2005 Annual Report - SBM Offshore

Report of the Supervisory Board
and on organic growth offers attractive long-term
prospects and a reduced risk profile due to lower variability
in results.
In respect of compliance with the Code, the following two
best practice provisions have been addressed in 2005:
• stock options allocated to Board of Management members
are subject to performance criteria under the revised
remuneration policy approved by the 2005 Annual General
Meeting of Shareholders;
• the slide presentations made to analysts and institutional
investors can be consulted on the Company’s website, and
the mid-year results presentation to analysts was webcast
live. Webcasting of the presentations of full-year and
mid-year results has been adopted as standard practice.
Best practice under the Code calls for the duration of
Managing Directors’ employment contracts to be limited to
four years, while the Code’s principles require that proxy
voting means be provided for the Annual General Meeting of
Shareholders. The Company’s current CEO, Mr. D. Keller was
appointed prior to introduction of the Code and the duration
of this appointment remains unspecified. Mr. Keller will
however reach retirement age in 2008. Proxy voting means
are provided for the Annual General Meeting of Shareholders
but electronic proxy voting will not for the time being be
implemented due to remaining legal questions concerning
cross-border voting and the Company’s high proportion of
non-Dutch shareholders.
The rules of the Code regarding conflicts of interest are
complied with by both the Supervisory Board and by the
Board of Management. In 2005 there have been no such
conflicts of interest, neither for the members of the
Supervisory Board nor for the Board of Management.
Summary reports of the three Committees reporting to the
Supervisory Board are included below. The Board has
discussed the outcome of the findings of the three
Committees and, in particular, the internal risk management
and control systems which are fully described in the Report
of the Board of Management. The Supervisory Board
considers that financial reporting has operated properly
during 2005 and that there is reasonable assurance that
financial reports do not contain inaccuracies of a material
nature.
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Audit Committee
The Audit Committee’s members are:
• A.G. Jacobs, Chairman and financial expert in the
Supervisory Board
• J.D.R.A. Bax
• H.C. Rothermund and
• L.J.A.M. Ligthart (from August 2005)
The Audit Committee met five times and held one telephone
conference in 2005 with all members present. All the
meetings were attended by members of the Board of
Management and the external auditor. On each occasion
(with the exception of the telephone conference) a discussion
was held with the external auditor without the Board of
Management being present.
The main items that were discussed during the year
were:
• annual and half-yearly Financial Statements and financial
data to be included in press releases;
• quarterly financial reports;
• development of new financial reporting systems.
Particularly close attention was focused on implementing a
new system for producing consolidated Financial
Statements and half-yearly Statements and, as a second
step, internal management reports;
• application and analysis of the effects of IFRS;
• internal risk management and control systems, including a
quarterly updated risk evaluation of the FPSO fleet;
• reports by external auditors and compliance with
recommendations and observations;
• relations with the external auditor, including, in particular,
his independence, remuneration and non-audit services for
the Company. Although the implementation of new
consolidation and management reporting software was
performed with the assistance of KPMG Information Risk
Management, the external auditor was concluded to be
independent;
• fiscal policy of the Company;
• financing of the Company, including bank covenant
compliance and balance sheet gearing. In addition, two
members of the Audit Committee have visited the
Company’s Treasury office in 2005 and reviewed policies
and procedures, including those relating to currency and
interest rate risk management;
• applications of Information and Communication
Technology (ICT);