February 8, 2017
SBM Offshore is pleased to report revenues and EBITDA in line
with expectations, concluding a year of many achievements
notwithstanding the backdrop of the prolonged market downturn.
After adjusting to the new market circumstances, the offshore
industry shows early signs of stabilization but with a slow
recovery. SBM Offshore has continued to transform itself to address
this change, safeguarding experience to reinforce a strategic
position underpinned by strong cash flow from the Lease &
Operate portfolio. At the end of the year the Company was awarded
contracts by ExxonMobil for a Floating Production, Storage and
Offloading vessel (FPSO) for development and production in Guyana,
subject to Final Investment Decision; the only major new
FPSO-related contracts awarded in the industry as a whole in 2016.
During the year three FPSOs were delivered to clients, which were
successfully integrated into the fleet. These new vessels further
strengthened cash flow allowing the company to re-initiate the
dividend and complete a significant EUR 150 million share
repurchase program during 2016. Given its continued positive
outlook for underlying cash flow generation, the Company proposes a
cash dividend of US$0.23 per share, an increase of c. 10%
year-on-year. In addition the Company will be updating and
reinforcing its dividend policy.
Bruno Chabas, CEO of SBM Offshore,
commented:
"Experience matters. This was demonstrated by
SBM Offshore teams once more this year. Three technologically
complex FPSOs were delivered, on time, in line with clients'
expectations, using teams across the globe. SBM Offshore is
approaching 300 years of cumulative operating experience and has
now delivered 118 Turnkey projects, including 34 FPSOs. And since
1959 the Company has delivered more than 450 offshore terminals.
Lease and Operate continues to show solid performance with a fleet
that has a production capacity of 1.6 million barrels per day.
To firmly position the Company for the future
and align its business with today's reality in the oil services
industry which is characterized by "lower for longer" activity, SBM
Offshore initiated a strategic improvement program. This program
leverages our experience and is structured around the pillars
"Optimize", "Transform" and "Innovate". The importance of working
closely with client teams to optimize developments combined with
the ability to deliver projects on time and on budget has become
crucial. As such, with its balance sheet and experienced staff, SBM
Offshore is uniquely positioned to create value for customers and
investors in today's oil price environment and thereby utilize its
solid foundation for future growth."
Financial Highlights
- Underlying1 Directional2 EBITDA of US$778 million and
Underlying Directional EPS of US$0.71 per share
- Directional revenue of US$2,013 million
- Restructuring cost savings of US$260 million, including foreign
exchange rate impact; ahead of plan to date
- Cash return to shareholders totaling US$211 million for the
year in the form of dividend and share repurchases
- Cash dividend of US$0.23 per share for 2016, a c.10% increase
compared to 2015
- Proportional net debt at year-end unchanged at US$3.1 billion,
and cash/undrawn credit facilities of US$1.9 billion
- 2017 Guidance: Directional revenue around US$1.7 billion,
Directional EBITDA around US$ 750 million
- Recorded adjustments to accounts in-line with 2016 Year-end
Update
As reported in the 2016 Year-End Update in
December, the 2016 results include a number of non-cash adjustments
as a result of its regular year-end review taking into account
uncertainties in its outlook for some areas of its operations
reflected in its updated business planning assumptions. These
adjustments comprise US$90 million in total for the impairment of
the Company's net investment in the Angolan construction yard
Paenal and the recognition of an onerous contract for the DSCV SBM
Installer. During 2016, the compliance related Brazilian settlement
provision was increased by US$36 million, consisting of US$22
million plus a time value of money adjustment3 of US$14 million.
All these amounts have been used to adjust the results for 2016, to
arrive at the underlying figures as reported above and throughout
this document. 2015 underlying results reflect an adjustment for
compliance related items amounting to US$157 million.
Project Review
FPSO
The Company delivered three complex FPSOs to
clients during the year. First, FPSO Cidade de Maricá (Brazil) was
formally on hire as of February 7, 2016 with an initial charter
contract of 20 years. Second, FPSO Cidade de Saquarema (Brazil) was
on hire as of July 8, 2016 with an initial charter contract of 20
years. Third, FPSO Turritella (US Gulf of Mexico) was on hire as of
September 2, 2016 with an initial lease and operate contract for 10
years with future extension options up to a total of 20 years.
The FPSO Marlim Sul received a decommissioning
day rate through the end of the first quarter 2016, and was
subsequently formally decommissioned in April 2016 and is currently
laid-up in Malaysia.
Turrets & Mooring Systems
Commissioning continues in accordance with
clients' schedules and contractual planning, for the two large,
complex turrets for Prelude FLNG and FPSO Ichthys.
Front-End Engineering and Design (FEED)
contracts
On December 20, 2016 the Company announced the
award by ExxonMobil of FPSO contracts for the Liza development in
Guyana, subject to final investment decision. The Company is
progressing with the scope for this FEED study.
|
Project |
Contract |
SBM
Share |
Capacity, Size |
Expected Delivery |
Notes |
|
|
|
|
|
|
Prelude, Turret |
Turnkey sale |
100% |
95m height, 11,000 tons |
2017 |
Commissioning ongoing |
Ichthys, Turret |
Turnkey sale |
100% |
60m height, 7,000 tons |
2017 |
Commissioning ongoing |
Cidade de Maricá, FPSO |
20 year finance lease |
56% |
150,000 bpd |
2016 |
Delivered |
Cidade de Saquarema, FPSO |
20 year finance lease |
56% |
150,000 bpd |
2016 |
Delivered |
Turritella, FPSO |
10 year finance lease |
55% |
60,000 bpd, disconnectable |
2016 |
Delivered |
Directional Backlog
Directional backlog at the end of December 2016
remained high at US$17.1 billion compared to US$18.9 billion at the
end of 2015. This reflects both the lower level of order intake for
the Turnkey segment and the resilience of the Lease and Operate
portfolio amounting to US$ 17.0 billion at the end of 2016. Revenue
generated in 2016 was $2,013 million with total order intake of
US$186 million, including US$110 million of new orders in
Turnkey.
Backlog as of December 2016
(in billion US$) |
|
Turnkey |
|
Lease & Operate |
|
Total |
|
|
|
|
|
|
|
2017 |
|
0.1 |
|
1.5 |
|
1.6 |
2018 |
|
- |
|
1.5 |
|
1.5 |
2019 |
|
- |
|
1.5 |
|
1.5 |
Beyond 2019 |
|
- |
|
12.5 |
|
12.5 |
|
|
|
|
|
|
|
Total
Backlog |
|
0.1 |
|
17.0 |
|
17.1 |
|
|
|
|
|
|
|
Funding
At the end of the year, SBM Offshore had cash
and undrawn committed credit facilities totaling US$1,904 million
compared to US$2,681 million at year-end 2015 on an IFRS basis. On
a proportional basis the period ended at US$1,850 million versus
US$2,155 million at the end of 2015.
SBM Offshore completed the procedure for
re-flagging of the FPSOs Cidade de Maricá and Cidade de Saquarema
enabling the release of the pre-completion guarantees associated
with FPSOs Cidade de Maricá and Cidade de Saquarema, which were
confirmed in November 2016 and January 2017, respectively. As of
year-end 2016, no other pre-completion guarantees relating to
project financing were outstanding.
Despite the increase in debt associated with the
FPSO deliveries to the fleet, the cash requirement for funding the
2016 dividend and share repurchase program, cash flow generation
from Lease and Operate was sufficiently strong to maintain the
proportional net debt level at US$3.1 billion at year-end.
Transformation, retaining experience
SBM Offshore has transformed itself over the
last 3 years in response to the change in market circumstances,
while retaining experience. Over this period, the Company has
reduced its staff and contractor headcount by more than 50%.
Compared to 2014 and as of year-end 2016, this multi-year
restructuring has generated approximately US$260 million to date or
US$160 million of annual Employee Benefits savings after adjusting
for positive foreign exchange rate impacts. This result represents
both an acceleration and outperformance as compared to the initial
target. An additional amount of approximately US$20 million of
annual savings is expected next year as a result of 2016
restructuring.
SBM Offshore has decided to safeguard its
experience through retention of core capacity which represents an
investment for the future; when the offshore market comes back.
However, should the market downturn persist, the Company will
consider additional measures to adjust its cost structure.
Operational Update
The Lease & Operate fleet uptime performance
for the year was 96.8%. Operational uptime for the full year was
impacted during the second quarter by downtime associated with the
Deep Panuke production facility. Deep Panuke experienced a flare
stack malfunctioning which was repaired in May 2016. Whilst the
operational downtime at Deep Panuke affected operational
performance it did not materially affect contractual income under
the terms of the lease and operate contract.
Shareholder returns
SBM Offshore reached a positive free cash flow
inflexion point in the first half of 2016. Given this cash flow
position and the outlook for underlying cash generation, the
Company decided to return an aggregate c. US$211 million during
2016 to its shareholders representing approximately US$ 1 per share
in the form of the dividend and a share repurchase program.
In the second half of the year, a EUR 150
million share repurchase program was announced and subsequently
completed. On December 20, the program finished with the repurchase
of 11.44 million shares, representing approximately 5% of the
original number of outstanding shares and an investment of US$166
million cash. During the Annual General Meeting (AGM) of
Shareholders on April 13, 2017, a consequent proposal for
cancellation of shares will be made.
With the announcement of Full Year results 2015,
SBM Offshore re-initiated its dividend program and paid US$45
million in cash to its shareholders. This dividend represented 25%
of Underlying Directional net profit and was US$0.21 on a per share
basis.
Considering its continued positive underlying
cash flow outlook, the Company proposes a dividend of US$0.23 per
share in respect of 2016, to be declared at the AGM on April 13,
2017. This is a c. 10% increase per share compared to last year and
represents a pay-out of approximately 30% of the Underlying
Directional 2016 net result, adjusted for exceptional items. The
proposed ex-dividend date is April 19, 2017. The dividend is
payable within 30 days following the AGM.
The annual dividend will be calculated in US
Dollars, but will be payable in Euros. The conversion into Euros
will be effected on the basis of the exchange rate on April 13,
2017. Given the Company's strong cash position, the dividend will
be fully paid in cash.
SBM Offshore intends to revise its dividend
policy relating to future dividend proposals as follows: "The
Company's policy is to maintain a stable dividend which grows over
time. Determination of the dividend is based on the Company's
assessment of the underlying cash flow position and of 'Directional
net income', where a target payout ratio of between 25% and 35% of
'Directional net income' will also be considered". The proposed
change will be presented for discussion at the AGM on April 13,
2017.
Management Board
On November 30, 2016, at an Extraordinary
General Meeting of Shareholders, Mr. D.H.M. Wood was appointed as
Management Board member and Chief Financial Officer (CFO). Mr. Wood
is appointed for a period of four years until the Annual General
Meeting of Shareholders in 2021. Mr. Wood succeeded Mr. P.M. van
Rossum who retired as Management Board member and CFO.
Corporate Social Responsibility
SBM Offshore has continued to improve its
Process Safety performance and has achieved its best ever
performance for the most severe Loss of Primary Containment (Tier
1) events since 2014. In Occupational Safety, the outstanding
performance recorded in the Turnkey segment was offset by incidents
related to the start-up of the three new FPSOs. As a result, the
Company was not able to further improve on its robust performance
in 2014 and 2015 and the Total Recordable Injury Frequency Rate
(TRIFR) stood at 0.31 at the end of 2016, compared to target of
below 0.27. The Company is targeting a reduction in safety-related
events and is committed to addressing underlying challenges to come
back to its solid safety performance as recorded for 2014 and
2015.
Environmental reporting was significantly
improved by more accurate data gathering and monitoring of the
actual gas composition on each unit to calculate the greenhouse gas
(GHG) emission levels for 2015 and 2016. This has resulted in
decreases in recorded emissions levels, leading the Company to use
revised 2015 reported environmental data for comparisons.
The total volume of gas flared in 2016 remained
similar to that for 2015, as revised, notwithstanding three new
FPSOs being added to the fleet. Relative to the Company's increased
hydrocarbon production, gas flared was reduced by 23% compared to
2015. Also total GHG emissions relative to hydrocarbon production
decreased by 13% compared to 2015. The start-up of the three new
FPSOs only increased energy consumption per hydrocarbon production
by 3%. Both GHG emissions and energy consumption ratios show better
performance than the benchmark International Association of Oil and
Gas Producers (IOGP) industry average.
The Company's sustainability performance
continues to improve. For the seventh consecutive year the Company
was included in the Dow Jones Sustainability World index, showing
SBM Offshore to be an Industry Leader for 2016/2017. This
continuous improvement is a credit to the Company's strong
commitment and its sustainability programs on Environmental, Social
and Governance (ESG) issues driving to create a more sustainable
business.
Compliance
In 2016, further progress was made with the
discussions with Brazilian authorities and Petrobras. On July 16,
2016 a Leniency Agreement was signed between Brazilian authorities,
Petrobras and SBM Offshore, that will become legally binding after
approval by Brazilian Fifth Chamber. Until then, the Company is not
under any obligation to make payments under the Leniency Agreement.
The Fifth Chamber did not approve the agreement in its current form
after which appeals were filed by various governmental parties who
were signatories to the Leniency Agreement. Subsequently, the
Higher Council decided on December 14, 2016 not to accept appeals
filed by the MPF and the General Counsel for the Republic and
referred the case back to the Fifth Chamber and the prosecutor
handling the case for further review and determination of next
steps.
SBM Offshore remains committed to engage with
the prosecutor and the Fifth Chamber until the Leniency Agreement
is approved by the Fifth Chamber. The Leniency Agreement further
remains subject to review by the Federal Court of Accounts but this
is not a condition precedent to the Leniency Agreement.
The Company continues to cooperate with the
United States Department of Justice following the reopening of the
investigation it had closed in November 2014 and its inquiry into
Unaoil, a company that SBM Offshore had engaged with as an agent
prior to 2012 in relation to delivery of barges, offshore terminals
and maintenance.
Outlook and Guidance
Management's expectations for order intake in
2017 remain unchanged, aligned with an outlook for the industry
where recovery is expected to be gradual as clients remain cautious
regarding investment in their development programs. At the same
time, productive client discussions continue to take place to make
deep water projects competitive in today's oil price environment. A
positive medium to long-term outlook is maintained as deep water
offshore is expected to remain an important element in the energy
supply of the future.
The Company is providing 2017 Directional
revenue guidance of around US$1.7 billion, with around US$1.5
billion from Lease and Operate and around US$200 million from
Turnkey. 2017 Directional EBITDA is guided at around US$750
million.
FINANCIAL REVIEW
Overview
Directional
Directional
consolidated net income for 2016 was US$ 24 million, stable
compared to 2015. This result includes non-recurring items which
generated a net loss of US$ 126 million in 2016 compared to a net
loss of US$ 157 million in 2015. Excluding non-recurring items,
2016 Underlying consolidated Directional net income attributable to
shareholders stood at US$ 150 million, a decrease from US$ 30
million from the previous year, mainly attributable to lower
Turnkey segment activity. |
Non-recurring items for 2016 underlying
performance relate to (i) provision for an onerous long-term
charter contract with the Diving Support and Construction Vessel
(DSCV) SBM Installer (US$ 31 million), (ii) the update of the
provision for contemplated settlement with Brazilian authorities
and Petrobras (US$ 36 million) and the impairment of the Company's
carrying amount for the net investment in the Joint Venture owning
the Paenal construction yard (US$ 59 millions). These non-recurring
items are the same in both IFRS and Directional, impacting EBIT and
EBITDA by US$ 53 million, net financing costs by US$ 14 million and
Share of Profit of Equity-accounted investees by US$ 59 million.
For reference, non-recurring items for 2015 totalling US$ 157
million, were included in EBIT and EBITDA and were related to
compliance issues.
Directional earnings per share (EPS) in 2016
amounted to US$ 0.11 compared to US$ 0.11 per share in 2015.
Adjusted for non-recurring items, Underlying Directional EPS
decreased by 17% year-on-year from US$ 0.85 in 2015 to US$
0.71.
New orders for the year totaled US$ 110 million
as a result of current market downturn, which compares to US$ 248
million achieved in 2015.
Directional revenue decreased by 23% to US$
2,013 million compared to US$ 2,618 million in the year-ago period.
This was primarily attributable to lower Turnkey segment
revenues.
Directional backlog at the end of 2016 remained
high at US$ 17.1 billion compared to US$ 18.9 billion at the end of
2015. This reflects both the lower level of order intake for the
Turnkey segment and the resilience of the Lease and Operate
portfolio amounting to US$ 17.0 billion at the end of 2016.
Directional EBITDA amounted to US$ 725 million,
representing a 29% increase compared to US$ 561 million in 2015.
This figure includes non-recurring net costs totaling US$ 53
million.
Directional EBIT increased to US$ 290 million
after non-recurring net costs of US$ 53 million. This compares to
US$ 191 million in 2015 which included US$ 157 million of
non-recurring costs.
IFRS
Reported consolidated 2016 IFRS total net income
was US$ 247 million versus US$ 110 million in 2015. IFRS net income
attributable to shareholders amounts to US$ 182 million compared to
US$ 29 million in 2015.
IFRS revenue decreased by 16% to US$ 2,272
million versus US$ 2,705 million in 2015. This was mainly
attributable to lower Turnkey segment revenues.
IFRS EBITDA amounted to US$ 772 million,
representing a 67% increase compared to US$ 462 million in
2015.
IFRS EBIT increased to US$ 564 million,
representing 136% increase compared to US$ 239 million in 2015.
IFRS Net Debt at the year-end totaled US$ 5,216
million versus US$ 5,208 million in 2015. All bank covenants were
met and available cash and undrawn committed credit facilities
stood at US$ 1,537 million.
Financial Highlights
The year was marked by the following financial
highlights:
- Successful delivery of FPSOs Cidade de Maricá, Cidade de
Saquarema and Turritella which were formally on hire respectively
as of February 7, 2016, July 8, 2016 and September 2, 2016.
- The Company completed its share repurchase program under the
authorization granted by the Annual General Meeting of Shareholders
of the Company held on April 6, 2016. In the period between August
11, 2016 and December 20, 2016, a total number of 11,442,179 shares
totaling EUR 150 million were repurchased. The repurchased shares
are held as Treasury shares predominantly for share capital
reduction purposes and, to a lesser extent, for employee share
programs.
- Award of the Front End Engineering and Design component of the
contract for a FPSO by Esso Exploration and Production Guyana
Limited to the Company and for which construction, installation and
operation of the FPSO remain subject to a final investment decision
expected in 2017. This contributed to new orders of US$ 110 million
in aggregate.
- The Company, together with its core relationship banks, signed
an amendment of its Revolving Credit Facility (RCF) on April 18,
2016, providing headroom improvements to the leverage and interest
coverage ratios. The agreed upon amendments, combined with a strong
cash position, provide the Company with a greater degree of
flexibility in navigating the current industry downturn.
- During the first half of 2016, the Company, the Ministry of
Transparency, Oversight and Control (Ministério da Transparência,
Fiscalização e Controle - 'MTFC'), the Attorney General's Office
(Advocacia-Geral da União - 'AGU'), the Public Prosecutor's Office
(Ministério Público Federal -'MPF') and Petrobras engaged in
further negotiations which resulted in the signature on Friday,
July 15 of a Settlement Agreement ('Leniency Agreement'). As a
result, the provision booked in December 2015 has been increased in
the consolidated financial statements as at December 31, 2016, up
to the amount of the present value of the financial terms of the
leniency agreement being US$ 281 million, impacting the lines
"Other operating expense" of the consolidated income statement by
US$ 22 million and 'Net financing costs' by US$ 14 million for the
unwinding of the discounting impact of future settlement. As more
fully explained in section 5.3.1 Highlights of the Annual Report,
the agreement will become legally binding after approval of the
Fifth Chamber for Coordination and Review and Anti-Corruption of
the Federal Prosecutor Service and remains subject to review by the
Federal Court of Accounts ('TCU'), which is not a condition
precedent to the Leniency Agreement. However, the terms of this
agreement remains SBM Offshore's current best estimate for an
eventual settlement, given that it was duly signed by the relevant
parties and the approval process is still underway.
- At the end of January 2016, the United States Department of
Justice (DoJ) informed the Company that it has re-opened its past
inquiry of the Company in relation to the alleged improper sales
practices over the period 2007 to 2011 and has made information
requests in connection with that inquiry. During the period, the
Company has cooperated with the DoJ and remains committed to close
out discussions on this legacy issue which the Company
self-reported to the authorities in 2012 and for which it reached a
settlement with the Dutch Public Prosecutor in 2014. The Company
also continues to cooperate with the DoJ for its inquiries in
Unaoil, a company that SBM Offshore had engaged with as an agent
prior to 2012 in relation to delivery of barges, offshore terminals
and maintenance.
- As a result of an on-going review of the cost structure and
continued market downturn, the Company's workforce reduction over
2016 totaled approximately 2,250 positions. Roughly 650 were
full-time employees and contractor staff. The remaining 1,600 were
construction yard positions related to demobilization following
successful delivery of main projects over the period. Restructuring
costs of US$ 37 million were recorded during the period. The
adaptation to market developments is focused on retaining core
competencies.
- The Company has a long-term charter contract with the Diving
Support and Construction Vessel (DSCV) SBM Installer. Due to the
ongoing downturn which has created significant over-supply in
offshore markets, the costs of the long-term chartering contract
exceed the economic benefits expected to be received by the Company
through the utilization of the vessel. As a result, a provision for
onerous contract of US$ 31 million has been recognized over the
period.
- The activity outlook for the Company's investment (30%
ownership) in the Joint Venture owning the Paenal construction yard
operating in Angola has deteriorated. As a result, the Company's
carrying amount for the net investment in this entity has been
impaired by US$ 59 million on the second half of 2016. Because this
investment is consolidated using the equity method, this non-cash
impairment is recognized in the Company's Consolidated Income
Statement on the line item 'Share of profit of equity-accounted
investees'.
Backlog
Directional backlog at
the end of 2016 remained healthy at US$ 17.1 billion compared US$
18.9 billion at the end of 2015. This reflects both the lower level
of order intake for the Turnkey segment and the resilience of the
Lease and Operate portfolio. |
Directional Turnkey backlog decreased to US$ 0.1
billion compared to US$ 0.5 billion in 2015 as no major Turnkey
orders were signed in 2016. As market conditions continued to be
challenging during the period, the level of tendering activity was
lower than in 2015 and the order intake continued to be impacted by
structural delays in client final investment decisions.
Backlog as of December 31, 2016 is expected to
be executed as per the below tables:
Revenue
Directional Revenue
decreased by 23% year-on-year despite an increase of 19% for the
Lease and Operate segment: |
Directional
Third party Directional Turnkey revenue came
down 54% year-over-year to US$ 702 million, representing only 35%
of total 2016 revenue. This compares to US$ 1,512 million, or 58%
of total revenue, in 2015. The decrease is mostly attributable to
the completion stage reached in the course of 2016 on Ichthys
turret and FPSOs Cidade de Maricá, Cidade de Saquarema and
Turritella, as well as the very low order intake in 2014, 2015 and
2016 as a result of the market downturn.
Directional Lease and Operate revenue increased
by 19% to US$ 1,310 million, representing 65% of total Directional
revenue contribution in 2016, up from the 42% contribution of 2015.
The increase in segment revenue is attributable to the start-up of
FPSOs Cidade de Maricá, Cidade de Saquarema and Turritella while no
vessel have been decommissioned during the period.
IFRS
Total IFRS revenue decreased during the year,
down by 16% to US$ 2,272 million, despite an increase of 25% for
the Lease and Operate segment. This was mainly attributable to
significantly lower revenue recognized in the Turnkey segment upon
completion of major projects in the course of 2016 as well as low
order intake in 2014, 2015 and 2016.
Profitability
The Company's primary business segments are
Lease and Operate and Turnkey plus 'Other' non-allocated corporate
income and expense items. EBITDA and EBIT are analyzed by segment
but it should be recognized that business activities are closely
related, and that certain costs are not specifically related to
either one segment or another. For example, when sales costs are
incurred, including significant sums for preparing a bid, it is
often uncertain whether the project will be leased or contracted on
a turnkey lump sum basis.
The Company's profitability may be affected by
external variables and conditions. Profitability may be sensitive
to significant areas of estimation and judgements, and to potential
interest rates and currency fluctuations against the US dollar as
described in the Annual Report notes 5.2.7.B (a) and 5.3.29 to the
financial statements, respectively.
In recent years, new lease contracts are showing
longer duration and are systematically classified under IFRS as
finance leases for accounting purposes whereby the fair value of
the leased asset is recorded as a Turnkey 'sale' during
construction. For the Turnkey segment this has the effect of
accelerating during the construction period a substantial part of
the lease profits which would in the case of an operating lease be
recognized through the Lease and Operate segment during the lease
period. To address this lease accounting issue and IFRS 10 and 11
standards introduced in 2014, the Company has, in addition to its
IFRS reporting, assessed its performance by treating all lease
contracts as operating leases and consolidated all JVs related to
lease contracts on a proportional basis, referred to as
Directional. This provides consistency in segment presentation.
EBITDA Directional (in millions of
US$)
Reported 2016 Directional EBITDA was US$ 725 million compared to
US$ 561 million in 2015. Directional EBITDA consisted of US$ 823
million from the Lease and Operate segment compared to US$ 667
million in 2015, and a loss of US$ 14 million from the Turnkey
segment compared to profit of US$ 239 million in 2015.
Other non-allocated expenses came at US$ 84
million, compared to US$ 345 million in 2015, related mainly to
restructuring charges and update of provision related to potential
settlement contemplated with the Brazilian authorities and
Petrobras.
Adjusted for non-recurring items related to
provision for onerous long-term charter contract with the DSCV SBM
Installer (US$ 31 million) and the update of the provision for
contemplated settlement with Brazilian authorities and Petrobras
(US$ 22 million), 2016 Underlying Directional EBITDA increased by
8% to US$ 778 million compared to US$ 718 million in 2015. This
increase is primarily attributable to the Lease and Operate segment
with the three new FPSOs that came into production in 2016 and
significant saving on other non- allocated costs of US$ 38 million.
The Underlying turnkey EBITDA decreased significantly due to the
profit recognized in 2015 upon the sale of 45% of Company's shares
in the joint venture leasing and operating the FPSO Turritella
while the decline of Turnkey activity year-on-year have been
mitigated thanks to strong projects performance, under-recovery
monitoring and significant saving on Turnkey overheads.
As a percentage of revenue, Underlying
Directional EBITDA was 39% compared to 27% in 2015. Underlying
Directional EBITDA margin for the Lease and Operate segment stood
at 63% versus 57% in 2015, while Turnkey segment Underlying
Directional EBITDA margin decreased to 3% compared to 12% in
2015.
EBITDA IFRS (in millions of US$)
IFRS EBITDA in 2016 came in at US$ 772 million
versus US$ 462 million in 2015. Total IFRS EBITDA consisted of US$
733 million from the Lease and Operate segment compared to US$ 592
million in 2015, and US$ 124 million from the Turnkey segment
compared to US$ 215 million in 2015. Other non-allocated expenses
came at US$ 84 million with no difference compared to Directional.
Adjusted for non-recurring items, 2016 Underlying IFRS EBITDA
increased by 33% to US$ 825 million compared to US$ 619 million in
2015. This is primarily due the Lease and Operate segment and the
three new FPSOs that came into production in 2016, while the
Underlying IFRS turnkey EBITDA, not impacted by the sale of
Company's shares in the joint venture leasing and operating the
FPSO Turritella in 2015, remained almost stable.
As a percentage of revenue, IFRS Underlying
EBITDA was 36% compared to 23% in 2015. IFRS Underlying EBITDA
margin for the Lease and Operate segment stood at 58% versus 55% in
2015, while Turnkey segment EBITDA margin stood at 16% compared to
10% in 2015 driven by project performance and decrease of
structural costs.
EBIT Directional (in millions of US$)
Directional EBIT in 2016 amounted to US$ 290
million compared to US$ 191 million in 2015. Adjusted for same
non-recurring items as EBITDA, Underlying Directional 2016 EBIT
slightly decreased by 1% to US$ 344 million versus US$ 348 million
in 2015. Underlying EBIT variations per segment are the same as for
the EBITDA, the increase of Lease and Operate Underlying EBITDA
(US$ 191 millions) being however partially offset by depreciation
charges (US$ 66m) related to the three new FPSOs that came into
production in 2016.
EBIT IFRS (in millions of US$)
IFRS EBIT in 2016 amounted to US$ 564 million
compared to US$ 239 million in 2015. Adjusted for non- recurring
items Underlying 2015 EBIT increased by 56% to US$ 617 million
compared to US$ 395 million in 2015.
Overheads, Other Income and Expenses, Net
Financing Costs, Share of Profit of Equity-Accounted Investees and
Income Tax
Overheads (in millions of US$)
Directional overheads were US$ 209 million in
2016 compared to US$ 299 million in 2015. This significant
reduction resulted from the finalization of the Company's business
improvement initiatives, material saving on general and
administrative expenses, lower tendering activity and decreased
costs of research and development. There is no material difference
between IFRS and Directional overheads.
Other Operating Income And Expenses (in
millions of US$)
Directional 'Other income and expenses' showed a
net cost of US$ 66 million in 2016 compared to US$ 298 million in
2015. This includes the restructuring costs over the period of US$
49 million, of which US$ 11 million relate to provision related to
long-term offices rental contracts, and US$ 22 million related to
the potential settlement discussed with Petrobras and the Brazilian
authorities. The restructuring program has led to a significant
decrease in staffing levels, which created overcapacity in rented
office space in various Regional Centers. As a result, the
obligation for the discounted future unavoidable costs has been
provided for at an amount of US$ 11 million.
In comparison, in 2015, the Directional 'Other
income and expenses' were mainly made of US$ 245 million provision
related to the potential settlement discussed with Petrobras and
the Brazilian authorities and US$ 55 million of restructuring
charges. There is no material difference between IFRS and
Directional 'Other income and expenses'.
Net Financing Costs (in millions of
US$)
Directional net financing costs increased to US$
196 million compared to US$ 137 million in 2015. This was mainly
due to interest paid on project loans for FPSOs Cidade de Marica,
Cidade de Saquarema and Turritella joining the fleet in 2016. The
2016 average cost of debt remained low at 4.6% compared to 4.1% in
2015. More generally, once production units are brought into
service, the financing costs are expensed to the P&L statement,
whereas during construction interest is capitalized. It should be
emphasized that the net profit contribution of newly operating
leased units is limited by the relatively high interest burden
during the first years of operation, although dedication of lease
revenues to debt servicing leads to fast redemption of the loan
balances and hence reduced interest charges going forward.
IFRS net financing costs increased by US$ 100
million compared to 2015, mainly due to interest paid on project
loans for the FPSOs joining the fleet in 2016.
Share of Profit of Equity-Accounted
Investees
The Directional share of profit of equity
accounted investees, mainly consisting of the Paenal and the Brasa
yards, resulted in a loss of US$ 61 million in 2016, up from a loss
of US$ 8 million in 2015, mostly driven by the impairment
recognized on the Company's investment (30% ownership) in the Joint
Venture owning the Paenal construction yard operating in
Angola.
Under IFRS, the Company's share of net losses of
non-controlled joint ventures amounted to US$ 14 million in 2016
compared to a profit of US$ 73 million in 2015. This decrease is
mainly due to the impairment recognized on the net investment in
the Joint Venture owning the Paenal construction yard as well as
the impact in 2015 of the turnkey contribution of the N'Goma
project finalized early in that year.
Income Tax
The 2016 IFRS tax expense slightly increased
from US$ 26 million in 2015 to US$ 28 million, leading to an
effective tax rate of 9.6% in 2016.
Net Income
Directional consolidated net income for 2016 was
US$ 24 million, stable compared to 2015. Adjusted for non-
recurring items, 2016 Underlying consolidated Directional net
income attributable to shareholders stood at US$ 150 million and a
decrease by US$ 30 million from the previous year period, mainly
attributable to lower Turnkey segment activity.
After IFRS non-controlling interests of US$ 65
million included in 2016 net income and related to reported results
from fully consolidated joint ventures where the Company has a
minority partner (principally Brazilian FPSOs, Aseng and
Turritella), IFRS net income attributable to shareholders amounted
to US$ 182 million compared to US$ 29 million in 2015.
Statement of Financial Position
Total assets remained almost stable at US$ 11.5
billion as of December 31, 2016 compared to US$ 11.3 billion at
year end 2015. This slight variance is mainly attributable to the
increasing cash position while the finalized investments in FPSOs
Cidade de Maricá, Cidade de Saquarema and Turritella are largely
offset by vessels depreciation and finance lease redemptions.
Shareholder's equity increased from US$ 2,496
million to US$ 2,516 million mostly due to the 2016 net income
partially offset by the Share repurchase program completed over the
period.
Capital Employed (Equity + Non-Current
Provisions + Deferred tax liability + Net Debt) at year-end 2016
amounted to US$ 8,996 million, an increase of 2% compared to US$
8,806 million in 2015. This was due in large part to the increase
of non-current provisions following the reclassification as
"non-current" of part of the provision for contemplated settlement
with Brazilian authorities and Petrobras, as well as the new
provision for onerous contracts booked over the period.
IFRS net debt was at US$ 5,216 million versus
US$ 5,208 million in 2015. Proportional net debt at year-end
amounted to US$ 3,147 million versus US$ 3,128 million in the
year-ago period. The stability of the net debt is mainly related to
strong operating cash-flow generation covering investing
activities, payment of dividends and the share repurchase program
over the period.
IFRS net gearing (net debt over equity + net
debt) at the end of the year came at 59.8%, almost stable compared
to year end 2015 (60%).
The relevant banking covenants (Solvency, Net
Debt/Adjusted EBITDA, Interest Cover) were all met. As in previous
years, the Company has no off-balance sheet financing.
Capital Structure
Despite the continuous market downturn, the
Company's financial position has remained strong. The growth of the
lease and operate segment as well as the adaptation of the Turnkey
segment to a depressed market, coupled with strong cash-flows
generated by the fleet strengthened equity and resulted in net debt
staying constant despite payment of significant shareholder
returns.
Investment and Capital Expenditures
Total investments made in 2016 reached US$ 34
million compared to the US$ 775 million in 2015. Highlights for
fiscal year 2016 investments are:
- Capital expenditure of US$ 14 million compared to US$ 23
million in 2015.
- Net investments in finance leases totaling US$ 20 million
compared to US$ 704 million in 2015.
Total capital expenditures for 2016,
which consist of additions to property, plant and equipment plus
capitalized development expenditures, were related to minor
investments.
Due to the classification of the contracts as
finance leases under IFRS, investments in the units were recorded
as construction contracts, with the investments in finance leases
ultimately recorded as financial assets. The net investment in
these finance lease contracts amounted to US$ 20 million in 2016,
which compares to US$ 704 million in 2015, and is reported as
operating activities in the consolidated cash-flow statement.
The decrease in property, plant and equipment in
2016 to US$ 1,474 million, compared to US$ 1,686 million at the end
of 2015, resulted from the very low level of capital expenditure
less normal depreciation and amortisation.
Return on Average Capital Employed and
Equity
Both IFRS Return on Average Capital Employed
(ROACE) and Return on Average Shareholders' Equity (ROAE)
increased, to 6.3% and 7.3% respectively in 2016. This was
primarily the result of the higher EBIT and Net Result reported
under IFRS in 2016 while equity and capital employed remained
almost stable.
Cash Flow/Liquidities
Cash and undrawn committed credit facilities
amounted to US$ 1,904 million, US$ 221 million of which can be
considered as being dedicated to specific project debt servicing or
otherwise restricted in its utilization.
The Enterprise Value to EBITDA ratio at year-end
2016 came in at 12.4 lower than the previous year, due mainly to
significant increase in the Company's IFRS EBITDA.
Provided below is a reconciliation of net income
before taxes to Cash Flow from Operations:
Analyst Presentation & Conference
Call
SBM Offshore has scheduled a conference call and
webcast of its presentation to the financial community followed by
a Q&A session at 0900 Central European Time on Thursday,
February 9, 2017.
The presentation will be hosted by Bruno Chabas
(CEO), Douglas Wood (CFO), Philippe Barril (COO) and Erik Lagendijk
(CGCO). Interested parties are invited to listen to the call by
dialing +31 20 531 5851 in the Netherlands, +44 203 365 3210 in the
UK or +1 (866) 349 6093 in the US. Interested parties may
also listen to the presentation via webcast through a link posted
on the Investor Relations section of the Company's website.
The live webcast and replay, which should be
available shortly after the call, will be available at:
http://player.companywebcast.com/sbmoffshore/20170209_1/en/Player.
Financial Calendar |
Date |
Year |
Publication of the AGM Agenda |
March 1 |
2017 |
Annual General Meeting of Shareholders |
April 13 |
2017 |
Trading Update 1Q 2017 - Press Release |
May 10 |
2017 |
Half-Year 2017 Earnings - Press Release |
August 8 |
2017 |
Trading Update 3Q 2017 - Press Release |
November 7 |
2017 |
Corporate Profile
SBM Offshore N.V. is a listed holding company
that is headquartered in Amsterdam. It holds direct and indirect
interests in other companies that collectively with SBM Offshore
N.V. form the SBM Offshore group ("the Company").
SBM Offshore provides floating production
solutions to the offshore energy industry, over the full product
life-cycle. The Company is market leading in leased floating
production systems with multiple units currently in operation and
has unrivalled operational experience in this field. The
Company's main activities are the design, supply, installation,
operation and the life extension of Floating Production, Storage
and Offloading (FPSO) vessels. These are either owned and
operated and maintained by SBM Offshore and leased to its clients
or supplied on a turnkey sale basis. The Company's product
portfolio also includes: Semi-submersibles, Tension Leg Platforms
(TLPs), Floating Gas Systems, Turret Mooring Systems, Brownfield
Services, Offshore Contracting, Offshore (off)loading terminals and
Renewable Energy floaters.
As of December 31, 2016, Group companies employ
approximately 4,750 people worldwide. Full-time company
employees totalling c. 4,250 are spread over five regional centers,
ten operational shore bases and the offshore fleet of
vessels. A further 500 are working for the joint ventures
with several construction yards. Please visit our website at
www.sbmoffshore.com for more information.
The companies in which SBM Offshore N.V.
directly and indirectly owns investments are separate
entities. In this communication "SBM Offshore" is sometimes
used for convenience where references are made to SBM Offshore N.V.
and its subsidiaries in general, or where no useful purpose is
served by identifying the particular company or companies.
The Management BoardAmsterdam, the Netherlands,
February 8, 2017
For further information, please contact:
Investor Relations |
|
Bert-Jaap Dijkstra |
|
Investor Relations Director |
|
Telephone: |
+31 (0)
20 236 3222 |
Mobile
NL: |
+31 (0)
6 21 14 10 17 |
Mobile
MC: |
+33 6
4391 9302 |
E-mail: |
bertjaap.dijkstra@sbmoffshore.com |
Website: |
www.sbmoffshore.com |
|
|
|
|
Media Relations |
|
Vincent Kempkes |
|
Group
Communications Director |
|
Telephone: |
+31 (0)
20 2363 170 |
Mobile: |
+31 (0)
6 25 68 71 67 |
E-mail: |
vincent.kempkes@sbmoffshore.com |
Website: |
www.sbmoffshore.com |
Disclaimer
This press release contains inside information
within the meaning of Article 7(1) of the EU Market Abuse
Regulation. Some of the statements contained in this release
that are not historical facts are statements of future expectations
and other forward-looking statements based on management's current
views and assumptions and involve known and unknown risks and
uncertainties that could cause actual results, performance, or
events to differ materially from those in such statements. Such
forward-looking statements are subject to various risks and
uncertainties, which may cause actual results and performance of
the Company's business to differ materially and adversely from the
forward-looking statements. Certain such forward-looking statements
can be identified by the use of forward-looking terminology such as
"believes", "may", "will", "should", "would be", "expects" or
"anticipates" or similar expressions, or the negative thereof, or
other variations thereof, or comparable terminology, or by
discussions of strategy, plans, or intentions. Should one or more
of these risks or uncertainties materialize, or should underlying
assumptions prove incorrect, actual results may vary materially
from those described in this release as anticipated, believed, or
expected. SBM Offshore NV does not intend, and does not assume any
obligation, to update any industry information or forward-looking
statements set forth in this release to reflect subsequent events
or circumstances. . Nothing in this press release shall
be deemed an offer to sell, or a solicitation of an offer to buy,
any securities.
1 Underlying earnings adjusted for exceptional items: in 2015
compliance related items and in 2016 compliance related items and
impairments as reported in the 2016 Year-End Update; further
explanation on this on page 2. This explanatory note relates to any
reference made to Underlying in this document.2 Directional view is
a non-IFRS disclosure, which assumes all lease contracts are
classified as operating leases and all vessel joint ventures are
proportionally consolidated. This explanatory note relates to any
reference made to Directional in this document.3 Represents the
2016 increase of the net present value of the future payments
(instalments and bonus reductions) related to contemplated Leniency
Agreement; the unwinding effect of the initial discount is
recognized over time in the net financing costs according to
IFRS
Attachments:
http://www.globenewswire.com/NewsRoom/AttachmentNg/172590e7-9f82-4959-ae0b-129aac268e45
SBM Offshore NV (EU:SBMO)
Historical Stock Chart
From Mar 2024 to Apr 2024
SBM Offshore NV (EU:SBMO)
Historical Stock Chart
From Apr 2023 to Apr 2024