4.1.2Financial Highlights

The year was marked by the following financial highlights (please refer to note 4.3.1 Financial Highlights for further detail).

Turritella (FPSO) purchase option

After an operational transition period, SBM Offshore and Shell E&P Offshore Services B.V. (Shell) completed the transaction related to the sale of Turritella (FPSO) on January 16, 2018.

Under Directional reporting, the gain on the disposal of the vessel has been recognized for US$ 217 million in the consolidated income statement for the year ended December 31, 2018. Under IFRS reporting, the financial impact of the transfer of Turritella (FPSO) was already fully recognized in 2017.

Leniency agreement signed between SBM Offshore, Brazilian authorities and Petrobras

On July 26, 2018 the Company signed a leniency agreement with the Brazilian Ministry of Transparency and Comptroller’s General Office (Ministério da Transparência e Controladoria-Geral da União – ’CGU’), the General Counsel for the Republic (Advocacia Geral da União – ’AGU’) and Petróleo Brasileiro S.A. (’Petrobras’) (the ’Leniency Agreement’). The agreement was immediately effective and legally binding as of the signature date.

At signature date, the net present value of the total financial considerations of the Leniency Agreement was in line with the provision of US$ 299 million accounted for as at December 2017. The impact on the consolidated income statement for the period ended December 31, 2018 is limited to US$ (13) million under both Directional and IFRS.

Agreement signed between SBM Offshore and Brazilian Public Prosecutor

In addition to the Leniency Agreement, the Company signed an agreement with the Brazilian Federal Prosecutor’s Office (Ministério Público Federal – ’MPF’). The Agreement provides – in addition to the amounts agreed in the Leniency Agreement – for the payment of an additional fine by the Company of BRL 200 million (Brazilian Reais). The Fifth Chamber of the MPF approved the Agreement on December 18, 2018.

As a result from the signature of the agreement, a provision has been booked during the period, up to the amount of the present value of the financial terms of the agreement, being US$ 43 million (as per exchange rate at the transaction date), under both Directional and IFRS.

Awarded contracts for ExxonMobil’s second Liza FPSO

On July 2, 2018, ExxonMobil awarded the Company contracts to perform Front End Engineering Design (FEED) for a second FPSO for the Liza development located in the Stabroek block in Guyana (FPSO Liza Unity). Following the FEED and subject to requisite government approvals, project sanction and authorization to proceed with the next phase, the Company will construct, install and then lease and operate the FPSO for a period of up to 2 years, after which the FPSO ownership and operation will transfer to ExxonMobil.

The design of FPSO Liza Unity is based on the Company’s industry leading Fast4WardTM program and will incorporate the Company’s new build, multi-purpose hull combined with several standardized topside modules.

Final settlement on the Yme insurance claim

On September 10, 2018, the Company announced that it had reached a final settlement of its insurance claim related to the Yme project. Following reimbursement first of legal fees and other claim-related expenses incurred to date (the significant majority of which were incurred by the Company), the balance of the settlement monies will be shared equally with Repsol and its partners.

The impact on the consolidated income statement for the year ended December 31, 2018 is an estimated insurance income of US$ 37 million, net of the claim-related costs incurred and accounted for in 2018. The impact is the same under Directional and IFRS reporting.

As a result of this settlement, the litigation against insurers and the associated trial which was due to commence on October 1, 2018 has been fully concluded.

Impairment of the goodwill related to the acquisition of the Houston based subsidiaries

Based on a more pessimistic outlook for the FPU market, and the fact that project awards included in prior forecasts did not fully materialize, goodwill related to the acquisition of Houston-based subsidiaries has been impaired in full. This results in an impairment charge of US$ 25 million under both Directional and IFRS. The establishment of a global resource pool for engineering, announced in February 2018, has facilitated the deployment of Houston-based resources towards other Product Lines, including FPSO.

Impairment of the Brazilian yard

Brazil is a key market for SBM Offshore, where a number of opportunities are being actively pursued. However, given the lead time for opportunities to mature in terms of construction activities, combined with the uncertainty regarding the evolution of local content regulations, SBM Offshore, together with its joint venture partner, has decided to take steps to close the BRASA construction yard for at least the coming few years with an option to reopen thereafter. As a consequence, the assets of the joint venture (50% owned by the Company) were fully impaired, resulting in an impairment charge of US$ 19 million accounted for in 2018, under both Directional and IFRS reporting.