2011 Annual Report - SBM Offshore

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organisation has been implemented with accountability for performance at execution center level. The impairment charges have impacted the 2011 full year results and balance sheet at year-end. Net debt level at year-end 2011 stands at US$ 1,958.5 million with all debt covenants met. 3.1.1 Organisation Following revisions to its management structure, implemented in 2009, the Company has focused on developing an organisational structure, which maximises its capacity to execute large, complex projects. This has resulted in the delegation of a broad range of responsibilities, for delivery and performance, to the execution level. Within the context of the Group’s principles, rules and guidelines, each project or FPSO unit constitutes a ‘building block’ within an execution centre and each such project or FPSO, is managed by a fully integrated project team. Consistency, in the organisational structure in place at each and every Execution Centres, creates one way of working, which ensures the same processes, systems and objectives are used throughout the Group. The Company’s strategy, values, and brand have been developed to reflect its new organisational structure and promote a one-company culture, focused on delivering uniform future success. Improvements in project management, tendering, proposals and execution implemented in 2009, have produced encouraging results for new projects. The Company is focused on achieving continuous improvement in these core competencies. 3.1.2 Branding In line with organisational changes and its refocus on core products, the Company has initiated an exercise, involving employees and other stakeholders - to identify its brand ‘core;; or ‘essence’ and to translate this into a coherent vision, set of values and promises for the future. As a result, the Company has defined its brand essence as: the most experienced partner for complete lifecycle solutions. The Company’s core purpose and offer is summed up in the following statement: our people have unrivalled experience and understanding of the needs of the global offshore energy industry, and can confidently supply floating production solutions for the full production lifecycle. The Company has also defined its vision and driving ambition:to be the trusted partner of choice in the development of complete offshore floating solutions for the world’s energy companies - which is underpinned by three core values: Team-Energy (Work as One), Success (Perform) and Ambition (Shape our Future). The Company’s promises to different stakeholder groups are included in the strategy and branding section of this report. The new brand and supporting visual identity is being launched with the publication of the Company’s online annual report. This is a customized selection from the SBM Offshore N.V. Annual Report 2011 26
3.1.3 Risk Management The Company continues to focus efforts on managing the financial, operational and execution-related risks it faces. Risks associated with proposals, estimates and contracts have been addressed;; now focus has shifted to improving risk management during execution - resulting, inter alia, in more conservative use of accounting estimates. The increasing complexity of modern projects requires a revised approach to margin recognition and contingency levels. In order to ensure this, the Company has adopted a new approach to margin recognition, with a more conservative stance towards the percentage of completion method used in construction contracts. Complex projects will be submitted to gate reviews before margins can be recognised. These gate reviews will happen at a later stage in completion of engineering with overall project progress at typically around 25%. This change will not affect margin or profitability at completion, but will alter the timing of margin recognition. For 2011, approximately US$ 57 million of gross margin has been deferred. For 2012, a deferral of approximately US$ 100 million of gross margin is estimated. The Company has also adopted a new approach to general risk assessment, reflecting the increased complexity and scope of major projects along with the corresponding need for a more conservative approach to contingency levels. The risk management processes are implemented throughout the Company with specific focus on the tender phase to identify specific risks at the earliest stage of the project. 3.1.4 HSSE The Company strives continuously to ensure incident-free workspaces in its onshore and offshore operations. It is committed to protect its most valuable assets – the men and women responsible for its success. For 2011, its TRIFR (Total Recordable Incident Frequency Rate) shows an increase from 2010. The Company has implemented a wide range of initiatives to reverse this unsatisfactory trend, and has appointed in January 2012 a new Group HSSE Director who has been tasked with spearheading the drive by all employees to improve results in 2012. 3.1.5 Sustainability The Company has combined its Sustainability Report and Annual Report online. The report still provides detailed information on the Company’s HSSE and Human Resources activities and strategy. The Company’s transparent reporting on sustainability issues has led to its inclusion in the Dow Jones Sustainability World Index. This is a customized selection from the SBM Offshore N.V. Annual Report 2011 27
Page 2 and 3: Table of contents 1 Overview 1 1.1
Page 4 and 5: esource, through selected R&D, to m
Page 6 and 7: Business Model The Company generate
Page 8 and 9: 1.3 Snapshot 2011 (US$ mln.) 2011 2
Page 10 and 11: 1.4 Stakeholders Information 1.4.1
Page 12 and 13: 1.4.5 Investor Relations The Compan
Page 14 and 15: 1.5 Corporate Strategy 1.5.1 Introd
Page 16 and 17: 1.5.2 Vision, promises and values V
Page 18 and 19: The Company only enters partnership
Page 20 and 21: Supply Chain In line with its Code
Page 22 and 23: 1.6 Corporate Management Systems &
Page 24 and 25: Status updates for the implementati
Page 26 and 27: This is a customized selection from
Page 30 and 31: 3.1.6 Local Content Brazil In Brazi
Page 32 and 33: New contracts During 2011 the Compa
Page 34 and 35: 3.4 Product and Technology Developm
Page 36 and 37: time, and cost. 3.4.3 Offshore LNG
Page 38 and 39: Appointment of a Managing Director
Page 40 and 41: Loans or guarantees No loans or gua
Page 42 and 43: In case a binding proposal is made,
Page 44 and 45: 3.5.5 Shareholders Share capital At
Page 46 and 47: Dividend The Management Board is au
Page 48 and 49: former notary and presently a lawye
Page 52 and 53: Onshore Operations In addition to t
Page 54 and 55: voluntary basis in Brazil for Occup
Page 56 and 57: Permit-to-Work (Carros) Safety is a
Page 58 and 59: Although unhappy with the increases
Page 60 and 61: 2012. The primary emissions from th
Page 62 and 63: 3.8 Human Resources 3.8.1 Introduct
Page 64 and 65: The total headcount is based on all
Page 68 and 69: The Employee Share Ownership Plan,
Page 70 and 71: White Collar Staff Training is base
Page 72 and 73: 3.9 Sustainable Initiatives 3.9.1 C
Page 74 and 75: 3.9.2 Supply Chain in Focus SBM Off
Page 76 and 77: 3.9.3 Local content In a number of
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Equatorial Guinea A very motivated
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the building process, an SBM team a
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This is a customized selection from
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5.1.2 Environmental Reporting Envir
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Total Production of Hydrocarbons Of
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HSS Accident Statistics for Dynamic
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Regional CO2 Emissions Values expre
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Permanent Part Time Employees Headc
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Women Men Equality % of Women in ma
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GRI Index Level C Vision and Strate
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LTIFR = (LTI x 200,000)/ EH Where:
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