Annual Report 2010 - SBM Offshore

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Use of estimates In the preparation of the financial statements, it is necessary for the management of the Company to make estimates and certain assumptions that can affect the valuation of the assets and liabilities and the outcome of the income statement. The actual outcome may differ from these estimates and assumptions. Estimates and judgements are continually evaluated and are based on historical experience and other factors, including expectations of future events that are believed to be reasonable. In particular, significant areas of estimation, uncertainty and critical judgements in applying accounting policies that have the most significant effect on amounts recognised in the financial statements are: • the anticipated useful life and residual value of the leased facilities; • the lease classification; • the revenue recognition on construction contracts based on the stage of completion method; • the impairment of tangible and intangible fixed assets; • the impact of variation orders and recoveries from clients where negotiations or discussions are at a sufficiently advanced stage; • the future costs to complete for construction projects and required contingencies; • the demobilisation provisions; • the Company's exposure to litigation with third parties. 1. Segment information Business information Sales between segments are carried out at arm’s length. The revenue to third parties reported to the Chief Operating Decision Maker is measured in a manner consistent with that in the income statement. The amounts provided to the Chief Operating Decision Maker with respect to non-current assets and noncurrent liabilities are measured in a manner consistent with that of the financial statements. These assets and liabilities are allocated based on the operations of the segment. Financial Review / Financial Statements 2010 SBM Offshore – Annual Report 2010 127
Financial Review / Financial Statements 2010 The segmental analysis of the consolidated income statement is as follows: Period ending 31 December 2010 in thousands of US$ Lease and Operate Turnkey Systems Turnkey Services Other Eliminations and adjustments Consolidated REVENUES Third party 800,492 1,984,467 270,802 - - 3,055,761 Inter-segment - 259 67,927 - (68,186) - Total revenues 800,492 1,984,726 338,729 - (68,186) 3,055,761 Gross margin 165,566 270,431 75,417 - - 511,414 Other operating income 26 2,130 - 84 - 2,240 Selling and marketing (7,495) (31,806) (5,316) - - (44,617) General and administrative (8,561) (38,983) (4,277) (34,156) - (85,977) Research and development (3,186) (15,832) (1,641) - - (20,659) EBIT 146,350 185,940 64,183 (34,072) - 362,401 Net financing costs (83,741) Income tax expense (2,649) Share of profit of associates - Profit 276,011 EBITDA EBIT 146,350 185,940 64,183 (34,072) - 362,401 Depreciation and amortization and impairment 301,847 14,818 8,297 1,003 - 325,965 EBITDA 448,197 200,758 72,480 (33,069) - 688,366 OTHER SEGMENT INFORMATION Impairment charges 50,746 - - - - 50,746 Capital expenditure 473,153 21,703 16,658 7,621 - 519,135 Non-current assets 2,909,742 150,891 67,611 135,946 - 3,264,190 Investments in associates - 42 - - - 42 There were no contingent-based rents recognised in the 2010 income statement (2009: nil). In 2010, there has been no non-recurring revenue generated from the sale of the Company's production facilities. 128 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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Report of Board of Management Compo
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Report of Board of Management Remun
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Report of Board of Management was a
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Report of Board of Management Actua
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Report of Board of Management With
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Report of Board of Management Infor
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Disconnectable Turret of the FPSO O
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Introduction The relatively high oi
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Turnkey Systems A major highlight o
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Top: Deep Panuke Production Field C
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Report of the Board of Management 0
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At the start of 2010, the Company o
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SBM Offshore employees on board an
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contract will be based on a product
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Semi-Submersible Drilling Rigs The
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Semi-Submersible drilling rig 'Delb
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Top: SBM Services repairing the Sof
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y a large buoyant structure when di
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For smaller gas-supply rates, the C
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Corporate Governance Corporate Gove
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If either the GM or the Supervisory
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Annual Report 2010 - SBM Offshore

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