Annual Report 2010 - SBM Offshore

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Future IFRS changes Certain IFRS standards are in the process of being amended or replaced. Some of these future amendments and replacements will impact the consolidated financial statements of SBM Offshore significantly although the timing of the implementation of such changes can not yet be established. The amendment of the existing standards follows the convergence with US GAAP and will solve current inconsistencies between several standards. The standards that will impact the financial statements relate to revenue recognition, joint venture treatment in the consolidated financial statements and lease accounting. Revenue recognition The IASB and the FASB together initiated a joint project to clarify the principles for recognizing revenue from contracts with customers. The proposal of IASB introduces the principles of “contractual performance obligation” and suggests recognizing revenue only once this contractual performance obligation is met. Based on on-going analysis of main contracts, SBM Offshore revenue recognition pattern may not be significantly impacted and the cost-to-cost method SBM Offshore currently applies could be maintained. The standard is expected to be released in the first half of 2011. Joint Ventures The objective of the project is to develop an IFRS that enhances the accounting for, and the quality of information being reported about, joint arrangements. The project shall increase consistency, transparency and comparability of the reporting of these arrangements by addressing principally two aspects: • The structure of the arrangement will no longer be the most significant factor in determining the accounting treatment; • Accounting options will be eliminated, in particular the proportionate consolidation method. SBM Offshore is currently reviewing the treatment of its Joint Ventures and such analysis might lead to the Joint Ventures being either fully consolidated or recognized as investment in associates, which may in turn have a Financial Review / Financial Statements 2010 significant impact on consolidated turnover, EBITDA, EBIT, property, plant & equipment, net debt and other elements of the financial statements. The standard is expected to be released in the first half of 2011. Leases The aim of the project is to develop a new single approach to lease accounting that would ensure that all assets and liabilities under lease contracts are recognized in the statement of financial position. For lessors like SBM Offshore, two main approaches would co-exist: • When the lease transfers significant risks or benefits of the underlying asset to the lessee, the lessor would apply the De-recognition approach (similar to the current approach of finance lease); • When the lessor retains exposure to significant risks or benefits, the lessor would apply the Performance Obligation approach. The Performance Obligation approach requires the lessor to keep the underlying asset on its balance sheet and to record a right to receive lease payments and a liability to permit the lessee to use the underlying asset. This would lead to the expansion of balance sheet asset and liabilities. The exposure draft was open for public comments until 15 December 2010. SBM Offshore is currently following the developments but it is still too early to anticipate precisely the related impact. SBM Offshore – Annual Report 2010 109
Financial Review / Financial Statements 2010 Financial Statements Consolidated income statement For the years ended 31 December in thousands of US$ Notes 2010 2009 Revenue 1 3,055,761 2,956,545 Cost of Sales 3 (2,544,347) (2,504,211) Gross margin 1 511,414 452,334 Other operating income 2 2,240 1,080 Selling and marketing expenses 3 (44,617) (57,102) General and administrative expenses 3 (85,977) (80,072) Research and development expenses 3/6 (20,659) (22,801) Operating profit (EBIT) 362,401 293,439 Financial income 5 19,734 17,278 Financial expenses 5 (103,475) (77,248) Net financing costs (83,741) (59,970) Share of profit of associates - 185 Profit before tax 278,660 233,654 Income tax 7 (2,649) (3,673) Profit 276,011 229,981 2010 2009 Attributable to shareholders of the parent company 239,960 221,001 Attributable to non-controlling interests 36,051 8,980 Profit 276,011 229,981 Notes 2010 2009 Weighted average number of shares outstanding 167,095,777 150,100,926 Basic earnings per share 8 US$ 1.44 US$ 1.47 Fully diluted earnings per share 8 US$ 1.42 US$ 1.46 110 SBM Offshore – Annual Report 2010
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Annual Report 2010
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Financial Review / Financial Statem
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1 2 Overview 11 Message from the CE
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Semi-Submersible Drilling Rig Tensi
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Deck view of the FPSO Espirito Sant
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I am pleased to report that the Com
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In addition to these main centres,
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Highlights 2010 Financial • Turno
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Shareholders As the shares are bein
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Corporate Strategy In line with the
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Lease and Operate The lease and ope
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World Map of SBM Offshore Project E
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Report of Board of Management Repor
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Disconnectable Turret of the FPSO O
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Top: Deep Panuke Production Field C
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At the start of 2010, the Company o
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Annual Report 2010 - SBM Offshore

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