4.3.25Provisions
The movement and type of provisions during the year 2021 are summarized as follows:
Provisions (movements)
|
Demobilisation |
Onerous contracts |
Warranty |
Employee benefits |
Other |
Total |
|
|---|---|---|---|---|---|---|
|
Balance at 1 January 2021 |
134 |
3 |
37 |
34 |
167 |
376 |
|
Arising during the year |
(0) |
(1) |
23 |
1 |
30 |
53 |
|
Unwinding of interest |
1 |
- |
- |
0 |
- |
2 |
|
Utilised |
(10) |
(3) |
(0) |
(1) |
(12) |
(26) |
|
Released to profit |
(5) |
(3) |
(6) |
0 |
(1) |
(15) |
|
Other movement |
0 |
6 |
(0) |
(9) |
(4) |
(7) |
|
Balance at 31 December 2021 |
121 |
3 |
54 |
26 |
179 |
383 |
|
of which : |
||||||
|
Non-current portion |
78 |
- |
- |
26 |
131 |
235 |
|
Current portion |
43 |
3 |
54 |
- |
49 |
149 |
Demobilization
The provision for demobilization relates to the costs for demobilization of the vessels and floating equipment at the end of the respective operating lease periods. The obligations are valued at net present value, and a yearly basis interest is added to this provision. The recognized interest is included in the line item ’Financial expenses’ of the consolidated income statement (refer to note 4.3.9 Net Financing Costs).
The decrease in the provision for demobilization mainly relates to the progress in the recycling activities of Deep Panuke MOPU unit during the year 2021.
Expected outflow within one year is US$43 million and amounts to US$53 million between one and five years, and US$25 million after five years.
Onerous contracts
The Company recognized individually immaterial onerous contract provisions for insignificant contracts with clients for a total amount of US$6 million.
Warranty
For most Turnkey sales, the Company gives warranties to its clients. Under the terms of the contracts, the Company undertakes to make good, by repair or replacement, defective items that become apparent within an agreed period starting from the final acceptance by the client. The increase of the warranty provision consists of new provisions accrued on projects under construction over the period.
Other
Other provisions mainly relate to claims, regulatory fines related to operations and local content penalty on construction projects. The latter was the main driver of the increase in Other provisions during 2021.