LIC. JOSÉ EDUARDO CALZADA ROVIROSA,
Artículo 20. Por el uso, goce, aprovechamiento o explotación de bienes del dominio público:
IV. Para los entretenimientos públicos permanentes, se causará y pagará:
As from January 1st, 2014, in accordance with IFRS 8 "Operating segments" and as stated in section 6.2.7 C. "Change in accounting policies used in the measurement of operating segments", operating segments are now measured under Directional Reporting principles (see section 6.2.7.G. "Significant accounting principles" part (e)) in order to better reflect the manner in which the Management Board analyses segmental information.
The comparative information has been restated.
2014 operating segments
Third party revenue 1,059 2,487 3,545 - 3,545
Gross margin 304 390 694 - 694
Other operating income/expense 0 (2) (2) (184) (186)
Selling and marketing expense (3) (43) (46) 0 (46)
General and administrative expense (25) (111) (136) (85) (221)
Research and development expense (2) (38) (40) (40)
Operating profit/(loss) (EBIT) 274 195 469 (268) 201
Net financing costs (127)
Share of profit of equity-accounted investees 13
Income tax expense (3)
Profit/(Loss) 84
Operating profit/(loss) (EBIT) 274 195 469 (268) 201
Depreciation, amortisation and impairment 261 15 275 9 284
EBITDA 535 210 745 (259) 486
Other segment information :
Impairment charge / (reversal) (17) - (17) - (17)
Reconciliation of 2014 operating segments
Lease and Operate 1,059 34 (82) 1,011
Turnkey 2,487 (164) 2,148 4,471
Total revenue 3,545 (130) 2,067 - 5,482
Gross margin
Lease and Operate 304 39 35 378
Turnkey 390 (42) 491 838
Total gross margin 694 (3) 526 - 1,217
EBIT
Lease and Operate 274 38 35 - 347
Turnkey 195 (39) 491 - 647
Other - - - (268) (268)
Total EBIT 469 (1) 527 (268) 726
SBM Offshore N.V. 2014 Annual Report 155
2013 operating segments
Period ending 31 December 2013 (*)
Lease and
Third party revenue 1,006 2,367 3,373 - 3,373
Gross margin (181) 435 254 - 254
Other operating income/expense - (5) (5) 32 27
Selling and marketing expense (3) (31) (34) - (34)
General and administrative expense (20) (88) (108) (53) (161)
Research and development expense - (23) (23) - (23)
Operating profit/(loss) (EBIT) (204) 288 84 (21) 63
Net financing costs (80)
Share of profit of equity-accounted investees 11
Income tax expense (52)
Profit/(Loss) (58)
Operating profit/(loss) (EBIT) (204) 288 84 (21) 63
Depreciation, amortisation and impairment 441 15 456 1 457
EBITDA 237 303 540 (20) 520
Other segment information :
Lease and Operate 1,006 (24) (47) - 935
Turnkey 2,367 (136) 1,418 - 3,648
Total revenue 3,373 (160) 1,371 - 4,584
Gross margin
Lease and Operate (181) 26 11 (144)
Turnkey 435 (94) 182 522
Total gross margin 254 (67) 192 - 379
EBIT
Lease and Operate (204) 27 11 - (167)
Turnkey 288 (94) 182 - 375
Other - - - (21) (21)
Total EBIT 84 (67) 192 (21) 188
Settlement with Dutch Public Prosecutor’s Office
On November 12th, 2014 the Company reached an out-of-court settlement with the Dutch Public Prosecutor’s Office (Openbaar Ministerie) over the investigation into potentially improper sales payments. Furthermore, the US Department of Justice (DoJ) informed the Company that it closed its inquiry into the matter and would not prosecute the Company.
The out-of-court settlement consists of a payment by the Company to the Openbaar Ministerie of US$ 240 million.
Payments will be made in three instalments, the first of which (US$ 100 million) was paid in November 2014. The two further instalments of US$ 70 million each will be due on December 1st, 2015 and 2016 respectively.
The settlement cost of US$ 240 million is accounted for within the “Other operating expenses” in the 2014 income statement.
SBM Offshore N.V. 2014 Annual Report 156
Restructuring
On December 11th, 2014, the Company announced the process of releasing approximately 600 contractor staff and an equal number of permanent staff, totalling approximately 1,200 positions worldwide, over the period 2014 and 2015.
Restucturing costs of US$ 8 million were accounted for within the "Other operating expense" regarding 2014 obligations.
Divestment program for non-core assets
On August 29th, 2014 the Company completed the sale and operating lease back of its Monaco real estate portfolio. The last of the three buildings was sold for approximately US$ 62 million net of expenses, resulting in a book profit of
approximately US$ 58 million accounted for within the “Other operating income” in the 2014 income statement.
On December 1st, 2014 the Company also completed the all cash sale of the Diving Support and Construction Vessel (DSCV) SBM Installer to OS Installer AS for approximately US$ 150 million, resulting in a book profit of US$ 4 million accounted for within the “Other operating income” in the 2014 income statement. OS Installer AS is a new established joint-venture between Ocean Yield (75%) and the Company (25%). The Company will charter the vessel under an operating lease for a fixed period of 12 years and will have certain options to acquire the vessel during the bare boat charter period, with the first option exercisable after five years.
Thunder Hawk
Following the signature on September 16th, 2014 of a Production Handling Agreement with Noble Energy, the Company has reversed the previously taken US$ 109 million impairment incurred on the semi-submersible facility in the US Gulf of Mexico. The value in use of the asset has been calculated based on estimated future cash flows including the tie back of two wells to the platform, and using a weighted average cost of capital of 6.9% (2013: 8.0%). The reversal is accounted for within the "Cost of sales" of the Lease and Operate segment in the 2014 income statement.
Deep Panuke
The Company has reduced the useful life of the Deep Panuke Field Centre from ten to eight years in line with the fixed contract period. This change of assumption decreases the recoverable amount based on the adjusted present value method of the asset and results in a non-cash impairment charge of US$ 59 million recorded in the second half of 2014.
The adjusted present value of the platform has been estimated based on estimated future cash flows including bareboat, operating expenditures and some winter bonus, using a weighted average cost of capital of 6.0% (2013: 8.0%) and assuming transferability to a third party of existing tax loss carried forward and Atlantic incentive tax credit. The impairment charge has been accounted for within the "Cost of sales" of the Lease and Operate segment in the 2014 income statement.
Warranty fund
The Company has recorded a specific increase of the warranty provision at year-end of US$ 40 million, in relation to a warranty claim. The additional provision has been recorded within the "Cost of sales" of the Turnkey segment in the 2014 income statement.
Financial Asset Impairment
The Company has taken a one-off impairment charge (non-cash) of assets of approximately US$ 49 million following a dispute with a US-based client. This impairment is accounted for US$ 19 million within the “Cost of sales” of the Turnkey Segment and US$ 29 million within the “Net financing costs” in the 2014 income statement.
SBM Offshore N.V. 2014 Annual Report 157