45 LEADERSHIP MESSAGES FINANCIAL REVIEW The Group’s awarded FPSO contracts are systematically classified as finance leases or service contracts in accordance with the International Financial Reporting Standards (“IFRS”) for accounting purposes. The revenue generated from the conversion of VLCCs to FPSOs, which is classified as EPCIC revenue, is recognised either over time (based on the progress of construction) or at a point in time when the asset’s rights of use are handed over to a lease client. EPCIC revenues and profits are recognised during the construction phase of the asset under this accounting treatment. Except for advance payments received for certain FPSO contracts, it is important to remember that the asset generates cash only after construction and commissioning activities are completed, as that is the point in time the Group is entitled to start receiving the lease payments. In the case of an operating lease, lease revenues and profits are recognised during the lease period, effectively more closely tracking cash receipts. The accounting classification and timing of EPCIC revenue recognition (where relevant) for the Group’s offshore assets which contributed to the Group’s results in the current financial year are set out below. Project Equity ownership Accounting classification EPCIC recognition* Timing of EPCIC recognition* Owned by the Group FPSO JAK 74% Operating lease No FPSO Helang 100% Finance lease Yes Point in time (Q4 FYE 2020) FPSO Abigail-Joseph 100% Finance lease Yes Point in time (Q3 FYE 2021) FPSO Anna Nery 75% Finance lease Yes Over time FPSO Maria Quitéria 100% Finance lease Yes Over time FPSO Atlanta 100% Accounted for as a service contract under IFRS 15 Yes Over time Owned through joint venture arrangements FPSO PTSC Lam Son 49% Operating lease No FSO PTSC Bien Dong 01 49% Operating lease No Note: * Refer to the Group’s accounting policy for EPCIC revenue recognition in Note 2.7(i) to the Financial Statements. EPCIC (RM million) 4,558 2,206 3,394 1,551 FYE FYE 1,627 1,286 1,408 917 991 FPSO Operations (RM million) 2023 2022 2021 2020 2023 2022 2021 2020 2019
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