Note 4 - Segment Reporting

The Company identifies its reportable segments and disclose segment information under IFRS8 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, CHRO and COO. 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 11 Platform Supply Vessels. The OSCV and WIV segment includes five Offshore Subsea Construction Vessels and two Well Intervention Vessels. The ATHS 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. This business area was sold in 2017. 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)

2017

2016

Operating revenue by business area

PSV

57,930

62,058

OSCV and WIV

118,143

97,232

AHTS Vessels

46,659

48,326

Other Vessels in Brazil

28,177

20,143

Canadian fleet

29,154

24,474

Other/Intercompany elimination

-1,727

-9,256

Operating revenue OSV segment

278,336

242,976

Combat Management Systems

-

2,410

Submarine Power Cable Installation

108,243

193,774

Scientific Core-Drilling

27,237

26,376

Siem WIS

1,493

3,587

Other/Intercompany elimination

-

-

Operating revenue Industrial segment

136,973

226,147

Total

415,309

469,123

Consolidated

(Amounts in USD 1,000)

2017

2016

Depreciation and amortization
by business area

PSV

19,155

23,134

OSCV and WIV

32,726

25,435

AHTS Vessels

41,252

40,292

Other Vessels in Brazil

5,203

4,710

Canadian fleet

8,217

4,845

Other/Intercompany elimination

6,861

6,554

Depreciation and amortization
OSV segment

113,414

104,970

Combat Management Systems

-

-

Submarine Power Cable Installation

2,893

1,663

Scientific Core-Drilling

3,038

3,676

Siem WIS

1,115

1,201

Other/Intercompany elimination

1,572

261

Depreciation and amortization
Industrial segment

8,618

6,801

Total

122,032

111,771

Impairment by business area

2017

2016

PSV

52,930

47,605

OSCV and WIV

15,450

10,750

AHTS Vessels

40,146

-

Other Vessels in Brazil

2,545

-

Canadian fleet

4,130

1,824

Other/Intercompany elimination

11,043

-

Impairment OSV Segment

126,244

60,180

Combat Management Systems

-

-

Submarine Power Cable Installation

12

-

Scientific Core-Drilling

-

-

Siem WIS

-

1,015

Other/Intercompany elimination

43

-

Impairment Industrial Segment

55

1,015

Total

126,299

61,195

Consolidated

(Amounts in USD 1,000)

2017

2016

Operating profit/(loss) by business area

PSV

-45,315

-43,081

OSCV and WIV

22,557

7,406

AHTS Vessels

-78,859

-29,496

Other Vessels in Brazil

6,879

3,184

Canadian fleet

1,179

5,739

Other/Intercompany elimination

-23,803

-11,996

Operating profit OSV segment

-117,362

-68,244

Combat Management Systems

-

31

Submarine Power Cable Installation

24,080

30,540

Scientific Core-Drilling

12,433

11,391

Siem WIS

-251

-710

Other/Intercompany elimination

-5,000

-

Operating profit Industrial segment

31,263

41,253

Administration expenses

-33,334

-33,059

Gain (loss) from sale of fixed assets

46

-423

Gain from bargain purchase

-

18,312

Gain sale of interest rate derivatives

368

368

Currency gain/ (loss)

-264

-7,762

Total

-119,283

-49,555

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
for tangible assets

2017

2016

PSV (1)

3,159

33,391

OSCV and WIV (1)

5,249

238,533

AHTS Vessels

5,461

130,426

Other Vessels in Brazil

648

6,000

Canadian fleet

1,015

-2,124

Other/Intercompany elimination

874

70,061

OSV Segment

16,406

476,287

Combat Management Systems

-

-

Submarine Power Cable Installation

1,869

14,637

Scientific Core-Drilling

1,741

714

Siem WIS

-

194

Other/Intercompany elimination

-

-

Industrial Segment

3,610

15,545

Total

20,016

491,832

(1) Includes newbuilding program, in total

-

333,544

Consolidated

Book value by business area for tangible assets
(Amounts in USD 1,000)

2017

2016

PSV

274,233

346,342

OSCV and WIV

629,205

671,694

AHTS Vessels

583,869

655,744

Other Vessels in Brazil

32,667

63,852

Canadian fleet

87,274

94,159

Other/Intercompany elimination

113,007

126,045

OSV Segment

1,720,255

1,957,836

Combat Management Systems

-

-

Submarine Power Cable Installation

5,967

12,954

Scientific Core-Drilling

18,139

20,594

Siem WIS

2,352

2,724

Other/Intercompany elimination

-

-

Industrial Segment

26,458

36,272

Total

1,746,713

1,994,108

Board Of Directors

Financial Statements

Notes