Note 4 - Segment Reporting

The Company identifies its reportable segments and disclose segment information under IFRS 8 Operating Segments which requires Siem Offshore Inc. to identify its segments according to the organization and reporting structure used by management. Operating Segments are components of a business that are evaluated regularly by the chief operating decision maker for the purpose of assessing performance and allocating resources.

The Company’s chief operating decision maker is the management board, comprised of the CEO, CFO, CCO and CHRO. Generally, financial information is required to be disclosed on the same basis that is used by the chief operating decision maker. The Company’s operating segments represent separately managed business areas with unique products serving different markets. The reportable business areas are OSV with the segments PSV, OSCV and WIV, AHTS Vessels, Canadian fleet and Other Vessels in Brazil, and Industrial with the segments Combat Management Systems, Submarine Power Cable Activities, Scientific Core-Drilling and Siem WIS.

The PSV segment includes 13 Platform Supply Vessels. The OSCV and WIV segment includes five Offshore Subsea Construction Vessels and two Well Intervention Vessels. The AHTS segment includes ten Anchor Handling and Tug Supply Vessels. The Canadian fleet Segment consist of five offshore support vessels operating offshore Canada. The Segment of Other Vessels in Brazil consists of two Oilspill Recovery Vessels and four smaller fast supply vessels and crew vessels.

Combat Management Systems is the activity of supplying software for a management system to the Brazilian Navy. Submarine Power Cable Installation comprises the activities of installation and maintenance of subsea power cables for offshore windfarms. Scientific Core-Drilling is comprised of the activity of a scientific drillship which performs core-drilling. The segment Siem WIS is comprised of the ownership of Siem WIS that develops applications for managed pressure drilling (“MPD”), and certain other activities. Siem Offshore Inc. uses three measures of segment results, Operating Revenue, Operating Margin and Net Profit.

Intersegment sales and transfers reflect arm’s length prices as if sold or transferred to third parties at the time of inception of the internal contract, which may cover several years. Transfers of business or fixed assets within or between the segments are reported without recognizing gains or losses. Results of activities not considered part of Siem Offshore Inc.’s main operations as well as unallocated revenues, expenses, liabilities and assets are reported together with Other under the Caption Other and eliminations. The following tables include information about the Company’s operating segments.

Consolidated

(Amounts in USD 1,000)

2016

2015

Operating revenue by business area

PSV

62,058

76,455

OSCV and WIV

97,232

111,315

AHTS Vessels

48,326

54,692

Other Vessels in Brazil

20,143

21,326

Canadian fleet

24,474

-

Other/Intercompany elimination

-9,256

-9,323

Operating revenue OSV segment

242,976

254,465

Combat Management Systems

2,410

4,741

Submarine Power Cable Installation

193,774

132,307

Scientific Core-Drilling

26,376

26,164

Siem WIS

3,587

4,773

Other/Intercompany elimination

-

Operating revenue Industrial segment

226,147

167,984

Total

469,123

422,449

Consolidated

(Amounts in USD 1,000)

2016

2015

Depreciation and amortization by business area

PSV

23,134

28,169

OSCV and WIV

25,435

24,744

AHTS Vessels

40,292

40,534

Other Vessels in Brazil

4,710

3,579

Canadian fleet

4,845

-

Other/Intercompany elimination

6,554

3,199

Depreciation and amortisation OSV segment

104,970

100,225

Combat Management Systems

-

-

Submarine Power Cable Installation

1,663

1,601

Scientific Core-Drilling

3,676

3,538

Siem WIS

1,201

1,660

Other/Intercompany elimination

261

-

Depreciation and amortisation Industrial segment

6,801

6,800

Total

111,771

107,025

Impairment by business area

2016

2015

PSV

47,605

39,507

OSCV and WIV

10,750

24,849

AHTS Vessels

-

95,109

Other Vessels in Brazil

-

-

Canadian fleet

1,824

-

Impairment OSV Segment

60,180

159,465

Siem WIS

1,015

6,705

Impairment Industrial Segment

1,015

6,705

Total

61,195

166,170

Consolidated

(Amounts in USD 1,000)

2016

2015

Operating profit/(loss) by business area

PSV

-43,081

-28,980

OSCV and WIV

7,406

19,998

AHTS Vessels

-29,496

-134,230

Other Vessels in Brazil

3,184

3,478

Canadian fleet

5,739

-

Other/Intercompany elimination

-11,996

-3,413

Operating profit OSV segment

-68,244

-143,147

Combat Management Systems

31

-208

Submarine Power Cable Installation

30,540

15,856

Scientific Core-Drilling

11,391

10,709

Siem WIS

-710

720

Other/Intercompany elimination

-

-

Operating profit Industrial segment

41,253

27,076

Administration expenses

-33,059

-38,575

Gain (loss) from sale of fixed assets

-423

16,317

Gain from bargain purchase

18,312

-

Gain sale of interest rate derivatives

368

368

Currency gain/ (loss)

-7,762

-30,775

Total

-49,555

-168,735

Other operating profit/(loss) includes, among others, gain of sale of interest rate derivatives (CIRR), gain/(loss) on currency exchange forward contracts and general and administration expenses.

Capital expenditures by business area

2016

2015

PSV (1)

33,391

60,872

OSCV and WIV

238,533

58,684

AHTS Vessels

130,426

18,079

Other Vessels in Brazil

6,000

11,257

Canadian fleet

-2,124

-

Other/Intercompany elimination

70,061

1,407

OSV Segment

476,287

150,299

Combat Management Systems

-

-

Submarine Power Cable Installation

14,637

168

Scientific Core-Drilling

714

306

Siem WIS

194

142

Other/Intercompany elimination

-

-

Industrial Segment

15,545

616

Total

491,832

150,915

(1) Includes newbuilding program, in total

333,544

122,614

Consolidated

Capital expenditures by business area

2016

2015

PSV

346,342

405,391

OSCV and WIV

671,694

473,306

AHTS Vessels

655,744

557,679

Other Vessels in Brazil

63,852

41,274

Canadian fleet

94,159

-

Other/Intercompany elimination

126,045

81,838

OSV Segment

1,957,836

1,559,488

Combat Management Systems

-

-

Submarine Power Cable Installation

12,954

3,483

Scientific Core-Drilling

20,594

14,761

Siem WIS

2,724

4,408

Other/Intercompany elimination

-

-

Industrial Segment

36,272

22,652

Total

1,994,108

1,582,140

Board Of Directors

Financial Statements

Notes