Independent auditors’ report

To the Board of Directors and Shareholders of Hafnia Limited

Report on the audit of the financial statements



We have audited the financial statements of Hafnia Limited (the “Company”) and its subsidiaries (the “Group”). The financial statements comprise:

  • The balance sheet of the Company as at 31 December 2020, the statements of comprehensive income, changes in equity and cash flows for the year then ended, and notes to the financial statements, comprising significant accounting policies and other explanatory information; and
  • The consolidated balance sheet of the Group as at 31 December 2020, the consolidated statements of comprehensive income, changes in equity and cash flows for the year then ended, and notes to the consolidated financial statements comprising significant accounting policies and other explanatory information.

In our opinion, the accompanying financial statements present fairly, in all material respects, the financial position of the Company and the Group as at 31 December 2020, and their financial performance, changes in equity and cash flows for the year then ended in accordance with International Financial Reporting Standards (IFRS).


Auditors’ report – Basis for Opinion

We conducted our audit in accordance with International Standards on Auditing (ISAs). Our responsibilities under those standards are further described in the Auditors’ responsibilities for the audit of the financial statements section of our report. We are independent of the Company and the Group in accordance with the International Ethics Standards Board for Accountants The International Code of Ethics for Professional Accountants (including International Independence Standards) (IESBA Code), the Singapore Accounting and Corporate Regulatory Authority Code of Professional Conduct and Ethics for Public Accountants and Accounting Entities (ACRA Code), together with the ethical requirements that are relevant to our audit of the financial statements in Singapore, and we have fulfilled our other ethical responsibilities in accordance with these requirements and the IESBA Code and the ACRA Code.  We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.


Other Matter

The financial statements of the Company for the year ended 31 December 2019 were unaudited as the Company was exempted from an audit under Bermuda law. Following the listing of the Company’s equity shares on Oslo Børs on 30 April 2020, this is the first time the Company publishes its financial statements.


Auditors’ report – Key Audit Matters

Key audit matters are those matters that, in our professional judgement, were of most significance in our audit of the financial statements of the current period. These matters were addressed in the context of our audit of the financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters.

Key Audit Matter

Impairment assessment of vessels and right-of-use assets

Refer to Notes 1.2, 2.4(b) and 8 of the consolidated financial statements.

As at 31 December 2020, the carrying value of the Group’s vessels – owned and leased (including dry-docking) amounted to USD 2,206.4 million.

The Group has identified the relevant cash-generating units (“CGU”) for its fleet of vessels according to size, and mode of deployment in the generation of revenues; and performed its vessel impairment test according to its stated policy in 2.11. Vessels deployed in the three commercial pools – LR, MR and Handy constitute the Group’s most significant CGUs. Other CGUs refer to individual vessels under individual time-charter contracts

As described in Note 8(a), management has concluded presence of impairment indicators in the tankers market.

The recoverable amounts of vessels by CGUs were assessed by management based on higher of fair value less costs of disposal and value in use. In determining the value in use, expected cash flows to be generated by the vessels’ CGUs were discounted to their present values, which requires significant judgement covering forecast freight rates, forecast operating costs and the discount rate(s) applied.

We identified impairment of the vessels’ CGUs as a key audit matter because of its significance to the consolidated financial statements and because of the inherent uncertainty involved in forecasting and discounting future cash flows.

How the matter was addressed in our audit

We have performed the following audit procedures:

• We assessed the design and implementation of the Group’s key internal controls over the assessment of recoverable amounts of vessels’ CGUs;

• We assessed the Group’s process for identifying the relevant CGUs for its vessels for impairment testing;

• We challenged management’s assessment of indicators of impairment based on our own expectations developed from our knowledge of the Group and our experience of the tanker market;

• We evaluated the independence, competence and objectivity of the independent brokers engaged by the Group to appraise the market valuation of the vessels, including benchmarking the valuations obtained with recent sale transactions of similar types of vessels;

• We assessed the Group’s forecasts of freight rates and related operating costs together with the principles applied in formulating the Group’s discounted cash flow models for the vessel CGUs;

• We challenged the key assumptions adopted by management with externally derived data as well as our own assessments in relation to the key inputs used in discounted cash flow (“DCF”) models;

• We involved our corporate finance specialists to evaluate the discount rate(s) applied, with reference to the requirements of prevailing accounting standards;

• We assessed the sensitivity of the outcome of recoverable amounts of vessels CGUs to changes in key assumptions, including forecast freight rates and discount rate(s) applied and considered whether there were any indicators of management bias in the selection of the key assumptions.

We found the recoverable amounts of the vessels CGUs using the value-in-use calculations, as adopted by management to be aligned with general market expectations.

Other Information

Management is responsible for the other information. The other information comprises all information included in the annual report, but does not include the financial statements and our auditors’ report thereon.

Our opinion on the financial statements does not cover the other information and we do not express any form of assurance conclusion thereon.

In connection with our audit of the financial statements, our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the audit or otherwise appears to be materially misstated.  If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact.  We have nothing to report in this regard.


Responsibilities of Management and Those Charged with Governance for the Financial Statements

Management is responsible for the preparation and fair presentation of the financial statements in accordance with IFRS, and for such internal control as management determines is necessary to enable the preparation of the financial statements that are free from material misstatement, whether due to fraud or error.

In preparing the financial statements, management is responsible for assessing the Company and the Group’s ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless management either intends to liquidate the Company or the Group or to cease operations, or has no realistic alternative but to do so.

Those charged with governance are responsible for overseeing the Company’s and the Group’s financial reporting process.

Auditors’ Responsibilities for the Audit of the  Financial Statements

Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditors’ report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with ISAs will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements.

As part of an audit in accordance with ISAs, we exercise professional judgement and maintain professional scepticism throughout the audit. We also:

  • Identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.
  • Obtain an understanding of internal controls relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s or the Group’s internal controls.
  • Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by management.

  • Conclude on the appropriateness of management’s use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Company’s or the Group’s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditors’ report to the related disclosures in the financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditors’ report. However, future events or conditions may cause the Company or the Group to cease to continue as a going concern.
  • Evaluate the overall presentation, structure and content of the financial statements, including the disclosures, and whether the financial statements represent the underlying transactions and events in a manner that achieves fair presentation.
  • Obtain sufficient appropriate audit evidence regarding the financial information of the entities or business activities within the Group to express an opinion on the consolidated financial statements. We are responsible for the direction, supervision and performance of the group audit. We remain solely responsible for our audit opinion.


We communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal controls that we identify during our audit.

We also provide those charged with governance with a statement that we have complied with relevant ethical requirements regarding independence, and communicate with them all relationships and other matters that may reasonably be thought to bear on our independence, and where applicable, related safeguards

From the matters communicated with those charged with governance, we determine those matters that were of most significance in the audit of the financial statements of the current period and are therefore the key audit matters. We describe these matters in our auditors’ report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should not be communicated in our report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication.

The engagement partner on the audit resulting in this independent auditors’ report is Kenny Tan Choon Wah.


Public Accountants and
Chartered Accountants


7 March 2021

Consolidated statements

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