MODEC, Inc.
Consolidated Financial Statements
Years ended December 31, 2023 and 2022

Independent auditor’s report
To the Board of Directors of MODEC, Inc.:

Report on the Audit of the Consolidated Financial Statements
OpinionWe have audited the accompanying consolidated financial statements of MODEC, Inc. (“theCompany”) and its consolidated subsidiaries (collectively referred to as “the Group”), which comprisethe consolidated statement of financial position as at December 31, 2023, and the consolidated
statements of profit or loss, comprehensive income, changes in net assets and cash flows for the year
then ended, and notes, comprising material accounting policies and other explanatory information.
In our opinion, the accompanying consolidated financial statements present fairly, in all material
respects, the consolidated financial position of the Group as at December 31, 2023, and its consolidated
financial performance and its consolidated cash flows for the year then ended in accordance with IFRS
Accounting Standards as issued by the International Accounting Standards Board (IFRS AccountingStandards).
Basis for Opinion
We conducted our audit in accordance with auditing standards generally accepted in Japan. Our
responsibilities under those standards are further described in the Auditor’s Responsibilities for the
Audit of the Consolidated Financial Statements section of our report. We are independent of the Groupin accordance with the ethical requirements that are relevant to our audit of the consolidated financial
statements in Japan, and we have fulfilled our other ethical responsibilities in accordance with theserequirements. We believe that the audit evidence we have obtained is sufficient and appropriate toprovide a basis for our opinion.
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 thecontext 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.
Reasonableness of the estimated total costs used in recognizing revenue from construction
contracts related to the floating production, storage and offloading system
The key audit matter

How the matter was addressed in our audit

MODEC, Inc. and its consolidated
subsidiaries provide construction services
related to the floating production, storage andWe performed the audit procedures to assess thereasonableness of the estimated total costs used inrecognizing revenue from construction contracts

offloading system (hereinafter referred to as“FPSO”). As described in Note 23,“Revenue” to the consolidated financial
statements, the revenues related to these
construction contracts amounted to US dollar
2,488,995 thousand, representing
approximately 69.6% of total revenue in the
consolidated financial statements.
As described in Note 3, “Material accounting
policies, (14) Revenue from contracts withcustomers” to the consolidated financial
statements, MODEC, Inc. and its
consolidated subsidiaries recognize revenue
from a long-term construction contract overtime as the related performance obligations
are satisfied by transferring control overgoods promised in the contract to a customer.
For performance obligations satisfied overtime, the estimated progress is calculated as apercentage of accumulated costs incurred todate against the estimated total costs (input
method).
Contracts for construction services related to
the FPSOs that MODEC, Inc. and its
consolidated subsidiaries provide areindividually significant in contract amounts
and estimated total costs, and each project
has detailed terms and conditions andspecifications, in addition to a long
construction period. Therefore, thepreparation of the project budget, which
provided the basis for estimating total costsof each construction contract related to the
FPSO, involved a high degree of uncertainty.
Specifically, management’s determination on
the following key assumptions in preparing
the project budget primarily related to thework performed by the consolidated
subsidiaries to which the construction work
was assigned had a significant effect on theestimated total costs at the end of the fiscalyear;

whether all work necessary to complete
the construction contracts wereidentified and the estimated costs were
included in the project budget; andwhether any changes in work, such as

related to the FPSOs. These procedures included
requesting the component auditors of the relevant
consolidated subsidiaries, the assignees of theconstruction work, to perform an audit and thenevaluating the reports of the component auditors toconclude on whether sufficient and appropriate audit
evidence was obtained from the procedures. The
primary procedures performed by us and thecomponent auditors of the relevant consolidated
subsidiaries include the following:(1) Internal control testing
Test of the design and operating effectiveness ofcertain of MODEC, Inc.’s internal controls relevant to
the process of preparing a project budget, focusing on
the controls related to estimating a construction period,
the controls to update the estimated construction period
and the related costs in a timely manner in accordancewith changes in circumstances that occurred after thestart of construction, and the controls to reflect the riskthat these estimates may change within the projectbudget.
(2) Assessment of the reasonableness of the estimatedtotal costs
The procedures including the following to assess
whether key assumptions adopted in preparing the
project budget for the construction contract, whichwere used as the basis for estimating the total costs ofeach construction contract, were appropriate;

comparison of the work necessary to complete theconstruction contracts with the contents of theschedule of accumulated costs within the projectbudget;

assessment as to whether there were any special
terms and conditions or specifications requiringconsideration for proper estimation of total costsin the contracts with customers or key local
subcontractors;evaluation of the accuracy of the project budget bycomparing the past project budgets forconstruction contracts with actual costs
subsequently incurred and analyzing the variance
between the two, and assessment as to whether thecauses of these variances were considered in
preparation or updating of the latest projectbudget;

inspection of the project management materials forspecifications and the status ofcompliance with contract terms andconditions, due to changes incircumstances that occurred subsequent
to the start of construction needed to bereflected within the project budget in atimely and appropriate manner.
We, therefore, determined that ourassessment of the reasonableness of theestimated total costs used in recognizing
revenue from construction contracts related
to the FPSOs was one of the most significant
matters in our audit of the consolidated
financial statements for the current fiscal
year, and accordingly, a key audit matter.

the construction contracts and comparison of the
progress calculated based on the performance ofthe construction work confirmed by the customer
with the progress measured by using the input
method; andinquiry of the project manager and other relevant
personnel, including the head of accounting, about
any changes in circumstances that occurred after
the start of construction and their judgment onwhether the project budget needed updating forthe changes, and inspection of relevant materials
supporting their responses to the inquiry, such as
the contracts and the minutes of negotiations withcustomers, key local subcontractors or otherrelevant parties.

Reasonableness of the estimate of provisions for onerous contracts related to the operation
services of the floating production, storage and offloading system
The key audit matter

How the matter was addressed in our audit

MODEC, Inc. and its consolidated
subsidiaries provide operation services
related to the floating production, storage andoffloading system (hereinafter referred to as“FPSO”). As described in Note 18,“Provisions” to the consolidated financial
statements, provisions for onerous contracts
amounted to US dollar 5,161 thousand at theend of the current fiscal year, which were all
related to the contracts for the operation
services of the FSPO.

We performed the audit procedures to assess thereasonableness of the estimate of provisions foronerous contracts related to the operation services of
the FSPO. These procedures included requesting thecomponent auditors of the relevant consolidated
subsidiaries, the responsible parties to the contracts, toperform an audit and then evaluating the reports of thecomponent auditors to conclude on whether sufficientand appropriate audit evidence was obtained from theprocedures. The primary procedures performed by us
and the component auditors of the relevant
consolidated subsidiaries include the following:

As described in Note 3, “Material accounting
policies, (12) Provisions” to the consolidated
financial statements, MODEC, Inc. and its
consolidated subsidiaries recognize aprovision for onerous contracts when the
expected benefits to be derived from acontract are less than the unavoidable costsof meeting the obligations under the contract.
The provisions are measured as the excess ofthe expected costs over the expected benefits
from continuing with the contract.
The estimates of the expected benefits to be
derived from the contracts for the operation
services of the FSPO and the unavoidable
costs of meeting the obligations under the(1) Internal control testing
Test of the design and operating effectiveness ofcertain of MODEC, Inc.’s internal controls relevant to
the process of preparing project budgets, focusing oncontrols related to the future forecasts of the FPSOs’
operating status, which were used as the basis for
estimating the future costs expected to be unavoidable
and the expected benefits to be derived from thecontract.
(2) Assessment of the reasonableness of the estimate
of provisions for onerous contracts
The procedures including the following to assess
whether key assumptions adopted in preparing thecontract, which are estimated based on the
project budget prepared for each FPSO in thescope of the service contract, involved
uncertainty due to the long-term nature of thecontract period. In addition, especially forcontracts on the FPSOs which wereexperiencing troubles with the operation, theestimate of future repair costs to address any
troubles besides the costs of the operation
services contract incurred on a constant basis
involved a high degree of uncertainty.
Specifically, management’s determination on
the following key assumptions in preparing
the project budget had a significant effect on
the estimate of provisions for onerous
contracts at the end of the fiscal year;the scope of the unavoidable costs ofmeeting the obligations under theoperation services contract, including
future repair costs; andproject budgets were appropriate;inquiry of the project manager and other relevant
personnel, including the head of accounting, about
key assumptions in preparing the project budgets
related to the contracts for the operation servicesof the FSPO, and inspection of relevant materials
supporting their responses to the inquiry, such as
the contracts and the minutes of negotiations withcustomers or key local subcontractors;comparison of the work necessary to perform theobligations under the contracts with customers for
operation services of the FSPO with the contentsof the schedule of accumulated costs within the
project budget;

assessment as to whether there were any special
terms and conditions or specifications requiringconsideration for proper estimation of provisions
in the contracts with customers or key local
subcontractors;evaluation of the accuracy of the project budget bycomparing the past project budgets for contracts
for the operation services of the FSPO with actual
costs subsequently incurred and analyzing thevariance between the two, and assessment as towhether the causes of these variances wereconsidered in preparation of the latest projectbudget; and

comparison of the future forecasts of the FPSOs’
operating status with the actual operating status in
the past and the operating trend for the current
fiscal year during which repair work was
implemented, including the periods before andafter the repair.

the future forecasts of the FPSOs’
operating status, which affected theestimation of the expected benefits to be
derived from the contract.
We, therefore, determined that ourassessment of the reasonableness of theestimate of provisions for onerous contracts
related to the operation services of the FPSO
was one of the most significant matters in our
audit of the consolidated financial statements
for the current fiscal year, and accordingly, a
key audit matter.
Other Information

The other information comprises the information included in the disclosure documents that contain or
accompany the audited consolidated financial statements, but does not include the consolidated
financial statements and our auditor’s report thereon.
We do not perform any work on the other information as we determine such information does not exist.
Responsibilities of Management and Corporate Auditors and the Board of Corporate Auditors
for the Consolidated Financial Statements
Management is responsible for the preparation and fair presentation of the consolidated financial
statements in accordance with IFRS Accounting Standards, and for such internal control as
management determines is necessary to enable the preparation of consolidated financial statements thatare free from material misstatement, whether due to fraud or error.

In preparing the consolidated financial statements, management is responsible for assessing the Group’s
ability to continue as a going concern, disclosing, as applicable, matters related to going concern inaccordance with IFRS Accounting Standards and using the going concern basis of accounting unlessmanagement either intends to liquidate the Group or to cease operations, or has no realistic alternative
but to do so.
Corporate auditors and the board of corporate auditors are responsible for overseeing the directors’
performance of their duties with regard to the design, implementation and maintenance of the Group’s
financial reporting process.
Auditor’s Responsibilities 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 misstatement, whether due to fraud or error, and to issue an auditor’sreport that includes our opinion. Reasonable assurance is a high level of assurance, but is not aguarantee that an audit conducted in accordance with auditing standards generally accepted in Japan
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 toinfluence the economic decisions of users taken on the basis of these consolidated financial statements.
As part of our audit in accordance with auditing standards generally accepted in Japan, 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, andobtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The riskof not detecting a material misstatement resulting from fraud is higher than for one resulting fromerror, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or theoverride of internal control.

Obtain an understanding of internal control relevant to the audit in order to design audit proceduresthat are appropriate in the circumstances, while the objective of the audit is not to express 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 management.

Conclude on the appropriateness of management’s use of the going concern basis of accounting
and based on the audit evidence obtained, whether a material uncertainty exists related to events orconditions 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 auditor’sreport 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 auditor’s report. However, future events or conditions may cause the Group tocease to continue as a going concern.



Evaluate whether the presentation and disclosures in the consolidated financial statements are inaccordance with IFRS Accounting Standards, the overall presentation, structure and content of theconsolidated financial statements, including the disclosures, and whether the consolidated financial
statements represent the underlying transactions and events in a manner that achieves fairpresentation.

Obtain sufficient appropriate audit evidence regarding the financial information of the entities orbusiness 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 remainsolely responsible for our audit opinion.

We communicate with corporate auditors and the board of corporate auditors regarding, among othermatters, the planned scope and timing of the audit, significant audit findings, including any significant
deficiencies in internal control that we identify during our audit.
We also provide corporate auditors and the board of corporate auditors with a statement that we havecomplied with relevant ethical requirements regarding independence, and communicate with them all
relationships and other matters that may reasonably be thought to bear on our independence, and whereapplicable, actions taken to eliminate threats or safeguards applied.
From the matters communicated with corporate auditors and the board of corporate auditors, 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 auditor’s report unless law or regulation precludes public disclosure about the matter or when, in
extremely rare circumstances, we determine that a matter should not be communicated in our reportbecause the adverse consequences of doing so would reasonably be expected to outweigh the public
interest benefits of such communication.
Fee-related Information
Fees paid or payable to our firm and to other firms within the same network as our firm for audit andnon-audit services provided to the Company and its subsidiaries for the current year are US dollar
3,300 thousand and US dollar 239 thousand, respectively.
Interest required to be disclosed by the Certified Public Accountants Act of Japan
We do not have any interest in the Group which is required to be disclosed pursuant to the provisions of
the Certified Public Accountants Act of Japan.

Makoto Yamada
Designated Engagement Partner
Certified Public Accountant
Fumitaka Otani
Designated Engagement Partner
Certified Public Accountant
KPMG AZSA LLC
Tokyo Office, Japan
March 27, 2024

Notes to the Reader of Independent Auditor’s Report:
This is a copy of the Independent Auditor’s Report and the original copies are kept separately by theCompany and KPMG AZSA LLC.

【Consolidated financial statements】
1. Consolidated statement of financial positionin thousands of US dollars
Notes

December 31, 2023

December 31, 2022

AssetsCurrent assets
Cash and cash equivalents

5492,625

1,013,912

Trade and other receivables

6, 23, 31

478,083

592,163

Contract assets

23

257,328

185,585

Loans receivable

11, 30, 31－

27,370

Other financial assets

12, 30, 32

37,28857,806

Other current assets

13, 23

141,820

158,712

1,407,147

2,035,550

4, 7, 964,31450,0424, 8

70,21349,483

Investments accounted for using
equity method

4, 10, 31

1,114,066

1,374,188

Loans receivable

11, 30, 31

365,032

348,636

12, 3013,603

13,16327

65,016

16,4894, 13, 23

36,819367

1,729,066

1,852,371

3,136,213

3,887,921

Total current assets
Non-current assets
Property, plant and equipment
Intangible assets

Other financial assets
Deferred tax assets
Other non-current assets
Total non-current assets
Total assets-1-

in thousands of US dollars
Notes

December 31, 2022

December 31, 2023

Liabilities and equity
Liabilities
Current liabilities
Trade and other payables

14, 30, 31

921,708

1,189,228

23

499,383

590,278

15, 30, 32

19,084

57,79938,38970,147

18

109,704

126,268

Other financial liabilities

19, 30, 32

99,219150,826

Other current liabilities

20

76,95459,551

1,764,443

2,244,101

374,293

512,954

Contract liabilities
Borrowings
Income taxes payable
Provisions

Total current liabilities
Non-current liabilities
Bonds and borrowings

15, 30, 32

Deferred tax liabilities

27

1,283

－

Defined benefit liability

16

43,95945,091

Provisions

18

56,67524,28819, 30, 32

37,127

19,399Other financial liabilities
Other non-current liabilities

20

Total non-current liabilities
Total liabilities

17,3106,794

530,649

608,5292,295,092

2,852,630

EquityShare capital

21

282,292

190,495

Capital surplus

21, 31

280,686

187,112Retained earnings

21

131,004

522,260

Treasury shares

21

Other components of equity
Equity attributable to owners of parent(1,092)(1,092)

118,748

94,042

811,640

992,817

Non-controlling interests

29,48142,473

Total equity

841,121

1,035,291

3,136,213

3,887,921

Total liabilities and equity

-2-

2.

Consolidated statement of profit or loss
in thousands of US dollars
2022

Notes
Revenue
Cost of sales

2,739,762

3,574,924(2,671,503)(3,324,543)

68,259250,380

7, 8, 16, 17, 24, 31(153,101)(188,538)

10, 30126,845

128,677

25

33,3842,513

4, 23, 31
7, 8, 16, 17, 24, 31

Gross profit
Selling, general and administrative
expenses
Share of profit of investments accounted
for using equity method
Other income

2023

Other expenses

(57)

(94)

Operating profit

75,330

192,938

Finance income

26, 3064,38990,834

Finance costs

26, 30(84,884)(69,104)

54,835

214,668(13,691)(88,712)

41,143125,955

Owners of parent

37,377

96,536

Non-controlling interests

3,766

29,419Profit for the period

41,143125,955

Profit before tax
Income tax expense

27

Profit for the period
Profit attributable toin US dollars
Earnings per share
Basic earnings per share

28

Diluted earnings per share

-3-

0.66

1.55

0.66

1.55

3.

Consolidated statement of comprehensive incomein thousands of US dollars
2022

Notes
Profit for the period2023
41,143125,955

8,378

1,321

8,378

1,321

29

6,962

5,223

29

212

(5,597)

226,675(22,766)

233,850(23,140)

242,228(21,818)

283,372

104,136

278,925

73,394

4,447

30,741

283,372

104,136

Other comprehensive Income
Items that will not be reclassified
subsequently to profit or loss
Remeasurements of defined benefit
liability
Total items that will not be reclassified
subsequently to profit or loss
Items that may be reclassified
subsequently to profit or loss
Effective portion of cash flow hedges
Exchange differences on translation offoreign operations
Share of other comprehensive incomeof investments accounted for using
equity method
Total items that may be reclassified
subsequently to profit or loss
Total other comprehensive income, net oftax
Total comprehensive income for theperiod16, 2910, 29Total comprehensive income attributable to
Owners of parent
Non-controlling interests
Total comprehensive income-4-4. Consolidated statement of changes in equity
2022
in thousands of US dollars
Equity attributable to owners of parent
Notes

At January 1, 2022
Profit for the period
Other comprehensive income

16, 29Total comprehensive income for theperiodCapital contribution to newly
established subsidiary
Dividends to non-controllingshareholder
Share-based payment transactions

17, 21, 31

Transfer from other components ofequity to retained earnings
Total transactions with owners
At December 31, 2022

Capitalsurplus

Share capital

Retainedearnings

Other components of equity

TreasurysharesRemeasurementsof defined benefit
liability

Effective
portion of cash
flow hedges

282,292

280,71185,957(1,291)－(90,866)－－

37,377

－

－

－

－

－

－

－

7,669

233,656－－

37,377－

7,669

233,656

－

－

－

－

－

－

－

－

－

－

－

－

－

(24)

－

198

－

－

－

－

7,669

－

(7,669)

－

－

(24)

7,669

198

(7,669)－282,292

280,686

131,004(1,092)－

142,790

Equity attributable to owners of parent
Other components of equity
Notes

At January 1, 2022
Profit for the period
Other comprehensive income

16, 29Total comprehensive income for theperiodCapital contribution to newly
established subsidiary
Dividends to non-controllingshareholder
Share-based payment transactions
Transfer from other components ofequity to retained earnings
Total transactions with owners
At December 31, 2022

17, 21, 31

Total equity
Non-controlling
attributable tointerests
owners ofparentExchangedifferences ontranslation offoreign
operations

Total othercomponents ofequity(24,262)(115,129)532,541

22,218554,759－－

37,377

3,766

41,143

221

241,547

241,547681

242,228221

241,547

278,925

4,447

283,372

－

－

－

3,500

3,500

－

－

－

(684)

(684)

－

－

173

－

173

－

(7,669)－－－Total equity－(7,669)

173

2,815

2,989

(24,041)

118,748

811,640

29,481

841,121-5-

2023
in thousands of US dollars
Equity attributable to owners of parent
Notes

At January 1, 2023
Profit for the period
Other comprehensive income

16, 29Total comprehensive income for theperiodOther components of equity
Capitalsurplus

Share capital

Retainedearnings

TreasurysharesRemeasurements Effective portionof defined benefitof cash flow
liability
hedges282,292

280,686

131,004(1,092)－

142,790－－

96,536

－

－

－

－

－

－

－

1,565

(19,237)－－

96,536－

1,565(19,237)

Issuance of new shares

31

53,572

53,976－－－－

Reduction of share capital

31(145,370)

145,370

－

－

－

－

31

－

(293,154)

293,154

－

－

－

－

－

－

－

－

－

－

232

－

－

－

－

－

－

1,565

－

(1,565)－

Transfer from capital surplus toretained earnings
Dividends to non-controllingshareholder
Share-based payment transactions

17, 21, 31

Transfer from other components ofequity to retained earnings
Total transactions with owners(91,797)(93,573)294,719－(1,565)－At December 31, 2023

190,495

187,112522,260(1,092)－

123,552

Equity attributable to owners of parent
Other components of equity
Notes

At January 1, 2023
Profit for the period
Other comprehensive income

16, 29Total comprehensive income for theperiodExchangedifferences ontranslation offoreign
operations

Total othercomponents ofequity(24,041)

118,748

Total equity
Non-controlling
attributable tointerests
owners ofparent811,640

29,481

Total equity

841,121－－96,536

29,419125,955(5,469)(23,141)(23,141)

1,322(21,818)(5,469)(23,141)

73,39430,741

104,136

Issuance of new shares

31

－

－

107,549－

107,549

Reduction of share capital

31

－

－

－

－

－

31

－

－

－

－

－

－

－

－

(17,750)(17,750)

－

－

232

－

232

－

(1,565)

－

－

－

－

(1,565)

107,782(17,750)

90,032(29,510)

94,042992,81742,473

1,035,291

Transfer from capital surplus toretained earnings
Dividends to non-controllingshareholder
Share-based payment transactions
Transfer from other components ofequity to retained earnings
Total transactions with owners
At December 31, 2023

17, 21, 31

-6-

5.

Consolidated statement of cash flows
in thousands of US dollars
Notes

2023

2022

Cash flows from operating activities
Profit before tax

54,835

214,668

39,606

40,690(152,571)(16,938)(10,741)

1,130(126,845)(128,677)

Finance income and finance costs

20,495(21,730)

Decrease (increase) in trade and other receivables(91,633)(104,945)

Decrease (increase) in contract assets

447,452

71,743

7,497(13,738)(437,736)

260,298

Depreciation and amortization

7, 8

Increase (decrease) in provisions
Increase (decrease) in defined benefit liability

16

Share of profit of investments accounted for using equity
methodDecrease (increase) in other current assets
Increase (decrease) in trade and other payables
Increase (decrease) in contract liabilities

89,66077,921

Increase (decrease) in other current liabilities(23,110)(21,976)

Other(66,469)

24,117

Subtotal(249,559)

382,561Interest received

39,631

44,258Dividends received

46,22996,712

Interest paid

(16,898)(22,310)

Income taxes paid

(28,298)(15,335)

Net cash provided by (used in) operating activities(208,895)

485,886

Net decrease (increase) in short-term loans receivable(8,295)－

Payments for long-term loans receivable(24,103)－

Collection of long-term loans receivable

60,604

20,5277, 8(6,883)(7,469)31(96,383)(229,821)

Proceeds from liquidation of investments accounted for using
equity method

8,464

6,221

Proceeds from capital reduction of investments accounted forusing equity method

9,749

－

(56,846)(210,542)

Cash flows from investing activities

Purchase of property, plant and equipment andintangible assets
Purchase of investments accounted for using equity
methodNet cash used in investing activities
Cash flows from financing activities
Proceeds from issuance of bonds

30－

195,518

Repayments of long-term borrowings

30(31,620)(19,084)(21,463)(25,274)－

107,549

3,500－

Payments of lease liabilities
Proceeds from issuance of new shares
Capital contribution to newly established subsidiary from
non-controlling shareholder
Dividends paid

30

(19)

(10)

Dividends paid to non-controlling shareholder

22

(684)

(17,750)

Receipt of government grants

707

197

Proceeds from settlement of derivative contracts

568－(49,013)241,146(2,750)4,795

Net cash provided by (used in) financing activities
Effect of changes in exchange rates on cash and cash
equivalents
Net increase (decrease) in cash and cash equivalents(317,505)

521,286

Cash and cash equivalents at beginning of year

5810,131492,625

Cash and cash equivalents at end of year5492,625

1,013,912

-7-

1.

【Notes to the consolidated financial statements】
Reporting entity
MODEC, Inc. (the Company) is domiciled and incorporated in Japan. These consolidated financial statements comprise
the Company and its subsidiaries (together referred to as the Group). The Group is primarily involved in theengineering, procurement, construction and installation of floating, production, storage and offloading systems for oil
and gas production such as FPSO, FSO and TLP as well as related sales, leasing, charter and operation services.

2.

Basis of preparation(1)

Statement of compliance with IFRSThe consolidated financial statements of the Group have been prepared in accordance with IFRS in compliance with
Article 93 of Regulation on Terminology, Forms, and Preparation Methods of Consolidated Financial Statements inJapan since the Group satisfies all requirements of "specified company complying with designated international
accounting standards" in Article 1-2 of Regulation.
The consolidated financial statements were authorized for issue by Hirohiko Miyata, President and CEO, and Ryo
Suzuki, Group CFO, on March 27, 2024.

(2)

Basis of measurement
As noted in Note 3. Material accounting policies the consolidated financial statements have been prepared on thehistorical cost basis except for financial instruments, defined benefit liability and others, which are measured at fairvalue.

(3)

Functional and presentation currency
The consolidated financial statements are presented in the Company’s functional currency, United States (US) dollars.
Financial information presented has been rounded down to the nearest US thousand dollars.

(4)

Use of judgements and estimates
In preparing these consolidated financial statements, management has made significant accounting judgements,
estimates and assumptions that affect the application of the Group’s accounting policies and the reported amountsof assets, liabilities, revenue and expenses as well as the disclosures of contingent liabilities at the end of reporting
period. Actual results may differ from these estimates. Estimates and underlying assumptions are reviewed on an
ongoing basis. Revisions to estimates are recognized in the period in which the estimates are revised and in any
future periods affected.
Information about judgements, estimates and assumptions made in applying accounting policies that havesignificant effects on the amounts recognized in the Group’s consolidated financial statements is as follows:•

Scope of consolidation – Note 3. Material accounting policies (1) Basis of consolidation•

Revenue recognition – Note 3. Material accounting policies (14) Revenue from contracts with customers

Judgements, estimates and assumptions that may have significant effects on the Group’s consolidated financial
statements are as follows:•

Revenue recognition – Note 3. Material accounting policies (14) Revenue from contracts with customers•

Measurement of provisions – Note 3. Material accounting policies (12) Provisions•

Recognition of deferred tax assets – Note 3. Material accounting policies (17) Income tax•

Fair values of financial instruments – Note 3. Material accounting policies (4) Financial instruments•

Recoverable amounts in the impairment test of non-financial assets – Note 3. Material accounting policies(9) Impairment of non-financial assets•

Actuarial assumptions for the measurement of defined benefit liability – Note 3. Material accounting policies(10) Employee benefits•

Assessment of lease and lease term – Note 3. Material accounting policies (8) Leases•

Impacts of COVID-19
COVID-19 infections have negatively impacted to date to the overall progress of the Group’s ongoing EPCI
projects. The Group considers that the delays of projects caused by COVID-19 pandemic would be a force
majeure event according to the contracts, laws and regulations. Therefore, at the end of this year the Group
has not incorporated any impacts of liquidated damage penalty into the accounting estimates. However,depending on the outcome of future negotiations with the customers, the Group may be potentiallysubject to the assessment of penalties.

-8-

(5)

Changes in accounting policies
Amendment to IAS12 “Income Taxes”
The Group has adopted the "International Tax Reform - Pillar Two Model Rules" (Amendments to IAS 12) upon theirrelease on May 23, 2023. The amendments provide a temporary exception that exempts from recognition anddisclosure of deferred taxes related to Pillar Two Model Rules income taxes (global minimum top-up tax) by theOrganisation for Economic CO-operation and Development (OECD). The Group has retrospectively applied theexception and did not recognize or disclose information about deferred taxes related to global minimum top-up tax.

3.

Material accounting policies(1)

Basis of consolidation①

Subsidiaries
Subsidiaries are 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 throughits 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.
Changes in the Group’s interest in a subsidiary that do not result in a loss of control are accounted for as equity
transactions. The difference between change in non-controlling interests and the fair value of transaction priceis directly recognized in equity as equity attributable to owners of parent.
When the Group loses control over a subsidiary, any resulting gain or loss is recognized in profit or loss. Anyinterest retained in the former subsidiary is measured at fair value when control is lost. Intra-group asset/liability
balances and transactions, and any unrealized income and expenses arising from intra-group transactions, areeliminated for the preparation of the consolidated financial statements.

②

Investment in equity-accounted investees (associates and joint ventures)
Associates are those entities in which the Group has significant influence, but not control or joint control, overthe financial and operating policies.
A joint venture is an arrangement in which the Group and other parties have joint control, whereby the Grouphas rights to the net assets of the arrangement. Joint control is the contractually agreed sharing of control of anarrangement, which exists only when decisions about the relevant financial and operating activities require theunanimous consent of the parties sharing control.
Investments in associates and joint ventures are accounted for using the equity method. (equity-accounted
investees)
The consolidated financial statements include the Group’s share of the profit or loss and change in othercomprehensive income of equity-accounted investees from the date on which significant influence or joint
control of equity-accounted investees commences until the date ceases.
Investment in equity-accounted investees are initially recognized at cost, which includes transaction costs.
Goodwill recognized on acquisition of the investment relating to an associate or a joint venture is included ininvestment in equity-accounted investees. The Group’s share of the equity-accounted investees’ profit or loss
and change in other comprehensive income is recognized as change in investment in equity-accounted
investees from the date on which control of the equity-accounted investees commences until the date ceases.
Unrealized gains arising from transactions with equity-accounted investees are eliminated against theinvestment to the extent of the Group’s interest in the investee. When unrealized gains exceed the Group’s
interest in the investee, the excess is recognized as deferred revenue in other non-current liabilities. Similarly,
unrealized losses are eliminated against the investment but only to the extent that there is no evidence ofimpairment.
When losses of an equity-accounted investee are greater than the Group’s interest in the investee, the Group’s
interest is reduced to zero and additional losses are recognized only to the extent that the Group has legal orconstructive obligations. The additional losses are first accounted for against loans receivable towards theequity-accounted investee that form part of the net investment. Any excess is recognized as an equity method
liability.
Goodwill that forms part of the carrying amount of the net investment in equity-accounted investee is notamortized in profit or loss. If there is any indication of impairment of the net investment in equity-accounted
investee, the carrying amount of the investment is tested for impairment.
The Group owns 50% or more of voting powers of RANG DONG MV17 B.V., OPPORTUNITY MV18 B.V., GASOPPORTUNITY MV20 B.V., SHAPE PTE. LTD. and SHAPE BRASIL SOLUCOES DIGITALS LTDA. Since thesecompanies’ contractual arrangements agreed by parties provide the parties to the joint control with rights tothe net assets of the arrangements, the Group classifies these companies as joint ventures.

-9-

(2)

Business combinations
Business combinations are accounted for using the acquisition method. The consideration transferred in a businesscombination is measured at the sum of the acquisition date fair values of the assets transferred, the liabilities
assumed and the equity interests issued by the Group in exchange for the control of the acquiree. Goodwill isrecognized the excess of the cost of an acquisition over the fair value of the net identifiable assets and liabilities
acquired. While on a bargain purchase, gain is recognized in profit or loss. Transaction costs are expensed as incurred.
The Group measures the acquiree’s identifiable assets and the liabilities at their acquisition date fair values. The
acquisition of non-controlling interests after obtaining the control of acquiree is accounted for as an equity
transaction. In such a transaction goodwill is not recognized.
A business combination involving entities under common control is a business combination in which all of the
combining entities are ultimately controlled by the same party before and after the business combination, and that
control is not transitory. Such a business combination is principally accounted for using the acquiree’s carrying valueof assets and liabilities.

(3)

Foreign currency① Foreign currency translations
Transactions in foreign currencies including capital transactions are translated into the functional currency of
the Group at the exchange rates at the dates of the transactions. Monetary assets and liabilities denominatedin foreign currencies are translated into the functional currency at the exchange rate at the end of reporting
period. Exchange differences are recognized in profit or loss. However, when a gain or loss on assets or liabilities
is recognized in other comprehensive income, foreign currency differences arising from the translation of thoseassets and liabilities are recognized in other comprehensive income. Non-monetary assets and liabilities thatare measured based on historical cost in a foreign currency are translated at the exchange rate at the date of
the transaction.
②(4)Foreign operations
The assets and liabilities of foreign operations are translated into the presentation currency of the Group, US
dollars, at the exchange rates at the end of reporting period. The revenue and expenses of foreign operations
are translated into US dollars at the exchange rates at the dates of the transactions. Foreign currency differences
arising in the translation of financial statements of foreign operations are recognized in other comprehensive
income and accumulated in other components of equity.
When a foreign operation is disposed of in its entirety or partially such that control, significant influence or joint
control is lost, the cumulative amount of the exchange differences related to that foreign operation is reclassified
to profit or loss as part of the gain or loss on disposal. If the Group disposes of part of its interest in a subsidiary
but retains control, then the relevant proportion of the cumulative amount is reattributed to non-controllinginterests. When the Group disposes of only part of an associate or joint venture while retaining significant
influence or joint control, the relevant proportion of the cumulative amount is reclassified to profit or loss.

Financial instruments① Recognition and derecognition
Recognition:
Financial assets and financial liabilities including derivative instruments are initially recognized at trade datewhen the Group becomes a party to the contractual provisions of the instrument.
Purchase or sale of financial assets is recognized and derecognized using trade date accounting.
Derecognition:
The Group derecognizes a financial asset when:(a) the contractual rights to the cash flows from the financial asset expire; or(b) it transfers the rights to receive the contractual cash flows in a transaction in which substantially all of
the risks and rewards of ownership of the financial asset are transferred.
If the Group retains control of the transferred financial asset, the Group continues to recognize the asset andassociated liability to the extent of its continuing involvement.
The Group derecognizes a financial liability when its contractual obligations are discharged, cancelled or
expire.
②Classification
Financial assets:
On initial recognition, a financial asset is classified as measured at: amortized cost; fair value to profit or loss
(FVTPL); or fair value to other comprehensive income (FVTOCI) based on the criteria as follows:(a) a business model whose objective is to hold financial assets; and(b) the contractual cash flow characteristics of the financial asset.

- 10 -

A financial asset is measured at amortized cost if it meets both of the following conditions:(a) it is held within a business model whose objective is to hold assets to collect contractual cash flows; and(b) its contractual terms give rise on specified dates to cash flows that are solely payments of principal andinterest on the principal amount outstanding.
Financial assets not classified as measured at amortized cost are classified as FVTPL. Financial assets measured
at FVTPL are derivative financial assets. The Group does not have any financial assets classified as FVTOCI or
as FVTPL held for trading.
Financial liabilities:
Financial liabilities are all classified as measured at amortized cost except those classified as measured at
FVTPL. Financial liabilities that are classified as FVTPL are derivative financial liabilities.
③

Measurement
Initial measurement:
A financial asset or financial liability is initially measured at fair value plus or minus, for an item not at FVTPL,
transaction costs that are directly attributable to its acquisition or issue. A financial asset or financial liability
is initially measured at fair value for an item classified as FVTPL. A trade receivable without a significant
financing component is initially measured at the transaction price.
Subsequent measurement:
Financial assets and financial liabilities measured at amortized cost are subsequently measured at amortizedcost using the effective interest method. Interest income and expense, exchange gains and losses andimpairment are recognized in profit or loss. On derecognition gain or loss of a financial asset and thedifference between the carrying amount of a financial liability extinguished and the consideration paid arerecognized in profit or loss.
Financial assets and financial liabilities classified as FVTPL are subsequently measured at fair value.
After initial recognition financial guarantee contracts are subsequently measured at the higher of:(a) the amount of the loss allowance determined in accordance with the impairment criteria below.
(b) the amount initially recognized less the cumulative amount of income recognized in accordance withthe principles of IFRS15.
Impairment of financial assets:
The Group recognizes a loss allowance for expected credit losses on a financial asset that is measured atamortized cost, a contract asset or a financial guarantee contract.
At the end of each reporting period, the Group assesses whether the credit risk on a financial instrument has
increased significantly since initial recognition. The Group measures the loss allowance for a financial
instrument at an amount equal to the lifetime expected credit losses if the credit risk on that financial
instrument has increased significantly since initial recognition. If the credit risk on a financial instrument has
not increased significantly, the Group measures the loss allowance for that financial instrument at an amountequal to 12‑month expected credit losses.
Despite above, the Group always measures the loss allowance at an amount equal to lifetime expected credit
losses for trade receivables or contract assets that do not contain a significant financing component.
The Group recognizes in profit or loss, as an impairment gain or loss, for the amount of expected credit losses
or reversal that is required to adjust the loss allowance for a financial instrument.

④ Derivative financial instruments and hedge accounting
The Group holds derivative financial instruments such as forward exchange contracts and interest rate swap
contracts to hedge its foreign currency and interest rate risk exposures.
The Group makes formal designation and documentation of the hedging relationship and the risk management
objective and strategy at the inception of the hedging relationship when applying hedge accounting. That
documentation includes identification of the hedging instrument, the hedged item, the nature of the risk being
hedged and how the Group will assess whether the hedging relationship meets the hedge effectivenessrequirements when offsetting exposures to fair value changes of the hedged item attributable to the hedged
risk or cash flow variability. The Group expects these hedges are effective for offsetting fair value changes
attributable to the hedged risk or cash flow variability.
Derivatives are initially measured at fair value and presented in the consolidated statement of financial position
when the Group becomes a party to the contracts. Subsequent to initial recognition, except designated as
hedging instruments derivatives are measured at fair value, and changes therein are recognized in profit or loss.
Derivatives designated as hedging instruments are measured as follows:- 11 -Cash flow hedges:
The Group designates primarily cash flow hedge as hedging relationships. When a derivative is designated as acash flow hedging instrument, the effective portion of changes in the fair value of the derivative is recognizedin other comprehensive income and accumulated in the hedging reserve. Any ineffective portion of changes in
the fair value of the derivative is recognized immediately in profit or loss.
The Group designates only the change in fair value of the spot element of forward exchange contracts as thehedging instrument in cash flow hedging relationships. The change in fair value of the forward element offorward exchange contracts (forward points) is separately accounted for as a cost of hedging and recognized ina costs of hedging reserve within equity. When currency swap contract is designated as cash flow hedge, theGroup separates the foreign currency basis spread from a financial instrument and excludes it from thedesignation of that financial instrument as the hedging instrument. The change in fair value of the foreign
currency basis spread is separately accounted for as a cost of hedging and recognized in a costs of hedging
reserve in other comprehensive income within equity.
When the hedged forecast transaction subsequently results in the recognition of a non-financial item such as
inventory, the amount accumulated in the hedging reserve and the cost of hedging reserve is included directlyin the initial cost of the non-financial item when it is recognized. For all other hedged forecast transactions, theamount accumulated in the hedging reserve and the cost of hedging reserve is reclassified to profit or loss inthe same period or periods during which the hedged expected future cash flows affect profit or loss.
If the hedge no longer meets the criteria for hedge accounting even after adjusting the hedge ratio or thehedging instrument is sold, expires, is terminated or is exercised, then hedge accounting is discontinued
prospectively. When hedge accounting for cash flow hedges is discontinued, the amount that has been
accumulated in the hedging reserve remains in equity until, for a hedge of a transaction resulting in therecognition of a non-financial item, it is included in the non-financial item’s cost on its initial recognition or, forother cash flow hedges, it is reclassified to profit or loss in the same period or periods as the hedged expected
future cash flows affect profit or loss.
If the hedged future cash flows are no longer expected to occur, then the amounts that have been accumulated
in the hedging reserve and the cost of hedging reserve are immediately reclassified to profit or loss. The amounts
that have been accumulated in the hedging reserve and the cost of hedging reserve are presented in othercomponents of equity as effective portion of cash flow hedges.
(5)

Cash and cash equivalents
Cash and cash equivalents comprise cash on hand, demand deposits and short-term highly liquid investments thatare readily convertible to known amounts of cash, subject to insignificant risk of changes in value and redeemablein 3 months or less from each acquisition date.

(6)

Property, plant and equipment① Recognition and measurement
Property, plant and equipment are measured at cost less accumulated depreciation and any accumulated
impairment losses. Cost includes expenditure that is directly attributable to the acquisition of the asset, the costof dismantling and removing the items, restoring the site on which they are located. Subsequent expenditure iscapitalized if it is probable that future economic benefits associated with the expenditure will flow to the Groupand its cost can be measured reliably. All other repairs and maintenance are recognized in profit or loss as
incurred. Gains and losses arising on disposals of assets are determined as the difference between the net
disposal proceeds and the carrying amount of the asset and recognized in profit or loss.
②

Depreciation
Depreciation is recognized over estimated useful lives of each part of an item of property, plant and equipmentusing the straight-line method. Depreciation is calculated based on the depreciable value. Depreciable value isthe cost of an asset less its residual value.
The estimated useful lives of property, plant and equipment are as follows:
Leasehold improvements
2–16 years
Tools, furniture and fixtures
2–20 years
Machinery and vehicles
2–7 years
Depreciation methods, useful lives and residual values of assets are reviewed at the end of each reporting period
and revised as necessary.

- 12 -

(7)Intangible assets
Intangible assets are measured at cost less accumulated amortization and any accumulated impairment losses.
Amortization is recognized over estimated useful lives of each intangible asset using the straight-line method.
The estimated useful lives of intangible assets by major asset group are as follows:
Software2–10 years
Development costs
3–5 years
Other intangible assets
5–18 years
Amortization methods, estimated useful lives and residual values of intangible assets are reviewed at the end of eachreporting period and revised as necessary.

(8)

LeasesAt inception of a contract, the Group assesses whether a contract is, or contains, a lease. A contract is, or contains, alease if the contract conveys the right to control the use of an identified asset for a period in exchange forconsideration.

As a lessee
The Group recognizes 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 less any lease incentives received.
The right-of-use asset is subsequently depreciated using the straight-line method from the commencement date to
the shorter of estimated useful life of the asset or the end of the lease term. The estimated useful life of the rightof-use asset is determined on the same basis as those of property, plant and equipment.
The lease liability is initially measured at the present value of the lease payments that are not paid at thecommencement date, discounted using the interest rate implicit in the lease or, if that rate cannot be readily
determined, the Group’s incremental borrowing rate. Generally, the Group uses its incremental borrowing rate as thediscount rate.
Lease payments included in the measurement of the lease liability comprise as follows:•
fixed payments; and•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 reasonably certain not to terminate
early.
The lease liability is measured at amortized cost using the effective interest method. Interest rate used foramortization in each period is the discount rate initially used to determine the present value of the total lease
payments in measuring the lease liability. In accordance with the payment of the lease, it is reflected the lease liability
as repayment of the principal portion of the lease liability and payment of interest on the lease liability.
The lease liability is remeasured when the Group changes its assessment of whether it will exercise an extension or
termination option. When the lease liability is remeasured in this way, a corresponding adjustment is made to thecarrying amount of the right-of-use asset or recorded in profit or loss if the carrying amount of the right-of-use asset
has been reduced to zero.
Short-term leases and leases of low-value assets
The Group has elected not to recognize right-of-use assets and lease liabilities for short-term, 12 months or less,leases and leases of low-value assets. The Group recognizes the lease payments associated with these leases as an
expense on a straight-line basis over the lease term.
(9)

Impairment of non-financial assets
For non-financial assets, the Group determines at the end of reporting period whether there is any indication of
impairment. If any such indication exists, then the asset or cash-generating unit’s recoverable amount is estimated.
The recoverable amount of an asset or cash-generating unit is the greater of its value in use and its fair value lesscosts of disposal. Cash-generating units are the smallest group of assets that are largely independent of cash inflowsof other assets or cash-generating units. If recoverable amount cannot be determined for an individual asset,
recoverable amount is determined for the cash-generating unit to which the asset belongs. In the calculation of 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 or cash-generating unit.
An impairment loss is recognized if the carrying amount of an asset or cash-generating unit exceeds its recoverable
amount.
Impairment losses recognized in prior periods are assessed at the end of reporting period for any indications thatthe loss has decreased or no longer exists.

- 13 -

(10) Employee benefits① Post-employment benefits
a. Defined contribution plans
Obligations for contributions to defined contribution plans are recognized as an expense in profit or loss
in the period during which services are provided by employees.
b. Defined benefit plans
The present value of the Group’s obligation in respect of defined benefit plans and related current service
cost are calculated separately for each plan using the projected unit credit method. The discount rate isdetermined by reference to market yields at the end of reporting period on high quality corporate bonds.
In determining the discount rate the term of the corporate bonds reflects the estimated timing of benefit
payments. Defined benefit liability is recognized by discounting the defined benefit obligation. Current
service cost and interest expense related to defined benefit liability are recognized in profit or loss.
Remeasurements of the defined benefit liability are recognized immediately in other comprehensive
income and reclassified to retained earnings. Past service cost is recognized in profit or loss when incurred.
②

Short-term employee benefits
Short-term employee benefits are measured on an undiscounted basis and are expensed as the related service
is provided. A liability is recognized for the amount expected to be paid under short-term cash bonus or annual
paid vacation 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.

(11) Share-based payment
Under the arrangement the Company’s ordinary shares are granted to the directors and executive officers inaccordance with the number of share points awarded to the directors and executive officers. The points are awarded
based on the regulation of share-based payment arrangement of the Company. The Company’s ordinary shares are
acquired in the stock market and held by trust, which is established and funded by the Company.
Under the share-based payment arrangement, as the services provided to the Company by the directors andexecutive officers, the fair value of equity instruments granted are recognized in profit or loss with a corresponding
increase in equity. Fair value of equity instruments granted is determined by reference to the market price of theCompany’s ordinary shares on the date the Company and the directors and executive officers agree to the sharebased payment arrangement. As the directors and executive officers covered by the arrangement provide theservices, the Company recognizes expenses and the corresponding rights of directors and executive officers become
vested.
(12) Provisions
A provision is recognized when the Group has a present obligation, legal or constructive, as a result of a past event,
it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation
and a reliable estimate can be made of the amount of the obligation. Where the effect of the time value of money
is material, the amount of a provision is determined by discounting the expenditures expected to be required tosettle the obligation. The discount rate is a pre-tax rate that reflects current market assessments of the time value ofmoney and the risks specific to the liability.
① Warranties
A provision for warranties is recognized for the repair costs of the post-delivered defective items of the products.
The provision for the warranties is recognized for the total estimated repair costs of defective items. These
warranties are expected to be settled in 7 years from the end of reporting period.
② Profit on construction
A provision for loss on construction is recognized when the total costs of individual construction contract are
expected to exceed the total contract value and the estimated excess costs are reasonably determined andreliable. The provision is measured at the future total estimated loss on construction. The provisions for loss on
construction are expected to be settled in 2 years from the end of reporting period.
③ Onerous contracts
A provision for onerous contracts is recognized when the unavoidable costs of meeting the obligations under
the contract exceed the economic benefits expected to be received under it. The provision is measured at thepresent value of the lower of the expected cost of terminating the contract and the expected net cost ofcontinuing with the contract, which is determined based on incremental costs necessary to fulfil the obligation
under the contract. Before a provision is established, the Group recognizes any impairment loss on the assets
associated with that contract. The provisions for onerous contracts are expected to be settled in 4 years fromthe end of reporting period.
④ Repair costs of FPSO
A provision is recognized for the estimated repair costs of FPSO. The Group has recognized the estimated costrequired to repair the cracks on FPSO. The cracks were identified during decommissioning work undertaken by
the Group after the termination of its oil production, and the work was suspended.

- 14 -

(13) Share capital① Ordinary shares
Ordinary shares are classified as equity. Incremental costs directly attributable to the issue of ordinary sharesare recognized as a deduction from equity, net of any tax effects.
② Treasury shares
When shares are acquired, the amount of the consideration paid is recognized as a deduction from equity. Whentreasury shares are sold, retired, or reissued subsequently, any difference between the carrying value of treasury
shares and the amount received is recognized as equity.
(14) Revenue from contracts with customers
The Group recognizes revenue from transactions within the scope of IFRS15 Revenue from Contracts with Customers
based on 5 step approach as follows:
Step1: Identify the contract
Step2: Identify performance obligations
Step3: Determine the transaction priceStep4: Allocate the transaction price to performance obligations
Step5: Recognize revenue when (or as) the entity satisfies a performance obligation
The revenue recognition criteria for the main services provided by the Group are as follows:
The revenue of lease and chartering services for FPSOs owned by affiliates and provided to oil exploration andproduction companies under lease contracts is included in share of profit of investments accounted for using equity
method in the consolidated statements of profit or loss.
①

Construction contracts
For long term construction contracts revenue is recognized over time as performance obligation is satisfied
when the Group transfers control of the promised product or service to the customer. For performanceobligation satisfied over time the Group measures the progress by reference to the cost incurred relative to thetotal estimated costs.
The Group constructs specialized assets customized to customer's order which the Group does not have analternative use. These contracts span across several years. The Group has determined that for contracts where
the Group has an enforceable right to payment, the customer obtains control all of the work in progress. This isbecause under those contracts, the assets are at the customer's specification and the Group is entitled toreimbursement of costs incurred to date including a reasonable margin when the contracts are terminated by
the customer with their cause.
Contract modifications to the long-term construction contract of the Group do not add any distinct goods orservices in general. The Group accounts for such modifications as continuation of the original contract andrecognizes a cumulative revenue at the date of modification.
In some circumstances, the Group may not be able to reasonably measure the outcome of a performanceobligation (that is the stage of completion), but the Group expects to recover the costs incurred in satisfying theperformance obligation. In those circumstances, the Group recognizes revenue only to the extent of the costs
incurred until such time that the Group can reasonably measure the outcome of the performance obligation.
Revenue is measured as the consideration promised in the contract with the customer less penalties and otheritems based on the contract with the customer.
For variable consideration including penalties and other items that are variable the Group estimates the amountof consideration using all reasonably available information and recognizes revenue only to the extent that it ishighly probable that a material reversal will not occur.
Progress billings to the customer are based on a payment schedule in the contract that is dependent on theachievement of specified milestones. Invoices are usually payable within 30 to 60 days and do not contain asignificant financing component.
As warranty to the construction contract is obligation to repair or correct the defective product, it is notconsidered as a separate performance obligation but comprises as a part of construction contract. Warranty
period is usually 1 to 3 years after acceptance by the customer. The amount of warranty is based on estimates
made from historical warranty data associated with similar services by adjusted for any project-specific claims.

②

Operation services
Operation service is a service contract for the continuous provision of services. In principle, since the customer
will receive a benefit as the Group fulfills its obligations for services promised in the contract, it is a performanceobligation satisfied over a specified period. With respect to service contracts for the continuous provision ofservices, since the Group provides services that meet the customer's requirements over the contract term,
progress is measured at the ratio of period for which services are already provided relative to the total period
for which services will be provided.
For fixed daily rate contract revenue is recognized over time based on fixed daily operation rate on a monthly
basis. For cost plus agreed mark-up contract revenue is recognized over the period in which the services
rendered and costs incurred plus agreed mark-up.
- 15 -

Pre-operation services for which the services are provided during the construction period for the purpose of
preparation of operations may be included as part of the construction contract. When such pre-operation service
is classified as a separate service from the construction contract, revenue is recognized as a separate
performance obligation from the construction contract. In recognizing revenue the progress is measured as apercentage of the estimated total costs incurred and the Group recognizes revenue at that rate.
Revenue is measured as the consideration promised in the contract with the customer less penalties and otheritems based on the contract with the customer.
For variable consideration including penalties and other items that are variable the Group estimates the amountof consideration using all reasonably available information and recognizes revenue only to the extent that it ishighly probable that a material reversal will not occur.
Bonuses are recognized as revenue once it becomes near certain and is highly probable that no significant
reversal of revenue recognized will occur.
The payment terms of service contracts are in general within 30 days of receipts of final invoice by customers
and do not contain a significant financing component.
The Group recognizes a refund liability if the Group receives consideration from a customer and expects torefund some or all of that consideration to the customer. The refund liability is estimated by using the most
likely amount method based on the contract terms and historical data.
③

Agent transactions
If the Group’s performance obligation is to arrange for the provision of the specified service by another party,
the Group is an agent for the seller or purchaser of the contract. In such a case revenue is recognized at a point
in time when performance obligation is satisfied at the net value of the service.

④

Costs to obtain or fulfil a contract with a customer
Costs to obtain or fulfil a contract with a customer are expensed as incurred unless those costs meet the criteria
to recognize as an asset. It is recognized as an asset if it meets the criteria of capitalization and amortized on abasis that is consistent with the transfer to the customer of the goods or services to which the asset relates.

⑤

Contract assets and contract liabilities
The contract assets relate to the Group's rights to consideration for work completed but not billed. The contract
liabilities primarily relate to advance consideration received from customers for contract revenue. Contract
assets and liabilities are reported on the consolidated statement of financial position on a contract-by-contract
basis.

(15) Finance income and finance costs
Finance income comprises interest income, dividends received, derivative revenues and exchange gains. Financecosts comprises interest expenses, derivative losses, exchange losses and loss allowances recognized for expectedcredit losses. Interest income and interest expenses are recognized as accrue using the effective interest method.
Dividend income is recognized in profit or loss on the date on which the Group’s right to receive payment isestablished.
(16) Government grants
Government grants are recognized at their fair value when the conditions for receiving the grant are met and when
they become receivable.
(17) Income tax
Income tax expense comprises current and deferred tax. It is recognized in profit or loss except to the extent that it
relates to items recognized directly in other comprehensive income or in equity, or a business combination.
Current tax comprises the expected tax payable or receivable on the taxable income or loss for the year using tax
rates enacted or substantively enacted at the end of reporting period.
Deferred tax is recognized in respect of temporary differences between the carrying amounts of assets and liabilities
for financial reporting purposes and the amounts used for taxation purposes. Deferred tax assets are recognized for
deductible temporary differences, unused tax credits and unused tax losses to the extent that it is probable that
future taxable profits will be available against which they can be used. Deferred tax liabilities are recognized inprinciple for taxable temporary differences.
Deferred tax is not recognized for:•temporary differences on the initial recognition of assets or liabilities in a transaction that is not a businesscombination and that affects neither accounting nor taxable profit or loss;•
temporary differences related to investments in subsidiaries, associates and joint ventures to the extent that
the Group is able to control the timing of the reversal of the temporary differences and it is probable thatthey will not reverse in the foreseeable future; and•taxable temporary differences arising on the initial recognition of goodwill.

- 16 -

Deferred tax is measured using tax rates that are expected to apply when temporary differences reverse.
Deferred tax assets and liabilities are offset if there is a legally enforceable right to offset current tax assets andliabilities and they relate to income tax levied by the same tax authority on the same taxable entity.
The amount of current tax payable or receivable is the best estimate of the tax amount, which the Group considers
probable based on its interpretation of tax law, expected to be paid or received that reflects uncertainty related toincome taxes.
The Group has adopted the amendments to IAS12 and did not recognize or disclose information about deferredtaxes related to global minimum top-up tax.
(18) Earnings per share
Basic earnings per share are calculated by dividing profit for the period attributable to owners of parent by theweighted average number of ordinary shares outstanding adjusted by treasury shares during the period.
Diluted earnings per share are calculated based on the weighted average number of ordinary shares outstanding
above adjusted by the effects of all dilutive potential ordinary shares.
(19) Standards issued but not yet effective
Among the standards and interpretations that are new and amended by the approval date of this consolidated
financial statements, the standard which the Group has not adopted at the end of this year is as follows:
The effect of the standard to the Group’s consolidated financial statements is currently under study.
Standard

Title

Effective Date

Adoption Date

Content

IAS1

Presentation ofJanuary 1, 2024

January 1, 2024

Non-current

Financial

Liabilities with

Statements

Covenants- 17 -

4.

Operating segments(1) General information of reportable segments

An operating segment is a component of the Group for which discrete financial information is available and whose
operating results are regularly reviewed by the Group’s management to make decisions about resources to beallocated to the segment and assess its performance.
The Group is solely engaged in construction of floating, production, storage and offloading systems for oil and gas
productions and various related services as single business; therefore, general information of reportable segments
is not presented.

(2) Information about products and services

Revenue from the external customers for products and services is presented in Note 23. Revenue.

(3) Information about geographical areas

Revenue from external customers by geographical areas is as follows:in thousands of US dollars
2022

2023

Brazil

1,659,707

1,896,033

Guyana115,254823,745

Senegal490,056

450,161Ghana

166,91297,720－ (Note) 2

97,627

Mexico155,088

84,307

Others152,743

125,328

2,739,762

3,574,924

Cote d'Ivoire

Total

Note:
1 Revenue is categorized based on the ultimate destination of products and services.
2 Amounts not subject to disclosure.
Information about geographical areas – non-current assets
in thousands of US dollars
December 31, 2022

December 31, 2023

Netherlands

1,101,747

1,363,281

Singapore

60,41852,003

United States

56,18032,364

Japan

38,515

9,670

Others28,505

16,7581,285,368

1,474,078

Total

Note: Financial instruments other than investments accounted for using equity method, deferred tax assets and rights
arising under insurance contracts are excluded.

(4) Information about major customers

Customers represent more than 10% of consolidated revenue are as follows:in thousands of US dollars
Customer's name2022

Esso Exploration and Production2023－ (Note)821,739

Equinor Brasil Energia Ltda.

660,690

532,478

Equinor Energy do Brasil Ltda.

－ (Note)516,626

Woodside Energy (Senegal) B.V.

490,056

450,161

Guyana Limited

Note: Not presented as less than 10% of consolidated revenue.

- 18 -

5.

Cash and cash equivalents
Cash and cash equivalents are as follows:in thousands of US dollars
December 31, 2022

December 31, 2023

Cash and bank deposits

468,005

1,008,739

Time deposits with maturity of 3 months or less

24,620

5,172

Total

492,625

1,013,912

Note:
1 Cash and cash equivalents are classified as financial assets measured at amortized cost.
2 Cash and cash equivalents in the consolidated statement of financial position is equal to cash and cash
equivalents in the consolidated statement of cash flows.
6.

Trade and other receivables
Trade and other receivables are as follows:in thousands of US dollars
December 31, 2022

December 31, 2023

Trade474,540

583,578

Others

3,542

8,585

478,083

592,163

Total

Note:
1
Trade and other receivables are classified as financial assets measured at amortized cost.
2
At December 31, 2023 the amount expected to be recovered after more than 12 months after the reporting
period is US$19,416 thousand.
7.

Property, plant and equipment
Carrying amount of property, plant and equipment and right-of-use assets is as follows:in thousands of US dollars
Carrying amount

Property, plant andequipment

Right-of-use assets

Total

At January 1, 2022

12,704

38,66251,366At December 31, 2022

10,30354,01164,314

At December 31, 2023

9,856

40,18550,042- 19 -

Reconciliation of carrying amount of property, plant and equipment excluding right-of-use assets is as follows:
Acquisition cost
At January 1, 2022

LeaseholdTools, furnitureimprovements and fixtures

Machineryand vehicles

in thousands of US dollars
Construction
Total
in progress

24,763

19,4181,093

340

45,615Additions

463

2,291

3

621

3,379

Disposals

－

(305)

－

－

(305)

Exchange differences ontranslation of foreign operations

333

252

(21)

21

586

Transfers

300

23

－

(324)

－

Other

24

59

(35)

(150)

(101)

At December 31, 2022

25,884

21,7401,040

508

49,174

Additions

1,464

2,055

－

1,606

5,126

Disposals

(121)

(146)

－

－

(268)

Exchange differences ontranslation of foreign operations

434

461

12

60

969

Transfers

－

43

－

(43)

－

Other

－

(374)

－

－

(374)

27,662

23,779

1,053

2,132

54,627

LeaseholdTools, furnitureimprovements and fixtures

Machineryand vehicles

At December 31, 2023

Accumulated depreciationin thousands of US dollars
Construction
Total
in progress

At January 1, 2022

18,251

13,872787－

32,911

Depreciation

3,071

2,823

77

－

5,972

Disposals

－

(294)

－

－

(294)

Exchange differences ontranslation of foreign operations

183

116

(17)

－

282

Other

10

(7)

(3)

－

(0)

At December 31, 2022

21,517

16,510843－

38,871

Depreciation

2,854

2,659

61

－

5,575

Disposals

(121)

(145)

－

－

(267)

Exchange differences ontranslation of foreign operations

314

283

12

－

610

Other

－

(24)

6

－

(18)

24,564

19,283923－

44,771At December 31, 2023

Carrying amount

LeaseholdTools, furnitureimprovements and fixtures

Machineryand vehicles

in thousands of US dollars
Construction
Total
in progress

At January 1, 2022

6,511

5,545

306

340

12,704

At December 31, 2022

4,367

5,229

197

508

10,303

At December 31, 2023

3,097

4,495

130

2,132

9,856

Note: Depreciation of property, plant and equipment is included in cost of sales and selling, general and administrative
expenses in the consolidated statement of profit and loss.

- 20 -

8.

Intangible assets
Reconciliation of carrying amount of intangible assets is as follows:
Cost

SoftwareDevelopment
costs

Patents andtrademarksin thousands of US dollars
Customer
Total
relationships

At January 1, 2022

86,957

24,07630,0798,254

149,367

Additions

4,395

－

－

－

4,395

Disposals

(425)

－

－

－

(425)

66

－

－

－

66

Other

(2,308)(1,158)－－(3,466)At December 31, 2022

88,686

22,91730,0798,254

149,937

Additions

1,287

1,189

－

－

2,477

－

(22,917)－－(22,917)

Disposals

(62)

－

－

－

(62)

Exchange differences ontranslation of foreign operations

254

－

－

－

254

Other

359

－

－

－

359

90,524

1,189

30,0798,254

130,048Development
costs

Patents andtrademarks

Exchange differences ontranslation of foreign operations

Impairment losses

At December 31, 2023

Accumulated amortization

Softwarein thousands of US dollars
Customer
Total
relationships

At January 1, 2022

28,583

1,605

30,0798,254

68,522

Amortization

7,088

4,506

－

－

11,594

(404)

－

－

－

(404)

157

－

－

－

157

Other

(145)

－

－

－

(145)

At December 31, 2022

35,2796,111

30,0798,254

79,724

Amortization

6,878

4,584

－

－

11,462

Impairment losses－(10,696)－－(10,696)

Disposals

(55)

－

－

－

(55)

Exchange differences ontranslation of foreign operations

117

－

－

－

117

Other

11

－

－

－

11

42,230－30,0798,254

80,564

Disposals
Exchange differences ontranslation of foreign operations

At December 31, 2023

Carrying amount

SoftwareDevelopment
costs

Patents andtrademarksin thousands of US dollars
Customer
Total
relationships

At January 1, 2022

58,37422,470－－80,845At December 31, 2022

53,406

16,806－－70,213

At December 31, 2023

48,294

1,189

－

－

49,483

Note:
1
2
3

There are no material intangible assets with indefinite useful lives.
Amortization of intangible assets is included in cost of sales and selling, general and administrative expenses
in the consolidated statement of profit or loss.
The impairment losses of development costs are included in selling, general and administrative expenses in the
consolidated statement of profit and loss.

- 21 -

9.

LeasesAs lessee
The Group leases buildings for offices. The office leases typically run between 3 to 16 years. Some leases containextension options for certain period after the end of contract term, cancelation options or rent adjustment clause
during the contract terms.
Some office building leases contain extension options exercisable by the Group up to one year before the end of
the non-cancellable contract period. The Group assesses at the lease commencement date whether it is reasonably
certain to exercise the extension options. The Group reassesses whether it is reasonably certain to exercise theoptions if there is a significant event or significant changes in circumstances within its control.
Additionally, the Group leases IT equipment and others with contract terms of 1 to 6 years. The IT equipment leases
include short-term and leases of low-value items. The Group has elected not to recognize right-of-use assets andlease liabilities for these leases.
Carrying amount of right-of-use assets by underlying assets is as follows:in thousands of US dollars
Underlying assets
Tools, furnitureand fixtures

Buildings

Total

Machineryand vehicles

At January 1, 2022

36,391

1,805

465

38,662At December 31, 2022

52,689824

497

54,011At December 31, 2023

39,049847

288

40,185

Note: The increase in right-of-use assets amounted to US$37,280 thousand in 2022 and US$11,106 thousand in 2023.
Expenses and cash outflow related to leases are as follows:in thousands of US dollars
2022

2023

Depreciation of right-of-use assets
Buildings as underlying assets

20,48522,370Tools, furniture and fixtures as underlying assets

1,129

980

424

301

Total depreciation of right-of-use assets

22,03823,653

Interest expense on lease liabilities

1,710

2,050

Expenses relating to short-term leases

12,88525,819

Expenses relating to leases of low-value assets

1,017

1,282

Total cash outflow for leases

35,36652,376

Machinery and vehicles as underlying assets

Maturity analysis of lease liabilities is presented in Note 30. Financial instruments (4) Liquidity risk.
10. Investments accounted for using equity method(1) Investments, share of profit and share of other comprehensive income of investments accounted for using equity
methodInvestments accounted for using equity method are as follows:in thousands of US dollars
December 31, 2022

December 31, 2023

Associates

990,693

1,262,898

Joint ventures

123,372

111,289

1,114,066

1,374,188

Total- 22 -

Share of profit of investments accounted for using equity method is as follows:in thousands of US dollars
2023

2022
Associates

99,461

116,903

Joint ventures

27,384

11,773

126,845

128,677

Total

Share of other comprehensive income of investments accounted for using equity method is as follows:in thousands of US dollars
2022
Associates

2023
226,509(22,894)

166

128

226,675(22,766)

Joint ventures
Total
(2)

Associates
Associates that are not individually material
Carrying amount of interests in associates that are not individually material and the Group’s share of profit,
other comprehensive income and comprehensive income are as follows:in thousands of US dollars
December 31, 2022

Carrying amount of interests

December 31, 2023
990,693

1,262,898
in thousands of US dollars

2022

2023

The Group's share
Profit99,461

116,903

Other comprehensive income

226,509(22,894)

Comprehensive income

325,970

94,008(3)

Joint ventures
Joint ventures that are not individually material
Carrying amount of interests in joint ventures that are not individually material, the Group’s share of profit, othercomprehensive income and comprehensive income are as follows:in thousands of US dollars
December 31, 2022

Carrying amount of interests

December 31, 2023
123,372

111,289in thousands of US dollars
2023

2022
The Group's share
ProfitOther comprehensive income
Comprehensive income

27,384

11,773

166

128

27,55011,902

Note: In previous year the Group categorized GAS OPPORTUNITY MV20 B.V. (MV20) as joint ventures that are
individually material. This year the Group categorized and included MV20 as joint ventures that are not individuallymaterial since MV20 became less material. MV20's profit of US$21,714 thousand, other comprehensive income of
US$157 thousand and comprehensive income of US$21,872 thousand are included in 2022 above.

- 23 -

11. Loans receivable
Loans receivable is as follows:in thousands of US dollars
December 31, 2022

December 31, 2023

Financial assets measured at amortized cost
Short-term loans receivable－

27,370Long-term loans receivable

365,032

376,006

365,032

376,006Total
12. Other financial assets
Other financial assets are as follows:in thousands of US dollars
December 31, 2022

December 31, 2023

Financial assets measured at amortized cost
Interest receivable

33,736

48,460

Leasehold and guarantee deposits

12,711

12,779

4,033

9,319

410

410

50,89270,969Current assets

37,28857,806

Non-current assets

13,603

13,163Financial assets measured at fair value throughprofit or loss
Derivative assets
Other
Total

13. Other assets
Other assets are as follows:in thousands of US dollars
December 31, 2022

December 31, 2023

Contract fulfilment costs

45,00534,489Prepaid expenses

18,894

20,836

Value added tax receivable

45,81635,488

Withholding tax receivable

45,101

46,246

Others23,82122,018

178,639

159,079

Current assets

141,820

158,712

Non-current assets

36,819367

Total

14. Trade and other payables
Trade and other payables are as follows:in thousands of US dollars
December 31, 2022

December 31, 2023

Trade749,818

937,868

Others

171,889

251,360

921,708

1,189,228

Total

Note: Trade and other payables are classified as financial liabilities measured at amortized cost.

- 24 -

15. Bonds and borrowings(1) Bonds and borrowings are as follows:in thousands of US dollars
December 31, 2022

December 31, 2023

Current portion of long-term borrowings

19,084

57,799Long-term borrowings

153,425

95,626

Bonds

220,867

417,328

393,378

570,754

Current liabilities

19,084

57,799Non-current liabilities

374,293

512,954

Total(2) Borrowings

Weighted average interest rates for current portion of long-term borrowings and long-term borrowings are both
6.9%. The maturity of long-term borrowings is from 2025 to 2026.

(3) Financial covenants

At the end of previous year there were no breaches of financial covenants.

16. Employee benefits(1) Overview of defined benefit plan

The Group has defined benefit plans for employee’s postretirement benefits.
The Group has adopted retirement lump sum payment system as a defined benefit type of postretirement benefit.
The retirement lump sum payment system is to make a lump sum payment to employee when the employee retires
or voluntarily leaves the Group. The retirement funds are not accumulated externally but internally.
In addition, the Group has defined contribution plan.

(2) Defined benefit plan

① Movements in defined benefit plan liability
in thousands of US dollars

At January 1, 2022

54,693Service cost

6,693

Interest cost

1,028

Decrease (increase) in remeasurements:
Actuarial loss arising from changes in demographic

313

assumptions
Actuarial gain arising from financial assumptions(8,890)

Actuarial gain arising from experience adjustment(67)

Benefits paid

(9,811)

Effect of changes in exchange rates(1)

At December 31, 2022

43,959Service cost

9,519Interest cost

1,734

Decrease (increase) in remeasurements
Actuarial loss arising from changes in demographic(158)

assumptions
Actuarial gain arising from financial assumptions

1,627

Actuarial gain arising from experience adjustment(3,310)Benefits paid

(6,409)Effect of changes in exchange rates(1,870)At December 31, 2023

45,091

Note: Weighted average durations of defined benefit plan liability are 11.0 years and 10.9 years at December 31, 2022
and 2023, respectively.

- 25 -

② Actuarial assumptions
Principal actuarial assumptions are as follows:
December 31, 2022

December 31, 2023

Discount rate (weighted average)
1.2%～4.9%
1.3%～4.7%
Note: Additionally, actuarial assumptions include expected pay raise rate, expected death rate and expected retirement
rate.
Reasonably possible changes at each year to the discount rate would have affected the defined benefit plan liability
as follows.
The sensitivity analysis holds all other assumptions constant. Positive amount is increase in defined benefit plan liability,and negative amount is decrease.
in thousands of US dollars
Change in basic rate
Discount rate

December 31, 2022

December 31, 2023

1.0% increase(3,185)(3,178)

1.0% decrease

3,651

3,321

(3) Defined contribution plans
Contributions to defined contribution plans are US$19,488 thousand in 2022 and US$14,175 thousand in 2023.

(4) Employee benefit expenses

Employee benefit expenses are US$802,481 thousand in 2022 and US$864,921 thousand in 2023.
Employee benefit expenses are included in cost of sales and selling, general and administrative expenses in the
consolidated statement of profit or loss.

17. Share-based payment① Description of share-based payment trust arrangements (equity-settled)
Under the arrangement the Company’s ordinary shares acquired in the stock market and held by trust, which is a
subsidiary established and funded by the Company, are granted to the directors and executive officers inaccordance with the number of share points awarded based on the regulation of share-based payment
arrangement.
②

Fair value of share points awarded during period
Fair value of share points awarded during period is measured by reference to the observable market price.
Expected dividend is subtracted from market price for the measurement of fair value. Weighted average fair valueof share points awarded are US$13.09 in 2022 and US$10.43 in 2023.

③

Share-based payment transaction expenses
Share-based payment transaction related expenses are US$132 thousand in 2022 and US$232 thousand in 2023.
The expenses are included in cost of sales and selling, general and administrative expenses in the consolidated
statement of profit or loss.

- 26 -

18. Provisions
Changes in provisions are as follows:in thousands of US dollars
Warranties

Profit on
construction

At January 1, 2022

88,902

65,191

108,934

37,375

17,206317,611

Provisions made

14,313

11,948－－17,27443,536

Provisions utilized(13,381)(25,199)(74,674)(3,100)(2,286)(118,641)

Provisions reversed(2,990)(21,567)(3,405)(34,275)(14,773)(77,012)

－

－

－

－

886

886

At December 31, 2022

86,84430,37230,855－18,307

166,379

Provisions made

41,436

4,474

－

－

5,036

50,946

Provisions utilized(12,016)(21,115)(4,539)－(5,025)(42,696)

Provisions reversed(1,994)(2,138)(21,154)－(31)(25,318)

－

－

－

－

1,245

1,245

114,270

11,592

5,161－

19,532

150,557

Exchange differences ontranslation of foreign
operations

Exchange differences ontranslation of foreign
operations
At December 31, 2023

Onerouscontracts

Repair costs

Others

Total

Note:
1
Others include provision for lawsuits and asset retirement obligations.
2Time value adjustments are included in provisions made since the amounts are not material.
19. Other financial liabilities
Other financial liabilities are as follows:in thousands of US dollars
December 31, 2022
Lease liabilities
Financial liabilities measured at amortized cost:

December 31, 2023

58,90443,445

Accrued employee benefits

75,09793,020Accrued interest

1,933

33,404

－

36

411

319

136,346

170,226

Current liabilities

99,219150,826

Non-current liabilities

37,127

19,399

Other
Financial liabilities measured at fair value throughprofit or loss:
Derivative liabilities
Total- 27 -

20. Other liabilities
Other liabilities are as follows:in thousands of US dollars
December 31, 2022

December 31, 2023

Deposits received

3,077

7,223

Refund liabilities

49,901

27,758Equity method liabilities

5,600

4,470

Income taxes payable

13,231

16,850Other

22,453

10,043

94,264

66,345Current liabilities

76,95459,551

Non-current liabilities

17,310

6,794

Total

Note: Refund liabilities are recognized among consideration received from customer for the estimated amount ofpenalty. Penalty is estimated based on the historical amount and information available at the end of reporting period.
21. Equity and other components of equity(1) Share capital① Number of shares authorized
Number of shares authorized at the end of each reporting period is 102, 868,000 of ordinary shares.
② Movements in outstanding shares, share capital and capital surplus
Outstanding shares(in thousands of shares)

At January 1, 2022
Movements
At December 31, 2022
Movements
At December 31, 2023

Share capital
Capital surplus(in thousands of US dollars) (in thousands of US dollars)

56,408282,292

280,711

－

－

(24)

56,408282,292

280,686

11,937(91,797)(93,574)

68,345

190,495

187,112Note:
1
All authorized shares are ordinary shares with no par value and with no restrictions on rights, and all outstanding
shares are paid in full.
2
Movements of outstanding shares in 2023 is due to the third-party allotment of 11,937,300 shares.
3
Movements of share capital in 2023 is due to issuance of new shares and reduction of share capital.
4
Movements of capital surplus in 2023 is due to increase from the issuance of new shares, reduction of sharecapital and share-based payment transactions, in addition, transfer from capital surplus to retained earnings.

(2) Treasury shares

Movements in treasury shares are as follows:
Number of shares(in thousands of shares)

Amount(in thousands of US dollars)

At January 1, 2022

45

1,291

Movements

(6)

(198)

38

1,092

－

－

38

1,092

At December 31, 2022
Movements
At December 31, 2023

Note: Decreases are due to shares granted from trust to the directors under share-based payment transactions.

(3) Capital surplus and retained earnings①

Capital surplus
The Companies Act of Japan provides that an amount of 50% or more of contribution at the share issuance may
be incorporated into share capital and the remaining into capital reserve (capital surplus in statement ofconsolidated financial position). The capital reserve may be incorporated into share capital upon the resolution at
the shareholders’ meeting.
- 28 -

Retained earnings
Retained earnings represent profit and loss recognized in current year and previous years and the amountreclassified from other comprehensive income.
The Companies Act requires that an amount equivalent to 10% of dividends of surplus must be appropriated ascapital reserve or retained earnings reserve. No further appropriations are required when the total amount of capitalreserve and retained earnings reserve equals 25% of share capital. Retained earnings reserve may be reduced upon
the resolution at the shareholders’ meeting.
Distributable amount is determined based on the Company’s Japanese GAAP basis retained earnings.
Distributable amount is subject to certain restrictions imposed by the corporate law. The Company has been
compliant with the restrictions.

②

22. Dividends
Dividends declared before the financial statements were authorized for issue but not recognized as a distribution
to owners during the period
2023
Resolution

Type ofsharesDividend
per share(in Japaneseyen)

Total dividends(in million
Japanese yen)

Record date

Effective date

March 27, 2024
Ordinary
March 28, 2024
Annual shareholders
1,366
20 December 31, 2023
sharesmeeting
Note: Total dividends include 744 thousand Japanese yen paid to trust for share-based payment arrangement for
executives, which owns the Company’s ordinary shares.
23. Revenue(1)

Disaggregation of revenue from contracts with customers
The Group is primarily engaged in construction of floating, production, storage and offloading systems for oil and gas
productions and provision of various related services as single business. Disaggregation of revenue from contracts
with customers is as follows:
The Group’s revenue is all from contracts with customers. The considerations of contracts do not contain a significant
financing component. Revenue transferred from refund liabilities is not material either in previous year or current year.
in thousands of US dollars
2022

Construction contracts

2023
1,775,068

2,488,995

Operations

942,416

1,054,133

Other

22,27731,794

2,739,762

3,574,924

Total

Note: Disaggregation of revenue by geographical areas is presented in Note 4. Operating segments.
(2)

Contract balances
Information about trade receivables, contract assets and contract liabilities from contracts with customers is as follows:in thousands of US dollars
January 1, 2022

December 31, 2022

December 31, 2023

Trade receivables

356,645

478,083

592,163

Contract assets

704,730

257,328

185,585

Contract liabilities

405,807499,383

590,278

The contract assets primarily relate to the Group’s rights to consideration for work completed but not billed on contractsof which performance obligations satisfied over time. This primarily relates to consideration for work completed
regarding construction contracts and operation services at the end of reporting period. The contract assets aretransferred to trade receivables when the rights become unconditional. This usually occurs when the Group invoices thecustomer. Movements in contract assets in the current year are primarily due to the transfer to trade receivables.
The contract liabilities are primarily related to considerations received from customers prior to the provision of services,which are reduced in accordance with the recognition of revenue.
Increase and decrease of contract assets are mainly caused by the recognition of revenue (increase of contract assets) andthe reclassification to receivable (decrease of contract assets).

- 29 -

Increase and decrease of contract liabilities are mainly caused by advance receipt (increase of contract liabilities) and therecognition of revenue (decrease of contract liabilities).
Revenue recognized that was included in the contract liability balance at the beginning of year was US$423,113
thousand in 2023. Revenue recognized from performance obligations satisfied in previous periods was US$430,820
thousand.
(3)

Transaction price allocated to the remaining performance obligations
Transaction price allocated to the remaining performance obligations by satisfaction period is as follows:
The estimate of variable consideration is not included in this transaction price. No information is included about
remaining performance obligations that have an original expected duration of one year or less as a practical
expedient.
in thousands of US dollars
December 31, 2022

December 31, 2023

Within 1 year

1,863,663

3,903,626

After 1 year

8,927,303

12,914,311

10,790,967

16,817,938

Total

Note: The Group expects to recognize as revenue the amount disclosed in After 1 year at December 31, 2023 for major
construction contracts in 2 years and operation contracts in 2 to 26 years.
(4)

Assets recognized from the costs incurred to fulfill a contract with a customer
in thousands of US dollars
December 31, 2022

Assets recognized from the costs
incurred to fulfill a contract
Total

December 31, 2023
45,00534,48945,00534,489The costs incurred to fulfill a contract with customer, which directly relate to a contract and are expected to be recovered,
are recognized as assets and are included in other current assets and other non-current assets in the consolidated
statement of financial position.
Assets recognized for contract fulfillment costs are primarily the setup costs for operation contracts to satisfy
performance obligations in the future, which are recoverable as service fee revenue.
Amortization expenses from assets recognized for contract fulfillment costs in previous year and this year are US$14,283
thousand and US$21,916 thousand, respectively.
24. Expenses by nature(1) Cost of sales
Cost of sales is as follows:in thousands of US dollars
2022
Material and subcontracting

2023
1,811,806

2,460,835

Employee benefits

693,099

751,370

Other

166,597

112,336

2,671,503

3,324,543

Total(2) Selling, general and administrative expenses
Selling, general and administrative expenses are as follows:in thousands of US dollars
2022
Bidding and proposals

2023
6,295

9,551

Employee benefits

109,382

113,550

Depreciation and amortization

36,261

38,411

Other

1,161

27,024

153,101

188,538

Total- 30 -

25. Other income
Other income is as follows:in thousands of US dollars
2022

2023

Government grants
Reversal of provision for repair
Others
Total

707

197

32,216

－

460

2,316

33,3842,513

Note: In 2022 the Group recognized the reversal of provision for repair costs of FPSO Cidade do Rio de Janeiro MV14, forwhich the Group provided charter services offshore Brazil, as income since it became definite that a portion of repair costs
and related expenses would not be incurred.
26. Finance income and finance costs(1)

Finance income is as follows:in thousands of US dollars
2022

2023

Interest income
Financial assets measured at amortized cost
Bank deposits

4,405

15,505Subordinated loan to equity-accounted
investees

39,05340,928Other

18,983

1,119

775

－

－

31,500

－

703

1,171

1,076

64,38990,834Gain on valuation of derivatives
Financial assets and liabilities measured atfair value through profit or loss
Reversal of provision for loss allowance
Financial assets measured at amortized cost
Exchange gain
OthersTotal(2)Finance costs are as follows:in thousands of US dollars
2022

2023

Interest expenses
Financial liabilities measured at amortized cost
Bonds and borrowings

16,30027,482

Lease liabilities

1,710

2,050

－

24,270－334

20,495－

Exchange loss

36,374－

Others

10,004

14,96684,884

69,104

Other
Loss on valuation of derivatives
Reversal of provision for loss allowance
Financial liabilities measured at amortized cost
Provision for loss allowance
Financial assets measured at amortized costTotal

- 31 -

27. Income tax(1)

Deferred tax assets and deferred tax liabilities①

Movements in deferred tax assets and deferred tax liabilities

2022
in thousands of US dollars
Recognizedin other
December 31, 2022
comprehensive
incomeJanuary 1, 2022

Recognized in
profit or loss

322

9

－

332

Provision for warranties

14,299(736)－

13,563

Provision for loss allowance

9,290

117

－

9,408

Tax loss carryforwards

17,588

6,724－

24,312

Provision for loss on construction

8,191(5,927)－2,264

Construction contracts

6,027

5,331

－

11,359Defined benefit liability

52

232

(284)

－

Depreciation and amortization

0

(0)

－

－

14,652(2,425)－

12,226

858

－

(858)

－

8,184

3,498

－

11,682

79,467

6,824(1,142)85,14813,091(10,945)－

2,145

Undistributed profits of subsidiaries

666

95

－

761

Depreciation and amortization

－

5,016

－

5,016

Effective portion of cash flow hedges

－

－

651

651

10,775

2,064－

12,84024,533(3,769)651

21,41554,933

10,593(1,793)63,733

Deferred tax assets
Other financial liabilities - current

Unrealized profit of construction contracts
Effective portion of cash flow hedges
Others
Total
Deferred tax liabilities
Construction contracts

OthersTotal
Net deferred tax assets (liabilities)- 32 -

2023
in thousands of US dollars
January 1, 2023

Recognized in
profit or loss

Recognizedin othercomprehensive
incomeDecember 31, 2023

332

(243)

－

88

Provision for warranties

13,563(5,358)－

8,204

Provision for loss allowance

9,408(9,408)

－

－

－

6,282

－

6,282

Tax loss carryforwards

24,312(18,528)－

5,784

Provision for loss on construction

2,264(1,566)－697

Construction contracts

11,359(10,272)－

1,087

Defined benefit liability

－

520

(520)

－

Unrealized profit of construction contracts

12,226(6,040)－6,185

Others

11,682(7,130)－4,552

85,148(51,746)(520)

32,882

2,145(1,159)

－

985

761

(761)

－

－

5,016

1,844

－

6,861

651

－

920

1,572

12,840(5,866)－

6,973

21,415(5,943)920

16,392

63,733(45,802)(1,441)

16,489Deferred tax assets
Other financial liabilities – current

Foreign tax credits

Total
Deferred tax liabilities
Construction contracts
Undistributed profits of subsidiaries
Depreciation and amortization
Effective portion of cash flow hedges
OthersTotal
Net deferred tax assets (liabilities)

Note: The difference between the net deferred tax assets (liabilities) recognized through profit or loss and the deferred
tax expense at (2) Income tax ① Income tax recognized in profit or loss is due to exchange differences on translationof foreign operations.
② Deductible temporary differences, tax loss carryforwards and tax credit carryforwards for which no deferred tax
asset is recognizedDeferred tax assets have not been recognized in respect of the following items because it is not highly probable that
future taxable profit will be available against which the Group can utilize the benefits therefrom.
in thousands of US dollars
December 31, 2022
Deductible temporary differences

December 31, 2023
590,546

529,961

Tax loss carryforwards

1,002,843

1,217,891

Tax credit carryforwards

－

6,282

Total

1,593,390

1,754,136

Tax loss carryforwards for which no deferred tax assets are recognized expire as follows:in thousands of US dollars
December 31, 2022
Over fifth year

December 31, 2023
1,002,843- 33 -

1,217,891

③ Taxable temporary differences for which deferred tax liabilities have not been recognized
The Group has an ability to control the timing of the reversal of all taxable temporary differences associated withinvestments in subsidiaries, and it is highly probable that the temporary differences will not reverse in the foreseeable
future.
The aggregate amount of temporary differences associated with investments in subsidiaries for which deferred tax
liabilities have not been recognized at December 31, 2022 and 2023 are US$5,962 thousand and US$3,501 thousand,respectively.
(2)

Income tax① Income tax recognized in profit or loss
in thousands of US dollars
2022

2023

Current tax expense

25,20843,140

Deferred tax expense(11,517)45,572

13,691

88,712Total②

Reconciliation between statutory tax rate and effective tax rate
The effective tax rate represents the ratio of income tax expense to profit before tax.
2022

Statutory income tax rate

2023
31.0%

31.0%

Tax rate difference of foreign operations(14.6)(4.3)

Decrease (increase) in unrecognized deferred tax assets

105.3

34.5

8.3

1.4

(71.7)(18.6)

Combined foreign subsidiary tax

1.0

2.5

Effect of changes in exchange rates(42.4)(1.6)

Foreign tax credits

1.7

(2.2)

Others6.4(1.4)

Effective tax rate

25.0

41.3

Adjustments:

Permanently non-deductible items
Share of profit of investments accounted for using equity
methodNote: The Company calculates the statutory tax rate based on the corporate income tax, inhabitant tax and enterprise
tax in Japan. Subsidiaries are subject to corporate income taxes and other taxes in the countries where they are located.
(3)

Exposure note
The Group operates in jurisdictions that have enacted global minimum top-up tax rules. On March 28, 2023 the "Actfor Partial Revision of the Income Tax Act." (Act No. 3 of 2023) introduced global minimum top-up tax rules legislated
in Japan where the Company is located. However, since the global minimum top-up tax rules are effective from January
1, 2025, there is no impact for this year. The Group has also assessed the impact of the application of global minimum
top-up tax rules on the basis of income and tax expenses determined as part of the preparation of the consolidated
financial statements through December 31, 2023 taking into account certain adjustments required in the application of
the legislation. As a result of the assessment, it is anticipated the Group may incur additional income taxes in somejurisdictions, but no additional income taxes are expected to arise for most jurisdictions, so that the impact on theGroup's financial results is reasonably estimated to be immaterial.

- 34 -

28. Earnings per share
The following reflects the share data used in the basic earnings per share and diluted earnings per share calculations:
2022

2023

Profit used in the basic earnings per share calculation (in37,377
96,536thousands of US dollars)－－
Adjustment for profit (in thousands of US dollars)Profit used in the diluted earnings per share calculation (in37,377
96,536thousands of US dollars)
Weighted average number of ordinary shares used in
56,36762,420basic earnings per share calculation (in thousands ofshares)
Effect of dilutive potential ordinary shares
Share-based compensation (in thousands of shares)
26
39
Weighted average number of ordinary shares used in
56,39462,459diluted earnings per share calculation (in thousands ofshares)Note: The Company’s ordinary shares owned by trust are excluded from weighted average number of shares
outstanding in determining basic earnings per share. The weighted average number of treasury shares owned by trustand excluded in determining basic earnings per share are 39 thousand shares in 2022 and 37 thousand shares in 2023.
29. Other comprehensive income
Amount arising during year, reclassification adjustment to profit or loss and tax effect by item of other comprehensive
income are as follows:2022
in thousands of US dollars
Amountarisingduringyear

Reclassification toprofit orloss

Before tax
effectTax effect

After tax
effect

8,662

－

8,662

(284)

8,378

8,662

－

8,662

(284)

8,378

(6,985)

15,294

8,309(1,346)

6,962

212

－

212

－

212

205,378

21,297

226,675－

226,675

Total items that may be reclassified subsequently to
profit or loss

198,605

36,591

235,197(1,346)

233,850

Total

207,268

36,591

243,860(1,631)

242,228

Items that will not be reclassified subsequently to
profit or loss
Remeasurements of defined benefit liability
Total items that will not be reclassified subsequently
to profit or loss
Items that may be reclassified subsequently to profit
or loss
Effective portion of cash flow hedges
Exchange differences on translation of foreign
operations
Share of other comprehensive income ofinvestments accounted for using equity
method- 35 -

2023
in thousands of US dollars
Amountarisingduringyear

Reclassification toprofit orloss

Before tax
effectTax effect

After tax
effect

1,841

－

1,841

(520)

1,321

1,841

－

1,841

(520)

1,321

8,302

(2,158)

6,144

(920)

5,223

(5,598)－(5,598)－(5,598)1,566(24,332)(22,766)－(22,766)

Total items that may be reclassified subsequently to
profit or loss

4,270

(26,490)(22,220)(920)(23,141)

Total

6,111

(26,490)(20,378)(1,441)(21,819)

Items that will not be reclassified subsequently to
profit or loss
Remeasurements of defined benefit liability
Total items that will not be reclassified subsequently
to profit or loss
Items that may be reclassified subsequently to profit
or loss
Effective portion of cash flow hedges
Exchange differences on translation of foreign
operations
Share of other comprehensive income ofinvestments accounted for using equity
method30. Financial instruments(1) Capital management

The Group's capital management aims to improve capital efficiency to ensure sufficient funds for the developmentof its core business in order to achieve sustainable growth and increase the Group’s corporate value.
For management purpose the Group designated profit attributable to owners of parent and the rate of return on
equity attributable to owners of parent (ROE) as indicators related to maintaining a sound financial position.
2022

ROE

(%)

2023
5.6

10.7

Note: ROE: Profit attributable to owners of parent/Equity attributable to owners of parent (average between beginningand end of year)
There are no important capital regulations to which the Group is subject.

(2) Basic policy of financial risk management

The Group is exposed to financial risks in the course of its business activities and manages such risks based on certain
policies to avoid or mitigate such risks.
The Group's policy is to use derivative transactions to avoid market risks and not to engage in speculativetransactions.
The Group's business activities are affected by the business and financial market environment. Financial instruments
held in the course of business activities are exposed to inherent risks. The risks primarily include credit risk, liquidity
risk, foreign currency risk and interest rate risk.

(3) Credit risk

① Credit risk management and maximum exposure to credit risk
Trade and other receivables and contract assets held by the Group are exposed to customer credit risk. The Group
mitigates the risk by limiting to transact with creditworthy customers based on credit checks and by managing thebalance of receivables on a regular basis. Loans receivable and financial guarantee contracts are exposed to thecredit risk of counterparties. The Group addresses collection issues at early stage and mitigates the credit risk bydispatching executives to the counterparties for business management, making necessary instruction, collecting
financial information and assessment, and exercising voting rights at general shareholders meeting of counterparties.
Derivative transactions are exposed to counterparty credit risk. To mitigate counterparty credit risk, the Group enters
into transactions only with highly rated financial institutions.
The Group does not have excessively concentrated credit risk on specific counterparties.
The maximum exposure to credit risk on financial assets is the carrying amount of the financial assets presented in
the consolidated statement of financial position.

- 36 -

The maximum exposure to credit risk on financial guarantee contracts is as follows:in thousands of US dollars
December 31, 2022
Financial guarantee contracts

December 31, 2023

1,911,969

744,947

The credit risk of the financial guarantee contracts is insignificant.
② Credit risk management
The Group recognizes a loss allowance for financial assets measured at amortized cost. In recognizing and measuring
the loss allowance, the Group classifies financial assets into 3 stages based on whether there is a significant increasein credit risk associated with the financial asset and whether there is a credit impairment.
Stage 1: Financial assets for which credit risk has not increased significantly since initial recognition
Stage 2: Financial assets for which credit risk has increased significantly since initial recognition but
no credit impairment has been recognizedStage 3: Financial assets for which significant increase in credit risk and credit impairment have been observable
A significant increase in credit risk means that the risk of a default at the end of reporting period has significantly
increased compared with the risk of initial recognition. The Group determines whether there is a significant increasein credit risk based on the possibility that the debtor's ability to repay may change in the future, taking into
consideration the fact that interest or principal payments are, in principle, overdue for 30 days or more, as well as
economic trends in the industry to which the debtor belongs.
The Group determines that a default has occurred when the issuer or obligor is in serious financial difficulty or isdelinquent on interest or principal payments.
In the event of default, the Group determines that objective evidence of credit impairment exists and classifies thedebt as a credit impaired financial asset.
Regardless of the above stages, if it is reasonably determined that all or part of the financial asset is not collectible,
for example when a receivable is legally extinguished, the carrying amount of the financial asset is directly reduced.
In estimating the loss allowance, the expected credit losses on trade and other receivables and contract assets aremeasured on an aggregate basis with each creditor establishing its own group or subgroup.
In measuring expected credit losses for 12 months and for entire periods, the Group uses reasonable andsupportable information about past events, current conditions, and projected future economic conditions that isavailable at the end of reporting period without undue cost or effort.
In measuring expected credit losses on an aggregate basis, the Company may use historical default rates.
③

Changes in loss allowancein thousands of US dollars
Profit allowancemeasured at an
amount equal toexpected credit
losses for 12monthsExpected credit losses for entire period
Profit allowance forfinancial assets for
Profit allowance for
Profit allowance forwhich credit risk has
trade receivables
credit impaired
increased significantly
and contract assets
financial assets
since initialrecognition

At January 1, 2022－

18,413－89,085

Provision

－

208

－

26,234

Utilization

－

－

－

(1,986)

Reversal－(18,159)

－

(500)

Other

－

11

－

－

At December 31, 2022

－

473

－

112,833

Provision

－

9

－

－

Utilization

－

－

－

(710)

Reversal

－

(473)

－

(25,265)

Other

－

－

－

－

At December 31, 2023

－

9

－

86,857Note:
1There are no properties held as collateral or other credit enhancements.
2
In 2022 the Group had US$94,312 thousand of provision for loss allowance on the loan to GAS OPPORTUNITY- 37 -

MV20 B.V. (MV20), equity-accounted investee, due to the effect of deteriorating profitability of MV20. In 2023
the Group reversed a portion of provision for loss allowance of US$22,500 thousand since MV20’s projected
future cash flows have improved.
④

Carrying amounts of financial assets related loss allowance
Carrying amounts of financial assets before deducting loss allowance are as follows:in thousands of US dollars
Financial assets
for which loss
allowance
recognized at an
amount equal toexpected credit
losses for 12monthsExpected credit losses for entire period

Trade receivables
and contract assets

Financial assets forwhich credit risk
has increased
significantly sinceinitial recognition

Credit impaired
financial assets

At January 1, 2022

461,572

1,074,621－

94,252At December 31, 2022

408,509735,885－

115,804

At December 31, 2023

402,773

777,758－

121,329⑤

Credit risk analysis
Analysis of aging on overdue trade and other receivables at the end of each reporting period is as follows:in thousands of US dollars
December 31, 2022

December 31, 2023

Within 30 days after due date

22,99526,748More than 30 days and within 60 days after due date

1,136

772

More than 60 days and within 90 days after due date

3,949

3,216

More than 90 days after due date (Note)

32,01041,985

Total
60,09272,723
Note: At each reporting period credit impaired amounts are US$4,829 thousand and US$2,264 thousand, respectively.
Analysis of aging on overdue loans receivable at each reporting period is as follows:in thousands of US dollars
December 31, 2022

December 31, 2023

Within 30 days after due date－－More than 30 days and within 60 days after due date－－More than 60 days and within 90 days after due date－－

109,947

118,947

More than 90 days after due date
Total

109,947
118,947
Note: At each reporting period credit impaired amounts are US$106,975 thousand and US$84,475 thousand, respectively.

(4) Liquidity risk

① Liquidity risk management
The Group procures funds mainly through borrowings from financial institutions and issuing bonds. Regarding
exposures to the liquidity risk of trade payable and borrowings, they are managed by the Company’s financedepartment by preparing and updating a cash flow management plan based on the information from each Group
entity. In addition, the Group has entered into commitment line contracts with financial institutions to ensure theflexibility and liquidity of funding.
The total amount of commitment line and borrowings from commitment line are as follows:in thousands of US dollars
December 31, 2022

December 31, 2023

Total amount of commitment line
Borrowings

160,000

160,000－－

Unused commitment line

160,000

160,000- 38 -

② Balance of financial liabilities (including derivative financial instruments) by due date
At December 31, 2022
in thousands of US dollars
After 1 year After 2years After 3years After 4years
and within and within and within and within After 5years
2 years
3 years
4 years
5 years

Contractual
cash flows

Within1 yearTrade and other payables

921,708

921,708

－

－

－

－

－

Bonds and borrowings

466,076

38,30874,98069,621

201,074

3,585

78,506

Lease liabilities

61,93923,61020,427

13,162

3,219

1,322

197

Financial guarantee contracts

1,911,969

1,911,969

－

－

－

－

－

Subtotal

3,361,692

2,895,595

95,40882,783204,294

4,907

78,703

Cash inflow

11,706

10,936

－

769

－

－

－

Cash outflow

12,148

11,353

－

795

－

－

－

3,362,134

2,896,012

95,40882,809204,294

4,907

78,703Non-derivative financial liabilities

Derivative financial liabilities

Total
At December 31, 2023

in thousands of US dollars
After 1 year After 2years After 3years After 4years
and within and within and within and within After 5years
5 years
4 years
3 years
2 years

Contractual
cash flows

Within1 yearTrade and other payables

1,189,228

1,189,228

－

－

－

－

－

Bonds and borrowings

702,007

92,45886,214302,209

12,07686,997122,050

Lease liabilities

45,80925,524

16,190

3,359

729

5

－

Financial guarantee contracts

744,947

744,947

－

－

－

－

－

2,681,994

2,052,159

102,405

305,569

12,80587,002122,050

Cash inflow

11,045

11,045

－

－

－

－

－

Cash outflow

11,357

11,357

－

－

－

－

－

2,682,306

2,052,471

102,405

305,569

12,80587,002122,050

Non-derivative financial liabilities

Subtotal
Derivative financial liabilities

Total

Note:
1
The amounts presented are at undiscounted gross amounts and include contractual interest payments.
2
Financial guarantee contracts are contracts of which the Company to compensate for such losses based on
performance claims in the event that an associate of the Group as debtor is unable to repay the debt coveredby the guarantee obligation. For issued financial guarantee contracts the maximum amount of the guarantee isallocated to the earliest period in which the guarantee could be called.
3
Derivative financial liabilities represent the net cash flow amounts related to derivatives that are cash-settled ona net basis and the gross cash inflows and outflows related to derivatives that are simultaneously cash-settled
on a gross basis.

(5) Foreign currency risk

① Foreign currency risk management
The Group is exposed to foreign currency risk arising from foreign currency transactions other than US dollars, whichis the Group’s functional currency, since the Group operates its business globally. In order to prevent incurring andincreasing losses associated with foreign currency risk, the Group’s risk management policy is to hedge foreign
currency risk arising from purchase order in foreign currency exceeding a certain threshold amount that do not havean offsetting relationship with revenues in the same foreign currency and net exposure of loans receivable andborrowings in foreign currencies with mainly utilizing forward exchange contracts and currency swaps. The Group
usually designates these as cash flow hedges and matches the material terms and conditions of those hedged items.
The Group determines the economic relationship between the hedging instrument and the hedged item based on
their cash flows and assesses the effectiveness of the hedge.

- 39 -

② Exposures to foreign currency fluctuation risk
The Group’s exposures to foreign currency fluctuation risk are as follows:
The exposures exclude the amount of foreign currency fluctuation risk hedged using derivative transactions.
in thousands of US dollars
December 31, 2022

December 31, 2023

Brazilian Real(372,121)(235,282)

Singapore dollar(37,444)(40,414)③ Sensitivity analysis of foreign currency
The effect on profit or loss before tax and equity of 1.0% appreciation of US dollars against the currency below on
financial instruments held by the Group at each reporting period with all other variables held constant is as follows:2022
in thousands of US dollars
Effect on profit or loss before tax

Effect on equity

Brazilian Real

37,212

37,212Singapore dollar

3,744

3,741

2023
in thousands of US dollars
Effect on profit or loss before tax
Brazilian RealSingapore dollar

Effect on equity

2,352

2,344

404

402

Note: The effects on profit or loss before tax and equity in 2022 represent the 10.0% appreciation of US dollars against
the currency above on financial instruments.

(6) Interest rate risk

① Interest rate risk management
Borrowings with variable interest rates are exposed to interest rate fluctuation risk. For some of these long-termborrowings, the Group uses interest rate swaps as hedging instruments on an individual contract basis in order toavoid interest rate fluctuation risk and fix interest payments.

② Sensitivity analysis of interest rate
The effect on profit or loss before tax and equity of a 1% upwards in interest rates on variable borrowings held by
the Group at each reporting period with all other variables held constant is as follows:in thousands of US dollars
2022

2023

Effect on profit before tax(1,768)(1,686)

Effect on equity(1,665)(1,646)③ Exposures to interest rate fluctuation
Exposures to interest rate fluctuation are as follows:in thousands of US dollars
December 31, 2022

December 31, 2023

Variable rate financial instruments
Financial liabilities

172,450

153,425

Financial assets

82,36382,363

Net balance

90,086

71,061

11,2506,750

78,83664,311

Impact of interest rate swaps
Net balance- 40 -

(7) Fair value of financial instruments① Fair value and carrying amounts
The fair value of financial instruments measured at amortized cost and their carrying amounts are as follows:
The fair value of financial assets and liabilities measured at amortized cost other than loans receivable and bonds
and borrowings are not included because their carrying amounts are considered as a reasonable approximation offair value.
in thousands of US dollars
December 31, 2022
Carrying amount

December 31, 2023

Fair value

Carrying amount

Fair value

Loans receivable

365,032

345,182

376,006

353,137

Bonds and borrowings

393,378

376,702570,753

557,995

Note: Current portion of loans receivable and current portion of borrowings are included in loans receivable, bonds andborrowings, respectively.
② Fair value of financial instruments
Fair value measurement method(Loans receivable)
The fair value of loans receivable is calculated based on the present value of their future cash flows for each contractand discounted at an interest rate equal to an appropriate index such as the yield of government bonds plus a
credit spread.
(Bonds and borrowings)
For those with fixed interest rates, the fair value is calculated by discounting the total amount of principal andinterest by the interest rate that would be applicable if similar new borrowings were made at the time of fair value
evaluation. For those with variable interest rates, the carrying amount is used because the carrying amount reflects
market interest rate over a short period of time and is deemed as a reasonable approximation of fair value.
Loans receivable and bonds and borrowings are classified as Level 3 of fair value hierarchy.

(8) Fair value of financial instruments hierarchy

Financial instruments ordinarily measured at fair value after its initial recognition are categorized into the following
three levels based on the observability and significance of inputs used to measure such financial instruments.
Level 1: Quoted prices in active markets
Level 2: Inputs, other than Level 1, that are observable either directly or indirectly
Level 3: Unobservable inputs
Transfers between levels of the fair value hierarchy are deemed to have occurred at the beginning of each quarter.
There were no transfers made between levels during 2022 and 2023.
Financial instruments ordinarily measured at fair value are as follows:

At December 31, 2022
in thousands of US dollars
Level 1

Level 2

Level 3

Total

Financial assets
Financial assets measured at fairvalue through profit or loss
Derivatives assets

－

4,033

－

4,033

Other

－

410

－

410

－

4,444

－

4,444

Derivative liabilities

－

411

－

411

Total

－

411

－

411

Total
Financial liabilities
Financial liabilities measured at fairvalue through profit or loss

- 41 -

At December 31, 2023
in thousands of US dollars
Level 1

Level 2

Level 3

Total

Financial assets
Financial assets measured at fairvalue through profit or loss
Derivatives assets

－

9,319

－

9,319

Other

－

410

－

410

－

9,729

－

9,729

Derivative liabilities

－

319

－

319

Total

－

319

－

319

Total
Financial liabilities
Financial liabilities measured at fairvalue through profit or loss

The derivative assets and derivative liabilities of the Group are not traded in active markets. For the measurement of
their fair values the Group is, therefore, not relying on its own estimates to the extent possible but utilizing the best
available observable market data. Since all significant inputs are observable for the derivative assets and derivative
liabilities, they are classified as Level 2.
In accordance with the Group’s valuation policies and procedures for fair value measurements, the Group’s financedepartment measures the fair value of derivative assets and derivative liabilities. The results of fair value measurements
are approved by the responsible person of the Group’s finance department.

(9) Derivative transactions and hedging activities

In the ordinary course of business, the Group is exposed to market risks such as interest rate and exchange rate
fluctuations.
To manage these risks, the Group, in principle, assesses the net amount of risks and seeks to mitigate market risks
by utilizing transactions that have the effect of offsetting risks. Furthermore, the Group seeks to reduce the market
risks by utilizing appropriate derivative transactions for hedging purposes in accordance with its risk management
strategy.
Applying hedge accounting, whether the changes in fair value or cash flows of the hedged items attributable to thehedged risk are in an economic relationship to offset with the changes in fair value or cash flows of the hedging
instruments, the Group, in principle, confirms that the existence of an economic relationship between the hedged
item and the hedging instrument through a qualitative assessment of whether the significant conditions of thehedged item and the hedging instrument match or closely match and a quantitative assessment of whether thechanges in value of the hedged item and the hedging instrument offset each other under the same risk.
The Group principally utilizes highly effective hedges, however, ineffective portions of hedges may occur due todifferences in the timing of cash flows or fluctuations in the forecasted value of cash flows between hedging
instruments and hedged items. The ineffective portion of the hedge is recognized immediately in profit or loss.
The Group utilizes derivative transactions for hedging purposes based on appropriate hedge ratios in light of theeconomic relationship between hedging instruments and hedged items and its risk management strategy.
Cash flow hedge
The Group mainly designates forward exchange contracts, interest rate swaps and currency and interest rate swaps
as cash flow hedge to hedge against the risks of foreign exchange rate fluctuations related to trade payables
denominated in foreign currencies, interest payment fluctuations related to borrowings and interest payment
fluctuations and foreign exchange rate fluctuations related to borrowings denominated in foreign currencies.

- 42 -

① Amounts related to items designated as hedging instruments
The amounts related to items designated as hedging instruments are as follows:
At December 31, 2022
in thousands of US dollars
Hedging
instruments

Notional amount
Total

Carrying amount
Derivative
assetsDue after 1 year

Change in value used to
calculate the ineffective
portion of the hedge

Derivative
liabilities

Interest rate andcurrency risk
Interest rate andcurrency swaps

－

－

－

－

(600)

11,250

6,750

368

－

659

231,815

82,624

3,665

411(5,867)

Interest rate risk
Interest rate swaps
Foreign currency risk
Forward exchange
contracts
At December 31, 2023
in thousands of US dollars
Hedging
instruments

Notional amount
Total

Carrying amount
Derivative
assetsDue after 1 year

Change in value used to
calculate the ineffective
portion of the hedge

Derivative
liabilities

Interest rate andcurrency risk
Interest rate andcurrency swaps

－

－

－

－

－

6,750

2,250

166

－

78

Interest rate risk
Interest rate swaps
Foreign currency risk
Forward exchange
contracts
306,207
19,369
9,152
319
7,458
Note:
1
Derivative assets and derivative liabilities are included in other financial assets and other financial liabilities in
the consolidated statement of financial position, respectively.
2
Interest rate and currency swap contracts were all expired during 2022.
The average rates related to hedging instruments are as follows:

Interest rate and currency swaps

Interest rate swaps
Forward exchange
contracts

Euro
Norwegian krone
British pound
Singapore dollar
Swiss Franc
Brazilian Real

December 31, 2022

December 31, 2023

－ Japanese yen / US dollar－ Japanese yen / US dollar

－%

－%

3.16%

3.16%

1.07 US dollars / Euro－ kroner / US dollar－ US dollar / British pound
1.38 Singapore dollars / US dollar
0.94 francs / US dollar－ real / US dollar

0.92 US dollars / Euro
10.79 kroner / US dollar
0.80 US dollars / British pound
1.35 Singapore dollars / US dollar
0.88 francs / US dollar
5.20 real / US dollar- 43 -

② Balances in cash flow hedge reserve for continuing hedges
The balances by risk category of cash flow hedge reserve for the Group’s continuing hedges are as follows:
At December 31, 2022
in thousands of US dollars
Risk category

Cash flow hedge reserve

Interest rate and currency risk－

Interest rate risk

254

Foreign currency risk

2,187

At December 31, 2023
in thousands of US dollars
Risk category

Cash flow hedge reserve

Interest rate and currency risk－

Interest rate risk

114

Foreign currency risk

7,550

③ Amounts recognized in profit or loss and comprehensive income related to cash flow hedges
The amounts recognized by the Group in the consolidated statements of profit or loss and comprehensive income
related to cash flow hedges by risk category are as follows:2022
in thousands of US dollars
Classification of risks

Foreign currency risk

Gains or losses on hedges recognized in othercomprehensive income
Ineffective portion of hedges recognized in profit
or loss
Amount reclassified from other componentsof equity to profit or loss

Interest rate risk

Interest rate andcurrency risk

(7,044)

659

(600)

1,177

－

－

15,112

96

86

2023
in thousands of US dollars

Classification of risks

Foreign currency risk

Interest rate risk

Interest rate andcurrency risk

Gains or losses on hedges recognized in other
－
8,224
78
comprehensive income
Ineffective portion of hedges recognized in profit
－
－
(766)
or loss
Amount reclassified from other components－(1,878)(279)
of equity to profit or loss
Note:
1
No amounts were included directly in the carrying amount of asset and liability both in 2022 and 2023.
2
Line item where ineffective portion of hedges included is finance costs in 2022 and 2023.
3
Line item where amount reclassified from other components of equity to profit or loss of foreign currency risk
included is finance income in 2022 and 2023. Line items where amount reclassified from other components ofequity to profit or loss of interest rate risk and interest rate and currency risk included is finance costs in 2022
and 2023.

- 44 -

④ Changes relating cash flow hedges recognized in other components of equity
The changes relating cash flow hedges recognized in other components of equity in the consolidated statement offinancial position are as follows:in thousands of US dollars
Foreign currency
Interest rate andInterest rate risk
Total
risk
currency risk
At January 1, 2022
Amount arising during theperiodReclassification
adjustments to profit orloss
At December 31, 2022
Amount arising during theperiodReclassification
adjustments to profit orloss
At December 31, 2023

(4,484)

(387)

352

(4,520)(5,802)

545

(438)

(5,695)

12,47596

86

12,657

2,187

254

－

2,441

6,848

140

－

6,988

(1,485)(279)－(1,765)

7,550

114

－

7,665

31. Related parties(1) Related party transactions① Name of related parties and relationship with the Group
Refer to Note 33. List of Group companies.
In addition, Mitsui E&S Co., Ltd. is classified as a parent company under IFRS, but there were no material transactions
with the Group in 2022 and 2023.

②

Receivables and payables of the Group with associates and joint venturesin thousands of US dollars
December 31, 2022

December 31, 2023

Associates
Trade and other receivables
Short-term loans receivables
Long-term loans receivables
Contract assets
Other financial assets - current
Provision for loss allowance
Trade and other payables

202,260－
362,061
88,847
20,882(473)
10,578183,051
27,370374,768
31,574
22,394(9)
1,293

Joint ventures
Trade and other receivables

49,465
Short-term loans receivables
12,663Long-term loans receivables
97,284
Other financial assets - current
2,407
Provision for loss allowance(112,833)
Trade and other payables
3,119
Note: Receivables and payables include value added tax and other.

- 45 -

42,751
12,663106,284
5,595(86,857)
1,137

③ Transactions with associates and joint venturesin thousands of US dollars
2022

2023

Associates
Revenue

938,824

692,058

Purchases

8,550

11,643

Interest income

57,641

41,900

Dividend income

21,97472,412

Initial and additional capital contributions

96,383229,821

Payments for loans receivable

24,103－

Collection of loans receivable

14,204

20,527

Revenue

124,516

160,591

Purchases

Joint ventures
10,09017,531

Interest income

224

5,173

Dividend income

7,000

24,300

Payments for loans receivable

22,500－Note: Trade terms, conditions and policy of trade terms and conditions are as follows:1
Consumption and other taxes are not included in amount of transaction.
2
Trade terms and conditions are arm’s length basis. No receivables or payables have collaterals or guarantees.
3

Underwriting of additional investment is for newly established companies and capital increase of existing
companies.

④ Transactions with major shareholders
Transactions with major shareholders and the Group are as follows:in thousands of US dollars
2022

2023

Major shareholders
Third party allotment of new shares

107,953－

Note:
In 2023 the Company made a third-party allotment of new shares based on the resolution of Board meeting on
April 28, 2023 as follows:
Share price: 1,264 Japanese yen per share
Number of shares issued: 1,775,000 shares to Mitsui & Co., Ltd. and 10,162,300 shares to Mitsui O.S.K. Lines, Ltd.
The share price was discounted by 9.97% from the market price of 1,404 Japanese yen at the end of April 27, 2023.
The discount took consideration of the risk of potential decline of share price and dilution after allotment.
No unsettled balances of the transaction exist at the end of this year.

(2) Remuneration of key management personnel

in thousands of US dollars
2022

Base salary
Share-based payment
Total

2023
1,031

1,117

101

191

1,133

1,308

Note: The Company’s board of directors are considered as key management personnel.

- 46 -

32. Cash flow information
Changes in liabilities arising from financing activities are as follows:
Long-term
borrowings

Leaseliabilities

Bonds

in thousands of US dollars
Derivative
liabilities
Total(assets)

At January 1, 2022

204,240

222,682

43,137(690)

469,369

Changes from financing
cash flows(31,620)－(21,463)568(52,516)－－

37,137－

37,137

(109)

－

93

－

(16)

Changes in fair values

－

－

－

122

122

Other

－

(1,814)－－(1,814)

At December 31, 2022

172,510

220,867

58,904－452,282

Changes from financing
cash flows(19,084)

195,518(25,274)－

151,159－－

10,791－

10,791

－

－

(975)

－

(975)

Changes in fair values

－

－

－

－

－

Other

－

941

－

－

941

153,425

417,328

43,445－614,199

Non-cash transactions
New leases andcontract modifications
Effect of changes inexchange rates

Non-cash transactions
New leases andcontract modifications
Effect of changes inexchange rates

At December 31, 2023

Note: The Group has derivatives for the purpose of hedging interest rate and exchange rate fluctuation risks of foreign
currency denominated borrowings.
33. List of Group companies
Subsidiaries, associates and joint ventures
Name

Country

Principal business

Votingrightsholding(%)

Subsidiaries
FPSO engineering services,
FPSO design, construction
and installation
FPSO engineering services,
FPSO design, construction
and installation

MODEC OFFSHORE PRODUCTION SYSTEMS(SINGAPORE) PTE. LTD.

Singapore

OFFSHORE FRONTIER SOLUTIONS PTE. LTD.

Singapore

MODEC MANAGEMENT SERVICES PTE. LTD.

Singapore

FPSO/FSO operations

100.0

100.0

65.0

MODEC SERVICOS DE PETROLEO DO BRASILLTDAMODEC OFFSHORE SERVICOS LTDA.

BrazilFPSO/FSO operations

100.0

Brazil100.0

MODEC SERVICES NETHERLANDS B.V.

Netherlands

MODEC HOLDINGS NETHERLANDS B.V.
MODEC SERVICES NETHERLANDS 2 B.V.
MODEC FINACE B.V.

Netherlands
Netherlands
Netherlands

MODEC INTERNATIONAL, INC.

USA

Business support to affiliates
Business support to affiliates,
CMS management
Sub-holding company
Business support to affiliates
Financing
FPSO design, businesssupportMODEC OPERATIONS AND MAINTENANCESERVICES, INC.

USA

Business support to affiliates

100.0

SOFEC, INC．

USA

Mooring system design,
construction and sales

80.0- 47 -

100.0
100.0
100.0
100.0
100.0

SOFEC SERVICES, LLC

USA

SOFEC FLOATING SYSTEMS PTE. LTD.

Singapore

SOFEC MALAYSIA SDN. BHD.

Malaysia

SOFEC FZE

Nigeria

SOFEC MOZAMBIQUE LDA

Mozambique

MITSUI OCEAN DEVELOPMENT &ENGINEERING COMPANY MEXICO SOCIEDAD
DE RESPONSABILIDAD LIMITADA DE CAPITALVARIABLE (S. DE R.L DE C.V.)
MODEC UK LTD.
NATIONAL D'OPERATIONS PETROLIERES DE
COTE D'IVOIREMODEC (GHANA) LTD．
MODEC PRODUCTION SERVICES GHANA JVLTD
MODEC SENEGAL SASU
MODEC GUYANA INC.
MODEC ANGOLA LDA.
MODEC OFFSHORE ENGINEERINGSERVICES (DALIAN) CO., LTD.
1 other
Total 27 subsidiaries
Associates
PRA-1 MV15 B.V.
TUPI PILOT MV22 B.V.
GUARA MV23 B.V.
CERNAMBI SUL MV24 B.V.
T.E.N. GHANA MV25 B.V.
CERNAMBI NORTE MV26 B.V.
CARIOCA MV27 B.V.
TARTARUGA MV29 B.V.
SEPIA MV30 B.V.
LIBRA MV31 B.V.
BUZIOS5 MV32 B.V.
MARLIM1 MV33 B.V.
AREA1 MEXICO MV34 B.V.
MODEC AND TOYO OFFSHOREPRODUCTION SYSTEMS PTE. LTD.

Maintenance services
Mooring system design,
construction and sales
Mooring system design,
construction and sales
Mooring system design,
construction and sales
Mooring system design,
construction and sales

80.0
80.0
80.0
80.0
80.0

MexicoFPSO operations

100.0

UK

Business support to affiliates

100.0

Cote d’Ivoire

FPSO operations

100.0

Ghana

FPSO operations

100.0

Ghana

FPSO operations

85.0

Senegal
GuyanaAngolaFPSO operations
FPSO operations
Business support to affiliates

100.0
100.0
100.0

China

Business support to affiliates

100.0

Netherlands
Netherlands
Netherlands
Netherlands
Netherlands
Netherlands
Netherlands
Netherlands
Netherlands
Netherlands
Netherlands
Netherlands
Netherlands

FSO charter
FPSO charter
FPSO charter
FPSO charter
FPSO charter
FPSO charter
FPSO charter
FPSO charter
FPSO charter
FPSO charter
FPSO charter
FPSO charter
FPSO charter

40.6
42.5
34.0
29.4
25.0
29.4
29.4
29.4
29.4
29.4
35.0
32.5
35.0

SingaporeFPSO construction

50.0EURO TECHNIQUES INDUSTRIESFranceMooring system design,
construction and sales

23.6

Joint ventures
MODEC VENTURE 10 B.V.
RONG DOI MV12 PTE. LTD.
RANG DONG MV17 B.V.
OPPORTUNITY MV18 B.V.
GAS OPPORTUNITY MV20 B.V.
SHAPE PTE. LTD.

Netherlands
Singapore
Netherlands
Netherlands
Netherlands
Singapore

SHAPE BRASIL SOLUCOES DIGITAIS LTDA.

BrazilTotal 22 associates and joint ventures- 48 -FPSO charter
FSO charter
FSO charter
FPSO charter
FPSO charter
Digitalization business
Digitalization businessdevelopment in FPSO O&M
area

50.0
42.0
65.0
67.0
70.0
60.2
60.2

34. Contingencies
Financial guarantees
The Group has provided guarantees for the bank borrowings of associates and joint ventures as follows:in thousands of US dollars
December 31, 2022
Guarantees for associates
Guarantees for joint ventures
Total
35. Subsequent events
There are no subsequent events.

- 49 -

December 31, 2023
1,906,969

739,947

5,000

5,000

1,911,969

744,947