Prospectus - SBM Offshore

contract or project.
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· The Group's lease and operate contracts expose the Group to the risk of
inaccuracies in relation to the determination of the residual value of vessels.
Correctly estimating the residual value is an important component of the lease rate
calculation. If the actual residual value is below the estimated future market value,
this may adversely affect the Group's business, results and financial condition.
· The Company believes that the Group's success and results (including its ability to
charge a premium for its services) is in part dependent on the strength of its
reputation, as well as the reputation of its partners. Any damage to the reputation
of the Group or its partners may result in existing customers withdrawing their
business from the Group, or not awarding the Group future business or the
opportunity to bid for future business, each of which could adversely affect the
Group's business, results and financial condition.
· The Group relies significantly on the skills and experience of the managerial staff
and other key personnel and a loss of these individuals could adversely affect the
Group.
· The Group enters into turnkey contracts and lease and operate contracts with its
customers. The choice as to whether a particular project is undertaken as a lease
and operate contract, or a turnkey sale, is ultimately made by the relevant client.
Whereas turnkey contracts typically generate neutral or positive cash flows from
the engineering phase through the construction period of the vessel (as progress
payments from customers are made), lease and operate contracts are capital
intensive and typically require that significant amounts of third party debt funding
be arranged. The Group is continuously seeking an optimal balance between its
turnkey activities and its lease and operate activities that is consistent with its
budgeted cash flows and capital requirements, and that takes into account
considerations such as the availability of third-party debt funding, the cost of
borrowing and the likely returns on borrowed monies. The Group may not always
be able to maintain an optimal balance between turnkey contracts and lease and
operate contracts, or, in the case of lease and operate contracts, may not be able to
obtain the necessary third-party debt funding, each of which may adversely affect
the business, results and financial condition of the Group.
· The Group is active in a number of regions around the world, some of which are
politically and economically unstable. The Group also faces the risk of terrorist
attacks, acts of war, escalation of hostilities, riots, piracy, and civil unrest. Should
they eventuate, these risks may adversely affect the Group's business, results and
financial condition.
· The Group's current corporate transformation campaign may fail to meet
objectives and generate risks (such as resistance to the transformation campaign
by personnel) as well as ineffective processes or tools. If the Group is unable to
deliver expected improvements the Group's business, results and financial
condition could be adversely impacted.
· The Group may not succeed in redeploying vessels at existing rate levels or at all,
and may be subject to higher than anticipated demobilisation, refurbishment and
redeployment costs.
· There can be no assurance that FPSOs will be successfully operational for the
expected duration of their useful service lives.