Annual Report 2010 - SBM Offshore

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Capital risk management The Company’s objectives when managing capital are to safeguard the Company’s ability to continue as a going concern in order to provide returns for shareholders and benefits for other stakeholders and to maintain an optimal capital structure to reduce the cost of capital. In order to maintain or adjust the capital structure, the Company may adjust the amount of dividends paid to shareholders, return capital to shareholders, issue new shares or sell assets to reduce debt. Consistent with others in the industry, the Company monitors capital on the basis of the gearing ratio. This Financial Review / Financial Statements 2010 ratio is calculated as net debt divided by total capital. Net debt is calculated as total borrowings (including the short term part of the long term debt and bank overdrafts as shown in the consolidated balance sheet) less cash and cash equivalents. Total capital is calculated as equity, as shown in the consolidated balance sheet, plus net debt. During 2010, the Company’s strategy which was unchanged from 2009, was to target a gearing ratio between 50% and 60%. This target is subject to maintaining headroom of 20% of all banking covenants. The gearing ratios at 31 December 2010 and 2009 were as follows: in thousands of US$ 2010 2009 Total borrowings 1,814,542 1,610,705 Less: net cash and cash equivalents (103,421) (146,712) Net debt 1,711,121 1,463,993 Total equity 2,123,405 1,816,832 Total capital 3,834,526 3,280,825 Gearing ratio 44.6% 44.8% Fair value estimation The Company uses the following fair value hierarchy for financial instruments that are measured at fair value in the balance sheet, which require disclosure of fair value measurements by level: • Quoted prices (unadjusted) in active markets for identical assets or liabilities (level 1). • Inputs other than quoted prices included within level 1 that are observable for the asset or liability, either directly (that is, as prices) or indirectly (that is, derived from prices) (level 2). • Inputs for the asset or liability that are not based on observable market data (that is unobservable inputs) (level 3). Derivative financial instruments are the only assets and liabilities valued at fair value and they can be categorised as level 2 (2009: level 2). The derivative financial instruments are not traded in an active market. The fair value of these instruments is determined by using valuation techniques. These valuation techniques maximise the use of observable market data where it is available and rely as little as possible on entity specific estimates. Other risks In respect of controlling political and credit risk, the Company has a policy of thoroughly reviewing risks associated with contracts, whether turnkey or longterm leases. Where political risk cover is deemed necessary and available in the market, insurance is obtained. In respect of credit risk, bank or parent company guarantees are negotiated with customers. Furthermore, limited recourse project financing removes a large part of the risk on long term-leases. SBM Offshore – Annual Report 2010 171
Financial Review / Financial Statements 2010 29. Auditor's Fees and Services KPMG fees included in Other operating costs related to the Company's external auditor can be summarized as follows: in thousands of US$ 2010 2009 Audit fees 987 1,096 Audit related fees 149 173 Tax fees 203 232 Other 80 347 Total 1,419 1,848 30. Events after the balance sheet date There are no reportable events after the balance sheet date. 31. List of Group companies In accordance with legal requirements a list of Group companies which are included in the consolidated financial statements of SBM Offshore N.V. has been deposited at the Chamber of Commerce in Rotterdam. 32. Interest in joint ventures The Company has several joint ventures. Included in the consolidated financial statements are the following items that represent the Company’s interest in the assets, liabilities, revenues and expenses of the joint ventures: in thousands of US$ 2010 2009 Non-current assets 858,592 1,024,192 Current assets 295,564 264,385 Non-current liabilities (701,678) (874,067) Current liabilities (293,523) (284,249) Net assets / (liabilities) 158,955 130,261 Income 384,281 384,851 Expenses (321,649) (337,972) Net income / (expenses) 62,632 46,879 172 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 requi
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Report of Board of Management In co
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Report of Board of Management Remun
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Report of Board of Management Secti
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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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Appointment and Remuneration Commit
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of the Supervisory Board are meant
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Notice to convene a meeting The not
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Routine inspection on the Yme MOPUs
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• no agreement has been concluded
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Risk Management Risk Management ope
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Strategic Irregular order intake In
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the consequences of the Deepwater H
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Funding risk Success in obtaining n
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Supervisory Board and has been disc
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Michael Wyllie British, 1958 Chief
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Annual Report 2010 - SBM Offshore

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