rt is amended1Q14 REVENUE IN LINE WITH EXPECTATIONS
Highlights
- Year-to-date 2014 Directional1 revenues in line with expectations at US$782 million
- Directional1 Backlog as of March 31, 2014 stands at US$21.7 billion
- FPSO Cidade de Ilhabela module integration well underway at the Brasa yard outside Rio de Janeiro
- FPSO Stones Operations & Maintenance contract signed post-period
- US$400 million financing for the Deep Panuke platform was secured from international banks
- Deep Panuke MOPU legal proceedings brought to a successful conclusion
Bruno Chabas, CEO of SBM Offshore commented:
"We have delivered a steady performance in the first quarter, with revenues in line with expectations. Tendering activity has accelerated, but we remain conservative in our view of the speed of project awards. The first module integration on Cidade de Illhabela at Brasa was a major milestone for the yard and testament to SBM's commitment to the facility and to local content in Brazil. Additionally, we are pleased with the delivery of the brownfield Kikeh extension project, the outcome of the Deep Panuke settlement, and the additional US$400 million in new financing.
The publication of the findings of our internal investigation into potentially improper sales practices was a significant step forward, and we now look to the public authorities to complete their work. SBM has striven to address compliance and ethical conduct, and I am proud of the way everyone at SBM has embraced this program. We recognize that our clients value our approach, and we look to the future with confidence."
Financial Highlights
| Directional1 | IFRS | |||||||
| in US$ million | 1Q 2014 | 1Q 2013* | % Change | 1Q 2014 | 1Q 2013* | % Change | ||
| Revenue | 782 | 814 | -4% | 1,251 | 972 | 29% | ||
| Turnkey | 545 | 582 | -6% | 1,017 | 774 | 31% | ||
| Lease and Operate | 237 | 232 | 2% | 234 | 198 | 18% | ||
| Total Order Intake | 244 | 8,055 | NM | 264 | 9,827 | NM | ||
| in US$ million | 31. Mar 14 | 31-Dec-13* | % Change | 31. Mar 14 | 31-Dec-13* | % Change | ||
| Backlog | 21,660 | 22,198 | -2% | |||||
| Net Debt | 3,811 | 3,400 | 12% | |||||
| *Restated for the introduction of IFRS 10 and 11 | ||||||||
Year-to-date 2014 Directional1 revenue came to US$782 million versus US$814 million in the year-ago period due to strong performance in the Turnkey segment in the first half of 2013 and a different mix of Turnkey sales and JV interests in projects. Specifically, the first quarter of 2013 saw strong revenue contributions from the now completed OSX 2 (turnkey sale), Fram and Cidade de Paraty projects, while in the first quarter of 2014 the new FPSO Stones project in the absence of a JV partner is not generating income under Directional1 rules. Directional1 Lease & Operate and Turnkey segment revenue came in at US$237 million and US$545 million respectively, up 2% and down 6% year-over-year.
Year-to-date 2014 IFRS revenue totalled US$1,251 million versus US$972 million in the year-ago period. Showing year-over-year improvements due to the effect of finance leases on FPSOs Stones, and Cidade de Maricá & Saquarema, IFRS Turnkey segment revenue came in at US$1,017 million, up 31%. Following first oil of the FPSO Cidade de Paraty, Production Acceptance Notice of Deep Panuke, and despite the decommissioning of FPSOs Brasil and Kuito IFRS Lease & Operate segment revenue came in at US$234 million, up 18%. All of these lease contracts are treated under IAS 17 as outright sales projects with deferred payments.
Under new IFRS 10, 11 & 12 consolidation standards for joint ventures (JVs), reported net debt as of December 31, 2013 was restated from US$2,691 million (previous IFRS) to US$3,400 million (new IFRS). As of March 31, 2014 net debt under new IFRS standards increased to US$3,811 million reflecting significant investments in the ongoing lease and operate projects under construction. It is worth noting that bank covenants will continue to be calculated based on prior IFRS standards, therefore the impact to SBM Offshore's covenants is neutral. The Company ended the quarter with cash and cash equivalent balances of US$195 million versus US$208 million at the end of 2013. Committed, undrawn credit facilities stood at US$971 million, which compares to US$1,142 million as of December 31, 2013.
Capital expenditure and investments on finance lease contracts through the first quarter of 2014 amounted to a combined total of US$599 million.
On 2 May 2014, a US$400 million loan for the financing of the Deep Panuke platform was secured from three international banks with the intention to launch a US Private Placement (USPP) in the second half of 2014.
IFRS 10, 11 & 12
New consolidation standards for joint ventures have been introduced as of January 1, 2014 ending proportional consolidation of JVs for SBM Offshore. As disclosed in its 2013 Annual Report, the Company is now required to account for its fully controlled JVs on a fully consolidated basis (mostly impacting all Brazilian FPSOs) and apply equity accounting to the Company's jointly controlled JVs (mostly Angolan FPSOs). These new standards (IFRS 10, 11 & 12) apply to the income statement, statement of financial position and cash flow statement.
This implementation has a limited impact on SBM Offshore's IFRS revenues and almost nil to net income attributable to shareholders. The Company's reported total asset value has increased significantly by approximately US$1.6 billion. Included in today's press release are the Company's 2013 pro-forma financial statements.
To ensure that this change of consolidation rules under IFRS does not affect the understanding of the Company's performance, Directional1 reporting will be based on proportional consolidation for all Lease & Operate contracts. Compared to previous Directional1 reporting the change is limited to FPSOs Aseng and Capixaba previously fully consolidated and now proportionally consolidated as all other Lease & Operate contracts. This change to Directional1 reporting led to a limited negative impact of US$72 million and US$35 million on FY13 Directional1 Revenue and EBIT respectively (no impact on Directional1 net income attributable to shareholders).
Effective January 1, 2014 SBM Directional1 reporting principles are as follows:
- Directional1 reporting represents an additional non-GAAP disclosure to IFRS reporting
- Directional1 reporting assumes all lease contracts are classified as operating leases
- Directional1 reporting assumes all JVs related to lease contracts are consolidated on a proportional basis
- Directional1 reporting is limited to restating the consolidated income statement however no restatement of the statement of financial position is made
A summary of the main effects of IFRS 10, 11 & 12 for 2013 are as follows:
| New Directional1 | Directional1 | New IFRS | IFRS | |||
| in US$ million | 2013 | 2013 | 2013 | 2013 | ||
| Revenue | 3,373 | 3,445 | 4,584 | 4,803 | ||
| EBIT | 63 | 98 | 188 | 293 | ||
| Net Income attributable to shareholders | (58) | (58) | 114 | 111 | ||
| in US$ million | 31. Dec 13 | 31-Dec-13 | 31. Dec 13 | 31-Dec-13 | ||
| Backlog | 22,198 | 23,025 | ||||
| Gross Debt | 3,608 | 2,890 | ||||
| Total Assets | 8,692 | 7,118 | ||||
| Total Equity | 2,887 | 2,135 |
Project Review
FPSO Cidade de Ilhabela (Brazil)
Integration of the process modules for FPSO Cidade de Ilhabela has progressed at the Brasa yard in Brazil with the successful completion of the first lifting campaign achieved using the Pelicano 1 heavy lift floating crane. Start-up of the facility continues to be expected in the second half of 2014.
FPSOs Cidade de Maricá & Saquarema (Brazil)
Construction of Cidade de Maricá & Saquarema has progressed with refurbishment and conversion continuing at the shipyard in China. Fabrication of the modules is concurrently taking place in Brazil. Start-up of the facilities continues to be expected at the end of 2015 and early 2016 respectively.
FPSO Stones (US Gulf of Mexico)
Construction of FPSO Stones progressed, with refurbishment and conversion continuing at the shipyard in Singapore. The Operations & Maintenance contract was signed between SBM Offshore and Shell Offshore Inc. post-period. When installed at almost 3 kilometers of water depth, the FPSO Stones will be the deepest offshore production facility of any type in the world. Start-up of the facility continues to be expected in the first half of 2016.
FPSO N'Goma (Angola)
Construction of FPSO N'Goma progressed, with refurbishment and conversion at the shipyard in Singapore completed. The vessel left the quayside in Singapore in early May and set sail for Angola where conversion will be completed at the company's JV Paenal yard and start-up of the facility is expected in the second half of 2014.
FPSO Kikeh (Malaysia)
SBM Offshore and its joint venture partner MISC Bhd achieved a key milestone recently with the start-up of the Siakap North-Petai (SNP) field through a tie-back to the Kikeh FPSO.
The SNP field, a unitized development operated by Murphy Sabah Oil Co.,Ltd (Murphy), is located offshore Malaysia in water depth of approximately 1,300 metres. Murphy announced first oil production from the SNP field on February 27, 2014.
The event is an important milestone for a project that commenced in January 2012 at SBM Offshore's Kuala Lumpur office and involved the fabrication and offshore lifting of four new modules and approximately 340,000 man-hours of offshore construction and commissioning work done on a live FPSO.
Turrets Mooring Systems
The three large complex turrets for Prelude FLNG, Quad 204 and Ichthys are progressing well and on schedule at their respective stages of completion. Fabrication work on Prelude FLNG is progressing in Dubai, with expected delivery at the end of 2014. Integration of Quad 204 with the vessel continues in South Korea, with expected delivery in the first half of 2014. Engineering, procurement and construction of the Ichthys turret continue to progress at the yard in Singapore, with expected delivery in the first half of 2015.
Decommissioning
FPSO Brasil
Successful end of production of the vessel was completed during the first quarter after over eleven years of operations for Petrobras in Brazil. Decommissioning activities have commenced and are expected to be completed during the third quarter of 2014. Future conversion opportunities for the vessel are limited and she will be considered for scrapping.
FPSO Kuito
Decommissioning of the vessel is in progress and expected to be completed during the third quarter of 2014 after over fourteen years of operations for Chevron in Angola. Future conversion opportunities for the vessel are limited and she will be considered for scrapping.
Post-Period Events
Deep Panuke (Canada)
SBM Offshore and Encana have amicably settled claims arising from the Deep Panuke project offshore Nova Scotia. Under the pertinent arrangements, SBM Offshore will receive an increased lease rate. The legal proceedings commenced will be dismissed.
SBM Offshore do Brasil Advisory Board
Eduardo Eugenio Gouvêa Vieira has been appointed as President of the Company's Advisory Board in Brazil. The Gouvêa Vieira family is one of the pioneers of the oil industry in Brazil and Mr. Gouvêa Vieira currently serves as President of the Federation of Industries of the State of Rio de Janeiro (FIRJAN).
Divestment Update
The Company continues to market the DSCV SBM Installer, a newbuild Diving Support and Construction Vessel (DSCV). The FPSO Falcon and VLCC Alba remain held for sale and the disposal of the last of three Monaco office buildings is progressing.
Directional1 Backlog
Directional1 Backlog as of March 31, 2014 was US$21.7 billion.
Compliance
The internal investigation into potentially improper sales practices has been concluded, and on April 2, 2014 SBM Offshore published the findings of its internal investigation. The Company remains in active dialogue with the relevant authorities and more information on the progress of our discussions with them will be reported in due course.
Outlook and Guidance
Following the implementation of IFRS 10, 11 & 12 in early 2014, Directional1 reporting has been adjusted by approximately US$100 million of reported revenue to reflect all vessel JVs on a proportionally consolidated basis. The adjustment relates exclusively to FPSOs Aseng (60% SBM share) and Capixaba (80% SBM share), which previously were fully consolidated and are now only proportionally consolidated. This results in an otherwise unchanged 2014 Directional1 revenue outlook of US$3.3 billion, of which US$2.3 billion is expected in the Turnkey and US$1.0 billion in the Lease & Operate segments.
Conference Call
SBM Offshore has scheduled a conference call followed by a Q&A session at 9:00 Central European Time on Friday, May 9, 2014.
The call will be hosted by Bruno Chabas (CEO) and Peter van Rossum (CFO). Interested parties are invited to listen to the call by dialling +31 20 794 8485 in the Netherlands, +44 207 190 1595 in the UK or +1 480 629 9822 in the US and using access ID 4680542.
A replay will be available shortly after the end of the conference call. Interested parties can listen to the replay by dialling +44 207 959 6720 and using access code 4680542 for up to 10 days.
| Financial Calendar | Date | Year |
| Half-Year 2014 Results - Press Release | August 7 | 2014 |
| Trading Update Q3 2014 - Press Release | November 13 | 2014 |
| Full-Year 2014 Results - Press Release | February 5 | 2015 |
| Publication of AGM Agenda | March 3 | 2015 |
| Annual General Meeting of Shareholders | April 15 | 2015 |
| Trading Update Q1 2015 - Press Release | May 8 | 2015 |
| Half-Year 2015 Results - Press Release | August 6 | 2015 |
| Trading Update Q3 2015 - Press Release | November 12 | 2015 |
Corporate Profile
SBM Offshore N.V. is a listed holding company that is headquartered in Schiedam. It holds direct and indirect interests in other companies that collectively with SBM Offshore N.V. form the SBM Offshore group ("the Company").
SBM Offshore provides floating production solutions to the offshore energy industry, over the full product life-cycle. The Company is market leading in leased floating production systems with multiple units currently in operation, and has unrivalled operational experience in this field. The Company's main activities are the design, supply, installation, operation and the life extension of Floating Production, Storage and Offloading (FPSO) vessels. These are either owned and operated by SBM Offshore and leased to its clients or supplied on a turnkey sale basis.
Group companies employ over 9,600 people worldwide, who are spread over five execution centers, eleven operational shore bases, several construction yards and the offshore fleet of vessels. Please visit our website at www.sbmoffshore.com.
The companies in which SBM Offshore N.V. directly and indirectly owns investments are separate entities. In this communication "SBM Offshore" is sometimes used for convenience where references are made to SBM Offshore N.V. and its subsidiaries in general, or where no useful purpose is served by identifying the particular company or companies.
The Management Board
Schiedam, May 9, 2014
For further information, please contact:
Investor Relations
Nicolas D. Robert
Head of Investor Relations
| Telephone: | +377 92 05 18 98 |
| Mobile: | +33 (0) 6 40 62 44 79 |
| E-mail: | nicolas.robert@sbmoffshore.com |
| Website: | www.sbmoffshore.com |
Media Relations
Anne Guerin-Moens
Group Communications Director
| Telephone: | +377 92 05 30 83 |
| Mobile: | +33 (0) 6 80 86 36 91 |
| E-mail: | anne.guerin-moens@sbmoffshore.com |
| Website: | www.sbmoffshore.com |
Disclaimer
Some of the statements contained in this release that are not historical facts are statements of future expectations and other forward-looking statements based on management's current views and assumptions and involve known and unknown risks and uncertainties that could cause actual results, performance, or events to differ materially from those in such statements. Such forward-looking statements are subject to various risks and uncertainties, which may cause actual results and performance of the Company's business to differ materially and adversely from the forward-looking statements. Certain such forward-looking statements can be identified by the use of forward-looking terminology such as "believes", "may", "will", "should", "would be", "expects" or "anticipates" or similar expressions, or the negative thereof, or other variations thereof, or comparable terminology, or by discussions of strategy, plans, or intentions. Should one or more of these risks or uncertainties materialize, or should underlying assumptions prove incorrect, actual results may vary materially from those described in this release as anticipated, believed, or expected. SBM Offshore NV does not intend, and does not assume any obligation, to update any industry information or forward-looking statements set forth in this release to reflect subsequent events or circumstances.
Pro Forma FY 2013 Consolidated Statement of Financial Position
| Figures are expressed in millions of US$ and may not add up due to rounding | Proforma IFRS 10 &11 restated 2013 | IFRS 10&11 Impact | Audited 2013 | |
| ASSETS | ||||
| Property, plant and equipment | 2,055 | (31) | 2,023 | |
| Intangible assets | 30 | 0 | 30 | |
| Investment in associates | 242 | (242) | - | |
| Other financial assets | 2,394 | (872) | 1,522 | |
| Deferred tax assets | 25 | 0 | 25 | |
| Derivative fin instruments | 55 | (0) | 54 | |
| Total non-current assets | 4,800 | (1,145) | 3,654 | |
| Inventories | 16 | 11 | 27 | |
| Trade and other receivable | 1,152 | 67 | 1,218 | |
| Income tax receivable | 10 | 0 | 10 | |
| Construction work-in-progress | 2,221 | (488) | 1,733 | |
| Derivative financial instruments | 109 | (11) | 98 | |
| Cash and cash equivalents | 208 | (8) | 200 | |
| Assets held for sale | 177 | 0 | 177 | |
| Total current assets | 3,892 | (429) | 3,463 | |
| TOTAL ASSETS | 8,692 | (1,574) | 7,118 | |
| EQUITY AND LIABILITIES | ||||
| Equity attributable to shareholders of the parent company | 2,039 | 25 | 2,064 | |
| Non-controlling interests | 848 | (777) | 71 | |
| TOTAL EQUITY | 2,887 | (752) | 2,135 | |
| Loans and borrowings | 3,205 | (691) | 2,514 | |
| Deferrals | 265 | (120) | 145 | |
| Provisions | 84 | 3 | 87 | |
| Deferred tax liabilities | 11 | 23 | 34 | |
| Derivative financial instruments | 134 | (9) | 125 | |
| Total non-current liabilities | 3,698 | (793) | 2,905 | |
| Loans and borrowings | 403 | (27) | 376 | |
| Provisions | 59 | 5 | 64 | |
| Trade and other payables | 1,496 | 5 | 1,501 | |
| Corporate Income Tax | 53 | 1 | 54 | |
| Derivative financial instruments | 96 | (14) | 82 | |
| Liabilities held for sale | - | - | - | |
| Total current liabilities | 2,107 | (29) | 2,078 | |
| TOTAL EQUITY AND LIABILITIES | 8,692 | (1,574) | 7,118 |
Pro Forma FY 2013 Consolidated Income Statement
| Consolidated income statement (1/2) | ||||||
| Figures are expressed in millions of US$ and may not add up due to rounding | Proforma IFRS 10 &11 restated 2013 | IFRS 10&11 Impact | Audited 2013 | |||
| Revenue | 4,584 | 218 | 4,803 | |||
| Cost of Sales | (4,206) | (113) | (4,319) | |||
| Gross Margin | 379 | 105 | 484 | |||
| Other operating income | 27 | 0 | 28 | |||
| Selling and marketing expenses | (34) | (0) | (34) | |||
| General and administrative expenses | (160) | (0) | (161) | |||
| Research & development expenses | (23) | 0 | (23) | |||
| Operating Profit (EBIT) | 188 | 105 | 293 | |||
| Financial income | 26 | |||||
| Financial expenses | (126) | |||||
| Net financing costs | (112) | 11 | (100) | |||
| Share of profit in associates | 153 | (151) | 1 | |||
| Profit Before Tax | 229 | (35) | 194 | |||
| Income tax expenses | (54) | (26) | (80) | |||
| Profit | 175 | (61) | 114 | |||
| Consolidated income statement (2/2) | ||||||
| Figures are expressed in millions of US$ and may not add up due to rounding | Proforma IFRS 10 &11 restated 2013 | IFRS 10&11 Impact | Audited 2013 | |||
| Attributable to shareholders of the parent company | 114 | (3) | 111 | |||
| Attributable to minority interests | 61 | (58) | 3 | |||
| PROFIT | 175 | (61) | 114 |
Pro Forma FY 2013 Directional1 Income Statement
| FY2013 | Proforma | Impact | Directional | |||
| Figures are expressed in millions of US$ and may not add up due to rounding | New Directional | New Directional | ||||
| Total Revenues | 3,373 | 72 | 3,445 | |||
| Lease and Operate | ||||||
| Third parties revenues | 1,006 | 72 | 1,078 | |||
| Gross Margin | (181) | 27 | (154) | |||
| EBIT | (204) | 27 | (177) | |||
| Deprec., amort. and impairment | (441) | (21) | (463) | |||
| EBITDA | 237 | 48 | 285 | |||
| - | ||||||
| Turnkey | ||||||
| Third parties revenues | 2,367 | - | 2,367 | |||
| Gross Margin | 435 | 8 | 443 | |||
| EBIT | 288 | 8 | 296 | |||
| Deprec., amort. and impairment | (15) | (1) | (16) | |||
| EBITDA | 303 | 10 | 312 | |||
| - | ||||||
| Other | ||||||
| Other operating income | 33 | - | 33 | |||
| Selling & marketing expenses | (0) | - | (0) | |||
| General & administrative expenses | (53) | - | (53) | |||
| Research & development expenses | - | - | - | |||
| EBIT | (21) | - | (21) | |||
| - | ||||||
| Total EBIT | 63 | 35 | 98 | |||
| Total EBITDA | 520 | 58 | 577 | |||
| Net financing costs | (80) | (20) | (100) | |||
| Income from associated companies | 11 | (10) | 1 | |||
| Income tax expense | (52) | (2) | (54) | |||
| Profit/(Loss) | (58) | 3 | (55) | |||
| Non controling interests | (0) | 3 | 3 |
Detailed Impact Analysis of IFRS 10 and 11
| Joint Ventures | Lease Contract | SBM share % | New Directional1 | Old Directional1 | New IFRS | Old IFRS |
| Type | ||||||
| FPSO N'Goma | FL | 50% | Proportional | Proportional | Equity | Proportional |
| FPSO Saxi | FL | 50% | Proportional | Proportional | Equity | Proportional |
| FPSO Mondo | FL | 50% | Proportional | Proportional | Equity | Proportional |
| FPSO Cdde de Ilhabela | FL | 62,25% | Proportional | Proportional | Full consolidation | Proportional |
| FPSO Cdde de Maricá | FL | 56% | Proportional | Proportional | Full consolidation | Proportional |
| FPSO Aseng | FL | 60% | Proportional | Full consolidation | Full consolidation | Full consolidation |
| FPSO Cdde de Paraty | FL | 50,50% | Proportional | Proportional | Full consolidation | Proportional |
| FPSO Cdde de Saquarema | FL | 56% | Proportional | Proportional | Full consolidation | Proportional |
| FPSO Kikeh2 | FL | 49% | Proportional | Proportional | Equity | Proportional |
| FPSO Capixaba | OL | 80% | Proportional | Full consolidation | Full consolidation | Full consolidation |
| FPSO Espirito Santo | OL | 51% | Proportional | Proportional | Full consolidation | Proportional |
| FPSO Brasil | OL | 51% | Proportional | Proportional | Full consolidation | Proportional |
| Yetagun | OL | 75% | Proportional | Proportional | Full consolidation | Proportional |
| Nkossa II | OL | 50% | Proportional | Proportional | Equity | Proportional |
| 1Directional view is a non-IFRS disclosure, which treats all leases as operating leases and consolidates the vessel joint ventures proportionally. | ||||||
| 2Kikeh lease classification changed from OL to FL effective 1Q14 | ||||||
| NOTE: Deep Panuke, Thunderhawk and FPSOs Stones, Cidade de Anchieta, Marlim Sul are fully owned by SBM, thus not considered as JV and fully consolidated. | ||||||
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