Full Year 2005 SBM Offshore N.V. Analysts Meeting - Final.

Original Source: FD (FAIR DISCLOSURE) WIRE

HANS PEEREBOOM, HEAD OF IR, SBM OFFSHORE N.V.: Ladies and gentlemen, welcome and good morning to all of you and thank you for coming to this presentation of the annual accounts of SBM Offshore. The presentation will basically be separated in three sections. Didier Keller will start with an overview of the happenings of last year, technically as well as the events in the lease fleet and the orders we obtained and which we have started to execute.

Mark Miles will go in detail through the financials, of course all the results and also an outlook into 2006 and our expectations for the running year. And after that, Didier Keller will again come back and talk about the market in general, our expectations, and also a couple of words about our research and development activities in order to gear ourselves up for the future. So I will give the word to Didier Keller and he will start with an overview of the year 2005.

DIDIER KELLER, MANAGING DIRECTOR & CEO, SBM OFFSHORE N.V.: Good morning ladies and gentlemen and also welcome to those who are attending this session on the web. It is being broadcast through that means. We will try to highlight the situation in the business rapidly so that not only do we look at the Company from the present situation but also project a little bit into the future, as Hans said.

The Company is still in the same configuration as at the meeting last year and it is formed of all these fully owned affiliates that you see on the screen. We continue to operate from three major execution centers, Monaco, the Netherlands and Houston. And as part of our addressing the future we do plan to expand and expand the execution capacity and we have the demand to create something in South East Asia. And therefore you see Kuala Lumpur on this slide. The market is extremely buoyant and we need to expand our capacity, also we need to focus more on the South East Asia as we perceive a major part of the business is going to come from that region.

The management structure is unchanged and Hans Peereboom is still your preferred interlocutor.

The highlights of this year 2005. It is an exceptional year because of this extraordinary income from the sale of one of our floating production units, which has generated close to $80m bottom line input. This result has met the target of course that we have set of double-digit earning growth even without the sale of the Serpentina. It doesn't mean that we're going to slow down and make the average meet that thing, we are certainly going to keep the targets as high as we can. But, let's say just we are on track, tongue in cheek.

The dividend goes with it. We used to propose a dividend around 50% of the earnings and this time, of course, we have decided to include the extraordinary item for the calculation of the dividend which is good news for the shareholders. It doesn't mean that we don't need money for the future growth, it means that the balance sheet has still plenty of space to accommodate what we perceive on the horizon.

The CPR sale is history now. And we have been operating as a purely offshore oil and gas service company. And it has indeed -- for the first time you're going to see a split between the two segments of this capital intensive business and the sales segment.

During the year we have commissioned the Sanha LPG FPSO which is operating fine in Kabinda. We have obtained a large FPSO in the beginning of the year. We have kept saying from that date on that we were going to get two more during the year, we didn't make it but we made it in January. That's the way the business is, a bit unpredictable. So, we will come back on that one.

And we have a very good order book which keeps all the Group companies quite busy.

This picture is still the same, it gives in a glance the main components of the product line of the Company. And it goes for the facilities that are typically required for the deep offshore field developments. There is nothing much to say new on this, you have seen it several times before. It is showing technology that we have developed in house and for which we have all the resources for execution from A to Z.

The summary of activities to recap and make sure it's clear in everybody's mind.

FPSO and Floating Facilities in general are the core business of the Company, whether they are on a sale or a lease basis. And we are purposely made this first bullet such that it implies that we are going to lease probably more FPSOs in the future, and that's part of the strategy.

We are still in the business of providing the mooring systems, certainly when they are complex and require massive engineering and project management resources.

We continue in the CALM Buoy systems including for the deep water where we luckily we continue to stand up to pretty high share of the markets. We have obtained more deep water CALM systems this year and we are going to continue to try to maintain this position in the market. We have, I think, eight out of nine, or nine out of 10 of these facilities.

We are, here in the Netherlands and to some extent in Houston, in the provision of design and engineering services, for all sorts of tools that are needed, whether by oil companies or by contractors for the exploration of the offshore fields, drillships, jack-up rigs, semi-subs etc. I will come back on this.

The LNG and the gas in general is something we focus on. We've started this so called power and gas company three years ago. It takes time to get the first business but we are progressing. We'll come back on this as well.

And we are remaining pretty much focused on the offshore contracting and after-sales services which continues to be a very satisfactory business, and rather steady, not exposed to variations year to year.

In 2005 the major achievements, so to say. The first, of course, the Sanha LPG, it was installed in May, started producing around early June if I remember. It has received the full income during the second half of the year, from the first day of operation of its bareboat and operating revenues. We haven't lost any charges so from day one the system has performed satisfactorily and we have had an up-time way in excess of what was required by the contract. That means that there was no real debugging that affected the production.

There was some toothaches at the beginning but they did not affect the production. So you can that for a new unit never done before to have an integrated production on the back of a storage unit for propane and butane it was a very successful start.

We have delivered this White Rose Turret. Quite complex and special, disconnectable to resolve the threat of icebergs in this part of the world. We have delivered another type of disconnectable for Australia, which this one is for disconnectability to avoid the threat of hurricanes. So you can see that it can go in many different ways.

And we have completed two very large deepwater export terminals for Exxon in Nigeria and Angola.

This is to remind you of this LPG facility which is really a nice reference for the Company. The market will never be as large as for FPSOs in this kind of business. There will be some demand in the future but it will be a bit erratic and a question of opportunities rather then the sustained growing need for such facilities. So we will see more of LPG floating storage and export units but it will be, let's say, unsteady and a market of opportunity.

A picture of this large disconnectable system for Australia, took quite a while to build because of its complexity. It is now installed on the field and the client is satisfied. We didn't suffer any setback on this. It's pretty much the same type of system as we have supplied in the past to BHP and Woodside. Just more complicated, as everything tends to become more complicated all the time.

In 2005, that is pretty much the same slide as you have seen in September. I think we've added only a couple of bullets on this one. Major orders were the result in great part from technology that has been developed over the past few years, which is very comforting. It shows that the Company has made the right choices in its research and development efforts. Money has been invested and spent in the right products. And that goes for this deep draft semi-submersible for the Gulf of Mexico.

Second bullet is this Kikeh Field which is nothing new, just that Kikeh is -- will be by the time it is delivered, the largest FPSO on lease that we have every made.

It is the series of deepwater export buoys for BP, Chevron and Total that we have obtained. The Chevron Agbami is obtained with a full scope. The other two are obtained on the basis of delivery ex-quayside, if I may say.

This P-53 turret mooring system was obtained in the first half and that is also by far the largest thing every made as turrets. And we wonder where the limit is, we will come back, I think there is a slide later.

The GAP, which is a totally new technology which we claim has a great future, as you saw on the deep field development scenario that you saw before.

Another TLP for BHP, which is contracted on a special order contracting scenario where basically we are on a reimbursable-plus basis, that unit is being fabricated in the States, which shows that not everything is done in South East Asia anymore. It shows also that the market tends to respond to - sorry, the yards tend to respond to the market with increasing prices which make even the United States competitive. Which is a good indication of the change.

And the Trelline, which is a new technology and which we were very happy to sell this first one to Shell. It's going to be installed in the coming weeks on the Bonga field.

The picture of these Kikeh facilities, on the left the FPSO which is the result of our JV with the Petrobras Group. And on the right side is GAP, actually it doesn't look like that today, it has slightly evolved. This Kikeh that will be installed during the first quarter of the year 2007 being entirely fabricated in Malaysia in the Johor yard which is also a company in the Petrobras Group.

Picture of this gigantic P-53 mooring system which accommodates 75 risers. This is typical of the business in Brazil where Petrobras develops by sub-sea completed wells and they prefer that each individual well has its own flow lines to the surface. So you end up with three times as many flows lines as there are wells, therefore 75. In a nutshell that's what it is. So you're not likely to see turrets like this in other parts of the world, it is typically a Petrobras scenario. But it's still something we are very proud to be doing and it will be incorporated in a larger FPU that Petrobras is building in the Far East.

These are pictures of this deep draft semi-sub. The deepest facility that will have been installed in the world by the time it is going to site, 8,000 and a few feet. And on the right, another of these SeaStar TLPs as I said for BHP.

And I think here comes the show of Mark Miles who is going to explain very complicated things resulting from the changes in our accounting methods etc.

MARK MILES, CFO, SBM OFFSHORE N.V.: Thank you Didier. Good morning everybody.

Yes, the first word is a complicated one. IFRS, thankfully the conversion process is now behind us and we can look forward on a stable accounting principles basis. Certainly next year end will be easier than this one but it helps when we have good figures.

So as we see, the first bullet Didier has mentioned, $226m net profit including the exceptional profit from the FPSO Serpentina. Dividend has been mentioned. EBITDA $482m year end, cash flow $433m. We come back on the EBITDA analysis.

Capital expenditure just below $400m, again we come back on all of these figures in the details later. Net gearing has come down very fast in 2005, largely due to the FPSP Serpentina of course. Portfolio $4.1b and the returns on capital employed and the return on equity sharply up from last year. Again, we come back on all of this in the details.

So, turnover up 42%, of course Serpentina represents a big chunk of this increase but also it represents increasing revenues from both the lease fleets. We added in Marlim Sul in mid-2004 and Sanha in mid-2005, so that all has an impact.

Gross margin up, again the increase is largely due to Serpentina and the percentage gross margin also is brought up by the Serpentina sale.

EBITDA $482m compared to $371m last year. $482m is, if we strip out the impact of Serpentina, a little bit below what we had anticipated at the mid-year. Now of course we missed two months of …