Babcock & Wilcox A/S

Beskrivelse af virksomhedens væsentligste aktiviteter

Business review
Babcock & Wilcox A/ S is a fully owned subsidiary of Babcock & Wilcox Enterprises, Inc. (B&W), a U.S.- based public company listed on the New York Stock Exchange (Ticker: BW). We are a leading international supplier of technologies for renewable energy plants that use various types of waste and biomass as fuel. We design, engineer, manufacture, install and service components of various dimensions and configurations primarily based on our own stoker/ grate firing technology. We also provide operating and maintenances services and aftermarket equipment for renewable energy plants.

Beskrivelse af usikkerhed ved indregning eller måling

Uncertainties about recognition or measurement
We refer to descriptions in note 2 in the financial statements.

Beskrivelse af usædvanlige forhold, der kan have påvirket indregningen eller målingen

Going concern
The ultimate parent company Babcock & Wilcox Enterprises, Inc. has issued a letter of comfort inter alia stating that it is in the interest of the parent company to ensure that the company meets its financial obligations at all times and that it is the policy of the parent company to provide the company with such support and assistance as may be required to ensure that it maintains capital and liquidity levels to enable it at all times to meet its obligations in conformity with standards of prudence generally accepted for its field of business. This letter of comfort is valid through at minimum December 2025. Based on this, it is the Management's assessment that the Company can continue as going concern.

Beskrivelse af udviklingen i virksomhedens aktiviteter og økonomiske forhold

Development in activities and financial matters
The financial position on 31 December 2023 of the Company and the results of the activities of the Company for the financial year for 2023 have resulted in loss of the share capital. It is the management’s expectations that the equity will be reestablished based on the Company's operation.
Financial review The end-market demand for our products is strong. The markets in Europe, North and South America and Asia are showing increasing interest in renewable power generation projects from waste and biomass fuel sources, which are well aligned with our products and services. We are confident in our leading technology, which is in high demand in all markets. In 2023, we continued to focus on our core technologies and on transitioning into a fully integrated and efficient global projects and engineering execution model leveraging our knowledge and expertise with the rest of the global B&W operations. Our operations regarding service have been reduced as the main activity of service have been transferred to Babcock & Wilcox Renewable Service A/ S, which is also part of the group. This strategic transfer was to ensure we consolidated our service personnel under one system and operation and best service our customers. We continue to see strong demand for our renewable technologies. As a result, we expect sales to increase as we continue to pursue our growth strategy. We have handed over well-performing plants to our customers, and these plants function as showcases for future customers and offer longer-term opportunities for our service and O&M business. A more detailed project status summary is contained in our parent company's 10-K to be found at lnvestors.babcock.com. The shareholders’ support letter provided in 2017, in which B&W committed to fund our company with the cash required to meet our obligations and allow the business to continue as a going concern, was last year extended through at minimum December 2025 (see note 1).

Omtale af betydningsfulde hændelser, som er indtruffet efter regnskabsårets afslutning

Events occurring after the end of the financial year
No other events have occurred after the balance sheet date, which could influence this Annual Report.

Beskrivelse af virksomhedens forventede udvikling

Profit/loss for the year in relation to expected developments Our full-year 2023 net revenues were DKK 464 million, which is a decrease of DKK 117 million compared to the prior year due to a decreasing activity level in large project activities. Operating results was worsened with an operating loss in 2022 of 30,1 million to 139,3 million in 2023. We have remained focus on serving our customers, making important decisions to better position our businesses for the future, and driving improved financial performance. The year-end results reflected a loss of DKK 142,1 million. We generally recognize revenues and related costs from long-term contracts on a percentage- of completion basis. Accordingly, we review contract price and cost estimates regularly as work progresses and reflect adjustments in profit proportionate to the percentage of completion in the periods in which we revise estimates to complete the contract. To the extent that these adjustments result in a reduction of previously reported profits from a contract, we recognize a charge against current earnings. If a contract is estimated to result in a loss, such loss is recognized in the current period as a charge to earnings and the full loss is accrued on our balance sheet, which results in no expected gross profit from the loss contract in the future unless there are revisions to our estimated revenues or costs of completion in periods following the accrual of the contract loss. Changes in the estimated results of our percentage-of-completion contracts are necessarily based on information available at the time of the estimates and are based on judgments that are inherently uncertain, as they are predictive in nature. As with all estimates to complete used to measure contract revenue and costs, actual results can and do differ from our estimates made over time. Insurance recoveries and sub-contractor claims We have collected on claims in 2023 and we continue to pursue insurance recoveries and subcontractor claims related to the previous loss-making projects. Restructuring and growth activities In May 2020, we aligned under The Babcock & Wilcox Company (B&W) in a global company structure for all B&W operations. Under this structure, sales, engineering, project management, procurement, manufacturing, and other project-related support is provided through a globally matrixed structure. The structure helps us better address workload ebbs and flows, while also allowing employees across the global B&W operations to expand their skills and gain greater experience in supporting all of B&W’s product line areas, thus increasing overall manpower flexibility. Throughout 2023, we continued to identify and implement multiple actions to proactively improve our cost structure. Key actions included workforce reductions to align with the new global structure and our activity levels, other selling, general and administrative cost reductions as well as other process improvements. These actions have continued into 2023 and were focused on productivity and efficiency gains to enhance profitability and cash flow going forward.
Outlook We expect the results of the year for 2024 to be at, or just below, DKK 0 thousand.