SUBSEA 7 S.A.
ANNUAL
REPORT
2014WHO WE ARE
Subsea 7 is a world-leading seabed-to-surface engineering, construction
and services contractor to the offshore energy industry.
We provide cost-effective technical solutions to enable the delivery
of complex projects in all water depths and challenging environments.
Our vision is to be acknowledged by our clients, our people and our
shareholders as the leading strategic partner in our market.
OUR VALUES
Safety Performance
We are committed to an incident-free workplace, We are predictable and reliable in our performance.
every day, everywhere. We continue to minimise We always strive for excellence in everything we
the impact of our activities on the environment. do in order to achieve superior business results.
Integrity Collaboration
We apply the highest ethical standards to We are locally sensitive and globally aware.
everything we do. We believe that by treating Our people work together, leveraging our global
our clients, people and suppliers fairly and know-how and capabilities to build sustainable
with respect, we will earn their trust and build local businesses.
sustainable success together.
Innovation
We constantly strive to improve the effi ciency
of our business by investing in the development
of our people and through innovation in
technology, operations and processes.Overview Performance Governance Financials
2 Chairman’s Statement 22 A frica, Gulf of Mexico 26 Board of Directors 42 Financial Review
4 What We Do & Mediterranean (AFGOM) 28 E xecutive 48 Consolidated Financial
8 Where We Operate 23 A sia Pacifi c & Middle East Management Team Statements Contents
10 Chief Executive (APME) 30 Corporate Governance 49 Report of the Réviseur
Offi cer’s Review 24 Brazil 37 Risk Management d’Entreprises Agréé
12 Our Strategy 25 North Sea & Canada (NSC) 50 Consolidated Financial
14 People Statements
15 Technology 56 Notes to the Consolidated
17 Assets Financial Statements
19 Local Presence 105 Additional Information
20 Corporate Responsibility 108 Glossary
2014 Summary
Operational Financial
? Strong execution of various large and technology-rich ? Record revenue and Adjusted EBITDA driven by
projects worldwide strong execution
? High project activity with global vessel utilisation of 82% ? Solid backlog of $8.2 billion, of which $4.2 billion is
? Strategic investments in fl eet renewal on schedule for execution in 2015
with the fi rst of six new-build vessels, Seven Waves, ? Robust liquidity position with low net debt and a new
operational in 2014 fi ve-year revolving credit facility in place
? Safe operations with 84% of vessels recording zero ? Cash dividend and share repurchase programmes
Lost Time Incidents enhanced returns to shareholders
? Onshore asset investment saw reopening of spoolbase ? Impairment of the goodwill arising from the January
in Leith, Scotland, UK, and development of a logistics 2011 Combination resulted in a non-cash charge
and fabrication yard in Takoradi, Ghana. of $1,183 million.
2014 Financial highlights
Revenue Adjusted EBITDA3
$6,870m $1,439m
(2013: $6,297m) (2013: $981m)
By Territory1 By market segment2 Net (loss)/income
AFGOM $2,464m SURF $5,303m $(381)m
APME $911m Conventional/Hook-up $705m
BRAZIL $954m Life of Field $642m (Including the goodwill impairment charge of $1.2 billion)
NSC $2,533m i-Tech $220m (2013: Net income $344m)4
CORPORATE (CORP) $8m
Backlog Cash and cash equivalents
$8,239m $573m
(2013: $11,770m) (2013: $692m)4
By Territory By year of execution Earnings per share (diluted)
AFGOM $2,131m 2015 $4,150m $(1.02)5
APME $211m 2016 $1,690m
BRAZIL $3,427m 2017+ $2,399m (2013: $1.00 earnings per share)4
NSC $2,470m
1. For defi nitions of Territories, refer to page 66.
2. For explanations of market segments, refer to page 4.
3. For explanations and reconciliations of Adjusted EBITDA, refer to page 105.
4. Re-presented due to reclassifi cation of assets held for sale, refer to page 79.
5. Includes the goodwill impairment charge of $1,183 million. Adjusted diluted earnings per share
excluding the goodwill impairment charge was $2.32.
For defi nition of terms refer to Glossary on pages 108 to 110.
seabed-to-surface 1CHAIRMAN’S STATEMENT
Kristian Siem
Chairman
“ We remain committed to investing in strategic
capabilities and skills to ensure we can outperform
the industry when the market recovers.”
To the shareholders of Subsea 7 S.A.
Subsea 7 S.A. achieved record revenue and Adjusted EBITDA in 2014,
driven by excellent project execution overall and rigour in risk management.
Group revenue rose by 9% to $6.9 billion, while Adjusted EBITDA improved
over the prior year to $1.4 billion, equivalent to 21% of revenue.
Net income amounted to $802 million or $2.32 per share excluding the
impact of the goodwill impairment charge of $1.2 billion recorded in the fourth
quarter. This impairment charge was a non-cash item and gave rise to a net
loss of $381 million. It was largely driven by a reassessment of the near-term
prospects for the Group following the recent signifi cant drop in the price of oil.
Our strong underlying performance is largely attributable to the expertise and
commitment of our project and vessel management and engineering teams,
both onshore and offshore, as the focus on safe and effi cient execution of
our order backlog continued to be a priority during the year.
A further driver underpinning our good results was proactive management
of our costs and the implementation of a series of business improvement
initiatives to deliver effi ciencies at every level of the organisation.
Our strategic investment in the renewal of our fl eet with globally mobile,
versatile vessels proceeded well in 2014 and is expected to be fully completed