Note 14 - Related Party Transactions

The Company’s largest shareholder Siem Europe S.a r.l, with a holding of 83 %, and its parent company, Siem Industries Inc., are defined as a related parties.

The Company is obligated to Siem Industries Inc., for a fee of USD 250K for 2017 (2016 USD250K). This fee is the remuneration for the services of two of the Board members. This fee also covers office costs in the Cayman Islands and administrative costs.

Details related to transactions, loans and remuneration to the executive Management and the board of directors are set out in Note 18. For the Parent, all subsidiaries listed in Note 6 are also defined as related parties.

For other related parties, the following transactions were carried out:

Sales of services

Consolidated

(Amounts in USD 1,000)

2017

2016

Service to entity where director has ownership

23,570

26,150

Total

23,570

26,150

Above service is provided to companies in which a Board member has an interest. Kristian Siem is the Chairman of Siem Industries Inc., which is controlled by a trust whose potential beneficiaries include members of Kristian Siem’s immediate family. Siem Industries holds an interest in Subsea 7. Siem Offshore LLC, 100% owned by the Company and Siem AHTS Pool AS, 78% owned by the Company, have charted vessels to Subsea 7 during 2017 and 2016.

The amount for 2017 and 2016 also include management services delivered to Siem Industries and to subsidiaries of Siem Europe S.A.R.L.

Purchase of service

Consolidated

(Amounts in USD 1,000)

2017

2016

Service from related parties

2,394

4,425

Service from entity where director has ownership

933

234,709

Total

3,327

239,134

Service delivered from related parties is mainly cost for technical management, corporate management and delivered crew. The service is supported to Siem Meling Offshore DA, 51% owned by the Company, and is delivered by its partner in Siem Meling Offshore DA.

Service from entitiy where director has ownership consist of service from the yard Flensburger SchiffbauGesellschaft and management fee from Siem Kapital UK Ltd, both owned 100% by Siem Europe S.A.R.L.

Sales of vessel

Consolidated

(Amounts in USD 1,000)

2017

2016

Sale of vessel

19,581

-

Total

19,581

-

Siem Offshore Invest AS, 100% owned by the Company, acquired 49% of Siem Meling Offshore DA (SMODA) during 1st half of 2017. Siem Offshore Rederi AS, 100% owned by the Company, owns 51% of SMODA. The ownership of SMODA increased to 100% for the Company, and the SMODA changed the name to Siem Pilot DA.

Prior to the purchase of the 49% of Siem Pilot DA, the vessel Siddis Mariner owed by Siem Pilot DA was sold to a company controlled by the previous partner in Siem Pilot.

Both transactions were at arm’s length

Balance items following purchase and sale of service

CONSOLIDATED

(Amounts in USD 1,000)

2017

2016

Accounts receivables

2,455

3,642

Accounts payable

261

222

Loans to related parties

CONSOLIDATED

(Amounts in USD 1,000)

2017

2016

Loan to associates

At January 1

153

17,069

Drawings

-

-

Instalments

-117

-18,600

Interest charged

3

498

Interest received

-3

-1,047

Exchange rate variations

7

2,233

At December 31

43

153

The company holds a long-term loan to Roved Industripark AS, which was owned 50% by Siem Offshore Invest AS until December 2017, when the shares were sold to the other shareholder of Rovde Industripark AS.

Loans to related parties

CONSOLIDATED

(Amounts in USD 1,000)

2017

2016

Short-term loan to related parties

At January 1

6,070

5,786

Interest expenses

330

284

At December 31

6,400

6,070

In 2015 the Company provided a short-term loan to Research Developement & Financial Consultant Ltd. The borrower is the 49% owner of Siem Offshore Ghana International AS. The loan is on marktes term of interest.

Provision for 100% of outstanding loan is made at year-end and is not reflected in the overview above.

Liability to related parties

CONSOLIDATED

(Amounts in USD 1,000)

2017

2016

Long-term liability to related parties

At January 1

70,679

60,830

Drawings

13,954

39,948

Interest expenses

-59,187

-30,000

Interest expenses

1,668

2,485

Interest paid

-1,179

-2,583

Exchange rate variations

48

-1

At December 31

25,983

70,679

Long-term liability
The long-term liability consists of two fasilities. The Company has a long-term credit fasility provided by Siem Industries Inc, and Siem AHTS Pool AS has drawn a shareholder loan from the 22% shareholder Singa Star PTE LTD.

The long-term loan facility which was drawn by Siem Pilot DA from its previous partner was repaid as part of the sale transaction when Siem Offshore Invest AS purchased 49% of the shares of Siem Pilot DA, ref. comments above.

The liability is on markets term of interest.

Following transactions with related parties were carried out for the parent company

Sales of service

PARENT

(Amounts in USD 1,000)

2017

2016

Service to subsidiaries

1,766

601

Service to associates

2,800

264

Total

4,566

865

Purchase of service

PARENT

(Amounts in USD 1,000)

2017

2016

Service to subsidiaries

5,480

6,754

Service to associates

-

-

Total

5,480

6,754

Sales to subsidiaries and associates consists of guarantee provisions to Siem Offshore Rederi AS, Siem Offshore Contractors GmbH and Secunda Canada LP.

Service from subsidiaries consists of administrative and corporate services provided by Siem Offshore Management AS. All terms used for above transactions are at arms’ length.

Year-end balances arising from sales and purchases:

PARENT COMPANY

(Amounts in USD 1,000)

2017

2016

Receivables from related parties

Subsidiaries

2,223

1,027

Associates

179

327

Total

2,402

1,354

Payables from related parties

Subsidiaries

2,660

3,353

Associates

-

-

Total

2,660

3,353

Loans to related parties

PARENT COMPANY

(Amounts in USD 1,000)

2017

2016

Long-term loan to subsidiaries

At January 1

55,732

21,870

Drawings

11,490

34,723

Instalments

-

-1,950

Interest charged

2,238

1,045

Exchange rate variations

110

44

At December 31

69,570

55,732

 

Short-term loan to related parties

PARENT COMPANY

(Amounts in USD 1,000)

2017

2016

Short-term loan to related parties

At January 1

7,417

7,090

Interest charged

380

327

At December 31

7,797

7,417

The short-term loan to related parties on 31 December 2017, is held against Siem Offshore do Brasil SA and Research Developement & Financial Consultant Ltd. (RDFC). The borrower is 49% owner of Siem Offshore Ghana International AS. Provision for 100% of the outstanding loan towards RDFC is made at year-end and is not reflected in the overview above.

All loans are on market terms of interest.

Long-term liability to related parties:

PARENT COMPANY

(Amounts in USD 1,000)

2017

2016

At January 1

60,000

60,284

Drawings

10,744

30,000

Instalments

-57,997

-30,000

Interest charged

1,164

2,299

Interest received

-1,164

-2,583

Exchangerate variations

-

-

At December 31

12,746

60,000

The long-term credit facility is provided by Siem Industries Inc., and is on markets terms of interest