Other Reserves

The other reserves comprises the hedging reserve, actuarial gains/losses, the foreign currency translation reserve and IFRS 2 reserves. The movement and breakdown of the other reserves can be stated as follows (all amounts are expressed net of deferred taxes):

Hedging reserve Forward currency contracts

Hedging reserve Interest rate swaps

Actuarial gain/(loss) on defined benefit provisions

Foreign currency translation reserve

IFRS 2 Reserves

Protective share reserve

Total other reserves

Balance at 1 January 2022

(104)

(167)

7

(105)

22

-

(347)

Cash flow hedges

Change in fair value

(78)

473

-

-

-

-

394

Transfer to financial income and expenses

1

12

-

-

-

-

12

Transfer to construction contracts and property, plant and equipment

62

-

-

-

-

-

62

Transfer to operating profit and loss

48

-

-

-

-

-

48

IFRS 2 share-based payments

IFRS 2 vesting costs for the year

-

-

-

-

19

-

19

IFRS 2 vested share-based payments

-

-

-

-

(19)

-

(19)

Actuarial gain/(loss) on defined benefit provision

Change in defined benefit provision due to changes in actuarial assumptions

-

-

7

-

-

-

7

Foreign currency variations

Foreign currency variations

-

-

-

2

(1)

-

1

Mergers and acquisitions

-

-

-

(0)

-

(0)

Other movements

Reclassification

26

26

Balance at 31 December 2022

(72)

317

15

(103)

21

26

204

Cash flow hedges

Change in fair value

85

(53)

-

-

-

-

32

Deferred tax on cash flow hedges

-

(45)

-

-

-

-

(45)

Transfer to financial income and expenses

-

4

-

-

-

-

4

Transfer to construction contracts and property, plant and equipment

24

-

-

-

-

-

24

Transfer to operating profit and loss

8

-

-

-

-

-

8

IFRS 2 share-based payments

IFRS 2 vesting costs for the year

-

-

-

-

20

-

20

IFRS 2 vested share-based payments

-

-

-

-

(16)

-

(16)

Actuarial gain/(loss) on defined benefit provision

Change in defined benefit provision due to changes in actuarial assumptions

-

-

(4)

-

-

-

(4)

Foreign currency variations

Foreign currency variations

-

-

-

(2)

1

-

(2)

Mergers and acquisitions

-

-

-

0

-

0

Other movements

Reclassification

-

-

Balance at 31 December 2023

44

224

11

(105)

25

26

224

The hedging reserve consists of the effective portion of cash-flow hedging instruments related to hedged transactions that have not yet occurred, net of deferred taxes. The decreased fair value of interest rate swaps mainly arises from decreasing US$ market interest rates whereas the increased fair value of forward currency contracts is mainly driven by the depreciation of the US$ exchange rate versus the hedged currencies (especially EUR and BRL).

Actuarial gain/(loss) on defined benefits provisions includes the impact of the remeasurement of defined benefit provisions.

The foreign currency translation reserve is used to record exchange differences arising from the translation of the financial statements of foreign subsidiaries.

The Management Board, with the approval of the Supervisory Board, has granted a call option to Stichting Continuïteit SBM Offshore to acquire a number of preference shares. As of October 1, 2022, and with reference to articles 5.5 and 5.6 of the Articles of Association of the Company, a ’Protective Preference Shares’ reserve amounting to US$26 million (2022: US$26 million) was created at the expense of the share premium reserve at the level of the Company. If and when Stichting Continuiteït SBM Offshore would exercise the call option to acquire preference shares, these preference shares may also be paid-up from the reserve of the Company. In addition to the legal reserves, distributions to the Company’s shareholders are restricted to the amount of the statutory reserves.

The Company’s total equity as at December 31, 2023 is US$3,733 million, out of which US$2,052 million relates to legal reserves and US$26 million relates to the statutory reserves (December 31, 2022: Total equity of US$3,397 million out of which US$1,860 million relates to legal reserves and US$26 million to the statutory reserves). For more information, reference is made to note 4.5.4 Shareholders’ Equity.