interest in the equity accounted investee (borrowings to equity accounted invest- ees). If the negative investment in equity accounted investees exceeds the investor's interest, a liability is recognized for the net amount. Unre- alised gains arising from transactions with equity-accounted investees are eliminated against the investment to the extent of the Group's interest in the investee. Unrealised losses are eliminated in the same way as unreal- ised gains, but only to the extent that there is no evidence of impairment.

b) Foreign currency

Foreign currency transactions

Foreign currency transactions are converted to the respective functional currencies at the exchange rate applicable at the date of the transaction. Monetary assets and liabilities denominated in foreign currencies at the reporting date are translated to USD at the exchange rate applicable at that date. The non-monetary assets and liabilities that are measured in terms of historical cost are translated to USD at the exchange rate at the date of the initial transactions. Non-monetary items that are measured at fair value in a foreign currency are translated using the exchange rates at the date the fair value was determined. Foreign exchange differences arising on translation are recognised in the profit or loss statement, except for qualified cash flow hedges to the extent that the hedges are effective, which are recognised in other comprehensive income.

Financial statements of foreign operations

Assets and liabilities of foreign operations, including goodwill and fair value adjustments arising on acquisition, are translated to USD using the closing rate at reporting date. The income and expenses of the foreign operations are converted to USD at the exchange rate at the date of the transaction (the average exchange rate during the relevant period is used in case the date of transaction approximates this average rate). Foreign currency differences are recognized directly in other comprehensive income. These foreign currency differences are presented within the translation reserve. However, if the operation is a non-wholly-owned subsidiary, then the relevant proportionate share of the translation difference is allocated to the non-controlling interests. When a foreign operation is disposed of such that control, significant influence or joint control is lost, the cumulative amount in the translation reserve related to that foreign operation is reclassified to profit and loss as part of the gain or loss on disposal. When the Group disposes of only part of its interest in a subsidiary that includes a foreign operation while retaining control, the relevant proportion of the cumulative amount is reattributed to non-controlling interests. When the Group disposes of only part of its investment in an associate or joint venture that includes a foreign operation while retaining significant influence or joint control, the relevant proportion of the cumulative amount is reclassified to profit and loss.

c) Financial instruments

Financial assets and financial liabilities are recognised in the Group's statement of financial position when the Group becomes a party to the contractual provisions of the instrument.

Financial assets and financial liabilities are initially measured at fair value Transaction costs that are directly attributable to the acquisition or issue of financial assets and financial liabilities (other than financial assets and financial liabilities at fair value through profit or loss) are added to or deducted from the fair value of the financial assets or financial liabilities, as appropriate, on initial recognition. Transaction costs directly attributable to the acquisition of financial assets or financial liabilities at fair value through profit or loss are recognised immediately in profit or loss.

Financial assets

All regular way purchases or sales of financial assets are recognised and derecognised on a trade date basis. Regular way purchases or sales are purchases or sales of financial assets that require delivery of assets within the time frame established by regulation or convention in the market- place.

Debt instruments that meet the following conditions are measured subsequently at amortised cost:

• the financial asset is held within a business model whose objective is to hold financial assets in order to collect contractual cash flows; and

  • the contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding.

Debt instruments that meet the following conditions are measured subsequently at fair value through other comprehensive income (FVTOCI):

  • the financial asset is held within a business model whose objective is achieved by both collecting contractual cash flows and selling the fi- nancial assets; and
  • the contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding.

By default, all other financial assets are measured subsequently at fair value through profit or loss (FVTPL).

Despite the foregoing, the Group may make the following irrevocable election/designation at initial recognition of a financial asset:

  • the Group may irrevocably elect to present subsequent changes in fair value of an equity investment in other comprehensive income if certain criteria are met (see (iii) below); and
  • the Group may irrevocably designate a debt investment that meets the amortised cost or FVTOCI criteria as measured at FVTPL if doing so eliminates or significantly reduces an accounting mismatch (see (iv) below).

All recognised financial assets are measured subsequently in their entirety at either amortised cost or fair value, depending on the classification of the financial assets.

(i) Financial assets at amortised costs

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

(ii) Debt investments at FVTOCI

These assets are subsequently measured at fair value. Interest income is calculated using the effective interest method, foreign exchange gains and losses and impairment are recognised in profit or loss. Other net gains and losses are recognised in OCI. On derecognition, gains and losses accumulated in OCI are reclassified to profit or loss.

(iii) Equity investments at FVTOCI

These assets are subsequently measured at fair value. Dividends are recognised as income in profit or loss unless the dividend clearly represents a recovery of part of the cost of the investment. Other net gains and losses are recognised in OCI and are never reclassified to profit or loss.

(iv) Financial assets at FVTPL

These assets are subsequently measured at fair value. Net gains and loss- es, including any interest or dividend income, are recognised in profit or loss. However, see section derivative financial instruments and hedge accounting for derivatives designated as hedging instruments.

Derecognition of financial assets

The Group derecognises a financial

asset when the contractual rights to

the cash flows from the financial asset expire, or it transfers the rights to

receive the contractual cash flows in a transaction in

which substantially

all risks and rewards of ownership of the financial asset

are transferred or

69

in which the Group neither transfers nor retains substantially all of the

risks and rewards of ownership and it does not retain control over the fi-

nancial asset.

Financial liabilities

Financial liabilities are classified as

measured at amortised cost or FVTPL.

A financial liability is classified at

FVTPL if it is classified as held-for-

trading, it is a derivative or it is designated as such on initial recognition.

Financial liabilities at FVTPL are measured at fair value and net gains

and losses, including any interest expense, are recognised in profit or

loss. Other financial liabilities are subsequently measured at amortised

cost using the effective interest method. Interest expense and foreign

exchange gains and losses are recognised in profit or loss.

Any gain or loss

on derecognition is also recognised in profit

or loss.

See section derivative financial instruments

and hedge

accounting for

derivatives designated as hedging instruments.

Derecognition of financial liabilities

The Group derecognises a financial liability when its contractual obligations are discharged or cancelled, or expire. The Group also derecognises a financial liability when its terms are modified and the cash flows of the modified liability are substantially different, in which case a new financial liability based on the modified terms is recognised at fair value.

On derecognition of a financial liability, the difference between the carrying amount extinguished and the consideration paid (including any non-cash assets transferred or liabilities assumed) is recognised in profit or loss.

Offsetting

Financial assets and financial liabilities are offset and the net amount presented in the statement of financial position when, and only when, the Group currently has a legally enforceable right to set off the amounts and it intends either to settle them on a net basis or to realise the asset and settle the liability simultaneously.

Share Capital

Ordinary shares are classified as equity. Incremental costs directly attributable to the issue of ordinary shares and share options are recognised as a deduction from equity, net of tax effects. When share capital recognised as equity is repurchased, the amount of the consideration paid, including directly attributable costs net of tax, is recognised as a deduction from equity. When treasury shares are sold, the amount received is recognised as an increase in equity and the resulting surplus or deficit on the transaction is presented in retained earnings.

Derivative financial instruments & hedge accounting

The Group holds derivative financial instruments to hedge its foreign currency and interest rate risk exposures when considered necessary. Embedded derivatives are separated from the host contract and accounted for separately if the host contract is not a financial asset and certain criteria are met.

Derivatives are recognised initially at fair value at the date a derivative contract is entered into. Subsequent to initial recognition, derivatives are recognized at fair value and changes therein are generally recognized in profit and loss.

The Group designates certain derivatives as hedging instruments to hedge the variability in cash flows associated with highly probable forecast transactions arising from changes in foreign exchange rates and interest rates and certain derivatives and non-derivative financial liabilities as hedges of foreign exchange risk of a net investment in a foreign operation.

EXMAR REPORT 2019

70

At inception of designated hedge relationships, the Group documents the risk management objective and strategy for undertaking the hedge. The Group also documents the economic relationship between the hedged item and the hedged instrument, including whether the changes in cash flow of the hedged item and hedging instrument are expected to offset each other.

Cash flow hedges

When a derivative is designated as a cash flow hedging instrument, the effective portion of changes in the fair value of the derivative is recognized in OCI and accumulated in the hedging reserve. The effective portion of changes in the fair value of the derivative that is recognized in OCI is limited to the cumulative change in fair value of the hedged item, determined on a present value basis. Any ineffective portion of changes in the fair value of the derivative is recognized immediately in profit or loss. The amount accumulated in the hedging reserve and the cost of the hedging reserve is reclassified to profit or loss in the same period or periods during which the hedge expected future cash flows affect profit or loss.

If the hedge no longer meets the criteria for hedge accounting or the hedging instrument is sold, expires, is terminated or is exercised, then hedge accounting is discontinued prospectively. When hedge accounting for cash flow hedges is discontinued, any gain or loss recognised in other comprehensive income and accumulated in de cash flow hedge reserve at that time remains in equity and is reclassified to profit or loss when the forecasted transaction occurs. When a forecasted transaction is no longer expected to occur, the gain or loss accumulated in the cash flow hedge reserve is immediately reclassified to profit or loss.

d) Goodwill

Goodwill arising upon the acquisition of subsidiaries is included in intangible assets.

For acquisitions on or after 1 January 2010, the Company measures goodwill at the acquisition date as: the fair value of the consideration transferred; plus the carrying amount of any non-controlling interests in the acquiree; plus if the business combination is achieved in stages, the fair value of the existing equity interest in the acquiree; less the net recognised amount (generally fair value) of the identifiable assets acquired and liabilities assumed. When the excess is negative, a bargain purchase gain is recognised immediately in the statement of profit or loss. The consideration transferred does not include amounts related to the settlement of pre-existing relationships. Such amounts are generally recognised in the statement of profit or loss. Costs related to the acquisition, other than those associated with the issue of debt or equity securities, that the Company incurs in connection with a business combination are expensed as incurred. Any contingent consideration payable is recognised at fair value at the acquisition date. If the contingent consideration is classified as equity, it is not remeasured and settlement is accounted for within equity. Otherwise, subsequent changes to the fair value of the contingent consideration are recognised in profit or loss.

For acquisitions prior to 1 January 2010, goodwill represents the excess of the cost of the acquisition over the Company's interest in the recognized amount (generally fair value) of the identifiable assets, liabilities and contingent liabilities of the acquiree. When the excess was negative, a bargain purchase gain was recognized immediately in the statement of comprehensive income. Transaction costs, other than those associated with the issue of debt or equity securities, that the Company incurred in connection with business combinations were capitalized as part of the cost of the acquisition.

Subsequently goodwill is measured at cost less accumulated impairment losses. In respect of equity accounted investees, the carrying amount of goodwill is included in the carrying amount of the investment and an impairment loss on such an investment is allocated to the carrying amount of the equity accounted investee as a whole.

e) Intangible assets

Research and development

Expenditure on research activities, undertaken with the prospect of gaining new scientific or technical knowledge and understanding, is recognised in profit or loss as incurred.

Development activities involve a plan or design for the production of new or substantially new improved products and processes. Development cost is capitalised only if development costs can be measured reliably, the product or process is technically and commercially feasible, future economic benefits are probable and the Group intends to and has sufficient resources to complete development and to use or sell the asset. Other- wise, it is recognised in profit or loss as incurred. Capitalised development expenditure is measured at cost less accumulated amortisation and accumulated impairment losses.

Other intangible assets

Other intangible assets (e.g. software,…) acquired by the Group that have finite useful lives are measured at cost less accumulated amortisations and accumulated impairment losses. The amortisation is recognized in the profit or loss statement, and is spread over the useful life of the relevant intangible assets following the straight-line depreciation method. The amortization starts from the date that they are available for use. Amortization methods, useful lives and residual values are reviewed at each financial year-end and adjusted if appropriate.

Intangible assets with an indefinite useful life or that are not yet available for use, are subject to an annual impairment test.

Subsequent expenditure

Subsequent expenditure is capitalized only when it increases the future economic benefits embodied in the specific assets to which it relates. All other expenditure is recognized in profit or loss as incurred.

f) Property, plant and equipment

Owned assets

Items of property, plant and equipment are stated at cost, which includes capitalised borrowing costs, less accumulated depreciation and impairment losses. Cost includes expenditure that is directly attributable to the acquisition of the asset and to bringing the asset to the location and condition necessary for its intended use. The cost of self-constructed assets includes the cost of materials and direct labor, any other costs directly attributable to bringing the asset to a working condition for its intended use and capitalized borrowing costs.

Subsequent expenses associated with items of property, plant and equipment are capitalised only if a future economic advantage will result from this expenditure and its cost can be measured reliably. If a part of an item of property, plant and equipment is replaced, the replacement cost is capitalised and the carrying amount of the replaced part is derecognized. The costs of the day-to-day servicing of property, plant and equipment are recognised in the profit or loss statement as incurred.

When parts of an item of property, plant and equipment have different useful lives, they are accounted for as separate items (major components) of property, plant and equipment.

Depreciation is calculated over the depreciable amount, which is the cost of an asset, less its residual value and is recognized in profit or loss.

Vessels or units in the construction process are separately classified on the balance sheet as vessels under construction. These vessels under construction are not depreciated, depreciation starts at the moment that the vessels are delivered. As from the moment of delivery, the vessels are no longer classified as under construction. The business model of the Group aims to rent or operate the constructed assets.

The vessels are depreciated on a straight-line basis to their residual value over their estimated useful life in the Group. The residual value amounts to USD 0 for all vessels and platforms.

Gas vessels LPG:

30 years

Gas vessels LNG:

35 years

LNG units:

30 years

Accommodation platform,

second hand:

10-12 years

Accommodation platform, newbuild;

• Hull, machinery & deck outfitting

20 years

• Accommodation

10 years

Dry-docking expenses are capitalised when they occur and depreciated over a period until the next dry-dock.

Other property, plant and equipment are depreciated over their estimated useful life using the straight-line depreciation method. Land is not depreciated.

The estimated depreciation percentages of the various types of assets are as follows:

Buildings:

3%

Leased real estate:

3%

Plant and equipment:

20%

Furniture:

10%

Cars:

20%

Airplane:

10%

IT equipment:

33%

The method of depreciation, the residual value, and the useful life values are reviewed at each financial year-end and adjusted if appropriate.

Leased assets

Lease agreements substantially assigning all risks and rewards inherent to ownership to the Group, are classified as finance leases. The leased assets measured at an amount equal to the lower of its fair value and the present value of the minimum lease payments at inception of the lease, are subsequently reduced by the accumulated depreciation and possible impairment losses. The depreciation period matches the useful life. If there is uncertainty with respect to the transfer of ownership to the Group at the end of the contract, the asset is fully depreciated over the shorter of the lease term and its useful life.

g) Investment property

Investment property is measured at historical cost less accumulated depreciation and accumulated impairment losses.

The depreciation is recognized in the profit or loss statement on a straight- line basis over the estimated useful lives of the investment properties.

h) Impairment of assets

Financial assets

Financial assets measured at cost

Financial assets measured at cost are assessed each reporting date to determine whether the credit risk of a financial asset has increased significantly since initial recognition. The Group measures loss allowances at an amount equal to lifetime expected credit losses (ECL's). When determining whether the credit risk of a financial asset has increased significantly since initial recognition and when estimating lifetime ECL's, the Group considers reasonable and supportable information that is relevant and available without undue cost or effort. This includes both quantitative and qualitative information and analysis, based on the Group's historical experience and informed credit assessment and including forward-looking information.

Equity accounted investees

After application of the equity method, the entity determines whether it is necessary to recognise an impairment loss with respect to its net investment in the associate or joint venture. An impairment loss in respect of an equity-accounted investee is measured by comparing the recove­

rable amount of the investment with its carrying amount. An impairment 71 loss is recognised in profit and loss and is reversed when there is a favour-

able change in the estimates used to determine the recoverable amount.

Non-financial assets

The carrying value of non-financial assets, other than deferred tax assets, are reviewed at each balance sheet date to determine whether there is an indication of impairment. If any such indication exists, the asset's recoverable amount is estimated.

For goodwill and intangible assets that have indefinite lives or that are not yet available for use the recoverable amount is estimated on each balance sheet date.

The recoverable amount of an asset or cash-generating unit (CGU) is the greater of its value in use and its fair value less costs to sell. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset. For the purpose of impairment testing, assets that cannot be tested individually are grouped together into the smallest group of assets that generates cash inflows from continuing use that are largely independent of the cash inflows of other assets or CGUs.

The goodwill acquired in a business combination, for the purpose of impairment testing, is allocated to cash-generating units that are expected to benefit from the synergies of the combination.

An impairment loss is recognised if the carrying amount of an asset or its cash-generating unit exceeds its estimated recoverable amount. All impairment losses are recognised in the profit or loss statement.

Impairment losses recognized in respect of cash-generating units are allocated first to reduce the carrying amount of any goodwill allocated to the units and then to reduce the carrying amount of the other assets in the unit (group of units) on a pro rata basis.

An impairment loss in respect of goodwill is not reversed. In respect of other assets, impairment losses in prior periods are assessed at each reporting date for indications that the loss has decreased or no longer exists. An impairment loss is reversed if there has been a change in the estimates used to determine the recoverable amount. An impairment loss is reversed only to the extent that the asset's carrying amount does not exceed the carrying amount that would have been determined, net of depreciation or amortisation, if no impairment loss had been recognised.

i) Assets held for sale

Non-current assets, or disposal groups comprising assets and liabilities, that are expected to be recovered primarily through sale rather than through continuing use, are classified as held for sale. Immediately before classification as held for sale, the assets (or components of a disposal group) are remeasured in accordance with the Group's accounting poli- cies. Thereafter the assets (or disposal group) are measured at the lower of their carrying amount and fair value less cost to sell. Any impairment loss on a disposal group is allocated first to goodwill, and then to the remaining assets and liabilities on a pro rata basis except that no loss is allocated to assets not in the measurement scope of IFRS 5, which continue to be measured in accordance with the Group's other accounting policies. Intangible assets, property, plant and equipment and investment property once classified as held for sale or distribution are not amortised or de- preciated. In addition, equity accounting of equity-accounted investees ceases once classified as held for sale or distribution.

EXMAR REPORT 2019

72

j) Employee benefits

Defined contribution plans

Obligations for contributions to defined contribution pension plans are recognised as an expense in the profit or loss statement as the related service is provided.

Defined benefit plans

The Group's net obligation in respect of defined benefit pension plans is calculated separately for each plan by estimating the amount of future benefit that employees have earned in return for their service in the current and prior periods; discounting that amount and deducting the fair value of any plan assets. The calculation is performed annually by a qualified actuary using the projected unit credit method. When the calculation results in a potential asset for the Group, the recognized asset is limited to the present value of economic benefits available in the form of any future refunds from the plan or reductions in future contributions to the plan. To calculate the present value of economic benefits, consideration is given to any applicable minimum funding requirements.

Remeasurements of the net defined benefit liability, which comprise actuarial gains and losses, the return on plan assets (excluding interest) and the effect of the asset ceiling (if any, excluding interest), are recognised immediately in OCI. The Group determines the net interest expense (in- come) on the net defined benefit liability (asset) for the period by applying the discount rate used to measure the defined benefit obligation at the beginning of the annual period to the then net defined benefit liability (asset), taking into account any changes in the net defined benefit liability (asset) during the period as a result of contributions and benefit payments. Net Interest expense and other expenses related to defined benefit plans are recognised in profit or loss.

When the benefits of a plan are changed or when a plan is curtailed, the resulting change in benefit that relates to past service or the gain or loss on curtailment is recognised immediately in profit or loss. The Group recognises gains and losses on the settlement of a defined benefit plan when the settlement occurs.

Belgian defined contribution plans with return guaranteed by law

Belgian defined contribution plans are subject to the Law of April 28, 2003 on occupational pensions (hereafter 'the WAP'). According to article 24 of this Law, the employer has to guarantee an average minimum return of 3.75% on employee contributions and of 3.25% on employer contributions and this for contributions paid until 31/12/2015. As from January 2016, the employer has to guarantee an average minimum return of 1.75% on both employer and employee contributions (as changed by the Law of 18 December 2015). This guaranteed minimum return generally exceeds the return that is normally guaranteed by the insurer. Because the employer has to guarantee the statutory minimum return on these plans, not all actuarial and investment risks relating to these plans are transferred to the insurance company managing the plans. Therefore these plans do not meet the definition of defined contribution plan under IFRS and have to be classified by default as defined benefit plans. An actuarial calculation has been performed in accordance with IAS 19 based on the projected unit credit method.

Termination benefits

Termination benefits are recognised as an expense when the Group is demonstrably committed, without realistic possibility or withdrawal, to a formal detailed plan to either terminate employment before the normal retirement date, or to provide termination benefits as a result of an offer made to encourage voluntary redundancy. Termination benefits for voluntary redundancies are recognised as an expense if the Group has made an offer of voluntary redundancy, it is probable that the offer will be accepted, and the number of acceptances can be estimated reliably. If benefits are payable more than 12 months after the reporting date, then they are discounted to their present value.

Short-term employee benefit

Short-term employee benefit obligations are measured on an undis- counted basis and are expensed as the related service is provided. A liability is recognised for the amount expected to be paid under short-term cash bonus or profit-sharing plans if the Group has a present legal or constructive obligation to pay this amount as a result of past service provided by the employee, and the obligation can be estimated reliably.

Share-based payment transactions

The grant date fair value of options granted to employees is recognised as an employee expense, with a corresponding increase in equity, over the period that the employees unconditionally become entitled to the options. The amounts recognised as an expense is adjusted to reflect the actual number of options for which the related service and non-market vesting conditions are expected to be met, such that the amount ultimately recognised as an expense is based on the number of awards that do meet the related service and non-market performance conditions at vesting date.

k) Provisions

A provision is recognised in the statement of financial position when the Group has a legal or constructive obligation as result of a past event, that can be estimated reliably and it is probable that an outflow of benefits will be required to settle the obligation. If the effect is material, provisions are determined by discounting the expected future cash flows at a pre-tax rate that reflects current market assessments of the time value of money and, where appropriate, the risks specific to the liability.

Restructuring provisions

Provisions for restructuring are recognised when the Group has approved a detailed and formal restructuring plan, and the restructuring has either commenced or has been announced publicly. Future operating costs are not provided for.

Onerous contracts

A provision for onerous contracts is recognised when the expected benefits to be derived by the Group from a contract are lower than the unavoidable cost of meeting its obligations under the contract. The provision is measured at the present value of the lower of the expected cost of terminating the contract and the expected net cost of continuing with the contract. Before a provision is established, the Group recognises any impairment loss on the assets associated with that contract.

l) Income

Revenues from assets sold and services rendered

The company and/ or its joint ventures generate revenues from charterers for the use of its assets. Assets are chartered using voyage/spot, time or bareboat charters. For voyage/spot charters, a contract is closed in the spot market for the use of an asset for a specific voyage at a contractual agreed rate per metric tonnes transported. For time or bareboat charters, a contract is entered into for the use of an asset for a specific period of time at a contractual agreed daily or monthly rate. Revenue is recognised on a straight line basis over the duration of each voyage, time or bareboat charter. Invoices and related payment terms depend on individual contractual terms.

Revenue from the sale of assets is recognised in the profit or loss statement when control of the goods underlying the particular performance obligation is transferred to the customer. For the sale of a vessel, control is transferred to the customer at the moment that the vessel is delivered to the customer. Invoices and related payment terms depend on individual contractual terms.

Revenue from services is recognised in the profit or loss statement over time as the services are provided. The customer simultaneously receives and consumes the benefits provided by the entity's performance as the entity performs (recurring services). Invoices and related payment terms depend on individual contractual terms.

Commissions

If the group acts in the capacity of an agent rather than as a principal in the transaction, then the revenue recognised is the net amount of commission made by the Group.

Rental income from investment property

Rental income from investment property is recognised in the profit or loss statement on a straight-line basis over the term of the lease agreement.

m) Leases

The Group has applied IFRS 16 using the modified retrospective approach and therefore the comparative information has not been restated and continues to be reported under IAS 17 and IFRIC 4. The details of accounting policies under IAS 17 and IFRIC 4 are disclosed separately.

Policy applicable from 1 January 2019

At inception of a contract, the Group assesses whether a contract is, or con- tains, a lease. A contract is, or contains, a lease if the contract conveys the right to control the use of an identified asset for a period of time in exchange for consideration. To assess whether a contract conveys the right to control the use of an identified asset, the Group uses the definition of a lease in IFRS 16. This policy is applied to contracts entered into, on or after 1 January 2019.

As a lessee

At commencement or on modification of a contract that contains a lease component, the Group allocates the consideration in the contract to each lease component on the basis of its relative stand-alone prices.

The Group recognises a right-of-use asset and a lease liability at the lease commencement date. The right-of-use asset is initially measured at cost, which comprises the initial amount of the lease liability adjusted for any lease payments made at or before the commencement date, plus any initial direct costs incurred and an estimate of costs to dismantle and remove the underlying asset or to restore the underlying asset or the site on which it is located, less any lease incentives received.

The right-of-use asset is subsequently depreciated using the straight-line method from the commencement date to the end of the lease term, unless the lease transfers ownership of the underlying asset to the Group by the end of the lease term or the cost of the right-of-use asset reflects that the Group will exercise a purchase option. In that case the right- of-use asset will be depreciated over the useful life of the underlying asset, which is determined on the same basis as those of property and equipment. In addition, the right-of-use asset is periodically reduced by impairment losses, if any, and adjusted for certain remeasurements of the lease liability.

The lease liability is initially measured at the present value of the lease payments that are not paid at the commencement date, discounted using the interest rate implicit in the lease or, if that rate cannot be readily de- termined, the Group's incremental borrowing rate. Generally, the Group uses its incremental borrowing rate as the discount rate.

The Group determines its incremental borrowing rate by obtaining interest rates from various external financing sources and makes certain adjustments to reflect the terms of the lease and type of the asset leased.

Lease payments included in the measurement of the lease liability comprise the following:

  • fixed payments, including in-substance fixed payments;
  • variable lease payments that depend on an index or a rate, initially measured using the index or rate as at the commencement date;
  • amounts expected to be payable under a residual value guarantee; and
  • the exercise price under a purchase option that the Group is reason- ably certain to exercise, lease payments in an optional renewal period if the Group is reasonably certain to exercise an extension option, and penalties for early termination of a lease unless the Group is reason- ably certain not to terminate early.

The lease liability is measured at amortised cost using the effective interest method. It is remeasured when there is a change in future lease payments arising from a change in an index or rate, if there is a change in the Group's estimate of the amount expected to be payable under a residual value guarantee, if the Group changes its assessment of whether

it will exercise a purchase, extension or termination option or if there is a 73 revised in-substance fixed lease payment.

When the lease liability is remeasured in this way, a corresponding adjustment is made to the carrying amount of the right-of-use asset, or is recorded in profit or loss if the carrying amount of the right-of-use asset has been reduced to zero.

The Group presents right-of-use assets separately on the face of the balance sheet and lease liabilities in 'loans and borrowings' in the statement of financial position.

Short-term leases and leases of low-value assets

The Group has elected not to recognise right-of-use assets and lease liabilities for leases of low-value assets and short-term leases, including IT equipment. The Group recognises the lease payments associated with these leases as an expense on a straight-line basis over the lease term.

As a lessor

At inception or on modification of a contract that contains a lease com- ponent, the Group allocates the consideration in the contract to each lease component on the basis of their relative stand-alone prices.

When the Group acts as a lessor, it determines at lease inception whether each lease is a finance lease or an operating lease.

To classify each lease, the Group makes an overall assessment of whether the lease transfers substantially all of the risks and rewards incidental to ownership of the underlying asset. If this is the case, then the lease is a finance lease; if not, then it is an operating lease. As part of this assess- ment, the Group considers certain indicators such as whether the lease is for the major part of the economic life of the asset.

If an arrangement contains lease and non-lease components, then the Group applies IFRS 15 to allocate the consideration in the contract.

The Group recognises lease payments received under operating leases as income on a straight-line basis over the lease term as part of 'revenue'.

Generally, the accounting policies applicable to the Group as a lessor in the comparative period were not different from IFRS 16.

Policy applicable before 1 January 2019

For contracts entered into before 1 January 2019, the Group determined whether the arrangement was or contained a lease based on the assessment of whether:

  • fulfilment of the arrangement was dependent on the use of a specific asset or assets; and
  • the arrangement had conveyed a right to use the asset. An arrange- ment conveyed the right to use the asset if one of the following was met:
    • the purchaser had the ability or right to operate the asset while obtaining or controlling more than an insignificant amount of the output;
    • the purchaser had the ability or right to control physical access to the asset while obtaining or controlling more than an insignificant amount of the output; or
    • facts and circumstances indicated that it was remote that other parties would take more than an insignificant amount of the out- put, and the price per unit was neither fixed per unit of output nor equal to the current market price per unit of output.

EXMAR REPORT 2019

74

As a lessee

Leases of assets that transfer to the Group substantially all of the risks and rewards of ownership are classified as finance leases. The leased assets are measured initially at the lower of fair value and the present value of the minimum lease payments. Subsequent to initial recognition, the assets are accounted for in accordance with the accounting policy applicable to that asset.

Assets held under other leases are classified as an operating lease and are not recognised in the statement of financial position. Payments made under operating leases are recognised in the statement of profit or loss on a straight-line basis over the term of the lease. Lease incentives received are recognised as an integral part of the total lease expense, over the term of the lease.

As a lessor

When the Group acted as a lessor, it determined at lease inception whether each lease was a finance lease or an operating lease.

To classify each lease, the Group made an overall assessment of whether the lease transferred substantially all of the risks and rewards incidental to ownership of the underlying asset. If this was the case, then the lease was a finance lease; if not, then it was an operating lease. As part of this assessment, the Group considered certain indicators such as whether the lease was for the major part of the economic life of the asset.

n) Government grants

Government grants are recognised initially as deferred income at fair value when there is a reasonable assurance that they will be received and the Group will comply with the conditions associated with the grant and are then recognised in profit and loss as other income on a systematic basis over the useful life of the asset. Grants that compensate the Group for expenses incurred are recognised in profit or loss on a systematic basis in the periods in which the expenses are recognised.

o) Finance income and expenses

Finance income consists of interests received, dividend income, gains on the disposal of equity securities at FVTPL, changes in the fair value of

financial assets at fair value through profit or loss, and gains on hedging instruments that are recognised in profit or loss and exchange rate gains. Interest income is recognised in the profit or loss statement as it accrues, taking into account the effective yield on the asset. Dividend income is recognised in the profit or loss statement on the date that the dividend is declared.

Finance expenses consist of interest expense on borrowings, unwinding of the discount on provisions, changes in the fair value of financial assets at fair value through profit or loss, impairment losses recognised on financial assets, exchange rate losses and losses on hedging instruments that are recognised in profit or loss.

Borrowing costs that are not directly attributable to the acquisition, construction or production of a qualifying asset are recognised in profit or loss using the effective interest method. Foreign currency gains and losses are reported on a net basis per currency as either other finance income or finance expense.

p) Taxes

Income tax expense consists of current and deferred taxes. Current and deferred tax is recognized in the profit or loss statement, except to the extent it relates to a business combination, or when they relate to items that are recognised directly in equity or in other comprehensive income.

Current tax is the expected tax payable or receivable on the taxable income or loss of the year, using tax rates enacted or substantively enacted at the reporting date, and any adjustment to tax payable in respect of previous years. Current tax assets and liabilities are offset only if certain criteria are met.

Deferred tax is recognised on all temporary differences between the carrying amounts of assets and liabilities for reporting purposes and the amounts used for taxation purposes. The following temporary differences are not provided for: the initial recognition of goodwill, the initial recognition of assets or liabilities in a transaction that is not a business combination and that affects neither accounting, nor taxable profit, and differences relating to investments in subsidiaries, associates and joint arrangements to the extent that the Group is able to control the timing

of reversal and it is probable that they will not reverse in the foreseeable future.

Deferred tax is measured at the tax rates that are expected to be applied to temporary differences when they reverse, based on the laws that have been enacted or substantively enacted by the reporting date. Deferred tax assets are recognised for unused tax losses, tax credits and deductible temporary differences, to the extent that it is probable that future taxable profits will be available against which they can be utilised.

Deferred tax assets are reduced when it is no longer probable that the related tax benefits will be realized. Unrecognized deferred tax assets are reassessed at each reporting date and recognized to the extent that is has become probable that future taxable profits will be available against which they can be used. Deferred tax assets and liabilities are offset only if certain conditions are met.

Tonnage tax is not accounted for as income taxes in accordance with IAS 12 and is not presented as part of income tax expense in the profit or loss statement but is shown under other operating expenses.

q) Segment reporting

An operating segment is a component of the Group that engages in business activities from which it may earn revenues and incur expenses, including revenues and expenses that relate to transactions with any of the Group's other components. All operating segments' operating results are reviewed regularly by management to make decisions about resources to be allocated to the segment and assess its performance.

The result for each segment includes all income and expenses generated directly by this segment, as well as part of the income and expenses that can reasonably be allocated to this segment. The assets and liabilities allocated to a segment include as a minimum the assets and liabilities which are periodically reported to the Chief operating decision maker, being the Group's CEO and the Executive Committee.

Segment capital expenditure is the total cost incurred during the period to acquire property, plant and equipment and intangible assets other than goodwill.

r) Earnings per share

The Group presents basic and diluted earnings per share for its ordinary shares. Basic earnings per share is calculated by dividing the profit or loss attributable to ordinary shareholders of the Company by the weighted

average number of ordinary shares outstanding during the period, adjust- 75 ed for treasury shares held. Diluted earnings per share is determined by adjusting the profit and loss attributable to ordinary shareholders and the weighted average of ordinary shares outstanding, adjusted for treasury shares held and for the effects of all dilutive potential ordinary shares such

as share options granted to employees.

s) Discontinued operations

A discontinued operation is a component of the Group's business, the operations and cash flows of which can be clearly distinguished from the rest of the Group and which represents a separate major line of business or geographical area of operations that has been disposed of or is held for sale; is part of a single co-ordinated plan to dispose of a separate major line of business or geographic area of operations or is a subsidiary acquired exclusively with a view to re-sale. Classification of a discontinued operation occurs upon disposal or when the operation meets the criteria to be classified as held for sale, if earlier. When an operation is classified as a discontinued operation, the comparative profit or loss statement is restated as if the operation had been discontinued from the start of the comparative period.

EXMAR REPORT 2019

76

2. SEGMENT REPORTING (IN THOUSANDS OF USD)

In respect of joint-ventures, the company continues to manage its operations based on internal management reports applying the principles of the proportionate consolidation method. The reconciliation of the segment reporting to the consolidated statement of financial position and the consolidated statement of profit or loss is presented in note 3. All differences relate to the application of IFRS 11 Joint arrangements, no other differences exist.

The Group has changed its reportable segments in 2019, the Group has currently 3 reportable segments. The Group's operating segments reflect the level at which the Group's CEO and the Executive Committee review the business and make decisions about the allocation of resources and other operating matters. These segments offer different products and services and are managed separately.

  • The activities in the shipping segment include the transportation of liquefied gas products such as Liquid Petroleum Gas (LPG, butane, propane and a mixture of both), anhydrous ammonia and petrochemical gases.
  • The infrastructure segment includes LNG infrastructure and Offshore. The mission is to provide innovative floating infrastructure solutions to the Oil & Gas industry covering the complete lifecycle starting from engineering, construction supervision and moving into ownership, leasing and operations & maintenance.
  • The segment supporting services includse the specialised supporting services such as shipmanagement services and travel agency services.

The company's internal and management structure does not distinguish any geographical segments as the company's fleet is operated on a worldwide basis.

The intra-segment revenue mainly relates to management and crew services provided.

Major shipping client Equinor (ex-Statoil) represents 26% of the revenue of the shipping segment and 13.9% of the EXMAR Group revenue in 2019. Major shipping client Excelerate Energy Llc represents 9% of the revenue of the shipping segment revenue and 5% of the EXMAR Group revenue in 2019. The remaining part of the shipping revenue is divided between 16 different customers. Gunvor represents 35.8% of the revenue of the Infrastructure segment and 11.4% of the EXMAR Group revenue in 2019. YPF represents 24.8% of the revenue of the Infrastructure segment and 7.9% of the EXMAR Group revenue in 2019. No other customers represent more than 10% of the segment revenue or of the EXMAR group revenue in 2019.

SEGMENT REPORTING 2019

Shipping

Infrastructure

Supporting

Eliminations

Total

Services

CONSOLIDATED STATEMENT OF PROFIT OR LOSS

Revenue third party

Revenue intra-segment

Total revenue

Revenue on property rental third party

Revenue on property rental intra-segment

Total revenue on property rental

Gain on disposal

Other operating income

OPERATING INCOME

OPERATING RESULT BEFORE DEPRECIATION AND AMORTISATION CHARGES (EBITDA)

Depreciations, amortisations and impairment loss

OPERATING RESULT (EBIT)

Interest income (non-interco)

Interest income interco

Interest expenses (non-interco)

Interest expenses interco

Other finance income

Other finance expenses

Share of result of equity accounted investees (net of income tax) Income tax expense

SEGMENT RESULT FOR THE PERIOD

RESULT FOR THE PERIOD

Non-controlling interest

ATTRIBUTABLE TO OWNERS OF THE COMPANY

119,388

71,315

33,732

0

224,435

3,040

468

7,892

-11,400

0

122,428

71,783

41,624

-11,400

224,435

0

0

611

0

611

0

0

62

-62

0

0

0

673

-62

611

16

0

19,189

0

19,205

430

1,594

331

0

2,355

122,874

73,377

61,817

-11,462

246,606

60,425

20,617

19,873

100,915

-45,976

-18,650

-1,912

-66,538

14,449

1,967

17,961

0

34,377

2,855

1,229

233

4,317

771

550

26,557

-27,878

0

-21,034

-21,115

-716

-42,865

-2,038

-24,985

-855

27,878

0

691

1,812

1,419

3,922

-2,752

-4,430

-1,517

-8,699

0

322

-125

197

-139

-509

-3,804

-4,452

-7,197

-45,159

39,153

0

-13,202

-13,202

16

-13,219

SEGMENT REPORTING 2019

Shipping

Infrastructure

Supporting

Eliminations

Total

Services

STATEMENT OF FINANCIAL POSITION

ASSETS

77

Vessels

487,839

466,095

0

953,934

Other property, plant and equipment

393

123

1,281

1,797

Intangible assets

0

0

195

195

Right-of-use assets

33,613

2,617

2,594

38,824

Equity accounted investees

3,741

0

5,119

8,860

Borrowings to equity accounted investees

0

7,396

0

7,396

Non-current derivative financial instruments

175

0

0

175

Non-current assets held for sale

13,279

0

0

13,279

Restricted cash

1,733

67,270

0

69,003

Cash and cash equivalents

25,733

11,651

39,859

77,243

TOTAL SEGMENT ASSETS

566,506

555,152

49,048

0

1,170,706

Unallocated other investments

4,170

Unallocated trade and other receivables

53,362

Other unallocated assets

1,368

TOTAL ASSETS

1,229,606

LIABILITIES

Non-current borrowings

363,696

217,677

1,789

583,162

Current borrowings

73,329

30,430

22,903

126,662

Non-current provisions

0

1,733

0

1,733

Non-current derivative financial instruments

153

0

0

153

TOTAL SEGMENT LIABILITIES

437,178

249,840

24,692

0

711,710

Unallocated equity

448,940

Unallocated trade and other payables

62,243

Unallocated other liabilities

6,713

TOTAL EQUITY AND LIABILITIES

1,229,606

CASH FLOW STATEMENT

Cash from operating activities Cash from investing activities Cash from financing activities Dividends paid/received Exchange rate fluctuations

TOTAL CASH FLOW

37,903

-25,773

33,453

45,583

-1,349

-11,029

18,468

6,090

-15,297

-64,955

29,954

-50,298

0

-481

21,257

-101,757

81,875

0

894

ADDITIONAL INFORMATION

Capital expenditures

-1,349

-12,029

-336

-13,714

Proceeds from disposals

0

0

0

0

EXMAR REPORT 2019

78

SEGMENT REPORTING 2018

Shipping

Infrastructure

Supporting

Eliminations

Total

(IN THOUSANDS OF USD)

Services

CONSOLIDATED STATEMENT OF PROFIT OR LOSS

Revenue third party

112,844

29,886

27,671

0

170,401

Revenue intra-segment

1,549

2,189

8,878

-12,616

0

Total revenue

114,393

32,075

36,549

-12,616

170,401

Revenue on property rental third party

0

0

1,200

0

1,200

Revenue on property rental intra-segment

0

0

130

-130

0

Total revenue on property rental

0

0

1,330

-130

1,200

Gain on disposal

31,824

14

26

0

31,864

Other operating income

672

7,454

503

0

8,629

Other operating income intra-segment

0

551

0

-551

0

Total other operating income

672

8,005

503

-551

8,629

OPERATING INCOME

146,889

40,094

38,408

-13,297

212,094

OPERATING RESULT BEFORE DEPRECIATION

67,977

716

-1,322

67,371

AND AMORTISATION CHARGES (EBITDA)

Depreciations, amortisations and impairment loss

-30,086

-14,123

-1,145

-45,354

OPERATING RESULT (EBIT)

37,891

-13,407

-2,467

0

22,017

Interest income (non-interco)

1,602

1,532

152

3,286

Interest income interco

708

446

22,865

-24,019

0

Interest expenses (non-interco)

-17,207

-18,346

-356

-35,909

Interest expenses interco

-2,709

-19,994

-1,316

24,019

0

Other finance income

526

5,340

1,446

7,312

Other finance expenses

-1,802

-5,898

-3,596

-11,296

Share of profit (loss) of equity accounted investees (net of income tax)

0

1,050

-412

638

Income tax expense

-71

0

-2,047

-2,118

SEGMENT RESULT FOR THE PERIOD

18,938

-49,277

14,269

0

-16,070

RESULT FOR THE PERIOD

-16,070

Non-controlling interest

-157

ATTRIBUTABLE TO OWNERS OF THE COMPANY

-15,913

STATEMENT OF FINANCIAL POSITION

ASSETS

Vessels

492,853

469,683

0

962,536

Other property, plant and equipment

228

400

1,430

2,058

Intangible assets

0

160

402

562

Investment property

0

0

8,454

8,454

Equity accounted investees

0

4,637

4,413

9,050

Borrowings to equity accounted investees

0

3,948

0

3,948

Non-current derivative financial instruments

3,150

0

0

3,150

Current derivative financial instruments

358

0

0

358

Restricted cash

1,695

67,270

0

68,965

Cash and cash equivalents

39,299

11,051

26,000

76,350

TOTAL SEGMENT ASSETS

537,583

557,149

40,699

0

1,135,431

Unallocated other investments

4,022

Unallocated trade and other receivables

88,355

Other unallocated assets

201

TOTAL ASSETS

1,228,008

LIABILITIES

Non-current borrowings

311,639

158,057

8,787

478,483

Current borrowings

82,083

142,591

883

225,557

TOTAL SEGMENT LIABILITIES

393,722

300,648

9,670

0

704,040

Unallocated equity

462,763

Unallocated trade and other payables

54,666

Unallocated other liabilities

6,539

TOTAL EQUITY AND LIABILITIES

1,228,008

SEGMENT REPORTING 2018

Shipping

Infrastructure

Supporting

Eliminations

Total

(IN THOUSANDS OF USD)

Services

CASH FLOW STATEMENT

79

Cash from operating activities

20,985

-41,460

25,707

5,232

Cash from investing activities

1,449

-14,491

-139

-13,181

Cash from financing activities

28,151

-17,803

267

10,615

Dividends paid/received

0

Exchange rate fluctuations

-1,186

TOTAL CASH FLOW

50,585

-73,754

25,835

0

1,480

ADDITIONAL INFORMATION

Capital expenditures

Proceeds from disposals

-82,666

-18,841

-299

-101,806

2,177

0

81

2,258

3. RECONCILIATION SEGMENT REPORTING (IN THOUSANDS OF USD)

The financial information of each operating segment is reviewed by management using the proportionate consolidation method. The below tables reconcile the financial information as reported in the consolidated statement of financial position and the consolidated statement of profit or loss (using the equity consolidation method as required under IFRS 11) with the financial information disclosed in note 2 'Segment reporting' (using the proportionate consolidation method).

Proportionate

Difference

Equity Consolidation

consolidation

RECONCILIATION CONSOLIDATED STATEMENT OF FINANCIAL POSITION AND PROPORTIONATE CONSOLIDATION

(SEGMENT REPORTING)

31 DECEMBER 2019

Vessels

953,934

-377,329

576,605

Other property, plant and equipment

1,797

0

1,797

Intangible assets

195

0

195

Right-of-use assets

38,824

-32,714

6,111

Investments in equity accounted investees

8,860

86,697

95,557

Borrowings to equity accounted investees

7,396

42,084

49,479

Derivative financial instruments

175

-175

0

NON-CURRENT ASSETS

1,011,181

-281,436

729,745

Non-current assets held for sale

13,279

-2,279

11,000

Other investments

4,170

0

4,170

Trade and other receivables

53,362

-9,759

43,603

Current tax assets

1,368

-14

1,353

Restricted cash

69,003

-1,733

67,270

Cash and cash equivalents

77,243

-24,617

52,626

CURRENT ASSETS

218,425

-38,403

180,022

TOTAL ASSETS

1,229,606

-319,839

909,767

EQUITY

448,940

0

448,940

Borrowings

583,162

-259,581

323,582

Employee benefits

1,597

0

1,597

Non-current provisions

1,733

-1,733

0

Non-current derivative financial instruments

153

-153

0

NON-CURRENT LIABILITIES

586,645

-261,466

325,179

Borrowings

126,662

-44,810

81,851

Trade and other payables

62,243

-13,562

48,681

Current tax liability

5,116

0

5,116

CURRENT LIABILITIES

194,021

-58,372

135,649

TOTAL EQUITY AND LIABILITIES

1,229,606

-319,839

909,767

EXMAR REPORT 2019

80

Proportionate

Difference

Equity Consolidation

consolidation

RECONCILIATION CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND PROPORTIONATE CONSOLIDATION

(SEGMENT REPORTING)

FOR THE YEAR ENDED 31 DECEMBER 2019

Revenue

Gain on disposal

Other operating income

Vessel expenses

General and administrative expenses

Personnel expenses

Depreciations, amortisations & impairment losses Provisions

Loss on disposal

RESULT FROM OPERATING ACTIVITIES

Interest income

Interest expenses

Other finance income

Other finance expenses

RESULT BEFORE INCOME TAX AND SHARE OF RESULT OF EQUITY ACCOUNTED INVESTEES

Share of result of equity accounted investees (net of income tax) Income tax expense

RESULT FOR THE PERIOD

225,046

-88,321

136,726

19,205

0

19,205

2,355

-39

2,315

-79,011

32,082

-46,928

-31,248

903

-30,345

-33,175

44

-33,131

-66,538

34,628

-31,910

-1,733

1,733

0

-524

0

-524

34,377

-18,970

15,407

4,317

113

4,430

-42,865

16,255

-26,611

3,922

-106

3,816

-8,699

1,029

-7,670

-8,948

-1,679

-10,627

197

1,560

1,757

-4,452

119

-4,332

-13,202

0

-13,202

Proportionate

Difference

Equity Consolidation

consolidation

RECONCILIATION CONSOLIDATED STATEMENT OF FINANCIAL POSITION AND PROPORTIONATE CONSOLIDATION

(SEGMENT REPORTING)

31 DECEMBER 2018

Vessels

962,536

-398,113

564,423

Other property, plant and equipment

2,058

-26

2,032

Intangible assets

562

-157

405

Investment property

8,454

-8,454

0

Investments in equity accounted investees

9,050

95,440

104,490

Borrowings to equity accounted investees

3,948

45,380

49,328

Derivative financial instruments

3,150

-3,150

0

NON-CURRENT ASSETS

989,757

-269,080

720,677

Other investments

4,022

0

4,022

Trade and other receivables

88,355

-16,010

72,345

Current derivative financial instruments

358

-358

0

Current tax assets

201

-11

190

Restricted cash

68,965

-1,695

67,270

Cash and cash equivalents

76,350

-36,513

39,837

CURRENT ASSETS

238,251

-54,586

183,664

TOTAL ASSETS

1,228,008

-323,667

904,341

EQUITY

462,763

0

462,763

Borrowings

478,483

-257,274

221,209

Employee benefits

4,166

0

4,166

NON-CURRENT LIABILITIES

482,649

-257,274

225,376

Borrowings

225,557

-59,899

165,657

Trade and other payables

54,666

-6,483

48,183

Current tax liability

2,373

-11

2,362

CURRENT LIABILITIES

282,595

-66,393

216,203

TOTAL EQUITY AND LIABILITIES

1,228,008

-323,667

904,341

Proportionate

Difference

Equity Consolidation

consolidation

RECONCILIATION CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND PROPORTIONATE CONSOLIDATION

(SEGMENT REPORTING)

81

FOR THE YEAR ENDED 31 DECEMBER 2018

Revenue

171,601

-83,902

87,699

Gain on disposal

31,864

-922

30,942

Other operating income

8,629

126

8,754

Vessel expenses

-77,537

43,757

-33,780

General and administrative expenses

-33,898

976

-32,922

Personnel expenses

-34,374

80

-34,294

Depreciations, amortisations & impairment losses

-45,354

26,335

-19,019

Provisions

2,360

0

2,360

Loss on disposal

-1,272

0

-1,272

RESULT FROM OPERATING ACTIVITIES

22,017

-13,550

8,467

Interest income

3,286

-243

3,043

Interest expenses

-35,909

14,668

-21,241

Other finance income

7,312

-313

6,999

Other finance expenses

-11,296

1,486

-9,810

RESULT BEFORE INCOME TAX AND SHARE OF RESULT OF

-14,591

2,049

-12,542

EQUITY ACCOUNTED INVESTEES

Share of result of equity accounted investees (net of income tax)

638

-2,242

-1,603

Income tax expense

-2,118

193

-1,925

RESULT FOR THE PERIOD

-16,070

0

-16,070

4. OPERATING INCOME (IN THOUSANDS OF USD)

2019

2018

REVENUE

Shipping segment

31,571

30,268

Infrastructure segment

68,957

27,725

Services segment

36,198

29,705

136,726

87,699

The increase in total revenue in the Infrastructure segment is mainly due to invoicing towards Gunvor for the FSRU which started in the last quarter of 2018. The standby revenues generated by TANGO FLNG since May 2019 are only recognised in P&L as from start of operations in September 2019 (in accordance with IFRS 15).

The increase in total revenue in the Services segment is amongst others explained by the new contract for the management of the Floating Storage and Offloading (FSO) LPG unit NKOSSA II in Congo.

Revenue which falls within the scope of IAS 17/ IFRS 16 Leasing represents 37.6% of total revenue and is mainly situated in the shipping segment. Revenue which falls within the scope of IFRS 15 Revenue from contracts with customers represents 62.4% of total revenue and is mainly situated in the Infrastructure and Services segment.

Major shipping client Equinor (ex-Statoil) represents 41.5% of the revenue of the shipping segment and 9.6% of the EXMAR Group revenue in 2019. Gunvor represents 37% of the revenue of the Infrastructure segment and 18.7% of the EXMAR Group revenue in 2019. YPF represents 25.7% of the revenue of the Infrastructure segment and 13% of the EXMAR Group revenue in 2019. No other customers represent more than 10% of the EXMAR Group revenue in 2019.

EXMAR REPORT 2019

82

2019

2018

CONTRACT BALANCES

Trade receivables which are included in trade and other receivables

26,574

21,469

Contract assets which are included in trade and other receivables

3,454

3,532

Contract liabilities which are included in trade and other payables

10,015

6,266

40,043

31,267

The contracts assets mainly relate to the Group's rights to consideration for work completed but not billed at the reporting date. The contract assets are transferred to receivables when the rights become unconditional. The contract liabilities primarily relate to invoices made up in respect of vessel income (prepaid hire).

2019

2018

GAIN ON DISPOSAL

Disposal equity accounted investees

19,164

30,892

Other

41

50

19,205

30,942

On June 29, 2019 EXMAR has sold its 50% share in RESLEA to Compagnie Maritime Belge ("CMB"). We refer to note 10 for more information in this respect. On January 31, 2018 EXMAR has sold its 50% share in Excelsior BVBA to Excelerate Energy LP.

2019

2018

OTHER OPERATING INCOME

License fee

1,498

3,410

Settlement fee

0

4,000

Other

817

1,344

2,315

8,754

A license has been invoiced in the second semester of 2018 which represents the right to use the EXMAR design for the construction, delivery, ownership and operation of an EXMAR OPTI -11,000Semi-Submersible Hull as an oil & gas floating production unit. Part of this license fee in recognised in the consolidated overview of profit or loss in the second semester of 2018, the remaining part is recognised in 2019.

The settlement fee in 2018 relates to the settlement agreement closed in December 2018 between EXMAR and PT JAWA SATU POWER as a consequence of the parties inability to agree on the terms of EXMAR's involvement as FSRU partner and FSRU shipmanager.

5. VESSEL EXPENSES (IN THOUSANDS OF USD)

2019 2018

VESSEL EXPENSES

-46,928-33,780

-46,928-33,780

Vessel expenses are expenses made to operate a vessel. Vessel expenses contain expenses related to crewing (2019: KUSD 22,054), maintenance

(2019: KUSD 14,967), insurance (2019: KUSD 3,259) and other vessel expenses like bunkers, port expenses,... (2019: KUSD 6,648). The increase in the vessel expenses compared to 2018 can be mainly explained by crewing and maintenance for the FSRU and TFLNG.

6. GENERAL AND ADMINISTRATIVE EXPENSES (IN THOUSANDS OF USD)

2019 2018

83

GENERAL AND ADMINISTRATIVE EXPENSES

-30,345-32,922

-30,345-32,922

General and administrative expenses decrease with KUSD 2,577 compared to 2018, this is mainly caused by the implemantation of IFRS 16. General and administrative expenses include amongst others administrative expenses (2019: KUSD 27,499), non-income based taxes (2019: KUSD 1,655) and other expenses (2019: KUSD 1,191).

7. PERSONNEL EXPENSES (IN THOUSANDS OF USD)

2019

2018

PERSONNEL EXPENSES

Salaries and wages

-27,152

-27,626

Social security charges

-4,803

-4,825

Employee benefit, defined benefit and defined contribution plan

-1,176

-1,265

Share option plan

0

-578

-33,131

-34,294

NUMBER OF PERSONNEL MEMBERS

Seagoing

2,124

1,784

Staff

292

300

2,416

2,084

The number of personnel members represents the effective number of personnel

members in service per period end.

A significant part of EXMAR's seagoing personnel is employed on the assets held or operated by EXMAR's equity accounted investees, the related expense is not included in the personnel expenses disclosed above but presented as vessel expenses in EXMAR's equity accounted investees.

Personnel expenses decrease in comparison with 2018, mainly as a consequence of decreased expenses relating to share option plans. We refer to note 26 in this respect.

8. FINANCE INCOME / EXPENSES (IN THOUSANDS OF USD)

2019

2018

INTEREST INCOME AND EXPENSES

INTEREST INCOME

Interest income on borrowings to equity accounted investees

2,912

2,880

Interest income on cash and cash equivalents

1,518

163

4,430

3,043

INTEREST EXPENSES

Interest expenses on borrowings

-26,611

-21,241

Interest expenses on derivative financial instruments

0

0

-26,611

-21,241

The interest income on borrowings to equity accounted investees relates to interests paid by these equity accounted investees on the borrowings provided by EXMAR. We refer in this respect also to note 17. Interest expenses relate to EXMAR's borrowings as disclosed in note 25. The increase in the interest expenses can be mainly explained by the implementation of IFRS 16 and the full impact of the interests paid on the TANGO FLNG facility. In 2018, a part of these interests was paid by Wison.

EXMAR REPORT 2019

84

2019

2018

OTHER FINANCE INCOME AND EXPENSES

OTHER FINANCE INCOME

Realised exchange gains

2,781

1,197

Unrealised exchange gains

661

5,661

Dividend income from non-consolidated companies

259

113

Equity securities measured at FVTPL

92

0

Other

22

28

3,816

6,999

OTHER FINANCE EXPENSES

Realised exchange losses

-1,006

-2,545

Unrealised exchange losses

-1,493

-612

Banking fees

-4,543

-3,842

Equity securities measured at FVTPL

0

-2,385

Other

-628

-426

-7,670

-9,810

The unrealized exchange gain in 2018 mainly relates to the revaluation of the NOK bond. In June 2019, the bond of NOK 1 billion has been fully repaid, which amongst others explains the increase in the realised exchange gains. This repayment was financed partially with a new bond issued in June 2019 (NOK 650 million) and partially with available resources. The NOK/ USD exposure and the NOK interest rate exposure are not covered by any financial instrument contract. The profit and loss effect in respect of the equity securities measured at FVTPL relates to the equity securities as disclosed in note 19.

2019

2018

FINANCE INCOME/EXPENSE RECOGNISED DIRECTLY IN EQUITY

Equity accounted investees - share of other comprehensive income

-3,555

204

Foreign currency translation differences

409

-878

-3,146

-674

Recognised in:

Translation reserve

343

-1,280

Hedging reserve

-3,486

607

Non-controlling interest

-3

-1

-3,146

-674

In certain of our equity accounted investees, interest rate swaps (IRS) contracts have been closed to cover their exposure on variable interest rates. The market values of these IRS-contracts have significantly decreased compared to 2018, the effect of this decrease is registered via the hedging reserve.

9. INCOME TAXES (IN THOUSANDS OF USD)

2019

2018

INCOME TAXES

Taxes current period

-4,633

-1,865

Prior year adjustments

301

-60

INCOME TAXES

-4,332

-1,925

DEFERRED INCOME TAXES

0

0

-4,332

-1,925

2019

2018

RECONCILIATION OF THE EFFECTIVE TAX RATE

85

RESULT BEFORE INCOME TAX

-8,870

-14,145

TAX AT DOMESTIC TAX RATE

-29.58%

2,624

-29.58%

4,184

Share of profit of equity accounted investees net

of tax

520

-474

Increase/decrease resulting from:

Effects of tax rates in foreign jurisdictions

-3,071

-3,146

Non-deductible expenses

-385

-1,136

Other taxes (*)

-813

0

Current year tax losses/ credits for which no deferred tax asset has been recognised

-13,151

-5,353

Use of tax credits, tax losses carried forward,... for which no DTA was recognised before

10,449

5,042

Tax exempt income

-806

-982

Adjustments in respect of prior years

301

-60

48.83%

-4,332

13.61%

-1,925

(*) The other taxes relate mainly to local company taxes paid in EXMAR Shipmanagement Congo (branch of EXMAR Shipmanagement) relating to NKOSSA.

10. DISPOSAL OF AN EQUITY ACCOUNTED INVESTEE

(IN THOUSANDS OF USD)

On June 29, 2019, EXMAR signed an agreement with Compagnie Maritime Belge ("CMB") for the sale of its 50% share in RESLEA, owner of the office buildings in Antwerp. The investment in this equity accounted investee has been derecognised from the balance sheet. The sale resulted in a gain of USD 19.2 million.

Year ended 31/12/2019

A. CONSIDERATION RECEIVED

Consideration received in cash and cash equivalents

18,667

Composition of consideration received

Disposal of an equity accounted investee

24,791

Repayment of a loan granted by an equity accounted investee to EXMAR

-6,124

18,667

The sales price of RESLEA amounts to EUR 22.2 million (USD 24.8 million). The difference with the sales prices reported per 30/06/2019 relates on the one hand to the adjustment of the sales prices as a consequence of the adjusted net equity based on final financial statements per 30/06/2019. On the other hand, the difference relates to changes in the EUR/USD exchange rate.

Year ended 31/12/2019

B. GAIN ON DISPOSAL OF AN EQUITY ACCOUNTED INVESTEE

Contractual consideration

24,791

Carrying amount of the equity accounted investee disposed of

-5,627

19,164

EXMAR REPORT 2019

86

COMPARATIVE INFORMATION AS DISCLOSED IN ANNUAL REPORT 2018

DISPOSAL OF AN EQUITY ACCOUNTED INVESTEE IN 2018

On January 31, 2018 EXMAR has sold its 50% share in Excelsior BVBA (owner of LNGRV EXCELSIOR) to Excelerate Energy LP. Per 31 December 2017, the investment in Excelsior was presented as an equity accounted investee held for sale. We also refer to note 17 of this annual report. The investment in this equity accounted investee has been derecognised from the balance sheet., the sale resulted in a gain of USD 30.9 million.

Year ended 31/12/2018

A. CONSIDERATION RECEIVED

Consideration received in cash and cash equivalents

44,438

Composition of consideration received

Disposal of an equity accounted investee

54,438

Repayment of a loan granted by an equity accounted investee to EXMAR

-10,000

44,438

Year ended 31/12/2018

B. GAIN ON DISPOSAL OF AN EQUITY ACCOUNTED INVESTEE

Total consideration received

44,438

Repayment of loan granted by an equity accounted investee to EXMAR

10,000

Carrying amount of the equity accounted investee disposed of

-23,546

30,892

11. VESSELS (IN THOUSANDS OF USD)

Under

Shipping

Infrastructure

construction

Total

87

- advance

payments (*)

COST 2018

BALANCE AS PER 01 JANUARY 2018

118,500

453,562

0

572,062

Changes during the financial year

Acquisitions

742

18,815

19,557

Disposals

-270

0

-270

Conversion differences

0

0

0

BALANCE AS PER 31 DECEMBER 2018

118,972

472,377

0

591,349

COST 2019

BALANCE AS PER 01 JANUARY 2019

118,972

472,377

0

591,349

Changes during the financial year

Acquisitions (**)

5,353

13,736

15,470

34,559

Disposals

-2,378

0

0

-2,378

Conversion differences

0

0

0

0

BALANCE AS PER 31 DECEMBER 2019

121,947

486,113

15,470

623,530

DEPRECIATIONS AND IMPAIRMENT LOSSES 2018

BALANCE AS PER 01 JANUARY 2018

9,041

0

0

9,041

Changes during the financial year

Depreciations

5,983

12,172

18,155

Disposals

-270

0

-270

Conversion differences

0

0

0

BALANCE AS PER 31 DECEMBER 2018

14,754

12,172

0

26,926

DEPRECIATIONS AND IMPAIRMENT LOSSES 2019

BALANCE AS PER 01 JANUARY 2019

14,754

12,172

0

26,926

Changes during the financial year

Depreciations

6,200

16,177

22,377

Disposals

-2,378

0

-2,378

Conversion differences

0

0

0

BALANCE AS PER 31 DECEMBER 2019

18,576

28,349

0

46,925

NET BOOK VALUE

NET BOOK VALUE AS PER 31 DECEMBER 2018

104,218

460,205

0

564,423

NET BOOK VALUE AS PER 31 DECEMBER 2019

103,371

457,764

15,470

576,605

  1. The advance payments in respect of vessels under construction have been presented under vessels in the consolidated statement of financial position. The advance payments made do not give EXMAR ownership rights on the vessels before their final delivery. The advance payments registered during 2019 relate to 2 VLGC's with LPG as fuel. The delivery of these vessels is expected in the second quarter of 2021.
  1. During 2019, additional investments occurred in respect of the TANGO FLNG and the FSRU (Infrastructure segment). Depreciations on both units started in the course of 2018, they are depreciated over a period of 30 years. Investments in the shipping segment mainly relate to capitalised dry-dock expenses.

The vessels are pledged as a security for the related underlying liabilities. We refer to note 25 for more information in respect of these underlying liabilities.

IMPAIRMENT

For the wholly-owned fleet, internal and external triggers are evaluated which indicate that the carrying value of this fleet should be tested for im- pairment. The carrying amount of the fleet is compared to the recoverable amount, which is the higher of the fair value less cost to sell and the value in use.

EXMAR REPORT 2019

88

The fair value less costs to sell is based upon the average fair market value as determined by two independent ship brokers. This market value is corrected with an average brokerage commission to be paid when a vessel is sold. The value in use is based upon the estimated future cash flows discounted to their present value and reflecting current market assessments relating to freight rate estimates, employment and operating expenses. The operating cash flows are based on internal information and a sensitivity analysis is performed on each assumption. The discounted cash flow model used by management includes cash flows for the remaining lifetime of the wholly-owned fleet. Three year cash flow forecasts are estimated by management based upon the past experience as well as current market expectations regarding volumes and freight rates going forward. Freight rates as well as operating expenses subsequent to this three year period are expected to change in line with estimated inflation afterwards. The discount rate used is a weighted average cost of capital of 5.76% for the shipping segment and 3.93% for the infrastructure segment.

For the FSRU, a fair value calculation was obtained based on a valuation report of an independent ship broker. Based on this valuation report and expected earnings under its employment, management has concluded that no impairment correction is required for the FSRU barge.

For the jointly-owned fleet, impairment triggers are evaluated in the same way as for the wholly-owned fleet. We refer to note 15 for more information in this respect.

12. OTHER PROPERTY, PLANT AND EQUIPMENT (IN THOUSANDS OF USD)

Land and

Machinery and

Furniture and

Total

buildings

equipment

movables

COST 2018

BALANCE AS PER 01 JANUARY 2018

4,216

1,166

5,308

10,690

Changes during the financial year

Acquisitions

0

168

275

443

Disposals

0

0

-510

-510

Translation differences

-191

-9

-106

-306

BALANCE AS PER 31 DECEMBER 2018

4,025

1,325

4,967

10,317

COST 2019

BALANCE AS PER 01 JANUARY 2019 Changes during the financial year

Acquisitions

Disposals

Translation differences

BALANCE AS PER 31 DECEMBER 2019

4,025

1,325

4,967

10,317

0

74

262

336

0

-2

-558

-561

-76

2

-38

-112

3,949

1,399

4,633

9,980

DEPRECIATIONS AND IMPAIRMENT LOSSES 2018

BALANCE AS PER 01 JANUARY 2018

3,400

931

4,036

8,367

Changes during the financial year

Depreciations

31

176

428

635

Disposals

0

0

-469

-469

Translation differences

-155

-9

-84

-248

BALANCE AS PER 31 DECEMBER 2018

3,276

1,098

3,911

8,285

DEPRECIATIONS AND IMPAIRMENT LOSSES 2019

BALANCE AS PER 01 JANUARY 2019

Changes during the financial year

Depreciations

Disposals

Translation differences

BALANCE AS PER 31 DECEMBER 2019

3,276

1,098

3,911

8,285

30

143

376

549

0

-2

-558

-561

-62

2

-31

-90

3,244

1,241

3,698

8,183

NET BOOK VALUE

NET BOOK VALUE AS PER 31 DECEMBER 2018

749

227

1,056

2,032

NET BOOK VALUE AS PER 31 DECEMBER 2019

704

158

935

1,797

13. INTANGIBLE ASSETS (IN THOUSANDS OF USD)

Concessions, patents,

licences

89

COST 2018

BALANCE AS PER 01 JANUARY 2018

3,077

Changes during the financial year

Acquisitions

34

Disposals

0

Translation differences

-63

BALANCE AS PER 31 DECEMBER 2018

3,048

COST 2019

BALANCE AS PER 01 JANUARY 2019

Changes during the financial year

Acquisitions

Disposals

Translation differences

BALANCE AS PER 31 DECEMBER 2019

DEPRECIATIONS AND IMPAIRMENT LOSSES 2018

BALANCE AS PER 01 JANUARY 2018

Changes during the financial year

Depreciations

Disposals

Translation differences

BALANCE AS PER 31 DECEMBER 2018

DEPRECIATIONS AND IMPAIRMENT LOSSES 2019

BALANCE AS PER 01 JANUARY 2019

Changes during the financial year

Depreciations

Disposals

Translation differences

BALANCE AS PER 31 DECEMBER 2019

NET BOOK VALUE

NET BOOK VALUE AS PER 31 DECEMBER 2018

NET BOOK VALUE AS PER 31 DECEMBER 2019

3,048

122

-453

-32

2,685

2,465

211

0

-33

2,643

2,643

145

-267

-31

2,490

405

195

EXMAR REPORT 2019

90

14. RIGHT-OF-USE ASSETS (IN THOUSANDS OF USD)

The Group has initially applied IFRS 16 from 1 January 2019. IFRS 16 introduced a single, on-balance sheet accounting model for lessees. As a result, the Group, as a lessee, has recognised right-of-use assets representing its rights to use the underlying assets and lease liabilities representing its obligation to make lease payments. The Group has applied IFRS 16 using the modified retrospective approach, under this approach comparative information is not restated and the impact on retained earnings is determined as zero. We refer in this respect also to the accounting policies section E and to note 31.

Property

Motor vehicles

IT equipment

Total

COST 2019

BALANCE AS PER 01 JANUARY 2019

5,529

6,901

596

13,026

Changes during the financial year

Acquisitions (*)

172

12,369

0

12,541

Disposals

-48

-73

0

-121

Translation differences

24

0

0

24

Contract re-measurement/ contract modification

25

-1

29

53

Transfer (*)

0

-17,166

0

-17,166

BALANCE AS PER 31 DECEMBER 2019

5,702

2,030

625

8,357

DEPRECIATIONS AND IMPAIRMENT LOSSES 2019

BALANCE AS PER 01 JANUARY 2019

0

0

0

0

Changes during the financial year

Depreciations

1,721

1,764

215

3,700

Impairment

0

4,712

0

4,712

Translation differences

0

0

0

0

Transfer (*)

0

-6,166

0

-6,166

BALANCE AS PER 31 DECEMBER 2019

1,721

310

215

2,246

NET BOOK VALUE

NET BOOK VALUE AS PER 1 JANUARY 2019

5,529

6,901

596

13,026

NET BOOK VALUE AS PER 31 DECEMBER 2019

3,981

1,720

410

6,111

  1. The change in the motor vehicles right-of-use assets can be mainly explained by a contractual modification for an aircraft with the establishment of a purchase obligation. In the course of 2019 an impairment loss of USD 4.7 million has been registered in the statement of profit or loss to reflect the current market value of the asset. Per 31 December 2019, the aircraft has been presented as non- current asset held for sale in the balance sheet. We refer in this respect also to note 18 of this annual report.

15. EQUITY ACCOUNTED INVESTEES (IN THOUSANDS OF USD)

2019

2018

EQUITY ACCOUNTED INVESTEES

BALANCE AS PER 1 JANUARY

104,490

104,416

Changes during the financial year

Share in the profit/loss(-)

1,757

-1,603

Dividends paid

-5,000

-2,000

Changes in consolidation scope (*)

-5,359

-938

Allocation of negative net assets (**)

3,224

4,691

Conversion differences

-69

-403

Changes in other comprehensive income equity accounted investees

-3,486

1,000

Other

0

-673

BALANCE AS PER 31 DECEMBER

95,557

104,490

(*)The changes in consolidation scope in 2019 relate to the sale of Reslea (we refer to note 10 for further information in this respect) and to the sale of the Bim companies (Bu- reau International Maritime NV, Bureau International Maritime Congo and Compagnie Parisienne Formation et Logistique).

  1. The equity accounted investees for whom the share in the net assets is negative, are allocated to other components of the investor's interest in the equity accounted investee and if the negative net asset exceeds the investor's interest, a corresponding liability is recognized.

EXMAR has analysed the existing joint arrangements and has concluded that the existing joint arrangements are all joint ventures in accordance with IFRS 11 "joint arrangements".

EXMAR has provided guarantees to financial institutions that have provided credit facilities to her equity accounted investees. As of December 31, 2019, an amount of USD 543.4 million (2018: USD 637.1 million) was outstanding under such loan agreements, of which EXMAR has guaranteed

USD 271.7 million (2018: USD 318.5 million). We refer in this respect also to note 30. EXMAR did not incur material contingent liabilities versus 91 its equity accounted investees.

Following regulatory requirements or borrowing arrangements, our joint ventures or associates may be restricted to make cash distributions such as dividend payments or repayments of shareholder loans. Under the borrowing arrangements our joint ventures or associates may only make a distribution if no event of default or no breach of any covenant would result from such distribution. Under corporate law, dividend distributions are restricted if the net assets would be less than the amount of paid up capital plus any reserves that cannot be distributed.

For the jointly-owned fleet, impairment triggers are evaluated in the same way as for the wholly-owned fleet. We refer to note 11 for more information in this respect. We refer to note 38 Subsequent events for the impairment loss registered on the vessel TEMSE.

16. FINANCIAL INFORMATION EQUITY ACCOUNTED INVESTEES

(IN THOUSANDS OF USD)

2019

2018

ASSETS

Interest in joint ventures

86,697

96,679

Interest in associates

8,860

7,811

Borrowings to equity accounted investees

49,979

54,203

145,536

158,693

LIABILITIES

Interest in joint ventures

0

0

Interest in associates

0

0

0

0

Segment

JV partner

Description activities

JOINT VENTURES

Estrela Ltd

Infrastructure

ASS

Owner of the accommodation barge NUNCE

EXMAR Gas Shipping Ltd

Shipping

TEEKAY LPG

Owner of the midsize vessels TOURAINE and WEPION

EXMAR LPG BVBA

Shipping

TEEKAY LPG

Holding company for EXMAR-Teekay LPG activities

EXMAR Shipping BVBA

Shipping

TEEKAY LPG

Owner of 18 midsize carriers, 5 carriers under finance lease

Good Investment Ltd

Shipping

TEEKAY LPG

Time-charter agreement of the VLGC BW TOKYO

Monteriggioni Inc

Shipping

MOL

Owner of the LNG carrier EXCEL which was sold during 2017

Solaia Shipping Llc

Shipping

TEEKAY LNG

Owner of the LNG carrier EXCALIBUR

The company Reslea is no longer recognized as joint venture due to the sale of the shares of this company in June 2019. We refer to note 10 for more information in this respect.

Segment

Ownership%

Description activities

ASSOCIATES

Bexco NV

Services

44,91%

Rope manufacturer for marine and offshore industry

Marpos NV

Services

45,00%

Provides waste solutions for maritime industry

Electra Offshore Ltd

Infrastructure

40,00%

Owner of the accommodation barge WARIBOKO

Exview Hong Kong Ltd

Infrastructure

40,00%

Bareboat owner of the accommodation barge WARIBOKO

Springmarine Nigeria Ltd

Infrastructure

40,00%

Time-charter agreement for the accommodation barge WARIBOKO

The companies Bureau International Maritime NV, Bureau International Maritime Congo and Compagnie Parisienne Formation et Logistique are no longer recognized as associates due to the sale of the shares of these companies in December 2019 (loss of USD 0.2 million).

EXMAR REPORT 2019

92

The financial information presented below represents the IFRS financial statements of the joint ventures or associates and not EXMAR's share of those amounts.

JOINT VENTURE PARTNER

TEEKAY LPG

MOL

SEGMENT

Shipping

Shipping

PERCENTAGE OWNERSHIP INTEREST

50%

50%

31 DECEMBER 2019

Non-current assets

735,715

0

Current assets

50,215

4,744

Of which Cash and cash equivalents

28,704

4,743

Non-current liabilities

591,970

3,466

Of which Bank Borrowings

250,842

0

Of which finance leases

236,597

0

Of which Other Borrowings

104,531

0

Current liabilities

92,911

5

Of which Bank Borrowings

42,580

0

Of which finance leases

34,174

0

Of which Other Borrowings

3,000

0

Revenue

149,255

0

Depreciations, amortizations & impairment losses

59,174

0

Interest income

4,786

77

Interest expense

35,256

0

Income tax expense

5

0

RESULT FOR THE PERIOD

-2,924

-3,427

Other comprehensive result for the period

-5,950

0

TOTAL COMPREHENSIVE RESULT FOR THE PERIOD

-8,874

-3,427

NET ASSETS (100%)

101,049

1,273

EXMAR'S SHARE OF NET ASSETS

50,523

636

SHARE IN THE NET ASSETS OF EQUITY ACCOUNTED INVESTEES AT 1 JANUARY 2019

54,960

2,350

Share in total comprehensive income

-4,437

-1,714

Dividends paid

0

0

Other

0

0

SHARE IN THE NET ASSETS OF EQUITY ACCOUNTED INVESTEES AT 31 DECEMBER 2019

50,523

636

NETTING NEGATIVE EQUITY

10,182

0

SHARE IN THE NET ASSETS OF EQUITY ACCOUNTED INVESTEES AT 31 DECEMBER 2019

60,705

636

AFTER NETTING

  1. On June 29, 2019, EXMAR signed an agreement with Compagnie Maritime Belge ("CMB") for the sale of its 50% share in RESLEA, owner of the office buildings in Antwerp. We refer to note 10 for futher information.
  1. The companies Bureau International Maritime NV, Bureau International Maritime Congo and Compagnie Parisienne Formation et Logistique are no longer recognized as associates due to the sale of the shares of these companies in December 2019 (loss of USD 0.2 million).

TEEKAY LNG

ASS

CMB

ASSOCIATES

TOTAL

93

Services

Services

Infrastructure

Services

Shipping

Infrastructure

Services

WARIBOKO

BIM

Bexco

Marpos

companies

companies

50%

50%

50% (*)

45%

45%

40%

40% (**)

68,052

16,667

0

7,143

402

10,615

0

838,594

8,751

5,193

0

20,471

1,234

13,188

0

103,796

5,427

3,119

0

337

811

2,348

0

45,489

32,028

0

0

4,142

0

8,558

0

640,164

31,723

0

0

3,732

0

0

0

286,297

0

0

0

0

0

0

0

236,597

0

0

0

0

0

8,558

0

113,089

14,447

1,479

0

15,605

704

6,434

0

131,585

11,660

0

0

9,878

0

0

0

64,118

0

0

0

0

0

0

0

34,174

0

0

0

0

0

500

0

3,500

22,302

10,545

989

32,517

2,042

11,529

2,186

231,365

6,961

2,295

511

963

53

1,892

246

72,095

392

0

0

0

0

0

14

5,269

2,561

0

173

155

4

1,199

18

39,366

0

0

234

-35

86

29

0

319

7,995

1,072

402

519

207

806

-1,129

3,521

-1,022

0

0

0

0

0

0

-6,972

6,973

1,072

402

519

207

806

-1,129

-3,451

30,328

20,381

0

7,867

932

8,811

0

15,164

10,190

0

3,534

420

3,524

0

14,676

11,654

4,914

3,364

333

3,420

696

96,365

3,488

536

201

233

93

322

-452

-1,729

-3,000

-2,000

0

0

0

0

0

-5,000

0

0

-5,115

-63

-6

0

-244

-5,428

15,164

10,190

0

3,534

420

3,743

0

84,208

0

0

0

0

0

1,167

0

11,349

15,164

10,190

0

3,534

420

4,910

0

95,557

EXMAR REPORT 2019

94

JOINT VENTURE PARTNER

TEEKAY LPG

MOL

SEGMENT

Shipping

Shipping

PERCENTAGE OWNERSHIP INTEREST

50%

50%

31 DECEMBER 2018

Non-current assets

708,549

0

Current assets

71,032

4,704

Of which Cash and cash equivalents

43,387

4,703

Non-current liabilities

601,534

0

Of which Bank Borrowings

293,422

0

Of which finance leases

203,581

0

Of which Other Borrowings

104,531

0

Current liabilities

68,126

4

Of which Bank Borrowings

43,564

0

Of which finance leases

14,001

0

Of which Other Borrowings

0

0

Revenue

132,766

0

Depreciations, amortizations & impairment losses

40,969

0

Interest income

3,773

46

Interest expense

30,230

0

Income tax expense

0

0

RESULT FOR THE PERIOD

-13,844

113

Other comprehensive result for the period

1,834

0

TOTAL COMPREHENSIVE RESULT FOR THE PERIOD

-12,010

113

NET ASSETS (100%)

109,921

4,700

EXMAR'S SHARE OF NET ASSETS

54,960

2,350

SHARE IN THE NET ASSETS OF EQUITY ACCOUNTED INVESTEES AT 1 JANUARY 2018

61,638

2,293

Share in total comprehensive income

-6,005

57

Dividends paid/received

0

0

Other

-673

0

SHARE IN THE NET ASSETS OF EQUITY ACCOUNTED INVESTEES AT 31 DECEMBER 2018

54,960

2,350

NETTING NEGATIVE EQUITY

6,885

0

SHARE IN THE NET ASSETS OF EQUITY ACCOUNTED INVESTEES AT 31 DECEMBER 2018

61,845

2,350

AFTER NETTING

TEEKAY LNG

ASS

CMB

ASSOCIATES

TOTAL

Services

Services

Infrastructure

Services

Shipping

Infrastructure

Services

WARIBOKO

BIM

Bexco

Marpos

companies

companies

95

50%

50%

50%

45%

45%

40%

40%

75,013

19,277

17,008

7,945

428

12,507

416

841,143

17,213

4,057

12,587

15,485

1,375

11,253

2,907

140,613

16,012

2,883

86

197

937

2,553

318

71,076

0

0

17,597

4,601

0

5,183

0

628,915

0

0

17,541

4,149

0

0

0

315,112

0

0

0

0

0

0

0

203,581

0

0

3

0

0

5,183

0

109,717

62,871

25

2,173

11,340

1,065

10,573

1,581

157,758

60,490

0

1,718

4,643

0

0

0

110,415

0

0

0

0

0

0

0

14,001

0

0

0

0

0

4,875

0

4,875

24,799

10,220

2,168

18,543

1,893

15,876

1,938

208,203

6,960

2,969

1,072

1,055

51

1,892

220

55,188

1,368

72

0

0

0

0

19

5,278

3,360

146

375

154

4

1,491

7

35,767

0

0

386

3

62

288

5

744

9,044

-376

579

45

115

2,625

-1,209

-2,908

125

42

0

0

0

0

0

2,001

9,169

-334

579

45

115

2,625

-1,209

-907

29,355

23,309

9,825

7,489

738

8,004

1,742

14,676

11,654

4,914

3,364

333

3,202

696

13,030

11,821

4,818

3,503

296

2,370

1,215

100,982

4,585

-167

290

20

52

1,050

-484

-603

-2,000

0

0

0

0

0

0

-2,000

-938

0

-194

-159

-15

0

-35

-2,014

14,676

11,654

4,914

3,364

333

3,420

696

96,365

0

0

0

0

0

1,219

21

8,125

14,676

11,654

4,914

3,364

333

4,639

717

104,490

EXMAR REPORT 2019

96

17. BORROWINGS TO EQUITY ACCOUNTED INVESTEES

(IN THOUSANDS OF USD)

Shipping

Infrastructure

Total

BORROWINGS TO EQUITY ACCOUNTED INVESTEES 2018

AS PER 1 JANUARY2018

50,273

12,971

63,244

New loans and borrowings

0

0

0

Repayments

0

-4,350

-4,350

Change in allocated negative net assets (*)

-4,910

219

-4,691

AS PER 31 DECEMBER2018

45,363

8,840

54,203

MORE THAN 1 YEAR

45,363

3,965

49,328

LESS THAN 1 YEAR

0

4,875

4,875

Shipping

Infrastructure

Total

BORROWINGS TO EQUITY ACCOUNTED INVESTEES 2019

AS PER 1 JANUARY 2019

45,363

8,840

54,203

New loans and borrowings

0

0

0

Repayments

0

-1,000

-1,000

Change in allocated negative net assets (*)

-3,296

72

-3,224

AS PER 31 DECEMBER 2019

42,067

7,912

49,979

MORE THAN 1 YEAR

42,067

7,412

49,479

LESS THAN 1 YEAR

0

500

500

  1. The equity accounted investees for whom the share in the net assets is negative, are allocated to other components of the investor's interest in the equity accounted investee and if the negative net asset exceeds the investor's interest, a corresponding liability is recognized.

The activities and assets of certain of our equity accounted investees are financed by shareholder borrowings made by the company to the respective equity accounted investees. The current portion of such borrowings is presented as other receivables. The balances mentioned below between brackets represent the outstanding balances including netting of negative net assets.

EXMAR LPG (Shipping segment) - USD 42.1 million (2018: USD 45.4 million)

Both shareholders have granted shareholder loans to EXMAR LPG in 2013. Repayment occurs based on availability of cash and only if such repayment would not result in a breach of the covenants applicable on the bank borrowings to EXMAR LPG. The applicable interest rate on these loans amounts to three-month LIBOR plus 0.5%.

Electra Offshore Ltd (Infrastructure segment) - USD 7.9 million (2018: USD 8.8 million)

EXMAR Netherlands has granted a loan to Electra Offshore Ltd in 2016. The loan is repaid based on availability of cash. The interest rate applicable on the loan is a fixed percentage of 12%.

18. NON-CURRENT ASSETS HELD FOR SALE (IN THOUSANDS OF USD)

2019

2018

NON-CURRENT ASSETS HELD FOR SALE

Aircraft

11,000

0

11,000

0

A purchase obligation has been registered for an aircraft as a consequence of a contractual modification. In the course of 2019, an impairment loss of USD 4.7 million has been registered in the statement of profit or loss to reflect the current market value of the asset. Per 31 December 2019, the aircraft has been presented as non-current asset held for sale in the balance sheet because of EXMAR's intent to sell the aircraft.

19. OTHER INVESTMENTS (IN THOUSANDS OF USD)

2019

2018

97

EQUITY SECURITIES - FVTPL

Unquoted shares (*)

1,004

1,237

Quoted shares (**)

3,166

2,785

4,170

4,022

(*) The unquoted shares include the 149 shares of Sibelco, which were acquired during 2014.

  1. The quoted shares include the 149,089 shares of Teekay LNG (TGP) quoted at USD 15.35 on 31 December 2019 (31 December 2018: USD 11.02) and the 116,338 shares of Frontera Energy Corporation quoted at CAD 9.8 on 31 December 2019 (31 December2018: CAD 13.38).

20. TRADE AND OTHER RECEIVABLES (IN THOUSANDS OF USD)

2019 2018

TRADE AND OTHER RECEIVABLES

Trade receivables & contract assets Cash guarantees

Borrowings to equity accounted investees less than 1 year Other receivables

Deferred charges and accrued income (*)

OF WHICH FINANCIAL ASSETS (NOTE 30)

30,028 25,001

  1. 209
  1. 4,875

7,795 38,599

5,017 3,661

43,603 72,345

35,107 65,815

  1. 'Deferred charges' comprise expenses already invoiced relating to the next accounting year, e.g. hire, insurances, commissions, bunkers,...
    'Accrued income' comprises uninvoiced revenue related to the current accounting period, e.g. interests,...

The Group's exposure to credit and currency risks and impairment losses related to trade and other receivables is disclosed in note 30.

The decrease in other receivables is mainly due to the advance payments made for the building of 2 VLGC newbuildings to Hanjin Heavy Industries

  • Construction. On January 8, 2019 Hanjin Heavy Industries & Construction at Subic Bay (Philippines) filed for rehabilitation due to financial diffi- culties. The construction disruptions caused thereby obliged EXMAR to cancel both Shipbuilding Contracts and invoke the Refund Guarantee from Korean Development Bank (South Korea) to recover each of the Instalments already paid (as a consequence, the installments have been presented as "other receivables" per 31 December 2018). These instalments (USD 27.2 million) have been repaid during the first semester of 2019 together with an interest of 6%.

EXMAR REPORT 2019

98

21. TAX ASSETS AND LIABILITIES (IN THOUSANDS OF USD)

CURRENT TAX ASSETS AND LIABILITIES

2019

2018

CURRENT TAX ASSETS AND LIABILITIES

Current tax assets

1,353

190

Current tax liabilities

5,116

2,362

Current tax assets and current tax liabilities increase mainly as a consequence of a received additional tax assessment for accounting year 2017 for EXMAR NV. EXMAR disputes this tax assessment and has simultaneously registered a tax liability (to reflect the received assessment note) and a tax receivable (to reflect the disputed tax assessment note). As the management assessed that the tax claim is not valid, a receivable, for the same amount

as the liability, has been accounted for in the consolidated financial statements per 31

December 2019.

DEFERRED TAX ASSETS AND LIABILITIES

Assets

Liabilities

Assets

Liabilities

31 December 2019

31 December 2018

DEFERRED TAX ASSETS AND LIABILITIES IN DETAIL (*)

Provisions

0

100

0

100

Employee benefits

2,254

3,612

0

Vessels

0

0

0

2,504

DEFERRED TAX ASSETS / LIABILITIES

2,254

100

3,612

2,604

Set off of taks assets/ liabilities

-100

0

-2,604

0

Tax assets not recognised (**)

-2,154

0

-1,008

0

0

0

0

0

DEFERRED TAX ASSETS/ LIABILITIES NOT RECOGNISED (***)

Deductible temporary differences

2,154

1,008

Unused tax losses and investment tax credits (***)

43,422

48,145

45,576

0

49,153

0

(*) The temporary differences that exist within our equity accounted investees are not included in above overview of deferred tax assets and liabilities in detail.

(**) These deferred tax assets have not been recognised because it is not probable that future taxable profit will be available against which the Group can use the benefits therefrom or because the future taxable profits cannot be measured on a reliable basis.

(***) The unused tax losses and the main part of the investment tax credits do not expire in time.

22. RESTRICTED CASH AND CASH AND CASH EQUIVALENTS

(IN THOUSANDS OF USD)

2019

2018

99

RESTRICTED CASH AND CASH AND CASH EQUIVALENTS

RESTRICTED CASH

67,270

67,270

Bank

52,145

39,461

Cash in hand

83

118

Short-term deposits

398

258

NET CASH AND CASH EQUIVALENTS

52,626

39,837

The restricted cash relates to the credit facility with the Bank of China for the TANGO FLNG (see also note 25). On February 26, 2020, the Bank of China released USD 40 million of the restricted cash or debt service reserve account (DSRA). The balance of the DSRA will be released pro rata the repayment of the outstanding debt.

23. SHARE CAPITAL AND RESERVES (IN THOUSANDS OF USD)

SHARE CAPITAL AND SHARE PREMIUM

2019

2018

NUMBER OF ORDINARY SHARES

Issued shares as per 1 January

59,500,000

59,500,000

Issued shares as per 31 December - paid in full

59,500,000

59,500,000

The issued shares have no nominal value. The holders of ordinary shares are entitled to dividends and are entitled to one vote per share during the General Shareholders' Meetings of the Company.

DIVIDENDS

No distribution to owners of the Company occurred for 2019 and 2018.

TREASURY SHARES

The reserve for treasury shares comprises the cost of the Company's shares held by the Group.

2019 2018

TREASURY SHARES

Number of treasury shares held as of 31 December (*) Bookvalue of treasury shares held (in thousands USD) Average cost price per share (in EUR) - historical value

2,273,263 2,273,263

44,349 44,349

14.1507 14.1507

(*) No treasury shares have been sold during 2019 in respect of the share option plans.

EXMAR REPORT 2019

100

TRANSLATION RESERVE

The translation reserve comprises all foreign exchange differences arising from the translation of the financial statements of foreign operations and the financial statements of consolidated companies not reporting in USD as functional currency.

HEDGING RESERVE

The hedging reserve comprises the effective portion of the cumulative net change in the fair value of cash flow hedging instruments related to the hedged transactions that have not yet occurred. In certain of our equity accounted investees, interest rate swaps (IRS) contracts have been closed to cover their exposure on variable interest rates.

24. EARNINGS PER SHARE (IN THOUSANDS OF USD)

2019

2018

BASIC EARNINGS PER SHARE IN USD

Result for the period (in USD)

-13,218,671

-15,912,725

Issued ordinary shares as per 31 December

59,500,000

59,500,000

Effect of treasury shares

-2,273,263

-2,454,561

Weighted average number of ordinary shares as per 31 December

57,226,737

57,045,439

-0.23

-0.28

DILUTED EARNINGS PER SHARE IN USD

Result for the period (in USD)

-13,218,671

-15,912,725

Weighted average number of ordinary shares as per 31 December

57,226,737

57,045,439

Average closing rate of one ordinary share during the year (in EUR)

(a)

5.65

5.99

Average exercise price for shares under option (in EUR)

(b)

0.00

0.00

Number of shares under option

(c)

0

0

Number of shares that would have been issued at average market price: (c*b) / a

0

0

Weighted average number of ordinary shares including options

57,226,737

57,045,439

-0.23*

-0.28

(*) As option plan 4, 8, 9 and 10 are anti-dilutive as per 31 December 2019, they are not included in the calculation of the diluted earnings per share.

25. BORROWINGS (IN THOUSANDS OF USD)

Bank loans

Other loans

Lease liabilities

Total

ROU assets (*)

101

BORROWINGS AS PER 31 DECEMBER 2018

AS OF 1 JANUARY 2018

246,973

125,734

0

372,707

New loans

49,173

20,411

0

69,584

Scheduled repayments

-56,379

-1,126

0

-57,505

Paid transaction costs

-1,646

-649

0

-2,295

Amortized transaction costs

2,114

1,236

0

3,350

Translation differences

0

-6,188

0

-6,188

Accrued interest payable

4,702

2,512

0

7,214

AS OF 31 DECEMBER 2018

244,937

141,930

0

386,867

More than 1 year

204,690

16,519

0

221,209

Less than 1 year

40,247

125,411

0

165,658

AS OF 31 DECEMBER 2018

244,937

141,930

0

386,867

Infrastructure segment

67,555

18,635

0

86,190

Shipping segment

177,354

123,295

0

300,649

Services segment

28

0

0

28

AS OF 31 DECEMBER 2018

244,937

141,930

0

386,867

BORROWINGS AS PER 31 DECEMBER 2019

AS OF 1 JANUARY 2019 AS PREVIOUSLY REPORTED

244,937

141,930

0

386,867

ADJUSTMENT ON INITIAL APPLICATION OF IFRS 16 (NET OF TAX) (*)

0

0

13,026

13,026

ADJUSTED BALANCE AT 01 JANUARY 2019

244,937

141,930

13,026

399,893

New loans (**)

61,705

107,688

11,198

180,591

Scheduled repayments (**)

-43,309

-125,997

-2,600

-171,906

Paid transaction costs

-922

-1,935

0

-2,857

Amortized transaction costs

2,502

1,122

0

3,624

Translation differences

0

-1,393

-10

-1,403

Accrued interest payable

-811

-1,749

0

-2,560

Contract re-measurement/ contract modification

0

0

51

51

AS OF 31 DECEMBER 2019

264,102

119,666

21,665

405,433

More than 1 year

200,473

118,903

4,206

323,582

Less than 1 year

63,629

763

17,459

81,851

AS OF 31 DECEMBER 2019

264,102

119,666

21,665

405,433

Infrastructure segment

70,178

46,118

16,338

132,634

Shipping segment

161,872

73,548

2,687

238,107

Services segment

32,052

0

2,640

34,692

AS OF 31 DECEMBER 2019

264,102

119,666

21,665

405,433

2019

2018

CREDIT LINES

Total credit lines Drawn credit lines Available credit lines

36,740 21,870

-32,0000

4,740 21,870

  1. The Group has initially applied IFRS 16 at 1 January 2019, using the modified retrospective method. Under this approach, comparative information is not restated and the impact on retained earnings is determined as zero. We refer in this respect also to the accounting policies section E and to note 31.
  1. The sum of the new bank and other loans is reflected under "proceeds from new borrowings" in the cash flow statement. The sum of the scheduled repayments for bank and other loans is reflected under "repayments of borrowings" in the cash flow statement.

EXMAR REPORT 2019

102

BANK LOANS

The bank loans mainly relate to the LPG pressurized facilities and the CARIBBEAN FLNG facility, now renamed TANGO FLNG facility.

NEW LPG pressurized facilities - USD 70.2 million (2018: USD 47.7 million)

In the last quarter of 2018, EXMAR refinanced its LPG pressurized fleet. Five vessels were refinanced under this transaction in October 2018, one vessel in December 2018 and four vessels in April 2019. The loans are repayable in quarterly tranches and the applicable interest percentage amounts to three-month LIBOR plus 2.4%. The last repayment is foreseen in December 2025. All obligations of the borrower are guaranteed by EXMAR NV ("guarantor").

TANGO FLNG facility - USD 161.9 million (2018: USD 177.4 million)

End of June 2017, EXPORT Lng Limited (a 100% subsidiary of EXMAR NV) has signed a financing agreement of USD 200 million with the Bank of China (Boc), Deutsche Bank and Sinosure for the financing of the TANGO FLNG. This loan has been drawn on 27 July 2017 at the time of the delivery of the CARIBBEAN FLNG, renamed TANGO FLNG. The agreement with BoC provides a repayment period of 12 years and the loan bears interest at a rate of six-month LIBOR plus 3%. The yearly estimated debt service amounts to USD 25 million. All obligations of the borrower are guaranteed by EXMAR NV ("guarantor"). There is a requirement for EXPORT to deposit an amount equal to 30 months principal plus interest, i.e. an amount of USD 67.3 million, on an escrow account as long that no long-term employment is in place. Further to the successful performance acceptance tests of the TANGO FLNG on 5 June 2019, EXMAR met all conditions for the partial release (USD 40 million in a first phase) of the debt service reserve account (amounting in total USD 67.3 million) in respect of the USD 200 million loan with Bank of China and Deutsche Bank. This release was subject to the approval of SINOSURE, the latter took more time than expected. On February 26, 2020, Bank of China finally released the amount of 40 million USD from the debt service reserve account. The amount of 40 million USD has been partially allocated to the repayment of the bridge loans and to cover EXMAR's capital commitments.

Bridge loans - USD 15 million & straight loans - USD 17 million

The delay incurred by the release of the Debt Service Reserve Account (DSRA) has caused pressure on the liquidity position of EXMAR in 2019 and early 2020. Pending the release of the DSRA, EXMAR closed a bridge loan in the amount of USD 30 million with NORDEA and BELFIUS who assisted EXMAR during this interim period to temporarily increase its liquidity. The applicable interest percentage amounted to 1-month LIBOR plus 4% for Nordea and plus 3.25% for Belfius. These bridge loans have been reduced to USD 15 million in December and have been fully repaid end of February 2020 with the released amount from the debt service reserve account (DSRA). EXMAR also used USD 17 million per 31 December 2019 from its available credit facilities (USD 21 million) in the form of straight loans. A part of these straight loans (USD 4.4 million) has been repaid end of February 2020 with the released amount from the DSRA. The applicable interest percentage amounted to 1-month LIBOR plus 2.55%.

OTHER LOANS

The other loans relate mainly to a senior unsecured bond issue. This bond was closed in July 2014 by EXMAR Netherlands BV ("issuer"), a 100% subsidiary of EXMAR NV, for an amount of NOK 700 million. During 2015, an additional amount of NOK 300 million has been issued (second tranche on the original NOK 700 million bond). The total nominal amount outstanding amounted to NOK 1 billion with initial maturity date in July 2017. In June 2017, the term of the bond has been amended and extended until July 2019. As a consequence of the extension of the term of the bond, each bond holder had the possibility to exchange NOK bonds to USD bonds. The interest percentage applicable on the remaining NOK bonds amounted to three-month NIBOR plus a margin of 8%. The exchanged USD bonds beared an interest percentage of three-month LIBOR plus a margin of 8.5%. In June 2019, the bond of NOK 1 billion has been fully repaid. This repayment was financed partially with a new bond issued in June 2019 and partially with available resources.

EXMAR Netherlands BV, a fully owned subsidiary of EXMAR NV, has successfully completed a new unsecured bond issue of NOK 650 million with a coupon of 3 months NIBOR plus 8.75% and with maturity date in May 2022. All obligations of the issuer are guaranteed by EXMAR NV ("guarantor"). EXMAR NV has to maintain direct or indirect a 100% ownership in the issuer. The NOK/ USD exposure and the NOK interest rate exposure are not covered by any financial instrument contract. We refer to note 30 for the currency risk exposure and related sensitivity analysis.

EXMAR has two Very Large Gas Carriers under construction at Jiangnan, due for delivery in the course of 2021. The two vessels will each enter a five year time-charter to Equinor upon delivery from the shipyard. EXMAR has obtained and drawn under a pre-delivery financing of USD 20 million with Maritime Asset Partners, which partially covers the instalments during the construction of these vessels. The repayment date of this pre-delivery financing is the earlier of the delivery date or the maturity date (June 2021). The interest percentage applicable on this pre-delivery financing amounts to 10.75% per annum.

OTHER INFORMATION

EXMAR's barge based FSRU was delivered end of December 2017. The unit was able to obtain a long-term contract with GUNVOR and its employment commenced in October 2018. The FSRU has been mainly financed with available resources. The finance documentation for the sale and lease back of the FSRU barge by CSSC shipping was finalized and signed at the end of August. A first tranche of approximately USD 78.0 million was conditional upon fulfilment of the conditions precedent under the lease agreement (including security documents requiring charterers' signature) and a second tranche of USD 31.0 million upon start of the regasification operations at a location. In September 2019, GUNVOR gave notice of a dispute with respect to the execution of the Charter and has commenced arbitration. This arbitration procedure could last several months. Under the ongoing arbitration procedure, the financing of the asset could not be completed at this stage of the procedure. Meanwhile the charter remains in full force and effect.

In general, the borrowings held by EXMAR and its equity accounted investees are secured by a mortgage on the underlying assets owned by EXMAR and its equity accounted investees. Furthermore, different pledges and other types of guarantees exist to secure the borrowings. In addition, dividend restrictions are included as a special covenant in the terms of the bond. EXMAR shall not declare or make any dividend payment or distribution, whether in cash or in kind, that in aggregate exceed 50% of the consolidated net profit after tax (proportionate consolidation) based on the audited

consolidated financial statements for the previous financial year. EXMAR has pledged financial assets as collateral for liabilities.

We refer to note 22

where the amount of restricted cash in respect of financing agreements is disclosed.

103

COVENANTS

Different debt covenants exist that require compliance with certain financial ratio's. These ratio's are calculated semi-annually based on EXMAR's consolidated figures in which equity accounted investees are not accounted for under IFRS 11 but still on a proportionate basis (similar to accounting policies used for segment reporting purposes). In case of non-compliance with these covenants, early repayment of related borrowings might be required and should therefore be accounted for as short term debt. We refer to the table below for an overview of the applicable covenants.

APPLICABLE COVENANTS

Pressurized facility

TANGO FLNG

Bond

Other (*)

Actual

RATIO

facility

31/12/2019 (**)

Minimum/ Book equity ratio

Minimum free cash

Equity ratio (Equity/Total assets)

Net Interest Bearing Debt or NIBD/equity Interest Coverage ratio

Working capital ratio

Net financial indebtedness ratio

Outstanding loan amount

≥ USD 300 million

≥ USD 300 million

≥ USD 300 million

≥ USD 300 million

+ 50% of

448.94

net positive income

≥ USD 25 million

≥ USD 25 million

≥ USD 25 million

≥ USD 40 million

81.98

≥ 25%

≥ 25%

NA

≥ 25%

40.12%

NA

NA

Maximum 2,50

NA

1.28

NA

min 2:1

min 2:1

NA

2.30

min positive

min positive

min positive

min positive

82.80

NA

NA

NA

< 70%

58.52%

96,296

161,872

73,548

48,041

  1. The other covenants partly relate to loan amounts which are registered in our proportionate consolidation but not in our equity consolidation. The outstanding loan amount for this covenant is not included in the outstanding loan amount in the table above. The outstanding loan amount for this covenant in our proportionate consolidation amounts to USD 21.7 million.

(**) The actual amounts presented are based on the most restrictive definitions.

As of December 31, 2019 EXMAR was compliant with all covenants with sufficient headroom.

EXMAR believes that as per June 2020 and December 2020, all covenants will be met. EXMAR is continuously monitoring compliance with all applicable covenants.

If a breach of covenants would occur, the Company will request and believes it will be able to obtain a waiver from the relevant lenders. Following steps are to be taken in accordance with applicable agreements if a breach of covenants would occur:

  • Each borrower shall notify the Facility Agent of any Defaults ( and the steps, if any, taken to remedy it) promptly upon becoming aware of its occurrence.
  • Promptly, upon the request by the Facility Agent, the Borrower shall supply a certificate signed by two of its directors certifying that no Default is continuing, specifying the Default and the steps, if any, being taken to remedy it.

EXMAR REPORT 2019

104

26. SHARE BASED PAYMENTS (IN THOUSANDS OF USD)

The Group established a share option plan program that entitles certain employees to register for a number of shares. The share options are only exercisable after a period of three years and for employees still in service after this three year period. Each share option entitles the holder of the option to one EXMAR share.

The fair value of services received in return for share options granted are measured by reference to the exercise price of the granted share options. The estimated fair value of the services received is measured based on a binomial lattice model. The contractual life of the option is used as an input into this model.

Plan 10

Plan 9

Plan 8

Plan 4

GRANT DATE FAIR VALUE OF SHARE OPTIONS AND ASSUMPTIONS AT INCEPTION

Number of options outstanding at year-end (*)

371,500

374,100

437,600

212,958

Fair value at grant date (in EUR)

3.21

2.32

3.36

5.64

Share price at grant date (in EUR)

9.62

10.00

11.33

16.80

Exercise price at inception (in EUR) (*)

9.62

10.54

10.54

14.64

Expected volatility (**)

40.70%

30.60%

31.40%

25.78%

Option life at inception (***)

8 years

8 years

8 years

8 years

Maturity date

2023

2022

2021

2020

Expected dividends

0.3 eur/y

0.3 eur/y

0.4 eur/y

0.5 eur/y

Risk-free interest rate

0.53%

0.62%

1.87%

4.29%

  1. The number of options granted and the exercise prices for option plans have been adjusted due to the dilutive effect of the capital increase (adjustment ratio of 0.794) of November 2009, extraordinary dividend distributions (adjustment ratio of 0.929) of May 2012 and extraordinary dividend distributions (adjustment ratio of 0.9364) of September 2013. The number of options granted and the exercise price mentioned above reflect the adjusted amounts.
  1. The expected volatility is based on the historical volatility (calculated based on the weighted average remaining life of the share options), adjusted for any expected changes to future volatility due to publicly available information.
  1. The board of directors of 23th March 2009 decided to extend the exercise period for option plans 1 - 4 by 5 years, in virtue of the decision by the Belgian Government to extend the Act of 26 March 1999 regarding stock options. At modification date additional fair value calculations were made based on the remaining and extended life time of the options.

Plan 1, 2, 3, 5, 6 and 7 have been removed from above table as the plans matured. Plan 5 matured at the end of 2016, plans 1 and 6 matured at the end of 2017, plans 2 and 7 matured at the end of 2018, plan 3 matured at the end of 2019. In respect of plan 3, zero options have been exercised during 2019 and 386,008 options have forfeited as a consequence of the maturity of the plan. No new option plans have been granted in 2018 and 2019.

2019

2018

number of

weighted

number of

weighted

average exercise

average exercise

options

options

price

price

RECONCILIATION OF OUTSTANDING SHARE OPTIONS

OUTSTANDING AT 1 JANUARY

1,796,390

12.00

2,483,178

11.14

New options granted

0

0.00

0

0.00

Changes during the year

Options exercised

0

0.00

-211,984

4.71

Options forfeited

-400,232

15.76

-474,804

10.76

OUTSTANDING AT 31 DECEMBER

1,396,158

10.92

1,796,390

12.00

EXERCISABLE AT 31 DECEMBER

1,396,158

10.92

1,796,390

12.00

The weighted average remaining contractual life of the outstanding options at the end of December 2019, amounts to 2.7 years (2018: 3.08 years).

2019

2018

SHARE OPTIONS

105

Total number of share options outstanding

1,396,158

1,796,390

Included in personnel expenses

option plan 10

0

578

0

578

27. EMPLOYEE BENEFITS (IN THOUSANDS OF USD)

LIABILITY FOR DEFINED BENEFIT PLAN AND SIMILAR LIABILITIES

The group provides pension benefits for most of its employees, either directly or through a contribution to an independent fund. The pension benefits for management staff employed before 1 January 2008 are provided under a defined benefit plan. This plan is a defined benefit plan organized as a final pay program.

For the management staff employed as from 1 January 2008, the management staff promoted to management as from 1 January 2008 and the management staff who reached the age of 60, the pension benefits are provided under a defined contribution plan. Belgian defined contribution plans are subject to the Law of April 28, 2003 on supplementary pensions (WAP). According to article 24 of this law, the employer has to guarantee a fixed minimum return of 3.25% on employer contributions and of 3.75% on employee contributions and this for contributions paid until December 31, 2015. As from January 2016, the employer has to guarantee an average minimum return of 1.75% on both employer and employee contributions (as changed by the Law of 18 December 2015).

This guaranteed minimum return generally exceeds the return that is normally guaranteed by the insurer.

Because the employer has to guarantee the statutory minimum return on these plans, not all actuarial and investment risks relating to these plans are transferred to the insurance company managing the plans. Therefore these plans do not meet the definition of defined contribution plan under IFRS and have to be classified by default as defined benefit plans. An actuarial calculation has been performed in accordance with IAS 19 based on the projected unit credit method. The contributions recognised in the profit or loss statement in respect of this defined contribution plan amount to USD 0.6 million (2018: USD 0.6 million).

The weighted average duration of the defined benefit obligation for the defined benefit plan amounts to 6 years. The weighted average duration of the defined benefit obligation for the defined contribution plan amounts to 19 years.

EMPLOYEE BENEFITS

2019

2018

2017

2016

2015

EMPLOYEE BENEFITS - DEFINED BENEFIT PLAN

Present value of funded obligations

-11,535

-11,697

-12,072

-11,297

-11,662

Fair value of the defined plan assets

8,839

7,626

7,361

7,098

7,217

PRESENT VALUE OF NET OBLIGATIONS

-2,696

-4,072

-4,711

-4,198

-4,445

EMPLOYEE BENEFITS - BELGIAN DEFINED CONTRIBUTION PLAN WITH GUARANTEED RETURN

Present value of funded obligations

Fair value of the defined plan assets

PRESENT VALUE OF NET OBLIGATIONS

TOTAL EMPLOYEE BENEFITS

-5,340

-4,703

-3,313

-3,845

6,438

4,609

3,198

3,777

1,099

-94

-115

-69

0

-1,597

-4,166

-4,826

-4,267

-4,445

EXMAR REPORT 2019

106

DEFINED BENEFIT PLAN

2019

2018

CHANGES IN LIABILITY DURING THE PERIOD

LIABILITY AS PER 1 JANUARY

11,697

12,072

Distributions

-622

-333

Actual employee's contributions

76

89

Interest cost

101

101

Current service cost

464

536

Actual taxes on contributions paid (excluding interest)

-89

-102

Actuarial gains/losses

129

-114

Translation differences

-222

-552

LIABILITY AS PER 31 DECEMBER

11,535

11,697

CHANGES OF FAIR VALUE OF PLAN ASSETS

PLAN ASSETS AS PER 1 JANUARY

7,626

7,361

Contributions

808

929

Distributions

-622

-333

Interest income

68

64

Actuarial gain/loss

145

117

Actual taxes on contributions paid (excluding interest)

-89

-102

Actual administration costs

-50

-58

Translation differences

-144

-353

Correction paragraph 115

1,097

0

PLAN ASSETS AS PER 31 DECEMBER (*)

8,839

7,626

EXPENSE RECOGNISED IN THE STATEMENT OF PROFIT OR LOSS

Current service expenses

-464

-536

Interest expense

-101

-101

Expected return on plan assets

68

64

Administration cost

-50

-58

TOTAL PENSION COST RECOGNISED IN THE INCOME STATEMENT (SEE NOTE 6)

-547

-631

EXPENSE RECOGNISED IN OTHER COMPREHENSIVE INCOME

Recognition of actuarial gains and losses

-16

-231

TOTAL PENSION COST RECOGNISED IN OTHER COMPREHENSIVE INCOME

-16

-231

MOST SIGNIFICANT ASSUMPTIONS, EXPRESSED IN WEIGHTED AVERAGES

Discount rate at 31 December

0.20%

0.90%

Expected return on assets at 31 December

0.20%

0.90%

Future salary increases (including inflation)

(salary scales)

(salary scales)

Mortality tables

Belgian (MR/FR)

Belgian (MR/FR)

Inflation

2%

2%

EXPECTED NEXT YEAR CONTRIBUTIONS

Best estimate of contributions expected to be paid during next year

835

960

DETAIL PLAN ASSETS INVESTMENTS

Shares

2%

2%

Bonds & loans

87%

90%

Property investments

7%

6%

Cash

4%

2%

(*) The plan assets do not include any shares issued by EXMAR or property occupied by EXMAR.

28. PROVISIONS (IN THOUSANDS OF USD)

2019

2018

107

PROVISIONS

Long-term provisions (*)

0

2,360

AS PER 1 JANUARY

0

2,360

New provisions

0

0

Reversal of unused provisions (*)

0

-2,360

AS PER 31 DECEMBER

0

0

Long-term provisions (*)

0

0

AS PER 31 DECEMBER

0

0

  1. Following the partial demerger from CMB, EXMAR provided for 39% of the estimated exposure relating to the PSA claim against CMB. The provision in respect of this claim has been released in the statement of profit or loss during 2018 as a consequence of a confirmation from PSA that the litigation has been terminated.

29. TRADE AND OTHER PAYABLES (IN THOUSANDS OF USD)

2019

2018

TRADE AND OTHER PAYABLES

Trade payables

24,658

24,772

Other payables

10,655

15,258

Deferred income (*)

13,368

8,153

48,681

48,183

OF WHICH FINANCIAL LIABILITIES (NOTE 30)

34,695

39,877

(*) 'Deferred income' comprises already invoiced revenue, related to the next accounting year, e.g. freight, hire,...

The decrease in the other payables compared to 2018 can be mainly explained by the repayment of the loan granted by RESLEA to EXMAR as a consequence of the sale of RESLEA to CMB. We refer in this respect to note 10 of this annual report.

Compared to previous year, deferred income shows an increase at year-end 2019. This increase is mainly triggered by the received prepayment (USD 3.3 million) from Excelerate Energy. In February 2019, Excelerate Energy, via the respective owning companies of each vessel, elected to terminate the ship management agreements for their 7 vessels managed by EXMAR Shipmanagement NV. In accordance with the contractually agreed termination clauses a notice period up to 2 years is to be considered and a cancellation fee is payable to EXMAR Shipmanagement. A transition schedule, subject to the operations of each vessel, and a payment schedule for the cancellation fee has been agreed between both parties end 2019. The first prepayment of the cancellation fee has been received at December 31, 2019 and is recognised as deferred income at year-end. The cancellation fee will be recognised in operating income in 2020 and/or 2021, depending upon the actual transition date for each vessel once all performance obligations have been satisfied by EXMAR Shipmanagement NV.

EXMAR REPORT 2019

108

30. FINANCIAL RISKS AND FINANCIAL INSTRUMENTS

During the normal course of its business, EXMAR is exposed to various risks as described in more detail in the Corporate Governance Statement. EXMAR is exposed to credit, interest, currency and liquidity risks and in order to hedge this exposure, EXMAR uses different financial instruments, mainly interest rate hedges situated within our equity accounted investees. EXMAR applies hedge accounting for all hedging relations which meet the conditions to apply hedge accounting (formal documentation and high effectiveness at inception and on an ongoing basis). Financial instruments are recognised initially at fair value. Subsequent to initial recognition, the effective portion of changes in fair value of the financial instruments qualifying for hedge accounting, is recognised in other comprehensive income. Any ineffective portion of changes in fair value and changes in fair value of financial instruments not qualifying for hedge accounting are recognised immediately in profit or loss.

The following table shows financial assets and financial liabilities measured at fair value, including their level in the fair value hierarchy.

FAIR VALUE & FAIR VALUE HIERARCHY

Level 1

Level 2

Level 3

Total

31 DECEMBER 2019

Equity securities - FVTPL

3,166

1,004

0

4,170

TOTAL FINANCIAL ASSETS CARRIED AT FAIR VALUE

3,166

1,004

0

4,170

TOTAL FINANCIAL LIABILITIES CARRIED AT FAIR VALUE

0

0

0

0

Financial instruments other than those listed above are all measured at amortized cost.

CREDIT RISK

Credit risk policy

Credit risk is monitored closely on an ongoing basis by the Group and creditworthiness controls are carried out if deemed necessary. At year-end no significant creditworthiness problems were noted. The borrowings to equity accounted investees consist of shareholder loans to our joint ventures that own or operate an LPG vessel or Offshore platform. As all vessels are operational and generate income, we do not anticipate any recoverability issues for the outstanding borrowings to equity accounted investees. The equity accounted investees for whom the share in the net assets is negative, are allocated to other components of the investor's interest in the equity accounted investee and if the negative net asset exceeds the investor's interest, a corresponding liability is recognized. The term of the shareholder loans are discussed in note 17 of this annual report.

Exposure to risk

2019

2018

CARRYING AMOUNTS OF FINANCIAL ASSETS

Borrowings to equity accounted investees

49,979

54,203

Other investments - equity instruments at FVTPL

4,170

4,022

Trade and other receivables

34,607

60,940

Restricted cash

67,270

67,270

Cash and cash equivalents

52,626

39,837

208,653

226,272

The carrying amounts of the financial assets represent the maximum credit exposure.

Impairment losses

As past due outstanding receivable balances are immaterial, no ageing analysis is disclosed. No important impairment losses have occurred and at reporting date, no significant allowances for impairment have been recorded.

INTEREST RISK

Interest risk policy

The interest-bearing loans are mainly negotiated with variable interest rates. In order to monitor this interest risk, the Group makes use of interest hedging instruments available on the market when management is of the opinion that it is favorable to do so. For the moment, no interest rate swaps

exist within our subsidiaries. On the other hand, different interest rate swaps exist within our equity accounted investees. The Group applies hedge 109 accounting when the conditions to apply hedge accounting are met. In case no hedge accounting is applied, the changes in fair value are recorded in

the statement of profit or loss.

Exposure to risk

2019

2018

EXPOSURE TO INTEREST RATE RISK

Total borrowings (*)

391,612

392,918

with fixed interest rate

46,975

19,285

with variable interest rate: gross exposure

344,637

373,633

Interest rate financial instruments (nominal amount)

0

0

NET EXPOSURE

344,637

373,633

  1. The difference of the total borrowings compared to the balance sheet amount relates to transaction costs, accrued interests payables allocated to the loan account and leasing liabilities as a consequence of the implementation of IFRS 16.

Sensitivity analysis

In case the interest rate would increase/decrease with 50 basis points, the financial statements would be impacted with the following amounts (as- suming that all other variables remain unchanged):

2019

2018

+ 50 bp

- 50 bp

+ 50 bp

- 50 bp

SENSITIVITY ANALYSIS

Interest-bearing loans (variable interest rate)

-1,723

1,723

-1,868

1,868

Interest rate swaps and cross currency rate swaps

0

0

0

0

SENSITIVITY (NET)

-1,723

1,723

-1,868

1,868

Impact in profit or loss

-1,723

1,723

-1,868

1,868

Impact in equity

0

0

0

0

TOTAL IMPACT

-1,723

1,723

-1,868

1,868

A significant portion of EXMAR's interest income is derived from borrowings to equity accounted investees with variable interest rates. Any increase/ decrease in the interest rate would result in an increase/decrease of interest income but would mainly be offset by an increase/ decrease in the interest expense recognized by the equity accounted investee for a corresponding amount. Accordingly, any increase/decrease in the variable interest rate applied on the borrowings to equity accounted investees would have no impact on the net result of the Group. Therefore, borrowings to equity accounted investees have not been included in the above sensitivity analysis.

EXMAR REPORT 2019

110

CURRENCY RISK

The Group's currency risk is historically mainly affected by the EUR/USD ratio for manning its fleet, paying salaries and all other personnel-related expenses. EXMAR Netherlands BV has completed a new unsecured bond issue of NOK 650 million in 2019. In order to monitor the currency risk, the Group uses a range of foreign currency rate hedging instruments if deemed necessary. As per 31 December 2019 and 2018, no financial instrument contracts were outstanding to cover the EUR/USD exposure or the NOK/ USD exposure.

Exposure to risk

Exposure to currency risk, based on notional amounts in thousands of foreign currency:

2019

2018

EUR

NOK

SGD

ARS

EUR

NOK

GBP

Receivables

11,489

70

0

98,173

12,576

0

0

Payables

-16,045

-107

-1,501

-19,924

-19,632

-70

-583

Interest-bearing loans

0

-650,000

0

0

-14

-912,450

0

BALANCE SHEET EXPOSURE

-4,556

-650,037

-1,501

78,249

-7,070

-912,520

-583

IN THOUSANDS OF USD

-5,118

-74,039

-1,116

1,307

-8,095

-105,031

-746

Sensitivity analysis

As per 31 December 2019 an increase in the year-end EUR/USD rate of 10% would affect the statement of profit or loss with USD -0.5 million (2018: USD -0.8 million). A 10% decrease of the EUR/USD rate would impact the profit or loss statement with the same amount (opposite sign).

The NOK/USD exposure on the outstanding NOK bond is not covered by financial instrument contracts. An increase in the year-end NOK/USD rate of 10% would affect the statement of profit or loss with USD -7.4 million (2018: USD -10.5 million). A 10% decrease of the NOK/USD rate would impact the profit or loss statement with the same amount (opposite sign).

LIQUIDITY RISK

Liquidity risk policy

The Group manages the liquidity risk in order to meet financial obligations as they fall due. The risk is managed through a continuous cash flow projection follow-up, monitoring balance sheet liquidity ratio's against internal and regulatory requirements and maintaining a diverse range of funding sources with adequate back-up facilities. Different debt covenants exist that require compliance with certain financial ratio's. As of December 31, 2019 EXMAR was compliant with all covenants. We also refer in this respect to note 25 regarding borrowings and to note 32 regarding capital commitments.

Maturity analysis of financial liabilities, borrowings to equity accounted investees and financial guarantees

Our current financial liabilities such as trade and other payables are expected to be paid within the next twelve months and are therefore not included in below tables. The contractual maturities of our financial liabilities and our borrowings to equity accounted investees, including estimated interest payments, are detailed in the tables below. The contractual maturities of our financial liabilities are based on the contractual amortization tables of the facilities. The bridge loans and the straight loans are not included in the tables below. The contractual maturities of our borrowings to equity accounted investees are based on the contractual amortization table of the loan for the Electra Offshore Ltd facility and on the cash flow projections for future years for the EXMAR LPG shareholder's loan. EXMAR has also provided guarantees to financial institutions that have provided credit facilities to her equity accounted investees. The amount that EXMAR could have to pay if the guarantee is called on, is disclosed below under financial guarantees.

Contractual cash flows

Currency

Interest rates

Maturity

Carrying amount

Total

0-12 mths

1-2 years

2-5 years

> 5 years

111

AS PER 31 DECEMBER 2018

NON-DERIVATIVE FINANCIAL LIABILITIES

Bank loans

Bank loans/other loans

Bank loans

Bond

Other bank loans

USD

libor + 3%

2019-

-19,891

-20,549

-16,105

-4,444

0

0

2020

libor + 2.4%

2023-

USD

2024-

-66,278

-76,272

-10,362

-10,390

-33,843

-21,677

2025

USD

libor + 3%

2029

-177,353

-255,251

-27,205

-27,264

-77,514

-123,268

NOK

Nibor + 8%

2019

-123,295

-130,633

-130,633

0

0

0

Libor +8.5%

EUR

-50

-60

-38

-22

0

0

-386,867

-482,765

-184,343

-42,120

-111,357

-144,945

BORROWINGS TO EQUITY

USD

54,203

72,168

7,502

6,458

37,749

20,459

ACCOUNTED INVESTEES

FINANCIAL GUARANTEES

USD

0

-318,538

-60,511

-29,875

-153,923

-74,229

Contractual cash flows

Currency

Interest rates

Maturity

Nominal amount

Total

0-12 mths

1-2 years

2-5 years

> 5 years

AS PER 31 DECEMBER 2019

NON-DERIVATIVE FINANCIAL LIABILITIES

Bank loans/other loans

Bank loans

Bond

Other loans

Lease liabilities ROU assets Lease liabilities ROU assets Lease liabilities ROU assets Lease liabilities ROU assets

BORROWINGS TO EQUITY ACCOUNTED INVESTEES

FINANCIAL GUARANTEES

libor +

2023-

USD

2024-

-98,916

-108,078

-16,454

-16,529

-58,880

-16,215

2.4%

2025

USD

libor + 3%

2019

-166,667

-212,850

-24,884

-23,681

-68,159

-96,126

NOK

Nibor +

2022

-74,029

-93,825

-7,950

-7,919

-77,956

0

8.75%

USD

10.75%

2021

-20,000

-23,303

-2,037

-21,266

0

0

USD

-18,371

-18,834

-16,742

-1,106

-986

0

EUR

-3,111

-3,248

-1,704

-844

-508

-192

SGD

-42

-44

-33

-1

-9

0

INR

-142

-168

-45

-47

-75

0

-381,277

-460,350

-69,850

-71,394

-206,573

-112,533

USD

49,979

71,546

3,435

14,690

52,846

575

USD

0

-271,678

-35,506

-149,129

-19,476

-67,567

EXMAR REPORT 2019

112

FAIR VALUES

Carrying amounts versus fair values

2019

2018

Fair value

Carrying

Fair value

Carrying

Fair value

hierarchy (*)

amount

amount

CARRYING AMOUNTS VERSUS FAIR VALUES

Borrowings to equity accounted investees

2

49,979

46,605

54,203

50,188

Other investments - equity instruments at FVTPL

1/2

4,170

4,170

4,022

4,022

Interest-bearing loans

2

-405,433

-426,676

-386,867

-396,650

-351,284

-375,901

-328,642

-342,440

(*) The financial assets and liabilities carried at fair value are analysed and a hierarchy in valuation method has been defined: level 1 being

quoted bid prices in active

markets for

identical assets or liabilities, level 2 being inputs in other than quoted prices included in level 1 that are observable for the related assets and liabilities, either directly (as prices) or indirectly (derived from prices), level 3 being inputs for the asset or liability that are not based on observable market data. The breakdown between level 1 and 2 of the equity instruments at FVTPL is shown in the beginning of this note.

BASIS FOR DETERMINING FAIR VALUES:

Equity instruments at FVTPL

quoted closing bid price at reporting date for Teekay shares and Frontera shares/ non-quoted

closing fixing price at reporting date through a public auction via Euronext for Sibelco shares

Interest-bearing loans

present value of future cash flows,

discounted

at the

market rate of interest at reporting date

Borrowings to equity accounted investees

present value of future cash flows,

discounted

at the

market rate of interest at reporting date

For certain financial assets and liabilities (trade and other receivables, cash and cash equivalents and trade and other payables) not carried at fair value, no fair value is disclosed because the carrying amounts are a reasonable approximation of the fair values.

31. LEASES (IN THOUSANDS OF USD)

We also refer to the accounting policies - section changes in accounting policies and section Lease.

LEASES AS A LESSEE

The Group leases properties, motor vehicles and IT equipment.

Property

Motor vehicles

IT equipment

Total

RIGH-OF-USE ASSETS

BALANCE AT 1 JANUARY 2019

5,529

6,901

596

13,026

BALANCE AT 31 DECEMBER 2019

3,981

1,720

410

6,111

For the full roll forward schedule in respect of the right-of-use assets including the depreciation charge for the year, we refer to note 14 of this annual report.

AMOUNTS RECOGNISED IN PROFIT OR LOSS

LEASES UNDER IFRS 16

Interest on lease liability

Expenses related to short-term leases Expenses related to leases of low-value assets

2019

113

1,392

0

0

2018

OPERATING LEASES UNDER IAS 17

Lease expense

2,178

There are no extension or termination options on the lease contracts.

For the maturity analysis in respect of related lease liabilities, we refer to note 30.

LEASES AS A LESSOR

The Group entered into long-term time charter agreements for certain assets in its fleet. In respect of lease classification, it was judged that substantially all risks and rewards remain with the Group. As a consequence, these agreements qualify as operating leases. The accounting policies applicable to the Group as a lessor are not different from those under IAS 17.

Rental income recognised by the Group during 2019 was USD 51.4 million ( 2018: 33.6 million).

The following table sets out a maturity analysis of lease payments, showing the undiscounted lease payments to be received after the reporting date. No variable lease payments are included.

2019

OPERATING LEASES UNDER IFRS 16

Less than one year

76,636

One to two years

68,783

Two to three years

68,783

Three to four years

68,783

Four to five years

68,783

More than five years

310,114

TOTAL

661,882

2018

OPERATING LEASES UNDER IAS 17

Less than one year

67,812

Between one and five years

276,079

More than five years

378,896

TOTAL

722,787

EXMAR REPORT 2019

114

32. CAPITAL COMMITMENTS (IN THOUSANDS OF USD) As per December 31, 2019 the capital commitments are as follows:

Subsidiaries (*)

Equity accounted

investees

CAPITAL COMMITMENTS

Shipping-segment

139,516

0

139,516

0

In March 2018 EXMAR announced it had contracted 2 VLGC Newbuildings with LPG as a fuel for the main engine at Hanjin Heavy Industries & Construction at Subic Bay (Philippines) to serve long-term commitments with Equinor ASA of Norway for worldwide LPG transportation.

In January 2019 Hanjin Heavy Industries & Construction at Subic Bay (Philippines) filed for rehabilitation due to financial difficulties. The construction disruptions caused thereby obliged EXMAR to cancel both Shipbuilding Contracts and invoke the Refund Guarantee from Korean Development Bank (South Korea) to recover each of the Instalments already paid. These instalments (USD 27.2 million) have been repaid during the first semester of 2019 together with an interest of 6%.

In order to fulfil its long-term commitments towards Equinor ASA of Norway, EXMAR entered into shipbuilding contracts with Jiangnan Shipyard (China) for 2 VLGC's with LPG as fuel. These contracts are also covered by a Refund Guarantee. The delivery of these vessels is expected in the second quarter of 2021.

(*) Payment schedule for the two contracted VLCC newbuilds is as follows:

Timing

In thousands of USD

2020 (**)

15,470

2021 at delivery

124,046

TOTAL

139,516

(**) paid per January 22, 2020

33. CONTINGENCIES

In September 2019, GUNVOR gave notice of a dispute under the Charter for EXMAR's FSRU unit and has commenced arbitration. This arbitration procedure could last several months. EXMAR is confident about the outcome. Meanwhile the charter remains in full force and effect and management is of the opinion that the hire paid is effectively earned.

EXMAR NV received a tax assessment of USD 1.0 million regarding the tax treatment of remunerations paid. Even though the management assessed that the tax claim is not valid, a receivable, for the same amount as the liability, has been accounted for in the consolidated financial statements per 31 December 2019.

Several of the Group's companies are involved in a number of minor legal disputes arising from their day-to-day operations. The management does not expect the outcome of these procedures to have any material effect on the Group's financial position.

34. RELATED PARTIES (IN THOUSANDS OF EUR)

We also refer in this respect to the remuneration report (for remuneration policy) and to the Board of Directors report (for information relating to conflicts of interests).

115

ULTIMATE CONTROLLING PARTY

Saverex NV, the major shareholder of EXMAR NV prepares consolidated financial statements available in Belgium. Saverex NV is controlled by Mr. Nicolas Saverys (CEO of EXMAR).

TRANSACTIONS WITH CONTROLLING SHAREHOLDER AND WITH

CONTROLLING SHAREHOLDER RELATED PARTIES

Saverbel NV and Saverex NV, both controlled by Mr. Nicolas Saverys, charged KEUR 453 to the Group (2018: KEUR 392) for general admin-

istration services provided during 2019. The outstanding amount at year end in respect of these services amounts to KEUR 20 (2018: KEUR 72).

EXMAR Shipmanagement charged KEUR 669 to Saverex for shipmanagement services in respect of the yacht "Douce France" (2018: KEUR

464). The outstanding amount at year end in respect of these services amounts to KEUR 0 (2018: KEUR 174).

During 2019, an amount of KEUR 122 was invoiced to Mr. Nicolas Saverys as a consequence of private expenses to be recharged. The relating outstanding amount per 31 December 2019 in respect of these services is KEUR 5.5. Per 31 December 2018, a provision of KEUR 397 was accounted for in this respect.

TRANSACTIONS WITH JOINT VENTURES AND ASSOCIATED COMPANIES

EXMAR provides general, accounting, corporate, site supervision and shipmanagement services to its joint ventures and associates. For these ser- vices, fees are charged based on contractual agreements between all parties involved. Below table gives an overview of the significant receivables, significant payables and the related P&L amount of services provided and received.

Receivables per

Payables per

Services

Services

provided

received

31/12/2018

31/12/2018

P&L2018

P&L2018

SERVICES (IN THOUSANDS OF EUR)

Shipmanagement services

579

89

12,336

0

General, accounting and corporate services

0

5,200

976

0

Site supervision & plan approval services

36

0

940

0

Rental services

0

0

0

1,238

Receivables per

Payables per

Services

Services

provided

received

31/12/2019

31/12/2019

P&L2019

P&L 2019

SERVICES (IN THOUSANDS OF EUR)

Shipmanagement services

1,378

37

13,625

0

General, accounting and corporate services

873

0

722

0

Site supervision & plan approval services

0

0

0

0

Rental & other services

0

0

0

1,040

EXMAR also provides borrowings to its joint ventures and associates for which an interest income is recognised in the financial statements. We refer to note 17 for an overview of these borrowings and to note 8 for the total amount of interest income.

EXMAR REPORT 2019

116

TRANSACTIONS WITH KEY MANAGEMENT PERSONNEL

Board of Directors

2019

2018

BOARD OF DIRECTORS (IN THOUSANDS OF EUR)

Chairman

100

100

Other members (individual amount)

50

50

Total paid (*)

485.6

500

  1. The total amount paid to the members of the Board of Directors represents the total payments to all non-executive and independent directors for the activities as members of the Board of Directors. The directors,who are member of the executive committee and were paid accordingly, have foregone the director's payment. No loans were granted to the members of the Board in 2019. The outstanding amount per 31 December 2019 in respect of recharged private expenses to Mr. Nicolas Saverys is KEUR 5.5. Per 31 December 2018, a provision of KEUR 397 was accounted for in this respect.

Audit committee

2019

2018

AUDIT COMMITTEE (IN THOUSANDS OF EUR)

Chairman

20

20

Other members (individual amount)

10

10

Total paid

50

50

Nomination and remuneration committee

2019

2018

NOMINATION AND REMUNERATION COMMITTEE (IN THOUSANDS OF EUR)

Chairman

10

10

Total paid

30

30

Executive Committee

The remuneration of the members of the Executive Committee is determined annually by the Board of Directors on the basis of a proposal of the Nomination and Remuneration Committee. The remuneration consists of a fixed component and a variable component. The variable component is partly determined in function of the financial result of the Group.

End of 2019 the Executive Committee, excluding the CEO, consisted of four members. All members of the Executive Committee (including the CEO) have a self-employed status. In the event of termination of their appointment, they have no contractual right to any form of severance com- pensation. Three members of the Executive Committe are represented by means of their management company. In the event of termination by EXMAR, FLX Consultancy BVBA (represented by Jonathan Raes) would be entitled to a compensation equivalent of nine month's salary, Chirmont NV (represented by Miguel De Potter) to a compensation equivalent of three month's salary and Lisann AS (represented by Jens Ismar) to a compensation equivalent of three months salary.

2019

2018

EXECUTIVE COMMITTEE, EXCLUDING CEO (IN THOUSANDS OF EUR)

Total fixed remuneration

2,493

2,366

of which for insurance and pension plan

265

333

of which value of share options

0

0

Total variable remuneration

0

625

2019

2018

CEO (IN THOUSANDS OF EUR)

117

Total fixed remuneration

998

997

of which for insurance and pension plan

175

174

of which value of share options

0

0

Total variable remuneration

0

1,100

No loans were granted to the members of the executive committee in 2019. The outstanding amount per 31 December 2019 in respect of recharged private expenses to Mr. Nicolas Saverys is KEUR 5.5. Per 31 December 2018, a provision of KEUR 397 was accounted for in this respect.

The members of the executive committee are among the beneficiaries of the 4 share option plans approved by the board of directors. The accumulated number of options (plan 4 and plan 8 to 10) allocated to the members of the executive committee are as follows:

2019

2018

NUMBER OF SHARES ALLOCATED

Nicolas Saverys

198,624

227,553

Patrick De Brabandere

134,464

156,160

Pierre Dincq

100,847

108,982

Marc Nuytemans

90,000

90,000

Miguel de Potter

90,000

90,000

David Lim

97,232

104,464

Jonathan Raes

2,500

2,500

713,667

779,659

A number of key management personnel, or their close family members, hold positions in other companies that result in them having control or joint control over these companies. None of these companies transacted with the Group during the year.

EXMAR REPORT 2019

118

35. GROUP ENTITIES

Country of

Company id

Consolidation

Ownership

incorporation

method

2019

2018

CONSOLIDATED COMPANIES

JOINT VENTURES

Estrela Ltd

Hong Kong

Equity

50.00%

50.00%

EXMAR Gas Shipping Ltd

Hong Kong

Equity

50.00%

50.00%

EXMAR LPG BVBA

Belgium

0501.532.758

Equity

50.00%

50.00%

EXMAR Shipping BVBA

Belgium

0860.978.334

Equity

50.00%

50.00%

Good Investment Ltd

Hong Kong

Equity

50.00%

50.00%

Monteriggioni Inc.

Liberia

Equity

50.00%

50.00%

Reslea NV (*)

Belgium

0435.390.141

Equity

0.00%

50.00%

Solaia Shipping Llc

Liberia

Equity

50.00%

50.00%

ASSOCIATES

Bexco NV

Belgium

0412.623.251

Equity

44.91%

44.91%

Bureau International Maritime NV (*)

Belgium

0462.574.489

Equity

0.00%

40.00%

Bureau International Maritime Congo (*)

Congo

Equity

0.00%

40.00%

Compagnie Parisienne Formation et

France

Equity

0.00%

40.00%

Logistique (*)

Electra Offshore Ltd

Hong Kong

Equity

40.00%

40.00%

Exview Hong Kong Ltd

Hong Kong

Equity

40.00%

40.00%

Marpos NV

Belgium

0460.314.389

Equity

45.00%

45.00%

Springmarine Nigeria Ltd

Nigeria

Equity

40.00%

40.00%

SUBSIDIARIES

Ahlmar Germany GmbH

Germany

Full

100.00%

60.00%

Ahlmar SA (*)

Luxembourg

Full

0.00%

60.00%

Ahlmar Ship Management NV

Belgium

0676.847.588

Full

100.00%

60.00%

Best Progress International Ltd

Hong Kong

Full

100.00%

100.00%

Croxford Ltd

Hong Kong

Full

100.00%

100.00%

DV Offshore SAS

France

Full

100.00%

100.00%

ECOS SRL

Italy

Full

60.00%

60.00%

EXMAR Argentina (**)

Argentina

Full

100.00%

0.00%

EXMAR Energy France

France

Full

100.00%

100.00%

EXMAR Energy Hong Kong Ltd

Hong Kong

Full

100.00%

100.00%

EXMAR Energy Netherlands BV

Netherlands

Full

100.00%

100.00%

EXMAR Energy Services BV

Netherlands

Full

100.00%

100.00%

EXMAR Export Netherlands

Netherlands

Full

100.00%

100.00%

EXMAR FSRU Hong Kong Ltd

Hong Kong

Full

100.00%

100.00%

EXMAR Holdings Ltd

Liberia

Full

100.00%

100.00%

EXMAR Hong Kong Ltd

Hong Kong

Full

100.00%

100.00%

EXMAR LNG Holding NV

Belgium

0891.233.327

Full

100.00%

100.00%

EXMAR LNG Investments Ltd

Liberia

Full

100.00%

100.00%

EXMAR Lux SA

Luxembourg

Full

100.00%

100.00%

EXMAR Marine NV

Belgium

0424.355.501

Full

100.00%

100.00%

EXMAR Netherlands BV

Netherlands

Full

100.00%

100.00%

EXMAR NV

Belgium

0860.409.202

Full

100.00%

100.00%

EXMAR Offshore Company

USA

Full

100.00%

100.00%

EXMAR Offshore Ltd

Bermuda

Full

100.00%

100.00%

EXMAR Offshore Services SA

Luxembourg

Full

100.00%

100.00%

EXMAR Offshore NV

Belgium

0882.213.020

Full

100.00%

100.00%

EXMAR Singapore Pte Ltd

Singapore

Full

100.00%

100.00%

EXMAR Shipmanagement NV

Belgium

0442.176.676

Full

100.00%

100.00%

EXMAR Shipmanagement India Private Ltd

India

Full

100.00%

100.00%

EXMAR Shipping USA Inc

USA

Full

100.00%

100.00%

EXMAR Small Scale LPG NL BV

Netherlands

Full

100.00%

100.00%

EXMAR Small Scale LPG HK Ltd

Hong Kong

Full

100.00%

100.00%

EXMAR Small Scale LPG BE NV

Belgium

0713.409.957

Full

100.00%

100.00%

EXMAR (UK) Shipping Company Ltd

Great-Britain

Full

100.00%

100.00%

Country of

Company id

Consolidation

Ownership

incorporation

method

2019

2018

CONSOLIDATED COMPANIES

119

EXMAR VLGC BV (**)

Belgium

0739.802.370

Full

100.00%

0.00%

EXMAR Yachting NV

Belgium

0546.818.692

Full

100.00%

100.00%

Export LNG Ltd

Hong Kong

Full

100.00%

100.00%

Farnwick Shipping Ltd (***)

Liberia

Full

0.00%

100.00%

Franship Offshore Lux SA

Luxembourg

Full

100.00%

100.00%

Fertility Development Co. Ltd

Hong Kong

Full

100.00%

100.00%

Glory Transportation Ltd

Hong Kong

Full

100.00%

100.00%

Hallsworth Marine Co.

Liberia

Full

100.00%

100.00%

Internationaal Maritiem Agentschap NV

Belgium

0404.507.915

Full

99.03%

99.03%

Laurels Carriers Inc

Liberia

Full

100.00%

100.00%

Seavie Private Ltd

India

Full

100.00%

100.00%

Talmadge Investments Ltd

British Virgin Islands

Full

100.00%

100.00%

Tecto Cyprus Ltd

Cyprus

Full

100.00%

100.00%

Tecto Luxembourg SA

Luxembourg

Full

100.00%

100.00%

Travel Plus NV

Belgium

0442.160.147

Full

100.00%

100.00%

Universal Crown Ltd

Hong Kong

Full

100.00%

100.00%

Vine Navigation Co. (***)

Liberia

Full

0.00%

100.00%

  1. These companies have been sold during the accouting year. For Reslea, we refer to note 10 for further information. (**) These companies were incorporated during the accouting year.
    (***) These companies were liquidated during the accouting year.

36. MAJOR EXCHANGE RATES USED

Closing rates

Average rates

2019

2018

2019

2018

EXCHANGE RATES

EUR

0.8902

0.8734

0.8918

0.8447

GBP

0.7573

0.7812

0.7844

0.7478

HKD

7.7865

7.8319

7.8370

7.8371

NOK

8.7803

8.6885

8.7857

8.1245

ARS

59.8700

NA

47.1800

NA

KRW

1,153.8900

NA

1,160.8300

NA

All exchange rates used are expressed with reference to the USD.

37. FEES STATUTORY AUDITOR

The worldwide audit and other fees in respect of services provided by the statutory auditor or companies or persons related to the auditors, can be detailed as follows:

2019

2018

FEES STATUTORY AUDITOR

Audit services

457

384

Audit related services

130

3

Tax services

124

89

711

476

For 2019 and 2018, the non-audit fees do not exceed the audit fees.

EXMAR REPORT 2019

120

38. SUBSEQUENT EVENTS

On February 26, 2020, Bank of China finally released the amount of 40 million USD from the debt service reserve account. The relaxation of the cash collateral follows the steady operational results of the TANGO FLNG since September 2019, under the 10-years' charter with YPF S.A. The amount of 40 million USD has been partially allocated to the repayment of the bridge loans and to cover EXMAR's capital commitments.

The vessel TEMSE which is situated within one of our equity accounted investees, has been registered as held for sale as a consequence of ongoing negotiations with a potential buyer. An impairment loss of in total USD 1.3 million (EXMAR share: USD 0.65 million) has been registered in the accounts to reflect the fair value of the vessel (USD 4.65 million for 100%).

A purchase obligation has been registered for an aircraft as a consequence of a contractual modification. In the course of 2019 an impairment loss of USD 4.7 million has been registered in the statement of profit or loss to reflect the current market value of the asset. Per 31 December 2019, the aircraft has been presented as non-current asset held for sale in the balance sheet. Per 26 February 2020, the aircraft has been purchased for an amount of USD 15.4 million.

COVID-19 is causing a high level of uncertainty in the world. Several operational measures on-shore and on-board have been taken by EXMAR to ensure the safety and wellbeing of our personnel and continuity of our business operations. The majority of our ships are currently operating under medium to long-term contracts. We are however subject to certain risks with respect to market dynamics. We are however subject to certain risks with respect to our contractual counterparties, and failure of such counterparties to meet their obligations could cause us to suffer losses or impact our liquidity position. EXMAR continues to closely monitor the situation.

SIGNIFICANT JUDGMENTS AND ESTIMATES

The significant judgements and estimates that might have a risk of causing a material adjustment to the carrying amount of assets and liabilities within the next financial year relates to:

Going Concern

Over the past months EXMAR's liquidity positions was closely monitored and evolved positively amongst other because of:

  • On February 26, 2020, Bank of China finally released the amount of 40 million USD from the debt service reserve account in respect of financing of TANGO FLNG. The relaxation of the cash collateral follows the steady operational results of the TANGO FLNG since September 2019, under the 10-years' charter with YPF S.A. The amount of 40 million USD has been partially allocated to the repayment of the bridge loans and to cover EXMAR's capital commitments.

* EXMAR has obtained and drawn under a pre-delivery financing of USD 20 million with Maritime Asset Partners in December 2019, which partially covers the instalments paid during the construction of the two VLGC under construction.

The company is of the opinion that, taking into account its available cash and cash equivalents, its undrawn committed facilities available on the date of establishing the consolidated financial statements, its project cash flows based on approved budgets and the liquidity impact of the elements listed below, it has sufficient liquidity to meets its present obligations and cover its working capital needs for a period of at least 12 months from the authorization date of this annual report.

The consolidated financial statements for the year ended 31 December 2019 have been prepared on a going concern basis. The main assumptions and uncertainties for EXMAR underpinning the going concern assessment are concentrated around following matters:

* In September 2019, GUNVOR gave notice of a dispute under the Charter and has commenced arbitration. This arbitration procedure could last several months. Meanwhile management assumes that the charter remains in full force and effect and management is of the opinion that the hire paid is effectively earned and no amounts should be repaid.

* EXMAR assumes to obtain post-delivery financing to cover the payments in April and June 2021 of the last instalments at delivery of the 2 Very Large Gas Carriers under construction at Jiangnan, amounting to USD 62 million per vessel, as well as the repayment of the pre-delivery financing at that date.

  • Considerations received from YPF with respect to the barge Tango FLNG are paid into a restricted earnings account with Bank of China, the provider of financing of the Tango FLNG. Management assumes that Bank of China will give its consent to withdraw excess cash, after payments to the debt servicing account.
  • COVID-19is causing a high level of uncertainty in the world. Several operational measures on-shore and on-board have been taken by EXMAR to ensure the safety and wellbeing of our personnel and continuity of our business operations. The majority of our ships are currently operating under medium to long-term contracts. We are however subject to certain risks with respect to market dynamics. We are however subject to certain risks with respect to our contractual counterparties, and failure of such counterparties to meet their obligations could cause us to suffer losses or impact our liquidity position. EXMAR continues to closely monitor the situation.

Covenants

In light of its ongoing operational challenges and the resulting pressure on its financial position, the Company is closely monitoring its compliance with the financial covenants. The Company has met all its financial covenants as at December 31, 2019 and the next testing date with respect to the financial position as at the end of June 2020 is in September 2020. EXMAR believes that based on forecasts for the remaining of the year, and more in particular thanks to the revenue to be generated by TFLNG and the FSRU barge, all covenants will be met as per June 2020 and December 2020.

EXMAR is continuously monitoring compliance with all applicable covenants. If a breach of covenants would occur, the Company will request and believes it will be able to obtain a waiver from the relevant lenders. See also note 25 of this report.

The unexpected delays in the release of the 40 million USD caused EXMAR to continue to pay careful attention to the liquidity of the Company. The receipt of the restricted cash under the Tango FLNG financing together with other anticipated cash flows (i.e. the charter fees from the shipping and infrastructure assets), allows EXMAR to cover its financial commitments budgeted for the year 2020.

121

Considering the assumptions and uncertainties described above, the Board is confident that management will be able to maintain sufficient liquidities to meet its commitments and therefore it has an appropriate basis for the use of the going concern assumption. In the event the above assumptions are not timely met, there is a material uncertainty whether the Company will have sufficient liquidities to fulfil its obligations of at least 12 months from the date of authorising these financial statements.

Provisions

The LNG EXCEL, owned by one of our joint ventures, was party to a lease arrangement in the UK whereby the Lessor could claim depreciation on the capital expenditures it incurred to acquire the vessel (Capital Allowances). As is typical in these leasing arrangements, tax and change of law risks are assumed by the Lessee. Our joint venture terminated this lease arrangement in August 2013. The UK tax authorities (HMRC) have made inquiries in respect of the right to receive the Capital Allowances. Based on commercial, legal and financial considerations, our position is that the allowances were validly claimed and we have informed HMRC accordingly. However, in case of a successful challenge by the UK tax authorities of the tax treatment of the lease, we could be required to compensate the Lessor for any tax amount to be reimbursed to the tax authorities. The amount held on the joint venture company's account (USD 1.7 million for EXMAR's share), is maintained to cover our obligations to the Lessor and has therefore been provisioned in the current financial period. Last year no such provision was recognised in the consolidated financial statements of EXMAR as the possible outflow could not be accurately calculated at that time.

STATEMENT ON THE TRUE AND FAIR VIEW OF THE CONSOLIDATED FINANCIAL STATEMENTS AND THE FAIR OVERVIEW OF THE MANAGEMENT REPORT

The Board of Directors, represented by Nicolas Saverys and Jalcos NV represented by its legal representative Ludwig Criel , and the Executive Committee, represented by Patrick De Brabandere (CFO) and Francis Mottrie (Deputy CEO), hereby certifies on behalf and for the account of the company, that to their knowledge,

  • the consolidated financial statements which have been prepared in accordance with International Financial Reporting Standards as adopted by the European Union, give a true and fair view of the equity, financial position and financial performance of the company, and the entities included in the consolidation as a whole,
    -the annual report on the consolidated financial statements includes a fair overview of the development and performance of the business and the position of the company, and the entities included in the consolidation, together with a description of the principal risks and uncertainties which they are exposed to.

EXMAR REPORT 2019

122

REPORT OF THE STATUTORY AUDITOR

STATUTORY AUDITOR'S REPORT TO THE SHAREHOLDERS' MEETING OF EXMAR NV FOR THE YEAR ENDED 31 DECEMBER 2019 - CONSOLIDATED FINANCIAL STATEMENTS

In the context of the statutory audit of the consolidated financial statements of EXMAR NV ("the company") and its subsidiaries (jointly "the group"), we hereby submit our statutory audit report. This report includes our report on the consolidated financial statements and the other legal and regulatory requirements. These parts should be considered as integral to the report.

We were appointed in our capacity as statutory auditor by the shareholders' meeting of 16 May 2017, in accordance with the proposal of the board of directors ("bestuursorgaan" / "organe d'administration") issued upon recommendation of the audit committee. Our mandate will expire on the date of the shareholders' meeting deliberating on the financial statements for the year ending 31 December 2019. We have performed the statutory audit of the consolidated financial statements of EXMAR NV for 3 consecutive periods.

REPORT ON THE CONSOLIDATED FINANCIAL STATEMENTS

Unqualified opinion

We have audited the consolidated financial statements of the group, which comprise the consolidated statement of financial position as at 31 December 2019, the consolidated statement of profit or loss and consolidated statement of other comprehensive income, the consolidated statement of changes in equity and the consolidated statement of cash flows for the year then ended, as well as the summary of significant accounting policies and other explanatory notes. The consolidated statement of financial position shows total assets of 909 767 (000) USD and the consolidated statement of profit or loss shows a loss for the year then ended of 13 202 (000) USD.

In our opinion, the consolidated financial statements give a true and fair view

of the group's net equity and financial position as of 31 December 2019

and of its consolidated results and its consolidated cash flow for the year then

ended, in accordance with International Financial Reporting Standards

(IFRS) as adopted by the European Union and with the legal and regulatory requirements applicable in Belgium.

Basis for the unqualified opinion

We conducted our audit in accordance with International Standards on Auditing (ISA), as applicable in Belgium. In addition, we have applied the International Standards on Auditing approved by the IAASB applicable to the current financial year, but not yet approved at national level. Our responsibilities under those standards are further described in the "Responsibilities of the statutory auditor for the audit of the consolidated financial statements" section of our report. We have complied with all ethical requirements relevant to the statutory audit of consolidated financial statements in Belgium, including those regarding independence.

We have obtained from the board of directors and the company's officials the explanations and information necessary for performing our audit. We believe that the audit evidence obtained is sufficient and appropriate to provide a basis for our opinion.

Material uncertainty relating to going concern

We draw attention to Note "Significant judgements and estimates" in the financial statements, which states that the Company is facing ongoing challenges that put pressure on its financial position. In preparing the financial statements, and as disclosed in this note, the board has considered four main assumptions and uncertainties to be successfully and timely completed to provide sufficient liquidity to the Company during a period of at least 12 months from the authorization date of the annual report. These assumptions and uncertainties form a material uncertainty that may cast significant doubt on the Company's ability to continue as a going concern when not timely realized. Our opinion is not modified in respect of this matter.

Key audit matters

Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the consolidated financial statements of the current period. These matters were addressed in the context of our audit of the consolidated financial statements as a whole and in forming our opinion thereon, and we do not provide a separate opinion on these matters.

Key audit matters

How our audit addressed the key audit matters

IMPAIRMENT OF PROPERTY, PLANT AND EQUIPMENT - VESSELS

123

• Property, plant and equipment - vessels with a carrying amount of

• We considered the process and the internal controls implemented by

576 605 (000) USD represent 63% of the consolidated balance

management and we carried out testing relating to the design and im-

sheet total as at 31 December 2019. Management's assessment of the

plementation of management's controls to assess impairment indica-

valuation of property, plant and equipment is significant to our audit

tors and perform impairment testing.

because this process is complex and requires significant management

• We validated for each cash generating unit if impairment indicators, as

judgement.

determined by IAS 36, were considered in the impairment assessment

Reference to disclosures

of management.

We refer to the consolidated financial statements, including notes to the

• We obtained the appraisal reports from external brokers which are used

consolidated financial statements: 11 - vessels.

by management to test for impairment indicators and to determe the

fair value less costs to sell ("FVLCTS") of the vessels.

• We tested management's assumptions used in the value in use ("VIU")

calculations especially the most critical assumptions such as the post

contract charter rates and discount rates. In challenging these assump-

tions, we took into account actual results, negotiated contract terms,

external data, independent market reports and market conditions.

• Furthermore, we evaluated the adequacy of the disclosures regarding

the impairments of property, plant and equipment.

Responsibilities of the board of directors for the preparation of the consolidated financial statements

The board of directors is responsible for the preparation and fair presentation of the consolidated financial statements in accordance with International Financial Reporting Standards (IFRS) as adopted by the European Union and with the legal and regulatory requirements applicable in Belgium and for such internal control as the board of directors determines is necessary to enable the preparation of consolidated financial statements that are free from material misstatement, whether due to fraud or error.

In preparing the consolidated financial statements, the board of directors is responsible for assessing the group's ability to continue as a going concern, disclosing, as applicable, matters to be considered for going concern and using the going concern basis of accounting unless the board of directors either intends to liquidate the group or to cease operations, or has no other realistic alternative but to do so.

Responsibilities of the statutory auditor for the audit of the consolidated financial statements

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

During the performance of our audit, we comply with the legal, regulatory and normative framework as applicable to the audit of consolidated financial statements in Belgium. The scope of the audit does not comprise any assurance regarding the future viability of the company nor regarding the efficiency or effectiveness demonstrated by the board of directors in the way that the company's business has been conducted or will be conducted.

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

  • identify and assess the risks of material misstatement of the consolidated financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from an error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control;
  • obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the group's internal control;
  • evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by the board of directors;
  • conclude on the appropriateness of the use of the going concern basis of accounting by the board of directors and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the group's ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our statutory auditor's report to the related disclosures in the consolidated financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our statutory auditor's report. However, future events or conditions may cause the group to cease to continue as a going concern;
  • evaluate the overall presentation, structure and content of the consolidated financial statements, and whether the consolidated financial state- ments represent the underlying transactions and events in a manner that achieves fair presentation.
  • obtain sufficient appropriate audit evidence regarding the financial information of the entities and business activities within the group to express an opinion on the consolidated financial statements. We are responsible for the direction, supervision and performance of the group audit. We remain solely responsible for our audit opinion.

We communicate with the audit committee regarding, amongst other matters, the planned scope and timing of the audit and significant audit

EXMAR REPORT 2019

124

findings, including any significant deficiencies in internal control that we identify during our audit.

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

From the matters communicated to the audit committee, we determine those matters that were of most significance in the audit of the consolidated financial statements of the current period and are therefore the key audit matters. We describe these matters in our report unless law or regulation precludes any public disclosure about the matter.

OTHER LEGAL AND REGULATORY REQUIREMENTS

Responsibilities of the board of directors

The board of directors is responsible for the preparation and the content of the directors' report on the consolidated financial statements, the statement of non-financial information attached to the directors' report on the consolidated financial statements and other matters disclosed in the annual report on the consolidated financial statements.

Responsibilities of the statutory auditor

As part of our mandate and in accordance with the Belgian standard complementary to the International Standards on Auditing (ISA) as applicable in Belgium, our responsibility is to verify, in all material respects, the director's report on the consolidated financial statements, the statement of non-financial information attached to the directors' report on the consolidated financial statements and other matters disclosed in the annual report on the consolidated financial statements, as well as to report on these matters.

Aspects regarding the directors' report on the consolidated financial statements

In our opinion, after performing the specific procedures on the directors' report on the consolidated financial statements, this report is consistent with the consolidated financial statements for that same year and has been established in accordance with the requirements of article 3:32 of the Code of companies and associations.

In the context of our statutory audit of the consolidated financial statements we are also responsible to consider, in particular based on information that we became aware of during the audit, if the directors' report on the consolidated financial statements is free of material misstatement, either by information that is incorrectly stated or otherwise misleading. In the context of the procedures performed, we are not aware of such material misstatement.

The non-financial information as required by article 3:32, § 2 of the Code of companies and associations, has been disclosed in the directors' report on the consolidated financial statements. This non-financial information has been established by the company in accordance with an internationally recognised framework. In accordance with article 3:80 § 1, 5° of the Code of companies and associations we do not express any opinion on the question whether this non-financial information has been established in accordance with this internationally recognised framework.

Statements regarding independence

  • Our audit firm and our network have not performed any prohibited services and our audit firm has remained independent from the group during the performance of our mandate.

• The fees for the additional non-audit services compatible with the statutory audit, as defined in article 3:65 of the Code of companies and associ- ations, have been properly disclosed and disaggregated in the notes to the consolidated financial statements.

Other statements

This report is consistent with our additional report to the audit committee referred to in article 11 of Regulation (EU) No 537/2014.

Zaventem, 6 April 2020

The statutory auditor

Deloitte Bedrijfsrevisoren/Réviseurs d'Entreprises CVBA/SCRL

Represented by Gert Vanhees

125

EXMAR REPORT 2019

126

STATUTORY ACCOUNTS

127

The statutory accounts of EXMAR NV are disclosed hereafter in a summarised version. The full version will be filed with the National Bank of Belgium. The full version is available on the Company's website (www.exmar.be) and a copy can be obtained free of charge on request. An unqualified audit opinion has been expressed by the statutory auditor.

BALANCE SHEET

31/12/2019

31/12/2018

(IN THOUSANDS OF USD)

ASSETS

FIXED ASSETS

703,235

619,568

(In)-tangible assets

414

394

Financial assets

702,821

619,174

CURRENT ASSETS

120,100

117,273

Amounts receivable within one year

70,344

79,250

Investments

17,501

19,587

Cash and cash equivalents

31,965

18,201

Accrued income and deferred charges

290

235

TOTAL ASSETS

823,335

736,841

EQUITY AND LIABILITIES

EQUITY

Capital

Share premium

Reserves

Accumulated profits

PROVISIONS AND DEFERRED TAXES Provisions and deferred taxes

LIABILITIES

Amounts payable within one year

TOTAL EQUITY AND LIABILITIES

STATEMENT OF PROFIT OR LOSS

(IN THOUSANDS OF USD)

STATEMENT OF PROFIT OR LOSS

Operating income

Operating expenses

OPERATING RESULT

Financial income

Financial expenses

RESULT FOR THE YEAR BEFORE TAX Income tax

RESULT FOR THE YEAR

APPROPRIATION OF RESULT

Result to be appropriated

Transfer from/(to) capital and reserves Result to be carried forward Distribution of result

704,115 659,230

88,812 88,812

209,902 209,902

84,103 86,338

321,298 274,178

  1. 337
  1. 337

118,883 77,274

118,883 77,274

823,335 736,841

01/01/2019 01/01/2018

-31/12/2019-31/12/2018

3,538 3,846

-9,075-9,551

-5,537-5,705

58,350 24,788

-5,816-7,606

46,997 11,477

-2,112-1,297

44,885 10,180

319,063 270,516

2,235 3,662

-321,298-274,178

00

EXMAR REPORT 2019

128

#05

GLOSSARY

EXMAR REPORT 2019

130

GLOSSARY

BWTS

Ballast water treatment system

cbm

Cubic meters (m³)

CEO

Chief Executive Officer

CFO

Chief Financial Officer

CO2

Carbon dioxide

COO

Chief Operating Officer

DVO

DV Offshore

EBIT

Earnings before interest and taxes

EBITDA

Earnings before interest, taxes, depreciation, and amortization

EE

Excelerate Energy

EEDI

Energy Efficiency

Design Index

EEOI

Energy Efficiency

Operational Indicator

EOC

EXMAR Offshore Company

ESI

Environment Ship Index

ESM

EXMAR Ship Management

FID

Final Investment Decision

FLNG

Floating Liquefaction of Natural Gas

FPS

Floating Production System

FPSO

Floating Production Storage and Offloading-unit

FSO

Floating Storage and Offloading

FSU

Floating Storage Unit

FSRU

Floating Storage and Regasification Unit

GDPR

General Data Protection Regulation

GHG

Greenhouse gas

HFO

Heavy Fuel Oil

HMPE

High Modulus Polyethylene

HR

Human Resources

HSEQ

Health, Safety, Environment and Quality

HSEEQ

Health, Safety, Environmental Energy and Quality

HyMethShip

Hydrogen Methanol Ship

IAS

International Accounting Standards

IFRS

International Financial Reporting Standards

ISM

International Safety Management

ISO

International Organization for Standardization

JV

Joint venture

k

1,000

KPI

Key Performance Indicators

LGC

Large Gas Carrier

LNG

Liquefied

Natural Gas

LNG/C

Liquefied

Natural Gas Carrier

LNGRV

Liquefied

Natural Gas Regasification Vessel

LPG

Liquefied

Petroleum Gas

LTI

Lost Time Injurie

LTIF

Lost Time Injury Frequency

Cubic metres

MGC

Midsize Gas Carrier

131

Midsize

20,000 m³ to 40,000 m³

Mio

Million

MMSCFD

Million standard cubic feet per day

MT

Metric tons

MTPA

Million tons per annum

NH³

Ammonia

NM

Nautical Mile

O&M

Operations & Maintenance

OB

Order book

OCIMF

Oil Companies Marine International Forum

OPEX

Operating Expenditures

Petchems

Petrochemicals

PPE

Personal Protective Equipment

PPM

Parts per million

R&D

Research & Development

REBITDA

Recurring earnings before interests, taxes, depreciations and amortizations

Semi-ref.

Semi-refrigerated LPG carrier

SMS

Safety Management Systems

STS

Ship-to-ship

TC

Time charter

TCE

Time charter equivalent

TMSA

Tanker Manager Self-Assesment

TRCF

Total Recordable Cases Frequency

TTSL

Taking The SAFETY LEAD

U/C

Under Construction

US

United States

USA

United States of America

USCG

United States Coast Guard

USD

United States Dollar

VCM

Vinyl Chloride Monomer

VLGC

Very Large Gas Carrier

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Exmar NV published this content on 22 April 2020 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 22 April 2020 10:12:10 UTC