SBM OFFSHORE 2016 FULL YEAR EARNINGS
(Thomson Reuters ONE) -
February 8, 2017
SBM Offshore is pleased to report revenues and EBITDA in line with expectations,
concluding a year of many achievements notwithstanding the backdrop of the
prolonged market downturn. After adjusting to the new market circumstances, the
offshore industry shows early signs of stabilization but with a slow recovery.
SBM Offshore has continued to transform itself to address this change,
safeguarding experience to reinforce a strategic position underpinned by strong
cash flow from the Lease & Operate portfolio. At the end of the year the Company
was awarded contracts by ExxonMobil for a Floating Production, Storage and
Offloading vessel (FPSO) for development and production in Guyana, subject to
Final Investment Decision; the only major new FPSO-related contracts awarded in
the industry as a whole in 2016. During the year three FPSOs were delivered to
clients, which were successfully integrated into the fleet. These new vessels
further strengthened cash flow allowing the company to re-initiate the dividend
and complete a significant EUR 150 million share repurchase program during
2016. Given its continued positive outlook for underlying cash flow generation,
the Company proposes a cash dividend of US$0.23 per share, an increase of c.
10% year-on-year. In addition the Company will be updating and reinforcing its
dividend policy.
Bruno Chabas, CEO of SBM Offshore, commented:
"Experience matters. This was demonstrated by SBM Offshore teams once more this
year. Three technologically complex FPSOs were delivered, on time, in line with
clients' expectations, using teams across the globe. SBM Offshore is approaching
300 years of cumulative operating experience and has now delivered 118 Turnkey
projects, including 34 FPSOs. And since 1959 the Company has delivered more than
450 offshore terminals. Lease and Operate continues to show solid performance
with a fleet that has a production capacity of 1.6 million barrels per day.
To firmly position the Company for the future and align its business with
today's reality in the oil services industry which is characterized by "lower
for longer" activity, SBM Offshore initiated a strategic improvement program.
This program leverages our experience and is structured around the pillars
"Optimize", "Transform" and "Innovate". The importance of working closely with
client teams to optimize developments combined with the ability to deliver
projects on time and on budget has become crucial. As such, with its balance
sheet and experienced staff, SBM Offshore is uniquely positioned to create value
for customers and investors in today's oil price environment and thereby utilize
its solid foundation for future growth."
Financial Highlights
* Underlying(1) Directional(2) EBITDA of US$778 million and Underlying
Directional EPS of US$0.71 per share
* Directional revenue of US$2,013 million
* Restructuring cost savings of US$260 million, including foreign exchange
rate impact; ahead of plan to date
* Cash return to shareholders totaling US$211 million for the year in the form
of dividend and share repurchases
* Cash dividend of US$0.23 per share for 2016, a c.10% increase compared to
2015
* Proportional net debt at year-end unchanged at US$3.1 billion, and
cash/undrawn credit facilities of US$1.9 billion
* 2017 Guidance: Directional revenue around US$1.7 billion, Directional EBITDA
around US$ 750 million
* Recorded adjustments to accounts in-line with 2016 Year-end Update
As reported in the 2016 Year-End Update in December, the 2016 results include a
number of non-cash adjustments as a result of its regular year-end review taking
into account uncertainties in its outlook for some areas of its operations
reflected in its updated business planning assumptions. These adjustments
comprise US$90 million in total for the impairment of the Company's net
investment in the Angolan construction yard Paenal and the recognition of an
onerous contract for the DSCV SBM Installer. During 2016, the compliance related
Brazilian settlement provision was increased by US$36 million, consisting of
US$22 million plus a time value of money adjustment(3) of US$14 million. All
these amounts have been used to adjust the results for 2016, to arrive at the
underlying figures as reported above and throughout this document. 2015
underlying results reflect an adjustment for compliance related items amounting
to US$157 million.
Project Review
FPSO
The Company delivered three complex FPSOs to clients during the year. First,
FPSO Cidade de Maricá (Brazil) was formally on hire as of February 7, 2016 with
an initial charter contract of 20 years. Second, FPSO Cidade de Saquarema
(Brazil) was on hire as of July 8, 2016 with an initial charter contract of 20
years. Third, FPSO Turritella (US Gulf of Mexico) was on hire as of September
2, 2016 with an initial lease and operate contract for 10 years with future
extension options up to a total of 20 years.
The FPSO Marlim Sul received a decommissioning day rate through the end of the
first quarter 2016, and was subsequently formally decommissioned in April 2016
and is currently laid-up in Malaysia.
Turrets & Mooring Systems
Commissioning continues in accordance with clients' schedules and contractual
planning, for the two large, complex turrets for Prelude FLNG and FPSO Ichthys.
Front-End Engineering and Design (FEED) contracts
On December 20, 2016 the Company announced the award by ExxonMobil of FPSO
contracts for the Liza development in Guyana, subject to final investment
decision. The Company is progressing with the scope for this FEED study.
Project Contract SBM Capacity, Size Expected Notes
Share Delivery
--------------------------------------------------------------------------------
+----------------+-------------+-----+--------------+--------+-----------------+
|Prelude, Turret |Turnkey sale |100% | 95m height, | 2017 |Commissioning |
| | | | 11,000 tons | |ongoing |
+----------------+-------------+-----+--------------+--------+-----------------+
|Ichthys, Turret |Turnkey sale |100% | 60m height, | 2017 |Commissioning |
| | | | 7,000 tons | |ongoing |
+----------------+-------------+-----+--------------+--------+-----------------+
|Cidade de | 20 year | 56% | 150,000 bpd | 2016 |Delivered |
|Maricá, FPSO |finance lease| | | | |
+----------------+-------------+-----+--------------+--------+-----------------+
|Cidade de | 20 year | 56% | 150,000 bpd | 2016 |Delivered |
|Saquarema, FPSO |finance lease| | | | |
+----------------+-------------+-----+--------------+--------+-----------------+
|Turritella, FPSO| 10 year | 55% | 60,000 bpd, | 2016 |Delivered |
| |finance lease| |disconnectable| | |
+----------------+-------------+-----+--------------+--------+-----------------+
Directional Backlog
Directional backlog at the end of December 2016 remained high at US$17.1 billion
compared to US$18.9 billion at the end of 2015. This reflects both the lower
level of order intake for the Turnkey segment and the resilience of the Lease
and Operate portfolio amounting to US$ 17.0 billion at the end of 2016. Revenue
generated in 2016 was $2,013 million with total order intake of US$186 million,
including US$110 million of new orders in Turnkey.
Backlog as of December 2016
-------------------- ----------- ------------------- ---------
(in billion US$) Turnkey Lease & Operate Total
-------------------- ----------- ------------------- ---------
2017 0.1 1.5 1.6
2018 - 1.5 1.5
2019 - 1.5 1.5
Beyond 2019 - 12.5 12.5
Total Backlog 0.1 17.0 17.1
--------------------------------------------------------------------
Funding
At the end of the year, SBM Offshore had cash and undrawn committed credit
facilities totaling US$1,904 million compared to US$2,681 million at year-end
2015 on an IFRS basis. On a proportional basis the period ended at US$1,850
million versus US$2,155 million at the end of 2015.
SBM Offshore completed the procedure for re-flagging of the FPSOs Cidade de
Maricá and Cidade de Saquarema enabling the release of the pre-completion
guarantees associated with FPSOs Cidade de Maricá and Cidade de Saquarema, which
were confirmed in November 2016 and January 2017, respectively. As of year-end
2016, no other pre-completion guarantees relating to project financing were
outstanding.
Despite the increase in debt associated with the FPSO deliveries to the fleet,
the cash requirement for funding the 2016 dividend and share repurchase program,
cash flow generation from Lease and Operate was sufficiently strong to maintain
the proportional net debt level at US$3.1 billion at year-end.
Transformation, retaining experience
SBM Offshore has transformed itself over the last 3 years in response to the
change in market circumstances, while retaining experience. Over this period,
the Company has reduced its staff and contractor headcount by more than 50%.
Compared to 2014 and as of year-end 2016, this multi-year restructuring has
generated approximately US$260 million to date or US$160 million of annual
Employee Benefits savings after adjusting for positive foreign exchange rate
impacts. This result represents both an acceleration and outperformance as
compared to the initial target. An additional amount of approximately US$20
million of annual savings is expected next year as a result of 2016
restructuring.
SBM Offshore has decided to safeguard its experience through retention of core
capacity which represents an investment for the future; when the offshore market
comes back. However, should the market downturn persist, the Company will
consider additional measures to adjust its cost structure.
Operational Update
The Lease & Operate fleet uptime performance for the year was 96.8%. Operational
uptime for the full year was impacted during the second quarter by downtime
associated with the Deep Panuke production facility. Deep Panuke experienced a
flare stack malfunctioning which was repaired in May 2016. Whilst the
operational downtime at Deep Panuke affected operational performance it did not
materially affect contractual income under the terms of the lease and operate
contract.
Shareholder returns
SBM Offshore reached a positive free cash flow inflexion point in the first half
of 2016. Given this cash flow position and the outlook for underlying cash
generation, the Company decided to return an aggregate c. US$211 million during
2016 to its shareholders representing approximately US$ 1 per share in the form
of the dividend and a share repurchase program.
In the second half of the year, a EUR 150 million share repurchase program was
announced and subsequently completed. On December 20, the program finished with
the repurchase of 11.44 million shares, representing approximately 5% of the
original number of outstanding shares and an investment of US$166 million cash.
During the Annual General Meeting (AGM) of Shareholders on April 13, 2017, a
consequent proposal for cancellation of shares will be made.
With the announcement of Full Year results 2015, SBM Offshore re-initiated its
dividend program and paid US$45 million in cash to its shareholders. This
dividend represented 25% of Underlying Directional net profit and was US$0.21 on
a per share basis.
Considering its continued positive underlying cash flow outlook, the Company
proposes a dividend of US$0.23 per share in respect of 2016, to be declared at
the AGM on April 13, 2017. This is a c. 10% increase per share compared to last
year and represents a pay-out of approximately 30% of the Underlying Directional
2016 net result, adjusted for exceptional items. The proposed ex-dividend date
is April 19, 2017. The dividend is payable within 30 days following the AGM.
The annual dividend will be calculated in US Dollars, but will be payable in
Euros. The conversion into Euros will be effected on the basis of the exchange
rate on April 13, 2017. Given the Company's strong cash position, the dividend
will be fully paid in cash.
SBM Offshore intends to revise its dividend policy relating to future dividend
proposals as follows: "The Company's policy is to maintain a stable dividend
which grows over time. Determination of the dividend is based on the Company's
assessment of the underlying cash flow position and of 'Directional net income',
where a target payout ratio of between 25% and 35% of 'Directional net income'
will also be considered". The proposed change will be presented for discussion
at the AGM on April 13, 2017.
Management Board
On November 30, 2016, at an Extraordinary General Meeting of Shareholders, Mr.
D.H.M. Wood was appointed as Management Board member and Chief Financial Officer
(CFO). Mr. Wood is appointed for a period of four years until the Annual General
Meeting of Shareholders in 2021. Mr. Wood succeeded Mr. P.M. van Rossum who
retired as Management Board member and CFO.
Corporate Social Responsibility
SBM Offshore has continued to improve its Process Safety performance and has
achieved its best ever performance for the most severe Loss of Primary
Containment (Tier 1) events since 2014. In Occupational Safety, the outstanding
performance recorded in the Turnkey segment was offset by incidents related to
the start-up of the three new FPSOs. As a result, the Company was not able to
further improve on its robust performance in 2014 and 2015 and the Total
Recordable Injury Frequency Rate (TRIFR) stood at 0.31 at the end of 2016,
compared to target of below 0.27. The Company is targeting a reduction in
safety-related events and is committed to addressing underlying challenges to
come back to its solid safety performance as recorded for 2014 and 2015.
Environmental reporting was significantly improved by more accurate data
gathering and monitoring of the actual gas composition on each unit to calculate
the greenhouse gas (GHG) emission levels for 2015 and 2016. This has resulted in
decreases in recorded emissions levels, leading the Company to use revised 2015
reported environmental data for comparisons.
The total volume of gas flared in 2016 remained similar to that for 2015, as
revised, notwithstanding three new FPSOs being added to the fleet. Relative to
the Company's increased hydrocarbon production, gas flared was reduced by 23%
compared to 2015. Also total GHG emissions relative to hydrocarbon production
decreased by 13% compared to 2015. The start-up of the three new FPSOs only
increased energy consumption per hydrocarbon production by 3%. Both GHG
emissions and energy consumption ratios show better performance than the
benchmark International Association of Oil and Gas Producers (IOGP) industry
average.
The Company's sustainability performance continues to improve. For the seventh
consecutive year the Company was included in the Dow Jones Sustainability World
index, showing SBM Offshore to be an Industry Leader for 2016/2017. This
continuous improvement is a credit to the Company's strong commitment and its
sustainability programs on Environmental, Social and Governance (ESG) issues
driving to create a more sustainable business.
Compliance
In 2016, further progress was made with the discussions with Brazilian
authorities and Petrobras. On July 16, 2016 a Leniency Agreement was signed
between Brazilian authorities, Petrobras and SBM Offshore, that will become
legally binding after approval by Brazilian Fifth Chamber. Until then, the
Company is not under any obligation to make payments under the Leniency
Agreement. The Fifth Chamber did not approve the agreement in its current form
after which appeals were filed by various governmental parties who were
signatories to the Leniency Agreement. Subsequently, the Higher Council decided
on December 14, 2016 not to accept appeals filed by the MPF and the General
Counsel for the Republic and referred the case back to the Fifth Chamber and the
prosecutor handling the case for further review and determination of next steps.
SBM Offshore remains committed to engage with the prosecutor and the Fifth
Chamber until the Leniency Agreement is approved by the Fifth Chamber. The
Leniency Agreement further remains subject to review by the Federal Court of
Accounts but this is not a condition precedent to the Leniency Agreement.
The Company continues to cooperate with the United States Department of Justice
following the reopening of the investigation it had closed in November 2014 and
its inquiry into Unaoil, a company that SBM Offshore had engaged with as an
agent prior to 2012 in relation to delivery of barges, offshore terminals and
maintenance.
Outlook and Guidance
Management's expectations for order intake in 2017 remain unchanged, aligned
with an outlook for the industry where recovery is expected to be gradual as
clients remain cautious regarding investment in their development programs. At
the same time, productive client discussions continue to take place to make deep
water projects competitive in today's oil price environment. A positive medium
to long-term outlook is maintained as deep water offshore is expected to remain
an important element in the energy supply of the future.
The Company is providing 2017 Directional revenue guidance of around US$1.7
billion, with around US$1.5 billion from Lease and Operate and around US$200
million from Turnkey. 2017 Directional EBITDA is guided at around US$750
million.
FINANCIAL REVIEW
Overview
Directional
Directional consolidated net income for 2016 was US$ 24 million, stable
compared to 2015. This result includes non-recurring items which generated a
net loss of US$ 126 million in 2016 compared to a net loss of US$ 157 million
in 2015. Excluding non-recurring items, 2016 Underlying consolidated
Directional net income attributable to shareholders stood at US$ 150 million,
a decrease from US$ 30 million from the previous year, mainly attributable to
lower Turnkey segment activity.
Non-recurring items for 2016 underlying performance relate to (i) provision for
an onerous long-term charter contract with the Diving Support and Construction
Vessel (DSCV) SBM Installer (US$ 31 million), (ii) the update of the provision
for contemplated settlement with Brazilian authorities and Petrobras (US$ 36
million) and the impairment of the Company's carrying amount for the net
investment in the Joint Venture owning the Paenal construction yard (US$ 59
millions). These non-recurring items are the same in both IFRS and Directional,
impacting EBIT and EBITDA by US$ 53 million, net financing costs by US$ 14
million and Share of Profit of Equity-accounted investees by US$ 59 million. For
reference, non-recurring items for 2015 totalling US$ 157 million, were included
in EBIT and EBITDA and were related to compliance issues.
Directional earnings per share (EPS) in 2016 amounted to US$ 0.11 compared to
US$ 0.11 per share in 2015. Adjusted for non-recurring items, Underlying
Directional EPS decreased by 17% year-on-year from US$ 0.85 in 2015 to US$ 0.71.
New orders for the year totaled US$ 110 million as a result of current market
downturn, which compares to US$ 248 million achieved in 2015.
Directional revenue decreased by 23% to US$ 2,013 million compared to US$ 2,618
million in the year-ago period. This was primarily attributable to lower Turnkey
segment revenues.
Directional backlog at the end of 2016 remained high at US$ 17.1 billion
compared to US$ 18.9 billion at the end of 2015. This reflects both the lower
level of order intake for the Turnkey segment and the resilience of the Lease
and Operate portfolio amounting to US$ 17.0 billion at the end of 2016.
Directional EBITDA amounted to US$ 725 million, representing a 29% increase
compared to US$ 561 million in 2015. This figure includes non-recurring net
costs totaling US$ 53 million.
Directional EBIT increased to US$ 290 million after non-recurring net costs of
US$ 53 million. This compares to US$ 191 million in 2015 which included US$ 157
million of non-recurring costs.
IFRS
Reported consolidated 2016 IFRS total net income was US$ 247 million versus US$
110 million in 2015. IFRS net income attributable to shareholders amounts to US$
182 million compared to US$ 29 million in 2015.
IFRS revenue decreased by 16% to US$ 2,272 million versus US$ 2,705 million in
2015. This was mainly attributable to lower Turnkey segment revenues.
IFRS EBITDA amounted to US$ 772 million, representing a 67% increase compared to
US$ 462 million in 2015.
IFRS EBIT increased to US$ 564 million, representing 136% increase compared to
US$ 239 million in 2015.
IFRS Net Debt at the year-end totaled US$ 5,216 million versus US$ 5,208 million
in 2015. All bank covenants were met and available cash and undrawn committed
credit facilities stood at US$ 1,537 million.
Financial Highlights
The year was marked by the following financial highlights:
* Successful delivery of FPSOs Cidade de Maricá, Cidade de Saquarema and
Turritella which were formally on hire respectively as of February 7, 2016,
July 8, 2016 and September 2, 2016.
* The Company completed its share repurchase program under the authorization
granted by the Annual General Meeting of Shareholders of the Company held on
April 6, 2016. In the period between August 11, 2016 and December 20, 2016,
a total number of 11,442,179 shares totaling EUR 150 million were
repurchased. The repurchased shares are held as Treasury shares
predominantly for share capital reduction purposes and, to a lesser extent,
for employee share programs.
* Award of the Front End Engineering and Design component of the contract for
a FPSO by Esso Exploration and Production Guyana Limited to the Company and
for which construction, installation and operation of the FPSO remain
subject to a final investment decision expected in 2017. This contributed to
new orders of US$ 110 million in aggregate.
* The Company, together with its core relationship banks, signed an amendment
of its Revolving Credit Facility (RCF) on April 18, 2016, providing headroom
improvements to the leverage and interest coverage ratios. The agreed upon
amendments, combined with a strong cash position, provide the Company with a
greater degree of flexibility in navigating the current industry downturn.
* During the first half of 2016, the Company, the Ministry of Transparency,
Oversight and Control (Ministério da Transparência, Fiscalização e Controle
- 'MTFC'), the Attorney General's Office (Advocacia-Geral da União - 'AGU'),
the Public Prosecutor's Office (Ministério Público Federal -'MPF') and
Petrobras engaged in further negotiations which resulted in the signature on
Friday, July 15 of a Settlement Agreement ('Leniency Agreement'). As a
result, the provision booked in December 2015 has been increased in the
consolidated financial statements as at December 31, 2016, up to the amount
of the present value of the financial terms of the leniency agreement being
US$ 281 million, impacting the lines "Other operating expense" of the
consolidated income statement by US$ 22 million and 'Net financing costs' by
US$ 14 million for the unwinding of the discounting impact of future
settlement. As more fully explained in section 5.3.1 Highlights of the
Annual Report, the agreement will become legally binding after approval of
the Fifth Chamber for Coordination and Review and Anti-Corruption of the
Federal Prosecutor Service and remains subject to review by the Federal
Court of Accounts ('TCU'), which is not a condition precedent to the
Leniency Agreement. However, the terms of this agreement remains SBM
Offshore's current best estimate for an eventual settlement, given that it
was duly signed by the relevant parties and the approval process is still
underway.
* At the end of January 2016, the United States Department of Justice (DoJ)
informed the Company that it has re-opened its past inquiry of the Company
in relation to the alleged improper sales practices over the period 2007 to
2011 and has made information requests in connection with that inquiry.
During the period, the Company has cooperated with the DoJ and remains
committed to close out discussions on this legacy issue which the Company
self-reported to the authorities in 2012 and for which it reached a
settlement with the Dutch Public Prosecutor in 2014. The Company also
continues to cooperate with the DoJ for its inquiries in Unaoil, a company
that SBM Offshore had engaged with as an agent prior to 2012 in relation to
delivery of barges, offshore terminals and maintenance.
* As a result of an on-going review of the cost structure and continued market
downturn, the Company's workforce reduction over 2016 totaled approximately
2,250 positions. Roughly 650 were full-time employees and contractor staff.
The remaining 1,600 were construction yard positions related to
demobilization following successful delivery of main projects over the
period. Restructuring costs of US$ 37 million were recorded during the
period. The adaptation to market developments is focused on retaining core
competencies.
* The Company has a long-term charter contract with the Diving Support and
Construction Vessel (DSCV) SBM Installer. Due to the ongoing downturn which
has created significant over-supply in offshore markets, the costs of the
long-term chartering contract exceed the economic benefits expected to be
received by the Company through the utilization of the vessel. As a result,
a provision for onerous contract of US$ 31 million has been recognized over
the period.
* The activity outlook for the Company's investment (30% ownership) in the
Joint Venture owning the Paenal construction yard operating in Angola has
deteriorated. As a result, the Company's carrying amount for the net
investment in this entity has been impaired by US$ 59 million on the second
half of 2016. Because this investment is consolidated using the equity
method, this non-cash impairment is recognized in the Company's Consolidated
Income Statement on the line item 'Share of profit of equity-accounted
investees'.
Backlog
Directional backlog at the end of 2016 remained healthy at US$ 17.1 billion
compared US$ 18.9 billion at the end of 2015. This reflects both the lower
level of order intake for the Turnkey segment and the resilience of the Lease
and Operate portfolio.
Directional Turnkey backlog decreased to US$ 0.1 billion compared to US$ 0.5
billion in 2015 as no major Turnkey orders were signed in 2016. As market
conditions continued to be challenging during the period, the level of tendering
activity was lower than in 2015 and the order intake continued to be impacted by
structural delays in client final investment decisions.
Backlog as of December 31, 2016 is expected to be executed as per the below
tables:
Revenue
Directional Revenue decreased by 23% year-on-year despite an increase of 19%
for the Lease and Operate segment:
Directional
Third party Directional Turnkey revenue came down 54% year-over-year to US$ 702
million, representing only 35% of total 2016 revenue. This compares to US$
1,512 million, or 58% of total revenue, in 2015. The decrease is mostly
attributable to the completion stage reached in the course of 2016 on Ichthys
turret and FPSOs Cidade de Maricá, Cidade de Saquarema and Turritella, as well
as the very low order intake in 2014, 2015 and 2016 as a result of the market
downturn.
Directional Lease and Operate revenue increased by 19% to US$ 1,310 million,
representing 65% of total Directional revenue contribution in 2016, up from the
42% contribution of 2015. The increase in segment revenue is attributable to the
start-up of FPSOs Cidade de Maricá, Cidade de Saquarema and Turritella while no
vessel have been decommissioned during the period.
IFRS
Total IFRS revenue decreased during the year, down by 16% to US$ 2,272 million,
despite an increase of 25% for the Lease and Operate segment. This was mainly
attributable to significantly lower revenue recognized in the Turnkey segment
upon completion of major projects in the course of 2016 as well as low order
intake in 2014, 2015 and 2016.
Profitability
The Company's primary business segments are Lease and Operate and Turnkey plus
'Other' non-allocated corporate income and expense items. EBITDA and EBIT are
analyzed by segment but it should be recognized that business activities are
closely related, and that certain costs are not specifically related to either
one segment or another. For example, when sales costs are incurred, including
significant sums for preparing a bid, it is often uncertain whether the project
will be leased or contracted on a turnkey lump sum basis.
The Company's profitability may be affected by external variables and
conditions. Profitability may be sensitive to significant areas of estimation
and judgements, and to potential interest rates and currency fluctuations
against the US dollar as described in the Annual Report notes 5.2.7.B (a) and
5.3.29 to the financial statements, respectively.
In recent years, new lease contracts are showing longer duration and are
systematically classified under IFRS as finance leases for accounting purposes
whereby the fair value of the leased asset is recorded as a Turnkey 'sale'
during construction. For the Turnkey segment this has the effect of accelerating
during the construction period a substantial part of the lease profits which
would in the case of an operating lease be recognized through the Lease and
Operate segment during the lease period. To address this lease accounting issue
and IFRS 10 and 11 standards introduced in 2014, the Company has, in addition to
its IFRS reporting, assessed its performance by treating all lease contracts as
operating leases and consolidated all JVs related to lease contracts on a
proportional basis, referred to as Directional. This provides consistency in
segment presentation.
EBITDA Directional (in millions of US$)
Reported 2016 Directional EBITDA was US$ 725 million compared to US$ 561 million
in 2015. Directional EBITDA consisted of US$ 823 million from the Lease and
Operate segment compared to US$ 667 million in 2015, and a loss of US$ 14
million from the Turnkey segment compared to profit of US$ 239 million in 2015.
Other non-allocated expenses came at US$ 84 million, compared to US$ 345 million
in 2015, related mainly to restructuring charges and update of provision related
to potential settlement contemplated with the Brazilian authorities and
Petrobras.
Adjusted for non-recurring items related to provision for onerous long-term
charter contract with the DSCV SBM Installer (US$ 31 million) and the update of
the provision for contemplated settlement with Brazilian authorities and
Petrobras (US$ 22 million), 2016 Underlying Directional EBITDA increased by 8%
to US$ 778 million compared to US$ 718 million in 2015. This increase is
primarily attributable to the Lease and Operate segment with the three new FPSOs
that came into production in 2016 and significant saving on other non- allocated
costs of US$ 38 million. The Underlying turnkey EBITDA decreased significantly
due to the profit recognized in 2015 upon the sale of 45% of Company's shares in
the joint venture leasing and operating the FPSO Turritella while the decline of
Turnkey activity year-on-year have been mitigated thanks to strong projects
performance, under-recovery monitoring and significant saving on Turnkey
overheads.
As a percentage of revenue, Underlying Directional EBITDA was 39% compared to
27% in 2015. Underlying Directional EBITDA margin for the Lease and Operate
segment stood at 63% versus 57% in 2015, while Turnkey segment Underlying
Directional EBITDA margin decreased to 3% compared to 12% in 2015.
EBITDA IFRS (in millions of US$)
IFRS EBITDA in 2016 came in at US$ 772 million versus US$ 462 million in 2015.
Total IFRS EBITDA consisted of US$ 733 million from the Lease and Operate
segment compared to US$ 592 million in 2015, and US$ 124 million from the
Turnkey segment compared to US$ 215 million in 2015. Other non-allocated
expenses came at US$ 84 million with no difference compared to Directional.
Adjusted for non-recurring items, 2016 Underlying IFRS EBITDA increased by 33%
to US$ 825 million compared to US$ 619 million in 2015. This is primarily due
the Lease and Operate segment and the three new FPSOs that came into production
in 2016, while the Underlying IFRS turnkey EBITDA, not impacted by the sale of
Company's shares in the joint venture leasing and operating the FPSO Turritella
in 2015, remained almost stable.
As a percentage of revenue, IFRS Underlying EBITDA was 36% compared to 23% in
2015. IFRS Underlying EBITDA margin for the Lease and Operate segment stood at
58% versus 55% in 2015, while Turnkey segment EBITDA margin stood at 16%
compared to 10% in 2015 driven by project performance and decrease of structural
costs.
EBIT Directional (in millions of US$)
Directional EBIT in 2016 amounted to US$ 290 million compared to US$ 191 million
in 2015. Adjusted for same non-recurring items as EBITDA, Underlying Directional
2016 EBIT slightly decreased by 1% to US$ 344 million versus US$ 348 million in
2015. Underlying EBIT variations per segment are the same as for the EBITDA, the
increase of Lease and Operate Underlying EBITDA (US$ 191 millions) being however
partially offset by depreciation charges (US$ 66m) related to the three new
FPSOs that came into production in 2016.
EBIT IFRS (in millions of US$)
IFRS EBIT in 2016 amounted to US$ 564 million compared to US$ 239 million in
2015. Adjusted for non- recurring items Underlying 2015 EBIT increased by 56% to
US$ 617 million compared to US$ 395 million in 2015.
Overheads, Other Income and Expenses, Net Financing Costs, Share of Profit of
Equity-Accounted Investees and Income Tax
Overheads (in millions of US$)
Directional overheads were US$ 209 million in 2016 compared to US$ 299 million
in 2015. This significant reduction resulted from the finalization of the
Company's business improvement initiatives, material saving on general and
administrative expenses, lower tendering activity and decreased costs of
research and development. There is no material difference between IFRS and
Directional overheads.
Other Operating Income And Expenses (in millions of US$)
Directional 'Other income and expenses' showed a net cost of US$ 66 million in
2016 compared to US$ 298 million in 2015. This includes the restructuring costs
over the period of US$ 49 million, of which US$ 11 million relate to provision
related to long-term offices rental contracts, and US$ 22 million related to the
potential settlement discussed with Petrobras and the Brazilian authorities. The
restructuring program has led to a significant decrease in staffing levels,
which created overcapacity in rented office space in various Regional Centers.
As a result, the obligation for the discounted future unavoidable costs has been
provided for at an amount of US$ 11 million.
In comparison, in 2015, the Directional 'Other income and expenses' were mainly
made of US$ 245 million provision related to the potential settlement discussed
with Petrobras and the Brazilian authorities and US$ 55 million of restructuring
charges. There is no material difference between IFRS and Directional 'Other
income and expenses'.
Net Financing Costs (in millions of US$)
Directional net financing costs increased to US$ 196 million compared to US$
137 million in 2015. This was mainly due to interest paid on project loans for
FPSOs Cidade de Marica, Cidade de Saquarema and Turritella joining the fleet in
2016. The 2016 average cost of debt remained low at 4.6% compared to 4.1% in
2015. More generally, once production units are brought into service, the
financing costs are expensed to the P&L statement, whereas during construction
interest is capitalized. It should be emphasized that the net profit
contribution of newly operating leased units is limited by the relatively high
interest burden during the first years of operation, although dedication of
lease revenues to debt servicing leads to fast redemption of the loan balances
and hence reduced interest charges going forward.
IFRS net financing costs increased by US$ 100 million compared to 2015, mainly
due to interest paid on project loans for the FPSOs joining the fleet in 2016.
Share of Profit of Equity-Accounted Investees
The Directional share of profit of equity accounted investees, mainly consisting
of the Paenal and the Brasa yards, resulted in a loss of US$ 61 million in
2016, up from a loss of US$ 8 million in 2015, mostly driven by the impairment
recognized on the Company's investment (30% ownership) in the Joint Venture
owning the Paenal construction yard operating in Angola.
Under IFRS, the Company's share of net losses of non-controlled joint ventures
amounted to US$ 14 million in 2016 compared to a profit of US$ 73 million in
2015. This decrease is mainly due to the impairment recognized on the net
investment in the Joint Venture owning the Paenal construction yard as well as
the impact in 2015 of the turnkey contribution of the N'Goma project finalized
early in that year.
Income Tax
The 2016 IFRS tax expense slightly increased from US$ 26 million in 2015 to US$
28 million, leading to an effective tax rate of 9.6% in 2016.
Net Income
Directional consolidated net income for 2016 was US$ 24 million, stable compared
to 2015. Adjusted for non- recurring items, 2016 Underlying consolidated
Directional net income attributable to shareholders stood at US$ 150 million and
a decrease by US$ 30 million from the previous year period, mainly attributable
to lower Turnkey segment activity.
After IFRS non-controlling interests of US$ 65 million included in 2016 net
income and related to reported results from fully consolidated joint ventures
where the Company has a minority partner (principally Brazilian FPSOs, Aseng and
Turritella), IFRS net income attributable to shareholders amounted to US$ 182
million compared to US$ 29 million in 2015.
Statement of Financial Position
Total assets remained almost stable at US$ 11.5 billion as of December 31, 2016
compared to US$ 11.3 billion at year end 2015. This slight variance is mainly
attributable to the increasing cash position while the finalized investments in
FPSOs Cidade de Maricá, Cidade de Saquarema and Turritella are largely offset by
vessels depreciation and finance lease redemptions.
Shareholder's equity increased from US$ 2,496 million to US$ 2,516 million
mostly due to the 2016 net income partially offset by the Share repurchase
program completed over the period.
Capital Employed (Equity + Non-Current Provisions + Deferred tax liability + Net
Debt) at year-end 2016 amounted to US$ 8,996 million, an increase of 2% compared
to US$ 8,806 million in 2015. This was due in large part to the increase of non-
current provisions following the reclassification as "non-current" of part of
the provision for contemplated settlement with Brazilian authorities and
Petrobras, as well as the new provision for onerous contracts booked over the
period.
IFRS net debt was at US$ 5,216 million versus US$ 5,208 million in 2015.
Proportional net debt at year-end amounted to US$ 3,147 million versus US$
3,128 million in the year-ago period. The stability of the net debt is mainly
related to strong operating cash-flow generation covering investing activities,
payment of dividends and the share repurchase program over the period.
IFRS net gearing (net debt over equity + net debt) at the end of the year came
at 59.8%, almost stable compared to year end 2015 (60%).
The relevant banking covenants (Solvency, Net Debt/Adjusted EBITDA, Interest
Cover) were all met. As in previous years, the Company has no off-balance sheet
financing.
Capital Structure
Despite the continuous market downturn, the Company's financial position has
remained strong. The growth of the lease and operate segment as well as the
adaptation of the Turnkey segment to a depressed market, coupled with strong
cash-flows generated by the fleet strengthened equity and resulted in net debt
staying constant despite payment of significant shareholder returns.
Investment and Capital Expenditures
Total investments made in 2016 reached US$ 34 million compared to the US$ 775
million in 2015. Highlights for fiscal year 2016 investments are:
* Capital expenditure of US$ 14 million compared to US$ 23 million in 2015.
* Net investments in finance leases totaling US$ 20 million compared to US$
704 million in 2015.
Total capital expenditures for 2016, which consist of additions to property,
plant and equipment plus capitalized development expenditures, were related to
minor investments.
Due to the classification of the contracts as finance leases under IFRS,
investments in the units were recorded as construction contracts, with the
investments in finance leases ultimately recorded as financial assets. The net
investment in these finance lease contracts amounted to US$ 20 million in 2016,
which compares to US$ 704 million in 2015, and is reported as operating
activities in the consolidated cash-flow statement.
The decrease in property, plant and equipment in 2016 to US$ 1,474 million,
compared to US$ 1,686 million at the end of 2015, resulted from the very low
level of capital expenditure less normal depreciation and amortisation.
Return on Average Capital Employed and Equity
Both IFRS Return on Average Capital Employed (ROACE) and Return on Average
Shareholders' Equity (ROAE) increased, to 6.3% and 7.3% respectively in 2016.
This was primarily the result of the higher EBIT and Net Result reported under
IFRS in 2016 while equity and capital employed remained almost stable.
Cash Flow/Liquidities
Cash and undrawn committed credit facilities amounted to US$ 1,904 million, US$
221 million of which can be considered as being dedicated to specific project
debt servicing or otherwise restricted in its utilization.
The Enterprise Value to EBITDA ratio at year-end 2016 came in at 12.4 lower than
the previous year, due mainly to significant increase in the Company's IFRS
EBITDA.
Provided below is a reconciliation of net income before taxes to Cash Flow from
Operations:
Analyst Presentation & Conference Call
SBM Offshore has scheduled a conference call and webcast of its presentation to
the financial community followed by a Q&A session at 0900 Central European Time
on Thursday, February 9, 2017.
The presentation will be hosted by Bruno Chabas (CEO), Douglas Wood (CFO),
Philippe Barril (COO) and Erik Lagendijk (CGCO). Interested parties are invited
to listen to the call by dialing +31 20 531 5851 in the Netherlands,
+44 203 365 3210 in the UK or +1 (866) 349 6093 in the US. Interested parties
may also listen to the presentation via webcast through a link posted on the
Investor Relations section of the Company's website.
The live webcast and replay, which should be available shortly after the call,
will be available at:
http://player.companywebcast.com/sbmoffshore/20170209_1/en/Player.
+-----------------------------------------+------------+------+
| Financial Calendar | Date | Year |
+-----------------------------------------+------------+------+
| Publication of the AGM Agenda | March 1 | 2017 |
+-----------------------------------------+------------+------+
| Annual General Meeting of Shareholders | April 13 | 2017 |
+-----------------------------------------+------------+------+
| Trading Update 1Q 2017 - Press Release | May 10 | 2017 |
+-----------------------------------------+------------+------+
| Half-Year 2017 Earnings - Press Release | August 8 | 2017 |
+-----------------------------------------+------------+------+
| Trading Update 3Q 2017 - Press Release | November 7 | 2017 |
+-----------------------------------------+------------+------+
Corporate Profile
SBM Offshore N.V. is a listed holding company that is headquartered in
Amsterdam. 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 and maintained by SBM Offshore and leased to its
clients or supplied on a turnkey sale basis. The Company's product portfolio
also includes: Semi-submersibles, Tension Leg Platforms (TLPs), Floating Gas
Systems, Turret Mooring Systems, Brownfield Services, Offshore Contracting,
Offshore (off)loading terminals and Renewable Energy floaters.
As of December 31, 2016, Group companies employ approximately 4,750 people
worldwide. Full-time company employees totalling c. 4,250 are spread over five
regional centers, ten operational shore bases and the offshore fleet of
vessels. A further 500 are working for the joint ventures with several
construction yards. Please visit our website at www.sbmoffshore.com for more
information.
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
Amsterdam, the Netherlands, February 8, 2017
For further information, please contact:
Investor Relations
Bert-Jaap Dijkstra
Investor Relations Director
Telephone: +31 (0) 20 236 3222
Mobile NL: +31 (0) 6 21 14 10 17
Mobile MC: +33 6 4391 9302
E-mail: bertjaap.dijkstra(at)sbmoffshore.com
Website: www.sbmoffshore.com
Media Relations
Vincent Kempkes
Group Communications Director
Telephone: +31 (0) 20 2363 170
Mobile: +31 (0) 6 25 68 71 67
E-mail: vincent.kempkes(at)sbmoffshore.com
Website: www.sbmoffshore.com
Disclaimer
This press release contains inside information within the meaning of Article
7(1) of the EU Market Abuse Regulation. 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. . Nothing in this press release shall be deemed an offer to
sell, or a solicitation of an offer to buy, any securities.
1 Underlying earnings adjusted for exceptional items: in 2015 compliance related
items and in 2016 compliance related items and impairments as reported in the
2016 Year-End Update; further explanation on this on page 2. This explanatory
note relates to any reference made to Underlying in this document.
2 Directional view is a non-IFRS disclosure, which assumes all lease contracts
are classified as operating leases and all vessel joint ventures are
proportionally consolidated. This explanatory note relates to any reference made
to Directional in this document.
(3) Represents the 2016 increase of the net present value of the future payments
(instalments and bonus reductions) related to contemplated Leniency Agreement;
the unwinding effect of the initial discount is recognized over time in the net
financing costs according to IFRS
SBM OFFSHORE 2016 FULL YEAR EARNINGS:
http://hugin.info/130754/R/2076951/781173.pdf
This announcement is distributed by Nasdaq Corporate Solutions on behalf of Nasdaq Corporate Solutions clients.
The issuer of this announcement warrants that they are solely responsible for the content, accuracy and originality of the information contained therein.
Source: SBM Offshore N.V. via GlobeNewswire
Unternehmensinformation / Kurzprofil:
Datum: 08.02.2017 - 18:00 Uhr
Sprache: Deutsch
News-ID 522859
Anzahl Zeichen: 57614
contact information:
Town:
Schiedam
Kategorie:
Business News
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