1 DRAFT MINUTES of the Annual General Meeting ... - SBM Offshore

More documents

Recommendations

Info

is still a few years away from first orders, as it is still in the technical development stage, where quite some progress was made. He indicated that it should move through a series of more robust prototype testing before there is a position to really market such a product. Ms Lindeman (MN Services and on behalf of Robeco) first of all expressed her compliments on the 2010 results. Last year there was a request for a more transparent reporting of social and environmental targets. When looking to the carbon disclosure project, in which SBM had been participating for some years, she noted that the business had not indicated any goals for 2010 in relation to lowering emissions of greenhouse gasses. She indicated that a lot of businesses do indicate such goals and pursue a progressive position on sustainability. She asked (first question) for an explanation why the goals could not be reported more transparently and requested SBM to consider doing this in the future. Furthermore, she indicated that the sustainability report referred to "stakeholder engagement" as a "corporate principle". The business holds road shows and presentations for shareholders and other interested parties. These are devoted mainly to financial results and less to sustainability. She asked (second question) whether it would be possible to focus more on Corporate Social Responsibility in relation to stakeholder engagement,. Her last question (third question) related to SBM’s inclusion in the Dow Jones Sustainability Index in Europe. She indicated that this confirmed that the business had progressed in terms of sustainability. Many businesses which aim to acquire a progressive position in the sustainability area, would choose to combine the sustainability and financial reports. This would integrate strategic and sustainable ambitions better. She asked whether SBM would consider doing this in the future. The Chairman thanked Ms Lindeman and gave the floor to Mr Mace. Mr Mace replied to the first question in relation to the transparent way in which SBM reports on emissions and whether or not SBM could set targets and report against those targets. He indicated that it is not possible for SBM to do that, as SBM is operating and producing hydrocarbons on behalf of its clients in accordance with their instructions. SBM does not control the operations offshore, in terms of the production throughput operations. This has an impact on emissions coming from power generation or from incidental flaring, which do happen from time to time. It’s almost impossible for SBM to set objectives in advance. SBM could only take care and ensure that it operates in the most effective and efficient way with respect to emissions from its facilities, which it endeavours to do. On the design of new facilities SBM tried to introduce the most recent and latest technological innovations in order to minimize emissions, where possible. He replied on the question related to stakeholder engagement and Corporate Social Responsibility (second question), that it is true that most of the engagement is with financial institutions, investors and potential investors. He indicated that this question also comes up more and more often in the meetings. SBM has said that it would look where opportunities could be provided to meet relevant NGO’s or other bodies to set out ideas and discuss these. He indicated that this would also be endeavoured in 2011. On the incorporation into the Dow Jones Sustainability Index (third question) and the ability to integrate the objectives of the CSR strategy into the overall strategies of the Company, Mr Mace replied that big progress was made in that area and a lot of the initiatives are taken into account in the Company to address where relevant the CSR objectives. And eventually come into the financial results of the Company. Mr Boom had a question in relation to risks, namely in relation to what happened in Japan (seaquake followed by an enormous tsunami). This tsunami manifested itself merely in the coastal waters. He indicated that what had happened in Japan could also happen elsewhwere, perhaps even where SBM's production platforms are located. He asked what the risks were of a production platform being hit by a natural disaster. Mr Mace outlined that most design criteria received from the clients provide information on tsunamis where appropriate geographically. Generally speaking, in the locations where SBM operates, more offshore and not very close inshore, the impact is quite negligible but some of the CALM buoy mooring terminals, which are much closer inshore, may well be impacted by such an event. Where appropriate that design criteria is 10
included into the design of the system. For the big production facilities this is not really significant as an impact. Mr Jorna (VEB) said he had noticed that the operational margin with the Turnkey Systems historically was around 5%, while last year that had been 9%. Also, when he looked at the 2011 forecast, more profit would be generated than previously. His first question was what the reasons were for this. Furthermore, he referred to a discussion with a client on a contract. He indicated that certain "headache files" had been closed. He referred in particular to the Norwegian Talisman field and asked (second question) whether it had been closed and whether that would increase margins in the turnkey systems segment. Was SBM capable of asking for higher margins or was this left to market operations themselves? He also said that he had read about risks and he said that he himself considered them conceivable for the oil companies which engage SBM for services or purchase vessels, particularly as regards leasing. He asked (third question) whether oil companies were not increasingly inclined to shrug off responsibility, given the risks involved. Was SBM as leasing company responsible for what happens, and was SBM still capable of assuming risks even if markets were to take a downturn? The Chairman indicated that Mr Jorna had interesting questions. Mr Mace answered in relation to the first question, on the turnkey systems margins, that there had been improvements from the prior two years and, as has been announced, these improvements continued. There are two reasons, being (i) the underlying more robust performance on execution of projects and therefore the better margins and (ii) the financial lease accounting treatment of long-term leases, which has a knock-on effect in the turn key system result. He asked Mr Miles to add something to that. Mr Miles indicated additionally on the first question, that SBM has a couple of long-term lease contracts, the terms of which imply that the lease contract is reported as a sale of an FPSO with a financing package attached to it. That means that part of the return which is rolled up into that lease contract is in fact reported as a turnkey systems sale during the construction phase of the project. This means that part of the lease returns are brought forward into the construction phase, earlier than they would otherwise have been recognised. That impact is giving a booster on top of the improved performance on the underlying projects. Indeed two effects: (i) better underlying performance and (ii) an addition from the financial lease accounting treatment. Mr Mace replied to the second question related to the Norwegian project where SBM had impairments in the past and has announced in the Trading Update Press release of earlier in the day, that it has an outstanding financial situation in the project to conclude with the client. Mr Mace indicated that he cannot say more than that at this point. Mr Jorna may have been referring to the Canadian project, where SBM has a litigation process, which started earlier this year. Again, Mr Mace indicated that he was not able to say more at this time, as he does not want to jeopardize the Company’s commercial position on those two projects. The last question (third question) related to the leasing business and whether SBM inherits risks or takes on risks with these lease contracts. Mr Mace indicated that the answer is yes, but that SBM tries to mitigate or insure to get indemnified for the risk. One of the biggest risks which SBM could be faced with is pollution and it is quite strict in always demanding and getting a full indemnity from the client for any pollution emanating from the vessel under any circumstance. Mr Van de Roemer indicated that everything was reported in USD, but that the USD was weakening. He asked how the company covered this and what the percentage was of the costs in USD. Mr Miles outlined that the oil and gas business a USD business is and that probably 95% of SBM's revenues are USD based. A lot of the costs are also in USD, so that there is a natural match between those costs and revenues. There is an exposure on the costs spent in EUR, GBP or BRL or other currencies. SBM operates for a long time a policy whereby when it obtains a project it hedges its currency exposure immediately, so that, whatever price it assumed those currencies would be spent at in the project is what they will cost. SBM manages to cover exposure and overheads. For the offices in the Netherlands and elsewhere in Europe SBM basically covers itself by buying those currencies forward. 2011 was covered entirely and two thirds of the costs for next year are already covered. The fact that the USD weakened during the year doesn’t have 11
Page 1 and 2: DRAFT MINUTES of the Annual General
Page 3 and 4: extensions and upgrade work on exis
Page 5 and 6: involves the completion of the quay
Page 7 and 8: The second question related to the
Page 9: SBM would not be too dependent on o
Page 13 and 14: 3. Report of the Supervisory Board
Page 15 and 16: 177). The 2010 financial statements
Page 17 and 18: After the notarial deed of the amen
Page 19 and 20: taken in the remuneration policy an
Page 21 and 22: itself is adjusted because the inde
Page 23 and 24: met if use were to be made of these
Page 25 and 26: in article 4 of the Company’s Art
Page 27: 12. Communications and questions Th

1 DRAFT MINUTES of the Annual General Meeting ... - SBM Offshore

You also want an ePaper? Increase the reach of your titles

Delete template?

Save as template?