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Financial instruments

12 Months Ended

Dec. 31, 2022

Note 8 – Financial instruments

Categories of financial instruments

(Dollars in thousands)	Carrying amount
Financial assets	2022		2021
Cash and cash equivalents ^{1, 3}	$	125,948	$	60,658
Accounts receivable and accrued revenues ¹		59,465		30,361
Derivative financial assets, current ²		3,759		-
Total financial assets	$	189,172	$	91,018

Financial liabilities
Accounts payables and accrued expenses ¹	$	29,398	$	19,662
Derivative financial liabilities, current ²		-		7,002
Current portion long-term debt ¹		29,626		9,792
Long-term debt ¹		367,069		512,507
Derivative financial liabilities, non-current ²		-		4,222
Total financial liabilities	$	426,094	$	553,184

¹	Amortized cost.

²	Fair value through profit or loss.

³	Cash and cash equivalents include $316 thousand in restricted cash in 2022 and $289 thousand in 2021, including employee withholding tax.

Fair value of non-derivative financial instruments

It is assumed that fair value of non-derivative financial instruments is equal to the nominal amount for all financial assets and liabilities. With regards to trade receivables, the credit risk is not viewed as significant. With regards to the credit facilities, these are floating rate with terms and conditions considered to be according to market terms and no material change in credit risk; consequently, it is assumed that carrying value has no material deviation from fair value.

Measurement of fair value

In the statement of financial position, only derivatives are classified within a fair value measurement category and recognized at fair value. Fair value measurement is based on Level 2 in the fair value hierarchy as defined in IFRS 13 Fair Value Measurement. Such measurement is based on techniques for which all inputs that have a significant effect on the recorded fair value are observable. Future cash flows are estimated based on forward interest rates (from observable yield curves at the end of the reporting period) and contract interest rates, discounted at a rate that reflects the credit risk of various counterparties.

Derivatives – interest rate swaps

		Notional amount				Fair value - Financial asset				Fair value - Financial liability
(Dollars in thousands)	Expires	2022		2021		2022		2021		2022		2021
Swap pays 2.987%, receive floating	Apr. 20, 2023	$	37,200	$	39,600	$	202	$	-	$	-	$	1,173
Swap pays 3.012%, receive floating	Apr. 20, 2023		37,200		39,600		200		-		-		1,185
Swap pays 3.019%, receive floating	Sept. 29, 2023		25,609		28,176		365		-		-		1,017
Swap pays 3.019%, receive floating	Sept. 29, 2023		24,695		27,262		351		-		-		982
Swap pays 2.8665%, receive floating	Sep. 29, 2023		41,120		43,690		629		-		-		1,509
Swap pays 2.8785%, receive floating	Jun. 30, 2023		35,539		38,106		357		-		-		1,162
Swap pays 2.885%, receive floating	Sept. 29, 2023		40,478		43,048		623		-		-		1,504
Swap pays 2.897%, receive floating	Sept. 30, 2023		35,717		38,284		544		-		-		1,339
Swap pays 3.020%, receive floating	Sept. 29, 2023		34,033		36,600		488		-		-		1,353
Total carrying amount		$	311,590	$	334,365	$	3,759	$	-	$	-	$	11,224

Interest-bearing debt

(Dollars in thousands)		Remaining		Carrying amount
	Interest	notional		2022		2021
Credit Agricole Credit Facility	SOFR + 2.05 %		37,500		36,381		35,002
Danish Ship Finance Credit Facility	LIBOR + 2.00 %		31,547		31,342		33,683
Nordea Credit Facility	LIBOR + 1.90 %		117,235		113,043		225,214
ABN AMRO Credit Facility	LIBOR + 2.40 %		216,761		215,929		228,400
Total carrying amount			403,043		396,696		522,299

As of December 31, 2022, $144.4 million was undrawn under the Nordea Credit Facility and $90.1 million was undrawn under the ABN AMRO Credit Facility.

Interest on all our credit facilities is payable quarterly in arrears except the Danish Ship Finance Credit Facility which has interest payable semi-annually in arrears. The credit facilities are principally secured by the first-priority mortgages on the vessels financed by the credit facility, assignments of earnings, pledge of shares in the borrower, insurance and the borrowers’ rights under charters for the vessels, if any, as well as a pledge of the borrowers’ bank account balances.

Reconciliation of liabilities arising from financing activities

The table below details changes in liabilities arising from financing activities, including both cash and non-cash changes. Liabilities arising from financing activities are those for which cash flows were, or future cash flows will be, classified in the Company’s consolidated statement of cash flows as cash flows from financing activities.

						Non-cash changes

	As of January 1, 2022		Financing cash flows ¹			Amortization		Other changes ²			As of December 31, 2022
Bank loans ³	$	522,299		(127,816	)		2,902		(688	)		396,696
Office leases ⁴		3,285		(1,090	)				1,743			3,938
Total ⁵	$	525,584		(128,906	)		2,902		1,054			400,634

							Non-cash changes

	As of January 1, 2021			Financing cash flows ¹			Amortization		Other changes ²			As of December 31, 2021
Bank loans ³		$	449,959		72,840			2,550		(3,049	)		522,299
Office leases ⁴			4,060		(611	)				(164	)		3,285
Total ⁵		$	454,019		72,228			2,550		(3,213	)		525,584

¹	The cash flows from bank loans make up the net amount of issuance of long-term debt and repayment of long-term debt in the statement of cash flows.

Other changes related to bank loans for the years 2022 and 2021 represent gains on modification of debt which includes previously capitalized fees. Other changes related to office leases for 2022 represent lease liabilities assumed through the business combination (for more details see Note 16), lease modification, and foreign exchange effects during the year related to IFRS 16. Other changes related to office leases for 2021 represent foreign exchange effects during the year related to IFRS 16.

³	As of December 31, 2022, bank loans consist of current portion long-term debt of $29,626 thousand and long-term debt of $367,069 thousand. As of December 31, 2021, bank loans consist of current portion long-term debt of $9,792 thousand and long-term debt of $512,507 thousand.

⁴

As of December 31, 2022, office leases consist of $1,178 thousand of current liabilities and $2,760 thousand of non-current liabilities. As of December 31, 2021, office leases consist of $624 thousand of current liabilities and $2,661 thousand of non-current liabilities. The remaining balance of non-current liabilities consists of pensions, deferred tax liability, and restoration cost related to office rental in 2022 and of pensions in 2021.

⁵	The reconciliation does not include interest rate swaps, which are described in Note 8.