Statement of Financial Position

• ¹ Net debt is calculated as total borrowings (including lease liabilities) less cash and cash equivalents.

Total equity increased from US$3,462 million at December 31, 2020 to US$3,537 million, with the positive result over the current year period and the equity injection from non-controlling interest in special purpose entities being partially offset by:

• The completion of the EUR150 million (US$178 million) share repurchase program executed between April 5, 2021 and October 11, 2021;
• Dividends distributed to the shareholders and non-controlling interests (US$292 million); and
• A decrease of the hedging reserves (US$18 million). The movement in hedging reserve was mainly caused by the increase of the marked-to-market value of the interest rate swaps due to declining market interest rates during the year. This was partially offset by the decrease of the marked-to-market value of forward currency contracts, mainly driven by the depreciation of the US$ exchange rate versus the hedged currencies (especially EUR).

Net debt increased by US$1,472 million to US$6,681 million at year-end 2021. While the Lease and Operate segment continues to generate strong operating cash flow, the Company drew on project finance and bridge loan facilities to fund the continued investment in growth.

Half of the Company’s debt as of December 31, 2021 consisted of non-recourse project financing (US$3.8 billion) in special purpose investees. The remainder (US$3.8 billion) comprised of (i) borrowings to support the ongoing construction of five FPSOs which will become non-recourse following project execution finalization and release of the related Parent Company Guarantee and (ii) the loan related to the DSCV SBM Installer. The Revolving Credit Facility (RCF) was undrawn at year-end and the net cash balance stood at US$ 1,021 million (December 31, 2020: US$414 million). The bridge loans related to FPSO Almirante Tamandaré and FPSO Alexandre de Gusmão were drawn in full during the last quarter of 2021 for a total amount of US$1,255 million. This generated a significant excess of financing cash flow compared with actual investments to date on these two units (approximately US$800 million as of December 31, 2021). Lease liabilities totaled US$56 million as of December 31, 2021.

Total assets increased to US$13.2 billion as of December 31, 2021, compared with US$11.1 billion at year-end 2020. This primarily resulted from (i) the increase of work-in-progress related to the FPSO projects under construction, and (ii) the increase in the net cash balance. These variations were partially offset by a reduction of the gross amount of the finance lease receivables, in line with the repayment schedules, as well as regular depreciation of PP&E.

RETURN ON AVERAGE CAPITAL EMPLOYED

Return on average capital employed (ROACE) is a measure of the return generated on capital invested in the Company. The measure provides a guide for long-term value creation by the Company. ROACE is calculated as Underlying EBIT divided by the annual average of: i) total equity, ii) total borrowings and lease liabilities, iii) non-current provisions and iv) deferred tax liabilities minus the cash and cash equivalents.

2021 ROACE stood at 7.6%, which is below the past three-year average of 8.5%. This is mainly explained by a significant increase in the Capital Employed in 2021 on projects under construction which have yet to fully contribute to earnings, as three FPSO projects under construction have not yet reached the gate progress of completion allowing margin recognition under the Company policy.

RETURN ON AVERAGE EQUITY

Return on average equity (ROAE) measures the performance of the Company based on the average equity attributable to the shareholders of the parent company. ROAE is calculated as Underlying profit attributable to shareholders divided by the annual average of equity attributable to shareholders of the parent company.

2021 ROAE stood at 15.8%,above the past three-year average of 11.5%. This is driven by a higher underlying profit attributable to shareholders, mainly explained by the increase in the Turnkey activity.