U.K. Annual Report and
IFRS Financial Statements
for the year ended December 31, 2019
This U.K. Annual Report and IFRS Financial Statements of TechnipFMC plc (“TechnipFMC,” the “Company,”
“we,” or “our”) comprises the Strategic Report, Directors’ Report, Corporate Governance Report,
Directors’ Remuneration Report, and the TechnipFMC plc consolidated IFRS financial statements
contained herein (“U.K. Annual Report”).
This U.K. Annual Report has been prepared in accordance with the reporting requirements of the U.K.
Companies Act 2006 and the U.K. Financial Conduct Authority’s Disclosure Guidance and Transparency
Rules. It has been submitted to the U.K. National Storage Mechanism and is available for inspection
at www.morningstar.co.uk/uk/nsm and will be included in the materials for the 2020 annual general
meeting of shareholders to be held on April 24, 2020 (the “2020 Annual Meeting”).
Contents
Strategic Report
Company Overview
Financial Highlights and Business Overview
Business Segments
Business Review
Corporate Responsibility and Sustainability –
Non-financial Information Statement
Core Values and Foundational Beliefs
Code of Business Conduct
Sustainability
Supporting Communities
Advancing Gender Diversity
Respecting the Environment
Employee and Social Matters
Our Compliance Program
Supply Chain and Customer Matters
Health and Safety
Decision making and section 172 of the Companies Act
Principal Risks and Uncertainties
Directors’ Report
Directors
Share Capital and Articles of Association of the Company
Share Repurchases
Significant Shareholdings
Directors’ Indemnities
Company Details and Branches Outside the United Kingdom
Dividend
Employee Engagement and Business Relationships
Greenhouse Gas Emissions
Events since December 31, 2019
Future Developments
Change in Control
Political Donations
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2 TechnipFMC
U.K. Annual Report and IFRS Financial Statements 2019 Financial Risk Management Objectives/Policies and Hedging Arrangements
Research and Development
Directors’ Responsibility Statements
Corporate Governance Report
Board Composition and Independence
Enterprise Risk Management
Committees of the Board
Internal Control over Financial Reporting
Risk Management of Financial Reporting
Code of Business Conduct
Diversity Policy
Significant Shareholdings
Directors’ Remuneration Report
Introduction and Compliance Statement
Letter from the Chairman of the Compensation Committee
Annual Report on Remuneration: At-a-Glance – 2019 Highlights
Annual Report on Remuneration:
Report for the Year Ended December 31, 2019
Elements of 2019 Executive Director Compensation
Statement of Directors’ Shareholding and Share Interests
Application of the policy in 2020
Benefits and Pension
Remuneration Policy
Approach to Recruitment Remuneration
Service Agreement
Illustrations of Application of Directors’ Remuneration Policy
Policy on Payment for Loss of Office
Potential Payments upon Change in Control
Differences between Remuneration Policy
for Executive Directors and Other Employees
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Statement of consideration of employment conditions elsewhere in Company 154
Statement of consideration of shareholder views
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3 TechnipFMC
U.K. Annual Report and IFRS Financial Statements 2019 Independent Auditors’ Report to The Members of TechnipFMC Plc
Consolidated Financial Statements
1. Consolidated Statements of Income
2. Consolidated Statements of Other Comprehensive Income
3. Consolidated Statement of Financial Position
4. Consolidated Statements of Cash Flows
5. Consolidated Statements of Changes in Stockholders’ Equity
6. Notes to Consolidated Financial Statements
Company Financial Statements
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4 TechnipFMC
U.K. Annual Report and IFRS Financial Statements 2019 Strategic Report
March 13, 2020
Dear Shareholders,
TechnipFMC has enjoyed another exceptional year of success. Against a dynamic landscape, we continue to enhance the
performance of the world’s energy industry, driving change and innovation while growing our integrated business model
and expanding backlog across our portfolio.
We constantly adapt to ensure our market leadership. During 2019, we announced that we will reshape our future by
transitioning into two diversified pure-play companies with the spin-off of our Onshore/Offshore segment (including
Genesis, Loading Systems and Cybernetix) to create Technip Energies. We are on target for the completion of this
transaction in the second quarter of 2020.
None of this would be possible without the talent, dedication and hard work of the 37,000 women and men of
TechnipFMC. They make us the very best we can be and put our Foundational Beliefs of safety, integrity, quality, respect
and sustainability into action. I am proud of our people for the steadfast commitment and real progress achieved in our
sustainability efforts towards the communities in which we live and work, diversity, and the environment.
Our achievements in 2019
We maintain a leadership position within the industry by promoting excellence, creating value, seeking new and
pioneering technologies, and delivering for our clients, despite market and economic volatility.
We experienced significant growth during 2019 supported by an unprecedented level of inbound orders of $22.7 billion,
a 59% increase. As a result, we have built a robust backlog at $24.3 billion, an increase of 67% compared to 2018, with
more than half of those projects scheduled for execution beyond 2020. Total revenue exceeded $13 billion, supported by
a higher activity across all segments, representing 7% growth compared to the previous year.
In Subsea, our full-year inbound was $8 billion, a 50% increase over 2018 which is the highest for the Company in more
than a decade and more than double that recorded across the industry. Full-year revenue in this segment increased by
13% over 2018 and in Subsea Services by 15%. Our iEPCI™ integrated model showed significant strength, with award
value more than doubling compared to earlier years and accounting for more than 40% of total inbound orders. During
the year, we won 13 iEPCI™ awards, including the Mozambique LNG Subsea project, which is our largest integrated
subsea project to date. Other wins included Atlantis Phase 3 and Perdido Phase 2 in the Gulf of Mexico, the Pyxis and
Xena fields in Australia, TOR II in the Norwegian North Sea, and we signed a deepwater strategic collaboration agreement
with Allseas. Our iEPCI™ offering is now the model of choice for most of our clients.
Onshore/Offshore orders grew by nearly 80% over 2018, driven by more than $8 billion in LNG awards. Projects
included the Arctic LNG 2 contract from Novatek, which builds upon our success with Yamal LNG. We were also part
of the winning consortium on ExxonMobil’s Rovuma LNG. We also continued to build our portfolio of sustainable,
proprietary technologies to further enhance our role in energy transition.
Surface Technologies delivered a 2% revenue increase compared to the prior year. International business accounts for
more than half of revenue. This strong growth more than offset the steep decline in North America. Our five-year frame
agreement with Chevron continues to offer us continuity and opportunity. We are optimizing our services and operating
geographies and continue to transform our North America business by working with our customers to further drive
operational efficiencies, optimize the worksite footprint, and lower greenhouse emissions.
During 2019, we continued to capitalize on our strengths. We are in a strong and confident position to embark on the
transformational changes we plan for 2020 and beyond.
5 TechnipFMC
U.K. Annual Report and IFRS Financial Statements 2019 Sustainability
Sustainability is one of our Foundational Beliefs. It is at the center of everything we do and is a key element in our long-
term success. We have a corporate responsibility to make a lasting and positive impact on our planet, our people, and the
communities we serve.
We focus our sustainability efforts under three key pillars:
` Supporting Communities through active engagement in health, education, and local employment. We increased our
participation in community initiatives from 245 in 27 countries in 2018 to 346 in 33 countries, with our employees
growing their voluntary hours from 10,000 to 26,500 through our new global iVolunteer program. We also increased
our Science, Technology, Engineering, and Mathematics (STEM) promotion from 14 initiatives in eight countries in 2018
to 58 initiatives in 17 countries last year.
` Advancing Gender Diversity. We create an environment that encourages everyone to reach their full potential. In
2018, we reviewed 100% of our job functions to ensure pay equity, and in 2019, we completed all necessary salary
adjustments based on such review. We will continue to review our gender pay equity every three years. In 2019, to
foster a diverse and inclusive culture, we launched an e-learning module to raise awareness of our differences and help
our employees improve and continue to ensure gender advancement and diversity in our succession planning.
` Respecting the Environment. We aim to reduce our carbon footprint and impact on the planet through innovative and
sustainable solutions. Our total greenhouse gas emissions decreased in 2019 by 27% compared to the previous year,
mainly linked to the closure of important engineering, procurement, and construction projects. At the same time, we
launched a comprehensive Carbon Footprint Training Program implemented by the Company’s HSE department for all
business levels and projects.
During 2019, we reaffirmed our support for the Ten Principles of the United Nations (UN) Global Compact in the areas
of Human Rights, Labor, Environment, and Anti-Corruption. TechnipFMC is also a proud member of Building Responsibly
— an industry-led collaborative initiative enabling construction and engineering companies to collaborate around their
shared values, advance their compliance programs, and agree on common approaches regarding worker welfare and
human rights.
Looking forward
There is no doubt that 2020 will be an exciting and transformational year for TechnipFMC. We start from a strong
position across all our segments and are well placed to grow during the years ahead.
In Subsea, we will continue leading the industry. We anticipate ongoing momentum in activity for small to mid-sized
brownfield projects and a continued healthy outlook for greenfield activity. Emerging markets such as Guyana and
Mozambique and strengthening activity in markets such as Brazil will be important to us. We expect double-digit growth
in subsea services to continue, driven in part by digital monitoring, well intervention, and asset refurbishment activities.
Onshore/Offshore will transition to Technip Energies during 2020. We remain confident that additional LNG projects will
be sanctioned in the near-to-intermediate term. The growth outlook for long-term demand requires additional capacity,
and natural gas will be critical during the global energy transition. Beyond LNG, we continue to selectively pursue
refining, petrochemical, and biofuel project opportunities in Europe, the Middle East, Asia, and North America, particularly
where we can benefit from early engagement or leverage our process technology portfolio.
The focus for Surface Technologies is transforming. While we anticipate double-digit revenue growth outside North
America supported by our leading technologies and market positions, we anticipate further declines in North America
through the first half of 2020. Despite the market volatility, we will continue to invest in our people, in solutions — such
as iProduction — that enable oil and gas producers to reduce cost and carbon intensity, and in local product and service
capabilities.
6 TechnipFMC
U.K. Annual Report and IFRS Financial Statements 2019 I firmly believe that, in a time of exciting change for our industry, our long-term strategy of relentless focus on value,
innovation, and excellence will sustain TechnipFMC in its strong, industry-leading position.
We all look forward to delivering for you in the year ahead and beyond.
Douglas J. Pferdehirt
Chairman and Chief Executive Officer (“CEO”)
7 TechnipFMC
U.K. Annual Report and IFRS Financial Statements 2019 Company Overview
TechnipFMC plc, a public limited company incorporated and organized under the laws of England and Wales, with
registered number 09909709, and with registered office at One St. Paul’s Churchyard, London EC4M 8AP, United
Kingdom (“TechnipFMC”, the “Company,” “we,” or “our”) is a global energy service company with a portfolio of solutions
for the production and transformation of hydrocarbons and renewable energy sources. These solutions range from
discreet products and services to fully integrated solutions based on proprietary technologies, with a clear focus to
deliver greater efficiency across project lifecycles from concept to delivery and beyond.
We have operational headquarters in Paris, France and Houston, Texas, United States. We operate across three business
segments: Subsea, Onshore/Offshore, and Surface Technologies. Through these segments, we are levered to the three
energy growth areas of unconventionals, liquefied natural gas (“LNG”), and deepwater developments.
We have a unique and comprehensive set of capabilities to serve the oil and gas industry. With our proprietary
technologies and production systems, integration expertise, and comprehensive solutions, we are transforming our
clients’ project economics.
Enhancement of the Company’s performance and competitiveness is a key component of this strategy that is achieved
through technology and innovation differentiation, seamless execution, and reliance on simplification to drive costs down.
We are targeting profitable and sustainable growth by seizing market growth opportunities and expanding our range of
services, and we are managing our assets efficiently to ensure that we are well-prepared to drive and benefit from the
opportunities we are experiencing in many of the segments we serve.
Each of our more than 37,000 employees is driven by a steadfast commitment to clients and a culture of purposeful
innovation, challenging industry conventions, and finding new and better ways of working to unlock possibilities. This
leads to fresh thinking, streamlined decisions, and smarter results, enabling us to achieve our vision of enhancing the
performance of the world’s energy industry.
History
In March 2015, FMC Technologies, Inc., a U.S. Delaware corporation (“FMC Technologies”), and Technip S.A., a French
société anonyme (“Technip”), signed an agreement to form an exclusive alliance and to launch Forsys Subsea, a 50/50
joint venture, that would unite the subsea skills and capabilities of two industry leaders. This alliance, which became
operational on June 1, 2015, was established to identify new and innovative approaches to the design, delivery, and
maintenance of subsea fields.
Forsys Subsea brought the industry’s most talented subsea professionals together early in operators’ project concept
phase with the technical capabilities to design and integrate products, systems, and installation to significantly reduce the
cost of subsea field development and enhance overall project economics.
Based on the success of the Forsys Subsea joint venture and its innovative approach to integrated solutions, Technip
and FMC Technologies announced in May 2016 that the companies would combine through a merger of equals to create
a global subsea leader, TechnipFMC, that would drive change by redefining the production of oil and gas. The business
combination was completed on January 16, 2017 (the “Merger”), and on January 17, 2017, TechnipFMC began operating
as a unified, combined company trading on the New York Stock Exchange (“NYSE”) and on the Euronext Paris Stock
Exchange (“Euronext Paris”) under the symbol “FTI.”
In 2017, our first year as a merged company, TechnipFMC secured several project awards as many operators moved
forward with final investment decisions for major onshore projects and subsea developments. Several of the subsea
awards incorporated the use of our integrated approach to project delivery, validating our unique business model aimed
at lowering project costs and accelerating the delivery of initial hydrocarbon production. This was made possible by
bringing together the complimentary subsea work scopes of the merged companies.
8 TechnipFMC
U.K. Annual Report and IFRS Financial Statements 2019 In 2018, TechnipFMC delivered the industry’s first three full-cycle, integrated projects and realized considerable growth
in Subsea order inbound, driven in part by its unique integrated offering, iEPCI™ (“iEPCI”). For all of 2019, the value of
integrated subsea awards to TechnipFMC more than doubled versus the prior year, representing more than 50% of all
Subsea project order inbound. The increase was driven by a wider adoption of the integrated business model, particularly
with those clients where we have unique alliances. With the industry’s most comprehensive and only truly integrated
subsea market offering, we have continued to expand the deepwater opportunity set for our customers.
TechnipFMC’s expertise does not end with the production of hydrocarbons. Because of its best in class Engineering
and Construction (“E&C”) project design and execution capabilities, enabled by a portfolio of proprietary technologies,
TechnipFMC continues to secure and deliver projects that further enable our clients to monetize resources — from
liquefaction of gas, both onshore and on floating vessels, through refining and product facilities and with green chemistry
and renewables.
On August 26, 2019, the Company announced that it will separate into two diversified pure-play market leaders —
TechnipFMC, focused on subsea and surface hydrocarbon production, and Technip Energies, focused on downstream
engineering, procurement, and construction (“EPC”) project execution. We expect to complete the transaction in the
first half of 2020, subject to financing, general market conditions, regulatory approvals, consultation of employee
representatives, where applicable, and final approval from our Board of Directors. The separation will enable both
companies to benefit from distinct and compelling market opportunities across the energy value chain; dedicated focus
of management; resources and capital; and unique value propositions with differentiated investment appeal.
` TechnipFMC will be a fully-integrated technology and services provider, driving energy development across
deepwater, conventional, and unconventional resources. The Company continues to successfully demonstrate
leadership in integrated subsea project delivery and is focused on replicating this success through the development of
integrated production models for the surface market. TechnipFMC is also poised to benefit from service opportunities
resulting from the world’s largest installed base of subsea production equipment, umbilicals, risers, and flowlines.
` Technip Energies will be a leading engineering and construction player, with a robust project delivery model, strong
technical capabilities, and proven track record as demonstrated by the successful execution of some of the world’s
most iconic EPC projects. The new company will continue to leverage its industry-leading process technology
portfolio, particularly in the areas of ethylene and hydrogen, while pursuing further opportunities to enhance and
differentiate this portfolio.
The Company continues to innovate and introduce new technologies across our portfolio of products and services.
TechnipFMC’s strong operational performance in 2019 was driven by a relentless focus on operational execution, while
our significant growth in project backlog provides improved visibility for our businesses for 2020 and beyond.
9 TechnipFMC
U.K. Annual Report and IFRS Financial Statements 2019 Financial Highlights and Business Overview
Governance
Combined the roles of
Chairman and CEO
Olivier Piou and John Yearwood were appointed
as directors to replace two retired directors
` Enhanced disclosures
regarding shareholder
feedback and our response
` Improved disclosures
regarding Board
composition and succession
planning
Strategic Transaction
Announced spin-off of Technip Energies creating two industry-leading publicly traded companies
TechnipFMC (RemainCo)
` Unlocking value, realizing potential
` TechnipFMC will retain Subsea and Surface
Technologies segments (noted exceptions to SpinCo)
` Listings: NYSE, Euronext Paris
` HQ: Houston; Domicile: United Kingdom
` Employees: ~22,000
TechnipFMC (SpinCo)
` Capitalizing on structural growth trends
` Spin-off will include Onshore/Offshore segment
(including Genesis), Loading Systems (Surface
Technologies), and Cybernetix (Subsea)
` Listing: Euronext Paris
` HQ: Paris; Domicile: Netherlands
` Employees: ~15,000
Financials1
Subsea
Onshore/Offshore
Surface Technologies
Results
` Revenue growth of 14% versus the
prior year, driven by double-digit
growth in both project and service
activities
Results
` Three quarters of sequential
revenue growth, as segment
revenue has inflected above the
2018 trough
` Integrated project activity a higher
mix of business portfolio
` Backlog of $8.5 billion
` Revenue growth, excluding the
Yamal LNG project, exceeded
25% versus the prior year
` Backlog of $15.3 billion
Results
` Revenue growth of more than
15% in markets outside of North
America versus the prior year
` Surface international revenues
account for more than 50%
of total segment
` Backlog of $0.5 billion
(1) Reported financial results for the twelve months ended December 31, 2019 and inbound and backlog as of December 31, 2019 are as reported in
our Financial Statements as set out in this U.K. Annual Report.
10 TechnipFMC
U.K. Annual Report and IFRS Financial Statements 2019
Business Segments
Subsea
The Subsea segment provides integrated design, engineering, procurement, manufacturing, fabrication, installation,
and life of field services for subsea systems, subsea field infrastructure, and subsea pipe systems used in oil and
gas production and transportation. We are a fully-integrated technology and services provider, continuing to drive
responsible energy development.
We are an industry leader in front-end engineering and design (“FEED”), subsea production systems (“SPS”), subsea
flexible pipe, and subsea umbilicals, risers, and flowlines (“SURF”). We also have the capability to install these products
and related subsea infrastructure with our fleet of highly specialized vessels. By integrating the SPS and SURF work
scopes, we are uniquely able to drive greater value to our clients through more efficient execution of the installation
campaign. This, in conjunction with our strong commercial focus, has enabled the successful market introduction of
an integrated subsea business model, iEPCI, which spans a project’s early phase design through the life of field. Our
integrated business model is unlocking incremental opportunities and materially expanding the deepwater opportunity
set. Since the first iEPCI project was awarded in 2016, market adoption of the business model has accelerated each year,
and in 2019 we secured more than 75% of the industry’s integrated project awards.
Through integrated FEED studies, or iFEED™ (“iFEED”), we are uniquely positioned to influence project concept and
design. Using innovative solutions for field architecture, including standardized equipment, new technologies, and
simplified installation, we can significantly reduce subsea development costs and accelerate time to first production.
Our first-mover advantage and ability to convert iFEED studies into iEPCI contracts, often as a direct award, creates
a unique set of opportunities for the Company that are not available to our peers. This allows us to deliver a fully
integrated — and technologically differentiated — subsea system, and to better manage the complete work scope through
a single contracting mechanism and a single interface, yielding meaningful improvements in project economics and time
to first oil.
We continue to support our clients following project delivery by offering aftermarket and life of field services. Our wide
range of capabilities and solutions, including integrated life of field, or iLOF™ (“iLOF”), allows TechnipFMC to help clients
increase oil and gas recovery and equipment uptime while reducing overall cost. Our iLOF offering is designed to unlock
the full potential of subsea infrastructures during operations by transforming the way subsea services are delivered and
proactively addressing the challenges operators face over the life of subsea fields. We provide production optimization,
asset life extension insight, proactive debottlenecking, and condition-based maintenance.
Our Subsea business depends on our ability to maintain a cost-effective and efficient production system, achieve planned
equipment production targets, successfully develop new products, and meet or exceed stringent performance and
reliability standards.
Principal Products and Services
Subsea Production Systems. Our systems are used in the offshore production of crude oil and natural gas. Subsea
systems are placed on the seafloor and are used to control the flow of crude oil and natural gas from the reservoir to a
host processing facility, such as a floating production facility, a fixed platform, or an onshore facility.
Our subsea production systems and products include subsea trees, chokes and flow modules, manifold pipeline systems,
control and data management systems, well access systems, multiphase and wetgas meters, and additional technologies.
The design and manufacture of our subsea systems requires a high degree of technical expertise and innovation. Some of
our systems are designed to withstand exposure to the extreme hydrostatic pressure of deepwater environments, as well
as internal pressures of up to 20,000 pounds per square inch (“psi”) and temperatures of up to 400º F. The development
of our integrated subsea production systems includes initial engineering design studies and field development planning
11 TechnipFMC
U.K. Annual Report and IFRS Financial Statements 2019 and considers all relevant aspects and project requirements, including optimization of drilling programs and subsea
architecture.
Subsea Processing Systems. Our subsea processing systems, which include subsea boosting, subsea gas compression,
and subsea separation, are designed to accelerate production, increase recovery, extend field life, and/or lower operators’
production costs for greenfield, subsea tie-backs and brownfield applications. To provide these products, systems,
and services, we utilize our engineering, project management, procurement, manufacturing, and assembly and test
capabilities.
Flexible Pipe and Umbilical Supply. We engineer and manufacture flexible pipes as well as steel tube, thermoplastic hose,
power and communication and hybrid (a combination of steel tube, thermoplastic hose, and electrical cables) umbilicals.
TechnipFMC vessels will typically perform the installation of the flexible pipes and umbilicals, but we also sell these
products directly to oil companies or to other vessel operators.
Vessels. We operate a fleet of 18 vessels. Of the 18 vessels currently in operation, we have sole ownership of ten
vessels, ownership of six vessels as part of joint ventures, and operate two vessels under long-term charter.
We wholly own four pipelay support vessels and jointly own six subsea construction vessels. The jointly-owned vessels
operate under a 50/50 ownership structure exclusively in the Brazilian market. These vessels are primarily contracted
to Petróleo Brasileiro S.A. - Petrobras (“Petrobras”), principally to install umbilical and flexible flowlines and risers to
connect subsea wells to floating production units across a range of water depths. We also own three subsea construction
vessels and have long-term charter agreements for two other construction vessels. The Company also owns three dive
support vessels.
Subsea Services. We provide a portfolio of services that improve uptime, lower lifecycle costs and increase recovery
over the life of the field for our clients’ subsea assets. These services include: (i) provision of exploration and production
wellhead systems and services; (ii) remotely operated vehicle (“ROV”) services; (iii) installation and well completion rig
services; (iv) maintenance services for test, modification, refurbishment, and upgrade of subsea equipment and tooling;
(v) asset integrity services based on product and field data to optimize the performance of the subsea asset, including
proactive inspection, maintenance, and repair (“IMR”) of subsea infrastructure; (vi) well access and intervention services,
both rig-based and vessel-based (riserless light well intervention or “RLWI”); (vii) production management services to
enhance well and field production, including subsea multiphase boosting and real time virtual metering services; and (viii)
well plug, abandonment and decommissioning. Our vision is to transform the customer experience with an agile services
culture and grow our business across the life of the field.
Key drivers of subsea services market activity are the inspection and maintenance of subsea infrastructure, driven in
large part by aging infrastructure on mature fields. The need for well intervention services also continues to grow, with
more than 6,500 wells operated globally.
With our extensive experience in subsea equipment, our large installed base of subsea production equipment, our broad
range of services, and our historical technical design and manufacturing leadership, we are in a unique position to offer
integrated solutions across the “life of field” services combining asset light solutions (e.g. RLWI), digital services (e.g.
data driven monitoring, surveillance and production management suite of applications), and leading edge automated
systems (e.g. Schilling ROVs) to enhance the economics of producing fields through maximization of asset uptime, higher
production volumes, and lower operating expense.
Robotics, Controls and Automation. We design and manufacture ROVs and manipulator arms that are used in subsea
drilling, construction, IMR, and life of field services. Our product offering includes electric and hydraulic work-class ROVs,
tether-management systems, launch and recovery systems, remote manipulator arms, and modular control systems. We
also provide support and services such as product training, pilot simulator training, spare parts, and technical assistance.
We also provide electro-hydraulic and electric production and intervention control systems, allowing accurate control and
monitoring of subsea installations to ensure the highest production availability that can ensure safe and environmentally
12 TechnipFMC
U.K. Annual Report and IFRS Financial Statements 2019 friendly field operations. These include the sensors, multiphase flow meters, digital infrastructure, integrity monitoring,
control functionality, and automation features needed for subsea systems. Robotics capabilities are now being used in the
control of manifold valves during production, which demonstrates a convergence of our technologies in order to provide
better systems for our customers.
Research, Engineering, Manufacturing and Supply Chain (“REMS”). REMS is an organization we formed in September of
2019 to support accelerated technology innovation, and product delivery improvements. We accomplish this by reducing
the cycle-time of engineering and manufacturing our products, including working with our suppliers to reduce their costs,
and optimizing our processes and how we manage workflow. Through REMS, we are focused on challenging the existing
technologies and implementing world-class manufacturing practices, including LEAN and process automation, to improve
reliability while reducing total product cost and lead time to delivery. Our REMS organization primarily supports our
Subsea segment but is also integrated across our Surface Technologies business.
Also this year, we established a Product Management function to further our capabilities to understand, define, and
deliver the technologies and products of the future. This function will provide a complement to REMS, Subsea and
Surface business, and will drive the understanding of customer requirements, competitive landscape, and investment
prioritization.
Capital Intensity
Many of the systems and products we supply for subsea applications are highly engineered to meet the unique
demands of our customers’ field properties and are typically ordered one to two years prior to installation. We often
receive advance payments and progress billings from our customers to fund initial development and working capital
requirements.
Dependence on Key Customers
Generally, our customers in the Subsea segment are major integrated oil companies, national oil companies, and
independent exploration and production companies.
We actively pursue alliances with companies that are engaged in the subsea development of oil and natural gas to
promote our integrated systems for subsea production. These alliances are typically related to the procurement of subsea
production equipment, although some alliances are related to EPCI services. Development of subsea fields, particularly in
deepwater environments, involves substantial capital investments. Operators have also sought the security of alliances
with us to ensure timely and cost-effective delivery of subsea and other energy-related systems that provide integrated
solutions to meet their needs.
Our alliances establish important ongoing relationships with our customers. While these alliances do not contractually
commit our customers to purchase our systems and services, they have historically led to, and we expect that they
would continue to result in, such purchases.
The commitment to our customers goes beyond project delivery, and we nurture these alliances with transparency and
collaboration to better understand their needs to ensure customer success.
No single Subsea customer accounted for 10% or more of our 2019 consolidated revenue.
Competition
We are the only fully integrated company that can provide the complete suite of subsea production equipment,
umbilicals, and flowlines with the complete portfolio of installation services enabling us to develop a subsea field as a
single company. Our Company competes with companies that supply some of the components as well as installation
companies. Our competitors include Aker Solutions ASA, Baker Hughes Company (“Baker Hughes”), Dril-Quip, Inc.,
McDermott International, Inc. (“McDermott”), National Oilwell Varco, Oceaneering International, Inc., Saipem S.p.A.
(“Saipem”), Schlumberger, Ltd. (“Schlumberger”), and Subsea 7 S.A.
13 TechnipFMC
U.K. Annual Report and IFRS Financial Statements 2019 Seasonality
In the North Sea, winter weather generally subdues drilling activity, reducing vessel utilization and demand for subsea
services as certain activities cannot be performed. As a result, the level of offshore activity in our Subsea segment is
negatively impacted in the first quarter of each year.
Market Environment
The volatile, and generally low, crude oil price environment over the last four years led many of our customers to reduce
their capital spending plans or defer new deepwater projects. The reduction and deferral of projects resulted in delayed
subsea project inbound for the industry. In response to the lower commodity prices and reduced cash flow, operators
took actions needed to improve their subsea project economics, and suppliers, in turn, took the steps necessary to further
reduce project break-even levels by offering cost-effective approaches for project developments. These actions continue.
The rate of project sanctioning for new subsea developments has moved higher since the market trough as project
economics and operator confidence have improved. Similarly to other parts of the market (e.g. onshore), the trajectory
and pace of further recovery and expansion in the subsea market is subject to the allocation of capital our clients
dedicate to developing offshore oil and gas fields amongst their entire portfolio of projects and drivers of capital
expansion or discipline. The risk of project sanctioning delays is still present in the current environment; however,
innovative approaches to subsea projects, like our iEPCI solution, have improved project economics, and many offshore
discoveries can be developed economically at today’s crude oil prices. In the long-term, deepwater development is
expected to remain a significant part of many of our customers’ portfolios.
Strategy
With our proprietary technologies and production systems, integration expertise, and comprehensive solutions, we are
transforming our clients’ project economics. We have used these capabilities to develop a new subsea commercial model
that is transforming the way we interact with our customers and create value with them.
Our strategy includes the following priorities:
` Engagement in the conceptual design and integrated front-end engineering, or iFEED, of subsea development projects
to create value through technology and integration of scopes (iEPCI) by simplifying field architecture and accelerating
both delivery schedules and time to first production;
` Innovative research and development (“R&D”), often in collaboration with clients and partners, to develop leading
products and technologies that deliver greater efficiency to the client, lower development costs, unlock stranded and/
or marginal fields, and enable frontier developments;
` Focus on selecting the right projects to ensure a strong and healthy backlog;
` Superior project execution capabilities allowing the Company to mobilize the right teams, assets, and facilities to
capture and profitably execute complex subsea projects and services;
` Capitalize on combined competencies coming from alliances and partnerships with both clients and suppliers; and
` Leverage supplier relationships to optimize supply chain market dynamics and implement greater simplification and
standardization in products and processes.
TechnipFMC is a clear leader in the subsea industry. Our success has been built on our technological strength, innovation,
focus on digitalization, and strong partnerships with major oil companies to expand market opportunities.
Recent and Future Developments
In 2019, our Subsea inbound orders increased more than 50% versus the prior year, driven by further adoption of the
integrated model and growth in services activity. The value of integrated project awards also more than doubled from
the levels we recorded in 2018. Subsea services continued to benefit from the industry’s largest and expanding installed
base, with growth in the year reflecting increased installation, asset refurbishment and well intervention activities.
Subsea services remain on track for double-digit growth in 2020.
14 TechnipFMC
U.K. Annual Report and IFRS Financial Statements 2019 We continue to focus on performance improvement and optimization strategies that will improve our profitability. Our
investments decisions fully support our business with technologies that will differentiate our portfolio.
In December 2019, we completed the sale of the G1201 vessel as part of our overall strategy to optimize the profile
and size of its subsea fleet. In addition to the sale transaction we also executed a Memorandum of Agreement which
includes a Collaboration Agreement with the buyer that provides five years of exclusivity for a list of named subsea
projects in a specific jurisdiction and the right of first refusal for other projects. This followed the announcement of our
Strategic Collaboration Agreement with Allseas aimed at jointly pursuing specific deepwater projects where the assets,
products and capabilities of both companies are complementary. This supports the Company’s intent to use collaboration
agreements, where possible, to execute its differentiated iEPCI™ business model.
We received the industry’s first award of a 20K high-pressure, high-temperature system for LLOG’s Shenandoah project in
the Gulf of Mexico. This new technology was the result of our joint industry program that included 5 major operators. This
was the first time the industry collaborated to develop a new subsea system focused on the delivery of a single-part number
and designed to handle hydrocarbons under the industry’s most extreme pressure and temperature conditions to date.
We have accelerated our digital journey to deliver an integrated digital thread from Front End to Services, thus enhancing
the performance of our products and services as well as safety and asset integrity. With its presence all along the oil
and gas value chain, TechnipFMC is well-placed to leverage data to improve and enhance the performance of our clients’
assets, optimize operational costs, deliver predictive and preventive maintenance, and enable remote operations.
Our inbound order growth for the full year was significantly better than the total Subsea market growth. This high level
of growth came in the third year of a market recovery and is the highest annual growth rate we have experienced in
a decade. Strength in project activity, as well as our expectation for double-digit revenue growth in Subsea Services,
provides the framework for 2020 Subsea orders to approach the level achieved in 2019, although this remains
dependent on the timing of one or two major project awards. We expect our iEPCI capabilities to provide a competitive
advantage as we deliver comprehensive and differentiated solutions. In addition, we anticipate the following longer-term
trends in the subsea market:
` Increased market adoption of integrated subsea projects, leading to further penetration of our integrated business
model and higher levels of iEPCI order activity for our Company;
` Growing service opportunities, driven by (i) higher levels of project activity, (ii) increased asset integrity and
production management activities focused on improving uptime and production volume and lowering emissions, and
(iii) increased maintenance and intervention activity resulting from an expanding and aging installed equipment base;
` Smaller projects and direct awards will continue to contribute meaningfully to our order mix. In 2018 and 2019,
these awards collectively represented just under one-half of our total subsea inbound orders, with the remainder
being publicly announced projects and subsea service activities. Subsea tiebacks are often part of this mix, and these
shorter cycle brownfield expansions provide operators with faster paybacks and higher returns;
` There is a growing trend towards independent operators and new entrants undertaking subsea developments; we are
a natural partner for this customer group because of our ability to offer fully integrated solutions; and
` Natural gas developments are growing in prominence. We believe that more than 20% of offshore capital
expenditures could be directed at natural gas developments by early next decade. We also anticipate that 45% of gas
production will come from offshore, with significant growth in the Middle East (shallow water) followed by Australia
(deep water) in the next five years.
We continue to work closely with our customers and believe that, in the context of lower oil prices, with our unique
business model we can further reduce their project break-even levels by offering cost-effective approaches to their
project developments and accelerate time to first oil and gas.
15 TechnipFMC
U.K. Annual Report and IFRS Financial Statements 2019 Product Development
In 2014, we entered into a joint development agreement with several major operators to develop common standards
for subsea production equipment capable of operating at pressures as high as 20,000 psi and temperatures up to
350º F. This joint development agreement is delivering standardized design, materials, processes, and interfaces
to provide improved reliability and operations over the life of the field. The first major achievement of this joint
development effort, and further highlighting our technology-based solutions focused on creating customer success, we
delivered a complete production system for Shell’s high-pressure and high-temperature Appomattox field in the Gulf of
Mexico in 2018, and Shell began producing from Appomattox in May of 2019.
Technology development progressed on our Subsea 2.0TM product platform, the next generation of subsea equipment,
using designs that are significantly simpler, leaner, and smarter than current designs. These new products incorporate
a modular product architecture and component level standardization to enable a flexible configure-to-order approach,
reducing hardware delivery time for clients. The products are expected to deliver breakthroughs in the way subsea
products are manufactured, assembled, installed, and maintained over the life of the field. The smaller, lighter products
achieve up to a 50% reduction in size, weight, and part count, while maintaining the same or improved functionality.
When combined with iEPCI, our powerful integrated approach to field architecture, and project execution, Subsea 2.0TM
improves project economics and unlocks first oil and gas faster.
In addition to investments to develop lower cost production solutions, we also invest in the development of technology
to expand our service portfolio. We have qualified new technology to enable the inspection of flexible risers and
flowlines. We also are advancing subsea robotic productivity through the development of more efficient ROV systems
that are easier to operate and maintain.
Acquisitions and Investments
In February 2018, we signed an agreement with the Island Offshore Group to acquire a 51% stake in Island Offshore’s
wholly-owned subsidiary, Island Offshore Subsea AS. Island Offshore Subsea AS provides RLWI project management
and engineering services for plug and abandonment (“P&A”), riserless coiled tubing, and well completion operations.
In connection with the acquisition of the controlling interest, TechnipFMC and Island Offshore entered into a strategic
cooperation agreement to deliver RLWI services on a worldwide basis, which also include TechnipFMC’s RLWI capabilities.
Island Offshore Subsea AS has been rebranded to TechnipFMC Island Offshore Subsea (“TIOS”) and is now the operating
unit for TechnipFMC’s RLWI activities worldwide.
In March 2018, we announced a collaboration agreement with Magma Global Ltd. to develop a new generation of
hybrid flexible pipe (“HFP”) for use in offshore applications. HFP is expected to provide increased strength and fatigue
performance, while also achieving dramatic weight and cost reductions, for subsea fluid transport applications. As part
of the collaboration, TechnipFMC purchased a minority stake in Magma Global. We are advanced in creating our new HFP
and continue working towards important milestones in the qualification process.
In January 2019, we acquired a new dive support vessel, the Deep Discoverer, to replace a vessel we retired in support
of our fleet optimization strategy. The acquisition was somewhat opportunistic, but allowed us to obtain a high-quality,
top-tier vessel significantly below newbuild cost and without a protracted delivery schedule. The vessel will operate
primarily in the dive construction, inspection, maintenance, and repair markets in the North Sea and can also support our
iEPCI™ initiative in the region.
In December 2019, we completed the acquisition of the remaining 50% interest in Technip Odebrecht PLSV CV (“TOP
CV”). TOP CV was formed as a joint venture between Technip SA and Ocyan SA to provide pipeline installation ships to
Petrobras for its work in oil and gas fields offshore Brazil.
16 TechnipFMC
U.K. Annual Report and IFRS Financial Statements 2019 Onshore/Offshore
The Onshore/Offshore segment offers a full range of design, project management and construction services to our
customers spanning the entire downstream value chain, including technical consulting, concept selection, and final
acceptance test. We have been successful in meeting our clients’ needs given our proven skills in managing large EPC
projects. When our announced separation is complete, this segment will be the cornerstone of Technip Energies.
Our Onshore business combines the study, engineering, procurement, construction, and project management of the entire
range of onshore facilities related to the production, treatment, and transportation of oil and gas, the transformation
of petrochemicals such as ethylene, polymers, and fertilizers, as well as other activities, and the commercialization of
renewable energy and feedstocks.
We conduct large-scale, complex, and challenging projects that involve extreme climatic conditions and non-conventional
resources and are subject to increasing environmental and regulatory performance standards. We rely on technological
know-how for process design and engineering, either through the integration of technologies from leading alliance
partners or through our own technologies. We seek to integrate and develop advanced technologies and reinforce our
strong project execution capabilities in each of our Onshore activities.
Our Offshore business combines the study, engineering, procurement, construction, and project management within the
entire range of fixed and floating offshore facilities, many of which were the first of their kind, including the development
of floating liquefied natural gas (“FLNG”) facilities.
Principal Products and Services
Onshore E&C. We design and build different types of facilities for the development of onshore oil and gas, processing
facilities, and product export systems. In addition, we renovate existing facilities by modernizing production equipment
and control systems, in accordance with applicable environmental standards.
Refining. We are a leader in the design and construction of oil refineries. We manage many aspects of these projects,
including the preparation of concept and feasibility studies, and the design, construction, and start-up of complex
refineries or single refinery units. We have been involved in the design and construction of over 30 new refineries or
major refinery expansions, and are one of the few contractors in the world to have built seven new refineries since
2000. We have extensive experience with technologies related to refining and have completed more than 840 individual
process units within major expansion or refurbishment projects, implemented in more than 75 countries. As a result of
our cooperation with the most highly renowned technology licensors and catalyst suppliers and our strong technological
expertise and refinery consulting services, we are able to provide an independent selection of appropriate technologies
to meet specific project and client targets. These technologies result in direct benefits to the client, such as emission
control and environmental protection, including hydrogen and carbon dioxide management, sulfur recovery units,
water treatment, and zero flaring. With a strong record of accomplishment in refinery optimization projects, we have
experience and competence in relevant technological fields in the oil refining sector.
Natural Gas Treatment and Liquefaction. We offer a complete range of services across the gas value chain to support our
clients’ capital projects from concept to delivery. Our capabilities include the design and construction of facilities for LNG,
gas-to-liquids (“GTL”), natural gas liquids (“NGL”) recovery, and gas treatment.
In the field of LNG, we pioneered base-load LNG plant construction through the first-ever facility in Arzew, Algeria.
Working with our partners, we have constructed facilities that can deliver more than 105 million metric tonnes per
annum (“Mtpa”), which is a significant portion of the global liquefaction capacity in operation today. TechnipFMC brings
knowledge and conceptual design capabilities that are unique among engineering and construction companies involved
in LNG. We have engineered and delivered a broad range of LNG plants, including mid-scale and very large-scale plants,
both onshore and offshore, and plants in remote locations. We have experience in the complete range of services for LNG
receiving terminals from conceptual design studies to EPC. Reference projects include LNG trains in Qatar (the six largest
ever constructed), Yemen, and a series of mid-scale LNG plants in China, and together with our joint venture partners, we
17 TechnipFMC
U.K. Annual Report and IFRS Financial Statements 2019 delivered first phase of the Yamal LNG plant (“Yamal”) in the Russian Arctic with all three trains put in production before
the end of 2018. During 2019, the Arctic LNG 2 project for Novatek was sanctioned following award of the EPC contract
to us, together with our joint venture partners.
We are also well-positioned in the GTL market and are one of the few contractors with experience in large GTL facilities.
We have unique experience in delivering plants using Sasol’s “Slurry Phase Distillate” technology, and we have provided
front-end engineering design for the Fischer-Tropsch section of more than 60% of commercial liquids conversion capacity
worldwide. Our clients also benefit from our development of environmental protection measures, including low nitrogen
oxide and sulfur oxide emissions, waste-water treatment, and waste management.
We specialize in the design and construction of large-scale gas treatment complexes as well as existing facility upgrades.
Gas treatment includes the removal of carbon dioxide and sulfur components from natural gas using chemical or physical
solvents, sulfur recovery, and gas sweetening processes based on the use of an amine solvent. The Company ranks
among the top contractors in the field in relation to sulfur recovery units installed in refineries or natural gas processing
plants. Given our long-term experience in the field of sour gas processing, we can provide support to clients for the
overall evaluation of the gas sweetening/sulfur recovery chain and the selection of optimum technologies.
Ethylene. We hold proprietary technologies and are a leader in the design, construction, and commissioning of ethylene
production plants. We design steam crackers, from concept stage through construction and commissioning, for both
new plants (including mega-crackers) and plant expansions. We have a portfolio of the latest generation of commercially
proven technologies and are uniquely positioned to be both a licensor and an EPC contractor. Our technological
developments have improved the energy efficiency in ethylene plants by improving thermal efficiency of the furnaces
and reducing the compression power required per ton, thereby reducing carbon dioxide emissions per ton of ethylene by
30% over the last 25 years.
Petrochemicals and Fertilizers. We are one of the world leaders in the process design, licensing, and realization of
petrochemical units, including basic chemicals, intermediate and derivative plants. We provide a range of services that
includes process technology licensing and development and full EPC complexes. We license a portfolio of chemical
technologies through long-standing alliances and relationships with leading manufacturing companies and technology
providers. We have research centers to develop and test technologies for polymer and petrochemical applications, where
fully automated pilot plants gather design data to scale-up processes for commercialization.
Hydrogen. Hydrogen is the most widely used industrial gas in the refining, chemical, and petrochemical industries, and is
also widely used in the production of cleaner transport fuels. We offer a single point of responsibility for the design and
construction of hydrogen and synthesis gas production units, with solutions ranging from Process Design Packages to
full lump-sum turnkey projects. We also offer services for maintenance and performance optimization of running units.
We have solutions in place for carbon capture readiness in future hydrogen plants, targeting more than a two-thirds
reduction in carbon dioxide release from the hydrogen plant.
Fixed Platforms. We offer a broad range of fixed platform solutions in shallow water, including: (i) large conventional
platforms with pile steel jackets whose topsides are installed offshore either by heavy lift vessel or floatover; (ii) small,
conventional platforms installed by small crane vessel; (iii) steel gravity-based structure platforms, generally with
floatover topsides; and (iv) small to large self-installing platforms.
Floating Production Units. We offer a broad range of floating platform solutions for moderate to ultra-deepwater
applications, including:
` Spar Platforms: Capable of operating in a wide range of water depths, the Spar is a low motion floater that can
support full drilling with dry trees or with tender assist and flexible or steel catenary risers. The Spar topside is
installed offshore either by heavy lift vessel or floatover.
` Semi-Submersible Platforms: These platforms are well-suited for oil field developments where subsea wells drilled by
a mobile offshore drilling unit are appropriate. Semi-Submersibles can operate in a wide range of water depths and
18 TechnipFMC
U.K. Annual Report and IFRS Financial Statements 2019 may have full drilling and large topside capabilities. We have our own unique design of low-motion Semi-Submersible
platforms that can accommodate dry trees.
` Tension-Leg Platforms (“TLP”): An appropriate platform for deepwater drilling and production in water depths up to
approximately 1,500 meters, the TLP can be configured with full drilling or with tender assist and is generally a dry
tree unit. The TLP and our topside can be integrated onto the substructure in a cost-effective manner at quayside.
Floating Production, Storage and Offloading (“FPSO”). Working with our construction partners, we have delivered some
of the largest FPSOs in the world. FPSOs enable offshore production and storage of oil which is then transported by
a tanker where pipeline export is uneconomic or technically challenged (e.g., ultra-deepwater). FPSOs utilize onshore
processes adapted to a floating marine environment. They can support large topsides and hence large production
capacities. Leveraging our industry-leading capabilities in gas monetization, particularly FLNG, we are currently well-
positioned to leverage the global offshore gas cycle with gas FPSOs.
Floating Liquefied Natural Gas (“FLNG”). FLNG is an innovative alternative to traditional onshore LNG plants and
is suitable for remote and stranded gas fields that were previously deemed uneconomical. FLNG is a commercially
attractive approach to the monetization of offshore gas fields. It avoids the cost of building and operating long-distance
pipelines and extensive onshore infrastructure. We pioneered the FLNG industry and are the only contractor to integrate
all of the core activities required to deliver an FLNG project: LNG process, offshore facilities, loading systems, and subsea
infrastructure. We delivered the industry’s first and largest FLNG facilities and are currently executing ENI’s Coral South
FLNG, which will be installed offshore Mozambique in East Africa.
Capital Intensity
Our Onshore/Offshore business executes turnkey contracts on a lump-sum or reimbursable basis through engineering,
procurement, construction, and project management services on both brownfield and greenfield developments and
projects. We can execute EPC contracts through sole responsibility, joint ventures, or consortiums with other companies.
We often receive advance payments and progress billings from our customers to fund initial development and working
capital requirements. However, our working capital balances can vary significantly through the project lifecycle
depending on the payment terms and timing on contracts.
Dependence on Key Customers
Generally, our Onshore/Offshore customers are major integrated oil companies or national oil companies. We have
developed long-term relationships with our main clients around our portfolio of technologies, expertise in project
management, and strong execution. Our customers have sought the security of partnerships with us to ensure timely and
cost-effective delivery of their projects.
One customer, JSC Yamal LNG, represented more than 10% of 2019 consolidated revenue. We do not anticipate JSC
Yamal LNG representing more than 10% of our consolidated revenue beyond 2019 as the project nears completion. We
consolidate all revenue from the JSC Yamal LNG partnership, including revenue associated with the minority partners of
the joint venture.
Competition
In the onshore market, we face a large number of competitors, including U.S. companies (Bechtel Corporation, Fluor
Corporation, KBR, Inc. (“KBR”), and McDermott), Asian and Australian companies (Chiyoda Corporation, JGC Corporation,
Hyundai Oilbank, Samsung Engineering Co., Ltd, SK Energy Co., Ltd, and WorleyParsons Limited), European companies
(John Wood Group plc, Maire Tecnimont Group, Petrofac, Ltd., Saipem, and Tecnicas Reunidas, S.A.). In addition, we
compete against smaller, specialized, and locally-based engineering and construction companies in certain countries or for
specific units such as petrochemicals.
Competition in the Offshore market is relatively fragmented and includes various players with different core capabilities,
including offshore construction contractors, shipyards, leasing contractors, and local yards in Asia Pacific, the Middle East,
and Africa. Competitors include China Offshore Oil Engineering Co., Ltd., Daewoo Shipbuilding & Marine Engineering Co.,
19 TechnipFMC
U.K. Annual Report and IFRS Financial Statements 2019 Ltd., Hyundai Heavy Industries Co., Ltd., JGC Corporation, KBR, McDermott, MODEC Inc., Saipem, and Samsung Heavy
Industries Co., Ltd.
Seasonality
Our Onshore business is generally not impacted by seasonality. Our Offshore business could be impacted by seasonality
in the North Sea and other harsh environment regions during the offshore installation campaign at the end of a project.
Market Environment
The onshore market is impacted by changes in oil and gas prices, but is typically more resilient than offshore markets.
Indeed, some downstream markets have benefited from low commodity prices where market fundamentals are
influenced by other economic factors (e.g., petrochemicals and fertilizers that are linked to global growth). This market
dynamic is mostly present in developing countries with rapidly growing energy demand (in particular, Asia) and countries
with abundant oil and gas reserves that have decided to expand downstream (in particular, the Middle East and
Russia). The onshore market remains relatively small in Western Europe with a diversity of projects, including a second
generation of bio ethanol plants. The North American onshore market is experiencing a strong recovery in the wake of
the oil and gas shale revolution.
The offshore market is more directly impacted by changes in oil prices. Offshore fields in the Gulf of Mexico, the
Middle East, and the North Sea were the traditional backbone for investments in the last decade. Recent discoveries of
offshore fields with reserves in other regions such as Brazil, Australia, and East Africa are expected to become drivers of
increased investment. In the long-term, gas is expected to become a bigger portion of the global energy mix, requiring
new investments in the upstream industry.
Strategy
Our strategy is based on the following:
` Selectivity of clients, projects, and geographies, which serves to maintain early engagement, leading to influence over
technological choices, design considerations, and project specifications that make projects economically viable;
` Technology-driven differentiation with strong project management, which eliminates or significantly reduces technical
and project risks, leading to both schedule and cost certainty without compromising safety; and
` Excellence in project execution, because of our global, multi-center project delivery model complemented by deep
partnerships and alliances to ensure the best possible execution for complex projects.
TechnipFMC’s Onshore/Offshore segment continually invests in innovation and technology. The Company is at the
forefront of digital solutions due in part to our investment in 3D models, often referred to as digital twin, and interfaces.
Recent and Future Developments
In response to industry challenges to improve project economics in the Offshore market, we are continuing our cost
reduction efforts to align capacity and capabilities with market demands. As such, in 2018 we sold our interest in the Pori
Offshore yard in Finland.
Onshore market activity continues to provide a tangible set of opportunities, including natural gas, refining, and
petrochemical projects.
Activity in LNG is fueled by higher demand for natural gas, a fuel source that continues to command a greater share of
global energy demand. Natural gas will play an essential role as an energy transition fuel, helping to meet the increasing
demand for energy while lowering greenhouse gases when compared to current fuel sources. This trend is structural,
driven by market preference for cleaner energy sources and the need to satisfy growing domestic demand in markets
such as Asia and the Middle East. To meet this demand, we believe that large gas projects will need to be sanctioned in
the near future, as evidenced by both the significant increase in pre-FEED and FEED contract awards and higher levels of
pre-bid project planning experienced in 2019. The award of Novatek’s Arctic LNG 2 project and its sanction in late 2019
confirmed this trend.
20 TechnipFMC
U.K. Annual Report and IFRS Financial Statements 2019 As onshore market activity levels remain stable, it provides our business with the opportunity to engage early with
our clients and pursue additional front-end engineering studies, which serve to optimize project economics while also
mitigating risks during project execution. Market opportunities for downstream front-end engineering studies and full
EPC projects in both LNG and refining are most prevalent in the Middle East, Africa, and Asia. We continue to track near-
term prospects for petrochemical and fertilizer projects as well. We believe this broad opportunity set could generate
additional inbound orders in the coming years.
In response to an increase in demand for gas, Offshore continued as a leader in gas FPSO projects. In addition to the
ongoing Karish project for Energean, we were awarded the EPCI contract for BP’s Tortue gas FPSO, which will be
deployed offshore West Africa.
Product Development
We are positioned as a premier provider of project execution and technology solutions, which enables our customers
to unlock resources at advantaged capital and operating economics. We invest in these main Onshore R&D areas: (i) the
development of process technology and equipment for economy of scale; (ii) continuous improvement of our proprietary
process technologies and other solutions to reduce operating and investment cost; and (iii) diversification of our
proprietary technology offering.
Our Offshore R&D efforts are focused on improving the economics of our clients’ diverse fixed and floating platform
projects. Additionally, to further reduce operating and investment costs, we continue to progress the development of
robotic solutions for offshore platforms and work towards a standard and adaptable design for Normally Unmanned
Installations (“NUI”). We are also evaluating the various opportunities that will emerge as the industry and societal
demands shift as part of the energy transition. The Company continues to assess and implement the best digital
technologies to support the business.
Acquisitions and Investments
No acquisitions or significant investments occurred during 2019 or 2018.
Surface Technologies
The Surface Technologies segment designs, manufactures, and services products and systems used by companies
involved in land and shallow water exploration and production of crude oil and natural gas. Such products and systems
include: (i) wellhead systems, (ii) hydraulic fracturing systems, including fracturing valves, pumps, rigid flowlines, and
flexible flowlines, (iii) production, separation, and flow processing systems, and (iv) measurement products and integrated
systems. We manufacture most of our products internally and on facilities located worldwide.
Principal Products and Services
Upstream Production. Our upstream production offering includes well control, safety and integrity systems, multiphase
meter modules, in-line separation and processing systems, and standard pumps. These offerings are differentiated by
our comprehensive portfolio of in-house compact, modular, and digital technologies, and are designed to enhance field
project economics and reduce operating expenditures with an integrated system that spans from wellhead to pipeline.
Our high-efficiency solutions, such as our separation portfolio and measurement technologies, combined with
our expertise in modularization, enable our customers to achieve first production faster with fully optimized and
environmentally-conscious, compact systems.
Well Control and Integrity Systems: We supply control components and safety systems designed to safely and efficiently
run either a wellpad, modules on an offshore platform, or a production facility. Our systems are based on standard, field-
proven building blocks and designed for minimal maintenance during life of field operations.
Surface Multiphase Meter: Our multiphase meters (“MPMs”) are a collection of technologically-advanced innovations
that provide a differentiated approach to multiphase measurement. The patented technology in our MPMs offers many
21 TechnipFMC
U.K. Annual Report and IFRS Financial Statements 2019 unique features that provide a step change in allocation measurement and allows for continuous surveillance of wells
across a full range of operating conditions. Our MPMs provide real-time data to a central facility, or our cloud portal, for
production reporting and remote notification and system troubleshooting.
Separation and Processing Systems: TechnipFMC provides industry-leading technology for the separation of oil, gas, sand,
and water. These solutions are used in onshore production facilities and on offshore platforms worldwide. Our family
of separation products delivers client success by increasing efficiency and throughput and reducing the footprint of
processing facilities. Our separation systems offering includes internal components for oil and gas multiphase separation,
in-line deliquidisers, and solids removal, as well as fully assembled separation modules and packages designed and
fabricated for oil and gas separation, fracturing flowback treatment, solids removal, and primary produced water
treatment.
Standard Pumps and Skid Systems: TechnipFMC provides complete skid solutions, from design consultation through
startup and commissioning. We offer a diverse line of reciprocating pumps, customized according to the application with
pressure ranges available up to 10,000 psi and flow rates up to 1,500 gpm.
Automation and Digital Systems: TechnipFMC provides hardware and software solutions to automate and provide simple
human interfaces for a number of its critical products. These digital offerings help enable the removal of personnel from
critical zones either offshore or onshore. In addition, the digital signatures from our products can then be interpreted and
used via condition performance monitoring to eliminate unplanned downtime.
Pressure Control. We design and manufacture equipment used in well completion and stimulation activities by major
oilfield service and drilling companies, as well as by oil and gas exploration and production operators directly.
Flowline: TechnipFMC is a leading supplier of flowline products and services to the oilfield industry. From the original
Chiksan® and Weco® products to our revolutionary equipment designs and integrated services, our family of flowline
products and services provides our customers with reliable and durable pressure pumping equipment. Our facilities
stock flowline products in the specific sizes, pressures, and materials common to each region. Our commitment is to
help our customers worldwide attain maximum value from their pressure pumping assets by guaranteeing that the right
products arrive at the job site in top working condition. Our total solutions approach includes the InteServ tracking and
management system, mobile inspection and repair, strategically located service centers, and genuine Chiksan® and Weco®
spare parts.
Well Service Pumps: TechnipFMC offers a diverse line of well service pumps for use in high-pressure pumping operations
such as hydraulic fracturing and stimulation, including triplex and quintuplex pumps, each with its own industry-leading
features, including: (i) heavy-duty power ends, paired with main journal roller bearings and heavy-duty rod journal
bearings, (ii) heavy-duty crankshafts, (iii) fluid cylinders, with accessible packing and valves, and (iv) made-to-order
pumps. Our pumps can withstand some of the harshest operating conditions, with pressure ranges up to 20,000 psi and
flow rates up to 1,500 gallons per minute.
All of our pumps are supported by dedicated service staff. We have the industry’s largest fleet of mobile units to perform
complete inspection and repair services at customer locations around the world. The mobile services include inspection,
testing, repair, documentation, and certification, with the goal of extending product life and reducing operator costs.
Drilling and Completion. We provide a full range of drilling and completion systems for both standard and custom
engineered applications. The customer base of our drilling and completion offerings are oil and gas exploration and
production companies.
Surface Wellheads and Production Trees: Our products are used to control and regulate the flow of crude oil and natural
gas from the well. The wellhead is a system of spools and sealing devices from which the entire downhole well string
hangs and provides the structural support for surface production trees. Production trees are comprised of valves,
actuators and chokes which can be combined in both vertical and horizontal configurations, depending on customer-
specific requirements.
22 TechnipFMC
U.K. Annual Report and IFRS Financial Statements 2019 Surface wellheads and production trees are “per-well” systems which are designed for onshore shale, onshore
conventional, and offshore shallow water platform applications, and are typically sold directly to exploration and
production operators during the drilling and completion phases of the well lifecycle. Our surface wellhead and production
tree systems are used worldwide, and we are one of the few companies that provide global coverage and a full range
of system configurations, including (i) conventional wellheads, (ii) Unihead® drill-thru wellheads designed for faster
installation and drill-time optimization, (iii) high-pressure, high-temperature (“HPHT”) systems for extreme production
applications, and (iv) steam-assisted gravity drainage (“SAGD”) and cyclic steam injection (“CSS”) thermal systems for
heavy oil applications.
We also provide services associated to our surface wellhead and production tree portfolio including service personnel
and rental tooling for wellhead and production tree installation and life of field repair, refurbishment, and general
maintenance. Our wellhead and production tree business relies on our ability to successfully provide the necessary field
operations coverage, responsiveness, and reliability to prevent downtime and nonproductive time during the drilling and
completion phases.
Fracturing Tree and Manifold Systems: During the completion of a shale well, the well undergoes hydraulic fracturing.
During this phase, durable and wear resistant wellsite equipment is temporarily deployed, designed to sustain the high
pressure and highly erosive fracturing fluid which is pumped through the well into the formation.
Our surface completions portfolio includes fracturing tree systems, fracturing valve greasing systems, hydraulic control
units, fracturing manifold systems, and rigid and flexible flowlines. This equipment is temporarily laid out between the
wellhead and the fracturing pump truck during hydraulic fracturing. These products are typically supplied to exploration
and production operators who rent this equipment directly from us during the hydraulic fracturing activities. Associated
with our fracturing equipment rental is fracturing rig-up / rig-down field service personnel as well as oversight and
operation of the equipment during the multiple fracturing stages for a shale well.
TechnipFMC’s manifold solutions help increase operational efficiency for a pad site with multiple wells. Our TE Manifold
provides time savings and pumping efficiencies when stimulating multiple wells on a single pad. The manifolds are
installed and connected to multiple trees off the critical path, which allows our customers to fracture more stages per day
in a compact footprint and efficiently move operations from one well to another, saving time and money. We also offer
conventional and articulating arm manifold trailers which are used as the connection point between fracturing pump
trucks and the fracturing flowline and manifold system.
Our Ground Level Fracturing System is an essential tool for unconventional operators who use simultaneous operations
to efficiently run completions in multi-well pads. The innovative system design uses various lengths of trunkline to
align the TE Manifold and fracturing tree at ground level, which minimizes the number of flowline connections for safer
operation. We are a significant supplier of flowline pipework (rigid and flexible) that is used to move the fracturing
product from the pump truck, via the manifold and into the fracturing trees.
With a presence in all the major shale plays worldwide, our fracturing offering is recognized for its reliability and
durability.
Flowback and Well Testing Services: After a shale well is hydraulically fractured, the well moves to the flowback phase in
which much of the fracturing fluid pumped into the well flows back out through the wellhead and fracturing tree system.
This phase lasts until the wellbore flow is adequate for flow through the production facilities downstream of the wellsite.
Our flowback and well testing offering includes chokes, de-sanders, and advanced well testing equipment and related
services which are provided to exploration and production operators during the flowback phase.
Fracturing Integrated Offering (“Frac I/O”): We are one of the few oilfield service providers that can offer an integrated
solution covering the fracturing through flowback phases. Our Frac I/O provides our exploration and production
customers with an integrated rental and service offering, including fracturing tree and manifold systems, as well as
pressure control flowlines, flowback and well testing equipment, and field services.
23 TechnipFMC
U.K. Annual Report and IFRS Financial Statements 2019 Services. We offer our customers a comprehensive suite of service packages to ensure optimal performance and
reliability of our equipment. These service packages include all phases of the asset’s life cycle: from the early planning
stages through testing and installation, commissioning and operations, replacement and upgrade, maintenance, storage,
preservation, intervention, integrity, decommissioning, and abandonment.
Measurement Solutions. We design, manufacture, and service measurement products for the oil and gas industry. Our
flow computers and control systems manage and monitor liquid and gas measurement for applications such as custody
transfer, fiscal measurement, and batch loading and deliveries. Our FPSO metering systems provide the precision and
reliability required for measuring large flow rates of marine loading operations. Our gas and liquid measurement systems
are utilized in multiple energy-related applications, including crude oil and natural gas production and transportation,
refined product transportation, petroleum refining, and petroleum marketing and distribution. We combine advanced
measurement technology with state-of-the-art electronics and supervisory control systems to provide the measurement
of both liquids and gases. This ensures processes operate efficiently while reducing operating costs and minimizing the
risks associated with custody transfer.
Loading Systems. We lead the market with reliable loading system solutions. We are globally recognized for setting
technical and performance standards in fluid transfer, delivering liquid and gas loading systems to the most challenging
applications, both onshore and offshore.
TechnipFMC leads the market with 10,000 marine loading arms supplied, including more than 500 arms for LNG
applications. We have developed unique offshore LNG transfer systems for all FLNG facilities operating to date. We offer
equipment design and fabrication projects, as well as services over the life of our systems. Our proven ability to innovate,
coupled with our modern manufacturing and assembly techniques, serve as the foundation for the future development
of fluid transfer systems capable of operating in the most hostile and challenging environments.
By offering both types of products covering the full range of midstream and downstream applications, we can
recommend and provide the best solution to our clients.
Capital Intensity
Surface Technologies manufactures most of its products, resulting in a reliance on manufacturing locations throughout
the world, including fully owned manufacturing hubs in Stephenville, Texas, United States and Singapore, and a wide
global network of third-party suppliers. We also maintain a large quantity of rental equipment related to our drilling &
completion and pressure control offerings.
Dependence on Key Customers
No single Surface Technologies customer accounted for 10% or more of our 2019 consolidated revenue.
Competition
Surface Technologies is a market leader for many of our products and services. Some of the factors that distinguish us
from other companies in the same sector include our technological innovation, reliability, product quality, and ability
to integrate across a broad portfolio scope. Surface Technologies competes with other companies that supply surface
production equipment and pressure control products. Some of our major competitors in Surface Technologies include
Baker Hughes, Cactus, Inc., Forum Energy Technologies, Inc., Gardner Denver, Inc., Schlumberger, and The Weir Group plc.
Market Environment
Surface Technologies’ performance is typically driven by variations in global drilling activity, creating a dynamic
environment. Operating results can be further impacted by pressure pumping activity and the completions intensity of
shale applications in the Americas.
The North America shale market is sensitive to oil price fluctuations. For a global oilfield service company such as
ourselves, this is partially offset by the less cyclical drilling activity in the international markets where most of the
activity is driven by national oil companies (NOCs), which tend to maintain longer term and more capital intense drilling
programs.
24 TechnipFMC
U.K. Annual Report and IFRS Financial Statements 2019 Global activity is still below levels achieved in the prior industry cycle and pricing remains competitive. Drilling activity
in North America during 2019 declined approximately 12% compared to 2018, in terms of rig count and number of wells
drilled. Completion activity contracted approximately 10% in 2019 in terms of number of wells fractured and a decrease
of approximately 7% in 2019 in terms of pressure pumping horsepower demand. The activity decline was driven by
pipeline takeaway capacity constraints, lower commodity prices, and lower spending by our customers.
Our business outside of the Americas continued to experience competitive pricing pressure throughout much of 2019. We
believe market pricing has since stabilized and expect this more stable pricing environment to continue throughout 2020.
Confidence in an improved outlook for our business, based on an expected 4% to 5% increase in rig count and number of
wells drilled in 2020, is further supported by the strong growth experienced in inbound orders and backlog in late 2019,
about 25% inbound increase in Q4 compared to the average in Q1 to Q3. We believe that the Middle East, Asia Pacific,
and Northern Europe are best poised for new order growth.
Strategy
Our strategy is focused on being a leading provider of best-cost and high-performance integrated assets and services for
our customers in the drilling, completion, upstream production, and midstream transportation sectors. We distinguish our
offering by combining four elements — innovative product design, exceptional customer experience, leading digital tools,
and integrated systems.
We have developed the digital tools and customer-centric organizational culture that help enable customer success. Our
system integration capabilities and automation technologies (i) reduce cycle time, lowering both capital and operating
expenditures and allowing our customers to achieve first oil faster, and (ii) optimize the production process, minimizing
facility footprint, manual interventions, and environmental impacts.
Recent and Future Developments
We continue to operate in a challenging environment as global activity is still below levels achieved in the prior industry
cycle and pricing remains competitive. In 2019 well completion activity in North America moved lower, negatively
impacting demand for pressure control equipment. The activity decline was driven by pipeline takeaway capacity
constraints, lower commodity prices, and lower operator budgets.
North American drilling and completion activity continued to move higher throughout 2018, peaking in the first quarter
of 2019, and then declining throughout the remainder of 2019. Forecasts for 2020 activity are heavily dependent on
commodity prices. Our current outlook is that activity in early 2020 will remain near the fourth quarter of 2019 exit
levels and then gradually increase in the second half of the year.
Outside of the Americas, drilling and completion activity increased 7% from 2018 to 2019 and is now planned to stabilize
on a 4% to 5% increase in the next three years.
Product Development
In 2019, we expanded our desanding product offering by introducing our Desander Pro which can handle up to 30%
higher drill out sand volumes during the flowback phase in shale applications. We are in the final stages of testing for
our high gas desander, specifically designed for gas shale plays in Canada and the United States and we have high hopes
that this technology can be utilized in conventional applications. We have introduced a number of products that are
specifically orientated to improving the safety and efficiency on the Fracturing Pad, including SAFlex - large bore flexible
Fracturing lines, 7” Check Valves, Speedloc Quick Connector for wireline intervention. These new products will all become
important element in our integrated fracturing offering. Further, we have expanded our suite of high-pressure, high-
temperature wellheads and trees, and continue to expand our digital product offering with automated desanding dumps,
tank level monitoring, automatic valve greasing units, and automated well testing system, all in an effort to further
reduce manning and increase remote oversight of drilling and completion operations.
Acquisitions and Investments
In October 2017, we announced an agreement to acquire Plexus Holding plc’s (“Plexus”) wellhead exploration equipment
25 TechnipFMC
U.K. Annual Report and IFRS Financial Statements 2019 and services business for jack-up applications. In conjunction with our global footprint and market presence, this portfolio
expansion in the mudline and high-pressure, high-temperature arena has enabled us to be a leading provider of products
and services to the global jack-up exploration drilling market. This acquisition fits within our strategy to extend and
strengthen our position in exploration drilling products and services while leveraging our global field presence. The
acquisition closed in the first quarter of 2018.
The business has been integrated into our Surface Technologies segment, including the transfer of key personnel from
Plexus, with their specialized expertise, to ensure continuity and ongoing customer support. The business continues to
operate from its existing location in Dyce, Aberdeen, United Kingdom.
In December 2017, we opened a new 18,000 square meter facility in Abu Dhabi’s Industrial City 2, which has been
further expanded in 2019 to provide customer inventory management services and position the Company for the
construction of integrated skids and modules in support of our Production Systems business. In June 2018, we broke
ground on a new 52,000 square meter facility in Dhahran, Saudi Arabia. These facilities are part of our continued
investment in the United Arab Emirates and Saudi Arabia to reinforce our leading position in delivering local solutions
that extend asset life and improve project returns. They position us to respond to the expected increase in activity for
Abu Dhabi National Oil Company (“ADNOC”) and Saudi Aramco in 2020 and beyond while strengthening our capabilities,
providing a solid platform for us to grow our integrated offerings in this region, including multiple product lines and
aftermarket services that are key to our growth strategy. The new facilities will offer a broader range of capabilities and
greater value-add in-country, supporting our full portfolio with high technology equipment in the drilling, completion,
production, and pressure control sectors.
26 TechnipFMC
U.K. Annual Report and IFRS Financial Statements 2019 Other business information relevant to our
business segments
Sources and Availability of Raw Materials
Our business segments purchase carbon steel, stainless steel, aluminum, and steel castings and forgings from the global
marketplace. We typically do not use single source suppliers for the majority of our raw material purchases; however,
certain geographic areas of our businesses, or a project or group of projects, may heavily depend on certain suppliers for
raw materials or supply of semi-finished goods. We believe the available supplies of raw materials are adequate to meet
our needs.
Research and Development
We are engaged in R&D activities directed toward the improvement of existing products and services, the design of
specialized products to meet customer needs, and the development of new products, processes, and services. A large
part of our product development spending has focused on the improved design and standardization of our Subsea and
Onshore/Offshore products to meet our customer needs.
Patents, Trademarks, and Other Intellectual Property
We own a number of patents, trademarks, and licenses that are cumulatively
important to our businesses. As part of our ongoing R&D focus, we seek patents
when appropriate for new products, product improvements, and related service
innovations. We have approximately 6,800 issued patents and pending patent
applications worldwide. Further, we license intellectual property rights to or from
third parties. We also own numerous trademarks and trade names and have
approximately 550 registrations and pending applications worldwide.
6,800
We protect and promote our intellectual property portfolio and take actions we
deem appropriate to enforce and defend our intellectual property rights. We do
not believe, however, that the loss of any one patent, trademark, or license, or
group of related patents, trademarks, or licenses would have a material adverse
effect on our overall business.
patents issued
and pending
applications
6,800
patents issued
and pending
applications
37,000
employees
37,000
employees
Employees
As of December 31, 2019, we had more than 37,000 employees.
Segment and Geographic Financial Information
The majority of our consolidated revenue and segment operating profits are generated in markets outside of the United
States. Each segment’s revenue is dependent upon worldwide oil and gas exploration, production and petrochemical
activity. Financial information about our segments and geographic areas is incorporated herein by reference from Note 3
to our consolidated financial statements of this U.K. Annual Report.
Order Backlog
Information regarding order backlog is incorporated herein by reference from the section entitled “Business Review” of
the Strategic Report contained in this U.K. Annual Report.
Website Access to Reports and Proxy Statement
Our U.K. Annual Reports and Half-Year Reports are available free of charge through our website at www.TechnipFMC.com,
under “Investors—Financial Information” as soon as reasonably practicable. Unless expressly noted, the information on our
website or any other website is not incorporated by reference in this U.K. Annual Report and should not be considered
part of this U.K. Annual Report or any other filing we make.
27 TechnipFMC
U.K. Annual Report and IFRS Financial Statements 2019 Business Review
Introduction
In this U.K. Annual Report, the Company is reporting in its consolidated financial statements the results of its operations
for the year ended December 31, 2019, which consist of the combined results of operations of Technip S.A. and FMC
Technologies, Inc.
Due to the Merger, FMC Technologies’ results of operations have been included in the consolidated financial statements
for periods subsequent to the consummation of the Merger on January 16, 2017. Under the acquisition method of
accounting, Technip was identified as the accounting acquirer and acquired a 100% interest in FMC Technologies.
Historically, Technip prepared its financial statements in accordance with International Financial Reporting Standards, as
adopted by the European Union (“IFRS”), and FMC Technologies prepared its financial statements in accordance with U.S.
GAAP. Following completion of the Merger, the Company is preparing its consolidated financial statements in accordance
with both (i) U.S. GAAP in accordance with U.S. securities law and reporting requirements, and (ii) IFRS in accordance
with the requirements of the U.K. Companies Act 2006 (the “Companies Act”) and the U.K. Disclosure Guidance and
Transparency Rules. The U.S. GAAP financial statements for the year ended December 31, 2019 were contained in the
Annual Report on Form 10-K filed with the SEC on March 3, 2020 and the IFRS consolidated financial statements are
contained in this U.K. Annual Report.
The basis of presentation, critical accounting estimates and significant accounting policies are set out in Note 1 to the
consolidated financial statements contained in this U.K. Annual Report.
Key Performance Indicators
We are a global leader in energy projects, technologies, systems and services. We have manufacturing operations
worldwide, strategically located to facilitate efficient delivery of these products, technologies, systems and services
to our customers. We report our results of operations in the following segments: Subsea, Onshore/Offshore, and
Surface Technologies. Management’s determination of the Company’s reporting segments was made on the basis of our
strategic priorities and corresponds to the manner in which our Chief Executive Officer reviews and evaluates operating
performance to make decisions about resource allocations to each segment.
We focus on economic- and industry-specific drivers and key risk factors affecting our business segments as we
formulate our strategic plans and make decisions related to allocating capital and human resources. The results of our
segments are primarily driven by changes in capital spending by oil and gas companies, which largely depend upon
current and anticipated future crude oil and natural gas demand, production volumes, and consequently, commodity
prices. We use crude oil and natural gas prices as an indicator of demand. Additionally, we use both onshore and offshore
rig count as an indicator of demand, which consequently influences the level of worldwide production activity and
spending decisions. We also focus on key risk factors when determining our overall strategy and making decisions for
capital allocation. These factors include risks associated with the global economic outlook, product obsolescence and the
competitive environment. We address these risks in our business strategies, which incorporate continuing development
of leading-edge technologies and cultivating strong customer relationships.
Our Subsea segment is affected by changes in commodity prices and trends in deepwater oil and natural gas production.
Our Onshore/Offshore segment is impacted by change in commodity prices, population growth and demand for natural
gas, although the onshore market is typically more resilient to these changes impacting the segment. Our Subsea and
Onshore/Offshore segments both benefit from the current market fundamentals supporting the demand for new
liquefied natural gas facilities. Onshore/Offshore also benefits from the construction of petrochemical and fertilizer
plants.
28 TechnipFMC
U.K. Annual Report and IFRS Financial Statements 2019 Our Surface Technologies segment is primarily affected by changes in commodity prices and trends in land-based and
shallow water oil and natural gas production. We have developed close working relationships with our customers. Our
results reflect our ability to build long-term alliances with oil and natural gas companies and to provide solutions for their
needs in a timely and cost-effective manner. We believe that by closely working with our customers, we enhance our
competitive advantage, improve our operating results and strengthen our market positions.
The Company’s directors consider that the most important key performance indicators (“KPIs”) for 2019 and 2018 are
set out below.
As we evaluate our operating results, we consider business segment performance indicators like segment revenue,
operating profit and capital employed, in addition to the level of inbound orders and order backlog. A significant
proportion of our revenue is recognized under the percentage of completion method of accounting. Cash receipts from
such arrangements typically occur at milestones achieved under stated contract terms. Consequently, the timing of
revenue recognition is not always correlated with the timing of customer payments. We aim to structure our contracts
to receive advance payments that we typically use to fund engineering efforts and inventory purchases. Working capital
(excluding cash) and net (debt) cash are therefore key performance indicators of cash flows. These key performance
indicators are detailed in the paragraph entitled “Consolidated Results of Operations” below.
Consolidated Results of Operations
Management’s report of the consolidated results of operations is provided on the basis of comparing actual results of
operations for the year ended December 31, 2019 to actual results of operations for the year ended December 31, 2018.
Year Ended
December 31,
Change
(In millions, except percentages)
2019
2018
Revenue
$
13,426.2 $
12,599.9 $
Costs and expenses
Cost of sales
Selling, general and administrative expense
Research and development expense
Impairment, restructuring and other expenses
Separation costs
Merger transaction and integration costs (a)
10,915.8
10,294.8
1,230.0
162.9
2,436.6
72.1
31.2
1,144.4
189.2
1,677.0
—
36.5
$
826.3
621.0
85.6
(26.3)
759.6
72.1
(5.3)
Total costs and expenses
14,848.6
13,341.9
1,506.7
Other income (expense), net
Income from equity affiliates
Net interest expense
Loss before income taxes
Provision for income taxes
Net loss
Net profit attributable to noncontrolling interests
(267.2)
12.3
(498.5)
(332.9)
122.7
(396.4)
(2,175.8)
(1,348.6)
275.1
(2,450.9)
(3.1)
397.0
(1,745.6)
(10.8)
65.7
(110.4)
(102.1)
(827.2)
(121.9)
(705.3)
7.7
Net loss attributable to TechnipFMC plc
$
(2,454.0) $
(1,756.4) $
(697.6)
a) Integration costs in 2019 incurred only in the first half of the year.
%
6.6%
6.0%
7.5%
(13.9)%
45.3%
n/a
(14.5)%
11.3%
19.7%
(90.0)%
(25.8)%
(61.3)%
(30.7)%
(40.4)%
71.3%
(39.7)%
29 TechnipFMC
U.K. Annual Report and IFRS Financial Statements 2019 Revenue
Revenue increased $826.3 million in 2019 compared to the prior-year period, primarily as a result of improved project
activity. Subsea revenue increased year-over-year with higher project-related activity, including increased revenue from
integrated project execution (iEPCI) and increased demand in subsea services. Onshore/Offshore revenue was stable
as a decrease in revenues from projects progressing towards completion, primarily Yamal LNG, was largely offset by
increased project activity in the Middle East and Asia Pacific regions. Surface Technologies revenue increased primarily
as a result of improving order backlog from international markets, primarily in the Middle East and Asia Pacific regions.
Gross profit
Gross profit (revenue less cost of sales) as a percentage of sales increased marginally to 18.7% in 2019 and 18.3% in the
prior-year period. Strong project execution and completion of Yamal LNG milestones improved gross profits in Onshore/
Offshore offset by lower gross profit due to a more competitively priced Subsea backlog and weaker demand in North
America for Surface Technologies products and services due to a challenged shale market.
Selling, general and administrative expense
Selling, general and administrative expense increased $85.6 million year-over-year, primarily as a result of increased
corporate expense driven largely by accelerated IT spending as well as additional performance incentive compensation
awards.
Impairment, restructuring and other expense
We incurred $2.4 billion of restructuring, impairment and other expenses in 2019, primarily driven by $2.0 billion of
goodwill impairment and $411.3 million of property, plant and equipment impairment. See Note 10 and Note 11 for
further details.
Separation costs
We have incurred $72.1 million associated with the preparation of the Separation during 2019. Refer to Note 1 for
further information regarding the planned transaction.
Merger transaction and integration costs
We incurred merger transaction and integration costs of $31.2 million during the first half of 2019, before the
announcement of the planned separation transaction due to the continuation of the integration activities pertaining to
combining the two legacy companies.
Other income (expense), net
Other income (expense), net, primarily reflects foreign currency gains and losses, non-recurring expenses and results of
disposals of assets. In 2019, we recognized $167.2 million of net foreign exchange losses, compared with $65.6 million of
net foreign exchange loss in the prior year period, mainly due to the devaluation of the Angolan kwanza, for which there
is no active forwards market, while in 2018 a $280 million legal provision was made.
Net interest expense
Net interest expense increased $102.1 million in 2019 compared to 2018, primarily due to the change in the fair value
of the redeemable financial liability. We revalued the mandatorily redeemable financial liability to reflect current
30 TechnipFMC
U.K. Annual Report and IFRS Financial Statements 2019 expectations about the obligation and recognized a charge of $423.5 million. See Note 26 for further information
regarding the fair value measurement assumptions of the mandatorily redeemable financial liability and related changes
in its fair value. Net interest expense in 2019, excluding the fair value measurement of the mandatorily redeemable
financial liability, increased by $1.3 million on a net basis compared to 2018.
Provision for income taxes
Our income tax provisions for 2019 and 2018 reflected effective tax rates of (12.6)% and (29.4)%, respectively. The year-
over-year change in the effective tax rate was primarily due to a decrease in the amount of tax expense associated with
deferred tax assets not recognized, the release of contingent tax accruals due to the favorable resolution of income tax
audits, and a favorable change in actual country mix of earnings, offset in part by the impact of nondeductible goodwill
impairments.
Our effective tax rate can fluctuate depending on our country mix of earnings, which may change based on changes in
the jurisdictions in which we operate.
Segment Results of Operations
Segment operating profit is defined as total segment revenue less segment operating expenses. Certain items have been
excluded in computing segment operating profit and are included in corporate items. Refer to Note 3 to our consolidated
financial statements included in this U.K. Annual Report for further information.
We report our results of operations in U.S. dollars; however, our earnings are generated in various currencies worldwide.
In order to provide worldwide consolidated results, the earnings of subsidiaries functioning in their local currencies
are translated into U.S. dollars based upon the average exchange rate during the period. While the U.S. dollar results
reported reflect the actual economics of the period reported upon, the variances from prior periods include the impact of
translating earnings at different rates.
Subsea
Year Ended
December 31,
Favorable/(Unfavorable)
(In millions, except %)
Revenue
Operating loss
2019
2018
$
5,523.4 $
4,865.6 $
(1,417.1)
(1,366.3)
$
657.8
(50.8)
Operating loss as a percent of revenue
(25.7)%
(28.1)%
%
13.5%
(3.7)%
2.4 pts
Subsea revenue increased $657.8 million year-over-year, primarily due to increased project revenue from iEPCI,
particularly projects in Asia, the North Sea and the Mediterranean that progressed towards completion, partially offset
by decreased activity in Australia. The increase of Subsea Services activity across the globe further added to the year-
over-year growth in revenue.
Subsea operating loss increased primarily due to the impairment of goodwill and property, plant and equipment. This
operating loss included $1,740.2 million of asset impairment charges primarily related to the impairment of goodwill and
property, plant and equipment compared to $1,592.0 million in 2018. Refer to Note 10 and Note 11 to our consolidated
financial statements included in this U.K. Annual Report for additional information related to these asset impairments.
31 TechnipFMC
U.K. Annual Report and IFRS Financial Statements 2019
Onshore/Offshore
Year Ended
December 31,
Favorable/(Unfavorable)
(In millions, except %)
Revenue
Operating profit
2019
2018
$
6,268.8 $
6,120.7 $
964.4
823.1
$
148.1
141.3
Operating profit as a percent of revenue
15.4%
13.4%
%
2.4%
17.2%
2.0 pts.
Onshore/Offshore revenue increased $148.1 million year-over-year. The increase was primarily driven by higher activity
Europe, Middle East, Africa and North American regions as well as our Process and Technology business. The increase
was partially offset by lower activity on Yamal LNG as the project nears completion.
Operating profit year-over-year was favorably impacted by reduced costs, strong project execution and bonus
achievements on Yamal LNG due to completion of key milestones ahead of schedule. Additionally, 2019 included $17.0
million in restructuring and other expenses.
Onshore/Offshore operating profit as a percentage of revenue increased to 15.4% compared to 2018.
Surface Technologies
(In millions, except %)
Revenue
Operating profit (loss)
Year Ended
December 31,
Favorable/(Unfavorable)
2019
2018
$
1,634.0 $
1,613.6
$
20.4
%
1.3%
(654.8)
172.7
(827.5)
(479.2)%
Operating profit (loss) as a percent of revenue
(40.1)%
10.7% %
(50.8) pts.
Surface Technologies revenue increased $20.4 million year-over-year primarily driven by increased activity in the Middle
East and Asia Pacific markets primarily driven by increased demand for drilling and completion and pressure control
equipment and services, offset by negative drilling and completions market activity in North America as customers
curbed capital spending.
Surface Technologies operating profit as a percent of revenue decreased significantly year-over-year. The decrease
was primarily due to a $708.4 million charge for impairment and restructuring and other charges, in particular related
to goodwill. This compared to a $13.8 million charge in the prior year. Refer to Note 11 to our consolidated financial
statements included in this U.K. Annual Report for additional information related to these impairments. Operating profit
was also negatively impacted by reduced demand for flowline, hydraulic fracturing services, wellhead systems and
pressure control equipment in North America, partially offset by increased demand for products and services in the
Middle East and Asia Pacific.
Surface Technologies operating profit as a percentage of revenue decreased to (40.1)% compared to 2018.
32 TechnipFMC
U.K. Annual Report and IFRS Financial Statements 2019
Corporate Items
(In millions, except %)
Corporate expense
Year Ended
December 31,
2019
$
(569.8) $
Favorable/(Unfavorable)
2018
(581.7)
$
11.9
%
2.0%
Inbound Orders and Order Backlog
Inbound orders — Inbound orders represent the estimated sales value of confirmed customer orders received during the
reporting period.
(In millions)
Subsea
Onshore/Offshore
Surface Technologies
Total inbound orders
Inbound Orders
Year Ended December 31,
2019
2018
$
7,992.6 $
13,080.5
1,619.9
5,178.5
7,425.9
1,686.6
$
22,693.0 $
14,291.0
Order backlog - Our consolidated order backlog is calculated as the estimated sales value of unfilled, confirmed customer
orders at the reporting date. See “Transaction Price Allocated to the Remaining Unsatisfied Performance Obligations” in Note
5 to our consolidated financial statements contained in this U.K. Annual Report for more information on order backlog.
(In millions)
Subsea
Onshore/Offshore
Surface Technologies
Total order backlog
Order Backlog
December 31,
2019
$
8,479.8 $
15,298.1
473.2
2018
5,999.6
8,090.5
469.9
$
24,251.1 $
14,560.0
Subsea — Order backlog for Subsea at December 31, 2019, increased by $2.5 billion from December 31, 2018. Subsea
backlog of $8.5 billion at December 31, 2019, was composed of various subsea projects, including Total Mozambique LNG
Subsea; Eni Coral and Merakes; Petrobras Mero I; Energean Karish; ExxonMobil Liza Phase 2; Neptune Duva & Giøa P1
and Seagull; Reliance MJ1; Lundin Edvard Grieg; BP Thunderhorse South Extension 2; Equinor Johan Sverdrup Phase 2 ;
Woodside Pyxis, and Husky West White Rose.
Onshore/Offshore — Onshore/Offshore order backlog at December 31, 2019, increased by $7.2 billion compared to
December 31, 2018. Onshore/Offshore backlog of $15.3 billion was composed of various projects,including Arctic LNG
2, Yamal LNG; Midor refinery expansion; BP Tortue FPSO; Long Son Petrochemicals; ExxonMobil Beaumont refinery
expansion; HURL fertilizer plants; Petronas Kasawari; Energean Karish; Neste bio-diesel expansion; and Motor Oil Hellas
New Naphta Complex.
Surface Technologies — Order backlog for Surface Technologies at December 31, 2019, increased by $3.3 million
compared to December 31, 2018. Given the short-cycle nature of the business, most orders are quickly converted into
sales revenue; longer contracts are typically converted within twelve months.
33 TechnipFMC
U.K. Annual Report and IFRS Financial Statements 2019
Non-consolidated backlog — Non-consolidated backlog reflects the proportional share of backlog related to joint
ventures that is not consolidated due to our minority ownership position.
(In millions)
Subsea
Onshore/Offshore
Total order backlog
Non-consolidated backlog
December 31,
2019
799.2 $
2,976.0
3,775.2 $
2018
974.0
1,748.5
2,722.5
$
$
Liquidity and Capital Resources
Most of our cash is managed centrally and flowed through centralized bank accounts controlled and maintained by the
Company domestically and in foreign jurisdictions to best meet the liquidity needs of our global operations.
We expect to meet the continuing funding requirements of our global operations with cash generated by such operations,
our commercial paper programs, and our existing revolving credit facility.
Net (Debt) Cash - Net (Debt) Cash is a non-IFRS financial measure reflecting cash and cash equivalents, net of debt.
Management uses this non-IFRS financial measure to evaluate our capital structure and financial leverage. We believe net
debt, or net cash, is a meaningful financial measure that may assist investors in understanding our financial condition and
recognizing underlying trends in our capital structure. Net (debt) cash should not be considered an alternative to, or more
meaningful than, cash and cash equivalents as determined in accordance with IFRS or as an indicator of our operating
performance or liquidity.
The following table provides an IFRS reconciliation of our cash and cash equivalents to net (debt) cash, utilizing details of
classifications from our consolidated statements of financial position:
(In millions)
Cash and cash equivalents
Short-term debt and current portion of long-term debt
Long-term debt, less current portion
Lease liabilities
Net (debt) cash
December 31,
2019
December 31,
2018
$
5,190.1 $
5,542.2
(2,462.2)
(2,013.2)
(956.8)
$
(242.1) $
(1,983.5)
(2,208.2)
(337.8)
1,012.7
34 TechnipFMC
U.K. Annual Report and IFRS Financial Statements 2019
Cash Flows
Cash flows for each of the years in the two-year period ended December 31, 2019 and 2018, were as follows:
(In millions)
Cash provided (required) by operating activities
Cash provided (required) by investing activities
Cash required by financing activities
Effect of exchange rate changes on cash and cash equivalents
Year Ended December 31,
2019
$
1,182.1 $
(419.8)
(1,120.2)
5.8
2018
(182.3)
(460.2)
(444.8)
(108.0)
Increase (decrease) in cash and cash equivalents
$
(352.1) $
(1,195.3)
Operating cash flows – During 2019, we generated $1,182.1 million in cash flows from operating activities as compared to
$182.3 million used in 2018, resulting in a $1,364.4 million increase compared to 2018. 65.9% of the annual operating cash
flow was generated in the fourth quarter, primarily due to timing differences on project milestones and vendor payments.
Investing cash flows – Investing activities used $419.8 million and $460.2 million of cash in 2019 and 2018, respectively.
The decrease in cash used by investing activities was primarily due to proceeds from repayment of advance to joint
venture of $62.0 million, decrease in cash used for acquisitions, partially offset by increased capital expenditures and
payment to acquire debt securities in 2019. In 2019, we purchased a deepwater dive support vessel, Deep Discoverer,
that was subsequently funded through a sale-leaseback transaction.
Financing cash flows – Financing activities used $1,120.2 million and $444.8 million in 2019 and 2018, respectively.
The increase of $675.4 million in cash required for financing activities was primarily due to increased settlement of
mandatorily redeemable financial liability, increased payments for the principal portion of lease liabilities, and decreased
borrowings of commercial paper, partially offset by decreased purchases of treasury stock in 2019.
Debt and Liquidity
Total borrowings at December 31, 2019 and 2018, comprised the following:
(In millions)
Commercial paper
Synthetic bonds due 2021
3.45% Senior Notes due 2022
5.00% Notes due 2020
3.40% Notes due 2022
3.15% Notes due 2023
3.15% Notes due 2023
4.00% Notes due 2027
4.00% Notes due 2032
3.75% Notes due 2033
Bank borrowings
Finance lease
Other
Total borrowings
35 TechnipFMC
Year Ended December 31,
2019
2018
$
1,967.0 $
1,916.1
491.7
500.0
224.4
168.4
145.4
140.2
84.2
108.6
109.2
513.3
956.8
23.0
488.8
500.0
228.4
171.6
148.1
142.9
85.8
110.5
111.1
265.2
337.8
23.2
$
5,432.2 $
4,529.5
U.K. Annual Report and IFRS Financial Statements 2019
The following is a summary of our revolving credit facility at December 31, 2019:
(In millions)
Description
Amount
Debt
Outstanding
Commercial
Paper
Outstanding
(a)
Letters of
Credit
Unused
Capacity
Maturity
Five-year revolving
credit facility
$
2,500.0 $ —
$
1,967.0 $ —
$
533.0
January 2023
(a) Under our commercial paper program, we have the ability to access up to $1.5 billion and €1.0 billion of financing through our commercial paper
dealers. Our available capacity under our revolving credit facility is reduced by any outstanding commercial paper.
Committed credit available under our revolving credit facility provides the ability to issue our commercial paper
obligations on a long-term basis. We had $1,967.0 million of commercial paper issued under our facilities at December 31,
2019.
Our revolving credit facility contains customary covenants as defined by the credit facility agreement which includes
a financial covenant requiring that our total capitalization ratio not exceed 60% at the end of any financial quarter. The
facility agreement also contains covenants restricting our ability and our subsidiaries ability to incur additional liens and
indebtedness, enter into asset sales, make certain investments. As of December 31, 2019, we were in compliance with all
restrictive covenants under our revolving credit facility.
Refer to Note 19 and Note 22 to the consolidated financial statements contained in this U.K. Annual Report for further
information related to our credit facility and our mandatorily redeemable liability, respectively.
Credit Risk Analysis
For the purposes of mitigating the effect of the changes in exchange rates, we hold derivative financial instruments.
Valuations of derivative assets and liabilities reflect the fair value of the instruments, including the values associated with
counterparty risk. These values must also take into account our credit standing, thus including in the valuation of the
derivative instrument and the value of the net credit differential between the counterparties to the derivative contract.
Adjustments to our derivative assets and liabilities related to credit risk were not material for any period presented.
We use the income approach as the valuation technique to measure the fair value of foreign currency derivative
instruments on a recurring basis. This approach calculates the present value of the future cash flow by measuring the
change from the derivative contract rate and the published market indicative currency rate, multiplied by the contract
notional values. Credit risk is then incorporated by reducing the derivative’s fair value in asset positions by the result
of multiplying the present value of the portfolio by the counterparty’s published credit spread. Portfolios in a liability
position are adjusted by the same calculation; however, a spread representing our credit spread is used. Our credit
spread, and the credit spread of other counterparties not publicly available are approximated by using the spread of
similar companies in the same industry, of similar size and with the same credit rating.
At this time, we have no credit-risk-related contingent features in our agreements with the financial institutions that
would require us to post collateral for derivative positions in a liability position.
Additional information about credit risk is incorporated herein by reference to Note 26 and Note 29 to the consolidated
financial statements contained in this U.K. Annual Report.
Outlook
Historically, we have generated our liquidity and capital resources primarily through operations and, when needed,
through our credit facility. We have $533.0 million of capacity available under our revolving credit facility that we expect
to utilize if working capital needs temporarily increase. The volatility in credit, equity and commodity markets creates
36 TechnipFMC
U.K. Annual Report and IFRS Financial Statements 2019
some uncertainty for our business. Any payment deferrals or discounts on pricing granted to clients in prior years may
adversely affect our results of operations and cash flows in 2020 and beyond.
We project spending approximately $450 million in 2020 for capital expenditures. However, projected capital
expenditures for 2020 do not include any contingent capital that may be needed to respond to a contract award.
We implemented a U.K. court-approved reduction of our capital, which was completed on June 29, 2017, in order to
create distributable profits to support the payment of future dividends or future share repurchases. Our board of
directors authorized $500 million for the repurchase of shares which was completed in 2018. The Board of Directors
authorized an extension of this program, adding $300 million in December 2018 for a total of $800 million in ordinary
shares.
During 2020, we expect to make contributions of approximately $6.9 million to our international pension plans,
representing primarily the Netherlands qualified pension plans and U.K qualified pension plans. Actual contribution
amounts are dependent upon plan investment returns, changes in pension obligations, regulatory environments and
other economic factors. We update our pension estimates annually during the fourth quarter or more frequently upon
the occurrence of significant events. We do not expect to make any contributions to our U.S. Qualified Pension Plan and
our U.S. Non-Qualified Defined Benefit Pension Plan in 2020.
Prior to the filing of this document and consequent to the balance sheet date of December 31, 2019, there has been a
decline in oil prices and uncertainty in the economy triggered by certain global events in 2020. It is too early to quantify
the impact of this, however the Company will continue to monitor the ongoing events and the implications for existing
forecasts. We enter this period with solid backlog and significant revenue coverage for 2020, however our business is
subject to oil and gas price volatility.
Market Risk
We are subject to financial market risks, including fluctuations in foreign currency exchange rates and interest rates. In
order to manage and mitigate our exposure to these risks, we may use derivative financial instruments in accordance
with established policies and procedures. We do not use derivative financial instruments where the objective is to
generate profits solely from trading activities. At December 31, 2019 and December 31, 2018, substantially all of our
derivative holdings consisted of foreign currency forward contracts and foreign currency instruments embedded in
purchase and sale contracts.
These forward-looking disclosures only address potential impacts from market risks as they affect our financial
instruments and do not include other potential effects that could impact our business as a result of changes in foreign
currency exchange rates, interest rates, commodity prices or equity prices.
Foreign Currency Exchange Rate Risk
We conduct operations around the world in a number of different currencies. Many of our significant foreign subsidiaries
have designated the local currency as their functional currency. Our earnings are therefore subject to change due to
fluctuations in foreign currency exchange rates when the earnings in foreign currencies are translated into U.S. dollars.
We do not hedge this translation impact on earnings. A 10% increase or decrease in the average exchange rates of all
foreign currencies at December 31, 2019, would have changed our revenue and income before income taxes attributable
to TechnipFMC by approximately $140.6 million and $5.5 million, respectively.
When transactions are denominated in currencies other than our subsidiaries’ respective functional currencies, we
manage these exposures through the use of derivative instruments. We primarily use foreign currency forward contracts
to hedge the foreign currency fluctuation associated with firmly committed and forecasted foreign currency denominated
payments and receipts. The derivative instruments associated with these anticipated transactions are usually designated
and qualify as cash flow hedges, and as such the gains and losses associated with these instruments are recorded in
other comprehensive income until such time that the underlying transactions are recognized. Unless these cash flow
37 TechnipFMC
U.K. Annual Report and IFRS Financial Statements 2019
contracts are deemed to be ineffective or are not designated as cash flow hedges at inception, changes in the derivative
fair value will not have an immediate impact on our results of operations since the gains and losses associated with these
instruments are recorded in other comprehensive income. When the anticipated transactions occur, these changes in
value of derivative instrument positions will be offset against changes in the value of the underlying transaction. When
an anticipated transaction in a currency other than the functional currency of an entity is recognized as an asset or
liability on the balance sheet, we also hedge the foreign currency fluctuation of these assets and liabilities with derivative
instruments after netting our exposures worldwide. These derivative instruments do not qualify as cash flow hedges.
Occasionally, we enter into contracts or other arrangements containing terms and conditions that qualify as embedded
derivative instruments and are subject to fluctuations in foreign exchange rates. In those situations, we enter into
derivative foreign exchange contracts that hedge the price or cost fluctuations due to movements in the foreign exchange
rates. These derivative instruments are not designated as cash flow hedges.
For our foreign currency forward contracts hedging anticipated transactions that are accounted for as cash flow hedges,
a 10% increase in the value of the U.S. dollar would have resulted in an additional loss of $83.8 million in the net fair
value of cash flow hedges reflected in our consolidated balance sheet at December 31, 2019.
Interest Rate Risk
At December 31, 2019, we had commercial paper of approximately $2.0 billion with a weighted average interest rate of
1.41%. Using sensitivity analysis to measure the impact of a 10% adverse movement in the interest rate, or eighteen basis
points, would result in an increase to interest expense of $2.8 million.
We assess effectiveness of forward foreign currency contracts designated as cash flow hedges based on changes in fair
value attributable to changes in spot rates. We exclude the impact attributable to changes in the difference between
the spot rate and the forward rate for the assessment of hedge effectiveness and recognize the change in fair value of
this component immediately in earnings. Considering that the difference between the spot rate and the forward rate is
proportional to the differences in the interest rates of the countries of the currencies being traded, we have exposure in
the unrealized valuation of our forward foreign currency contracts to relative changes in interest rates between countries
in our results of operations. To the extent any one interest rate increases by 10% across all tenors and other countries’
interest rates remain fixed, and assuming no change in discount rates, we would expect to recognize a decrease of $0.5
million in unrealized earnings in the period of change. Based on our portfolio as of December 31, 2019, we have material
positions with exposure to interest rates in the United States, Canada, Australia, Brazil, the United Kingdom, Singapore,
the European Community, and Norway.
38 TechnipFMC
U.K. Annual Report and IFRS Financial Statements 2019 Corporate Responsibility and Sustainability –
Non-financial Information Statement
We are a global leader in oil and gas projects, technologies, systems, and services and provide our clients deep expertise
across subsea, onshore/offshore, and surface projects. Our vision to enhance the performance of the world’s energy
industry is supported by a relentless drive of every individual at TechnipFMC.
Our decisions regarding corporate responsibility, governance, and sustainability are founded on the principles that guide our
Company. Our core values provide the framework for all of our decision making and are based on our Foundational Beliefs.
Core Values and Foundational Beliefs
Our core values are the drivers that guide how we act in a distinctly TechnipFMC way, so we can deliver on our purpose
and achieve our vision. We bring our values to life through our behaviors—specific, observable, and measurable actions.
Our Core Values
The Heart of
Everything We Do
Realizing Possibilities
Achieving Together
Building Trust
` We strive for ever
better
` We take initiative
` We learn from success
and failure
` We work as one team
` We listen to improve
` We share knowledge
` We partner
` We embrace diversity of
constructively
thought
` We seek to outperform
39 TechnipFMC
U.K. Annual Report and IFRS Financial Statements 2019 Our Foundational Beliefs are the cornerstone of our values that describe how we fundamentally do business and what
we never compromise on, no matter the circumstances.
Safety
Respect
We will not
compromise on health,
safety, and security.
We treat everyone
honestly, fairly, and
courteously.
Integrity
Sustainability
We hold ourselves to
the highest moral and
ethical principles.
Quality
We deliver the
highest quality in
everything we do.
We act responsibly,
always considering our
impact on the planet,
people, and communities
in which we operate.
Code of Business Conduct
Our Code of Business Conduct is built on our Foundational Beliefs and gives our directors, officers, and employees
a common language and playbook for decisions and actions that help us live our core values. We are committed to
establishing and maintaining an effective compliance program that is intended to increase the likelihood of preventing,
detecting, and correcting violations of Company policy and the law. Moreover, we have a hotline in place for employees,
officers, directors, and external parties to anonymously report violations of our Code of Business Conduct or complaints
regarding accounting and auditing practices. Reports of possible violations of financial or accounting policies are reported
to our Audit Committee.
We will disclose amendments to, or waivers of, our Code of Business Conduct that are required to be disclosed under
the U.S. Securities and Exchange Commission (“SEC”) and NYSE rules or any other applicable laws, rules, and regulations.
Any waiver of our Code of Business Conduct for our officers and directors must be approved by the Board or a relevant
Board committee. We have not made any such waivers, and do not anticipate making any such waiver.
40 TechnipFMC
U.K. Annual Report and IFRS Financial Statements 2019 Sustainability
We believe corporate responsibility and sustainability is a key element of our Company’s long-term success and is,
therefore, one of our Foundational Beliefs. To ensure that the Company is collectively focused on making meaningful and
tangible changes, we have focused our sustainability efforts under three pillars.
Corporate
Responsibility &
Sustainability Pillars
Supporting Communities
Advancing
Gender Diversity
Respecting the
Environment
Main Objectives
We make a long-term
positive impact in the
communities where we
live and work through
active engagement in
health, education, and local
employment
We create an
environment that
encourages everyone to
reach their full potential
We develop solutions and
operations to minimize
carbon intensity and the
impact on the planet
` Go beyond our
` Ensure gender pay
` Reduce the carbon
commercial obligations
to create in-country
value through initiatives
in health, education, and
local employment
` Enable employees to
volunteer and support
initiatives
` Support and develop
Science. Technology,
Engineering, and Math
(STEM) initiatives
equity everywhere we
operate
footprint of our facilities,
products, and solutions
` Improve gender balance
in the organization,
across all functions and
levels
` Promote women fairly
and equally through
the career development
process
` Provide the carbon
footprint of all our
deliverables to clients
through conceptual
studies
` Set up an internal
carbon price for
the entire Company,
projects, and operations
to impact investment
decisions
Each year, we set key performance targets for each of these pillars and report our performance against these targets to
our Board and other stakeholders. In addition to these annual objectives, the Company demonstrates its commitment in
other ways.
For instance, in 2019, TechnipFMC reaffirmed its support of the Ten Principles of the United Nations (UN) Global Compact
in the areas of Human Rights, Labor, Environment, and Anti-Corruption. The UN Global Compact requires an annual
Communication on Progress, which is submitted and made publicly available on the UN Global Compact website.
41 TechnipFMC
U.K. Annual Report and IFRS Financial Statements 2019 Additionally, our Code of Business Conduct requires that we, among other things:
` Design sustainable development initiatives with a focus on long-term added value
` Engage with local communities impacted by our activities in close coordination with our clients and contribute to
social and economic self-sustainability
` Anticipate and minimize potential disruptions to the community
` Mitigate any negative impacts to local communities from our activities
` Contribute to local employment growth by fostering training and transfer of skills and technology
` Respect local cultures and be aware of local practices and traditions, legislation, and cultural factors that may impact
behaviors and decisions
Our Code of Business Conduct also covers many sustainability issues, from fair employment practices and equal
opportunity to Health, Safety, and Environment (“HSE”), human rights, and community involvement. We also have a
Quality, Health, Safety, Environment and Security (“QHSES”) program aimed at preventing accidents and incidents,
ensuring personal and corporate accountability, and simplifying practices and processes across our Company. Backed by
our Foundational Beliefs, our HSE and QHSES teams create a culture of engagement to develop the leadership behaviors
that deliver enhanced performance and business results. For example, the Company is a proud member of Building
Responsibly — an industry-led collaborative initiative enabling construction and engineering companies to collaborate
around their shared values, advance their compliance programs, and agree on common approaches regarding worker
welfare and human rights. We are specifically advancing compliance in recruitment, working conditions, and supply
chain practices. In addition, we have a specific Environmental Working Group (“EWG”) that reports to the Company’s
Corporate HSE team and coordinates a network of environmental specialists from all of our business units. The EWG sets
environmental programs, supports the enhancement of environmental performance, and develops global environmental
initiatives involving all of our assets and projects.
42 TechnipFMC
U.K. Annual Report and IFRS Financial Statements 2019 Supporting Communities
Supporting Communities is our first
sustainability pillar. Our Code of Business
Conduct encourages employees to engage
with local communities where we live
and work, to contribute to their social
and economic self-sustainability, and to
ensure that TechnipFMC is a responsible
corporate citizen in our communities. It is the
foundation of that responsibility that forges
our commitment to local communities.
Supporting Communities – Objectives
TechnipFMC supports and encourages its employees to volunteer and support their community development
programs in line with our Code of Business Conduct and our Supporting Communities pillar, whose objectives include
the following:
` Go beyond our commercial
obligations to create in-country
value through initiatives in health,
education, and local employment
` Support and develop initiatives
related to Science, Technology,
Engineering, and Mathematics
(“STEM”)
` Enable employees to volunteer
and support initiatives
43 TechnipFMC
U.K. Annual Report and IFRS Financial Statements 2019
Go beyond our commercial obligations to create in-country value
Overall, in 2019, 346 initiatives were organized in 33 countries
where TechnipFMC operates, which is a significant increase from 245
initiatives in 27 countries in 2018. Employees spent approximately
26,500 volunteer hours in 2019 creating in-country value through
actions in health, education, STEM, local employment, environment,
gender diversity, and other relevant and impactful local issues.
Examples of initiatives launched or continued in 2019 in several
countries are described below.
Support and develop STEM initiatives
In 2019, we focused on topics related to STEM and 58 initiatives were
organized in 17 countries, which was a significant increase from 14
initiatives in eight countries in 2018.
Our target of having at least one STEM initiative in each Company
entity with more than 300 employees will be achieved by the end of
the first quarter 2020. Initiatives developed in 2019 could be grouped
in three main areas: working with schools and/or organizations to
promote STEM for children, promoting STEM careers for students and
young professionals, and promoting STEM for employees’ children.
Enable employees to volunteer and support initiatives
In 2019, we launched our global volunteering program, iVolunteer,
that enables employees to support initiatives in the communities
where they live and work. The key purpose is to have a positive,
tangible, and collective impact on these communities.
iVolunteer allows entities and countries to develop volunteering
initiatives to further engage employees. Globally, approximately
12,650 of our employees participated in local initiatives and spent
approximately 26,500 hours volunteering in 2019, which is over
double the 10,000 hours volunteered in 2018.
44 TechnipFMC
2018201920182019050100150200250300350050001000015000200002500030000245in 27 countries10,000hours volunteered346in 33 countries26,500hours volunteered Increasing the numberof community initiatives58employees volunteered in 2019 (vs. 2,600 in 2018)of entities with >300 employees in 2019 had STEM initiativesSTEM initiativesaround the world (vs 14 in 2018)96%12,650iVolunteer launched in 20192018201920182019050100150200250300350050001000015000200002500030000245in 27 countries10,000hours volunteered346in 33 countries26,500hours volunteered Increasing the numberof community initiatives58employees volunteered in 2019 (vs. 2,600 in 2018)of entities with >300 employees in 2019 had STEM initiativesSTEM initiativesaround the world (vs 14 in 2018)96%12,650iVolunteer launched in 20192018201920182019050100150200250300350050001000015000200002500030000245in 27 countries10,000hours volunteered346in 33 countries26,500hours volunteered Increasing the numberof community initiatives58employees volunteered in 2019 (vs. 2,600 in 2018)of entities with >300 employees in 2019 had STEM initiativesSTEM initiativesaround the world (vs 14 in 2018)96%12,650iVolunteer launched in 2019U.K. Annual Report and IFRS Financial Statements 2019 Below are some examples of our outreach in our communities in 2019:
United States
United Kingdom
We participate regularly in numerous events, including Women’s Initiative Day of Caring,
Target Hunger Day of Caring, and the Veterans Program. Other initiatives include being part
of the Houston Heart Walk, an annual fundraising event dedicated to spreading awareness
about health, and being a sponsor for the Energy Day Festival to promote the STEM fields
for thousands of local schoolchildren.
Our volunteers have raised funds for, and partner with, local and national charities chosen
by employees, including the Scotland Animal Welfare Charity, Chest, Heart and Stroke
Scotland, Charlie House, Kayleighs Wee Stars, and Alzheimer Scotland. We also support
events and network with other organizations that promote health, welfare, education, and
diversity.
TechnipFMC in France supports the non-profit organization, Elles Bougent (Girls on the
Move). Elles Bougent promotes gender diversity in STEM, as well as more accessibility to
young female students in technical and industrial careers. We also arrange for the collection
of clothes, books, and toys in Paris for donation to local charities for children, the homeless,
and vulnerable families. TechnipFMC also makes donations to schools and associations in
France to finance educational programs. Moreover, since 2018, our employees participated
in the Enfants sans Cancer (Children without Cancer) city race to raise funds and awareness
for this cause.
In Brazil, we engage in a series of social and environmental programs involving
underprivileged children and young students from neighboring communities to help
them become better citizens and have equal opportunities. Also, in 2019, our volunteers
organized a beach cleaning activity in Rio de Janeiro where half a ton of garbage was
collected.
In Colombia, we promote the respect of human rights of vulnerable populations through
workshops, donations, and assistance, particularly the recyclers, street vendors, and
homeless communities near our Bogota office.
Since 2018, our employees in Norway have participated in city walks, as part of our
iVolunteer program, to raise money for local charities of employees’ choice, including
children’s support charities, mental health charities, local hospitals, and charitable sports
organizations.
France
Brazil
Colombia
Norway
45 TechnipFMC
U.K. Annual Report and IFRS Financial Statements 2019 TechnipFMC in Italy, in collaboration with Technical School Enrico Fermi based in Rome, is
involved in the Alternanza Scuola-Lavoro (Education-Work Rotation) project. Our Rome
Operating Center is committed to deliver 400 individual hours of on-the-job training to 11
students on our premises. This collaboration enriches school programs with energy sector
experience focused on oil and gas, enabling students to better understand the added value
offered by working in our industry and at TechnipFMC.
In India, our impact-driven sustainable initiative, Seed of Hope, benefitted more than 10,000
lives by enabling STEM education for girls, skill development workshops for youth, and
sponsoring school fees for underprivileged children. We have also installed 100 biogas units
in a rural area and plastic recycling units to minimize our carbon footprint. Our commitment
towards community well-being and UN Sustainable Development Goals has been recognized
by the Ministry of Corporate Affairs with a National CSR Award 2019, conferred by the
Honorable, President of India.
In Malaysia, we adopted four schools under the PINTAR School Adoption program, targeted
at underprivileged schools with poor academic performance and students of lower
socioeconomic status. Our TechnipFMC school adoption initiative dates back to 2011, and
the initiative has helped approximately 500 students, equipping them with the necessary
knowledge and skills through creative, innovative, and mentally stimulating teaching
methods.
Our “Share to Care” campaign in Indonesia included the adoption of a home that houses
farmers’ children and abandoned kids. This long-term program aims to provide the
program’s children with education, training, and internships to sustain themselves. Currently,
one child is interning in our Jakarta office, while another is interning in our Cakung
manufacturing plant.
In March 2019, tropical cyclone Idai devastated Mozambique. Large parts of the country’s
second largest city, Beira, were damaged, and entire villages and towns completely flooded.
TechnipFMC donated $100,000 to assist disaster relief and recovery efforts. The funds
helped with ongoing rescue efforts by the Red Cross and helped provide shelter and basic
commodities for victims. Our employees also volunteered to work at the Maputo Bay to
pack emergency relief kits that were sent to the communities impacted by the cyclone.
Italy
India
Malaysia
Indonesia
Mozambique
46 TechnipFMC
U.K. Annual Report and IFRS Financial Statements 2019 Advancing Gender Diversity
Advancing Gender Diversity is our second
sustainability pillar, and we believe it is not
only a matter of responsibility, but also a
business imperative for our success. We do
not tolerate unlawful discrimination related
to employment, and our Code of Business
Conduct requires that employment decisions
related to recruitment, selection, evaluation,
compensation, and development, among
others, are not influenced by race, color,
religion, gender, age, ethnic origin, nationality,
sexual orientation, marital status, or disability.
We also ensure that our suppliers, customers,
and business partners are aware of our goal
of creating a diverse and tolerant workforce.
In the first quarter of 2018, we developed
a global framework and key performance
indicators for 2018 and beyond to promote
and accelerate the development of women in
all functions of our global organization
Advancing Gender Diversity – Objectives
Our Advancing Gender Diversity objectives include the following:
` Ensure gender pay equity
everywhere we operate and review
all jobs to ensure gender pay equity
and monitor them through a full
review every three years
` Improve gender balance in
the organization, across all
functions and levels
` Promote women fairly and
equally through the career
development process
47 TechnipFMC
U.K. Annual Report and IFRS Financial Statements 2019
Ensure gender pay equity
In 2018, we reviewed 100% of our Company job functions to ensure
pay equity. We identified areas for improvement and completed all
necessary salary adjustments in 2019 to ensure fair compensation
for all of our employees. A job review and any necessary adjustments
will be performed every three years to ensure that no pay gaps arise.
100%
of jobs reviewed to
ensure pay equity;
salary adjustments
completed in 2019
Top 2019 initiatives:
The launch of “Diversity
& Inclusion – it Matters!”
learning module
Diversity in STEM:
7 employee resource groups
(ERG) with ~1,800 members
36%
22%
57.23%
Diversity in STEM:
7 employee resource groups
(ERG) with ~1,800 members
70%
of executive
officers in 2019
were women
(vs. 27% in 2018)
of senior managers
in 2019 were women
(vs. 15% in 2018)
23%
women employees
in 2019
(vs. 22% in 2018)
of succession plans
include one woman
(vs. 35% in 2018)
100%
Improve gender balance
Top 2019 initiatives:
% of women by segment
100%
of jobs reviewed to
ensure pay equity;
salary adjustments
completed in 2019
In 2019, to foster a diverse and inclusive culture, the Company
launched its “Diversity & Inclusion — it Matters!” e-learning module
with an aim to raise awareness of our differences and help our
employees improve as people and professionals.
of jobs reviewed to
ensure pay equity;
salary adjustments
completed in 2019
Top 2019 initiatives:
The launch of “Diversity
& Inclusion – it Matters!”
learning module
Global Functions
Diversity in STEM:
Top 2019 initiatives:
7 employee resource groups
The launch of “Diversity
(ERG) with ~1,800 members
& Inclusion – it Matters!”
learning module
Other
21.90%
25%
Onshore/Offshore
EMS
19.98%
100%
36%
% of women by segment
of jobs reviewed to
ensure pay equity;
salary adjustments
57.23%
completed in 2019
The launch of “Diversity
Our Company also fosters Employee Resource Groups (“ERGs”), which
& Inclusion – it Matters!”
are voluntary, employee-led focus groups dedicated to a diverse
learning module
and inclusive work environment. We currently have seven active
Global Functions
ERGs with approximately 1,800 members in the United States, the
United Kingdom, and Brazil, covering Diversity in STEM, Mothers
Network, Black Organization for Leadership & Development, Young
25%
Professionals Group, Military Veterans & Friends Network, and
EMS
21.90%
Handicap Inclusion.
% of women by segment
Subsea
of executive
officers in 2019
were women
(vs. 27% in 2018)
57.23%
70%
36%
% of women by segment
Onshore/Offshore
Onshore/Offshore
Global Functions
15.75%
19.98%
21.90%
Other
Other
25%
EMS
Onshore/Offshore
10.85%
Our ambition is to encourage participation in ERGs throughout the
Surface
Global Functions
whole Company. ERGs discuss and promote topics related to diversity
and inclusion, develop and organize workshops internally and
externally, support local initiatives, and propose actions to improve
0.1
accessibility and inclusivity for all at the workplace.
19.98%
25%
0.3
21.90%
Surface
0.6
10.85%
15.75%
57.23%
Subsea
Other
EMS
0.4
0.2
0.3
0.0
0.0
0.1
0.2
0.4
70%
19.98%
of executive
of succession plans
officers in 2019
include one woman
were women
(vs. 35% in 2018)
(vs. 27% in 2018)
As of December 31, 2019, TechnipFMC had the following number of employees:
Subsea
15.75%
Surface
10.85%
23%
22%
70%
0.6
23%
0.0
0.1
0.2
Male Employees
0.3
0.6
0.4
of succession plans
include one woman
(vs. 35% in 2018)
Total
Female
Employees
women employees
in 2019
(vs. 22% in 2018)
% of Female
Employees
Subsea
15.75%
Surface
22%
36%
Diversity in STEM:
7 employee resource groups
10.85%
(ERG) with ~1,800 members
of senior managers
of executive
in 2019 were women
0.0
0.2
officers in 2019
(vs. 15% in 2018)
were women
(vs. 27% in 2018)
0.1
0.4
0.3
22%
0.6
of senior managers
in 2019 were women
(vs. 15% in 2018)
23%
women employees
of senior managers
in 2019
in 2019 were women
(vs. 22% in 2018)
of succession plans
(vs. 15% in 2018)
include one woman
(vs. 35% in 2018)
women employees
in 2019
(vs. 22% in 2018)
Executive officers
Senior managers
Employees on payroll
(overall)
2018
2019
2018
2019
2018
2019
2018
2019
8
98
7
84
3
17
4
24
11
115
11
108
28,987
28,760
8,157
8,407
37,144
37,167
27%
15%
22%
36%
22%
23%
48 TechnipFMC
U.K. Annual Report and IFRS Financial Statements 2019 100%
of jobs reviewed to
ensure pay equity;
salary adjustments
completed in 2019
Top 2019 initiatives:
The launch of “Diversity
& Inclusion – it Matters!”
learning module
Diversity in STEM:
7 employee resource groups
(ERG) with ~1,800 members
% of women by segment
Global Functions
Onshore/Offshore
36%
22%
of executive
officers in 2019
were women
(vs. 27% in 2018)
57.23%
of senior managers
in 2019 were women
(vs. 15% in 2018)
25%
Top 2019 initiatives:
100%
Other
Promote women fairly and equally
21.90%
Continuous discussions around improving representation of women
The launch of “Diversity
19.98%
of jobs reviewed to
& Inclusion – it Matters!”
in the organization helps us promote women fairly and equally
ensure pay equity;
learning module
throughout their career development process within our Company. In
salary adjustments
2019, our People and Culture team reviewed all senior management
completed in 2019
succession plans to ensure that female candidates were considered
0.3
and included. As a result, 70% of our succession plans in 2019 include
at least one woman, which is a significant increase from 35% in 2018.
Surface
10.85%
15.75%
Subsea
EMS
0.4
0.2
0.1
0.0
100%
36%
57.23%
of executive
of jobs reviewed to
officers in 2019
ensure pay equity;
were women
salary adjustments
(vs. 27% in 2018)
completed in 2019
70%
Diversity in STEM:
7 employee resource groups
(ERG) with ~1,800 members
of succession plans
include one woman
(vs. 35% in 2018)
0.6
Top 2019 initiatives:
22%
The launch of “Diversity
& Inclusion – it Matters!”
learning module
of senior managers
in 2019 were women
(vs. 15% in 2018)
23%
women employees
in 2019
(vs. 22% in 2018)
Diversity in STEM:
7 employee resource groups
(ERG) with ~1,800 members
70%
% of women by segment
Global Functions
of succession plans
include one woman
(vs. 35% in 2018)
57.23%
25%
21.90%
19.98%
23%
36%
70%
0.0
0.1
0.2
0.3
Onshore/Offshore
0.4
0.6
Other
EMS
22%
women employees
of executive
in 2019
officers in 2019
(vs. 22% in 2018)
were women
(vs. 27% in 2018)
of senior managers
in 2019 were women
(vs. 15% in 2018)
23%
women employees
in 2019
(vs. 22% in 2018)
of succession plans
include one woman
(vs. 35% in 2018)
% of women by segment
Global Functions
Onshore/Offshore
Other
EMS
25%
21.90%
19.98%
Subsea
15.75%
Surface
10.85%
Subsea
15.75%
Surface
10.85%
0.0
0.1
0.2
0.3
0.4
0.6
49 TechnipFMC
U.K. Annual Report and IFRS Financial Statements 2019 Respecting the Environment
Respecting the Environment is the third of
our three sustainability pillars. We believe
our environmental responsibility requires
us to operate in a manner that minimizes
the impact of our operations on the
environment, develop sustainable solutions
to reduce carbon emissions within our overall
environmental footprint, and avoid any
environmental incidents in our operations
and activities.
Respecting the Environment – Objectives
Our Respecting the Environment objectives include the following:
` Reduce the carbon footprint of our
facilities, products, and solutions and
reduce our greenhouse gas emissions
` Provide the carbon
footprint of all our
deliverables to clients
` Establish an internal carbon price for
the entire Company, including projects
and operations, to inform and impact
investment decisions
50 TechnipFMC
U.K. Annual Report and IFRS Financial Statements 2019 Reduce our carbon footprint
TechnipFMC is committed to reducing carbon emissions and its
overall environmental footprint by developing new, innovative, and
sustainable solutions in the oil and gas market. In 2019, the Company
adopted a Global Greenhouse Gas Management standard to enhance
the Company’s capabilities in greenhouse gas (“GHG”) reduction in
the Company’s business. In 2019, total GHG emissions decreased by
27% from 643,469 tons of CO2 equivalent in 2018 to 469,955 tons of
CO2 equivalent in 2019. The reduction is mainly linked to the closure
of important engineering, procurement, and construction (“EPC”)
projects that completed the energy consuming phases in the first
quarter of 2019.
In addition to our efforts in reducing our carbon emissions within our
operations, TechnipFMC is also working to ensure our next generation
of products are less carbon intensive. For example, our Subsea 2.0TM
design included a lifecycle GHG analysis that demonstrated how
our innovations for the production of trees may allow up to a 46%
reduction in our carbon footprint as compared to the previous design.
Moreover, a comprehensive Carbon Footprint Training Program was
also launched by the Company’s HSE department for all business
levels and projects. As of December 31, 2019, over 30 training
sessions for engineers and managers had been delivered in key
Company locations. This program is focusing on extended knowledge
transfer, from the lifecycle perspective, and carbon footprint concepts
to empower engineers in the implementation of a complete GHG
analysis for all business lines and to increase managers’ competencies
on the reduction of our carbon footprint at any company level.
30+
Carbon Footprint Training
sessions in 2019 for
engineers and managers
51 TechnipFMC
030000060000090000012000001500000TotalScope 2Scope 1-4.9%676,651643,469469,95520172018tons CO2 equivalent2019-27%Conceptual StudiesIn 2019, work started for • Onshore/Offshore (Genesis): Ultra Front End Suite • Subsea: Subsea Studio (Front End) – Methodology on-going In 2020A carbon footprint module will be implemented in both onshore/offshore and subsea conceptual studies.Greenhouse Gas Emissions Internal Carbon Price A 4-phase study(cid:31) 1. Benchmarking analysis (cid:31) 2. Definition of the mechanism(cid:31) 3. Case study (TMOS: vessel - hybrid battery) 4. Roadmap 2020: Refine recommendations• Price level, scope and boundaries• Incorporation in financial analysis• Governance rules.U.K. Annual Report and IFRS Financial Statements 2019 The annual quantity of GHG emissions measured in tons of CO2 equivalent resulting from activities for which the
Company is responsible and has operational control, is described in the table below:
Total GHG Emissions
(in metric tons CO2 equivalent)
Direct emissions
Scope 1
Indirect emissions
Scope 2
Direct emissions
Scope 1
Indirect emissions
Scope 2
2018
2019
Our Assets
Industrial sites
Fleet
Offices
Our Projects
including Construction sites and
Yards/Bases:
Onshore/Offshore
Subsea
Other
GHG Emissions by Scope
Total GHG Emissions
254,535
10,968
242,117
1,450
60,401
40,778
21
19,602
283,545
9,701
272,292
1,551
39,932
21,375
0
18,558
319,523
9,010
132,572
13,906
284,055
29,658
5,810
574,058
3,898
2,840
2,272
69,411
51,780
76,023
4,769
416,117
9,128
2,873
1,905
53,838
643,469
469,955
To ease yearly comparison and trend analysis, industrial sites, offices, and fleet are presented under Our Assets,
being TechnipFMC’s permanent sites fully owned and operationally managed. Construction sites and Yards/Bases are
aggregated under Our Projects and presented separately as they are usually temporary sites that are not owned by
TechnipFMC but operationally managed during the construction phase. They are subject to important variations from one
year to another, depending on the number and type of ongoing projects and the type of construction activities (e.g., early
site work, civil work, construction, pre-commissioning, commissioning, or start-up).
Within our Assets, Scope 1, direct emissions (“Scope 1”), increased minimally, due to fleet activities compared to the same
period in 2018, while Scope 2, indirect emissions (“Scope 2”), decreased by 34% compared to the same period in 2018.
This reduction is associated with the Company’s asset energy transition in place in different countries where businesses
are shifting towards certified renewables in offices and manufacturing plants. As part of the transition, 4,210 tons of CO2
equivalent have been saved by renewable energy in use in offices and manufacturing areas.
With respect to TechnipFMC projects, a 59% reduction of Scope 1 emissions was registered in 2019 compared to the
same period in 2018 due to the closure of several EPC projects in the first part of 2019. Scope 2 emissions increased
slightly due to the restart of activities in several yards for new projects starting in the second part of 2019.
52 TechnipFMC
U.K. Annual Report and IFRS Financial Statements 2019 The annual quantity of emissions from the purchase of electricity, heat, steam, or cooling by the Company is described in
the table below:
Total GHG Emissions from purchase of
(in metric tons CO2 equivalent)
Electricity
Heat
Steam
Cooling
Total Emissions
2018
2019
69,304
53,725
87
0
20
69,411
0
0
113
53,838
GHG Emissions Intensity
The Company’s GHG emissions’ intensity factor is calculated using both direct and indirect emissions (Scope 1 and
Scope 2 emissions) as a numerator and the environmental hours worked (corresponding to sites that contributed to
environmental data reporting)1 as a denominator. Hours worked has been acknowledged as being the information that is
the most representative of the Company’s overall activity and is frequently used in HSE standards in the industry.
(in kg eq. CO2/hours worked)
Total GHG Emissions Intensity
2018
4.07
2019
2.99
Methodology
Environmental data is collected through our HSE reporting system, Synergi, a global, integrated software solution. Each
of the Company’s reporting entities is required to consolidate and record its environmental data in Synergi on a monthly
basis. This data reflects the environmental performance of entities involved in the offices, construction sites, yards
and spoolbases, manufacturing, and fleet operations when we own or manage the site in question and when we are
responsible for managing the work.
Environmental data is aggregated for the analysis in Asset and Projects categories: industrial sites, fleet, and offices
are consolidated as Our Assets since these three categories represent TechnipFMC’s permanent sites (owned or leased)
under full operational control, while the EPC Construction sites and Yards/Bases are not all owned sites but are all under
the operational control and responsibility of the Company for short- to medium-term periods (less than five years of
activities). These definitions are set out in the Company’s guidelines on environmental reporting and are in line with our
HSE principles and standards.
The reporting period is the 2019 calendar year. Figures for environmental indicators have been extracted from the
Company reporting tool for the period from January 1, 2019 to December 31, 2019.
To calculate Scope 1 and Scope 2 GHG emissions, energy data registered by sites for electricity consumption and fuel
consumption are converted using emission factors from the IPCC Guidelines for National Greenhouse Gas Inventories,
2006, and from CAIT v8.0, 2011. Emission factors are different depending on the type of fuel, method of generating
electricity, and country. They are then integrated into the reporting tool that calculates the resulting CO2 emissions.
(1) Environmental Coverage is defined as the ratio between Environmental Worked Hours in locations reporting environmental data and HSE worked
hours in all Company locations. Environmental Coverage in 2019 was 93.8%, which was stable compared to 93.6% in 2018. In 2019, approximately
234 locations, projects, and vessels reported environmental data compared to 213 locations, projects, and vessels in 2018.
53 TechnipFMC
U.K. Annual Report and IFRS Financial Statements 2019 Provide the carbon footprint to our clients
Our second Respecting the Environment objective aims to provide the
carbon footprint of all our deliverables to clients through conceptual
studies to help introduce our clients to new, low-carbon options in
early stages of projects and highlight the carbon footprint differences
between concepts as early as possible. In 2019, carbon footprint
calculation modules were developed and are under implementation in
both Onshore/Offshore and Subsea conceptual studies.
42
Carbon footprint studies
completed for subsea
products and fleets
Mechanism applied to hybrid
battery on vessels
Mechanism applied to hybrid
battery on vessels
42
Carbon footprint studies
completed for subsea
products and fleets
Internal carbon price
Since 2019, TechnipFMC has been developing a mechanism to
establish an internal carbon price for the Company, focused on our
assets, which should be implemented as part of the future Company’s
investment decisions for capital expenditures. We followed the
highest international standards on this topic, and, in 2019, we formed
a business integrated Internal Carbon Price Workgroup with the
participation of our HSE, EWG, Strategy, Finance, and Sustainability
experts. The purpose of the workgroup was to assess the potential
impact of an internal carbon price on TechnipFMC’s capital
expenditures. A case study was performed and several internal
carbon price methodologies were applied. The case study emphasized
the improvement of the Company’s cumulative cash flow, internal rate
of return, and the reduction of the payback period, and valorized the
most sustainable solutions in terms of carbon emissions reduction.
As a result of the case study, we are further progressing the
development of a global internal carbon price standard and guiding
principles that will be implemented in the future.
54 TechnipFMC
U.K. Annual Report and IFRS Financial Statements 2019 Environmental Certifications
Despite operating in a complex industry, we are committed to successfully
managing our environmental impacts by effectively measuring our environmental
performance. The Company is operated in a manner that minimizes the
environmental impact of, and risks associated with, our activities through
effective environmental management standards that are implemented in an
extended lifecycle perspective.
64
entities
ISO 14001:2015
certified in 2019
The Company maintains a policy of seeking to implement environmental
certification ISO 14001 where practicable. To meet this commitment,
TechnipFMC has implemented an environmental management framework.
As of December 31, 2019, 64 entities have completed the transition to the
new ISO 14001:2015 standard, including all head offices and managed
projects, industrial sites, and fleet. For each of these entities, the environmental
management system was verified and certified by an independent third party.
2019 Environmental Initiatives
TechnipFMC has also joined global initiatives for the protection of the oceans from plastic pollution. Plastic is a valuable
resource that needs to be responsibly used. The Company is committed to reducing its use of single-use plastic in day-to-
day working activities. A Single-Use Plastic Elimination (“SUPE”) project was launched in 2018 in 52 locations, comprising
28% of Company locations, and in the fleet with the aim of eliminating single-use plastic or substituting it with more
sustainable and reusable items. In 2018, the SUPE project saved approximately 167,000 plastic bottles and 2.3 million
plastic cups.
In 2019, the SUPE project has been extended to over 40 countries. Approximately 139 locations, comprising 76% of
Company locations, and over 30 vessels and projects have completed the elimination of single-use plastic bottles and cups.
For details on the principal environmental risks related to our operations and our management of those risks see the
section entitled “Principal Risks and Uncertainties” of this Strategic Report.
55 TechnipFMC
20192018No. of LocationsSingle-Use Plastic Elimination Project% of implementation 5213976%28%Offices, Facilities and Yards130+Vessels and Projects30+Best Practices onEnvironment launched to eliminate/substitute single-use plastics100+U.K. Annual Report and IFRS Financial Statements 2019 Employee and Social Matters
People and Culture are at the heart of our development strategy. People are our wealth and strength. We are committed
to our employees, and our employee guidelines are specified in our Code of Business Conduct, which applies to all
employees, regardless of their roles, and no matter where they work.
We believe that all of our employees are entitled to fair treatment, courtesy, and respect, wherever they work — in
the office, on vessels, on industrial and construction sites, or in client offices. We do not tolerate any form of abuse or
harassment, and we will not tolerate any action, conduct, or behavior that is humiliating, intimidating, or hostile.
Furthermore, our hiring and employee development decisions are fair and objective. Employment decisions are based
only on relevant qualifications, performance, demonstrated skills, experience, and other job-related factors, with our goal
of creating a diverse, tolerant, and inclusive workforce.
Workforce Overview
Breakdown of total workforce per contract:
Achieved Performance
Permanent employees
Temporary employees (fixed-term)
Employees on payroll
Contracted workforce
Total Workforce
December 31, 2018
December 31, 2019
33,528
3,616
37,144
3,458
40,602
34,454
2,713
37,167
5,310
42,477
Developing and Keeping Talent
Enabling our people to grow and develop is a significant priority.
` In October 2018, we launched a global learning hub as part of our global Human Resources (“HR”) portal. This hub is a
learning experience platform with a modern and easy-to-use interface. Over 9,000 pieces of creative and innovative
learning content and ongoing releases of new and meaningful courses are available to support skills development for
our employees and enhance their performance in their job.
` In 2019, we continued our journey to offer best-in-class development opportunities to our people by enhancing our
processes and practices.
`We launched a new platform dedicated to continuous development feedback on behaviors, strengths, and
development areas. The platform is open to all employees to receive and provide constructive feedback to/from
their peers, colleagues, team members, and managers. This approach is in line with the continuous improvement
mindset. This platform offers a fully mobile access to learning content anywhere, anytime, and from any device. This
is a new key milestone in supporting our employees in realizing their potential by providing them with the tools,
processes, and data to effectively manage their career development.
`Our yearly performance appraisal process was kicked off for all TechnipFMC payroll employees in October 2019.
This process, supported by our HR portal, was released in a more stream-lined version compared to 2018. A
stronger focus was put on employees’ behaviors, as part of our core values framework, and the workflow for
employees and managers was also simplified.
56 TechnipFMC
U.K. Annual Report and IFRS Financial Statements 2019 `To support our talent acquisition efforts, we launched
a new employer brand in 2019, reflecting what our
people say about TechnipFMC: we work on breakthrough
projects, in a global playground and, as a result, our
people live inspiring experiences. This is the key message
we want potential future employees to associate with
TechnipFMC.
“We work on breakthrough
projects, in a global playground
and, as a result, our people live
inspiring experiences”
Promoting Cultural and Ethnic Diversity
The Company focuses on our broad cultural and ethnic diversity, which we constantly promote and develop throughout
the Company and our subsidiaries, through the internationalization of our teams, multicultural programs, and
international mobility.
Advancing gender diversity is a strategic objective for the Company. Details are available in the section entitled “Diversity
Policy” of the Corporate Governance Report.
Providing Employment to People with Disabilities
Three of the Company’s Foundational Beliefs — integrity, respect, and sustainability — are tangibly embedded in fair
employment practices and equal opportunity. The Company’s policy is that our employment decisions related to
recruitment, selection, evaluation, compensation, and development, among others, are not influenced by unlawful or
unfair discrimination on the basis of race, religion, gender, age, ethnic origin, nationality, sexual orientation, gender or
gender reassignment, marital status, or disability.
It is the Company’s policy to encourage and give full and fair consideration to applications for employment from disabled
people, and to assist with their training and development in light of their aptitudes and abilities. If an existing employee
becomes disabled, it is the Company’s policy wherever practicable to provide continuing employment under our
usual terms and conditions, and to provide training, career development, and promotion opportunities to the disabled
employee to the fullest extent possible.
Strengthening Social Dialogue
The Company has developed a culture that is based on the values of trust, mutual respect, and dialogue. In accordance
with local legislation, regular meetings with trade union-appointed and/or works council representatives are organized
for information and/or consultation.
The Company’s European Works Council (“EWC”) meets at least twice a year. All of our European entities were within the
EWC by the end of 2019.
Internal Communication
The Company has a robust internal communications strategy and supports communication channels that ensure that
all employees are communicated to within a timely and relevant way. The effectiveness of internal communication is
continually monitored and adjusted based on a focus group feedback program that reaches multiple levels across the
Company. Employees are regularly consulted and provided with information on changes and events that may affect
them through channels such as regular meetings, employee representatives, and the Company’s intranet site. These
consultations and meetings ensure that employees are kept informed of the financial and economic factors affecting the
Company’s performance and matters of concern to them as employees.
57 TechnipFMC
U.K. Annual Report and IFRS Financial Statements 2019 Labor Relations and Collective Agreements
The Company seeks to maintain constructive relationships with works councils and trade unions, and to comply with
relevant local laws and collective agreements in relation to collective or individual labor relations. The Company also
operates through local subsidiaries in many countries, a number of which, including France, Germany, Norway, and Italy,
have legal requirements for works councils, which include employee representatives.
We send regular information to all employees to share information about business success, change to the organizational
structure, and any major impact to the business or the company. The same approach of sharing information and
maintaining a regular dialogue with employees exists at a local level through the action of the local communications
teams and the managers. In countries where staff representatives or work councils are in place, the Company seeks to
maintain an effective and regular dialogue. To get the direct feedback of employees, employees surveys are performed
in some countries or business, such as Norway, the Surface Americas Business Unit, and the Asia Pacific region. Every
quarter, all employees receive a direct communication from the Chairman and CEO about the financial results of the
Company and main business information. While traveling to a Company center, the Executive Leadership Team members
take this as an opportunity to engage with employees, either through town halls or informal meetings.
58 TechnipFMC
U.K. Annual Report and IFRS Financial Statements 2019 Our Compliance Program
How TechnipFMC conducts its business across the world is as important as why TechnipFMC does business. We act
in accordance with our core values and our Foundational Beliefs in all that we do. We aspire to develop business
relationships with like-minded partners who are guided by a similar set of principles of business conduct. Integrity is one
of the most critical cornerstones of the way we conduct business, and, at TechnipFMC, we hold ourselves to the highest
moral and ethical principles that drive our compliance program.
Our Code of Business Conduct is built on our Foundational Beliefs of safety, integrity, quality, respect, and sustainability,
and gives us a common language and playbook for decisions and actions that help us live our core values. Available in
13 languages, our Code of Business Conduct helps us recognize and address the ethical dimensions to our everyday
decisions. In addition to our Code of Business Conduct, we maintain a world-class compliance program that is designed on
a risk-based approach and focuses on the following priorities:
` Human rights: The protection of human rights is an essential business principle we promote for our employees in the
workplace and across our supply chain.
` Trade controls and foreign boycotts: We implement policies and procedures pertaining to international trade laws and
regulations imposed by applicable authorities.
` Data privacy: We implement appropriate security and access measures to protect personal data stored in information
systems.
` Anti-bribery and corruption: Our standards and processes provide a clear and comprehensive framework for our
business in all of the countries in which we operate, in compliance with all applicable laws.
Our compliance program is supported by a global team of professionals embedded across our organization, who
are responsible for the provision of advice, counsel and training, and auditing of our program and its controls. This
is designed to mitigate and monitor compliance risk in support of our operations. Our program is led by a Chief
Compliance Officer, who reports dually to our Executive Vice President and Chief Legal Officer, and to the Chair of the
Board of Directors’ Nominating and Corporate Governance Committee. Our Chief Compliance Officer regularly reports
compliance matters to management and formally reports to the Committee quarterly. These reports include continuous
enhancements to our compliance program and allegations regarding potential non-compliance with our Code of Business
Conduct.
We believe it is up to all of us to uphold the principles in our Code of Business Conduct. We encourage employees and
others to raise questions and concerns to ensure that we are leading by example. Suspected breaches of our Code
of Business Conduct can be reported through various means, including through an independent third party via the
dedicated reporting hotline. TechnipFMC has a zero-tolerance policy on retaliation against employees for reporting
suspected violations of our policies or Code of Business Conduct.
59 TechnipFMC
U.K. Annual Report and IFRS Financial Statements 2019 Human Rights
Respect is one of our Foundational Beliefs. It guides how we fundamentally do business and what we never compromise
on, no matter the circumstances. We believe that everyone is entitled to honest, fair, and courteous treatment. We do not
tolerate any form of modern slavery and do express a strong commitment for respecting human rights and against the
use of child, forced, indentured, or involuntary labor, regardless of where we conduct business.
Our Code of Business Conduct requires that all directors, officers, employees, and employees of subsidiaries and affiliates
ensure our business partners and suppliers do not engage in inappropriate labor practices, including child or indentured
labor.
TechnipFMC has published its statement on slavery and human trafficking for the financial year ending December 31,
2018 in accordance with section 54 of the U.K. Modern Slavery Act 2015. This document is available on our website at
www.TechnipFMC.com under the heading “About us > Ethics and Compliance > Slavery and Human Trafficking Statement”.
Our employees are encouraged and expected to report violations or suspected violations of our Code of Business
Conduct. Various channels are available, including the option to report concerns to their managers, to anyone in the
corporate compliance or legal department, the employee’s human resources representative, or an independent third
party via a dedicated reporting helpline and website.
We treat all reports of suspected violations of our Code of Business Conduct confidentially and will share the information
only with those who have the responsibility and authority to investigate and properly resolve the issue. In addition, we
have a zero-tolerance policy on retaliation against employees for reporting suspected violations of our policies or Code
of Business Conduct or for cooperating with an investigation. We encourage employees and others to raise questions and
concerns to ensure that we are leading by example.
The Company endeavors to ensure compliance with human rights within the scope of our operations and in accordance
with the following international human rights regulations and principles:
` The United Nations Guiding Principles on Business and Human Rights
` The 1948 Universal Declaration of Human Rights
` The International Labour Organization’s Fundamental Conventions regarding the freedom of association, the
eradication of discrimination and forced labor and the abolition of child labor
The Company also remains a member of the United Nations Global Compact.
In addition, the Company has become a member of Building Responsibly, a group of leading engineering and construction
companies that are working together to promote the rights and welfare of workers across the industry, representing
more than 573,000 employees and operating in about 100 countries. Together the membership is working on publication
of ten guidance notes to provide minimum standards in human rights and worker welfare compliance, which forms
the basis of our strategic approach. We continue to work on our human rights strategy to address human rights risks
internally and in our supply chain, and enhance workers’ welfare. We have created an internal Human Rights Working
Group bringing together our support functions and operations to foster and ensure a better working environment for
our employees and our suppliers. The group is currently conducting an internal human rights risk assessment to assess
our processes against human rights international standards, Building Responsibly principles, and our clients’ human rights
expectations. We are also working on the standardization of our processes across the Company and on our human rights
expectations towards our suppliers.
60 TechnipFMC
U.K. Annual Report and IFRS Financial Statements 2019 Anti-Corruption and Anti-Bribery Compliance Controls
The Company is committed to conducting business across the world ethically, lawfully, and in accordance with our core
values and our Foundational Beliefs. Therefore, all employees, as well as our business partners and supply chain, are
expected to conduct their activities in an ethical and lawful manner on a day-to-day basis.
All acts of fraud and corruption (including bribes, kickbacks, and self-dealing) are strictly forbidden. We compete fairly
on the strength of our technology, service, and execution excellence. We do not tolerate corruption in any form and
do not make or accept improper payments to obtain or retain business with those in government or the private sector
or as a reward for awarding subcontractor or supplier contracts. We are committed to complying with all international
and national legislation against illegal payments, including prohibitions on facilitation payments (to expedite routine and
administrative government action) except in extraordinary circumstances where the safety or security of an employee is
in immediate danger.
To ensure that our partners share our commitment to ethical business practices, and to ensure that our partners’ other
relationships (including family relationships) do not create the appearance of a potential conflict of interest, we conduct
detailed due diligence of all potential business partners before entering into a relationship. Our Code of Business Conduct
highlights our commitment to integrity, and in conjunction with our standards and procedures, we have implemented a
variety of anti-bribery and corruption-related operational standards that translate our general principles into concrete
operating procedures.
We have also developed an Anti-Bribery and Corruption Standard, which applies to all our directors, officers, employees,
and contracted personnel, aimed at providing a clear and comprehensive operational framework for the conduct of our
business in all of the countries in which we operate. The Anti-Bribery and Corruption Standard sets out the Company’s
principles for strict compliance with applicable anti-bribery and corruption laws.
The Company pays particular attention to indicators that could cast doubt on the honesty and integrity of third parties
involved in our business. We have developed a Business Partner Standard, which applies to all our directors, officers,
employees, and contracted personnel, that establishes the due diligence requirements and procedures for third-party
government intermediaries and joint ventures/consortia partners, and enables us to assess and manage bribery and
corruption risks while conducting business globally.
We have a Gifts, Hospitality, and Travel Standard, which applies to all our directors, officers, employees, and contracted
personnel, setting forth our rules related to the receipt or provision of gifts, hospitality, or travel, and establishing
procedures for the approval, reporting, and accounting of such. The Gifts, Hospitality, and Travel Standard serves to assist
employees in ensuring that gifts and hospitality, whether given or received as part of a usual courtesy of business, are
not and cannot be considered as bribes.
We also have a Social Donations, Sponsorships, and Charitable Contributions Standard, which applies to all our directors,
officers, employees, and contracted personnel, setting forth our rules related to the making of contributions to our
communities. As a responsible corporate citizen, TechnipFMC believes in contributing to the communities where we conduct
business around the world by supporting worthy causes, donations, and activities. Under appropriate circumstances, social
donations, sponsorships, and charitable contributions provide an important way for TechnipFMC to play a constructive
role in the societies and communities in which we live, work, and conduct business. This standard, which applies to all our
directors, officers, employees, and contracted personnel, sets forth our rules associated with these activities to ensure our
contributions are not misused for improper purposes, such as to disguise illegal payments to government officials.
Our Code of Business Conduct and its related standards are applicable to all employees, business partners, and supply
chain members, as well as all of our business transactions, and all of our majority-owned or controlled subsidiaries. We
will also use our best efforts to induce our joint venture and consortium members to adopt the standards or agree to
abide by an equivalent set of standards. In sum, our compliance program is designed to effectively mitigate and monitor
risks relevant to our enterprise to ensure we are preserving the interests of our stakeholders in accordance with our core
values and Foundational Beliefs.
61 TechnipFMC
U.K. Annual Report and IFRS Financial Statements 2019 Supply Chain and Customer Matters
In line with our aspiration to develop business relationships with like-minded clients, sub-contractors, suppliers, and
business partners who are guided by a similar set of principles of business conduct, it is our policy that our Code of
Business Conduct be shared and discussed with clients, suppliers, and our business partners to better explain our rules
of conduct and reinforce our culture of accountability. We will do business only with those suppliers who respect human
rights and uphold labor laws. In undertaking sourcing, we focus on sustainability and consider our impact on the planet,
people, and communities in which we operate.
Our Code of Business Conduct requires directors, officers, and employees to ensure that:
` Our suppliers, customers, and business partners are aware of our commitment to creating a diverse and
tolerant workforce.
` Managers make contractors and suppliers aware of applicable Health, Safety, Environment, and Security (“HSES”)
rules, procedures, and expected behaviors, and their role in HSES culture wherever we operate.
` Our business partners and suppliers do not engage in inappropriate labor practices, including child or indentured labor.
` Appropriate due diligence is conducted on all consultants, suppliers, business partners, and agents, and ensures that
third parties understand TechnipFMC’s policy of zero tolerance for corruption.
` We exercise appropriate due diligence on subcontractors, suppliers, and other vendors to prevent money laundering.
` All payments to subcontractors, suppliers, consultants, and agents are made in accordance with our financial
standards, including the requirement that payment be made in the country in which the work was performed.
We aspire to develop business relationships with like-minded clients, subcontractors, suppliers, and business partners
who are guided by a similar set of principles of business conduct. Our goal is to build and sustain long-lasting
relationships with governments, customers, partners, suppliers, and local communities where we have operations.
Stakeholder considerations are embedded throughout our discussions and decisions, including in the discussions and
decisions of our board of directors during the past financial year. The supply of goods and services is critical to our
success as a business. We implement processes and procedures to enable us to manage our supply chain and supplier
relationships effectively. As part of these processes and procedures we work to identify and engage suppliers who can
meet the demands of our business at a competitive cost.
Our local procurement teams are essential in this process and facilitate regular dialogue with our suppliers, while
navigating local cultural, language, and time zone differences.
We regularly assess the performance of our suppliers to ensure they meet our standards and expectations in the
delivery, quality, and response to supply chain matters. We are committed to operating our business with a focus on
safety, integrity, quality, respect, and sustainability and we aspire to work with suppliers who are guided by a similar
set of principles of business conduct. We actively assess and monitor our suppliers’ compliance with rules, regulations,
principles, and guidelines relating to modern slavery, sustainability, human rights, anti-bribery, tax evasion, and data
protection, amongst others.
62 TechnipFMC
U.K. Annual Report and IFRS Financial Statements 2019 Health and Safety
We manage Health, Safety, Environmental, and Security (“HSES”) as an integral part of our business, based on a genuine
care and concern for the people and environment. Safety is one of our Foundational Beliefs and is at the heart of
everything we do. We are all responsible for creating a safe and secure workplace.
We believe that all injuries are preventable. By fostering an incident-free environment, we drive our clients’ success
without compromising safety, health, security, or environmental sustainability. We act responsibly and openly at every
step, assuring our customers and partners of our competence and inspiring their trust.
Pulse Program
At the core of our HSES system, Pulse, our HSES culture and engagement program, is an enabler to create one common,
strong HSES culture. Through this culture and engagement program, individuals learn leadership and communication skills
to more effectively use existing HSES tools and techniques. We focus on three key behaviors to drive change throughout
our organization, prevent incidents, and create leaders for HSES at all levels: Inspire, Interact, Intervene.
Safety Performance
In 2019 we continued to focus on assessing and lowering risks to prevent incidents in all the work we do. We continued
to regularly evaluate the Company’s full HSES risk profile within the context of our operations, our contractors,
subcontractors, and customer relationships. A standard risk matrix is used to evaluate our profile, followed by the
application of mitigation measures based on a hierarchy of controls to proactively prevent an incident.
Serious Incident and Fatality Prevention (SIFP) Program
A proactive high Impact Risk Prevention Program has been developed and fully implemented. It aims to facilitate to
shift the organization mindset from reactive to proactive risk reduction. The SIFP program is meant to identify potential
hazards within our operations that has the potential to cause Catastrophic or Substantial Loss to people and/or the
environment as defined by the Risk Matrix and provides a process for mitigation design, approval, and implementation.
The objectives are to prevent Serious Injuries, to proactively de-risk our overall risk profile by putting mitigation
strategies in place, and to bring visibility to critical issues requiring the support of leadership.
As a member of the International Association of Oil & Gas Producers (“IOGP”) TechnipFMC is fostering industry
standardization and has adopted since 2018 the new set of the IOGP Life-Saving Rules and will continue working with the
rest of industry to prevent serious incidents in the workplace.
In 2019, 167.1 million hours were worked at the Company’s facilities and project sites worldwide.
SAFETY PERFORMANCE
Total Recordable Incident Rate (TRIR)1
Lost Time Injury Frequency (LTIF)1
Leadership & Management Walkthrough
Frequency1
2017
0.28
0.05
13.18
2018
0.26
0.06
16.03
2019
0.17
0.04
12.76
Fatal Accident Frequency1
0
0.0012
0.0012
(1) The frequencies are calculated across 200,000 hours worked. Incidents as defined by the U.S. Department of Labor’s Occupational Safety and
Health Administration standards are considered. The cut-off date is December 31, 2019.
63 TechnipFMC
U.K. Annual Report and IFRS Financial Statements 2019 Decision making and section 172 of the Companies Act
Our success depends on our ability to engage effectively with our stakeholders. Our Board considers, both individually
and collectively, that they have acted in a way they consider in good faith, would be most likely to promote the success
of the company for the benefit of its members as a whole, having regard to matters set out in section 172(1)(a) to (f) of
the Companies Act in the decisions taken during the financial year ending December 31, 2019. In particular, we refer to:
` Likely consequences of any decision in the long term: We operate a sophisticated, global business in a highly
competitive industry that has been negatively impacted by low commodity prices. Enhancement of our performance
and competitiveness is a key component of our strategy, and this is achieved through technology innovation and
differentiation, seamless execution, and simplification that drives cost down. We are targeting profitable and sustainable
growth, seizing market growth opportunities, expanding our range of services, and managing our assets efficiently to
ensure that we are well-positioned to benefit from the opportunities we see in many of the segments we serve in order
to deliver a long-term beneficial impact on the company and our clients.
` Interests of employees: Each of our more than 37,000 employees is critical to delivering the strategy and success of
the company. We are committed to our employees, and our employee guidelines are specified in our Code of Business
Conduct, which applies to all employees, regardless of their roles, and no matter where they work. Employee matters
is one of our primary considerations in the way we do business (further details are set out in the paragraph entitled
“Employee and Social Matters” of this Strategic Report).
` Fostering relationships with suppliers, customers, and others: In line with our aspiration to develop business
relationships with like-minded clients, sub-contractors, suppliers, and business partners who are guided by a similar
set of principles of business conduct, it is our policy that our Code of Business Conduct be shared and discussed
with clients, suppliers, and our business partners to better explain our rules of conduct and reinforce our culture
of accountability. Our goal is to build and sustain long-lasting relationships with governments, customers, partners,
suppliers, and local communities where we have operations (further details are set out in the paragraph entitled “Supply
Chain and Customer Matters” of this Strategic Report).
` Impact of operations on the community and the environment: Respecting the Environment is the first of our three
Sustainability pillars. We believe our environmental responsibility requires us to operate in a manner that minimizes
the impact of our operations on the environment, develop sustainable solutions to reduce carbon emissions within
our overall environmental footprint, and avoid any environmental incidents in our operations and activities. We also
support and encourage our employees to volunteer and support their community development programs in line with
our Code of Business Conduct and our Supporting Communities pillar (further details are set out in the paragraphs
entitled “Respecting the Environment” and “Supporting Communities” of this Strategic Report).
` Maintaining a reputation for high standards of business conduct: Our Code of Business Conduct is built on our
Foundational Beliefs of safety, integrity, quality, respect, and sustainability, and gives us, including our directors and
each and every employee, a common language and playbook for decisions and actions that help us live our core values.
Available in 13 languages, our Code of Business Conduct helps us recognize and address the ethical dimensions to our
everyday decisions (further details are set out in the paragraph entitled “Our Compliance Program” of this Strategic Report).
` The need to act fairly as between shareholders of the company: To provide the opportunity to better understand
shareholder views, our Board and executive team maintain a shareholder engagement program to solicit feedback
across a number of shareholder matters. We believe this engagement is important as we seek to develop long-term
relationships with our shareholders and ensure that they fully understand our strategy and the ways in which we seek
to unlock value across our business portfolio. Our intention is to treat our shareholders fairly and equally. Our 2019 Off-
Season Shareholder Outreach Campaign involved our active outreach to 37 shareholders representing approximately
59% of TechnipFMC’s ordinary shares in issue with respect to our board leadership and governance, executive
compensation, and corporate responsibility and sustainability (further details are set out in the paragraph entitled
“Shareholder Engagement” of the Remuneration Report).
64 TechnipFMC
U.K. Annual Report and IFRS Financial Statements 2019 Principal Risks and Uncertainties
Principal risks and uncertainties that could impact our ability to achieve our anticipated operating results and growth plan
goals are presented below. The following principal risks and uncertainties should be read in conjunction with discussions
of our business and the factors affecting our business located elsewhere in this U.K Annual Report and in our other public
filings.
Risks Related to Our Business and Industry
We operate in a highly competitive environment and unanticipated changes relating to competitive factors in our
industry, including ongoing industry consolidation, may impact our results of operations.
We compete on the basis of a number of different factors, such as product offerings, project execution, customer service,
and price. In order to compete effectively we must develop and implement innovative technologies and processes,
and execute our clients’ projects effectively. We can give no assurances that we will continue to be able to compete
effectively with the products and services or prices offered by our competitors.
Our industry, including our customers and competitors, has experienced unanticipated changes in recent years. Moreover,
the industry is undergoing vertical and horizontal consolidation to create economies of scale and control the value chain,
which may affect demand for our products and services because of price concessions for our competitors or decreased
customer capital spending. This consolidation activity could impact our ability to maintain market share, maintain or
increase pricing for our products and services or negotiate favorable contract terms with our customers and suppliers,
which could have a significant negative impact on our financial condition, results of operations or cash flows. We are
unable to predict what effect consolidations and other competitive factors in the industry may have on prices, capital
spending by our customers, our selling strategies, our competitive position, our ability to retain customers or our ability
to negotiate favorable agreements with our customers.
Demand for our products and services depends on oil and gas industry activity and expenditure levels, which are
directly affected by trends in the demand for and price of crude oil and natural gas.
We are substantially dependent on conditions in the oil and gas industry, including (i) the level of exploration,
development and production activity, (ii) capital spending, and (iii) the processing of oil and natural gas in refining units,
petrochemical sites, and natural gas liquefaction plants by energy companies that are our customers. Any substantial or
extended decline in these expenditures may result in the reduced pace of discovery and development of new reserves
of oil and gas and the reduced exploration of existing wells, which could adversely affect demand for our products
and services and, in certain instances, result in the cancellation, modification, or re-scheduling of existing orders in
our backlog. These factors could have an adverse effect on our revenue and profitability. The level of exploration,
development, and production activity is directly affected by trends in oil and natural gas prices, which historically have
been volatile and are likely to continue to be volatile in the future.
Factors affecting the prices of oil and natural gas include, but are not limited to, the following:
` demand for hydrocarbons, which is affected by worldwide population growth, economic growth rates, and general
economic and business conditions;
` costs of exploring for, producing, and delivering oil and natural gas;
` political and economic uncertainty, and socio-political unrest;
` governmental laws, policies, regulations and subsidies related to or affecting the production, use, and exportation/
importation of oil and natural gas;
65 TechnipFMC
U.K. Annual Report and IFRS Financial Statements 2019 ` available excess production capacity within the Organization of Petroleum Exporting Countries (“OPEC”) and the level
of oil production by non-OPEC countries;
` oil refining and transportation capacity and shifts in end-customer preferences toward fuel efficiency and the use of
natural gas;
` technological advances affecting energy consumption;
` development, exploitation, relative price, and availability of alternative sources of energy and our customers’ shift of
capital to the development of these sources;
` volatility in, and access to, capital and credit markets, which may affect our customers’ activity levels, and spending
for our products and services; and
` natural disasters.
The oil and gas industry has historically experienced periodic downturns, which have been characterized by diminished
demand for oilfield services and downward pressure on the prices we charge. While oil and natural gas prices have
partially rebounded from the downturn that began in 2014, the market remains quite volatile and the sustainability of the
price recovery and business activity levels is dependent on variables beyond our control, such as geopolitical stability,
OPEC’s actions to regulate its production capacity, changes in demand patterns, and international sanctions and tariffs.
Continued volatility or any future reduction in demand for oilfield services could further adversely affect our financial
condition, results of operations, or cash flows.
Our success depends on our ability to develop, implement, and protect new technologies and services.
Our success depends on the ongoing development and implementation of new product designs, including the processes
used by us to produce and market our products, and on our ability to protect and maintain critical intellectual property
assets related to these developments. If we are not able to obtain patents, trade secrets or other protection of our
intellectual property rights, if our patents are unenforceable or the claims allowed under our patents are not sufficient
to protect our technology, or if we are not able to adequately protect our patents or trade secrets, we may not be able
to continue to develop our services, products and related technologies. Additionally, our competitors may be able to
independently develop technology that is similar to ours without infringing on our patents or gaining access to our trade
secrets. If any of these events occurs, we may be unable to meet evolving industry requirements or do so at prices
acceptable to our customers, which could adversely affect our financial condition, results of operations, or cash flows.
The industries in which we operate or have operated expose us to potential liabilities, including the installation or use
of our products, which may not be covered by insurance or may be in excess of policy limits, or for which expected
recoveries may not be realized.
We are subject to potential liabilities arising from, among other possibilities, equipment malfunctions, equipment misuse,
personal injuries, and natural disasters, any of which may result in hazardous situations, including uncontrollable flows
of gas or well fluids, fires, and explosions. Our insurance against these risks may not be adequate to cover our liabilities.
Further, the insurance may not generally be available in the future or, if available, premiums may not be commercially
justifiable. If we incur substantial liability and the damages are not covered by insurance or are in excess of policy limits,
or if we were to incur liability at a time when we were not able to obtain liability insurance, such potential liabilities could
have a material adverse effect on our business, results of operations, financial condition or cash flows.
We may lose money on fixed-price contracts.
As customary for some of our projects, we often agree to provide products and services under fixed-price contracts. We
are subject to material risks in connection with such fixed-price contracts. It is not possible to estimate with complete
certainty the final cost or margin of a project at the time of bidding or during the early phases of its execution. Actual
expenses incurred in executing these fixed-price contracts can vary substantially from those originally anticipated for
several reasons including, but not limited to, the following:
66 TechnipFMC
U.K. Annual Report and IFRS Financial Statements 2019 ` unforeseen additional costs related to the purchase of substantial equipment necessary for contract fulfillment or
labor shortages in the markets where the contracts are performed;
` mechanical failure of our production equipment and machinery;
` delays caused by local weather conditions and/or natural disasters (including earthquakes and floods); and
` a failure of suppliers, subcontractors, or joint venture partners to perform their contractual obligations.
The realization of any material risks and unforeseen circumstances could also lead to delays in the execution schedule of
a project. We may be held liable to a customer should we fail to meet project milestones or deadlines or to comply with
other contractual provisions. Additionally, delays in certain projects could lead to delays in subsequent projects that were
scheduled to use equipment and machinery still being utilized on a delayed project.
Pursuant to the terms of fixed-price contracts, we are not always able to increase the price of the contract to reflect
factors that were unforeseen at the time our bid was submitted, and this risk may be heightened for projects with longer
terms. Depending on the size of a project, variations from estimated contract performance, or variations in multiple
contracts, could have a significant impact on our financial condition, results of operations or cash flows.
New capital asset construction projects for vessels and manufacturing facilities are subject to risks, including delays
and cost overruns, which could have a material adverse effect on our financial condition, or results of operations.
We regularly carry out capital asset construction projects to maintain, upgrade, and develop our asset base, and such
projects are subject to risks of delay and cost overruns that are inherent in any large construction project, resulting from
numerous factors including, but not limited to, the following:
` shortages of key equipment, materials or skilled labor;
` delays in the delivery of ordered materials and equipment;
` design and engineering issues; and
` shipyard delays and performance issues.
Failure to complete construction in time, or the inability to complete construction in accordance with design
specifications, may result in the loss of revenue. Additionally, capital expenditures for construction projects could
materially exceed the initially planned investments, or there could be delays in putting such assets into operation.
Our failure to timely deliver our backlog could affect future sales, profitability, and relationships with our customers.
Many of the contracts we enter into with our customers require long manufacturing lead times due to complex technical
and logistical requirements. These contracts may contain clauses related to liquidated damages or financial incentives
regarding on-time delivery, and a failure by us to deliver in accordance with customer expectations could subject us to
liquidated damages or loss of financial incentives, reduce our margins on these contracts, or result in damage to existing
customer relationships. The ability to meet customer delivery schedules for this backlog is dependent upon a number
of factors, including, but not limited to, access to the raw materials required for production, an adequately trained and
capable workforce, subcontractor performance, project engineering expertise and execution, sufficient manufacturing
plant capacity, and appropriate planning and scheduling of manufacturing resources. Failure to deliver backlog in
accordance with expectations could negatively impact our financial performance.
We face risks relating to our reliance on subcontractors, suppliers, and our joint venture partners.
We generally rely on subcontractors, suppliers, and our joint venture partners for the performance of our contracts.
Although we are not dependent upon any single supplier, certain geographic areas of our business or a project or group
of projects may depend heavily on certain suppliers for raw materials or semi-finished goods.
67 TechnipFMC
U.K. Annual Report and IFRS Financial Statements 2019 Any difficulty in engaging suitable subcontractors or acquiring equipment and materials could compromise our ability to
generate a significant margin on a project or to complete such project within the allocated time frame. If subcontractors,
suppliers or joint venture partners refuse to adhere to their contractual obligations with us or are unable to do so due
to a deterioration of their financial condition, we may be unable to find a suitable replacement at a comparable price, or
at all. Moreover, the failure of one of our joint venture partners to perform their obligations in a timely and satisfactory
manner could lead to additional obligations and costs being imposed on us as we may be obligated to assume our
defaulting partner’s obligations or compensate our customers.
Any delay, failure to meet contractual obligations, or other event beyond our control or not foreseeable by us, that
is attributable to a subcontractor, supplier or joint venture partner, could lead to delays in the overall progress of the
project and/or generate significant extra costs. Even if we are entitled to make a claim for these extra costs against the
defaulting supplier, subcontractor or joint venture partner, we may be unable to recover the entirety of these costs and
this could materially adversely affect our business, financial condition or results of operations.
Our businesses are dependent on the continuing services of certain of our key managers and employees.
We depend on key personnel. The loss of any key personnel could adversely impact our business if we are unable
to implement key strategies or transactions in their absence. The loss of qualified employees or failure to retain and
motivate additional highly-skilled employees required for the operation and expansion of our business could hinder our
ability to successfully conduct research activities and develop marketable products and services.
Seasonal and weather conditions could adversely affect demand for our services and operations.
Our business may be materially affected by variation from normal weather patterns, such as cooler or warmer summers
and winters. Adverse weather conditions, such as hurricanes in the Gulf of Mexico or extreme winter conditions in
Canada, Russia, and the North Sea, may interrupt or curtail our operations, or our customers’ operations, cause supply
disruptions or loss of productivity, and may result in a loss of revenue or damage to our equipment and facilities, which
may or may not be insured. Any of these events or outcomes could have a material adverse effect on our business,
financial condition, cash flows, or results of operations.
Due to the types of contracts we enter into and the markets in which we operate, the cumulative loss of several major
contracts, customers, or alliances may have an adverse effect on our results of operations.
We often enter into large, long-term contracts that, collectively, represent a significant portion of our revenue. These
agreements, if terminated or breached, may have a larger impact on our operating results or our financial condition
than shorter-term contracts due to the value at risk. Moreover, the global market for the production, transportation,
and transformation of hydrocarbons and by-products, as well as the other industrial markets in which we operate, is
dominated by a small number of companies. As a result, our business relies on a limited number of customers. If we
were to lose several key contracts, customers, or alliances over a relatively short period of time, we could experience a
significant adverse impact on our financial condition, results of operations, or cash flows.
Our operations require us to comply with numerous regulations, violations of which could have a material adverse
effect on our financial condition, results of operations, or cash flows.
Our operations and manufacturing activities are governed by international, regional, transnational, and national laws and
regulations in every place where we operate relating to matters such as environmental protection, health and safety,
labor and employment, import/export controls, currency exchange, bribery and corruption, and taxation. These laws
and regulations are complex, frequently change, and have tended to become more stringent over time. In the event the
scope of these laws and regulations expand in the future, the incremental cost of compliance could adversely impact our
financial condition, results of operations, or cash flows.
Our international operations are subject to anti-corruption laws and regulations, such as the U.S. Foreign Corrupt Practices
Act (“FCPA”), the U.K. Bribery Act of 2010 (the “Bribery Act”), the anti-corruption provisions of French law n° 2016-1691
68 TechnipFMC
U.K. Annual Report and IFRS Financial Statements 2019 dated December 9, 2016 relating to Transparency, Anti-corruption and Modernization of the Business Practice (“Sapin II
Law”), the Brazilian Anti-Bribery Act (also known as the Brazilian Clean Company Act), and economic and trade sanctions,
including those administered by the United Nations, the European Union, the Office of Foreign Assets Control of the U.S.
Department of the Treasury (“U.S. Treasury”), and the U.S. Department of State. The FCPA prohibits corruptly providing
anything of value to foreign officials for the purposes of obtaining or retaining business or securing any improper
business advantage. We may deal with both governments and state-owned business enterprises, the employees of which
are considered foreign officials for purposes of the FCPA. The provisions of the Bribery Act extend beyond bribery of
foreign public officials and are more onerous than the FCPA in a number of other respects, including jurisdiction, non-
exemption of facilitation payments, and penalties. Economic and trade sanctions restrict our transactions or dealings with
certain sanctioned countries, territories, and designated persons.
As a result of doing business in foreign countries, including through partners and agents, we are exposed to a risk of
violating anti-corruption laws and sanctions regulations. Some of the international locations in which we currently
operate or may, in the future, operate, have developing legal systems and may have higher levels of corruption than
more developed nations. Our continued expansion and worldwide operations, including in developing countries, our
development of joint venture relationships worldwide, and the employment of local agents in the countries in which we
operate increases the risk of violations of anti-corruption laws and economic and trade sanctions. Violations of anti-
corruption laws and economic and trade sanctions are punishable by civil penalties, including fines, denial of export
privileges, injunctions, asset seizures, debarment from government contracts (and termination of existing contracts), and
revocations or restrictions of licenses, as well as criminal fines and imprisonment. In addition, any major violations could
have a significant impact on our reputation and consequently on our ability to win future business.
We have implemented internal controls designed to minimize and detect potential violations of laws and regulations in
a timely manner but we can provide no assurance that such policies and procedures will be followed at all times or will
effectively detect and prevent violations of the applicable laws by one or more of our employees, consultants, agents, or
partners. The occurrence of any such violation could subject us to penalties and material adverse consequences on our
business, financial condition, results of operations, or cash flows.
Compliance with environmental and climate change-related laws and regulations may adversely affect our business
and results of operations.
Environmental laws and regulations in various countries affect the equipment, systems, and services we design,
market, and sell, as well as the facilities where we manufacture our equipment and systems, and any other operations
we undertake. We are required to invest financial and managerial resources to comply with environmental laws
and regulations, and believe that we will continue to be required to do so in the future. Failure to comply with these
laws and regulations may result in the assessment of administrative, civil, and criminal penalties, the imposition of
remedial obligations, the issuance of orders enjoining our operations, or other claims and complaints. Additionally, our
insurance and compliance costs may increase as a result of changes in environmental laws and regulations or changes in
enforcement. These laws and regulations, as well as any new laws and regulations affecting exploration and development
of drilling for crude oil and natural gas, are becoming increasingly strict and could adversely affect our business and
operating results by increasing our costs, limiting the demand for our products and services, or restricting our operations.
Existing or future laws and regulations relating to greenhouse gas emissions and climate change may adversely affect
our business.
Climate change continues to attract considerable public and scientific attention. As a result, numerous laws, regulations,
and proposals have been made and are likely to continue to be made at the international, national, regional, and state
levels of government to monitor and limit emissions of carbon dioxide, methane, and other “greenhouse gases” (“GHGs”).
These efforts have included cap-and-trade programs, carbon taxes, GHG reporting and tracking programs and regulations
that directly limit GHG emissions from certain sources. Such existing or future laws, regulations, and proposals concerning
the release of GHGs or that concern climate change (including laws, regulations, and proposals that seek to mitigate the
69 TechnipFMC
U.K. Annual Report and IFRS Financial Statements 2019 effects of climate change) may adversely impact demand for the equipment, systems and services we design, market and
sell. For example, oil and natural gas exploration and production may decline as a result of such laws, regulations, and
proposals, and as a consequence, demand for our equipment, systems and services may also decline. In addition, such
laws, regulations, and proposals may also result in more onerous obligations with respect to our operations, including the
facilities where we manufacture our equipment and systems. Such decline in demand for our equipment, systems and
services and such onerous obligations in respect of our operations may adversely affect our financial condition, results of
operations, or cash flows.
Disruptions in the political, regulatory, economic, and social conditions of the countries in which we conduct business
could adversely affect our business or results of operations.
We operate in various countries across the world. Instability and unforeseen changes in any of the markets in which we
conduct business, including economically and politically volatile areas could have an adverse effect on the demand for
our services and products, our financial condition, or our results of operations. These factors include, but are not limited
to, the following:
` nationalization and expropriation;
` potentially burdensome taxation;
` inflationary and recessionary markets, including capital and equity markets;
` civil unrest, labor issues, political instability, disease outbreaks, terrorist attacks, cyber terrorism, military activity, and
wars;
` supply disruptions in key oil producing countries;
` the ability of OPEC to set and maintain production levels and pricing;
` trade restrictions, trade protection measures, price controls, or trade disputes;
` sanctions, such as prohibitions or restrictions by the United States against countries that are the targets of economic
sanctions, or are designated as state sponsors of terrorism;
` foreign ownership restrictions;
` import or export licensing requirements;
` restrictions on operations, trade practices, trade partners, and investment decisions resulting from domestic and
foreign laws, and regulations;
` regime changes;
` changes in, and the administration of, treaties, laws, and regulations including in response to public health issues;
` inability to repatriate income or capital;
` reductions in the availability of qualified personnel;
` foreign currency fluctuations or currency restrictions; and
` fluctuations in the interest rate component of forward foreign currency rates.
DTC and Euroclear may cease to act as depository and clearing agencies for our shares.
Our shares were issued into the facilities of The Depository Trust Company (“DTC”) with respect to shares listed on
the NYSE and Euroclear with respect to shares listed on Euronext Paris (DTC and Euroclear being referred to as the
“Clearance Services”). The Clearance Services are widely used mechanisms that allow for rapid electronic transfers of
securities between the participants in their respective systems, which include many large banks and brokerage firms. The
70 TechnipFMC
U.K. Annual Report and IFRS Financial Statements 2019 Clearance Services have general discretion to cease to act as a depository and clearing agencies for our shares. If either
of the Clearance Services determine at any time that our shares are not eligible for continued deposit and clearance
within its facilities, then we believe that our shares would not be eligible for continued listing on the NYSE or Euronext
Paris, as applicable, and trading in our shares would be disrupted. Any such disruption could have a material adverse
effect on the trading price of our shares.
The United Kingdom’s withdrawal from the European Union may have a negative effect on global economic conditions,
financial markets, and our business.
We are based in the United Kingdom and have operational headquarters in Paris, France; Houston, Texas, United States;
and in London, United Kingdom, with worldwide operations, including material business operations in Europe. The United
Kingdom formally withdrew from the European Union on January 31, 2020 and entered into a transition period, which
will end on or after December 31, 2020. During the transition period, the United Kingdom and the European Union will
continue to negotiate their future customs and trading arrangements, and other aspects of their relationship. Political and
economic uncertainty remains about whether the terms of the relationship will differ materially from the terms before
withdrawal, as well as the possibility that a so-called “no deal” separation will occur if negotiations are not completed by
the end of the transition period.
These developments could have a material adverse effect on global economic conditions and the stability of the global
financial markets and could significantly reduce global market liquidity and restrict the ability of key market participants
to operate in certain financial markets. Asset valuations, currency exchange rates, and credit ratings may be especially
subject to increased market volatility. In addition, a lack of clarity about the future relationship between the United
Kingdom and the European Union, and their respective laws and regulations, including financial laws and regulations,
tax and free trade agreements, intellectual property rights, supply chain logistics, environmental, health and safety
laws and regulations, immigration laws, employment laws, and other rules that would apply to us and our subsidiaries,
could increase our costs, restrict our access to capital within the United Kingdom and the European Union, depress
economic activity, and further decrease foreign direct investment in the United Kingdom. For example, withdrawal from
the European Union could, depending on the negotiated terms of such withdrawal, eliminate the benefit of certain tax-
related E.U. directives currently applicable to U.K. companies such as us, including the Parent-Subsidiary Directive and the
Interest and Royalties Directive, which could, subject to any relief under an available tax treaty, raise our tax costs.
Any of these factors could have a material adverse effect on our business, financial condition, or results of operations.
As an English public limited company, we must meet certain additional financial requirements before we may declare
dividends or repurchase shares and certain capital structure decisions may require stockholder approval which may
limit our flexibility to manage our capital structure. We may not be able to pay dividends or repurchase shares of our
ordinary shares in accordance with our announced intent, or at all.
Under English law, we will only be able to declare dividends, make distributions, or repurchase shares (other than out
of the proceeds of a new issuance of shares for that purpose) out of “distributable profits.” Distributable profits are a
company’s accumulated, realized profits, to the extent that they have not been previously utilized by distribution or
capitalization, less its accumulated, realized losses, to the extent that they have not been previously written off in a
reduction or reorganization of capital duly made. In addition, as a public limited company incorporated in England and
Wales, we may only make a distribution if the amount of our net assets is not less than the aggregate of our called-up
share capital and non-distributable reserves and to the extent that the distribution does not reduce the amount of those
assets to less than that aggregate.
Following the Merger, we implemented a court-approved reduction of our capital, which was completed on June 29, 2017,
in order to create distributable profits to support the payment of possible future dividends or future share repurchases.
Our articles of association permit us by ordinary resolution of the stockholders to declare dividends, provided that the
directors have made a recommendation as to its amount. The dividend shall not exceed the amount recommended by the
Board of Directors. The directors may also decide to pay interim dividends if it appears to them that the profits available
71 TechnipFMC
U.K. Annual Report and IFRS Financial Statements 2019 for distribution justify the payment. When recommending or declaring payment of a dividend, the directors are required
under English law to comply with their duties, including considering our future financial requirements.
In addition, the Board of Directors’ determinations regarding dividends and share repurchases will depend on a variety
of other factors, including our net income, cash flow generated from operations or other sources, liquidity position, and
potential alternative uses of cash, such as acquisitions, as well as economic conditions and expected future financial
results. Our ability to declare and pay future dividends and make future share repurchases will depend on our future
financial performance, which in turn depends on the successful implementation of our strategy and on financial,
competitive, regulatory, technical, general economic conditions, demand and selling prices for our products and services,
and other factors specific to our industry or specific projects, many of which are beyond our control. Therefore, our
ability to generate cash depends on the performance of our operations and could be limited by decreases in our
profitability or increases in costs, regulatory changes, capital expenditures, or debt servicing requirements.
Any failure to pay dividends or repurchase shares of our ordinary shares could negatively impact our reputation, harm
investor confidence in us, and cause the market price of our ordinary shares to decline.
Our existing and future debt may limit cash flow available to invest in the ongoing needs of our business and could
prevent us from fulfilling our obligations under our outstanding debt.
We have substantial existing debt. As of December 31, 2019, our total debt is $4.5 billion. We also have the capacity
under our $2.5 billion credit facility, in addition to our bilateral facility, to incur substantial additional debt. Our level of
debt could have important consequences. For example, it could:
` make it more difficult for us to make payments on our debt;
` require us to dedicate a substantial portion of our cash flow from operations to the payment of debt service, reducing
the availability of our cash flow to fund working capital, capital expenditures, acquisitions, distributions, and other
general partnership purposes;
` increase our vulnerability to adverse economic or industry conditions;
` limit our ability to obtain additional financing to react to changes in our business; or
` place us at a competitive disadvantage compared to businesses in our industry that have less debt.
Additionally, any failure to meet required payments on our debt or to comply with any covenants in the instruments
governing our debt, could result in an event of default under the terms of those instruments. In the event of such default,
the holders of such debt could elect to declare all the amounts outstanding under such instruments to be due and
payable.
The London Interbank Offered Rate (“LIBOR”) and certain other interest “benchmarks” may be subject to regulatory
guidance and/or reform that could cause interest rates under our current or future debt agreements to perform
differently than in the past or cause other unanticipated consequences. The United Kingdom’s Financial Conduct
Authority, which regulates LIBOR, has announced that it intends to stop encouraging or requiring banks to submit LIBOR
rates after 2021, and it is unclear if LIBOR will cease to exist or if new methods of calculating LIBOR will evolve. If LIBOR
ceases to exist or if the methods of calculating LIBOR change from their current form, interest rates on our current or
future debt obligations may be adversely affected.
A downgrade in our debt rating could restrict our ability to access the capital markets.
The terms of our financing are, in part, dependent on the credit ratings assigned to our debt by independent credit
rating agencies. We cannot provide assurance that any of our current credit ratings will remain in effect for any given
period of time or that a rating will not be lowered or withdrawn entirely by a rating agency. Factors that may impact
our credit ratings include debt levels, capital structure, planned asset purchases or sales, near- and long-term production
growth opportunities, market position, liquidity, asset quality, cost structure, product mix, customer and geographic
72 TechnipFMC
U.K. Annual Report and IFRS Financial Statements 2019 diversification, and commodity price levels. A downgrade in our credit ratings, particularly to non-investment grade
levels, could limit our ability to access the debt capital markets or refinance our existing debt or cause us to refinance
or issue debt with less favorable terms and conditions. Moreover, our revolving credit agreement includes an increase
in interest rates if the ratings for our debt are downgraded, which could have an adverse effect on our results of
operations. An increase in the level of our indebtedness and related interest costs may increase our vulnerability to
adverse general economic and industry conditions and may affect our ability to obtain additional financing, as well as
have a material adverse effect on our business, financial condition, or results of operations.
Uninsured claims and litigation against us, including intellectual property litigation, could adversely impact our financial
condition, results of operations, or cash flows.
We could be impacted by the outcome of pending litigation, as well as unexpected litigation or proceedings. We have
insurance coverage against operating hazards, including product liability claims and personal injury claims related to our
products or operating environments in which our employees operate, to the extent deemed prudent by our management
and to the extent insurance is available. However, our insurance policies are subject to exclusions, limitations, and other
conditions and may not apply in all cases, for example where willful wrongdoing on our part is alleged. Additionally,
the nature and amount of that insurance may not be sufficient to fully indemnify us against liabilities arising out of
pending and future claims and litigation. Additionally, in individual circumstances, certain proceedings or cases may
also lead to our formal or informal exclusion from tenders or the revocation or loss of business licenses or permits. Our
financial condition, results of operations, or cash flows could be adversely affected by unexpected claims not covered by
insurance.
In addition, the tools, techniques, methodologies, programs, and components we use to provide our services may infringe
upon the intellectual property rights of others. Infringement claims generally result in significant legal and other costs.
The resolution of these claims could require us to enter into license agreements or develop alternative technologies.
The development of these technologies or the payment of royalties under licenses from third parties, if available, would
increase our costs. If a license were not available, or we are not able to develop alternative technologies, we might not be
able to continue providing a particular service or product, which could adversely affect our financial condition, results of
operations, or cash flows.
Currency exchange rate fluctuations could adversely affect our financial condition, results of operations, or cash flows.
We conduct operations around the world in many different currencies. Because a significant portion of our revenue is
denominated in currencies other than our reporting currency, the U.S. dollar, changes in exchange rates will produce
fluctuations in our revenue, costs, and earnings, and may also affect the book value of our assets and liabilities and
related equity. We hedge transaction impacts on margins and earnings where a transaction is not in the functional
currency of the business unit, but we do not hedge translation impacts on earnings. Our efforts to minimize our currency
exposure through such hedging transactions may not be successful depending on market and business conditions.
Moreover, certain currencies in which we conduct operations, specifically currencies in countries such as Angola and
Nigeria, do not actively trade in the global foreign exchange markets and may subject us to increased foreign currency
exposures. As a result, fluctuations in foreign currency exchange rates may adversely affect our financial condition,
results of operations, or cash flows.
Our acquisition and divestiture activities involve substantial risks.
We have made and expect to continue to pursue acquisitions, dispositions, or other investments that may strategically fit
our business and/or growth objectives. We cannot provide assurances that we will be able to locate suitable acquisitions,
dispositions, or investments, or that we will be able to consummate any such transactions on terms and conditions
acceptable to us. Even if we do successfully execute such transactions, they may not result in anticipated benefits, which
could have a material adverse effect on our financial results. If we are unable to successfully integrate and develop
acquired businesses, we could fail to achieve anticipated synergies and cost savings, including any expected increases in
revenues and operating results. We may not be able to successfully cause a buyer of a divested business to assume the
73 TechnipFMC
U.K. Annual Report and IFRS Financial Statements 2019 liabilities of that business or, even if such liabilities are assumed, we may have difficulties enforcing our rights, contractual
or otherwise, against the buyer. We may invest in companies or businesses that fail, causing a loss of all or part of our
investment. In addition, if we determine that an other-than-temporary decline in the fair value exists for a company in
which we have invested, we may have to write down that investment to its fair value and recognize the related write-
down as an investment loss.
A failure of our IT infrastructure, including as a result of cyber attacks, could adversely impact our business and results
of operations.
The efficient operation of our business is dependent on our IT systems. Accordingly, we rely upon the capacity, reliability,
and security of our IT hardware and software infrastructure and our ability to expand and update this infrastructure
in response to changing needs. We have been subject to cyber attacks in the past, including phishing, malware, and
ransomware. No such attack has had a material adverse effect on our business, however this may not be the case with
future attacks. Our systems may be vulnerable to damages from such attacks, as well as from natural disasters, failures in
hardware or software, power fluctuations, unauthorized access to data and systems, loss or destruction of data (including
confidential customer information), human error, and other similar disruptions, and we cannot give assurance that any
security measures we have implemented or may in the future implement will be sufficient to identify and prevent or
mitigate such disruptions.
We rely on third parties to support the operation of our IT hardware, software infrastructure, and cloud services, and
in certain instances, utilize web-based and software-as-a-service applications. The security and privacy measures
implemented by such third parties, as well as the measures implemented by any entities we acquire or with whom we do
business, may not be sufficient to identify or prevent cyber attacks, and any such attacks may have a material adverse
effect on our business. While our IT vendor agreements typically contain provisions that seek to eliminate or limit our
exposure to liability for damages from a cyber attack, we cannot ensure such provisions will withstand legal challenges or
cover all or any such damages.
Threats to our IT systems arise from numerous sources, not all of which are within our control, including fraud or malice
on the part of third parties, accidental technological failure, electrical or telecommunication outages, failures of computer
servers or other damage to our property or assets, outbreaks of hostilities, or terrorist acts. The failure of our IT systems
or those of our vendors to perform as anticipated for any reason or any significant breach of security could disrupt our
business and result in numerous adverse consequences, including reduced effectiveness and efficiency of operations,
inappropriate disclosure of confidential and proprietary information, reputational harm, increased overhead costs, and
loss of important information, which could have a material adverse effect on our business and results of operations. In
addition, we may be required to incur significant costs to protect against damage caused by these disruptions or security
breaches in the future. Our insurance coverage may not cover all of the costs and liabilities we incur as the result of any
disruptions or security breaches, and if our business continuity and/or disaster recovery plans do not effectively and
timely resolve issues resulting from a cyber attack, we may suffer material adverse effects on our business.
We are subject to governmental regulation and other legal obligations related to privacy, data protection, and data
security. Our actual or perceived failure to comply with such obligations could harm our business.
We are subject to international data protection laws, such as the General Data Protection Regulation, or GDPR, in the
European Economic Area, or EEA. The GDPR imposes several stringent requirements for controllers and processors
of personal data which have increased our obligations, including, for example, by requiring more robust disclosures to
individuals, notifications, in some cases, of data breaches to regulators and data subjects, and a record of processing
and other policies and procedures to be maintained to adhere to the accountability principle. In addition, we are subject
to the GDPR’s rules on transferring personal data outside of the EEA (including to the United States), and some of these
rules are currently being challenged in the courts. Failure to comply with the requirements of GDPR and the local laws
implementing or supplementing the GDPR could result in fines of up to €20,000,000 or up to 4% of the total worldwide
annual turnover of the preceding financial year, whichever is higher, as well as other administrative penalties. We are
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U.K. Annual Report and IFRS Financial Statements 2019 likely to be required to expend significant capital and other resources to ensure ongoing compliance with the GDPR and
other applicable data protection legislation, and we may be required to put in place additional control mechanisms which
could be onerous and adversely affect our business, financial condition, results of operations, or cash flows.
The IRS may not agree that we should be treated as a foreign corporation for U.S. federal tax purposes and may seek to
impose an excise tax on gains recognized by certain individuals.
Although we are incorporated in the United Kingdom, the U.S. Internal Revenue Service (the “IRS”) may assert that
we should be treated as a U.S. “domestic” corporation (and, therefore, a U.S. tax resident) for U.S. federal income tax
purposes pursuant to Section 7874 of the U.S. Internal Revenue Code of 1986, as amended (the “Code”). For U.S. federal
income tax purposes, a corporation (i) is generally considered a “domestic” corporation (or U.S. tax resident) if it is
organized in the United States or of any state or political subdivision therein, and (ii) is generally considered a “foreign”
corporation (or non-U.S. tax resident) if it is not considered a domestic corporation. Because we are a U.K. incorporated
entity, we would be considered a foreign corporation (and, therefore, a non-U.S. tax resident) under these rules. Section
7874 of the Code (“Section 7874”) provides an exception under which a foreign incorporated entity may, in certain
circumstances, be treated as a domestic corporation for U.S. federal income tax purposes.
We do not believe this exception applies. However, the Section 7874 rules are complex and subject to detailed
regulations, the application of which is uncertain in various respects. It is possible that the IRS will not agree with our
position. Should the IRS successfully challenge our position, it is also possible that an excise tax under Section 4985 of the
Code (the “Section 4985 Excise Tax”) may be assessed against certain “disqualified individuals” (including former officers
and directors of FMC Technologies, Inc.) on certain stock-based compensation held thereby. We may, if we determine that
it is appropriate, provide disqualified individuals with a payment with respect to the Section 4985 Excise Tax, so that, on
a net after-tax basis, they would be in the same position as if no such Section 4985 Excise Tax had been applied.
In addition, there can be no assurance that there will not be a change in law or interpretation, including with retroactive
effect, that might cause us to be treated as a domestic corporation for U.S. federal income tax purposes.
U.S. tax laws and/or guidance could affect our ability to engage in certain acquisition strategies and certain internal
restructurings.
Even if we are treated as a foreign corporation for U.S. federal income tax purposes, Section 7874, U.S. Treasury
regulations, and other guidance promulgated thereunder may adversely affect our ability to engage in certain future
acquisitions of U.S. businesses or to restructure the non-U.S. members of our group. These limitations, if applicable, may
affect the tax efficiencies that otherwise might be achieved in such potential future transactions or restructurings.
In addition, the IRS and the U.S. Treasury have issued final and temporary regulations providing that, even if we are
treated as a foreign corporation for U.S. federal income tax purposes, certain intercompany debt instruments issued on
or after April 4, 2016 will be treated as equity for U.S. federal income tax purposes, therefore limiting U.S. tax benefits
and resulting in possible U.S. withholding taxes. Although recent guidance from the U.S. Treasury removes certain
documentation requirements that would otherwise be imposed with respect to covered debt instruments, announces an
intention to further modify and possibly withdraw certain classification rules relating to covered debt instruments, and
further indicates that these rules generally are the subject of continuing study and may be further materially modified,
the current regulations may adversely affect our future effective tax rate and could also impact our ability to engage in
future restructurings if such transactions cause an existing intercompany debt instrument to be treated as reissued for
U.S. federal income tax purposes.
We are subject to the tax laws of numerous jurisdictions; challenges to the interpretation of, or future changes to, such
laws could adversely affect us.
We and our subsidiaries are subject to tax laws and regulations in the United Kingdom, the United States, France, and
numerous other jurisdictions in which we and our subsidiaries operate. These laws and regulations are inherently
complex, and we are, and will continue to be, obligated to make judgments and interpretations about the application
75 TechnipFMC
U.K. Annual Report and IFRS Financial Statements 2019 of these laws and regulations to our operations and businesses. The interpretation and application of these laws and
regulations could be challenged by the relevant governmental authorities, which could result in administrative or judicial
procedures, actions, or sanctions, which could be material.
On December 22, 2017, the Tax Cuts and Jobs Act was signed into law in the United States, which made extensive
changes to the U.S. taxation of multinational companies, and is subject to future regulatory and possible legislative
changes. In addition, the U.S. Congress, the U.K. Government, the European Union, the Organization for Economic Co-
operation and Development (the “OECD”), and other government agencies in jurisdictions where we and our affiliates do
business have had an extended focus on issues related to the taxation of multinational corporations. New tax initiatives,
directives, and rules, such as the U.S. Tax Cuts and Jobs Act, the OECD’s Base Erosion and Profit Shifting initiative, and the
European Union’s Anti-Tax Avoidance Directives, may increase our tax burden and require additional compliance-related
expenditures. As a result, our financial condition, results of operations, or cash flows may be adversely affected. Further
changes, including with retroactive effect, in the tax laws of the United States, the United Kingdom, the European Union,
or other countries in which we and our affiliates do business could also adversely affect us.
We may not qualify for benefits under tax treaties entered into between the United Kingdom and other countries.
We operate in a manner such that we believe we are eligible for benefits under tax treaties between the United Kingdom
and other countries. However, our ability to qualify for such benefits will depend on whether we are treated as a U.K.
tax resident, the requirements contained in each treaty and applicable domestic laws, on the facts and circumstances
surrounding our operations and management, and on the relevant interpretation of the tax authorities and courts. For
example, because of Brexit, we may lose some or all of the benefits of tax treaties between the United States and the
remaining members of the European Union, and face higher tax liabilities, which may be significant. Another example
is the Multilateral Convention to Implement Tax Treaty Related Measures to Prevent Base Erosion and Profit Shifting
(the “MLI”), which entered into force for participating jurisdictions on July 1, 2018. The MLI recommends that countries
adopt a “limitation-on-benefit” rule and/or a “principle purposes test” rule with regards to their tax treaties. The scope
and interpretation of these rules as adopted pursuant to the MLI are presently under development, but the application of
either rule might deny us tax treaty benefits that were previously available.
The failure by us or our subsidiaries to qualify for benefits under tax treaties entered into between the United Kingdom
and other countries could result in adverse tax consequences to us (including an increased tax burden and increased
filing obligations) and could result in certain tax consequences of owning and disposing of our shares.
We intend to be treated exclusively as a resident of the United Kingdom for tax purposes, but French or other tax
authorities may seek to treat us as a tax resident of another jurisdiction.
We are incorporated in the United Kingdom. English law currently provides that we will be regarded as a U.K. resident
for tax purposes from incorporation and shall remain so unless (i) we are concurrently a resident in another jurisdiction
(applying the tax residence rules of that jurisdiction) that has a double tax treaty with the United Kingdom and (ii) there is
a tiebreaker provision in that tax treaty which allocates exclusive residence to that other jurisdiction.
In this regard, we have a permanent establishment in France to satisfy certain French tax requirements imposed by
the French Tax Code with respect to the Merger. Although it is intended that we will be treated as having our exclusive
place of tax residence in the United Kingdom, the French tax authorities may claim that we are a tax resident of France
if we were to fail to maintain our “place of effective management” in the United Kingdom. Any such claim would be
settled between the French and U.K. tax authorities pursuant to the mutual assistance procedure provided for by the tax
treaty concluded between France and the United Kingdom. There is no assurance that these authorities would reach an
agreement that we will remain exclusively a U.K. tax resident; an adverse determination could materially and adversely
affect our business, financial condition, results of operations, or cash flows. A failure to maintain exclusive tax residency
in the United Kingdom could result in adverse tax consequences to us and our subsidiaries and could result in certain
adverse changes in the tax consequences of owning and disposing of our shares.
76 TechnipFMC
U.K. Annual Report and IFRS Financial Statements 2019 Pirates endanger our maritime employees and assets.
We face material piracy risks in the Gulf of Guinea, the Somali Basin, and the Gulf of Aden, and, to a lesser extent, in
Southeast Asia, Malacca, and the Singapore Straits. Piracy represents a risk for both our projects and our vessels, which
operate and transport through sensitive maritime areas. Such risks have the potential to significantly harm our crews
and to negatively impact the execution schedule for our projects. If our maritime employees or assets are endangered,
additional time may be required to find an alternative solution, which may delay project realization and negatively impact
our business, financial condition, or results of operations.
Risks Related to the Proposed Separation Transaction
The proposed separation transaction announced on August 26, 2019 is contingent upon the satisfaction of a number of
conditions, may require significant time and attention of our management, and may not achieve the intended results.
As previously disclosed, our Board of Directors unanimously approved a plan to separate into two independent, publicly
traded companies. For more information, please refer to Note 1 to our consolidated financial statements of this U.K.
Annual Report. The completion of the transaction, which is expected to be structured as a separation of our Onshore/
Offshore segment including Genesis, a leader in front-end engineering and design, as well as Loading Systems, a leader
in cryogenic material transfer products, and Cybernetix, a technology leader in process automation, is contingent upon
the final approval of our Board of Directors as well as market conditions and the receipt of regulatory approvals, which
are beyond our control, as well as consultation of employee representatives, where applicable. We may also choose to
abandon the separation at any time. For these and other reasons, the separation may not be completed in the expected
timeframe or at all. Additionally, the execution of the proposed separation will likely continue to require significant time
and attention of our management, which could impact other strategic initiatives. Our employees may also be uncertain
about their future roles within the separate companies pending the completion of the separation, which could lead to
departures.
Also, in connection with the separation, we will indemnify Technip Energies for certain liabilities and Technip Energies
will indemnify us for certain liabilities. If we are required to act on these indemnities to Technip Energies, our financial
results could be negatively impacted. Additionally, any indemnity from Technip Energies may not be sufficient to insure
us against the full amount of liabilities for which we are responsible and Technip Energies may not be able to satisfy its
indemnification obligations in the future.
Any such difficulties could have an adverse effect on our business, financial condition, or results of operations, and cause
the combined market value of us and Technip Energies after the separation to fall short of the market value of our shares
prior to the separation. Substantial sales of our shares may also occur in connection with the separation, which could
cause our share price to decline.
On behalf of the Board
Douglas J. Pferdehirt
Chairman and CEO
March 13, 2020
77 TechnipFMC
U.K. Annual Report and IFRS Financial Statements 2019 Directors’ Report
The Board of Directors (the “Board”) presents its report together with the audited financial statements of the Company
and our consolidated subsidiaries for the year ended December 31, 2019.
The Corporate Governance statement as required by Rule 7.2.1 of the Disclosure Guidance and Transparency Rules
(the “DTRs”) of the U.K.’s Financial Conduct Authority is satisfied by the Corporate Governance Report set out in this
U.K. Annual Report. All information detailed in the Corporate Governance Report is incorporated by reference into this
Directors’ Report and is deemed to form part of this Directors’ Report.
For the purposes of DTR 4.1.5R(2) and DTR 4.1.8, this Directors’ Report and the Strategic Report comprise the
Management Report.
Directors
The directors of the Company who held office during the year ended December 31, 2019 were as follows:
Executive Directors
Executive Chairman
Chairman and CEO
Thierry Pilenko
(until May 1, 2019)
Douglas J. Pferdehirt
(Chairman from May 1, 2019)
Non-Executive Directors
Eleazar de Carvalho Filho
John O’Leary
Arnaud Caudoux
Pascal Colombani
Marie-Ange Debon
Claire S. Farley
Didier Houssin
Peter Mellbye
Olivier Piou
Kay G. Priestly
Joseph Rinaldi
James M. Ringler
John Yearwood
The appointment and replacement of the directors is governed by the Companies Act and the Company’s articles of
association (the “Articles of Association”).
The Board is responsible for promoting the long-term success of the Company. The Board is responsible for
implementation, understanding, and pursuit of a sound strategy for the success of the Company, relying upon a
framework of corporate governance and internal controls that are designed to protect the Company’s assets. The day-to-
day management of the business is delegated to the executive leadership team apart from matters specifically reserved
for the Board’s decision. The Board delegates some of its duties and powers to Board committees, each of which has a
written charter, available on the Company’s website.
The current directors of the Company have been appointed pursuant to the Articles of Association. Subject to the Articles
of Association and the Companies Act, a director may be appointed by an ordinary resolution at an annual meeting of
shareholders or by a decision of the Board.
78 TechnipFMC
U.K. Annual Report and IFRS Financial Statements 2019
Subject to the provisions of the Companies Act, the Articles of Association, the business of the Company is managed by
the Board, which may exercise all the powers of the Company whether relating to the management of the business of the
Company or not. The Board may delegate authorities to committees, and may delegate the day-to-day management and
decision making to the Chief Executive Officer.
Share Capital and Articles of Association
of the Company
As at the close of business on February 28, 2020, being the latest practicable date prior to the publication of this
Directors’ Report, the issued and fully paid share capital of the Company was as follows:
Class of shares
Ordinary
Number of shares
Nominal value
447,446,836
$447,446,836
There are no specific restrictions on the size of a holding or on the transfer of shares. No person has any special rights of
control over the Company’s share capital and all issued shares are fully paid. The Board is not aware of any agreements
between holders of the Company’s shares that may result in restrictions on the transfer of securities or voting rights.
Following the Merger, the reserves arising out of the Merger were capitalized by the allotment and issuance by
TechnipFMC of a bonus share, which was paid up using such reserves, such that the amount of reserves so applied,
less the nominal value of the bonus share, applied as share premium and accrued to our share premium account. We
implemented a court-approved reduction of our capital by way of a cancellation of the bonus share and share premium
account which completed on June 29, 2017, to create distributable profits to support the payment of future dividends
or future share repurchases. On November 27, 2019, the Company redeemed 50,000 redeemable shares of £1 each and
cancelled one deferred ordinary share of £1 in the capital of the Company.
Specific powers relating to the allotment, issuance and the ability of the Company to repurchase ordinary shares are
included within the Articles of Association. Under the Articles of Association, the Directors have the authority to allot
shares up to a maximum aggregate nominal amount representing 20% of the shares in the capital of the Company in
issue on January 16, 2017 with a five-year validity period. This is in addition to an authority to allot shares in accordance
with the provisions of section 570 of the Companies Act, as if section 561(1) of that Act did not apply, pursuant to a
shareholders’ resolution dated January 11, 2017 with a five-year validity period.
Shareholders shall not be entitled to vote at any shareholders’ meetings or at a separate meeting of the holders of any
class of shares, either in person or by representative or proxy, in respect of any share held by them unless all amounts
presently payable by them in respect of that share have been paid.
Subject to the Articles of Association and the Companies Act, a shareholder (or any person appearing to be interested
in any such shareholder’s shares) may be served with a notice under section 793 of the Companies Act. If the Board
is satisfied that such shareholder or person has failed to supply to the Company the required information for the
prescribed period, or in purported compliance with the section 793 notice, has made a statement that is materially
false or inadequate, the Board may direct that the shareholder shall not be entitled to attend or vote in respect of these
shares.
The Company operates a TechnipFMC Incentive Award Plan for which certain employees are eligible. Details are
set out in Note 18 to the consolidated financial statements contained in this U.K. Annual Report, and in the Proxy
Statement available on our website at www.TechnipFMC.com under the heading “Investors > Events and presentations >
Shareholders’ meeting”.
The process of amending the Articles of Association is subject to the procedure outlined in the Companies Act.
79 TechnipFMC
U.K. Annual Report and IFRS Financial Statements 2019 Share Repurchases
A share repurchase program authorization was granted by our then shareholder on January 11, 2017 with a five-year
validity period from that date. In April 2017, our Board authorized the repurchase of up to $500 million of ordinary
shares. The Company implemented the share repurchase program in September 2017, and it was completed on
December 18, 2018. In December 2018, our Board authorized an additional share repurchase program to repurchase up
to $300 million of ordinary shares through open market purchases, granted under the same shareholder authority. The
Company terminated its share repurchase program on July 3, 2019.
In 2019, the Company purchased a total of 4,012,752 of our own ordinary shares with a nominal value of $1.00 each,
representing almost 0.9% of the issued share capital on December 31, 2019 for a total amount of $68,740,031.25 and
€20,848,802.55 on the NYSE and on Euronext Paris, respectively. All weekly reports on share repurchases can be found
at: https://investors.TechnipFMC.com/stock-information/share-repurchase-program.
The Company does not currently hold any treasury shares and all ordinary shares repurchased under the share
repurchase program are cancelled and not held as treasury shares. The objective of the share repurchase program is
to reduce the Company’s issued share capital. Purchases of the Company’s ordinary shares under the share repurchase
program are carried out on the NYSE and Euronext Paris.
The Company established our Employee Benefit Trust (“EBT”), an offshore discretionary employee benefit trust, in 2017,
for the purposes of administering the Company’s share-based awards granted under shareholder approved incentive
plans. As at the close of business on February 28, 2020, being the latest practicable date prior to the publication of this
Directors’ Report, the EBT held 140 ordinary shares of the Company.
80 TechnipFMC
U.K. Annual Report and IFRS Financial Statements 2019 Significant Shareholdings
As at the close of business on February 28, 2020, being the latest practicable date prior to the publication of this
Directors’ Report, the Company’s significant shareholders who had notified the Company in accordance with the DTRs
that they hold 3% or more of the Company’s ordinary shares were as follows:
Name and Address of Beneficial Owner
Invesco Ltd.
1555 Peachtree Street NE, Suite 1800
Atlanta, Georgia 30309
First Eagle Investment Management, LLC
1345 Avenue of the Americas
New York, New York 10105
The Vanguard Group, Inc.
100 Vanguard Boulevard
Malvern, Pennsylvania 19355
Bpifrance Participations S.A.
27–31, avenue du Général Leclerc
94710 Maisons-Alfort Cedex
France
BlackRock, Inc.
55 East 52nd Street
New York, New York 10055
State Street Corporation
One Lincoln Street
Boston, Massachusetts 02111
Shares
Percent of Class1
34,142,7712
7.63%
32,271,8923
7.21%
29,406,2244
6.57%
24,688,6915
5.51%
22,701,6326
5.07%
21,353,0297
4.77%
(1) The calculation of percentage of ownership of each listed beneficial owner is based on 447,446,836 Ordinary Shares outstanding on February 28,
2020.
(2) Based on a Schedule 13G/A filed with the SEC on February 12, 2020, Invesco Ltd. has sole voting power over 32,768,781 Ordinary Shares and
sole dispositive power over 34,142,596 Ordinary Shares. Invesco Ltd., in its capacity as a parent holding company to its investment advisers,
may be deemed to beneficially own 34,142,771 Ordinary Shares. However, no one individual has greater than 5% economic ownership. The
shareholders of the Fund have the right to receive or the power to direct the receipt of dividends and proceeds from the sale of securities.
(3) Based on a Schedule 13G/A filed with the SEC on February 10, 2020, First Eagle Investment Management, LLC (“FEIM”) has sole voting power
over 30,730,041 Ordinary Shares and sole dispositive power over 32,271,892 Ordinary Shares. FEIM, an investment adviser registered under
Section 203 of the Investment Advisers Act of 1940, is deemed to be the beneficial owner of 32,271,892 Ordinary Shares as a result of acting as
investment adviser to various clients. Clients of FEIM have the right to receive and the ultimate power to direct the receipt of dividends from, or
the proceeds of the sale of, such securities.
(4) Based on a Schedule 13G/A filed with the SEC on February 12, 2020, The Vanguard Group, Inc. has sole voting power over 748,097 Ordinary
Shares, shared voting power over 129,243 Ordinary Shares, sole dispositive power over 28,553,856 Ordinary Shares, and shared dispositive
power over 852,368 Ordinary Shares. Vanguard Fiduciary Trust Company, a wholly owned subsidiary of The Vanguard Group, Inc., is the
beneficial owner of 610,922 Ordinary Shares as a result of its serving as investment manager of collective trust accounts. Vanguard Investments
Australia, Ltd., a wholly owned subsidiary of The Vanguard Group, Inc., is the beneficial owner of 370,927 Ordinary Shares as a result of its
serving as investment manager of Australian investment offerings.
(5) Based on a Schedule 13D filed with the SEC on May 30, 2017, Bpifrance Participations S.A., jointly with Caisse des Dépôts et Consignations,
EPIC Bpifrance, and Bpifrance S.A., have shared voting power over 24,688,691 Ordinary Shares and shared dispositive power over 24,688,691
Ordinary Shares.
(6) Based on a Schedule 13G filed with the SEC on February 7, 2020, BlackRock, Inc. has sole voting power over 19,747,763 Ordinary Shares and sole
dispositive power over 22,701,632 Ordinary Shares. BlackRock, Inc. reports that various persons have the right to receive or the power to direct
the receipt of dividends from, or the proceeds from, the sale of Ordinary Shares, and no one person’s interest in the Company is more than 5% of
the total outstanding Ordinary Shares.
(7) Based on a Schedule 13G filed with the SEC on February 13, 2020, State Street Corporation and its direct or indirect subsidiaries have shared
voting power over 18,454,907 Ordinary Shares and shared dispositive power over 21,350,343 Ordinary Shares.
81 TechnipFMC
U.K. Annual Report and IFRS Financial Statements 2019 Directors’ Indemnities
Each of our directors is covered by appropriate directors’ and officers’ liability insurance, and there are also deeds of
indemnity in place between the Company and each director. These were executed in 2017 upon the closing of the Merger
and provide for the Company to indemnify the directors in respect of any proceedings brought by third parties against
them personally in their capacity as directors of the Company. The Company would also fund ongoing costs in defending
a legal action as they are incurred rather than after judgment has been given. In the event of an unsuccessful defense in
an action against directors in a criminal or civil action, individual directors would be liable to repay defense costs to the
extent funded by the Company.
Company Details and Branches Outside the
United Kingdom
The Company is a public limited company incorporated in England and Wales with registered number 09909709, and
with our registered office at One St. Paul’s Churchyard, London EC4M 8AP.
The Company has one branch outside of the United Kingdom, which is located in Paris, France.
Dividend
For each quarter in the year ended December 31, 2019, the Board declared an interim quarterly dividend of $0.13 per
share.
Employee Engagement and Business Relationships
Further information on our work on strengthening social dialogue and internal communication, as part of our labor
relations along with information on how we promote cultural and ethnic diversity, including the provision of employment
to people with disabilities, is described in the section entitled “Employee and Social Matters” of the Strategic Report.
Advancing gender diversity is a strategic objective for the Company. More information can be found in the section
entitled “Advancing Gender Diversity” of the Strategic Report as well as in the section entitled “Diversity Policy” of the
Corporate Governance Report. More information on how we take into consideration the need to engage with our
employees and foster business relationships, can be found in the section entitled “Decision making and section 172 of the
Companies Act” of the Strategic Report.
82 TechnipFMC
U.K. Annual Report and IFRS Financial Statements 2019 Greenhouse Gas Emissions
The annual quantity of GHG emissions measured in tons of CO2 equivalent resulting from activities for which the
Company is responsible and has operational control, is described in the section entitled “Respecting the Environment” of
the Strategic Report.
Events since December 31, 2019
No significant events since December 31, 2019 are reported.
Future Developments
Expected future developments of the Company and our subsidiaries are set out in the Strategic Report.
Change in Control
The Companies Act requires the Company to identify (i) those significant arrangements to which the Company is party
that take effect, alter, or terminate upon a change of control of the Company following a takeover bid, (ii) the effects of
any such agreements, and (iii) any agreements with the Company and our directors or employees for compensation for
loss of office or employment that occurs because of a takeover bid.
Provisions under executive severance agreements entered into by each of the Company’s executives, except for our
Executive Chairman, may be triggered in the event of a change of control if certain conditions are met.
The impact of a change in control on the remuneration of the directors of the Company is set out in the paragraph
entitled “Potential Payments upon Change in Control” of the Directors’ Remuneration Policy.
Political Donations
The Company has not made any political donations or incurred any political expenditure during the year ended
December 31, 2019. In addition, the Company has not made any contributions to a non-E.U. political party during the
year ended December 31, 2019.
Financial Risk Management Objectives/Policies and
Hedging Arrangements
Please refer to the paragraph entitled “Risk Management of Financial Reporting” of the Corporate Governance report and
Note 29 of the consolidated financial statements contained in this U.K. Annual Report for information on the Company’s
financial risk management objectives/policies and hedging arrangements.
Research and Development
Please refer to the paragraph entitled “Research and Development” of the Strategic Report.
83 TechnipFMC
U.K. Annual Report and IFRS Financial Statements 2019 Directors’ Responsibility Statements
The directors are responsible for our U.K. Annual Report, containing the Strategic Report, this Directors’ Report, the
Corporate Governance Report, the Directors’ Remuneration Report, and the financial statements contained herein,
in accordance with applicable law and regulations. The Companies Act requires the directors to prepare financial
statements for each financial year. Under that law the directors have prepared the consolidated financial statements
in accordance with international financial reporting standards as issued by the International Accounting Standards
Board and as adopted by the European Union and Company financial statements in accordance with United Kingdom
Generally Accepted Accounting Practice (United Kingdom Accounting Standards, comprising FRS 101 “Reduced Disclosure
Framework”, and applicable law).
Under the Companies Act, the directors must not approve financial statements unless they are satisfied that they give a
true and fair view of the state of affairs of the Company and its consolidated subsidiaries and of the profit or loss of the
Company and its consolidated subsidiaries for that period.
In preparing these financial statements, the directors are required to:
` Select suitable accounting policies and then apply them consistently
` Make judgements and accounting estimates that are reasonable and prudent
` State whether applicable IFRS as adopted by the European Union have been followed for the consolidated financial
statements and United Kingdom Accounting Standards, comprising FRS 101, have been followed for the Company
financial statements, subject to any material departures disclosed and explained in the financial statements
` Prepare the financial statements on the going concern basis unless it is inappropriate to presume that the Company
and its consolidated subsidiaries will continue in business
The directors are responsible for ensuring that the Company keeps adequate accounting records that are sufficient to
show and explain the Company’s and its consolidated subsidiaries’ transactions and disclose with reasonable accuracy
at any time the financial position of the Company and its consolidated subsidiaries and enable them to ensure that
the financial statements and the U.K. Annual Report comply with the Companies Act and, as regards the consolidated
financial statements, Article 4 of the E.U. IAS Regulation. They are also responsible for safeguarding the assets of the
Company and its consolidated subsidiaries and for taking reasonable steps for the prevention and detection of fraud and
other irregularities.
The directors are responsible for the maintenance and integrity of the Company’s website. Legislation in the United Kingdom
governing the preparation and dissemination of financial statements may differ from legislation in other jurisdictions.
Statement as to the U.K. Annual Report
The directors consider that this U.K. Annual Report and financial statements, taken as a whole, is fair, balanced, and
understandable and provides the information necessary for shareholders to assess the Company’s and its consolidated
subsidiaries’ performance, business model, and strategy.
Each of the directors, whose names and functions are listed in the section entitled “Directors” of this Report, confirms
that to the best of his/her knowledge:
` The financial statements, prepared in accordance with applicable accounting standards, give a true and fair view of the
assets, liabilities, financial position, and profit or loss of the Company and the undertakings included in the consolidation
taken as a whole.
` The Directors’ Report and Strategic Report include a fair review of the development or performance of the business
and the position of the Company and the undertakings included in the consolidation taken as a whole, together with a
description of the principal risks and uncertainties that it faces.
84 TechnipFMC
U.K. Annual Report and IFRS Financial Statements 2019 Statement as to Disclosure to Auditors
The directors confirm that:
` So far as they are each aware, there is no relevant audit information of which the Company’s and its consolidated
subsidiaries’ auditor is unaware.
` They have each taken all the steps that they ought to have taken as a director in order to make themselves aware of
any relevant audit information and to establish that the Company’s and its consolidated subsidiaries’ auditor is aware of
that information.
On behalf of the Board
Douglas J. Pferdehirt
Chairman and CEO
March 13, 2020
85 TechnipFMC
U.K. Annual Report and IFRS Financial Statements 2019
Corporate Governance Report
The Board believes that the purpose of corporate governance is to facilitate effective oversight and management of
the Company to maximize shareholder value in a manner consistent with our vision statement, purpose, core values,
Foundational Beliefs, Code of Business Conduct, and all applicable legal requirements.
The Board provides accountability, objectivity, perspective, judgment, and, in some cases, specific industry or technical
knowledge or experience. In carrying out its responsibilities to our shareholders, the fundamental role of the Board is to
ensure continuity of leadership; the implementation, understanding, and pursuit of a sound strategy for the success of
our Company; and the availability of financial and management resources and the implementation of control systems to
carry out that strategy.
Board Composition and Independence
The Company’s current Board consists of 14 members, 13 of whom are independent under the rules of the NYSE.
Directors’ biographies can be found at https://www.TechnipFMC.com/en/who-we-are/board-of-directors.
Criteria for Board Membership in Governance Guidelines
Our Governance Guidelines state that candidates for our Board, in order to be nominated by our Nominating and
Corporate Governance Committee (or a subcommittee thereof), must be qualified and eligible to serve under applicable
law, our articles of association (“Articles”), and the NYSE and Euronext rules, and should have:
` A high level of personal and professional integrity
` Strong ethics and values
` The ability to make mature business judgments
In addition, the Governance Guidelines provide that the Nominating and Corporate Governance Committee, or relevant
subcommittee, may consider additional factors when determining whether a candidate is qualified to serve on our Board,
including the candidate’s:
` Experience in corporate management, as a board member of another publicly held company, and in finance and
accounting and/or compensation practices
` Professional and academic experience relevant to our industry
` Leadership skills
` Cultural perspective and diversity of thought
` Ability to commit the time required for service on our Board
86 TechnipFMC
U.K. Annual Report and IFRS Financial Statements 2019 Board Composition, Refreshment, and Succession Planning
The Nominating and Corporate Governance Committee regularly evaluates the composition of our Board and considers
whether the Board has the right set of backgrounds, experience, skills, diversity, and qualifications to effectively oversee
our Company’s strategy and our executives’ execution of that strategy. One of the key goals of our Board composition is
to ensure we have the right skills and experience on our Board to execute our strategic goals successfully and efficiently.
Our current directors possess a diversity of skills, experience, and expertise that are relevant to our business, such as
experience in the following:
` Executive leadership
` Industry experience
` Corporate governance and legal
` Strategy and risk management
` Cultural and gender diversity
` Sustainability and emerging technologies
` Outside public company board service
` Finance and audit
` Acquisition, divestment, and investment portfolio management
In 2019, two of our directors, Messrs. Thierry Pilenko and Richard Pattarozzi, retired at our 2019 Annual Meeting. Our
Nominating and Corporate Governance Committee, with the assistance of Spencer Stuart, a nationally recognized director
search firm, identified, screened, and assessed the capabilities of potential new director candidates. This rigor assisted
the Company in identifying and retaining two new Board members in 2019, Messrs. Olivier Piou and John Yearwood, as
part of our ongoing Board refreshment focus.
In addition to evaluating directors’ skills and experience that tie directly to our business strategy, the Nominating and
Corporate Governance Committee also regularly considers any changes in the professional status, independence, outside
commitments, and other public company directorships of our directors to assess the potential impact of these changes on
the Board’s effectiveness.
As further described in our Governance Guidelines, a non-executive director whose birth date occurs prior to July
1st must retire at the annual general meeting of shareholders of the Company during the year of such director’s 72nd
birthday, and a non-executive director whose birth date occurs on or after July 1st must retire at the annual general
meeting of shareholders of the Company the year following such director’s 72nd birthday. Our Board may waive this
policy on a case-by-case basis on the recommendation of the Nominating and Corporate Governance Committee if it
deems a waiver to be in the best interests of the Company and its shareholders.
87 TechnipFMC
U.K. Annual Report and IFRS Financial Statements 2019
Enterprise Risk Management
Executive management is responsible for the day-to-day management of the risks the Company faces, while our Board,
as a whole and through its various committees, has responsibility for the oversight of risk management for the Company.
The Company has an Enterprise Risk Management (“ERM”) process and framework to identify and evaluate varying
levels of risk and their potential impact on the Company, as well as steps to further mitigate those risks. As part of the
ERM framework, our senior management, led by our CEO, undertakes a process that identifies, categorizes, and analyzes
the relative severity and likelihood of the various risks to which the Company is or may be subject. In addition, our Board
and its committees receive periodic reports from senior management that identify and assess significant enterprise-
related risks and address mitigation strategies and plans implemented or proposed for each key risk. In 2019, the
Company retained external consultants to review our ERM program and benchmark our risk identification and mitigation
processes against best practices within the industry.
In addition, while the Board has ultimate responsibility for overall risk management oversight, it has designated each of
its four Board committees with oversight of certain risks within their own areas of responsibility, as indicated in the table
below.
Audit
Compensation
Nominating and
Corporate Governance
Strategy
` Financial reporting
` Compensation policies
` Legal and regulatory
` Global strategy
` Liquidity
` Contract management
` Cybersecurity
` Legal and regulatory
compliance related to
financial statements and
disclosures
` Information-related
risks, such as
cybersecurity, taxes,
and foreign exchange
` Insurance
and practices (including
employee benefit plans
and administration of
equity plans)
related to emerging or
evolving competitive
activity, governmental
or legislative
developments, and
global economic
conditions
corporate governance
compliance
` Director succession
` Crisis management
preparedness
` Emergency procedures
for management
succession
` Environmental,
sustainability,
and governance
88 TechnipFMC
U.K. Annual Report and IFRS Financial Statements 2019 Committees of the Board
Our Board has an Audit Committee, a Compensation Committee, a Nominating and Corporate Governance Committee, and
a Strategy Committee, each of which comprises at least four directors, selected by the Board upon the recommendation
of the Nominating and Corporate Governance Committee. Each member of our Audit Committee, Compensation
Committee, and Nominating and Corporate Governance Committee meets the heightened independence standards as
defined under the NYSE’s listing standards and SEC rules, as applicable, to which we are subject as a result of our listing
on the NYSE. Additionally, each member of our Audit Committee qualifies as an “audit committee financial expert” as
defined by SEC rules.
Following our announced spin-off transaction, TechnipFMC and Technip Energies will each have an Environmental,
Sustainability, and Governance Committee to better reflect our focus on these critical areas. For TechnipFMC, this
committee will replace its current Nominating and Corporate Governance Committee.
The Board receives regular updates from its committees on individual categories of risk, including strategy, financial/
operations, cybersecurity, people, technology, investment, legal/compliance, political/legislative/regulatory, and corporate
responsibility and sustainability. Each of these committees operates pursuant to a written charter setting out the
functions and responsibilities of the committee, which is reviewed annually, and may be viewed on our website at
www.TechnipFMC.com under the heading “About us > Governance.”
Audit Committee
2019 Meetings: 5
Members
Primary Responsibilities
Marie-Ange Debon
(Chair)
Eleazar de Carvalho
Filho
` Oversight of the financial management and control of the Company, as well as oversight of
the Company’s independent registered public accounting firm
` Monitoring the Company’s financial reporting process
` Reviewing the Company’s consolidated financial statements and internal controls with
Arnaud Caudoux
management and the independent auditor
Kay G. Priestly
` Monitoring the Company’s compliance with its internal accounting and control policies,
Joseph Rinaldi
as well as legal and regulatory requirements to the extent such compliance relates to the
consolidated financial statements and financial disclosures
` Selecting, subject to shareholder approval, the Company’s independent auditor, and
reviewing the qualifications, independence, performance, and remuneration of such
independent auditor
` Reviewing the effectiveness and performance of the Company’s internal audit function
` Considers risks relating to cybersecurity and receives regular reports on the Company’s
cyber readiness, adversary assessment, risk profile status, and any countermeasures
being undertaken or considered by the Company
` Reviewing the effectiveness of processes for reviewing and escalating financial-related
allegations reported through the Company’s allegation hotline
89 TechnipFMC
U.K. Annual Report and IFRS Financial Statements 2019 Compensation Committee
2019 Meetings: 5
Members
Primary Responsibilities
James M. Ringler
(Chair)
Claire S. Farley
John O’Leary
Joseph Rinaldi
John Yearwood
` Reviewing, evaluating, and approving the agreements, plans, policies, and programs of
the Company to compensate its independent directors, the Chairman and CEO, and other
officers
` Consistent with equity plans approved by the Company’s shareholders, reviewing,
evaluating, and approving all equity awards by the Company to executive officers and
approving the number of equity securities or equity derivatives that the CEO is authorized
to allocate to all other employees at his discretion
` Reviewing the compensation disclosures in the Company’s U.K. annual report and proxy
statement for the Company’s annual general meeting of shareholders
` Producing the Compensation Committee Report to be included in the Company’s proxy
statement
` Reviewing, evaluating, and approving the directors’ remuneration policy and the directors’
remuneration report
` Otherwise discharging the Board’s responsibilities related to compensation of the
Company’s executive officers and directors
Nominating and Corporate Governance Committee
2019 Meetings: 6
Members
Primary Responsibilities
Peter Mellbye (Chair)
` Advising and making recommendations to the Board regarding appropriate corporate
Pascal Colombani
Didier Houssin
Olivier Piou
John Yearwood
governance practices and assisting the Board in implementing those practices
` Monitoring the development and implementation of the Company’s compliance program
(including procedures for allegation reporting, investigation, and remediation) to ensure
that the Company operates in compliance with the principles of ethical conduct and good
governance
` Reviewing the Company’s corporate responsibility and sustainability program and key
performance indicators
` Reviewing the Company’s succession plans for the Chairman and CEO, and other executive
officers
` Identifying individuals qualified to become members of the Board and recommending
director nominees for election at the annual general meeting of shareholders or for
appointment to fill vacancies on the Board
` Recommending directors to serve on each committee of the Board and recommending the
Lead Independent Director
` Leading the Board in the annual performance evaluation of the Board and its committees
90 TechnipFMC
U.K. Annual Report and IFRS Financial Statements 2019 Strategy Committee
2019 Meetings: 5
Members
Primary Responsibilities
Douglas J. Pferdehirt
(Chair)
` Reviewing the development and implementation of the Company’s long-term global
strategy, risks, and opportunities relating to such strategy
Pascal Colombani
` Reviewing strategic decisions regarding major asset acquisitions, divestitures, joint
ventures, and strategic alliances by the Company
Claire S. Farley
Didier Houssin
Peter Mellbye
Olivier Piou
Internal Control over Financial Reporting
The Board has overall responsibility for the Company’s internal control over financial reporting. It is one of the
responsibilities that has been delegated to the Audit Committee. As set out in the paragraph entitled “Committees of the
Board” above, the Audit Committee is responsible for reviewing the Company’s internal controls (including reporting
structures), monitoring compliance with its internal accounting and control policies, and the effectiveness of the
Company’s internal audit function.
As part of its role, the Audit Committee is required to review, at least annually, the budget and current and future
programs of the Company’s internal audit department to assure it contains resources necessary to complete the annual
audit plan in accordance with appropriate professional standards for internal auditors and review summaries of formal
audit reports issued by the internal audit department.
In addition, each quarter, under the direction of the CEO and Chief Financial Officer, the Company is required to evaluate
the effectiveness of our disclosure controls and procedures, as defined in Rules 13a-15(e) and 15d-15(e) under the United
States Securities Act of 1934, as amended (the “Exchange Act”).
Evaluation of Disclosure Controls and Procedures
As of December 31, 2019, and under the direction of our CEO and Chief Financial Officer, we evaluated the effectiveness
of our disclosure controls and procedures, as defined in Rule 13a-15(e) under the Exchange Act. Based upon this
evaluation, our CEO and Chief Financial Officer concluded as of December 31, 2019, that our disclosure controls and
procedures were effective.
Management’s Annual Report on Internal Control over Financial Reporting
Management is responsible for establishing and maintaining adequate internal control over financial reporting as defined
in Rule 13a-15(f) under the Exchange Act.
Management evaluated the effectiveness of our internal control over financial reporting as of December 31, 2019 based
on the framework in Internal Control-Integrated Framework (2013) issued by the Committee of Sponsoring Organizations
of the Treadway Commission. As a result of this evaluation, management concluded that our internal control over
91 TechnipFMC
U.K. Annual Report and IFRS Financial Statements 2019 financial reporting was effective as of December 31, 2019.
The effectiveness of our internal control over financial reporting as of December 31, 2019, has been audited by
PricewaterhouseCoopers LLP, an independent registered public accounting firm, as stated in their report included herein.
Remediation Activities of Previously Disclosed Material Weaknesses
As of December 31, 2018, our management concluded that we had not maintained effective internal control over
financial reporting in the following areas:
i. period-end financial reporting
ii. accounting for income taxes.
Both material weaknesses were remediated as of December 31, 2019, as noted below.
Period-end Financial Reporting - Remediated as of December 31, 2019
We previously reported that in certain locations, we did not design and maintain effective controls over the period-
end financial reporting process. We had ineffective controls over the documentation, authorization, and review of
adjustments to and reconciliations of financial information.
These deficiencies did not result in a material misstatement of the financial statements; however, the deficiencies, when
aggregated, could have resulted in material misstatements of the consolidated financial statements and disclosures that
would not have been prevented or detected. Accordingly, our management determined that these deficiencies, in the
aggregate, constituted a material weakness.
Management took the following corrective actions to address this material weakness:
` Provided additional training and continuous guidance to finance team members on the requirements around control
processes;
` Improved the timeliness and effectiveness of our review and approval procedures; and
` Improved the control activities and execution thereof related to the review of adjustments to and reconciliations of
financial information.
As a result of these remediation activities and based on testing of the new and modified controls for operating
effectiveness, our management concluded that we remediated the material weakness related to period-end financial
reporting as of December 31, 2019.
Accounting for income taxes - Remediated as of December 31, 2019
We previously reported that we did not design and maintain effective controls over the completeness, accuracy, and
presentation of our accounting for income taxes, including the income tax provision and related income tax assets and
liabilities.
These deficiencies did not result in a material misstatement of the financial statements; however, the deficiencies, when
aggregated, could have resulted in material misstatements of the consolidated financial statements and disclosures that
would not have been prevented or detected. Accordingly, our management determined that these deficiencies, in the
aggregate, constituted a material weakness.
Management took the following corrective actions to address this material weakness:
` Reinforced the proper usage of the Company’s global taxation tool, implemented in 2018, by issuing detailed
instructions and application descriptions;
` Provided additional training to finance team members on the appropriate use of the global taxation tool;
92 TechnipFMC
U.K. Annual Report and IFRS Financial Statements 2019
` Improved the timeliness and effectiveness of our review and approval procedures; and
` Improved the control activities and execution thereof related to our accounting for income taxes.
As a result of these remediation activities and based on testing of the new and modified controls for operating
effectiveness, our management concluded that we remediated the material weakness related to accounting for income
taxes as of December 31, 2019.
Changes in Internal Control over Financial Reporting
Other than steps taken in connection with the completion of the remediation activities described above, there were no
changes in our internal control over financial reporting during the three months ended December 31, 2019 that have
materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
Risk Management of Financial Reporting
The Board believes that one of its most important roles is the oversight of the Company’s management of risk, which
the Board accomplishes through its Enterprise Risk Management program. Management presents to the Board the
risk areas that it believes to be the most significant and the plan for the assessment, monitoring and management of
those risks. The Board has ultimate responsibility for overall risk management oversight; however, it has designated the
Audit Committee with oversight of financial risk. The Audit Committee discusses with management on a regular basis
financial reporting, liquidity, contract management, legal and regulatory compliance, information-related risks, including
cybersecurity, taxes, and foreign exchange. The Audit Committee reviews the potential financial impacts of these risks,
the steps the Company takes to ensure that appropriate processes are in place to identify, manage, and control financial
and business risks and that the Company has adequate insurance coverage to mitigate these risks. In cases where a
practice or procedure is identified, or an operational incident occurs that could heighten the possibility of a negative
impact on our operations or financial results, our management reports to the Board the steps to be taken to ensure that
the risk is appropriately managed.
Code of Business Conduct
Our Code of Business Conduct is built on our Foundational Beliefs and gives our directors, officers, and employees
a common language and playbook for decisions and actions that help us live our core values. We are committed to
establishing and maintaining an effective compliance program that is intended to increase the likelihood of preventing,
detecting, and correcting violations of Company policy and the law. Moreover, we have a hotline in place for employees,
officers, directors, and external parties to anonymously report violations of our Code of Business Conduct or complaints
regarding accounting and auditing practices. Reports of possible violations of financial or accounting policies are reported
to our Audit Committee.
We will disclose amendments to, or waivers of, our Code of Business Conduct that are required to be disclosed under
SEC and NYSE rules or any other applicable laws, rules, and regulations. Any waiver of our Code of Business Conduct for
our officers and directors must be approved by the Board or a relevant Board committee. We have not made any such
waivers and do not anticipate making any such waiver.
The Code of Business Conduct can be found on our website at www.TechnipFMC.com under the heading “About us >
Governance”.
93 TechnipFMC
U.K. Annual Report and IFRS Financial Statements 2019 Diversity Policy
The Code of Business Conduct focuses on fair employment practices and equal opportunity, requiring decisions not
influenced by race, color, religion, gender, age, ethnic origin, nationality, sexual orientation, marital status, or disability.
More details are set out in the section entitled “Corporate Responsibility and Sustainability–Non-financial Information
Statement” of the Strategic Report.
Significant Shareholdings
Details of the significant shareholdings of the Company are set out above in the section entitled “Significant Shareholdings”
of the Directors’ Report.
On behalf of the Board
Douglas J. Pferdehirt
Chairman and CEO
March 13, 2020
94 TechnipFMC
U.K. Annual Report and IFRS Financial Statements 2019 Directors’ Remuneration
Report
Introduction and Compliance Statement
The purpose of this Directors’ Remuneration Report is to inform shareholders of the remuneration of the directors of
TechnipFMC for the period ended December 31, 2019. This report is divided into two sections:
i. The letter from the Chair of the Compensation Committee
ii. The Annual Report on Remuneration for 2019 including an upfront “At-a-Glance” section to highlight the key aspects
of remuneration policy
Note that the Remuneration Policy is not required in this year’s report following shareholder acceptance on June 14,
2018. Our Remuneration Policy is set out in this U.K. Annual Report after this Directors’ Remuneration Report to enable
you to easily review our report in the context of the policy to which it applies.
Pursuant to English law, the Directors’ Remuneration Report forms part of the statutory annual report of the Company
for the year ended December 31, 2019 and has been prepared by the Compensation Committee on behalf of the Board
in accordance with the laws, rules, and regulations applicable to the Company.
The Annual Report on Remuneration (elements of which are audited) describes the directors’ fixed and variable pay,
share awards, benefits, and pension arrangements, as required by Schedule 8 of the Large and Medium-sized Companies
and Groups (Accounts and Reports) Regulations 2008 (the “U.K. Regulations”). The Annual Report on Remuneration will
be subject to a non-binding advisory shareholder vote at the 2020 Annual Meeting on April 24, 2020.
95 TechnipFMC
U.K. Annual Report and IFRS Financial Statements 2019 Letter from the Chairman of the
Compensation Committee
Dear Shareholders,
On behalf of the Board, I am pleased to present the Directors’ Remuneration Report of the Company, covering the period
from January 1, 2019 to December 31, 2019. This is our third report since TechnipFMC was formed and the year has
proven to be transformative with our announced separation into two diversified, pure-play market leaders — TechnipFMC
and Technip Energies — planned to be completed in the second quarter of 2020, contingent upon the final approval of
our Board of Directors as well as market conditions and the receipt of regulatory approvals. The separation will enable
both companies to benefit from distinct and compelling market opportunities across the energy value chain; dedicated
focus of management; resources and capital; and unique value propositions with differentiated investment appeal.
The year was also marked by the retirement of Thierry Pilenko as Executive Chair at our AGM on May 1, 2019, with
Douglas Pferdehirt assuming the combined role of Chairman and CEO from May 1, 2019.
This means that Douglas Pferdehirt is now our sole Executive Director, a structure whilst relatively uncommon in the
United Kingdom is typical of U.S.-listed corporations. Details of Mr. Pilenko’s departure provisions and Mr. Pferdehirt’s
remuneration are provided in our Annual Report on Remuneration and summarized in the section below.
Notwithstanding these changes the executive leadership of TechnipFMC remained focussed on execution of strategy
during 2019, the key highlights of which are summarized below as they relate to compensation outcomes.
Our Compensation Philosophy and How that Informs Decision Making
We are a global leader in oil and gas projects, technologies, systems, and services and provide our clients with deep
expertise across subsea, onshore/offshore, and surface projects. Our vision to enhance performance of the world’s
energy industry is supported by the relentless drive of every individual at TechnipFMC. We are united by one single
purpose: to bring together the scope, knowledge, and determination to transform our clients’ project economics. Our
executive compensation is designed to help us achieve our vision by:
` Motivating our executive officers to achieve and exceed our short-term and long-term goals and objectives
` Aligning the interest of our executive officers with the interests of our shareholders by focusing our executive
compensation program on drivers of sustainable shareholder value and by ensuring a majority of executive
compensation is at-risk
` Providing market competitive levels of compensation to help us retain and attract exceptionally talented individuals
who can deliver on our vision
Remuneration Arrangements in 2019
With the departure of Mr. Pilenko and appointment of Mr. Pferdehirt as combined Chairman and CEO during the year,
the Committee reviewed and approved both the retirement payments and compensation package for each executive,
respectively. All payments were in line with our shareholder approved Remuneration Policy.
Mr. Pilenko left the Board of Directors effective May 1, 2019. In accordance with his service agreement, the Committee
determined that Mr. Pilenko would be entitled to receive a pro-rata annual cash incentive target of 120% of his annual
base salary, based on his service from January 1, 2019 to May 1, 2019, in addition to those payments due to him.
Further information can be found in the paragraph entitled “Payments for Loss of Office”.
96 TechnipFMC
U.K. Annual Report and IFRS Financial Statements 2019 Shareholder Engagement
Our Compensation Committee takes shareholder input seriously, carefully reflecting on the results of shareholder
advisory votes and feedback received during shareholder engagement. At our 2019 annual general meeting of
shareholders, 79.9% of votes cast approved our 2018 Remuneration Report with 20.1% voting against the report.
While this represented majority support, the Compensation Committee wanted to better understand the reasons some
shareholders voted against our 2018 executive compensation.
Through our shareholder engagement efforts, our Board and executive leadership team solicited feedback specifically
on our 2018 executive compensation program and considered shareholders’ input within the context of our pay-for-
performance philosophy, business, and strategies.
In response to shareholder feedback received in 2019, we took the following actions:
` Eliminated the role of Executive Chairman following completion of post-Merger integration and reduced to a single,
CEO-level compensation structure.
` Discontinued the use of stock options so that performance-based equity will represent 70% of all annual equity
awards beginning in 2020, and annual equity awards will comprise only performance stock units (“PSUs”) (70%) and
restricted stock units (“RSUs”) (30%).
` Retained the metric, EBITDA as a Percentage of Revenue, under our annual incentive plan to reinforce the link
between annual incentive metrics and business strategy.
` Continued the use of Return on Invested Capital (“ROIC”) in our long-term equity incentive plan, in addition to
relative Total Shareholder Return (“TSR”). ROIC is an absolute financial metric that measures management’s ability
to efficiently allocate capital, and performance for ROIC is measured against an internal target. The relative TSR
metric is based on share price performance relative to an external peer group. Due to the cyclical nature of the oil
and gas industry, shareholders have supported inclusion of both internal and external metrics in long-term equity
incentive plans.
` Based a portion of our Chairman and CEO’s annual cash incentive bonus on certain sustainability measures to further
reinforce the Company’s commitment to our Foundational Beliefs.
` Updated our compensation and performance peer groups to reflect changes in our business environment.
` Simplified disclosures in our Remuneration Report to provide additional details and calculations, including enhanced
descriptions of the individual performance component of our annual cash incentive bonus plan, as well as our target-
setting process and our peer group selection rationale.
97 TechnipFMC
U.K. Annual Report and IFRS Financial Statements 2019 Proposed Remuneration Arrangements in 2020
For 2020 we are proposing modest modifications to the implementation of our executive compensation program, in
line with our shareholder approved Remuneration Policy, and informed by feedback we received from our shareholders
during engagement in 2019.
The most significant change is a rebalancing of our long-term incentive mix with the removal of stock options. While the
Committee believed this to be an appropriate performance-based vehicle, given its inherent link to long-term sustainable
value creation, our shareholders did not universally agree. Furthermore, as we navigate the separation and strategic
realignment there is the risk of unintended windfalls primarily driven by stock price volatility. The 20% of the long-term
incentive mix that was previously delivered in stock options will be reallocated equally to PSUs and RSUs as follows:
SO
20%
RSU
20%
2019
PSU 60%
RSU
30%
2020
PSU 70%
We decided to base a portion of our CEO’s annual cash incentive bonus on certain sustainability measures to further
reinforce the Company’s commitment to our Foundational Beliefs.
Looking Ahead
As the Company continues to evolve, particularly with the announced separation to create two companies: TechnipFMC
and Technip Energies, it is important that we maintain a close eye on our executive compensation program to ensure it
remains aligned to our strategy and responsive to shareholder feedback, and tailored to their specific business needs.
We look forward to hearing your views on our executive compensation arrangements, and your continued support at the
2020 Annual Meeting.
Yours sincerely,
James M. Ringler
Director and Compensation Committee Chairman
March 13, 2020
98 TechnipFMC
U.K. Annual Report and IFRS Financial Statements 2019
Annual Report on Remuneration:
At-a-Glance – 2019 Highlights
TechnipFMC 2019 Performance
TechnipFMC operates a sophisticated, global business in a highly competitive industry that has been negatively impacted
by an extended period of low commodity prices. Our solutions add value to some of the largest capital investments in
the world. We identified an opportunity to change the way projects are conceived and executed in the industry with the
introduction of our subsea integrated engineering, procurement, construction, and installation (“iEPCI”) business model
aimed at lowering project costs and accelerating the delivery of initial hydrocarbon production.
In 2019, the value of these integrated subsea awards to TechnipFMC more than doubled versus the prior year,
representing more than 40% of all Subsea inbound orders. The increase was driven by further adoption of the integrated
business model, particularly with those clients where we have unique alliances. With the industry’s most comprehensive
and only truly integrated market offering, we have continued to expand the deepwater opportunity set for our
customers.
TechnipFMC’s expertise does not end with the development of hydrocarbons. Because of its best-in-class project design
and execution capabilities, enabled by a portfolio of proprietary technologies, TechnipFMC continues to secure and
deliver projects that further enable our clients to monetize resources — from liquefaction of gas, both onshore and on
floating vessels, to refining and production facilities, through new energy solutions and applications for the world’s
energy transition.
13
40%+
of all inbound
Subsea orders
are iEPCI™
iEPCI™
awards
99 TechnipFMC
U.K. Annual Report and IFRS Financial Statements 2019 On August 26, 2019, the Company announced that it will separate into two diversified, pure-play market leaders —
TechnipFMC, focused on subsea and surface hydrocarbon production, and Technip Energies, focused on downstream
EPC project execution. We expect to complete the transaction in the first half of 2020, subject to financing, general
market conditions, regulatory approvals, consultation of employee representatives, where applicable, and final approval
from our Board of Directors. The separation will enable both companies to benefit from distinct and compelling market
opportunities across the energy value chain; dedicated focus of management, resources, and capital; and unique value
propositions with differentiated investment appeal.
TechnipFMC (RemainCo)
Technip Energies (SpinCo)
TechnipFMC will be a fully integrated
technology and services provider, driving
energy development across deepwater,
conventional, and unconventional resources.
The Company will continue to demonstrate
leadership in integrated subsea project
delivery and will focus on replicating this
success through the development of integrated
production models for the surface production
market.
TechnipFMC is also poised to benefit from
service opportunities resulting from the
world’s largest installed base of subsea
production equipment, umbilicals, risers, and
flowlines.
Technip Energies will be a leading engineering
and construction provider, with a robust
project delivery model, strong technical
capabilities, and proven track record as
demonstrated by the successful execution of
some of the world’s most iconic EPC projects.
The new company will continue to leverage its
industry-leading process technology portfolio,
particularly in the areas of ethylene and
hydrogen, while pursuing further opportunities
to enhance and differentiate this portfolio.
Creating Two Industry Leaders
Distinct and compelling
market opportunities
Unique business profiles with
differentiated investment appeal
Strong balance sheets and
tailored capital structures
Focus, agility, and
strategic flexibility
Continuing to reshape the energy industry and create value for all stakeholders
We expect that the executive compensation programs for these two companies will continue to emphasize performance
and will be tailored to each company’s business and strategy.
100 TechnipFMC
U.K. Annual Report and IFRS Financial Statements 2019 Key Strategic Achievements in 2019
We have summarized some of our key 2019 results and achievements below.
Subsea
Financials1
Onshore/Offshore
Surface Technologies
` Revenue growth of 14% versus the
prior year, driven by double-digit
growth in both project and service
activities
$8bn
inbound orders
` Integrated project activity a higher mix
of business portfolio
Backlog
$8.5bn
` Three quarters of sequential revenue
growth, as segment revenue has
inflected above the 2018 trough
` Revenue growth excluding the Yamal
LNG project exceeded 25% versus the
prior year
$13.1bn
inbound orders
Backlog
$15.3bn
` Revenue growth of more than 15%
in markets outside of North America
versus the prior year
$1.6bn
inbound orders
` Surface international revenues account
for more than 50% of total segment
Backlog
$0.5bn
(1) Reported financial results for the twelve months ended December 31, 2019 and inbound and backlog as of December 21, 2019 as reported in our
financial statements as contained in this U.K. Annual Report.
101 TechnipFMC
U.K. Annual Report and IFRS Financial Statements 2019 ` Inbound order growth exceeded 50% versus the prior year driven by integrated (iEPCI™)
awards, subsea services, and new technologies
` Continued growth in adoption of the integrated model across multiple clients and regions
including the Mozambique LNG Subsea project, our largest integrated subsea award to
date
` Awarded industry’s first 20,000 psi high-pressure, high-temperature system for LLOG’s
Shenandoah project in the U.S. Gulf of Mexico
` Further enhanced our competitive position through newly formed strategic partnerships,
with particular focus on expanding the number of clients engaged in iEPCI alliances
` Entered into a strategic collaboration agreement with Allseas to jointly pursue
deepwater projects where the assets, products, and capabilities of both companies are
complementary and support the execution of our differentiated iEPCI business model
` Inbound order growth exceeded 75% versus the prior year driven by EPC contract
awards for LNG projects including:
`Novatek Arctic LNG 2 project which leverages our proven track record in delivering
harsh environment mega projects
`ExxonMobil Rovuma LNG project which builds upon our local content and expands our
capabilities in Africa; the full value of the EPC contract will be included in backlog upon
issuance of full notice to proceed, most likely in conjunction with project FID
` Strong order activity also supported by project awards in the downstream and gas
monetization sectors:
`MIDOR Refinery modernization and expansion in Egypt
`ExxonMobil Refinery crude expansion project in the U.S. Gulf of Mexico
`BP Greater Tortue Ahmeyim gas FPSO offshore Africa
` Entered into EPICEROL® strategic license agreement with Meghmani Finechem, marking
our first “green” epichlorohydrin (ECH) technology license in India
Market Leadership
Subsea
Onshore/Offshore
102 TechnipFMC
U.K. Annual Report and IFRS Financial Statements 2019 Surface Technologies
` Capitalized on our high degree of vertical integration and technology differentiation
outside North America where revenue increased more than 20% versus the prior year
` Successful introduction of several new product development items from
our Frac 2.0 suite
` Successful introduction of our first Automated Well Testing Unit in the Bakken
` Applying our subsea integrated model to the U.S. land production market to further
transform our North American business
` Awarded loading arms for a LNG project in Asia Pacific, one of our largest orders to date
Disciplined Capital Allocation
Total shareholder distributions
of $326 million:
Capital expenditures*
of $378 million:
Further optimization
of Subsea fleet:
` Dividend payments
of $233 million
initiatives
` Continued to fund targeted growth
` Disposal of a pipelay vessel
` Repurchase of Ordinary Shares of
` Capital expenditures were below
$93 million
depreciation
* Excludes $80 million associated with dive
support vessel acquisition
while retaining predetermined
operational access
` Consolidation of pipelay support
vessel joint venture to maximize
fleet optionality
While 2019 presented a competitive and challenging environment, our relentless focus on strong project execution and
cost reduction drove solid operational performance. Our integrated business models have further reinforced our market
leadership. We achieved robust year-over-year growth in inbound orders and backlog in both Subsea and Onshore/
Offshore, providing improved revenue visibility for 2020 and beyond. We are capitalizing on the offshore recovery and
current LNG cycle through early customer engagement, demonstrated engineering capabilities, and multicenter execution.
Additionally, in Surface Technologies, we are taking aggressive restructuring actions in North America to further realign
our product and service offering to the changing markets, while leveraging our strong international franchise for the
growth we see in markets outside of the United States. In support of the overall strategy, we continue to focus on quality,
health, safety, and environment with the implementation of our quality and safety program.
For detailed information regarding our 2019 results, please see our financial statements, as reported in this U.K. Annual
Report.
103 TechnipFMC
U.K. Annual Report and IFRS Financial Statements 2019 2019 Performance Impact on Compensation
The table below outlines the elements of our compensation program that are directly tied to Company performance,
along with 2019 performance and resulting payouts.
Compensation
Element
Objective
2019 Performance
Measures
2019 Performance
2019 Payout
Long-Term
Equity
To drive and reward
the achievement of
long-term results and
align interests of an
executive director with
shareholder interests
30% PSUs
3-year ROIC
> 2017-2019
performance of 6.9%1
30% PSUs
3-year relative TSR
>
2017-2019
performance of
5th rank1
>
>
0% of target1
100% of target1
The remaining 40% of the long-term equity incentive was delivered in the form of stock options (20%) and RSUs (20%),
the delivered value of which will also depend on share price appreciation, and thus is aligned with shareholder interests.
Annual Cash
Incentive
Bonus
To drive and reward the
achievement of short-
term Company strategic
goals and individual
contributions
25% EBITDA
> $1,667 million2 - 162%
performance rating
25% EBITDA
as a Percentage
of Revenue
25% Working
Capital Days
25% Annual
Individual
Performance
> 12.4% - 155%
performance rating
> 74 days - 200%
performance rating
Ranging from 140%
to 180% performance
>
rating
>
>
>
>
162% of target
155% of target
200% of target
140% to 180%
of target
(1) Payout for the 2017-2019 grant has been provided instead of payout for the 2019-2021 grant, since payout for the latter will only be determined
at the end of 2021.
(2) Please refer to Note 33 of the consolidated financial statements of this U.K. Annual Report for a reconciliation to the most directly comparable
GAAP measure.
Our pay-for-performance program aims to motivate our Chairman and CEO to achieve and exceed both our short-term
and long-term goals and objectives by including an appropriate mix of long-term equity compensation and annual
cash incentive bonus compensation. As intended by our program, our Chairman and CEO’s compensation was directly
impacted by our performance.
Long-Term Equity
The majority of our Chairman and CEO’s variable compensation is in the form of long-term equity compensation,
comprising 85% of 2019 total target variable compensation. Our Chairman and CEO achieved a payout of 50% of target on
his 2017 performance-based, long-term equity incentive awards, based on the following:
` For the ROIC measure, we did not meet the threshold performance for the 2017-2019 performance period, and as a
result, the ROIC component of the 2017 PSU awards paid out at 0%
104 TechnipFMC
U.K. Annual Report and IFRS Financial Statements 2019 ` For the three-year relative TSR measure, we achieved above-target performance for relative TSR for the 2017-2019
performance period based on our performance relative to our 2017 Performance Peer Group as defined in our 2017
U.K. Annual Report (“2017 Performance Peer Group”). However, our absolute TSR performance was negative given
the overall oil and gas market conditions during the same period. Therefore, our payout under our incentive plan was
capped at target (100%) given the absolute TSR performance.
Annual Cash Incentive Bonus
For 2019, our annual cash incentive comprised 15% of total target variable compensation for our Chairman and CEO.
Performance targets related to our annual cash incentive are set at “stretch” targets that are difficult and challenging but
achievable with superior execution based on our long-range plans. Given the cyclical nature of our sectors, as well as the
variability in some of our metrics caused by the lifecycle progression of a few very large projects, our targets will not
always increase, in absolute terms, over prior year targets but are set to ensure that achievement will require the same
or increased execution to achieve the targets.
In setting performance goals, the Compensation Committee considers the Company’s annual financial plans, strategic
initiatives, and projections, which are impacted by the following factors:
` The overall business climate and the cyclical nature of our business
` Underlying market conditions for our products and services
` Volatility in commodity prices
` Our competitors’ performance
` Anticipated changes in customer activity
` Our prior-year performance
These inputs inform discussions regarding both the targets and the ranges around the target to ensure the goals are
sufficiently difficult without incentivizing inappropriate risk taking.
In setting our 2019 targets, the Compensation Committee considered the market outlook for each of our business
segments and for the Company as a whole. In particular, we considered the projected decline for our Subsea segment due
to the volatile, and generally low, crude oil price environment over the last several years that led many of our customers
to reduce their capital spending plans or defer new deepwater projects. This led to the winding down of certain projects,
and an expected decline in operating margins due to the competitive environment in 2019. During this time, we focused
on growing our order backlog.
As a result in 2019, our performance exceeded the targets for the EBITDA, EBITDA as a Percentage of Revenue, and
Working Capital Days measures due to accelerated market adoption of our new subsea technologies, our strong execution
and disciplined capital spending, and achieving an unprecedented level of backlog. As a result, our annual cash incentive
bonus plan paid out with an overall weighted rating of 174%, including the impact of annual individual performance
indicator results.
105 TechnipFMC
U.K. Annual Report and IFRS Financial Statements 2019 Overview of our Compensation Practices
What We Do:
What We Don’t Do:
` Pay for performance by aligning performance
measures with our strategy and shareholder
interests
` Majority of executive director compensation
is performance-based, “at-risk” long-term
compensation
` No single-trigger vesting upon a change-in-control
` No guaranteed bonuses
` No uncapped incentives
` No tax gross-ups on any severance payments
` No excessive perquisites, benefits, or pension
` Maintain a clawback policy in the event of
payments
malfeasance or fraud
` No discounting, reloading, or repricing of stock
` Require robust executive and director share
options
ownership requirements
` No hedging and pledging of Company securities
` Engage an independent, external compensation
consultant
` Benchmark compensation against relevant global
and industry peer groups
` Cap PSU payout at target when relative TSR exceeds
peers’ but absolute TSR is negative
106 TechnipFMC
U.K. Annual Report and IFRS Financial Statements 2019 Annual Report on Remuneration: Report for the Year
Ended December 31, 2019
The Compensation Committee presents the Annual Report on Remuneration, which will be submitted to shareholders as
an advisory vote at the 2020 Annual Meeting. Some of the information contained in the Annual Report on Remuneration
is subject to audit. Where the information is subject to audit, the information is identified in the relevant heading.
As intended by our pay-for-performance program, and as outlined in the sections below, our 2019 compensation for our
Chairman and CEO was directly impacted by our performance against key financial, operational, and individual metrics.
Below is an illustration of the Chairman and CEO’s remuneration.
Note: All percentages provided are rounded to the closest whole percentage.
Stock options are considered variable as they require the stock price to increase before they yield any value.
The delivered value of RSUs is variable based on share price at vesting.
107 TechnipFMC
Fixed 10%Variable 90%Cash 23%Equity 77% Short-Term Performance 15%Long-Term Performance 85%Chairman & CEOBase Salary 10%RSUs15.5%StockOptions15.5%AnnualIncentive 13%PSUs46%90% VariableU.K. Annual Report and IFRS Financial Statements 2019 Single Total Figure of Remuneration (Audited Information)
The below table sets forth the single figure of remuneration for each of the Company’s executive directors for the
periods ended December 31, 2019 and 2018.
A proportion of the annual incentive and long-term incentive awards (the variable and at-risk element) — 89% — is subject
to share price appreciation. During 2019 we did not exercise the use of discretion as a result of share price appreciation
Executive Directors’ Single Figure Table
Year
Salary1
Taxable
Benefit2
Annual
Incentive
Awards3
Long-Term
Incentive
Awards4
Pension-
Related
Benefits
Total
Chairman and CEO: Douglas J. Pferdehirt
2019
$1,236,000
$84,989
$4,843,364
$1,455,003
$241,779
$7,861,135
CEO: Douglas J. Pferdehirt
2018
$1,230,000
$122,231
$3,894,477
$0
$190,796
$5,437,504
Executive Chairman: Thierry Pilenko
2019
2018
$335,391
$46,193
$402,470
$901,545
$9,665
$1,695,264
$1,061,194
$110,492
$1,758,397
$0
$29,983
$2,960,066
(1) Salary provides a fixed level of market competitive compensation to our executive directors that reflects their major responsibilities. Base pay is
set with reference to market median, based on responsibility, experience, individual performance, and contributions to the business.
Salary for our Chairman and CEO is unchanged since March 1, 2018.
(2) The Taxable Benefits for 2019 for the Chairman and CEO includes: (i) personal use of Company automobile of $4,977; (ii) spouse travel for
Company business functions of $42,699; (iii) financial planning and personal tax assistance of $20,935; and (iv) security services of $16,378.
Taxable Benefits for the Executive Chairman include premiums for (i) medical, life, and disability insurance of $3,457, (ii) financial planning and
personal tax assistance of $25,581, and (iii) spouse travel for Company business functions of $17,155.
(3) The amount disclosed in the Annual Incentive Awards column for our Chairman and CEO represents the sum of annual cash incentive bonus and
time-based (non-performance based) RSUs awarded in 2019. In 2019, our Chairman and CEO’s annual cash incentive was $2,903,364 calculated
using a target bonus of 135% of salary, a BPI rating of 172%, and an API rating of 180%. The time-vested (non-performance based) RSUs awarded
in 2019 were valued at $1,940,000, comprising 20% of the Chairman and CEO’s long-term equity incentive target value of $9,700,000.
Amounts disclosed in the Annual Incentive Awards column for our Chairman and CEO represent the sum of annual cash incentive bonus and time-
based (non-performance based) RSUs awarded in 2018. In 2018, our Chairman and CEO received a cash bonus of $2,154,499 calculated using a
target bonus of 135% of salary, a BPI rating of 123%, and an API rating of 150%. The time-vested (non-performance) RSUs awarded in 2018 were
valued at $1,739,978, comprising 20% of the Chairman and CEO’s long-term equity incentive value of $8,700,000.
The Executive Chairman was not awarded any time-based RSUs in 2019. The amount disclosed in 2019 as annual incentive awards reflects only
the target annual cash incentive bonus awarded to Mr. Pilenko, pro-rated January 1 to May 1, 2019.
The Executive Chairman was not awarded any time-based RSUs in 2018. The amount disclosed in 2018 as annual incentive reflects only the
annual cash incentive bonus awarded to Mr. Pilenko.
The payments for loss of office received by Mr. Pilenko are detailed in the paragraph entitled “Payments for Loss of Office”.
For more details on the Company’s executive director compensation program, please see the section “Elements of 2019 Executive Director
Compensation”.
(4) Amounts disclosed in the Long-Term Incentive Awards column for our Chairman and CEO and Executive Chairman represent the value of
performance-based RSUs subject to performance (ROIC) and market-based (TSR) vesting conditions with a performance period ending December
31, 2019. It does not include the performance (ROIC) or market-based (TSR) RSUs or market value of stock options awarded in 2019. The value
was calculated using the share price of $14.84 on the vesting date of February 28, 2020.
The long-term incentive awards disclosed in our 2018 U.K. Annual Report were the time-based (non-performance based) RSUs, performance-
based RSUs subject to performance (ROIC) and market-based (TSR) vesting conditions with a performance period ending December 31, 2020, and
grant date value of market value stock options awarded to our Chairman and CEO in 2018. The value of the time-based (non-performance based)
RSUs has been moved to the Annual Incentive Award column (see footnote (3) above). No long-term incentive value related to performance-based
or market-based RSUs was realized in 2018, therefore this value has been excluded. The value of the market value stock options has also been
excluded since the exercise price of these options is equal to the grant price.
Note: Numbers may not add due to rounding. The amounts reported as Salary, Taxable Benefits, Annual Incentive Awards, and Pension-Related
Benefits to our former Executive Chairman were paid in Euros. These amounts were converted to U.S. dollars utilizing an average of the Euro
to U.S. dollar exchange rates on the last day of each month during each reporting year (for 2019: EUR 1 to USD 1.117971). For 2019, the table
includes all compensation paid during the period he served as Executive Chairman, from January 1 to May 1, 2019.
Thierry Pilenko
Executive Chairman
January 1, 2019 – May 1, 2019
Douglas J. Pferdehirt
CEO
January 1, 2019 – May 1, 2019
Chairman and CEO
May 1, 2019 – December 31, 2019
108 TechnipFMC
U.K. Annual Report and IFRS Financial Statements 2019
Executive Director Remuneration Received in Respect of 2019
One of the Compensation Committee’s primary goals in establishing our executive director compensation philosophy
and designing our compensation program is to ensure that compensation incentivizes executive directors to achieve key
strategic goals, deliver strong operational and sustainable financial performance, and deliver long-term value for our
shareholders. With this as a guiding principle, the Compensation Committee adopted a program that links a significant
percentage of each executive directors’ compensation to key performance objectives that, if achieved, would result in the
creation of shareholder value over both the short- and long-term.
Alignment of pay and performance
The chart below presents the relative alignment of our Chairman and CEO pay to TSR performance over a two-year
period compared to our 2019 Industry Peer Group. For more details on our 2019 Industry Peer Group, please see the
section “Compensation Peer Groups.”
TechnipFMC’s position in the central corridor illustrates that our pay is in alignment with our performance.
Our two-year TSR performance for 2017-2018 is at the 57th percentile versus our peers, while our two-year CEO pay
rank is at the 47th percentile of our peers.
TechnipFMC plc: Pay for Performance*
Two-Year CEO Pay Rank vs. Two-Year TSR Percentile Rank
J
DOV
COP
SAPM.F
RIG
WDGJ.F
FTI
Pay = 47%
TSR = 57%
FTI
CMI
BKR
Pay for Performance
Alignment
SLB
APA
NOV
DVN
HAL
MDRI.Q
FLR
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
Two-Year CEO Pay Rank
100%
90%
80%
70%
60%
50%
40%
30%
20%
10%
k
n
a
R
e
l
i
t
n
e
c
r
e
P
R
S
T
r
a
e
Y
-
2
0%
0%
* Two-year performance and pay data was used (instead of a three-year analysis) since the Merger was
completed in 2017, and peer group data for 2019 was not available at the time of this Proxy Statement.
In addition, the above table excludes the following companies from our Industry Peer Group: (i) Anadarko
Petroleum Corporation and Chicago Bridge & Iron due to merger/acquisition activity; (ii) Weatherford
International plc due to Chapter 11 bankruptcy filing; and (iii) Subsea 7 S.A. due to insufficient disclosure.
109 TechnipFMC
U.K. Annual Report and IFRS Financial Statements 2019
Base salary:
Base salary is set with reference to a competitive range around the size-adjusted market median data, reflecting
factors such as individual performance, experience and business conditions within the parameters of our Directors’
Remuneration Policy. For the Chairman and CEO, base salary was frozen in 2019.
Pension:
Retirement benefits for 2019 have been calculated in line with the U.K. reporting regulations. Details of the aggregate
pension accrued in the U.S. Qualified Savings Plan, the U.S. Non-Qualified Savings Plan, and the French Supplemental
Retirement Plan (which are defined contribution schemes) by the Chairman and CEO and Executive Chairman in respect
of qualifying services are shown below. The value of the pension under the pension schemes is calculated based on the
Company’s contributions which are based on a percentage of employee salary.
Retirement contributions for the Chairman and CEO relate to our U.S. Qualified Savings Plan and U.S. Non-Qualified
Savings Plan. 2019 pension contributions for the Executive Chairman (retired) relate to our French Supplemental
Retirement Plan, known as an “Article 83” pension.
Values relating
to DC Schemes
Chairman and CEO
Executive Chairman (retired)
(1) Constitutes accrued total retirement benefit.
Accrued Pension at
Year End
$000
Company Contributions
Over Year
$000
Normal
Retirement Age
$3,3251
$NA
$242
$10
N/A
62
Benefits
The Company also provides limited perquisites to our Chairman and CEO, facilitating the performance of their roles and
to ensure a competitive total compensation package. The perquisites we provide to our executives may include financial
planning and personal tax assistance, personal use of Company automobiles, dining club memberships and country club
memberships, executive physicals, 100% match of charitable contributions up to an aggregate of $10,000 per year, and
other minor expenses associated with their business responsibilities. The value of perquisites deemed to be personal is
imputed as income to an executive officer and we do not gross up for the taxes due on such imputed income. Additional
allowances or benefits may be granted to our Chairman and CEO, if considered appropriate and reasonable. When
an executive director has to relocate from his/her home location as part of his/her duties, the Company may include
relocation expenses, housing allowance, and school fees.
Reflecting the safety concerns associated with their roles, the Company provides a security program for our Chairman
and CEO. The Compensation Committee believes this is in the best interests of shareholders as the personal safety and
security of an executive director is critical to the stability of the Company. The security program was developed based
on a risk assessment determined to be appropriate by our security team and an outside consultant. We do not consider
the security measures provided to an executive director to be a personal benefit, but rather reasonable and necessary
expenses for the benefit of the Company.
110 TechnipFMC
U.K. Annual Report and IFRS Financial Statements 2019
Elements of 2019 Executive Director Compensation
Our executive director compensation program comprises three primary elements of base salary, annual cash incentive
bonus, and long-term equity awards, along with the provision of market competitive benefits and perquisites. The
table below summarizes these elements, along with their purpose and key characteristics. However, a more detailed
explanation is available in further sections.
Element
Purpose
Key Characteristics
Base Salary
To provide market competitive
compensation for the role
` Fixed cash compensation
` Reflects major responsibilities of the role
` Set with reference to market median,
based on responsibility, experience, and
performance
Annual Cash
Incentive Bonus
To drive and reward the achievement of
short-term Company strategic goals and
individual contributions
` Variable cash compensation
` Target value based on role, set with
reference to market median
` Actual payout can range from 0% to 200%
of target
` Paid based on achievement of business
performance targets (75%) and
achievement of individual performance
targets (25%)
` 2019 shared business performance
targets were:
` 25% - EBITDA
` 25% - EBITDA as a Percentage of
Revenue
` 25% - Working Capital Days
111 TechnipFMC
U.K. Annual Report and IFRS Financial Statements 2019 Element
Purpose
Key Characteristics
Long-Term Equity
Incentives
To drive and reward the achievement of
long-term results and shareholder value
creation while encouraging retention
` Granted as combination of three vehicles:
PSUs (60%), stock options (20%)1, and
RSUs (20%)
` Target value based on role, set with
reference to market median
` PSUs (60% of total long-term equity grant)
subject to two performance conditions
measured over three years: ROIC (30% of
total long-term equity grant) and relative
TSR (30% of total long-term equity grant%)
` 50% of after-tax RSUs must be retained
for at least one year following vesting
` All long-term incentive awards are subject
to three year cliff vesting
Health and Welfare
Benefits, Retirement
Benefits, and
Perquisites
To facilitate the performance of the role
and ensure a market competitive total
compensation package
` Health and welfare benefits, similar to
what is offered to other employees of the
Company in the respective countries
` Retirement savings offered through
participation in our 401(k) and non-
qualified defined contribution plans
similar to plans offered to other U.S.
employees
` Limited perquisites including financial
planning, tax assistance, use of company
cars, club memberships, executive
physicals, and security services where
necessary
(1) In 2019, the Board decided to remove stock options; beginning in 2020, equity awards will be a combination of only PSUs (70%) and RSUs (30%).
Compensation Peer Groups
In making decisions about target compensation levels, the Compensation Committee references data from two distinct
peer groups. We believe that it is important to look at both global companies of similar size, complexity, and capital-
intensive nature; as well as companies within the same industry with significant U.S. operations in order to get a
comprehensive view of who we compete with for talent.
These two peer groups are combined to provide a holistic view for compensation benchmarking. In addition, the
Compensation Committee also looks at each peer group separately in order to gain insight into variations between the
two groups.
1. The Global Peer Group comprises a broadly equal weighting of U.S. and European headquartered companies, of
similar size to the Company (in terms of revenue) who compete for executive talent in capital intensive industries
similar to the company including the oil and gas industry, construction and engineering, and industrial manufacturing.
112 TechnipFMC
U.K. Annual Report and IFRS Financial Statements 2019 2. The Industry Peer Group is focused more closely on our sub-industry and is drawn from companies in the oilfield
services and oil exploration and production sectors, as well as heavy engineering organizations with greater (but not
exclusive) focus on North America.
The Compensation Committee does not place a specific weight on the data from either peer group, but considers the
data in light of all the circumstances relevant to each director under review, as well as the Company’s compensation
philosophy.
For both sets of peers, we use a range of selection criteria that include among other factors, financial indicators such as
revenue and market capitalization, number of employees, company size, industry, end markets, complexity, geographic
footprint, and headquarters location.
Peer Group
Purpose
Global Peer Group
Similarly sized, complex, and capital-intensive global companies, including those
based outside the United States.
Industry Peer Group
Companies with significant U.S. operations, reflecting competitors for critical U.S.
executive talent.
Below are the companies that comprised the 2019 Compensation Peer Group. The companies below include both global
peers and industry peers.
2019 Combined Compensation Peer Group Constituents
Air Liquide S.A
Alstom S.A.
Ingersoll-Rand plc
Jacobs Engineering Group Inc.
Anadarko Petroleum Corporation
John Wood Group plc
Apache Corporation
Baker Hughes Company
Caterpillar Inc.
Chicago Bridge & Iron
Cummins Inc.
ConocoPhillips
Devon Energy Corporation
Dover Corporation
Enbridge, Inc.
Fluor Corporation
Halliburton Company
Companies in blue bold comprise the Industry Peer Group.
McDermott International, Inc.
National Oilwell Varco, Inc.
Petrofac Limited
Repsol, S.A.
Saipem S.p.A.
Schlumberger Limited
Subsea 7 S.A.
Transocean Ltd.
VINCI S.A.
Weatherford International plc
113 TechnipFMC
U.K. Annual Report and IFRS Financial Statements 2019 The Compensation Committee reviews the composition of the Company’s peer groups on a periodic basis. For 2019
compensation decisions, the companies noted below were included; however, we anticipate these companies will be
removed from our peer groups for 2020 compensation decisions.
` Chicago Bridge & Iron merged with McDermott International, Inc. in May 2018.
` Anadarko Petroleum Corporation was acquired by Occidental Petroleum Corporation in August 2019.
` Weatherford International plc filed for bankruptcy under Chapter 11 in July 2019.
` McDermott International, Inc. filed for bankruptcy under Chapter 11 in January 2020.
When 2019 compensation decisions were made, the median revenue and median market capitalization for each of the
peer groups used and the Company’s relative ranking are provided below:
Peer Group
Median Revenue
TechnipFMC
Revenue Ranking
Median Market
Capitalization
TechnipFMC Market
Capitalization Ranking
Global Peer Group
$15.7 billion
46th percentile
$17.7 billion
48th percentile
Industry Peer Group
$9.5 billion
67th percentile
$13.6 billion
57th percentile
Combined Peer Group
$15.1 billion
57th percentile
$15.1 billion
46th percentile
Accordingly, the Compensation Committee agreed that this group of companies was reasonable in terms of size for
market median comparisons. Where possible, the Compensation Committee’s consultant size-adjusts data to account for
differences in size between the Company and the Compensation Peer Group.
114 TechnipFMC
U.K. Annual Report and IFRS Financial Statements 2019 Base Salary
We provide our Chairman and CEO with a market competitive base salary to compensate him for services performed
during the year. We set base salary by referencing market median total target compensation. When setting the base
salary, we consider factors such as individual performance, experience, and contributions to the business, while staying
within an appropriate range of the market median for the role.
The Compensation Committee reviews base salary for our Chairman and CEO on an annual basis. The Compensation
Committee determines and approves any changes, with input from the committee’s independent compensation
consultant. Our Chairman and CEO does not participate in discussions or decisions relating to his own compensation.
There was no increase in 2019 for Mr. Pferdehirt.
Chairman and CEO
Base Salary
(December 31, 2018)
Base Salary
(December 31, 2019)
Increase
Douglas J. Pferdehirt
$1,236,000
$1,236,000
0%
Annual Cash Incentive Bonus (Audited Information)
2019 Annual Cash Incentive Bonus Targets
We provide our Chairman and CEO with an annual cash incentive bonus, in order to drive and reward the achievement
of short-term Company strategic goals and individual contributions. The Chairman and CEO has an annual cash incentive
bonus target, set as a percentage of base salary. The Chairman and CEO can earn from 0%-200% of their annual cash
incentive bonus target, depending on performance.
The Compensation Committee reviews and approves target annual cash incentive bonus percentages for the Chairman
and CEO on an annual basis, based on a review of market median total compensation data for our peers. The targets are
set at appropriate levels to incentivize our Chairman and CEO to achieve the short-term financial and operational goals
for the Company, as well as to provide the Chairman and CEO with market-competitive levels of total compensation.
The following are the 2018 and 2019 annual cash incentive bonus targets for our Chairman and CEO:
Chairman and CEO
Douglas J. Pferdehirt
2018
135%
2019
135%
Increase
0%
2019 Annual Cash Incentive Bonus Performance Indicators
75% of the annual cash incentive bonus is based on business performance indicators (“BPI”), and 25% of the plan is based
on individual annual performance indicators (“API”).
75% BPI
Assessment of overall Company performance
based on EBITDA and EBITDA Percentage of
Revenue and Working Capital Days
+
25% API
Assessment of individual performance based
on qualitative factors reflected in the executive
director’s annual performance objectives
The payout under both the BPI and API components may range from 0% to 200% of target depending on performance.
115 TechnipFMC
U.K. Annual Report and IFRS Financial Statements 2019 BPI Component – 75% of Annual Cash Incentive Bonus
The Compensation Committee annually establishes BPI targets and reviews the performance measures at its February
meeting. In 2019, the Compensation Committee selected three equally weighted measures, which reflected the
Company’s strategic priorities: EBITDA, EBITDA as a Percentage of Revenue, and Working Capital Days.
BPI Measure
(Weight)
Weighting
2019 Goal
Definition
Why It Matters
EBITDA in ($M)
25%
$1,531
Earnings before interest,
taxes, depreciation, and
amortization
EBITDA as a
Percentage of
Revenue
25%
11.4%
Working Capital
Days
25%
55 days
Earnings before interest,
taxes, depreciation, and
amortization, calculated
as a percentage of
revenue
Average number of days
to convert working capital
into revenue
Indicative of our operating profitability
and a driver of shareholder value
creation; facilitates comparisons with
peer companies by excluding the
effect of different capital structures
and financing decisions
Reflects the performance and
sustainability of the business,
leveraging cost efficiencies, and
driving profitability improvement
Measures our efficiency of using
operating capital to operate the
business; our contract arrangements
typically result in negative working
capital due to advance payments
and milestone payments
The payout scale for 2019 is as follows:
Performance Level
Payout Percentage
Threshold
Target
Exceed
Maximum
0%
100%
150%
200%
Note: Payout for performance between the threshold, target, exceed, and maximum payouts are interpolated on a straight-line basis.
116 TechnipFMC
U.K. Annual Report and IFRS Financial Statements 2019 The 2019 performance goals and the 2019 results achieved for our Chairman and CEO are outlined below:
2019 Goals
2019 Outcome
BPI Measure
Threshold
performance
Target
Performance
Maximum
Performance
Actual
Performance
Payout
Percentage
Weighting
Weighted
Payout
Percentage
EBITDA ($M)
$1,246
$1,531
$1,751
$1,667
162%
EBITDA as % of Revenue
9%
11.4%
13.3%
12.4%
155%
Working Capital Days
48 days
55 days
61 days
74 days
200%
1/3
1/3
1/3
54%
512/3%
662/3%
Payout Percentage
0%
100%
200%
Final Weighted Payout Percentage (BPI)
172%
Note: Payout for performance between the threshold, target, and maximum payouts are interpolated on a straight-line basis. The final weighted
payout percentage for BPI is rounded to the nearest whole percent for calculating the annual cash incentive payout.
In accordance with established guidelines, the goals are adjusted for the cumulative effect of changes in accounting
principles, significant acquisitions and divestitures, and foreign exchange movements. These changes are intended to
ensure that performance is measured on a like-for-like basis relative to the goals that were set. Financial targets and
actual performance based on EBITDA exclude non-recurring charges and credits, such as impairments, restructuring
costs, integration costs, as well as other items identified in TechnipFMC’s quarterly and annual financial statements.
API Component — 25% of Annual Cash Incentive Bonus
Each February the individual performance goals are established for our Chairman and CEO.
These objectives are set at “stretch” levels (i.e., objectives that are difficult and challenging but should be achievable with
superior execution), and are set using a rigorous evaluation process. If an executive director failed to achieve any of his
or her objectives, the API multiple would likely be 0%, absent any mitigating factors. If an executive director met some,
but not all of the objectives, the API multiple would fall between the range of 0% to 200%, depending upon the number
of objectives accomplished, their relative importance and difficulty as determined by the Compensation Committee, and
any factors that may have prevented achievement of certain objectives. Our Chairman and CEO, achieving all objectives,
could potentially receive an API of 200%, although it is intended that this ranking reflects outstanding performance given
the inherent degree of difficulty factored into both the objective setting and evaluation processes.
For 2019, our Executive Director received an API rating of 180% for the year.
In determining the 2019 API rating for our Chairman and CEO, the Compensation Committee took into account a
comprehensive view of his performance and contributions, including performance on key objectives and results. In
addition to individual goals related to Company strategy, profitable growth, and safety, his objectives also included the
three pillars of our corporate responsibility and sustainability efforts to ensure that the Company makes meaningful
and tangible changes in this area. The Compensation Committee considers our Chairman and CEO’s overall performance
relative to the accomplishment of his key objectives, the importance of each accomplishment, as well as the market
conditions that impacted performance.
117 TechnipFMC
U.K. Annual Report and IFRS Financial Statements 2019 Objectives
Key Achievements
Performance Assessment
Below
Expectations
Meets
Expectations
Exceeds
Expectations
Mr. Pferdehirt
Strategy
` Unlock long-term shareholder value
Profitable Growth
` iEPCI — 35% subsea inbound orders
as iEPCI
` Spin-off of Technip Energies was
announced.
` Preparations for spin-off are
currently ongoing.
` Over 40% of inbound as iEPCI
` LNG market — secure $3 billion of
` Over $8 billion of LNG inbound
LNG awards
Corporate Responsibility and
Sustainability
` Focus and advance sustainability
efforts under three pillars –
Supporting Communities, Advancing
Gender Diversity, and Respecting the
Environment
Health & Safety
` Zero serious injuries in 2019
` Please see section “Corporate
Responsibility and Sustainability
– Sustainability” for a detailed
description of 2019 objectives
and results.
` Zero serious injury goal not
achieved.
Overall Rating for Mr. Pferdehirt
180%
Determination of 2019 Payouts under the Annual Cash Incentive Compensation Plan
Based on the performance described above, the following payouts were approved in respect of 2019 for our Chairman
and CEO:
Chairman
and CEO
Target Bonus
(% of Salary)
BPI Rating
(75% Weight)
API Rating
(25% Weight)
Overall
Weighted
Rating
Actual Bonus
(% of salary)
Actual Bonus
($)
Douglas J. Pferdehirt
135%
172%
180%
174%
234.9%
$2,903,364
118 TechnipFMC
U.K. Annual Report and IFRS Financial Statements 2019
Long-Term Equity Incentives
Long-term equity incentive awards, granted in the form of TechnipFMC equity, represent the largest component of our
Chairman and CEO’s annual target compensation opportunity grounded in our compensation philosophy of paying for
performance and aligning executive directors’ interests with those of our shareholders. Awards are made in the form of
three complementary vehicles, providing a balanced focus on performance, sustainable long-term value creation, and
retention.
Awards vest at the end of three
years subject to continued
employment, with 50% of
after-tax RSUs held for at least
one year following vesting
Awards vest at the end of three
years subject to continued
employment; share price
appreciation required for
awards to yield any value;
will be discontinued in 2020
RSUs
20%
Stock
Options
20%1
PSUs
60%
Awards vest based on
performance measured over
three years subject to ROIC
(30% of total grant) and
Relative TSR (30% of total
grant) performance goals
Performance-based equity,
with value tied to either
stock price appreciation
(options) or the achievement
of performance goals (PSUs)
(1) In 2020, we will discontinue the use of stock options, and annual equity awards will comprise only PSUs (70%) and RSUs (30%).
The Compensation Committee reviews and approves annual awards for our Executive Director on an annual basis. The
awards are based on market competitiveness on total target compensation and aim at providing appropriate levels of
retention and incentives for achieving the Company’s long-term goals.
For 2019, the Compensation Committee set the target value of equity awards for our Chairman and CEO reference to
market median total compensation data.
Named Executive Officer
Douglas J. Pferdehirt
2019 Long-Term Incentive Target Award
$9,700,000
119 TechnipFMC
U.K. Annual Report and IFRS Financial Statements 2019 2019 Performance Stock Unit Awards (60% of Equity Award) (Audited Information)
The Compensation Committee sets the performance targets associated with PSU awards prior to the beginning of each
three-year performance period. For awards in 2019, PSU awards comprised 60% of the total long-term equity award and
included the following two equally weighted measures:
PSU Measure
Weighting
Definition
Why It Matters
ROIC
30% of total
long-term
equity
Annual net income divided by
equity plus long-term debt
Relative TSR
30% of total
long-term
equity
Cumulative three-year
increase in volume-weighted
average price and reinvested
dividends relative to peers.
Assesses our profitability and how
effectively the Company is using capital
over the three-year period to generate
income. Given the capital-intensive
nature of our business it is critical that
we effectively use our investments and
assets.
Assesses our overall performance in the
eyes of our shareholders and the broader
stock market, relative to companies with
whom we compete for customers and
investors that are subject to similar macro-
economic factors.
The relative TSR performance for our 2019 PSU awards will be measured against a group of 13 companies (“Relative
TSR Peer Group”) that the Compensation Committee believes best reflect the companies that we compete with for both
investments and customers. The financial and operational performance of these companies is therefore most directly
relevant to TechnipFMC, and we are all subject to similar macro-economic factors.
We use relative TSR to motivate our Chairman and CEO to achieve superior share price compared to our key competitors,
thus aligning his interests with shareholder interests. We further reinforce this by requiring a minimum threshold of
relative performance for payout, and by capping payout in the case of negative shareholder return.
The Compensation Committee reviewed our 2018 Performance Peer Group as defined in our 2018 U.K. Annual Report,
and no changes were made for 2019 since they were deemed appropriate based on the factors stated above. For awards
made in 2019, the Performance Peer Group (now referred to as our Relative TSR Peer Group) comprised the following:
2019 Relative TSR Peer Group
Baker Hughes Company
McDermott International Inc.
Saipem S.p.A.
Chicago Bridge & Iron Company N.V.
National Oilwell Varco, Inc.
Subsea 7 S.A.
Fluor Corporation
Oceaneering International, Inc.
Weatherford International plc
Halliburton Company
Oil States International, Inc.
John Wood Group plc
Schlumberger Limited
120 TechnipFMC
U.K. Annual Report and IFRS Financial Statements 2019 The vesting date for these PSU awards is March 8, 2022, with a performance period of January 1, 2019 through
December 31, 2021.
The Compensation Committee approved the following targets in relation to the 2019 PSU awards:
Performance Achievement
ROIC Performance
Relative TSR Ranking
Below Threshold
Below Plan
Below 25th percentile
Threshold
Target
Maximum or above
6%
7%
8%
25th percentile
42nd percentile
75th percentile or greater
Payout
(% of earned PSUs)
0%
50%
100%
200%
Note: If the Company’s TSR is negative for the performance period, the payout in respect of the TSR element will be capped at target, regardless of
our relative performance.
For performance achievement between the levels identified above, payout percentage will be interpolated on a straight-
line basis.
Number of shares awarded
Share Price on Grant Date
2019 PSU Grant
277,408
$20.98
Fair Value on the date of award1
$5,820,020
Fair Value of award as a % salary
471%
Face Value on the date of award at
maximum performance1
Face Value of award at maximum
performance as a % salary
$11,640,000
942%
(1) Calculated using the grant price, equal to the closing price on the New York Stock Exchange on the date of grant, March 8, 2019.
121 TechnipFMC
U.K. Annual Report and IFRS Financial Statements 2019 2019 Stock Options (20% of Equity Award) (Audited Information)
In addition to PSUs, our Chairman and CEO received an annual grant of stock options in 2019. This award is aimed
at aligning pay with the performance of our stock, aligning our Chairman and CEO’s interests with our shareholders’
interests, as well as retaining our Chairman and CEO over the longer term.
Based on feedback received from shareholders, we plan to eliminate stock options in 2020, thereby increasing the share
of PSUs to further align pay with performance.
Our Chairman and CEO’s 2019 stock option awards are subject to a three-year cliff vesting, with no phased vesting,
meaning our Chairman and CEO must remain employed through the vesting date of March 8, 2022 for any of the options
to become exercisable, with exceptions for retirement, death, and disability in line with market norms. Options are
exercisable for a period of 10 years from the date of grant and have an exercise price equal to the closing price of the
Company’s Ordinary Shares, as reported by the NYSE on the grant date.
Number of options awarded
Share Price on Grant Date
Fair Value on the date of award1
Fair Value of award as a % salary
Face Value on the date of award2
Face Value of award as a % salary
2019 Stock Option Grant
343,727
$20.98
$1,940,000
157%
$7,211,392
583%
(1) Calculated using the fair value of the stock options of $5.64, determined using the Black-Scholes method.
(2) Calculated using the grant price, equal to the closing price on the New York Stock Exchange on the date of grant, March 8, 2019.
2019 Time-Based RSU Awards (20% of Equity Award)
The final component of the long-term incentive mix is RSU awards. These awards further align our Chairman and CEO’s
interests with the interests of our shareholders by incentivizing them to increase share price, while reinforcing the
retention impact of our compensation program.
RSUs are subject to three-year cliff vesting terms, with no phased vesting, meaning our Chairman and CEO must remain
employed through the vesting date of March 8, 2022, with exceptions only for retirement, death, and disability. Once
vested, our Chairman and CEO receives ownership and the voting rights of the underlying Ordinary Shares.
The number of RSUs granted to our Chairman and CEO was determined by dividing the target value set for our Chairman
and CEO by the closing price of the Company’s Ordinary Shares on the NYSE on the grant date.
On vesting, 50% of the after-tax number of RSUs must be held for a period of at least one year to incentivize our
Chairman and CEO to retain the shares and increase share price, further aligning our Chairman and CEO’s interests with
our shareholders.
Number of shares awarded
Share Price on Grant Date
Face Value on the date of award
Award as a % salary
2019 RSU Grant
92,469
$20.98
$1,940,000
157%
The share price is based on the closing price on the New York Stock Exchange on the date of grant, March 8, 2019.
122 TechnipFMC
U.K. Annual Report and IFRS Financial Statements 2019 Vesting of 2017 PSU Awards (Audited Information)
Following the Merger in 2017, the Compensation Committee approved PSU awards subject to a three-year performance period.
As with the awards made in 2018 and 2019, vesting was contingent on performance delivered in two areas: ROIC and relative
TSR. The Compensation Committee believes that the continued use of these metrics remains relevant for the long-term since they
focus executives on the achievement of specific financial long-term goals directly aligned with our operating and strategic plans.
As a result of our 2017-2019 performance, our Chairman and CEO achieved a payout of 50% of target on his 2017 PSUs.
Performance Goals:
Goal/Weightings
Performance Measure
ROIC
(30% of total long-term equity)
Achievement of stated target
Relative TSR
(30% of total long-term equity)
Ranking against the 2017
Performance Peer Group
Threshold
Performance
Target
Performance
Maximum
Performance
0%
0%
100%
200%
100%
200%
For the ROIC measure, the Performance Targets and earned PSUs are as noted below. For performance achievement between
the levels identified below, the payout percentage is interpolated on a straight-line basis.
Achieved Performance
Below Threshold
Threshold Performance
Target Performance
Maximum Performance or above
Performance Target
Earned PSUs
Below 10%
10%
11%
12%
0%
50%
100%
200%
For the relative TSR measure, the earned PSUs were based on a percentile ranking of the Company’s TSR against the constituents
of the 2017 Performance Peer Group.
Ranking
13th or Lower
11th or 12th
9th or 10th
8th
7th
6th
5th
4th
3rd or higher
Earned PSUs1
0%
50%
75%
100%
120%
140%
160%
180%
200%
(1) If the Company’s TSR is negative for the performance period, the payout in respect of the TSR element will be capped at target, regardless of our relative
performance.
123 TechnipFMC
U.K. Annual Report and IFRS Financial Statements 2019 The overall achievement for the performance element of our 2017 PSU awards was 50% based on the following:
` Three-year ROIC performance for 2017-2019 was 6.9%. This ROIC performance was below the threshold for payout
based on the payout scale provided above, and therefore, the ROIC component of the 2017 PSU awards paid out at 0%.
` Three-year relative TSR performance for the Company for 2017-2019 was -37.8%, which placed the Company at a
ranking of 5th relative to the 2017 Performance Peer Group. This resulted in a payout for the relative TSR metric of
100%, based on the payout scale above.
`We achieved above-target performance for the relative TSR measure for our 2017-2019 performance period based
on our performance relative to the Performance Peer Group. However, our absolute relative TSR performance was
negative given the overall oil and gas market conditions during the same period. Therefore, our payout under our
incentive plan was capped at target (100%) given the absolute TSR performance.
2017 Long-Term Incentive (Equity Award) Plan (as of December 31, 2019)
2017-2019 ROIC
2017-2019 Relative TSR
Threshold:
10% ROIC
Result:
6.9% ROIC
Target:
11% ROIC
100%
50%
200%
0%
PSUs
45%
Target performance: 11% ROIC
Actual result: 6.9% ROIC (0%)
Max:
12% ROIC
Threshold:
13th Rank
Max:
1-3 Rank
Target:
8th Rank
Result:
5th Rank
100%
200%
0%
FTI Rank: 1-3
Payout: 200%
PSUs
45%
4-12
180-50%
13-16
0%
Actual result: 5th Rank (100%)
*If absolute TSR is less than 0%, achievement cannot be greater than 100%
60% of Equity Grant (PSUs)
Three-Year Performance Period Two Equally Weighted Performance Measures
124 TechnipFMC
U.K. Annual Report and IFRS Financial Statements 2019 Statement of Directors’ Shareholding
and Share Interests
Share Ownership and Retention Requirements (Audited Information)
The Compensation Committee oversees the Company’s directors’ share ownership and retention policy to ensure a
continuing alignment of executive and shareholder interests.
None of the Directors exercised stock options in 2019.
Share Ownership Requirement
Executive directors are required to own shares in an amount equal to a multiple of their base pay. Our Chairman and
CEO is required to own shares in an amount equal to six times his base salary. Qualifying shares include ordinary
shares, time-based RSU awards, and performance-based RSUs where the performance period is final and approved.
Unexercised stock options, performance-based RSUs where the performance period is not final, and shares held in
Company retirement plans are not included in the ownership calculation. An executive director has five years to satisfy
an ownership multiple, pro-rated 20% each year, from the effective date of appointment.
All directors met our ownership guidelines in 2019, with the exception of John Yearwood, who joined the Board in
June 2019. Given Mr. Caudoux waived his annual cash and equity remuneration because of the policies of his employer,
Bpifrance, he is not subject to any share ownership requirements.
Share Retention Requirements
An executive director is required to retain, for a period of at least one year after the vesting date, shares equivalent
to at least one-half of the net after-tax number of shares deposited in his or her account for RSUs. The purpose of this
additional requirement is to impose a holding period during which our executive directors must retain ownership of a
significant portion of vested equity compensation.
We believe that the combination of the share ownership and share retention requirements more closely aligns the
interests of our executive directors with the long-term interest of our shareholders. We regularly evaluate and monitor
compliance with our share ownership and retention policy, and the Board will review compliance on at least an annual
basis. All executive directors met their pro rata ownership and retention requirements under the Company’s policy in
2019.
The table below sets forth the beneficial interests in the share capital of the Company held by each our former Executive
Chairman and our current Chairman and CEO, the executive directors, and their connected persons for the period ending
December 31, 2019:
Share
Number
Owned Outright
Vested but
Number of Shares
RSUs
Weighted
Average
Ownership
of Shares
(including
Unexercised
Unvested and
Subject to
Exercise Price
Weighted
Average
Requirements
(% of salary)
Required to
Hold1
Connected
Stock
Unexercised
Performance
of Vested
Period to Vest
Persons)
Options
Stock Options
RSUs
Conditions
Options
of RSUs
600%
600%
207,538
168,947
462,016
0
761,573
215,258
645,777
N/A
16 months
477,000
297,300
230,000
81,001
311,502
€28.85
4.8 months
Name
Chairman and CEO
Executive Chairman
(1) Number of Shares Required to Hold is based on the share price as at December 31, 2019 of $21.44. The executive directors have five years from
appointment to meet the full ownership requirements. As at December 31, 2019, the executive directors were required to hold 60% of the full
ownership requirement. Unexercised Stock Options and RSUs Subject to Performance Conditions where the performance period is not final are
not used to meet ownership requirements.
125 TechnipFMC
U.K. Annual Report and IFRS Financial Statements 2019 Payments to Past Directors (Audited Information)
The Company made no payments to past directors for the period under review.
Payments for Loss of Office (Audited Information)
On May 1, 2019, Mr. Pilenko retired from the Board of Directors.
He received end-of-service payments in line with his service agreement.
The detailed payments made in 2019 are as follows:
(a) a lump sum payment equal to his annual base salary and target
annual cash incentive, subject to his signing a release of claims
$2,213,582
(b) payment for all accrued but unused vacation days
$73,551
(c) continuation of his supplementary health and tax preparation
$72,3371
reimbursement benefits for two years
(1) The cost for continuation of supplementary health is $21,176. The cost for tax preparation of $51,161 has been estimated based on 2019 actual
cost.
He also received payment of his annual cash incentive bonus, pro-rated for the duration of his service as Executive
Chairman, i.e., four months, amounting $402,470, as set out in the Exective Directors’ Single Figure Table.
After May 1, 2019, Mr. Pilenko remained as an employee through December 31, 2019, using up his paid time off
accrued under French law. He did not receive any annual cash incentive bonus for this period. The reimbursement of
intercontinental flights for his spouse ceased on May 1, 2019.
As a retirement-eligible employee based on the TechnipFMC Incentive Award Plan, he will not forfeit his awards upon his
end of service.
All stock options granted under legacy Technip plans, RSU and PSU awards, and other awards granted prior to the Merger
will continue on their existing terms, including performance assessment, when applicable, and were not forfeited for
discontinued presence or upon his termination of employment.
The Board of Directors confirmed that a non-compete agreement was in the best interest of the Company and
shareholders given Mr. Pilenko’s deep knowledge of the Company’s strategy, markets, and operations, his 35 years of
industry expertise, and the overall competitive nature of the oil and gas industry. This non-compete, which will be paid in
2020, includes a required payment to ensure enforceability of the agreement in the key markets in which the Company
operates including the United States, France, and the United Kingdom. Mr. Pilenko will receive an annual cash incentive of
$2,213,582 payable monthly over January to December 2020 as payment for this non-compete.
126 TechnipFMC
U.K. Annual Report and IFRS Financial Statements 2019
2017-2019 TSR Performance Graphs and Table for the Chairman and CEO
30% of our long-term equity incentive plan is based on relative TSR performance versus the relative TSR peer
group for the year of grant. As such, the figures below indicate the Company’s TSR performance against our 2017
Performance Peer Group and against the Philadelphia Oil Service Sector (“OSX”) index, which is the most representative
of TechnipFMC’s industry. Note that the OSX index is not used for plan payout, but provided as a reference point to
demonstrate TSR performance for the oil service industry as a whole during the period.
Although our absolute TSR for this period was negative, our relative TSR was above the median for our 2017
Performance Peer Group, demonstrating superior relative performance during a period of downturn for the industry.
The table below also discloses total incentives for the Chairman and CEO over the last year.
Jan 17
Jul 17
Jan 18
Jul 18
Jan 19
Jul 19
Jan 20
TechnipFMC
2017 Performance Peer Group
e
c
n
a
m
r
o
f
r
e
P
R
S
T
e
c
n
a
m
r
o
f
r
e
P
R
S
T
120
100
80
60
40
20
0
120
100
80
60
40
20
0
Jan 17
Jul 17
Jan 18
Jul 18
Jan 19
Jul 19
Jan 20
TechnipFMC
OSX Index
Summary of Chairman and CEO Pay1
2018
2019
Total Single Figure of Remuneration
$5,437,504
$7,861,135
Annual Cash Incentive Award Paid as a % of Maximum
Long-Term Incentive Award Paid as a % of Maximum
65%
02
87%
25%
(1) For more details on the calculation of the Total Single Figure of Remuneration, please see the paragraph entitled “Executive Directors’ Single Figure
Table”.
(2) There were no long-term incentive payments during 2018 and 2019, because our long-term incentive awards are subject to a three-year vesting
period. As such, the payout under the long-term incentive as a percentage of the maximum is nil for 2018.
127 TechnipFMC
U.K. Annual Report and IFRS Financial Statements 2019
Percentage of Change in Remuneration of the Chairman and CEO
The following table shows the percentage change in the base salary, benefits, and annual incentive of the Chairman and
CEO between the year ended December 31, 2019 and the previous fiscal year, compared to the average for all employees
of the Company in the United States. The Company considers that the remuneration of employees in the United States is a
more appropriate comparator against that of the Chairman and CEO, rather than of the whole Company, on the basis that
the Chairman and CEO’s remuneration tracks market practice and the regulatory environment in the United States.
Category
Salary
Benefits
Annual Incentive
Chairman and CEO
All U.S. employees
0%
9.8%
25.8%
15.0%
12.3%
-7.7%
CEO Pay Ratio Reporting
This reporting year legislation has come into force which requires companies to publish information on the pay ratio
of the CEO to U.K. employees. In line with the new regulatory requirements, the table below sets out the ratio at
median, 25th and 75th percentile of the total remuneration received by our Chairman and CEO compared to the total
remuneration received by our U.K. employees — as well as comparing to base salary only. Total remuneration reflects all
remuneration received by an individual in respect of the relevant years, and includes salary, benefits, pension, and value
received from incentive plans. We believe that the median pay ratio shown in the table below is representative of pay
and progression policies of the Company in the U.K.
Financial year
Option
Total Remuneration
Base Salary Only
P25
(Lower
Quartile)
P50
(Median)
P75
(Upper
Quartile)
P25
(Lower
Quartile)
P50
(Median)
P75
(Upper
Quartile)
2019
C
133:1
115:1
80:1
24:1
22:1
15:1
The Company has decided to use Option C to select the P25, P50 and P75 employees. We used a database that includes
base salary, benefits, pensions, and incentive plans and selected the employees by comparing them on a full-time
equivalent basis among 2,586 employees. For the P25 we selected a sample of 20 employees around the P25, added
overtime and shift allowance, and used the median of that sample. Overtime and shift allowance has the highest impact
in this quartile. Due to operational constraints we are not able to build a database including those extra elements for all
employees.
Pursuant to Section 953(b) of the Dodd-Frank Wall Street Reform and Consumer Protection Act and Item 402(u) of
Regulation S-K as promulgated by the SEC, we also submit the following information in our Notice of 2020 Annual
Meeting and Proxy Statement, available on our website. This illustrates the ratio of the total annual compensation of
our Chairman and CEO to the total annual compensation of our median employee for our last completed fiscal year,
2019. For 2019, the annual total compensation of our Chairman and CEO for purposes of determining the pay ratio was
$15,351,206, and the annual total compensation of our median employee was $63,294. As a result, for 2019, the ratio of
the annual total compensation of our Chairman and CEO to the total annual compensation of our median employee was
approximately 243:1.
128 TechnipFMC
U.K. Annual Report and IFRS Financial Statements 2019 Relative Importance of Spend on Pay
The table below sets out data for 2018 and 2019.
Relative spend information
2018
2019
% Change
Remuneration for All Global Employees
$2,640,400,000
$2,552,670,000
Distributions to Shareholders
$238,065,468
$232,794,756
-3%
-2%
Remuneration of Non-Executive Directors
The following table presents the fees paid to the Company’s non-executive directors for the year ended 31 December
2019, pursuant to our Directors’ Remuneration Policy, which was approved at our 2018 Annual Meeting. Our former
Executive Chairman, Mr. Pilenko, and current Chairman and CEO, Mr. Pferdehirt, are not included in the table below as
they were employees during 2019 and did not receive any additional compensation for their service as a director.
Non-Executive Director Single Figure Table (Audited Information):
Non-Executive
Director
Eleazar de Carvalho
Filho
Arnaud Caudoux
Pascal Colombani
Marie-Ange Debon
Claire S. Farley
Didier Houssin
Peter Mellbye
John O’Leary
Richard A. Pattarozzi
Olivier Piou
Kay G. Priestly
Joseph Rinaldi
James M. Ringler
John Yearwood
2019 ($000s)
2018 ($000s)
Base
fees
Additional
fees
Stock
Awards
Taxable
benefits
Total
Base
fees
Additional
fees
Stock
Awards
Taxable
benefits
100
12.5
175
1.104 288.60
100
0
100
100
100
100
100
100
50
58.3
100
100
100
58.3
0
50
32.5
20
25
35
12.5
0
175
175
175
175
175
175
0
0
0
1.104 326.10
100
1.104 308.60
100
1.104 296.10
100
1.104 301.10
100
1.104 311.10
100
1.104 288.60
100
35
175
1.448 261.45
100
12.5
12.5
25
25
15
0
1.104
70.83
N/A
175
2.668 288.60
100
175
175
0
2.159 302.67
100
0 302.16
100
0
73.3
N/A
20
0
25
32.5
12.5
25
35
12.5
77.5
N/A
12.5
25
35
N/A
175
0
175
175
175
175
175
175
175
N/A
175
175
175
N/A
0
0
0
0
0
0
0
0
0
N/A
0
0
0
N/A
Total
295
0
300
308
288
300
310
288
352.5
N/A
288
300
310
N/A
129 TechnipFMC
U.K. Annual Report and IFRS Financial Statements 2019 Non-Executive Director Share Ownership (Audited Information)
To further align the interests of non-executive directors with the interests of the Company’s shareholders, each non-
executive director is subject to a share ownership requirement of five times the annual cash retainer. The following table
shows, as of 31 December 2019, the number of our Ordinary Shares owned by each of our non-executive directors.
Non-Executive Director
Share
ownership
requirement
Number
of shares
required to
hold
Number of
shares owned
outright1
Interest in
shares
Total number
of shares held
Eleazar de Carvalho Filho
$500,000
13,993
35,060
8,341
43,401
Arnaud Caudoux
Pascal Colombani
Marie-Ange Debon
Claire S. Farley
Didier Houssin
Peter Mellbye
John O’Leary
Richard A. Pattarozzi2
Olivier Piou
Kay G. Priestly
Joseph Rinaldi
James M. Ringler
John Yearwood
–
$500,000
$500,000
$500,000
$500,000
$500,000
$500,000
0
$500,000
$500,000
$500,000
$500,000
$500,000
–
13,993
13,993
13,993
13,993
13,993
13,993
0
2,332
13,993
13,993
13,993
2,332
–
11,675
11,685
65,364
11,655
21,848
14,455
0
3,000
20,016
11,655
180,312
–
–
8,341
8,341
8,341
8,341
8,341
8,341
0
–
8,341
8,341
8,341
–
–
20,106
20,026
73,705
19,996
30,189
22,796
0
3,000
28,357
19,996
188,653
–
(1) Includes Ordinary Shares owned by the individual and Ordinary Shares subject to RSUs credited to individual accounts of non-employee directors
under our incentive plan. As of 31 December 2019, the number of Ordinary Shares subject to RSUs credited to each non-executive director
under the incentive plan was 10,855, except for Messrs. Piou and Yearwood, who joined the Board in June 2019, and Mr. Caudoux who waived
his cash and equity remuneration because of the policies of his employer, Bpifrance. These directors have no power to vote or dispose of shares
underlying the RSUs until they are distributed upon the cessation of their service on our Board. Until such distribution, these directors have an
unsecured claim against us for such units.
(2) Mr. Pattarozzi retired from the Board on May 1, 2019. As such, he was not subject to share ownership requirements as of December 31, 2019.
All directors met our ownership guidelines in 2019, with the exception of John Yearwood, who joined the Board in
June, 2019. Given Mr. Caudoux waived his annual cash and equity remuneration because of the policies of his employer,
Bpifrance, he is not subject to any share ownership and retention requirements.
130 TechnipFMC
U.K. Annual Report and IFRS Financial Statements 2019 Executive Chairman Compensation Table
Mr. Pilenko’s compensation for 2019 was in accordance with our Directors’ Remuneration Policy that was approved at
our 2018 Annual Meeting, and his end-of-service payments are in accordance with the terms of his service agreement.
The following table summarizes the compensation earned by Mr. Pilenko for his services as Executive Chairman from
January 1 to May 1, 2019.
Year
Salary ($)1
Stock Awards ($)2
Non-Equity Incentive
Plan Compensation ($)3
All Other
Compensation
($)4
Total ($)
2019
2018
2017
335,391
1,061,194
1,023,929
0
0
2,199,987
402,470
1,758,397
1,954,680
46,193
784,054
132,894
159,466
2,952,485
5,338,062
(1) The amounts reported as Salary, Non-Equity Incentive Compensation, and All Other Compensation for Mr. Pilenko were paid in Euros. Mr. Pilenko’s
salary remained unchanged since our Company’s formation in 2017 (i.e., a salary of €900,000). The amounts in this column vary from year to
year due to the applicable Euro to U.S. dollar conversion on the last day of each month during each reporting year.
(2) The amounts represent the sum of the aggregate grant date fair value of options, RSUs and PSUs. They are based on an assumption that target
performance would be achieved. The actual value of the award may increase or decrease if actual performance is above or below target.
(3) Mr. Pilenko’s 2019 annual cash incentive bonus was paid at its target value, pro-rated to his time of service as Executive Chairman, from January
1 to May 1, 2019. He did not earn any bonus relative to the period from May 2, 2019 to December 31, 2019 when he was employed but paid
using accrued time off.
For 2017 and 2018, the amounts also include the payment of the last two installments of the 2014 legacy Technip Long-Term Cash Incentive Plan
of $102,393 and $106,119, respectively.
(4) The 2019 amount represents Mr. Pilenko’s pension-related payments of $9,665 and taxable benefits which include premiums for (i) medical, life,
and disability insurance of $3,457, (ii) financial planning and personal tax assistance of $25,581, and (iii) spousal travel for Company business
functions of $17,551.
131 TechnipFMC
U.K. Annual Report and IFRS Financial Statements 2019
Application of the policy in 2020
We believe that the policy agreed by shareholders in 2018 continues to be fit for purpose going forward. We are,
therefore, proposing modest adjustments, the most significant of which is a rebalancing of the incentive mix to reflect
a stronger link to performance. The 20% of the long-term incentive mix previously delivered in stock options, will be
reallocated equally to PSUs and RSUs, as follows:
SO
20%
RSU
20%
2019
PSU 60%
RSU
30%
2020
PSU 70%
Compensation for directors is recommended annually by the Compensation Committee with the assistance of Willis
Towers Watson and approved by the Board.
The Directors’ Remuneration will be implemented with effect from the 2020 Annual Meeting (24 April 2020) as follows:
Salary and Benefits
Chairman and CEO
2019 Base Salary
2020 Base Salary
Douglas J. Pferdehirt
$1,236,000
$1,236,000
Increase
0%
The 2020 annual incentive performance targets will be disclosed in our 2020 U.K. Annual Report.
Benefits and Pension
No changes are being made.
Annual Bonus
The bonus opportunity and operation for 2020 will be in line with the Directors’ Remuneration Policy. The measures and
weightings for the year will be as follows:
BPI
TechnipFMC EBITDA$
TechnipFMC EBITDA % revenue
TechnipFMC Working Capital Days
API
Total
132 TechnipFMC
75%
25%
25%
25%
25%
100%
U.K. Annual Report and IFRS Financial Statements 2019 Long-term Incentive Plan
The grant of any of these awards is always subject to the discretion of the Compensation Committee. The Compensation
Committee granted long-term equity incentives to our Chairman and CEO on March 9, 2020, consisting of the following:
` Based on feedback from shareholders in 2019, we eliminated the use of stock options in the 2020 long-term equity
incentive awards.
` 30% of awards granted are time-based RSUs.
` 70% of awards granted are PSUs. The performance period was set from January 1, 2020 to December 31, 2022. Due
to the announced spin-off of Technip Energies, the performance metrics for the PSUs will be pro-rated based on two
separate periods: January 1, 2020 to the closing date of the spin-off (“Pre-spin Period”) and from the closing date of
the spin-off to December 31, 2022 (“Post-spin Period”).
` For the Pre-spin Period, the PSU performance metric will be based on relative TSR performance versus our Relative
TSR Peer Group, using the payout scale below:
Relative TSR Ranking
Below 25th percentile
25th percentile
75th percentile or greater
Payout (% of earned PSUs)
0%
50%
200%
Note: If the Company’s TSR is negative for the performance period, the payout in respect of the TSR element will be capped at target, regardless of
our relative performance.
`For the Post-spin Period, each of TechnipFMC and Technip Energies will set its performance metrics and targets
related to the Post-spin Period as soon as practicable after the closing of the spin-off.
`Each company will include TechnipFMC’s Pre-spin Period performance in a weighted calculation of its performance
for the 2020-2022 performance period.
133 TechnipFMC
U.K. Annual Report and IFRS Financial Statements 2019 Non-Executive Director fees
For the year ending December 31, 2020, our non-executive director compensation program consists of cash
consideration and restricted stock unit awards. The following table describes the components of our non-executive
director compensation program.
Compensation Element
Compensation 2019
Compensation 2020
% increase
Annual Retainer
$100,000 paid in cash
$100,000 paid in cash
Annual Equity Grant
$175,000 in RSUs, vesting after
one year of service and settled
upon leaving the Board
$175,000 in RSUs, vesting after
one year of service and settled
upon leaving the Board
Starting with the 2020 award,
non-executive directors will have
the opportunity to elect the year
in which they will take receipt of
the equity grants from either (a)
a period of 1 to 10 years from
the grant date or (b) upon their
separation from Board service.
The elections are made prior to the
beginning of the grant year and are
irrevocable after December 31st of
the year prior to grant
Annual Chair Fee
$20,000 for Audit Committee
$20,000 for Audit Committee
$15,000 for Compensation
Committee
$15,000 for Compensation
Committee
$10,000 for Nominating and
Governance Committee
$10,000 for Nominating and
Governance Committee
$10,000 for Strategy Committee
$10,000 for Strategy Committee
Meeting Fee
$2,500 per committee meeting
$2,500 per committee meeting
Stock Ownership Requirement
Five times annual retainer
Five times annual retainer
0%
0%
0%
0%
0%
0%
0%
0%
Our Chairman and CEO is an employee and does not receive any additional compensation for his service as a director.
Each non-executive director receives reimbursement for reasonable incidental expenses incurred in connection with the
attendance at Board and committee meetings.
In addition, to reflect the Company’s corporate responsibility and sustainability strategy of supporting communities,
directors are eligible to participate in our matching charitable contribution program on the same terms as employees.
Pursuant to this program, the Company matches 100% of the charitable contributions of its employees and directors up
to an aggregate of $10,000 in any year, although the Company exercises discretion to approve matching contributions in
excess of that amount from time to time. Directors who are not Company employees do not participate in any employee
benefit plans other than the Company’s matching program for charitable contributions. The Company has not made any
charitable contribution to an organization in which a director serves as an employee or an immediate family member of
the director serves as an executive officer.
134 TechnipFMC
U.K. Annual Report and IFRS Financial Statements 2019 Starting with the 2020 award, non-executive Directors will have the opportunity to elect the year in which they will take
receipt of the equity grants from either (a) a period of one to 10 years from the grant date or (b) upon their separation
from Board service. The elections are made prior to the beginning of the grant year and are irrevocable after December
31 of the year prior to grant.
Activities of the Compensation Committee in 2019
The Chair of the Compensation Committee is James M. Ringler. The other members of the Compensation Committee
are Claire Farley, John O’Leary, Joseph Rinaldi, and John Yearwood (from July 2019), all of whom are non-executive
directors that the Company considers to be independent. The Compensation Committee’s terms of reference (Charter of
the Compensation Committee of the Board) are available on the Company’s website at www.TechnipFMC.com under the
heading “About us > Governance”.
The Compensation Committee’s responsibilities are:
` Reviewing, evaluating, and approving the agreements, plans, policies, and programs of the Company to compensate its
independent directors, the former Executive Chairman, the current Chairman and CEO, and other officers, as applicable
` Consistent with equity plans approved by the Company’s shareholders, reviewing, evaluating, and approving
all awards by the Company of equity securities or equity derivatives to executive officers of the Company and
approving the number of equity securities or equity derivatives to be allocated to all other employees at the
discretion of the Chairman and CEO.
` Reviewing the compensation disclosure to be included in the Proxy Statement for the Company’s 2020 Annual
Meeting, as well as the description of the Company’s directors’ remuneration policy and the annual remuneration
report, which form part of the Company’s annual report.
` Producing the Compensation Committee Report to be included in the Company’s proxy statement
` Reviewing, evaluating, and approving the directors’ remuneration policy and the directors’ remuneration report
` Otherwise discharging the Board’s responsibilities related to compensation of the Company’s executive officers
and directors
` Performing such other functions as the Board may assign to the Compensation Committee from time to time
Under its charter, the Compensation Committee has the sole authority to retain and terminate a compensation consultant,
outside counsel, or any other advisors engaged to assist in the evaluation of compensation of directors, as well as the
sole authority to approve the consultant’s fees and its terms, which are then paid by the Company (within any budgetary
constraints imposed by the Board). Our executive directors do not discuss compensation matters with the Compensation
Committee’s consultant, except as needed to respond to questions from the consultant.
In 2019, in order to ensure our compensation programs are aligned with peer group and industry best practices, the
Compensation Committee retained Willis Towers Watson as its principal compensation consultant to provide information
and advice to the Compensation Committee on executive and director compensation and related governance matters.
The firm was engaged in 2016, through a tender process, to advise on our 2017 merger and then subsequently
confirmed in 2017 as compensation advisors to the Compensation Committee. Fees are based on a fixed fee offset,
based on an assumed set of activities. Services carried out by Willis Towers Watson in 2019 included evaluating our
director and executive compensation programs against general market and peer data, and providing updates on current
executive compensation trends and applicable legislative and governance activity. In addition, Willis Towers Watson
provided retirement benefit consultant services, health and group benefits consulting services, and corporate risk and
broking services to management. In 2019, Willis Towers Watson was paid approximately $358,000 in fees related to
executive compensation services, and $1,960,000 related to non-executive compensation services, in each case relating
to both our directors and executive officers.
135 TechnipFMC
U.K. Annual Report and IFRS Financial Statements 2019 In February 2020, the Compensation Committee considered the independence of Willis Towers Watson in accordance
with applicable law. At the request of the Compensation Committee, Willis Towers Watson prepared a letter providing
data on the following factors relevant to assessing independence: (a) other services provided to the Company by Willis
Towers Watson; (b) fees paid by the Company as a percentage of Willis Towers Watson’s total revenue; (c) policies and
procedures maintained by Willis Towers Watson that are designed to prevent a conflict of interest; (d) any business
or personal relationships between the individual consultants involved in the engagement and a member of the
Compensation Committee; (e) any ordinary shares owned by the individual consultants involved in the engagement or
their immediate family members; and (f) any business or personal relationships between our executive officers and Willis
Towers Watson or the individual consultants involved in the engagement. The Compensation Committee also considered
that the Willis Towers Watson consultants advising the Compensation Committee derived no economic benefit from the
fees paid for the non-executive compensation services. The Compensation Committee discussed these considerations
and concluded that the work of Willis Towers Watson and the consultants involved in the engagement did not raise any
conflict of interest.
136 TechnipFMC
U.K. Annual Report and IFRS Financial Statements 2019 Compensation Committee Members
All members of the Compensation Committee are independent. The Compensation Committee met five times in 2019 and
all members attended each meeting.
The Compensation Committee’s Activities during the Year Ended December 31, 2019
Each year the Compensation Committee approves an annual calendar which sets out the key activities in accordance with
its charter. The key activities of the committee in 2019 were as follows:
Q1
Q2–Q3
Q4
Approve compensation decisions
and equity awards for directors and
officers
Approve executive officer
stock ownership guidelines and
compliance
Review internal governance policies
(clawback, insiders, anti-hedging,
pledging) and compliance with those
Approve company goal
achievements in relation to annual
and long-term incentive plans
Discuss shareholders engagement
outcomes and review proxy voting
results
Discuss Technip Energies Directors-
elect compensation policy
Review and discuss executive
compensation strategy structure
and programs
Approve annual disclosures,
including CD&A and U.K.
remuneration report
Approve equity programs, annual
budget for non-officers, and equity
awards impact on shareholders
dilution
Review of peer compensation
practices
Approve Technip Energies Directors-
elect compensation policy
Statement of Voting at Annual Shareholders’ Meeting
At our 2019 annual general meeting of shareholders, 79.9% of votes cast approved our 2018 Remuneration Report with
20.1% voting against the report (percentages subject to rounding), and 340,249 abstaining. At our 2018 annual general
meeting of shareholders, our Remuneration Policy was approved by 76.7% of shareholders, with 23.3% of votes cast
against the policy and 487,136 votes abstaining. The Compensation Committee has carefully considered the results of the
advisory votes as it completed its annual review of our compensation program. An integral component in the evaluation
and review of our compensation program is our shareholder engagement initiatives, explained in further detail in the
letter from our Compensation Committee Chairman.
We have continued our shareholder engagement program of soliciting feedback on our director compensation program
structure and decisions, and our Compensation Committee considers shareholder feedback as it evaluates and reviews
the compensation program each year.
On behalf of the Board
James M. Ringler
Director and Compensation Committee Chairman
March 13, 2020
137 TechnipFMC
U.K. Annual Report and IFRS Financial Statements 2019 Remuneration Policy
The Remuneration Policy was approved at the annual general meeting of shareholders on June 14, 2018 and took effect
from that date. There are no proposed changes to the policy, and therefore, no requirement for a shareholder vote at the
2020 Annual Meeting. The policy will continue to apply until the Annual General Meeting of Shareholders in 2021, or until
an earlier vote is held.
The Remuneration Policy is set out in this section for reference only.
Future Policy Table for Executive Directors
The table and accompanying notes below describe each component of the Company’s executive directors’ remuneration
package.
Base Salary
Purpose and link to
strategy
To attract and retain exceptionally talented individuals who deliver superior operational
performance in the Company’s businesses and create an environment that fosters the
innovation necessary for continued growth of the Company’s revenue, earnings and
shareholder returns.
Operation
Normally reviewed annually or following a change in responsibilities with changes
usually taking effect from March 1.
The Compensation Committee considers the following parameters when setting and
reviewing base salary levels:
` pay increases for other employees across the Company;
` economic conditions and governance trends;
` the individual’s performance, skills and responsibilities;
` base salaries of companies of a similar size and international scope; and
` market pay levels.
Salaries are normally paid in the currency of the executive director’s home country.
Salary increases will ordinarily be in line with increases awarded to other employees in
the Company. The Compensation Committee reserves the discretion to increase salary
levels in appropriate circumstances such as where the nature or scope of the executive
director’s role or responsibilities changes or in order to be competitive at the median
level of peer companies. Salary adjustments may also reflect wider market conditions
in the geography in which the executive director is based.
Maximum payment
Performance assessment
Overall performance of the executive director is considered by the Compensation
Committee when setting salaries annually.
Provisions to recover
sums paid or the
withholding of payments
Not applicable
138 TechnipFMC
U.K. Annual Report and IFRS Financial Statements 2019 Pension and Other Retirements Benefits
Purpose and link to
strategy
Operation
Maximum payment
Provides competitive post-retirement benefits.
Provision of market competitive retirement benefits that may vary based on the
location. The Chief Executive Officer currently participates in the Company’s U.S.
Qualified Savings Plan and U.S. Non-Qualified Savings Plan. The Executive Chairman
participates in a French defined contribution plan.
Further detail on current pension provisions for executive directors is disclosed in the
annual report on remuneration.
Retirement or pension benefits vary by geography and this makes it difficult to provide
a maximum payment level. Based on the single figure valuation approach, for the 2017
financial year, the executive directors’ pension benefits were equal to 11% of the Chief
Executive Officer’s salary and 3% of the Executive Chairman’s salary.
However, it is recognized that this value may fluctuate yearly.
The Executive Chairman is also entitled to a lump sum payment in settlement of his
“Article 39” pension payable in two equal installments in 2017 and 2018 of $2,218,512.
Performance assessment
None.
Provisions to recover
sums paid or the
withholding of payments
Not applicable.
139 TechnipFMC
U.K. Annual Report and IFRS Financial Statements 2019 Annual Performance Bonus
Purpose and link
to strategy
Incentivizes achievement of the Company’s annual financial and strategic targets. Provides
focus on key financial metrics and the individual’s contributions to the Company’s performance.
Operation
` Performance measures and stretching targets are set annually in advance by the
Compensation Committee by reference to the annual operating plan.
` The majority of the bonus will be based on financial performance. However, operational,
strategic and individual targets may also be used.
` 75% of the bonus is based on a BPI comprising financial metrics, and 25% of the bonus is
based on an API comprising personal targets.
` The award is usually paid out in cash after the end of the financial year.
` The Compensation Committee has discretion to amend the level of payment if it is not
deemed to reflect appropriately the individual’s contribution or the overall business
performance. Any discretionary adjustments will be detailed in the following year’s annual
report on remuneration.
` The Compensation Committee retains the discretion to make other bonus payments on
an exceptional basis when it considers this to be appropriate in the context of Company
and executive performance, and when it is considered to be in the best interests of our
shareholders. Where such bonuses are paid, we would seek to restrict the value to the limit
in this policy.
Further details of the annual bonus for 2017 and 2018 are set out in the annual report on
remuneration.
Maximum
payment
` The maximum annual bonus target for 2018 is currently set at 270% of base salary for the
Chief Executive Officer and at 240% of base salary for the Executive Chair. This equates to
200% of target value.
` For threshold performance, the bonus pays out from 0% of base salary.1
` For “on-target” performance up to 100% of base salary may be earned.2
` For maximum performance up to 200% of base salary may be earned.3
The Compensation Committee retains the discretion to increase the bonus target in
circumstances it deems appropriate, such as for a change in market levels.
Continued overleaf >
140 TechnipFMC
U.K. Annual Report and IFRS Financial Statements 2019 Annual Performance Bonus
Performance
assessment
` Performance measures and stretching targets are set annually by the Compensation
Committee by reference to the annual operating plan and renewed throughout the year by
the Compensation Committee and the Nominating and Corporate Governance Committee.
` The Compensation Committee has discretion to vary the weighting of these measures over
the life of this remuneration policy.
Further details are set out in the annual report on remuneration.
Provisions to
recover sums paid
or the withholding
of payments
Clawback provisions apply as described on page 63 of the 2017 U.K. Annual Report on
Remuneration.
(1) For clarification, this should read: “For threshold performance, the bonus pays out from 0% of target value”.
(2) For clarification, this should read: “For on-target performance, the bonus pays out at 100% of target value”.
(3) For clarification, this should read: “For maximum performance, up to 200% of target value may be earned”.
141 TechnipFMC
U.K. Annual Report and IFRS Financial Statements 2019 Long-term Incentive Schemes
Purpose and link
to strategy
Operation
Incentivizes executive directors to deliver superior long-term returns to shareholders.
Long-term incentives are granted under the TechnipFMC plc Incentive Award Plan (the
“Incentive Plan”). This is an omnibus arrangement whereby a variety of award types may be
granted, including: performance stock units, restricted stock units, stock options, cash settled
awards and share appreciation rights.
For 2018, it is currently intended that award grants comprise:
` Performance Stock Units (“PSUs”): an award of shares subject to performance conditions
assessed over a period of 3 years.
` Restricted Stock Units (“RSUs”): an award of shares that vest 3 years from grant.
` Stock options: an award of stock options that vest 3 years from grant and has a ten-year
term.
The type and weighting of awards granted each year is determined annually by the
Compensation Committee at its discretion. A minimum of 60% will be performance based.
However, it is the current intention of the Compensation Committee for the weighting for the
Chief Executive Officer based on the fair value at the grant date to be, for 2018:
` 60% Performance Stock Units;
` 20% Stock Options and;
` 20% Restricted Stock Units.
The Compensation Committee has discretion to vary the weighting of the performance
measures over the life of this remuneration policy.
Executive irectors will be eligible for any dividends paid and accumulated on RSUs and PSUs
during the performance or vesting period. No dividend equivalents will be payable on Stock
Options.
Maximum
payment
` The maximum grant date fair value of long-term incentive awards granted to the Chief
Executive Officer will be $15 million per annum. Under the terms of the Incentive Plan no
more than 2,000,000 shares may be granted to any one individual in any calendar year.
` PSUs pay out at 25% of maximum for achievement of threshold performance.
` The Compensation Committee retains the discretion to adjust the actual value of awards
granted under the Plan in circumstances it deems appropriate but in no way should the total
exceed $15 million.
Continued overleaf >
142 TechnipFMC
U.K. Annual Report and IFRS Financial Statements 2019 Long-term Incentive Schemes
Performance
Assessment
(applicable to
performance
based RSUs only)
` Long-term incentive awards except PSUs are not subject to achievement of performance
targets other than vesting periods. This is in line with market practice in the US.
` For PSUs, the vesting of awards is linked to a range of performance measures that may
include, but are not limited to:
`a growth measure (for example, net sales, EPS);
`a measure of efficiency (for example, operating margin, operating cash conversion, ROIC);
and
`a measure of the Company’s relative performance in relation to its peers (for example,
relative total shareholder return).
` Measures and targets will be determined by the Compensation Committee annually at its
discretion prior to grant and will be set out in the annual report on remuneration.
` The Compensation Committee has discretion to amend the performance conditions in
exceptional circumstances if it considers it appropriate to do so. Any such amendments
would be disclosed and explained in the following year’s annual report on remuneration.
Clawback provisions apply as described on page 63 of the 2017 U.K. Annual Report on
Remuneration.
Provisions to
recover sums paid
or the withholding
of payments
143 TechnipFMC
U.K. Annual Report and IFRS Financial Statements 2019 All Employee Share Scheme
Purpose and link
to strategy
To enable executive directors to participate in share purchase schemes applicable to all-
employees on the same basis as other employees.
Whilst the Company does not currently operate all employee share purchase schemes were it
to obtain shareholder approval to do so during the term of the remuneration policy executive
directors would be eligible to participate in such a plan on the same terms as other eligible
employees not inconsistent with this policy. Such employee share purchase schemes would
allow the executive directors to purchase up to $25,000 in value of shares each year at a
discount (which could take the form of a matching share), not to exceed 20%.
Up to $25,000 in value of the shares at a discount of up to 20%
None
None
Operation
Maximum
payment
Performance
assessment
Provisions to
recover sums paid
or the withholding
of payments
144 TechnipFMC
U.K. Annual Report and IFRS Financial Statements 2019 Benefits and Perquisites
Purpose and link
to strategy
To provide market competitive benefits and to facilitate the performance of executive
directors in their duties.
Operation
Executive directors are eligible to receive benefits, that may include, but are not limited
to: financial planning, personal tax assistance, use of company cars and club memberships
(primarily business related), medical, vision and dental benefits, sickness, death and
dismemberment benefits, work related travel and security expenses for the director and
spouse and matching charity contributions. Benefits may vary by location.
The Compensation Committee has discretion to offer additional allowances or benefits to
executive directors, if considered appropriate and reasonable. These may include relocation
expenses, housing allowance and school fees where an executive director has to relocate
from his/her home location as part of his/her duties.
Maximum
payment
The actual value of benefits and perquisites varies year on year depending on the cost to the
business and individual director’s circumstances. The benefits package is set at a level that
the Compensation Committee considers:
` provides an appropriate level of benefits depending on the role and individual
circumstances; and
` in line with comparable benefits in companies of a similar size and complexity in the market.
Performance
assessment
None.
Not applicable.
Provisions to
recover sums paid
or the withholding
of payments
145 TechnipFMC
U.K. Annual Report and IFRS Financial Statements 2019 Legacy Obligations
The Compensation Committee reserves the right to make any remuneration payments that are outside of this
remuneration policy if they were agreed to prior to this remuneration policy being enacted. The Compensation
Committee also reserves the right to make any remuneration payments that were agreed to prior to the relevant
individual becoming an executive director of the Company. Payments include share based and cash based incentives and/
or salary, benefits, pension and other payments.
Performance Target Selection
The performance targets for the annual bonus and long-term incentive plan are set each year prior to the grant date,
taking into account: market practice at peer companies; practice within the wider group; and our strategic and financial
business plan over the short and long-term.
The measures we select are chosen due to their link and importance to the strategy and our Key Performance Indicators.
We select measures intended to provide a balance between growth, efficiency and relative outperformance.
Non-Qualified Deferred Compensation
Our U.S.-based executives, including our Chief Executive Officer, are eligible to participate in the U.S. Non-Qualified
Savings Plan, which provides executives and other eligible employees with the opportunity to participate in a tax
advantaged savings plan comparable to the U.S. Qualified Savings Plan. The investment options offered to participants
in the U.S. Non-Qualified Savings Plan are similar to those offered in our U.S. Qualified Savings Plan. Participants may
elect to defer up to 90% of their base pay and/or annual cash incentive bonus into the U.S. Non-Qualified Savings Plan.
The Company contributes 5% of the employee’s contributions to the U.S. Non-Qualified Savings Plan. Participants are
100% vested in their contributions and the employer contributions. For those participants in the U.S. Non-Qualified
Savings Plan eligible to receive the non-elective contribution, we will contribute an additional 4% of the employee’s
contributions to the U.S. Non-Qualified Savings Plan (the 4% will decrease to 2% beginning in 2018). Similar to the U.S.
Qualified Savings Plan, eligible participants in the U.S. Non-Qualified Savings Plan become vested in their non-elective
contributions after three years of service with the Company. In addition, for these eligible participants, we will make
a contribution on annual compensation that exceeds the maximum compensation limit required by the U.S. Internal
Revenue Code of 1986, as amended, for our U.S. Qualified Savings Plan. The intent of our contributions to the U.S.
Non-Qualified Savings Plan is so that eligible employees receive the same contribution as a percentage of eligible
earnings from the company regardless of compensation level. All vested funds must be distributed upon an employee’s
termination or retirement from the Company.
146 TechnipFMC
U.K. Annual Report and IFRS Financial Statements 2019 Approach to Recruitment Remuneration
` The Compensation Committee’s approach to recruitment remuneration is to pay no more than is necessary to attract
appropriate candidates to the role.
` The Compensation Committee will seek to structure pay for any new director in line with the remuneration policy.
The Compensation Committee does not envisage paying above the levels set out in the policy for a new executive’s
ongoing package.
` Where it is necessary to “buy out” an individual’s awards from a previous employer, the Compensation Committee
will seek to match the expected value of the awards and to grant awards that vest over a time frame similar to
those given up, with a commensurate reduction in quantum where the new awards will be subject to performance
conditions that are not as stretching as those on the awards given up. Where recruitment payments or awards are
intended to replace pay forfeited by the individual, the value of such awards will not be limited to those limits set out
in the remuneration policy, but will be determined by the Compensation Committee at its discretion.
` The Compensation Committee may agree to relocation expenses and other associated expenses when negotiating the
employment conditions.
` For an internal promotion, any outstanding incentive awards or bonuses may be permitted to continue, or be adjusted
to reflect the new position.
` The Compensation Committee reserves the right to make payments of fees and base salary (or annual retainer) and
make benefit or annual cash bonus provisions or payments in respect of any other component of remuneration
(including the terms and conditions attaching thereto) outside of the scope of the general remuneration policy (and its
caps) for directors to meet individual circumstances of recruitment or in connection with any merger and acquisition
activity.
147 TechnipFMC
U.K. Annual Report and IFRS Financial Statements 2019 Service Agreement
Our Executive Chairman is the only executive director with a service agreement. Prior to the Merger, Technip had an
arrangement with Mr. Pilenko that established certain terms of employment pursuant to French laws. In connection
with the Merger, the Company agreed to continue and adopt the pre-Merger terms of employment, including those
mandated by French law, in order to ensure continuity during the post-Merger period until the Company’s post-Merger
Compensation Committee could review all executive employment arrangements. As such, the Company entered into
a service agreement with Mr. Pilenko to reflect his pre-Merger employment and compensation arrangements, which
entitles him to a base salary of €900,000 and participation in short- and long-term incentives. In addition, we agreed
to continue to provide Mr. Pilenko with the following benefits: (i) the continuation of supplementary health coverage for
him and his spouse subject to such coverage being available at reasonable cost; (ii) the reimbursement of the cost of
up to 12 intercontinental flights per year for his spouse at the same class of ticket he is allowed for business trips; (iii)
car service for his business trips; (iv) the reimbursement of reasonable expenses relating to preparing and filing his tax
returns in France, the United Kingdom, and the United States; (v) all existing or future supplementary retirement plans for
executives working in France; (vi) 25 days paid holiday each year; and (vii) reimbursement of various expenses related to
immigration.
Once our post-Merger Compensation Committee reviewed all executive employment arrangements, Mr. Pilenko’s service
agreement was updated to reflect the ability to earn an annual cash incentive, which we offer to all of our executive
officers. In addition, should Mr. Pilenko’s employment be terminated by us other than for cause (i.e., gross misconduct,
gross negligence, conviction of an arrestable offense, conduct bringing him or us into disrepute, or being prohibited from
being a director) prior to our 2019 annual general meeting, he will receive a lump sum payment equal to the salary he
would have received through the date of the 2019 annual general meeting. Upon termination of his employment other
than for cause, he will also be eligible for (i) a lump sum payment equal to his annual base salary and target annual cash
incentive, subject to his signing a release of claims, (ii) monthly payments of his base salary and one-twelfth of his target
annual cash incentive payable over 12 months as payment for a non-compete, (iii) payment for all accrued but unused
vacation days, and (iv) subject to his continued compliance with his non-compete, continuation of his supplementary
health and tax preparation reimbursement benefits for two years following his termination. If Mr. Pilenko’s employment
is terminated for cause, he would not be entitled to any additional payments or benefits upon termination. Upon
termination for any reason other than cause, all stock options granted under legacy Technip plans, performance stock
unit awards, and other awards granted prior to the Merger will continue on their existing terms and will not be forfeited.
Both the executive and non-executive directors have entered into letters of appointment.
Our Chief Executive Officer and non-executive directors have not entered into service agreements. Our Chief Executive
Officer has severance and change in control protections as detailed in relation to potential loss of office payments are set
out in Section V below.
148 TechnipFMC
U.K. Annual Report and IFRS Financial Statements 2019 Illustrations of Application of Directors’
Remuneration Policy
The charts below illustrate the potential value of total compensation under the remuneration policy at threshold, on-
target and maximum levels of performance, categorized by fixed pay, annual incentives and long-term incentives.
For the purposes of this chart, and in line with the definitions used for “variable” pay in U.K. legislation, the value of RSUs
has been included in the fixed pay column, along with salary, taxable benefits and retirement benefits.
The table below sets out the elements and approach to calculation for the above charts:
Performance
Fixed pay
Annual variable pay
Long-term variable pay
Threshold
performance
/ Minimum
pay-out
Base pay for 2018: (Chief Executive Officer:
$1,200,000, Executive Chairman: $1,023,929).
n/a
n/a
Taxable benefits as per the single figure
of remuneration: (Chief Executive Officer:
$114,603, Executive Chairman: $125,403).
Retirement benefits as per the single figure
of remuneration: (Chief Executive Officer:
$125,003, Executive Chairman: $28,563).
Face value of restricted stock awards at grant:
(Chief Executive Officer: $7,317,853, Executive
Chairman: $5,820,342).
On-target bonus (100%
of target).
Performance Stock
Units at 100% of target.
For 2018: 135% of
salary for the Chief
Executive Officer and
120% of salary for the
Executive Chairman.
For 2018: face value
of $9,705,195 for
the Chief Executive
Officer and $0 for the
Executive Chairman.
Maximum bonus (200%
of target).
Performance Stock
Units at 200% of target.
For 2018: 270% of
salary for the Chief
Executive Officer and
240% of salary for the
Executive Chairman.
For 2018: face value
of $15,930,419 for
the Chief Executive
Officer and $0 for the
Executive Chairman.
Fixed Pay (see above)
On-target /
“expected”
performance
Maximum
performance
Fixed Pay (see above)
149 TechnipFMC
U.K. Annual Report and IFRS Financial Statements 2019 Policy on Payment for Loss of Office
The Compensation Committee will seek to ensure that all payments for loss of office are reasonable and in the long-
term interests of shareholders and the business. The Compensation Committee will generally take into account the
circumstance of the loss of office and performance of the director.
The Compensation Committee reserves the right to:
` pay legal fees, financial planning or outplacement costs;
` pay an annual bonus for the year of cessation;
` retain or accelerate vesting of outstanding long-term incentive awards; and
` continue taxable benefits and retirement benefits during the period.
It is our policy to offer severance benefits to our executive directors because we believe that severance benefits provide
important financial protection to directors in the event of involuntary job loss, are consistent with the practices of peer
companies and are appropriate for the retention of executive talent. Under our executive severance plan, if our Chief
Executive Officer is terminated without cause, he is entitled to receive 18 months of severance pay (limited to base
pay and target annual cash incentive bonus), his pro-rated target annual cash bonus through the date of termination,
the continuation of medical and dental benefits for 15 months at the employee premium rate, outplacement assistance,
and financial planning and tax preparation assistance for the last calendar year of employment. The availability of these
severance benefits is conditioned on the Chief Executive Officer’s compliance with non-disclosure, non-compete, and
non-solicitation covenants.
In the event of a termination without cause, termination for good reason, or voluntary retirement, any performance-
based incentive payments are subject to our actual attainment of performance goals. The terms of our executive
severance plan are consistent with the market practice of large public companies surveyed by Willis Towers Watson.
Change in control severance benefits, as described below, and severance benefits are exclusive of one another, and in no
circumstance, would any executive director receive benefits under both a change in control and the executive severance
plan.
Only the Chief Executive officer participates in the executive severance plan. The Executive Chairman’s severance is
governed by his service agreement. It is intended that any new executive director would be retained on similar loss of
office terms to the current executives.
Non-executive directors may be terminated early by either the Company or the non-executive director giving one
month’s written notice. Non-executive directors are not entitled to any severance compensation on termination.
However, all vested share awards will be settled at the discretion of the Compensation Committee and the Compensation
Committee retains the right to accelerate vesting for any outstanding share awards.
150 TechnipFMC
U.K. Annual Report and IFRS Financial Statements 2019 Potential Payments upon Change in Control
It is the Company’s policy to operate change in control benefits to ensure that directors have an incentive to continue to
work in the Company’s best interest during the period of time when a change in control transaction is taking place and
in order to ensure continuity of management. The benefits payable upon a change in control are comparable to benefits
offered to director positions at peer companies.
The Company has entered into an executive severance agreement with our Chief Executive Officer. Pursuant to this
agreement, in the event of termination following a qualifying change in control and a qualifying adverse change in
employment circumstances, the Chief Executive Officer will be entitled to the following benefits:
` full vesting of any share awards;
` three times his annual base pay and annual target bonus;
` a pro-rated payment equal to the amount of his annual target bonus for the year which he is terminated;
` accrued but unpaid base pay and unused paid time off;
` elimination of ownership and retention guidelines;
` awards granted under the Company’s Incentive Plan and other incentive arrangements adopted by the Company’s will
be treated pursuant to the terms of the applicable plan;
` an amount equal to the total monthly premium payable for his coverage (and if applicable spouse and dependent
coverage) under the Company’s health, dental, vision, prescription drug life, accidental death and dismemberment
insurance and long-term disability insurance coverage for 36 months;
` reimbursement for the costs of all outplacement services obtained by him within 18 months of the termination date
(limited to the lesser of 15% of his base pay on termination and $50,000); and
` reimbursement for legal fees and other litigation costs incurred in good faith by the Chief Executive Officer as a result
of the Company’s refusal to provide severance benefits under the executive severance agreement, contesting the
validity, enforceability or interpretation of the agreement or as a result of any conflict between the parties pertaining
to the agreement.
The severance payment is required to be paid in a single lump sum payment no later than 30 days after the date of
termination. Additionally, should our Chief Executive Officer incur a qualifying termination prior to January 16, 2019,
then his severance benefits will not be less than those he would have received pursuant to the legacy change in control
severance agreement he had with FMC Technologies.
A “qualifying termination” includes: (a) an involuntary termination of the Chief Executive Officer’s employment by the
Company and our subsidiaries for reasons other than “cause,” disability or death within 24 months of the change in
control; (b) a voluntary termination by the Chief Executive Officer for “good reason” within 24 months of the change in
control; or (c) a breach by the Company or any successor of any provision in the executive severance agreement.
Under the executive severance agreements, an executive will be considered terminated for “cause” for:
` willful and continued failure to substantially perform the executive officer’s employment duties in any material respect
(other than any such failure resulting from physical or mental incapacity or occurring after an executive officer has
provided notification to the Company of a voluntary termination for a “good reason”) after proper written demand
has been provided to the executive officer and the executive officer fails to resume substantial performance of the
executive officer’s duties on a continuous basis within 30 days of receipt of such demand;
` willfully engaging in conduct which is demonstrably and materially injurious to the Company or an affiliate; or
` conviction for, or pleading guilty or not contesting, a felony charge under federal or state law.
151 TechnipFMC
U.K. Annual Report and IFRS Financial Statements 2019 It is intended that any new executive director would be retained on similar loss of office terms to the current executive
directors. Non-executive directors are not entitled to any compensation on termination and have a one-month notice
period. However, all share awards will automatically be accelerated on a change of control of the Company.
Future Policy Table for Non-Executive Directors
Directors Fees
Purpose and link
to strategy
Non-executive directors’ compensation is designed to reward the time and talent required
to serve on the board of a company of our size, complexity, and geographical spread,
acknowledging the significant international travel required to discharge their duties to the
Company. The Board seeks to provide sufficient flexibility in the form of compensation delivered
to meet the needs of individuals who are located in different countries, while ensuring that a
substantial portion of directors’ compensation is linked to the long-term success of the Company.
Operation and
maximum
payment
Our Incentive Plan allows the non-executive members of our Board to receive up to $500,000
annually in cash and grant date fair value of equity. The Incentive Plan, however, grants the
Board the authority to pay less than the amount provided under the Incentive Plan.
Non-executive directors are compensated in both cash and restricted stock units which
reflects practice amongst peer companies. Fees are reviewed periodically against market
levels.
The table below sets out the policy for 2018:
Compensation Element
Compensation
Annual Retainer
Annual Equity Grant
$100,000 paid in cash
$175,000 in RSUs that vest after one year
(Non-executive directors will be eligible for
any dividends paid and accumulated on
RSUs during the vesting period).
Annual Chair Fee
$20,000 for Audit Committee
$15,000 for Compensation Committee
$10,000 for Nominating and Governance
Committee
$10,000 for Strategy Committee
Annual Lead Director Fee
Committee Meeting Fee
$50,000
$2,500 per committee meeting
Share Ownership Requirement
Five times annual retainer (over 5 years)
The Compensation Committee retains the discretion to increase the value of compensation
or alter the weighting of share awards and cash at its discretion, should this be considered
appropriate. Where any discretion is exercised, the basis of this exercise should be disclosed
in the next remuneration report.
Continued overleaf >
152 TechnipFMC
U.K. Annual Report and IFRS Financial Statements 2019 Directors Fees
Performance
assessment
None, although overall performance of the non-executive director is considered by the
Compensation Committee when setting fee levels.
Not applicable.
Provisions to
recover sums paid
or the withholding
of payments
Other Benefits
Each non-executive director receives reimbursement for reasonable incidental expenses incurred in connection with the
attendance at Board and committee meetings. In addition, directors are eligible to participate in the matching charitable
contribution program on the same terms as employees. Pursuant to this program, the Company matches 100% of
the charitable contributions of our employees and directors up to an aggregate of $10,000 in any year, although the
Company exercises discretion to approve matching contributions in excess of that amount from time to time.
Directors who are not the Company’s employees do not participate in any employee benefit plans other than the
Company’s matching program for charitable contributions. The Company has not made a charitable contribution to any
charitable organization in which a director serves as an employee or an immediate family member of the director serves
as an executive officer that exceeds in any single year the greater of $1 million or 2% of such charitable organization’s
consolidated gross revenues.
Share Ownership Requirements
To further align the interests of non-executive directors with the interests of the Company’s shareholders, each non-
executive director is expected to acquire and retain the Company’s Ordinary Shares and/or RSUs having a value equal
to at least five times the amount of each director’s annual cash retainer. A director has five years from his or her initial
appointment date as a director to meet this requirement. The ownership requirement is pro-rated over the five-year
period. Each of the Company’s non-executive directors met their pro-rata ownership requirements for 2017.
The annual RSU grant vests after one year of service but is settled in Ordinary Shares only when the director leaves
the Board. The RSUs are forfeited if a director ceases service on the Board prior to the vesting date of the RSUs, except
in the event of death or disability. Unvested RSUs will be settled and are payable in Ordinary Shares upon the death or
disability of a director or in the event of a change in control of the Company.
Other Provisions
The directors’ appointment letters provide for a one-month notice period, unless the director is terminated for cause in
which case the Company is not required to give notice. All of our non-executive directors will be subject to annual re-
election from 2019 onwards. No compensation payable if required to stand down.
153 TechnipFMC
U.K. Annual Report and IFRS Financial Statements 2019 Differences between Remuneration Policy for
Executive Directors and Other Employees
The Remuneration Policy for the executive directors is designed with regard to the employee remuneration policy across
the Company. However, there are some differences in the structure of the remuneration policy for the executive directors
and other senior employees, which the Compensation Committee believes are necessary to reflect the different levels of
responsibility and market practices.
Statement of consideration of employment conditions
elsewhere in Company
During our first year, compensation continuity was important to ensure focus on integration and synergies. In addition,
the Company undertook during its first year to harmonize pay policies in to a single benefits plan in each of our locations.
As such, the Compensation Committee did not undertake a comparison with pay throughout the organization. In 2018,
following further pay practice integration, the Compensation Committee will benchmark director compensation against
employee compensation.
Statement of consideration of shareholder views
Directors’ remuneration was presented to shareholders in the European prospectus dated January 13, 2017 made
available to the public in the context of the admission to trading on the regulated market of Euronext Paris of all the
Ordinary Shares of the Company prior to completion of the Merger.
Throughout 2017, the Board conducted outreach to, and met with, shareholders accounting for a substantial portion
of our share ownership base. Specifically, regarding our compensation program, many of our shareholders expressed
their support, while others provided constructive feedback on the program. Shareholder feedback on our executive
compensation program focused primarily on the following four themes: (i) development of the compensation
program; (ii) annual and long-term incentive plans and how the metrics and targets tie to Company objectives
regarding performance and merger integration; (iii) compensation disclosures, including the Company’s commitment
to transparency, and (iv) the tenure and transition of executive director roles. This feedback was shared with the
Compensation Committee and the Board.
The Compensation Committee intends to consult key shareholders on a regular basis and to respond their queries relating
to director remuneration.
154 TechnipFMC
U.K. Annual Report and IFRS Financial Statements 2019 Independent auditors’ report to the members of
TechnipFMC Plc
Report on the audit of the financial statements
Opinion
In our opinion:
• TechnipFMC Plc’s group financial statements and company financial statements (the “financial
statements”) give a true and fair view of the state of the group’s and of the company’s affairs as at 31
December 2019 and of the group’s loss and cash flows for the year then ended;
•
•
•
the group financial statements have been properly prepared in accordance with International Financial
Reporting Standards (IFRSs) as adopted by the European Union;
the company financial statements have been properly prepared in accordance with United Kingdom
Generally Accepted Accounting Practice (United Kingdom Accounting Standards, comprising FRS 101
“Reduced Disclosure Framework”, and applicable law); and
the financial statements have been prepared in accordance with the requirements of the Companies Act
2006 and, as regards the group financial statements, Article 4 of the IAS Regulation.
We have audited the financial statements, included within the U.K. Annual Report and IFRS Financial Statements
(the “Annual Report”), which comprise: the Consolidated Statement of Financial Position and Company Statement
of Financial Position as at 31 December 2019; the Consolidated Statements of Income and Consolidated Statements
of Other Comprehensive Income, the Consolidated Statements of Cash Flows, and the Consolidated Statements of
Changes in Stockholders’ Equity and Company Statement of Changes in Stockholders’ Equity for the year then
ended; and the notes to the financial statements, which include a description of the significant accounting policies.
Our opinion is consistent with our reporting to the Audit Committee.
Basis for opinion
We conducted our audit in accordance with International Standards on Auditing (UK) (“ISAs (UK)”) and applicable
law. Our responsibilities under ISAs (UK) are further described in the Auditors’ responsibilities for the audit of the
financial statements section of our report. We believe that the audit evidence we have obtained is sufficient and
appropriate to provide a basis for our opinion.
Independence
We remained independent of the group in accordance with the ethical requirements that are relevant to our audit of
the financial statements in the UK, which includes the FRC’s Ethical Standard, as applicable to listed public interest
entities, and we have fulfilled our other ethical responsibilities in accordance with these requirements.
To the best of our knowledge and belief, we declare that non-audit services prohibited by the FRC’s Ethical Standard
were not provided to the group or the company.
Other than those disclosed in note 30 to the financial statements, we have provided no non-audit services to the
group or the company in the period from 1 January 2019 to 31 December 2019.
Our audit approach
TechnipFMC plc is a global provider of oil and gas projects, technologies, systems, and services. The group provides
services across three distinct segments: subsea, onshore/offshore, and surface projects. Our audit was planned to
take into account the impact of market conditions on the results and activities of the group.
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Overview
• Overall group materiality: $90 million (2018: $80 million), based on 0.67%
of Revenue.
• Overall company materiality: $80 million (2018: $70 million), based on
0.49% of Total assets.
• We conducted full scope audits on 5 components and the audit of specified
balances and classes of transactions on a further 31 components. The scope
of work at each component was determined by its contribution to the
group’s overall financial performance and its risk profile.
• We engaged our network firms in Australia, Brazil, France, Italy, India,
Malaysia, Netherlands, Norway, Russia, Singapore, UK and the US to
perform the audit procedures in those respective locations.
• The group audit engagement team visited France, Malaysia, and the US.
• The components where audit work was performed accounted for
approximately 76% of group revenue
• Risk of fraud of revenue recognition on long-term construction contracts
(group)
• Carrying value of goodwill – subsea operating segment (group)
• Carrying value of investments (company)
The scope of our audit
As part of designing our audit, we determined materiality and assessed the risks of material misstatement in the
financial statements. In particular, we looked at where the directors made subjective judgements, for example in
respect of significant accounting estimates that involved making assumptions and considering future events that are
inherently uncertain.
Capability of the audit in detecting irregularities, including fraud
Based on our understanding of the group and industry, we identified that the principal risks of non-compliance with
laws and regulations related to unethical and prohibited business practices and the wide variety of jurisdictions in
which the group operates, and we considered the extent to which non-compliance might have a material effect on
the financial statements. We also considered those laws and regulations that have a direct impact on the
preparation of the financial statements such as the Companies Act 2006. We evaluated management’s incentives
and opportunities for fraudulent manipulation of the financial statements (including the risk of override of controls)
and determined that the principal risks were related to posting inappropriate journal entries to manipulate revenue
or profit, and management bias in accounting estimates. The group engagement team shared this risk assessment
with the component auditors so that they could include appropriate audit procedures in response to such risks in
their work. Audit procedures performed by the group engagement team and/or component auditors included:
• Discussions with management and group General Counsel, including consideration of known or suspected
instances of non-compliance with laws and regulation and fraud;
• Evaluation of management’s controls designed to prevent and detect irregularities;
• Review of minutes of meetings of the Board of Directors;
• Challenging assumptions and judgements made by management in their significant accounting estimates,
in particular in relation to the accounting for contracts which recognise revenue under the over-time
recognition method; and
Identifying and testing journal entries, in particular any journal entries posted with unusual account
combinations or posted by senior management.
•
There are inherent limitations in the audit procedures described above and the further removed non-compliance
with laws and regulations is from the events and transactions reflected in the financial statements, the less likely we
would become aware of it. Also, the risk of not detecting a material misstatement due to fraud is higher than the risk
of not detecting one resulting from error, as fraud may involve deliberate concealment by, for example, forgery or
intentional misrepresentations, or through collusion.
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U.K. Annual Report and IFRS Financial Statements 2019
Key audit matters
Key audit matters are those matters that, in the auditors’ professional judgement, were of most significance in the
audit of the financial statements of the current period and include the most significant assessed risks of material
misstatement (whether or not due to fraud) identified by the auditors, including those which had the greatest effect
on: the overall audit strategy; the allocation of resources in the audit; and directing the efforts of the engagement
team. These matters, and any comments we make on the results of our procedures thereon, were addressed in the
context of our audit of the financial statements as a whole, and in forming our opinion thereon, and we do not
provide a separate opinion on these matters. This is not a complete list of all risks identified by our audit.
Key audit matter
How our audit addressed the key audit matter
Risk of fraud in revenue recognition on long-term
construction contracts
The group has a significant number of material lump
sum construction contracts which accounts for
approximately 80% of the group’s total revenue.
Contract revenue is recognised over the term of the
contract with reference to the percentage stage of
completion at each reporting date.
The judgement involved in assessing the percentage of
completion calculation can be complex and requires an
accurate forecast of total contract costs. This is
particularly important in respect of large contracts
(contract value greater than $250 million) with low
margins (0-2%), where management could manipulate
the estimates in the cost to complete forecast to avoid
recognising a loss on the contract.
Additional complexity arises through assessing the
revenue recognition for any contract contingencies. For
contracts where there is contract contingencies in excess
of $45 million we consider there to be a risk of fraud as
management could manipulate revenue by not releasing
these contingencies when no longer required.
We tested key internal financial controls, including the
review and approval of project margin calculation and
review of technical contingencies.
For a sample of contracts we obtained the percentage of
completion calculations, agreed key contractual terms
back to signed contracts, tested the mathematical
accuracy of the cost to complete calculations and re-
performed the calculation of revenue taken in the year
based on the percentage of completion.
We discussed the sample of contracts selected with
project managers and other members of senior
management to understand the status of the contract,
any changes from previous years, the key assumptions
underpinning the revenue and costs, and the existence
of any claims or litigation.
For costs incurred to date, we tested a sample to
appropriate supporting documentation. To test the
forecast cost to complete, we obtained the breakdown of
forecasted costs and tested elements of the forecast by
obtaining executed purchase orders and agreements,
comparing estimated costs to other similar projects and
corroborating management’s judgements and
assumptions to appropriate supporting documentation.
We assessed the competency and objectivity of the
project engineers and performed look-back tests to
assess the accuracy of forecasts in previous reporting
periods. For a sample of variation orders, we obtained
the signed contract amendments.
We assessed the adequacy of contingency provisions
against contract specific risks and management’s
assessment of the technical contingencies and the
potential for liquidated damages on projects with delays.
Overall, we are satisfied that the group’s accounting
policies for construction contract revenue recognition is
reasonable and have been appropriately applied.
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Key audit matter
How our audit addressed the key audit matter
Carrying value of goodwill - Subsea Operating Segment
The carrying value of Subsea goodwill as at 31 December
2019 is $2.9 billion. The goodwill balance relates to a
number of acquisitions, the most significant of which
resulting from the merger of Technip SA and FMC
Technologies Inc during 2017.
We obtained managements’ impairment model and
tested its mathematical accuracy and confirmed the cash
generating units (CGUs) identified following the
acquisition are the lowest level at which management
monitors goodwill.
Management undertook an annual impairment
assessment in accordance with the published accounting
policy. The challenging oil and gas environment, primarily
within the Subsea market, resulted in a goodwill
impairment of $1.3 billion being recognised within the
Subsea CGU.
We focused on this area given the significant judgements
involved, and complexity of valuation methodologies
requiring the use of estimates, to determine whether the
carrying value of goodwill is appropriate.
We performed audit procedures over the assumptions
used in respect of forecast growth rates and discount
rates. We involved our valuation specialists to
corroborate the appropriateness of the discount rate used
by forming an independent view of the rate using third
party source data to calculate a range of acceptable rates
and comparing this to the rate used in the analysis.
We agreed the underlying cash flow forecasts used in the
models to approved budgets and forecasts. We evaluated
the budgets and forecasts used within the model against
current trading conditions and corroborated the
reasonableness of certain key assumptions with external
third party data and historical results of the Company,
including the projected revenue growth in 2020, 2021
and 2022.
We reviewed the disclosures provided in the financial
statements to ensure compliance with IAS 36
‘Impairment of Assets’.
We also assessed the work performed by management
and their experts on the valuation models.
Based on our work performed we concluded that the
carrying value of goodwill at the year-end is appropriate
and the impairment recognised in respect of the goodwill
allocated to the Subsea segment has been appropriately
determined and in accordance with IAS 36.
Carrying value of investments (Company only)
The total carrying value of investments presented within
the Company financial statements as at 31 December
2019 is $14.5 billion.
In line with IAS 36, at the reporting date, management
assessed whether there were any indication that the
investments in subsidiaries may be impaired. Where an
impairment trigger was identified, management
performed an exercise to determine the recoverable
amount of the underlying investments.
This resulted in an impairment charge of $2 billion. We
focused on this area given the significant judgements
involved, and complexity of valuation methodologies
requiring the use of estimates.
We reviewed managements’ impairment indicator
assessment and concluded that it was reasonable.
We obtained managements’ impairment model and
tested its mathematical accuracy.
We performed audit procedures over the assumptions
used in respect of forecast growth rates and discount
rates. We involved our valuation specialists to
corroborate the appropriateness of the discount rate
used by forming an independent view of the rate using
third party source data to calculate a range of
acceptable rates and comparing this to the rate used in
the analysis.
We agreed the underlying cash flow forecasts used in
the models to approved budgets and forecasts. We
evaluated the budgets and forecasts used within the
model against current trading conditions and
corroborated the reasonableness of certain key
assumptions with external third party data and
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historical results of the Company, including the
projected revenue growth in 2020, 2021 and 2022.
We reviewed the disclosures provided in the financial
statements to ensure compliance with IAS 36
‘Impairment of Assets’.
We also assessed the work performed by management
and their experts on the valuation models.
How we tailored the audit scope
We tailored the scope of our audit to ensure that we performed enough work to be able to give an opinion on the
financial statements as a whole, taking into account the structure of the group and the company, the accounting
processes and controls, and the industry in which they operate.
The group financial statements are a consolidation of a large number of components which make up the group’s
operating businesses within the three business unit segments: subsea, onshore/offshore and surface projects. In
establishing the overall approach to the group audit, we determined the type of work that needed to be performed at
the components either by us, as the group engagement team, or component auditors from other PwC network firms
operating under our instruction.
The group’s components vary significantly in size and we identified 5 components that, in our view, required a full
scope audit due to their relative size or risk characteristics. Where component audits were performed by teams
other than the group engagement team, members of the group engagement team were involved in their work
throughout the audit. We maintained regular communication and conducted formal interim and year-end
conference calls with all full and specified procedure component teams. Additionally, senior members of the group
engagement team, including the group engagement leader, performed site visits to the France, Malaysia and US
components. We also held an in person audit planning meeting with component teams from US, France, Brazil,
Singapore, UK and Italy.
Of the 36 components in scope, we deemed two to be financially significant to the group: Yamal LNG and Technip
France. Senior members of the group engagement team, visited management of these components in France and
attended project review meetings.
Together these full and specific scope components audits gave appropriate coverage of all material balances at a
group level. On a consolidated basis, these provided coverage of 76% of revenue.
Materiality
The scope of our audit was influenced by our application of materiality. We set certain quantitative thresholds for
materiality. These, together with qualitative considerations, helped us to determine the scope of our audit and the
nature, timing and extent of our audit procedures on the individual financial statement line items and disclosures
and in evaluating the effect of misstatements, both individually and in aggregate on the financial statements as a
whole.
Based on our professional judgement, we determined materiality for the financial statements as a whole as follows:
159 TechnipFMC
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Group financial statements
Company financial statements
Overall materiality
$90 million (2018: $80 million).
$80 million (2018: $70 million).
How we determined it 0.67% of Revenue.
0.49% of Total assets.
Rationale for
benchmark applied
We considered a benchmark of total assets
when approaching the calculation of
overall materiality for the company. We
concluded that this was the most
appropriate benchmark given the
principal activity of the company is a
holding company carrying the investment
in subsidiaries.
Using auditor judgement, we determined
an overall materiality
level of $80 million to be a reasonable
amount, which equates to 0.49% of total
assets.
We considered the following benchmarks
when approaching the
calculation of overall materiality – total
revenues, total assets, adjusted pre-tax
income and EBITDA. We concluded
that the most appropriate benchmark was
total revenue given profitability measures
continue to be depressed as a result of the
pricing environment in the global oil and
gas industry and not
reflective of the scale of the operations of
the enlarged group following the merger
of Technip and FMC Technologies.
Revenue is a key measure used by
shareholders in assessing the
performance of the group.
Using auditor judgement, we determined
an overall materiality level of $90 million
to be a reasonable amount, which equates
to 0.67% of total revenue.
For each component in the scope of our group audit, we allocated a materiality that is less than our overall group
materiality. The range of materiality allocated across components was between $15 million and $50 million. Certain
components were audited to a local statutory audit materiality that was also less than our overall group materiality.
We agreed with the Audit Committee that we would report to them misstatements identified during our audit above
$7.5 million (Group audit) (2018: $6.5 million) and $4 million (Company audit) (2018: $5 million) as well as
misstatements below those amounts that, in our view, warranted reporting for qualitative reasons.
Conclusions relating to going concern
ISAs (UK) require us to report to you when:
•
•
the directors’ use of the going concern basis of accounting in the preparation of the financial statements
is not appropriate; or
the directors have not disclosed in the financial statements any identified material uncertainties that
may cast significant doubt about the group’s and company’s ability to continue to adopt the going
concern basis of accounting for a period of at least twelve months from the date when the financial
statements are authorised for issue.
We have nothing to report in respect of the above matters.
However, because not all future events or conditions can be predicted, this statement is not a guarantee as to the
group’s and company’s ability to continue as a going concern. For example, the terms of the United Kingdom’s
withdrawal from the European Union are not clear, and it is difficult to evaluate all of the potential implications on
the group’s trade, customers, suppliers and the wider economy.
Reporting on other information
The other information comprises all of the information in the Annual Report other than the financial statements
and our auditors’ report thereon. The directors are responsible for the other information. Our opinion on the
financial statements does not cover the other information and, accordingly, we do not express an audit opinion or,
except to the extent otherwise explicitly stated in this report, any form of assurance thereon.
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In connection with our audit of the financial statements, our responsibility is to read the other information and, in
doing so, consider whether the other information is materially inconsistent with the financial statements or our
knowledge obtained in the audit, or otherwise appears to be materially misstated. If we identify an apparent
material inconsistency or material misstatement, we are required to perform procedures to conclude whether there
is a material misstatement of the financial statements or a material misstatement of the other information. If, based
on the work we have performed, we conclude that there is a material misstatement of this other information, we are
required to report that fact. We have nothing to report based on these responsibilities.
With respect to the Strategic Report and Directors’ Report, we also considered whether the disclosures required by
the UK Companies Act 2006 have been included.
Based on the responsibilities described above and our work undertaken in the course of the audit, the Companies
Act 2006 and ISAs (UK) require us also to report certain opinions and matters as described below.
Strategic Report and Directors’ Report
In our opinion, based on the work undertaken in the course of the audit, the information given in the Strategic
Report and Directors’ Report for the year ended 31 December 2019 is consistent with the financial statements and
has been prepared in accordance with applicable legal requirements.
In light of the knowledge and understanding of the group and company and their environment obtained in the
course of the audit, we did not identify any material misstatements in the Strategic Report and Directors’ Report.
Directors’ Remuneration
In our opinion, the part of the Directors’ Remuneration Report to be audited has been properly prepared in
accordance with the Companies Act 2006.
Responsibilities for the financial statements and the audit
Responsibilities of the directors for the financial statements
As explained more fully in the Directors’ Responsibilities Statements, the directors are responsible for the
preparation of the financial statements in accordance with the applicable framework and for being satisfied that
they give a true and fair view. The directors are also responsible for such internal control as they determine is
necessary to enable the preparation of financial statements that are free from material misstatement, whether due
to fraud or error.
In preparing the financial statements, the directors are responsible for assessing the group’s and the company’s
ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going
concern basis of accounting unless the directors either intend to liquidate the group or the company or to cease
operations, or have no realistic alternative but to do so.
Auditors’ responsibilities for the audit of the financial statements
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from
material misstatement, whether due to fraud or error, and to issue an auditors’ report that includes our opinion.
Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with
ISAs (UK) will always detect a material misstatement when it exists. Misstatements can arise from fraud or error
and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the
economic decisions of users taken on the basis of these financial statements.
A further description of our responsibilities for the audit of the financial statements is located on the FRC’s website
at: www.frc.org.uk/auditorsresponsibilities. This description forms part of our auditors’ report.
Use of this report
This report, including the opinions, has been prepared for and only for the company’s members as a body in
accordance with Chapter 3 of Part 16 of the Companies Act 2006 and for no other purpose. We do not, in giving
these opinions, accept or assume responsibility for any other purpose or to any other person to whom this report is
shown or into whose hands it may come save where expressly agreed by our prior consent in writing.
161 TechnipFMC
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Other required reporting
Companies Act 2006 exception reporting
Under the Companies Act 2006 we are required to report to you if, in our opinion:
• we have not received all the information and explanations we require for our audit; or
•
adequate accounting records have not been kept by the company, or returns adequate for our audit have not
been received from branches not visited by us; or
certain disclosures of directors’ remuneration specified by law are not made; or
the company financial statements and the part of the Directors’ Remuneration Report to be audited are not
in agreement with the accounting records and returns.
•
•
We have no exceptions to report arising from this responsibility.
Appointment
Following the recommendation of the audit committee, we were appointed by the directors on 11 January 2017 to
audit the financial statements for the year ended 31 December 2017 and subsequent financial periods. The period of
total uninterrupted engagement is 3 years, covering the years ended 31 December 2017 to 31 December 2019.
Richard Spilsbury (Senior Statutory Auditor)
for and on behalf of PricewaterhouseCoopers LLP
Chartered Accountants and Statutory Auditors
Aberdeen
13 March 2020
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CONSOLIDATED FINANCIAL STATEMENTS
TECHNIPFMC PLC
AS OF DECEMBER 31, 2019
Company No. 09909709
163 TechnipFMC
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1. CONSOLIDATED STATEMENTS OF INCOME
(In millions, except per share data)
Revenue:
Service revenue from customer contracts
Product revenue from customer contracts
Lease revenue
Total revenue
Costs and expenses:
Cost of service revenue
Cost of product revenue
Cost of lease revenue
Selling, general and administrative expense
Research and development expense
Impairment, restructuring and other expenses
Separation costs
Merger transaction and integration costs
Total costs and expenses
Other income (expense), net
Income from equity affiliates
Loss before net interest expense and income taxes
Financial income
Financial expense
Loss before income taxes
Provision for income taxes
Net loss
Net profit attributable to noncontrolling interests
Net loss attributable to TechnipFMC plc
Earnings per share attributable to TechnipFMC plc
Basic
Diluted
Weighted average shares outstanding
Basic
Diluted
Note
5
$
6
1
6
9
6
6
7
8
$
$
$
Year Ended
2019
2018
9,793.1 $
3,359.2
273.9
13,426.2
7,784.4
2,963.9
167.5
1,230.0
162.9
2,436.6
72.1
31.2
14,848.6
(267.2 )
12.3
(1,677.3 )
115.8
(614.3 )
(2,175.8 )
275.1
(2,450.9 )
(3.1 )
(2,454.0 ) $
(5.48 ) $
(5.48 ) $
448.0
448.0
9,086.1
3,283.4
230.4
12,599.9
7,468.1
2,682.3
144.4
1,144.4
189.2
1,677.0
—
36.5
13,341.9
(332.9 )
122.7
(952.2 )
121.1
(517.5 )
(1,348.6 )
397.0
(1,745.6 )
(10.8 )
(1,756.4 )
(3.83 )
(3.83 )
458.0
458.0
The accompanying notes are an integral part of the consolidated financial statements.
The Company has applied IFRS 16 for the first time from January 1, 2019. Under the transition methods chosen,
comparative information is not restated. See Note 4.
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2. CONSOLIDATED STATEMENTS OF OTHER COMPREHENSIVE INCOME
(In millions)
Net loss
Year Ended
2019
2018
$
(2,450.9 ) $
(1,745.6 )
Exchange differences on translating entities operating in foreign currency
Reclassification adjustment for net gains included in net loss
Net gains (losses) on hedging instruments, net of income tax
Other comprehensive income (loss) to be reclassified to statement of income in subsequent
years, net of tax
Net remeasurement losses on defined benefit plans, net of income tax
Other comprehensive income (loss) not being reclassified to statement of income in
subsequent years, net of tax
Other comprehensive loss, net of income tax
Comprehensive loss, net of tax
Comprehensive income attributable to noncontrolling interest
Comprehensive loss attributable to TechnipFMC plc
$
11.6
(12.0 )
28.2
27.8
(49.6 )
(49.6 )
(21.8 )
(2,472.7 )
(2.4 )
(2,475.1 ) $
(178.4 )
(41.1 )
(75.2 )
(294.7 )
(26.9 )
(26.9 )
(321.6 )
(2,067.2 )
(6.2 )
(2,073.4 )
The accompanying notes are an integral part of the consolidated financial statements.
165 TechnipFMC
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3. CONSOLIDATED STATEMENT OF FINANCIAL POSITION
(In millions, except par value data)
Assets
Investments in equity affiliates
Property, plant and equipment, net
Right-of-use assets
Goodwill
Intangible assets, net
Deferred income taxes
Derivative financial instruments
Other assets
Total non-current assets
Cash and cash equivalents
Trade receivables, net
Contract assets
Inventories
Derivative financial instruments
Income taxes receivable
Advances paid to suppliers
Other current assets
Total current assets
Total assets
Liabilities and equity
Ordinary shares
Ordinary shares held in treasury and employee benefit trust
Retained earnings, net income and other reserves
Accumulated other comprehensive income (loss)
Total TechnipFMC plc shareholders’ equity
Non-controlling interest
Total equity
Long-term debt, less current portion
Lease liabilities
Deferred income taxes
Accrued pension and other post-retirement benefits, less current portion
Derivative financial instruments
Non-current provisions
Other liabilities
Total non-current liabilities
Short-term debt and current portion of long-term debt
Lease liabilities
Accounts payable, trade
Contract liabilities
Accrued payroll
Derivative financial instruments
Income taxes payable
Current provisions
Other current liabilities
Total current liabilities
Total liabilities
Total equity and liabilities
Note
December 31,
2019
2018
9
10
4
11
11
7
26
12
13
14
5
15
26
7
16
17
17
17
17
17
19
4
7
20
26
21
22
19
4
23
5
26
7
21
22
$
$
$
$
300.4 $
3,155.4
864.9
5,654.6
1,086.6
267.0
39.5
299.2
11,667.6
5,190.1
2,281.4
1,519.1
1,423.9
101.9
285.7
242.9
862.6
11,907.6
23,575.2 $
447.1 $
—
8,104.9
(937.4 )
7,614.6
69.9
7,684.5
2,013.2
681.7
184.0
386.8
52.7
47.7
433.9
3,800.0
2,462.2
275.1
2,660.7
4,571.4
411.7
141.3
73.6
476.6
1,018.1
12,090.7
15,890.7
23,575.2 $
359.1
3,570.1
—
7,693.9
1,176.7
244.2
18.3
313.6
13,375.9
5,542.2
2,467.8
1,295.0
1,257.0
95.7
284.0
189.6
666.4
11,797.7
25,173.6
450.5
(2.4 )
10,788.0
(916.3 )
10,319.8
69.8
10,389.6
2,546.0
—
236.5
325.2
44.9
42.7
547.2
3,742.5
1,983.5
—
2,610.8
4,069.0
394.7
138.4
66.9
826.3
951.9
11,041.5
14,784.0
25,173.6
The accompanying notes are an integral part of the consolidated financial statements.
The Company has applied IFRS 16 for the first time from January 1, 2019. Under the transition methods chosen,
comparative information is not restated. See Note 4.
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U.K. Annual Report and IFRS Financial Statements 2019
The consolidated financial statements were approved by the Board of Directors and signed on its behalf by
Douglas J. Pferdehirt
Director and Chief Executive Officer
March 13, 2020
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4. CONSOLIDATED STATEMENTS OF CASH FLOWS
(In millions)
Cash provided (required) by operating activities
Net loss
Adjustments to reconcile net profit (loss) to cash provided (required) by operating activities
Year Ended
Note
2019
2018
$
(2,450.9 ) $
(1,745.6 )
Depreciation
Amortization
Impairments
Employee benefit plan and share-based compensation costs
Deferred income tax provision (benefit), net
Unrealized loss (gain) on derivative instruments and foreign exchange
Income from equity affiliates, net of dividends received
Other
Changes in operating assets and liabilities, net of effects of acquisitions
Trade receivables, net and contract assets
4, 10
11
10, 11
712.5
126.0
2,430.0
93.0
(66.0 )
33.2
(8.2 )
353.7
(36.8 )
(171.7 )
16.5
522.5
4.5
(376.2 )
1,182.1
(454.4 )
(71.6 )
18.9
16.0
(2.1 )
7.8
62.0
3.6
(419.8 )
372.3
182.6
1,636.1
88.4
38.2
91.1
(119.6 )
284.0
(660.4 )
(340.7 )
(1,247.0 )
742.6
(205.8 )
701.5
(182.3 )
(368.1 )
—
—
(104.9 )
(6.7 )
19.5
—
—
(460.2 )
(34.9 )
496.6
—
—
(442.6 )
(238.1 )
(225.8 )
(444.8 )
(108.0 )
(1,195.3 )
6,737.4
5,542.1
19
19
19
4
17
17
22
13
13
$
(49.6 )
57.3
96.2
(335.8 )
(92.7 )
(232.8 )
(562.8 )
(1,120.2 )
5.8
(352.1 )
5,542.2
5,190.1 $
Inventories, net
Accounts payable, trade
Contract liabilities
Income taxes payable (receivable), net
Other assets and liabilities, net
Cash provided (required) by operating activities
Cash provided (required) by investing activities
Capital expenditures
Payment to acquire debt securities
Proceeds from sale of debt securities
Acquisitions, net of cash acquired
Cash divested from deconsolidation
Proceeds from sale of assets
Proceeds from repayment of advance to joint venture
Other
Cash provided (required) by investing activities
Cash provided (required) by financing activities
Net decrease in short-term debt
Net increase in commercial paper
Proceeds from issuance of long-term debt
Payments for the principal portion of lease liabilities
Purchase of treasury shares
Dividends paid
Settlements of mandatorily redeemable financial liability
Cash provided (required) by financing activities
Effect of changes in foreign exchange rates on cash and cash equivalents
Decrease in cash and cash equivalents
Cash and cash equivalents, beginning of period
Cash and cash equivalents, end of period
168 TechnipFMC
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(In millions)
Supplemental disclosures of cash flow information
Cash paid for interest on debt
Cash paid for income taxes (net of refunds received)
Year Ended December 31,
2019
2018
$
$
109.4 $
374.5 $
99.0
410.6
The accompanying notes are an integral part of the consolidated financial statements.
The Company has applied IFRS 16 for the first time from January 1, 2019. Under the transition methods chosen,
comparative information is not restated. See Note 4.
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5. CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY
(In millions)
Balance as of December 31, 2017
Cumulative effect of initial application of IFRS 15 (Note 5)
Cumulative effect of initial application of IFRS 9 (Note 1)
Net profit (loss)
Other comprehensive income (loss)
Dividends (Note 17)
Cancellation of treasury shares (Note 17)
Issuance of ordinary shares (Note 17)
Net sales of ordinary shares for employee benefit trust
(Note 17)
Share-based compensation (Note 18)
Put option on non-controlling interests
Acquisition
Other
Ordinary
Shares
$ 465.1 $
—
—
—
—
—
(14.8 )
0.2
—
—
—
—
—
Balance as of December 31, 2018
$ 450.5 $
Cumulative effect of initial application of IFRS 16 (Note 4)
Net profit (loss)
Other comprehensive income (loss)
Dividends (Note 17)
Cancellation of treasury shares (Note 17)
Issuance of ordinary shares (Note 17)
Net sales of ordinary shares for employee benefit trust
(Note 17)
Share-based compensation (Note 18)
Other
—
—
—
—
(4.0 )
0.6
—
—
—
Balance as of December 31, 2019
$ 447.1 $
Ordinary
Shares Held in
Treasury and
Employee
Benefit
Trust
Retained
Earnings,
Net
Income
and Other
Reserves
Accumulated
Other
Comprehensive
Income (Loss)
Non-
controlling
Interest
(4.8 ) $ 13,302.0 $
—
—
—
—
—
—
—
(91.5 )
(4.7 )
(1,756.4 )
—
(238.1 )
(428.0 )
—
—
49.1
(40.3 )
—
(4.1 )
2.4
—
—
—
—
(2.4 ) $ 10,788.0 $
—
—
—
—
—
—
1.8
(2,454.0 )
—
(232.8 )
(88.7 )
—
2.4
—
—
— $ 8,104.9 $
—
74.5
16.1
(599.3 ) $
—
—
—
(317.0 )
—
—
—
—
—
—
—
—
(916.3 ) $
—
—
(21.1 )
—
—
—
—
—
—
(937.4 ) $
Total
Shareholders’
Equity
13,184.5
(91.4 )
(4.7 )
(1,745.6 )
(321.6 )
(238.1 )
(442.8 )
0.2
2.4
49.1
(40.3 )
38.9
(1.0 )
10,389.6
1.8
(2,450.9 )
(21.8 )
(232.8 )
(92.7 )
0.6
2.4
74.5
13.8
7,684.5
21.5 $
0.1
—
10.8
(4.6 )
—
—
—
—
—
—
38.9
3.1
69.8 $
—
3.1
(0.7 )
—
—
—
—
—
(2.3 )
69.9 $
The accompanying notes are an integral part of the consolidated financial statements.
The Company has applied IFRS 16 for the first time from January 1, 2019. Under the transition methods chosen,
comparative information is not restated. See Note 5
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6. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1. ACCOUNTING PRINCIPLES
Nature of operations - TechnipFMC plc and consolidated subsidiaries (“TechnipFMC”, “we”, “us” or “our”) is a global
leader in oil and gas projects, technologies, systems and services through our business segments: Subsea,
Onshore/Offshore and Surface Technologies. We have manufacturing operations worldwide, strategically located to
facilitate delivery of our products, systems and services to our customers.
Details of its activities during the year are provided in the Strategic Report. TechnipFMC is a public limited company
by shares, incorporated and domiciled in England and Wales (United Kingdom) and listed on the New York Stock
Exchange (“NYSE”) and on Euronext Paris, in each case trading under the “FTI” symbol. The address of the
registered office is One St. Paul’s Churchyard, London, England, EC4M 8AP.
1.1 Basis of preparation
In accordance with the European Union’s regulation No. 1606/2002 of July 19, 2002, the consolidated financial
statements of TechnipFMC as of December 31, 2019 and for the two years then ended were prepared in accordance
with International Financial Reporting Standards (IFRS) issued by the International Accounting Standard Board
(IASB) and IFRS Interpretations Committee as endorsed by the European Union and the U.K. Companies Act 2006
(the “Art”). The IFRS as endorsed by the European Union are available on the website of the European Union
(http://ec.europa.eu).
The consolidated financial statements are expressed in millions of U.S. dollars and all values are rounded to the
nearest thousand, unless specified otherwise.
TechnipFMC’s consolidated financial statements have been prepared on a going concern basis under the historical
cost convention as modified by the revaluation of financial assets and liabilities at fair value through profit or loss.
TechnipFMC’s significant accounting policies adopted in the preparation of these consolidated financial statements
are set out below. These policies have been consistently applied to all the years presented, unless otherwise stated.
As further discussed in Note 4, the financial position and performance of TechnipFMC in 2019 was affected by the
adoption of the new accounting standard on leases.
Certain reclassification adjustments were recorded in the prior year comparative information in the Consolidated
statement of changes in shareholders’ equity and in the Consolidated statement of cash flows. Management
considers the changes to be more relevant to users in understanding the nature of the transactions.
Planned Separation transaction
On August 26, 2019, we announced that our Board of Directors had unanimously approved a plan to separate our
Onshore/Offshore segment and loading systems business (the "Separation") into an independent, publicly traded
company (“Technip Energies”). Upon effectiveness the transaction is expected to be tax free to certain shareholders
where permissible, including the U.S. We expect to complete the transaction in the first half of 2020, subject to general
market conditions, regulatory approvals, consultation of employee representatives, where applicable, and final
approval from our Board of Directors. Refer to Note 1.4 for further discussion on management’s judgment on
accounting for the Separation transaction.
1.2 Changes in accounting policies and disclosures
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U.K. Annual Report and IFRS Financial Statements 2019
a. Standards, amendments and interpretations effective in 2019
The impact of the adoption of the leasing standard, hedge accounting and the new accounting policies are disclosed
below. The other standards did not have any material impact on TechnipFMC’s accounting policies and did not require
retrospective adjustments.
IFRS 16 “Leases” (“IFRS 16”)
IFRS 16 supersedes IAS 17 “Leases” (“IAS 17”), IFRIC 4 “Determining whether an Arrangement contains a Lease”,
SIC-15 “Operating Leases-Incentives” and SIC-27 “Evaluating the Substance of Transactions Involving the Legal
Form of a Lease”. The standard sets out the principles for the recognition, measurement, presentation and disclosure
of leases and requires lessees to account for most leases under a single on-balance sheet model. Refer to Note 4
for disclosures on the adoption impact and changes in TechnipFMC’s accounting policies.
IFRS 9 “Financial instruments” (“IFRS 9”)
TechnipFMC has initially applied IFRS 9 on January 1, 2018 with exception to the hedging requirements of IFRS 9
as amended by IFRS 9 paragraph 7.2.21. The hedge accounting is adopted with the date of initial application as of
January 1, 2019.
TechnipFMC applied hedge accounting prospectively from January 1, 2019. At the date of initial application, all of
TechnipFMC’s existing hedging relationships were eligible to be treated as continuing hedging relationships. Upon
adoption of the hedge accounting requirements of IFRS 9, TechnipFMC continues to designate only the spot element
of forward contracts as hedging instrument. The forward element is recognized in the income statement, in the same
line as the hedged item.
Under IAS 39 “Financial Instruments: Recognition and Measurement” (“IAS 39”), all gains and losses arising from the
TechnipFMC’s cash flow hedging relationships were eligible to be subsequently reclassified to profit or loss. Under
IFRS 9, gains and losses arising on cash flow hedges of forecast purchases of non-financial assets need to be
incorporated into the initial carrying amounts of the non-financial assets. This change only applies prospectively from
the date of initial application of IFRS 9 and has no impact on the presentation of comparative figures.
TechnipFMC has not restated the comparative information on hedge accounting, which continues to be reported
under IAS 39. There were no differences arising from the adoption of the hedge accounting requirements of IFRS 9
which would impact Retained Earnings, Net Income and Other Reserves as of January 1, 2019.
b) Standards, amendments and interpretations to existing standards that are issued, not yet effective and
have not been early adopted as of December 31, 2019
Certain new accounting standards and interpretations have been published that are not mandatory for December 31,
2019 reporting periods and have not been early adopted by TechnipFMC. TechnipFMC’s assessment of the impact
of these new standards and interpretations is set out below.
Definition of a Business - Amendments to IFRS 3
The IASB issued amendments to the definition of a business in IFRS 3 “Business Combinations” (“IFRS 3”) to help
entities determine whether an acquired set of activities and assets is a business or not. They clarify the minimum
requirements for a business, remove the assessment of whether market participants are capable of replacing any
missing elements, add guidance to help entities assess whether an acquired process is substantive, narrow the
definitions of a business and of outputs, and introduce an optional fair value concentration test. New illustrative
examples were provided along with the amendments. The amendments must be applied to transactions that are
either business combinations or asset acquisitions for which the acquisition date is on or after the beginning of the
first annual reporting period beginning on or after January 1, 2020. Consequently, entities do not have to revisit such
transactions that occurred in prior periods. Earlier application is permitted and must be disclosed. The amendments
are effective for annual periods beginning on or after January 1, 2020 with early application permitted. Since the
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amendments apply prospectively to transactions or other events that occur on or after the date of first application,
TechnipFMC does not expect that the adoption of the amendments will have a significant impact on its consolidated
financial statements.
Definition of Material - Amendments to IAS 1 and IAS 8
In October 2018, the IASB issued amendments to IAS 1 “Presentation of Financial Statements” (“IAS 1”) and IAS 8
“Accounting Policies, Changes in Accounting Estimates and Errors” (“IAS 8”) to align the definition of “material”
across the standards and to clarify certain aspects of the definition. The new definition states that, “Information is
material if omitting, misstating or obscuring it could reasonably be expected to influence the decisions that the primary
users of general purpose financial statements make on the basis of those financial statements, which provide financial
information about a specific reporting entity.” The amendments clarify that materiality will depend on the nature or
magnitude of information, or both. An entity will need to assess whether the information, either individually or in
combination with other information, is material in the context of the financial statements. The amendments are
effective for annual periods beginning on or after January 1, 2020 with early application permitted. TechnipFMC does
not expect that the adoption of this amendment will have a material impact on its current or future reporting periods
and on foreseeable future transactions.
Revised Conceptual Framework for Financial Reporting
The IASB has issued a revised Conceptual Framework (“Framework”) which will be used in standard-setting
decisions with immediate effect. Key changes include:
•
increasing the prominence of stewardship in the objective of financial reporting;
•
reinstating prudence as a component of neutrality;
• defining a reporting entity, which may be a legal entity, or a portion of an entity;
•
revising the definitions of an asset and a liability;
•
removing the probability threshold for recognition and adding guidance on derecognition;
• adding guidance on different measurement basis, and
• stating that profit or loss is the primary performance indicator and that, in principle, income and expenses in other
comprehensive income should be recycled where this enhances the relevance or faithful representation of the
financial statements.
No changes will be made to any of the current accounting standards issued by the IASB. However, entities that rely
on the Framework in determining their accounting policies for transactions, events or conditions that are not otherwise
dealt with under the accounting standards will need to apply the revised Framework from January 1, 2020.
TechnipFMC does not expect that the adoption of the amendments will have a significant impact on its consolidated
financial statements.
IFRS 17 “Insurance Contracts” (“IFRS 17”)
IFRS 17 was issued in May 2017 as replacement for IFRS 4 “Insurance Contracts”. The new standard will be effective
for annual periods beginning on or after January 1, 2021 with early application permitted. TechnipFMC does not
expect that the adoption of the standard will have a significant impact on its consolidated financial statements.
1.3 Summary of significant accounting policies
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a) Consolidation principles
In accordance with IFRS 10 “Consolidated Financial Statements”, are consolidated all the companies (including
special purpose entities) for which TechnipFMC has all the following:
•
the power over the company subject to the investment;
• an exposure or rights to the company’s variable returns; and
•
the ability to use its power over the entity to affect these returns.
The power to direct the activities of the entity usually exists when holding more than 50% of voting rights in the entity
and these rights are substantive.
As per IFRS 11 “Joint Arrangements” (“IFRS 11”), joint arrangements classified as joint operations should be
recognized to the extent of TechnipFMC’s assets and its liabilities, including its share of any assets held jointly or
liabilities incurred jointly.
The equity method is used for joint ventures and for investments over which TechnipFMC exercises a significant
influence on operational and financial policies. Unless otherwise indicated, such influence is deemed to exist for
investments in companies in which TechnipFMC’s ownership is between 20% and 50%.
Companies in which our ownership is less than 20% or that do not represent material investments (such as dormant
companies) are recorded under the “Other Non-Current Financial Assets” and classified as “Financial Assets at Fair
Value through Profit or Loss”.
The list of TechnipFMC’s related undertakings is provided in Note 31 as of December 31, 2019.
The main affiliates of TechnipFMC close their accounts as of December 31 and all consolidated companies apply
TechnipFMC’s accounting policies as set in the Global Accounting Manual.
All intercompany balances and transactions, as well as internal income and expenses, are fully eliminated.
Subsidiaries are consolidated as of the date of acquisition, being the date on which TechnipFMC obtains control, and
continue to be consolidated until the date control ceases.
b) Recognition of revenue from customer contracts
TechnipFMC accounts for revenue in accordance with IFRS 15 “Revenues from Contracts with Customers” (“IFRS
15”). Revenue is measured based on the consideration specified in a contract with a customer. TechnipFMC
recognizes revenue when or as it transfers control over a good or service to a customer.
Allocation of transaction price to performance obligations - A contract’s transaction price is allocated to each distinct
performance obligation and recognized as revenue, when, or as, the performance obligation is satisfied. To determine
the proper revenue recognition method, we evaluate whether two or more contracts should be combined and
accounted for as one single contract and whether the combined or single contract should be accounted for as more
than one performance obligation. This evaluation requires significant judgment; some of our contracts have a single
performance obligation as the promise to transfer the individual goods or services is not separately identifiable from
other promises in the contracts and, therefore, not distinct. For contracts with multiple performance obligations, we
allocate the contract’s transaction price to each performance obligation using our best estimate of the standalone
selling price of each distinct good or service in the contract.
Variable consideration - Due to the nature of the work required to be performed on many of our performance
obligations, the estimation of total revenue and cost at completion is complex, subject to many variables and requires
significant judgment. It is common for our long-term contracts to contain variable considerations that can either
increase or decrease the transaction price. Variability in the transaction price arises primarily due to liquidated
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damages. TechnipFMC considers its experience with similar transactions and expectations regarding the contract in
estimating the amount of variable consideration to which it will be entitled, and determining whether the estimated
variable consideration should be constrained. We include estimated amounts in the transaction price to the extent it
is probable that a significant reversal of cumulative revenue recognized will not occur when the uncertainty associated
with the variable consideration is resolved. Our estimates of variable consideration are based largely on an
assessment of our anticipated performance and all information (historical, current and forecasted) that is reasonably
available to us.
Payment terms - Progress billings are generally issued upon completion of certain phases of the work as stipulated
in the contract. Payment terms may either be fixed, lump-sum or driven by time and materials (i.e., daily or hourly
rates, plus materials). Because typically the customer retains a small portion of the contract price until completion of
the contract, our contracts generally result in revenue recognized in excess of billings which we present as contract
assets on the statement of financial position. Amounts billed and due from our customers are classified as receivables
on the statement of financial position. The portion of the payments retained by the customer until final contract
settlement is not considered a significant financing component because the intent is to protect the customer. For
some contracts, we may be entitled to receive an advance payment. We recognize a liability for these advance
payments in excess of revenue recognized and present it as contract liabilities on the statement of financial position.
The advance payment typically is not considered a significant financing component because it is used to meet working
capital demands that can be higher in the early stages of a contract and to protect us from the other party failing to
adequately complete some or all of its obligations under the contract.
Warranty - Certain contracts include an assurance-type warranty clause, typically between 18 to 36 months, to
guarantee that the products comply with agreed specifications. A service-type warranty may also be provided to the
customer; in such a case, management allocates a portion of the transaction price to the warranty based on the
estimated stand-alone selling price of the service-type warranty.
Revenue recognized over time - Performance obligations are satisfied over time as work progresses or at a point in
time when performance obligations are fulfilled and control transfers to the customer. Revenue from products and
services transferred to customers over time accounted for approximately 81.6% of our revenue for the year ended
December 31, 2019. Typically, revenue is recognized over time using an input measure (e.g., costs incurred to date
relative to total estimated costs at completion) to measure progress.
Cost-to-cost method - For long-term contracts, because of control transferring over time, revenue is recognized based
on the extent of progress towards completion of the performance obligation. The cost-to-cost measure of progress
for contracts is generally used because it best depicts the transfer of control to the customer which occurs as costs
on the contracts incur. Under the cost-to-cost measure of progress, the extent of progress towards completion is
measured based on the ratio of costs incurred to date to the total estimated costs at completion of the performance
obligation. Revenues, including estimated fees or profits, are recorded proportionally as costs are incurred. Any
expected losses on contracts in progress are charged to earnings, in total, in the period the losses are identified under
the new revenue recognition standard consistently with previous standards.
Right to invoice practical expedient - The right-to-invoice practical expedient can be applied to a performance
obligation satisfied over time if we have a right to invoice the customer for an amount that corresponds directly with
the value transferred to the customer for our performance completed to date. When this practical expedient is used,
we do not estimate variable consideration at the inception of the contract to determine the transaction price or for
disclosure purposes. We have contracts which have payment terms dictated by daily or hourly rates where some
contracts may have mixed pricing terms which include a fixed fee portion. For contracts in which we charge the
customer a fixed rate based on the time or materials spent during the project that correspond to the value transferred
to the customer, we recognize revenue in the amount to which we have the right to invoice.
Contract modifications - Contracts are often modified to account for changes in contract specifications and
requirements. We consider contract modifications to exist when the modification either creates new, or changes the
existing, enforceable rights and obligations. Most of our contract modifications are for goods or services that are not
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distinct from the existing contract due to the significant integration service provided in the context of the contract and
are accounted for as if they were part of that existing contract. The effect of a contract modification on the transaction
price and our measure of progress for the performance obligation to which it relates is recognized as an adjustment
to revenue (either as an increase in or a reduction of revenue) on a cumulative catch-up basis.
c) Foreign currency transactions
Foreign currency transactions are translated into the functional currency at the exchange rate applicable on the
transaction date.
At the closing date, monetary assets and liabilities stated in foreign currencies are translated into the functional
currency at the exchange rate prevailing on that date. Resulting exchange gains or losses are directly recorded in the
statement of income, except exchange gains or losses on cash accounts eligible for future cash flow hedging and for
hedging on net foreign currency investments.
Translation of financial statements of subsidiaries in foreign currency
The income statements of foreign subsidiaries are translated into U.S. dollars at the average exchange rate prevailing
during the year. Statements of financial position are translated at the exchange rate at the closing date. Differences
arising in the translation of financial statements of foreign subsidiaries are recorded in other comprehensive income
(loss) as foreign currency translation reserve. Items that are recognized directly in equity are translated using the
historical rates. The functional currency of the foreign subsidiaries is most commonly the local currency.
d) Business combinations
Business combinations are accounted for using the acquisition method of accounting. Under the acquisition method,
assets acquired and liabilities assumed are recorded at their respective fair values as of the acquisition date.
Determining the fair value of assets and liabilities involves significant judgment regarding methods and assumptions
used to calculate estimated fair values. The purchase price is allocated to the assets, acquired, including identifiable
intangible assets, and liabilities based on their estimated fair values. Any excess of the purchase price over the
estimated fair values of the net assets acquired is recorded as goodwill. Identifiable assets are depreciated over their
estimated useful lives.
Acquisition-related costs are expensed as incurred and included in the statement of income line item “Selling, general
and administrative expenses”.
Adjustments recorded for a business combination on the provisional values of assets, liabilities and contingent
liabilities are recognized as a retrospective change in goodwill when occurring within a 12-month period after the
acquisition date and resulting from facts or circumstances that existed as of the acquisition date. After this
measurement period ends, any change in valuation of assets, liabilities and contingent liabilities is accounted for in
profit and loss statement, with no impact on goodwill.
e) Merger transaction and integration costs
Merger transaction and integration costs are expensed as incurred and include fees and expenses as a result of
business combination transactions. Merger transaction and integration costs are included in the statement of income
line item “Merger transaction and integration costs”.
f) Separation costs
Separation costs are expensed as incurred and include fees and expenses as a result of planned separation
transaction. The costs include legal and tax advice expenses, consulting services and other separation activities
related costs. Separation costs are included in the statement of income line item “Separation costs”.
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g) Segment information
Information by operating segment
Management’s determination of the reporting segments was made on the basis of strategic priorities within each
segment and the differences in the products and services TechnipFMC provides, which corresponds to the manner
in which TechnipFMC’s Chief Executive Officer, as a Chief Operating Decision Maker (“CODM”), reviews and
evaluates operating performance to make decisions about resources to be allocated to the segment. TechnipFMC
reports the results of operations in the following segments: Subsea, Onshore/Offshore and Surface Technologies.
TechnipFMC’s reportable segments are:
• Subsea - manufactures and designs products and systems, performs engineering, procurement and project
management and provides services used by oil and gas companies involved in deepwater exploration and production
of crude oil and natural gas.
• Onshore/Offshore - designs and builds onshore facilities related to the production, treatment and transportation of oil
and gas; and designs, manufactures and installs fixed and floating platforms for the production and processing of oil
and gas reserves for companies in the oil and gas industry; and
• Surface Technologies - designs and manufactures systems and provides services used by oil and gas companies
involved in land and offshore exploration and production of crude oil and natural gas; designs, manufactures and
supplies technologically advanced high pressure valves and fittings for oilfield service companies; and also provides
flowback and well testing services for exploration companies in the oil and gas industry.
Total revenue by segment includes intersegment sales, which are made at prices approximating those that the selling
entity is able to obtain on external sales. Segment operating profit is defined as total segment revenue less segment
operating expenses. Income (loss) from equity method investments is included in computing segment operating profit.
The following items have been excluded in computing segment operating profit: corporate staff expense, net interest
income (expense) associated with corporate debt facilities, income taxes, and other revenue and other expense, net.
Information by country
Operating activities and performances of TechnipFMC are reported on the basis of the following countries:
• Russia;
• United States;
• Norway;
• Brazil;
•
Israel;
• United Kingdom;
• Australia;
•
India; and
• all other countries.
The items related to segment results disclosed by TechnipFMC in its geographical segment information are the
‘‘Revenue’’ and the ‘‘Property, Plant and Equipment’’.
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Geographical areas are defined according to the following criteria: specific risks associated with activities performed
in a given area, similarity of economic and political framework, regulation of exchange control, and underlying
monetary risks. The geographical breakdown is based on the contract delivery within the specific country.
h) Earnings per share
As per IAS 33 “Earnings per Share” (“IAS 33”), Earnings Per Share (“EPS”) are based on the average number of
outstanding shares over the year, after deducting treasury shares.
Diluted earnings per share amounts are calculated by dividing the net profit of the year, restated if need be for the
after-tax financial cost of dilutive financial instruments, by the sum of the weighted average number of outstanding
shares, the weighted average number of share subscription options not yet exercised, the weighted average number
of performance shares granted calculated using the share purchase method, and the weighted average number of
shares of the convertible bonds and, if applicable, the effects of any other dilutive instrument.
In accordance with the share purchase method, only dilutive instruments are used in calculating EPS. Dilutive
instruments are those for which the option exercise price plus the future share-based compensation expense not yet
recognized is lower than the average share price during the EPS calculation period.
i) Goodwill
Goodwill is measured at the acquisition date as the total of the fair value of consideration transferred, plus the
proportionate amount of any non-controlling interest, plus the fair value of any previously held equity interest in the
acquiree, if any, less the net recognized amount (generally at fair value) of the identifiable assets acquired and
liabilities assumed. If those amounts are less than the fair value of the net identifiable assets of the business acquired,
the difference is recognised directly in profit or loss as a bargain purchase. Acquisition-related costs are expensed as
incurred.
If the business combination is achieved in stages, the acquisition date carrying value of the acquirer’s previously held
equity interest in the acquiree is remeasured to fair value at the acquisition date. Any gains or losses arising from
such remeasurement are recognised in profit or loss.
Goodwill is allocated to a group of cash-generating units (“GCGU”) that are expected to benefit from the business
combination in which the goodwill arose and in all cases is at the operating segment level, which represents the
lowest level at which goodwill is monitored for internal management purposes.
Gains and losses on the disposal of an entity include the carrying amount of goodwill relating to the entity sold.
j) Property, plant and equipment
In compliance with IAS 16 “Property, Plant and Equipment” (“IAS 16”), an asset is recognized only if the cost can be
measured reliably and if future economic benefits are expected from its use.
Property, plant and equipment could be initially recognized at cost or at their fair value in case of business
combinations.
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Depreciation is provided on a straight-line basis over the estimated useful lives of the assets. TechnipFMC uses
different depreciation periods for each of the significant components of a single property, plant and equipment asset
where the useful life of the component differs from that of the main asset. The following are the useful lives most
commonly applied by TechnipFMC:
• Buildings 10 to 50 years
• Vessels 10 to 30 years
• Machinery and Equipment 3 to 20 years
• Office Fixtures and Furniture 5 to 10 years
• Vehicles 3 to 7 years
•
IT Equipment 3 to 5 years
If the residual value of an asset is material and can be measured, it is taken into account in calculating its depreciable
amount.
On a regular basis, TechnipFMC reviews the useful lives of its assets. That review is based on the effective use of
the assets.
As per IAS 16, dry-dock expenses are capitalized as a separate component of the principal asset. They are
depreciated over a period of three to five years.
Depreciation costs are recorded in the statement of income as a function of the fixed assets’ use, split between the
following line items: cost of sales, research and development costs, selling, general and administrative costs.
In accordance with IAS 36 “Impairment of Assets” (“IAS 36”), the carrying value of property, plant and equipment is
reviewed for impairment whenever internal or external events indicate that there may be impairment, in which case,
an impairment test is performed. Impairment indicators / triggering events are changes in circumstances that indicate
the carrying amount of property, plant and equipment may not be recoverable include but are not limited to:
• A significant decrease in the market value of property, plant and equipment;
• A significant adverse change in the extent or manner in which property, plant and equipment is used or in its physical
condition;
• A significant adverse change in legal factors or in the business climate that could affect the value of a property, plant
and equipment, including an adverse action or assessment by a regulator or the increase of risk-adjusted discount
rates;
• An accumulation of costs significantly in excess of the amount originally expected for the acquisition or construction
of property, plant and equipment;
• A current period operating or cash flow loss combined with a history of operating or cash flow losses or a projection
or forecast that demonstrates continuing losses associated with the use of property, plant and equipment; and
• A current expectation that property, plant and equipment will become idle, a significant decrease in utilization of the
asset , the operation to which the asset belongs will be discontinued or restructured, sold, or otherwise disposed of
significantly before the end of its previously estimated useful life.
As an example, indications of impairment loss used for vessels and analyzed together are mainly the asset workload
scheduling, the change in its daily invoicing rate, its age as well as the frequency of its dry-docking.
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k)
Intangible assets
Internally generated research and development costs
Research costs are expensed when incurred. In compliance with IAS 38 “Impairment of Assets” (“IAS 38”),
development costs are capitalized if all of the following criteria are met:
•
the projects are clearly identified;
• TechnipFMC is able to reliably measure expenditures incurred by each project during its development;
• TechnipFMC is able to demonstrate the technical and industrial feasibility of the project;
• TechnipFMC has the financial and technical resources available to achieve the project;
• TechnipFMC can demonstrate its intention to complete, to use or to commercialize products resulting from the project;
and
• TechnipFMC is able to demonstrate the existence of a market for the output of the intangible asset, or, if it is used
internally, the usefulness of the intangible asset.
Other intangible assets
Intangible assets other than goodwill (including those acquired in a business combination) are amortized on a straight-
line basis over their expected useful lives, as follows:
• Acquired technology: 7 to 10 years
• Backlog: as per the timeframe of the outstanding orders (usually less than 3 years)
• Customer relationships: lower of 10 years or the terms of the customer contracts
• Trade names; Licenses, Patents and Trademarks: lower of 20 years or the period set forth in the legal conditions
• Software (including software rights, proprietary IT tools, such as the E-procurement platform, or TechnipFMC’s
management applications): 3 to 7 years
In accordance with IAS 36, the carrying value of intangible assets is reviewed for impairment whenever internal or
external events indicate that there may be impairment, in which case, an impairment test is performed.
l)
Impairment of non-financial assets
Non-financial assets, property, plant and equipment, and identifiable intangible assets being amortized are reviewed
for impairment whenever events or changes in circumstances indicate the carrying amount of the asset or cash-
generating unit (“CGU”) may not be recoverable. If any indication exists, or when annual impairment testing for an
asset is required, TechnipFMC estimates the asset’s recoverable amount. An asset’s recoverable amount is the higher
of an asset’s or CGU’s fair value less costs of disposal and its value in use. The recoverable amount is determined
for an individual asset, unless the asset does not generate cash inflows that are largely independent of those from
other assets or groups of assets. When the carrying amount of an asset or CGU exceeds its recoverable amount, the
asset is considered impaired and is written down to its recoverable amount.
In assessing the value in use, the estimated future cash flows are discounted to their present value using a pre-tax
discount rate that reflects current market assessments of the time value of money and the risks specific to the asset,
including growth rates in revenues, costs, estimates of future expected changes in operating margins, tax rates and
cash expenditures. Future revenues are also adjusted to match changes in TechnipFMC’s business strategy. Factors
that could trigger a lower value in use estimate include sustained price declines of a CGU’s products and services,
cost increases, regulatory or political environment changes, changes in customer demand, and other changes in
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market conditions, which may affect certain market participant assumptions used in the discounted future cash flow
model.
In determining the fair value less costs of disposal, recent market transactions are taken into account. If no such
transactions can be identified, an appropriate valuation model is used.
Goodwill is not amortized but it is tested for impairment annually as at October 31 or more frequently if events or
changes in circumstances indicate that it might be impaired, and is carried at cost less accumulated impairment
losses. Impairment of goodwill is determined by assessing the recoverable amount of each CGU (or group of CGUs)
to which the goodwill relates. When the recoverable amount of the CGU is less than its carrying amount, an
impairment loss is recognized. Impairment losses relating to goodwill cannot be reversed in future periods.
m) Fair value measurement
TechnipFMC measures certain financial instruments (including derivatives) at fair value at each balance sheet date.
Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction
between market participants at the measurement date.
The fair value of an asset or a liability is measured using the assumptions that market participants would use when
pricing the asset or liability, assuming that market participants act in their economic best interest.
A fair value measurement of a non-financial asset takes into account a market participant’s ability to generate
economic benefits by using the asset in its highest and best use or by selling it to another market participant that
would use the asset in its highest and best use.
TechnipFMC uses valuation techniques that are appropriate in the circumstances and for which sufficient data are
available to measure fair value, maximizing the use of relevant observable inputs and minimizing the use of
unobservable inputs.
All assets and liabilities for which fair value is measured or disclosed in the consolidated financial statements are
categorized within the fair value hierarchy, described as follows, based on the lowest level input that is significant to
the fair value measurement as a whole:
• Level 1: Observable inputs that reflect quoted prices (unadjusted) for identical assets or liabilities in active markets;
• Level 2: Inputs other than quoted prices included in Level 1 that are observable for the asset or liability either directly
or indirectly; and
• Level 3: Unobservable inputs (e.g., a reporting entity’s own data).
For assets and liabilities that are recognized in the consolidated financial statements at fair value on a recurring basis,
TechnipFMC determines whether transfers have occurred between levels in the hierarchy by re-assessing
categorization (based on the lowest level input that is significant to the fair value measurement as a whole) at the end
of each reporting period.
n) Financial assets
Financial assets are categorized at initial recognition, as subsequently measured at either amortized cost, at fair value
through other comprehensive income (“FVOCI”), or at fair value through profit or loss (“FVTPL”).
For debt instruments this classification depends on the financial asset’s contractual cash flow characteristics as well
as business model according to which TechnipFMC is managing them. Financial assets are initially measured at their
fair values plus, in the case of a financial asset not at fair value through profit or loss, transaction costs. Trade
receivables that do not contain a significant financing component are measured at the transaction price determined
under IFRS 15.
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A financial asset is classified and measured at amortized cost or fair value through other comprehensive income
(“OCI”) if and only if it gives rise to cash flows that are ‘solely payments of principal and interest (“SPPI”), ie. the asset
meets the SPPI test criteria, which are assessed at an instrument level.
The business model applied by TechnipFMC determines whether the cash flows from the instruments will be realized
through collecting contractual cash flows, selling the financial assets, or both.
Transactions on financial assets that require delivery of assets within a time frame legally or contractually (regular
way trades) are recognized on the trade date, being the date when TechnipFMC commits to acquire or sell the asset.
For purposes of subsequent measurement, financial assets are classified in three categories:
• Financial assets at amortized cost
• Financial assets at fair value through OCI, either with recycling or no recycling of cumulative gains and losses
• Financial assets at fair value through profit or loss
Financial assets at amortized cost
A financial asset is measured at amortized cost if both of the following conditions are met:
• The financial asset is held within a business model with the objective to hold financial assets in order to collect
contractual cash flows; and
• The contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of
principal and interest on the principal amount outstanding
Financial assets at amortized cost are subsequently measured using the effective interest rate and are also subject
to impairment. Gains and losses are recognized in profit or loss within the Other Income (Expense) line when the
asset is derecognized, impaired or contractual cash-flows change.
TechnipFMC’s financial assets at amortized cost include trade receivables, loans issued to third or related parties and
debt notes receivable presented under other non-current financial assets or other current assets, as applicable.
Financial assets at fair value through OCI
TechnipFMC measures debt instruments at fair value through OCI if all of the following conditions are met:
• The financial asset is held within a business model with the objective of both holding to collect contractual cash flows
and selling; and
• The contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of
principal and interest on the principal amount outstanding.
For debt instruments at fair value through OCI, interest income (using the effective interest rate), foreign exchange
impact and impairment charges are recognized in the statement of profit or loss. The remaining fair value changes
are recognized in OCI. Upon derecognition, the cumulative fair value changes recognized in OCI are recycled to profit
or loss.
TechnipFMC currently has no debt instruments at fair value through OCI.
In addition to debt instruments, upon initial recognition, TechnipFMC may classify irrevocably its equity investments
(on an instrument-by-instrument basis) to be designated at fair value through OCI when they meet the definition of
equity under IAS 32 “Financial Instruments: Presentation” (“IAS 32”) and are not held for trading. Gains and losses
on these financial assets are not recycled to profit or loss. Dividends are recognized in the statement of profit or loss
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when the right of payment has been established. Equity instruments designated at fair value through OCI are not
subject to impairment assessment.
TechnipFMC currently does not classify any equity investments under this category.
Financial assets at fair value through profit or loss
Financial assets at fair value through profit or loss include:
• Financial assets held for trading (i.e., those which are acquired for the purpose of selling or repurchasing in the near
term).
• Financial assets designated upon initial recognition at fair value through profit or loss (in order to eliminate, or
significantly reduce, an accounting mismatch), or
• Financial assets required to be measured at fair value (i.e. assets with cash flows that are not solely payments of
principal and interest, irrespective of the business model).
Derivatives, including separated embedded derivatives, are also classified as held for trading except for those
designated as effective hedging instruments. Financial assets at fair value through profit or loss are carried in the
statement of financial position at fair value with net changes in fair value recognized in the statement of profit or loss.
This category includes derivative instruments, listed and non-quoted equity investments which TechnipFMC had not
irrevocably elected to classify at fair value through OCI, as well as certain liquid, frequently traded debt instruments
such as treasury bills.
Dividends on listed equity investments are also recognized in the statement of profit or loss when the right of payment
has been established.
Impairment of financial assets
An allowance for Expected Credit Losses (“ECL”) is recognized for all debt instruments not held at fair value through
profit or loss. As opposed to the incurred loss approach, ECL is based on the difference between the carrying amount
(as per the contractual cash flows of the instruments) and all the cash flows that TechnipFMC expects to receive,
discounted at the original effective interest rate. The expected cash flows reflect the cash flows expected from
collateral or other credit enhancements that are part of the contractual terms and are not separately recognized by
TechnipFMC. The estimate of expected cash shortfalls on a collateralized financial instrument reflects the amounts
and timing of cash flows that are expected from foreclosure on the collateral less the costs of obtaining and selling
the collateral, irrespective of whether foreclosure is probable.
In case of instruments for which there has not been a significant increase in credit risk since initial recognition, ECL
is applied for default events that are possible within the next 12-months (a 12-month ECL). In case there has been a
significant increase in credit risk since initial recognition, an ECL is applied over the remaining life of the exposure
(lifetime ECL).
For trade receivables and contract assets TechnipFMC applies a simplified approach permitted by IFRS 9. Therefore,
TechnipFMC recognizes lifetime ECL at initial recognition and at each reporting date. TechnipFMC has considered
historical credit loss experience, adjusted for forward-looking factors specific to the debtors and the economic
environment to determine lifetime expected losses.
For short-term notes receivable an expected credit loss is calculated assuming the maximum possible loss in the
event of a default (that is, the loan is fully drawn and no amount is recovered). Management established a probability
of default based on the counterparty’s credit risk as determined by external credit rating agencies and the maximum
loss given default (average recovery rate of sovereign bond issuers as published by credit rating agencies). Based
on these factors management determines the ECL for TechnipFMC’s short-term loans receivable.
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For debt instruments recognized at amortized cost, as permitted by IFRS 9, TechnipFMC considers the low credit risk
simplification. Accordingly, TechnipFMC evaluates whether the debt instrument is considered to have low credit risk
at the reporting date, using available, reasonable and supportable information. TechnipFMC considers its internal
credit rating of the debt instrument, and also considers that there has been a significant increase in credit risk when
contractual payments are more than 90 days past due. For debt instruments that continue to have low credit risk after
the evaluation, TechnipFMC assumes that there is no significant increase in the credit risk of the instrument.
ECL on such instruments is measured on a 12-month basis. However, when there has been a significant increase in
credit risk since origination, the allowance will be based on the lifetime ECL. TechnipFMC uses the ratings from credit
rating agencies both to determine whether the debt instrument has significantly increased in credit risk and to estimate
ECLs.
Based on customer experience, customer relationships and the nature of the long term projects, TechnipFMC
considers a financial asset in default when contractual payments are 90 days past due. Also, in cases when internal
or external information indicates that it is unlikely to receive the outstanding contractual cash flows before considering
any credit enhancements, TechnipFMC also considers a financial asset to be in default. A financial asset is written off
when there is no reasonable expectation of recovering the contractual cash flows.
Derecognition
A financial asset (or, where applicable, a part of a financial asset or part of a group of similar financial assets) is
primarily derecognized when:
• The rights to receive cash flows from the asset have expired; or
• TechnipFMC has transferred its rights to receive cash flows from the asset or has assumed an obligation to pay the
received cash flows in full without material delay to a third party under a ‘pass-through’ arrangement; and either (a)
TechnipFMC has transferred substantially all the risks and rewards of the asset, or (b) TechnipFMC has neither
transferred nor retained substantially all the risks and rewards of the asset, but has transferred control of the asset
When TechnipFMC has transferred its rights to receive cash flows from an asset or has entered into a pass-through
arrangement, it evaluates if, and to what extent, it has retained the risks and rewards of ownership. When it has
neither transferred nor retained substantially all of the risks and rewards of the asset, nor transferred control of the
asset, TechnipFMC continues to recognize the transferred asset to the extent of its continuing involvement. In that
case, TechnipFMC also recognizes an associated liability. The transferred asset and the associated liability are
measured on a basis that reflects the rights and obligations that TechnipFMC has retained.
Continuing involvement that takes the form of a guarantee over the transferred asset is measured at the lower of the
original carrying amount of the asset and the maximum amount of consideration that TechnipFMC could be required
to repay.
Offsetting of financial instruments
Financial assets and financial liabilities are offset and the net amount is reported in the consolidated statement of
financial position if there is a currently enforceable legal right to offset the recognized amounts and there is an intention
to settle on a net basis, or to realize the assets and settle the liabilities simultaneously.
o) Derivative financial instruments and hedging - 2019
Initial recognition and subsequent measurement
TechnipFMC uses derivative financial instruments, such as forward contracts, swaps and options to hedge its risks,
in particular foreign exchange risks. Such derivative financial instruments are initially recognized at fair value on the
date on which a derivative contract is entered into and are subsequently remeasured at fair value. Derivatives are
carried as financial assets when the fair value is positive and as financial liabilities when the fair value is negative.
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Every derivative financial instrument held by TechnipFMC is aimed at hedging future cash inflows or outflows against
exchange rate fluctuations during the period of contract performance. Derivative instruments and in particular forward
exchange transactions are aimed at hedging future cash inflows or outflows against exchange rate fluctuations in
relation to awarded commercial contracts, or material, labor and overhead expenses.
To hedge its exposure to exchange rate fluctuations during the bid-period of construction contracts, TechnipFMC
occasionally enters into insurance contracts under which foreign currencies are exchanged at a specified rate and at
a specified future date only if the new contract is awarded. The premium that TechnipFMC pays to enter into such an
insurance contract is charged to the income statement when paid. If the commercial bid is not successful, the
insurance contract is automatically terminated without any additional cash settlements or penalties.
In some cases, TechnipFMC may enter into foreign currency options for some proposals during the bid-period. These
options are not designated for hedge accounting.
For the purpose of hedge accounting, instruments qualifying as hedges are classified as:
• Fair value hedges when hedging the exposure to changes in the fair value of a recognized asset or liability or an
unrecognized firm commitment (TechnipFMC currently has no financial instruments designated for such hedging
relationship)
• Cash flow hedges when hedging the exposure to variability in cash flows that is either attributable to a particular risk
associated with a recognized asset or liability or a highly probable forecast transaction or the foreign currency risk in
an unrecognized firm commitment
• Hedges of a net investment in a foreign operation (TechnipFMC currently has no financial instruments designated for
such hedging relationship)
Foreign currency treasury accounts designated for a contract and used to finance its future expenses in foreign
currencies may qualify as a foreign currency cash flow hedge. Cash as a hedging instrument is determined as cash
less accounts payables (including debts contracted on projects) plus accounts receivable (including loans contracted
on projects) on reimbursable, services and completed contracts at closing date.
An economic hedging may occasionally be obtained by offsetting cash inflows and outflows on a single contract
(“natural hedging”).
When implementing hedging transactions, each of TechnipFMC’s subsidiaries enters into forward exchange contracts
with banks or with Technip Eurocash SNC, the company that performs centralized treasury management for
TechnipFMC. However, under treasury center accounting only instruments backed by a third party outside of
TechnipFMC are designated as hedging instruments.
At the inception of a hedge relationship, TechnipFMC formally designates and documents the hedge relationship to
which it wishes to apply hedge accounting and the risk management objective and strategy for undertaking the hedge.
The documentation includes identification of the hedging instrument, the hedged item, the nature of the risk being
hedged and how TechnipFMC will assess whether the hedging relationship meets the hedge effectiveness
requirements (including the analysis of sources of hedge ineffectiveness and how the hedge ratio is determined). A
hedging relationship qualifies for hedge accounting if it meets all of the following effectiveness requirements:
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• There is ‘an economic relationship’ between the hedged item and the hedging instrument.
• The effect of credit risk does not ‘dominate the value changes’ that result from that economic relationship.
• The hedge ratio of the hedging relationship is the same as that resulting from the quantity of the hedged item that
TechnipFMC actually hedges and the quantity of the hedging instrument that TechnipFMC actually uses to hedge that
quantity of hedged item.
Hedges that meet all the qualifying criteria for hedge accounting are accounted for as described below. The fair value
of derivative financial instruments is estimated on the basis of valuations provided by bank counterparties or financial
models commonly used in financial markets, using market data as of the statement of financial position date.
A derivative instrument qualifies for hedge accounting (fair value hedge or cash flow hedge) when there is a formal
designation and documentation of the hedging relationship, and of the effectiveness of the hedge throughout the life
of the contract. A fair value hedge aims at reducing risks incurred by changes in the market value of some assets,
liabilities or firm commitments. A cash flow hedge aims at reducing risks incurred by variations in the value of future
cash flows that may impact net profit (loss) in the statement of income.
In order for a currency derivative to be eligible for hedge accounting treatment, the following conditions have to be
met:
•
its hedging role must be clearly defined and documented at the date of inception; and
•
its effectiveness should be proved at the date of inception and/or as long as it remains effective. Under IFRS 9 a
hedging relationship qualifies for hedge accounting if: (i) there is “an economic relationship” between the hedged item
and the hedging Instrument; (ii) the effect of credit risk does not “dominate the value changes” that result from that
economic relationship; and (iii) the hedge ratio used for hedge accounting purposes should be the same as that used
for risk management purposes (“economic hedging”).
All derivative instruments are recorded and disclosed in the statement of financial position at fair value:
• derivative instruments considered for hedge accounting are classified as current assets and liabilities, as they follow
the operating cycle; and
• derivative instruments not considered for hedge accounting are also classified as current assets and liabilities.
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Changes in fair value are recognized as follows:
•
regarding cash flow hedges, the effective portion of the gain or loss of the hedging instrument is recorded directly in
other comprehensive income, and the ineffective portion of the gain or loss on the hedging instrument is recorded in
the income statement. The amounts accumulated in other comprehensive income (“OCI”) are accounted for
depending on the nature of the underlying hedged transaction. If the hedged transaction subsequently results in the
recognition of a non-financial item, the amount accumulated and included in the initial cost or other carrying amount
of the hedged asset or liability. This is not a reclassification adjustment and will not be recognized in OCI for the
period. For any other cash flow hedges, the amount accumulated in OCI is reclassified to profit or loss as a
reclassification adjustment in the same period or periods during which the hedged cash flows affect profit or loss. If
cash flow hedge accounting is discontinued, the amount that has been accumulated in OCI must remain in
accumulated OCI if the hedged future cash flows are still expected to occur. Otherwise, the amount will be immediately
reclassified to profit or loss as a reclassification adjustment. After discontinuation, once the hedged cash flow occurs,
any amount remaining in accumulated OCI must be accounted for depending on the nature of the underlying
transaction as described above.
•
the changes in fair value of derivative financial instruments that qualify as fair value hedge are recorded as financial
income or expenses. The ineffective portion of the gain or loss is immediately recorded in the income statement. The
carrying amount of a hedged item is adjusted by the gain or loss on this hedged item which may be allocated to the
hedged risk and is recorded in the income statement; and
•
the changes in fair value of derivative financial instruments that do not qualify as hedging in accounting standards
are directly recorded in the income statement.
TechnipFMC designates only the spot element of forward contracts as a hedging instrument. The forward element of
contracts receiving hedge accounting is recognized in the income statement in the same line item as the underlying
hedged item.
Refer to Note 26 for disclosures.
p) Derivative financial instruments and hedging - 2018
Initial recognition and subsequent measurement
TechnipFMC uses derivative financial instruments, such as forward contracts, swaps and options to hedge its risks,
in particular foreign exchange risks. Such derivative financial instruments are initially recognized at fair value on the
date on which a derivative contract is entered into and are subsequently remeasured at fair value. Derivatives are
carried as financial assets when the fair value is positive and as financial liabilities when the fair value is negative.
Currently, every derivative financial instrument held by TechnipFMC is aimed at hedging future cash inflows or
outflows against exchange rate fluctuations during the period of contract performance. Derivative instruments and in
particular forward exchange transactions are aimed at hedging future cash inflows or outflows against exchange rate
fluctuations in relation with awarded commercial contracts.
To hedge its exposure to exchange rate fluctuations during the bid-period of construction contracts, TechnipFMC
occasionally enters into insurance contracts under which foreign currencies are exchanged at a specified rate and at
a specified future date only if the new contract is awarded. The premium that TechnipFMC pays to enter into such an
insurance contract is charged to the income statement when paid. If the commercial bid is not successful, the
insurance contract is automatically terminated without any additional cash settlements or penalties.
In some cases, TechnipFMC may enter into foreign currency options for some proposals during the bid-period. These
options cannot be eligible for hedging.
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For the purpose of hedge accounting, instruments qualifying as hedges are classified as:
• Fair value hedges when hedging the exposure to changes in the fair value of a recognized asset or liability or an
unrecognized firm commitment
• Cash flow hedges when hedging the exposure to variability in cash flows that is either attributable to a particular risk
associated with a recognized asset or liability or a highly probable forecast transaction or the foreign currency risk in
an unrecognized firm commitment
• Hedges of a net investment in a foreign operation (TechnipFMC currently has no financial instruments designated for
such hedging relationship)
Foreign currency treasury accounts designated for a contract and used to finance its future expenses in foreign
currencies may qualify as a foreign currency cash flow hedge. Cash as a hedging instrument is determined as cash
less accounts payables (including debts contracted on projects) plus accounts receivable (including loans contracted
on projects) on reimbursable, services and completed contracts at closing date.
An economic hedging may occasionally be obtained by offsetting cash inflows and outflows on a single contract
(“natural hedging”).
When implementing hedging transactions, each of TechnipFMC’s subsidiary enters into forward exchange contracts
with banks or with Technip Eurocash SNC, the company that performs centralized treasury management for
TechnipFMC. However, only instruments that involve a third party outside of TechnipFMC are designated as hedging
instruments.
At the inception of a hedge relationship, TechnipFMC formally designates and documents the hedge relationship to
which it wishes to apply hedge accounting and the risk management objective and strategy for undertaking the hedge.
The documentation includes identification of the hedging instrument, the hedged item or transaction, the nature of
the risk being hedged and how TechnipFMC will assess the effectiveness of changes in the hedging instrument’s fair
value in offsetting the exposure to changes in the hedged item’s fair value or cash flows attributable to the hedged
risk. Such hedges are expected to be highly effective in achieving offsetting changes in fair value or cash flows and
are assessed on an ongoing basis to determine that they actually have been highly effective throughout the financial
reporting periods for which they were designated.
Hedges that meet all the qualifying criteria for hedge accounting are accounted for as described below. The fair value
of derivative financial instruments is estimated on the basis of valuations provided by bank counterparties or financial
models commonly used in financial markets, using market data as of the statement of financial position date.
A derivative instrument qualifies for hedge accounting (fair value hedge or cash flow hedge) when there is a formal
designation and documentation of the hedging relationship, and of the effectiveness of the hedge throughout the life
of the contract. A fair value hedge aims at reducing risks incurred by changes in the market value of some assets,
liabilities or firm commitments. A cash flow hedge aims at reducing risks incurred by variations in the value of future
cash flows that may impact net profit (loss).
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In order for a currency derivative to be eligible for hedge accounting treatment, the following conditions have to be
met:
•
its hedging role must be clearly defined and documented at the date of inception; and
•
its effectiveness should be proved at the date of inception and/or as long as it remains effective. If the effectiveness
test results in a score between 80 and 125%, changes in fair value or in cash flows of the covered element must be
almost entirely offset by the changes in fair value or in cash flows of the derivative instrument.
All derivative instruments are recorded and disclosed in the statement of financial position at fair value:
• derivative instruments considered as hedging are classified as current assets and liabilities, as they follow the
operating cycle; and
• derivative instruments not considered as hedging are also classified as current assets and liabilities.
Changes in fair value are recognized as follows:
•
•
regarding cash flow hedges, the portion of the gain or loss corresponding to the effectiveness of the hedging
instrument is recorded directly in other comprehensive income, and the ineffective portion of the gain or loss on the
hedging instrument is recorded in the income statement. The exchange gain or loss on derivative cash flow hedging
instruments, which is deferred in equity, is reclassified in the net profit (loss) of the year(s) in which the specified
hedged transaction affects the income statement;
the changes in fair value of derivative financial instruments that qualify as fair value hedge are recorded as financial
income or expenses. The ineffective portion of the gain or loss is immediately recorded in the income statement. The
carrying amount of a hedged item is adjusted by the gain or loss on this hedged item which may be allocated to the
hedged risk and is recorded in the income statement; and
•
the changes in fair value of derivative financial instruments that do not qualify as hedging in accounting standards
are directly recorded in the income statement.
Embedded derivatives
A derivative embedded in a hybrid contract, with a financial liability or non-financial host, is separated from the host
and accounted for as a separate derivative if:
•
the economic characteristics and risks are not closely related to the host;
• a separate instrument with the same terms as the embedded derivative would meet the definition of a derivative; and
•
the hybrid contract is not measured at fair value through profit or loss.
Embedded derivatives are measured at fair value with changes in fair value recognized in profit or loss.
Reassessment only occurs if there is either a change in the terms of the contract that significantly modifies the cash
flows that would otherwise be required or a reclassification of a financial asset out of the fair value through profit or
loss category.
q)
Inventories
Inventories are recognized at the lower of cost and net realizable value with cost being principally determined on a
weighted-average cost basis.
Write-down of inventories are recorded when the net realizable value of inventories is lower than their net book value.
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r) Advances paid to suppliers
Advance payments made to suppliers under long-term contracts are shown under the “Advances Paid to Suppliers”
line item, on the asset side of the statement of financial position.
s) Trade receivables
Trade receivables are amounts due from customers for goods sold or services performed in the ordinary course of
business. Trade receivables are recognized initially at the amount of consideration that is unconditional unless they
contain significant financing components, when they are recognized at fair value. TechnipFMC holds the trade
receivables with the objective to collect the contractual cash flows and therefore measures them subsequently at
amortized cost using the effective interest method.
Impairment of trade receivables
TechnipFMC applies the IFRS 9 simplified approach to measuring expected credit losses which uses a lifetime
expected loss allowance for all trade receivables and contract assets. TechnipFMC’s trade receivables and contracts
assets constitute a homogeneous portfolio, therefore, to measure the expected credit losses, trade receivables and
contract assets have been grouped based on a selection of TechnipFMC’s entities that cover a representative part of
TechnipFMC’s combined trade receivables and contract assets at each period end. The contract assets relate to
unbilled work in progress and have substantially the same risk characteristics as the trade receivables for the same
types of contracts. TechnipFMC has therefore concluded that the expected loss rates for trade receivables are a
reasonable approximation of the loss rates for the contract assets.
t) Cash and cash equivalents
Cash and cash equivalents consist of cash in bank and in hand, as well as securities fulfilling the following criteria:
an original maturity of less than three months, highly liquid, a fixed exchange value and an insignificant risk of loss of
value. Securities are measured at their market value at year-end. Any change in fair value is recorded in the statement
of income.
u) Share-based compensation
The measurement of share-based compensation expense on restricted share awards is based on the market price
at the grant date and the number of shares awarded. TechnipFMC utilizes the Black-Scholes options pricing model
to measure the fair value of share options granted, excluding from such valuation the service and non-market
performance conditions (which are considered in the expected number of awards that will ultimately vest) but including
market conditions (Note 18). The share-based compensation expense for each award is recognized during the vesting
period (i.e. the period in which the service and, where applicable, the performance conditions are fulfilled). The
cumulative expense recognized for share-based employee compensation at each reporting date reflects the already
expired portion of the vesting period and TechnipFMC’s best estimate of the number of awards that will ultimately
vest. The expense or credit in the statement of profit or loss for a period represents the movement in cumulative
expense recognized as at the beginning and end of that period.
v) Provisions
Provisions are recognized if and only if the following criteria are simultaneously met:
• TechnipFMC has an ongoing obligation (legal or constructive) as a result of a past event;
•
•
the settlement of the obligation will likely require an outflow of resources embodying economic benefits without
expected counterpart; and
the amount of the obligation can be reliably estimated: provisions are measured according to the risk assessment or
the exposed charge, based upon best-known elements.
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Contingencies related to contracts
These provisions relate to claims and litigations on contracts.
Restructuring
Once a restructuring plan has been decided and the interested parties have been informed, the plan is scheduled
and valued. Restructuring provisions are recognized in accordance with IAS 37 “Provisions, Contingent Liabilities and
Contingent Assets” (“IAS 37”) and presented within Impairment, Restructuring and Other Expenses (Income) in the
Statements of Income.
w) Pensions and other long-term benefits
TechnipFMC sponsors various end-of-service and retirement employee benefit plans. Payments under such
employee benefit plans are made either at the date of the employee’s termination of service with TechnipFMC or at
a subsequent date or dates in accordance with the laws and practices of each country in which a participant resides.
Depending on the employing entity, the main defined benefit plans can be:
• end-of-career benefits, to be paid at the retirement date;
• deferred compensation, to be paid when an employee leaves TechnipFMC;
•
retirement benefits to be paid in the form of a pension.
TechnipFMC assesses its obligations in respect of employee pension plans and other long-term benefits such as
“jubilee benefits”, post-retirement medical benefits, special termination benefits and cash incentive plans. The plan
assets are recorded at fair value.
The defined benefits obligations are estimated by independent actuaries using the projected unit credit actuarial
valuation method as per IAS 19 “Employee Benefits” (“IAS 19”). The actuarial assumptions used to determine the
obligations may vary depending on the country. The actuarial estimation is based on usual parameters such as future
wage and salary increases, life expectancy, staff turnover rate and inflation rate.
The defined benefit liability equals the present value of the defined benefit obligation after deducting the plan assets.
Present value of the defined benefit obligation is determined using present value of future cash disbursements based
on interest rates of corporate bonds, in the currency used for benefit payment, and whose term is equal to the average
expected life of the defined benefit plan.
The actuarial gains and losses resulting from adjustments related to experience and changes in actuarial assumptions
are recorded in other comprehensive income (see Note 20 - Pensions and other long-term employee benefit plans).
x) Deferred income tax
Deferred income taxes are recognized in accordance with IAS 12 “Income Taxes” (“IAS 12”), measured at the tax
rates that are expected to apply to the period when the asset is realized or the liability is settled, based on tax rates
(and tax laws) that have been enacted or substantively enacted by the end of the reporting period on all temporary
differences at the closing date, between the tax bases of assets and liabilities and their carrying amounts for each
TechnipFMC’s company.
Deferred income taxes are reviewed at each closing date to take into account the effect of any changes in tax law
and in the prospects of recovery.
Deferred income tax assets are recognized for all deductible temporary differences, unused tax credits carry-forwards
and unused tax losses carry-forwards, to the extent that it is probable that taxable profit will be available.
To properly estimate the existence of future taxable income on which deferred tax assets could be allocated, the
following items are taken into account:
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•
•
•
existence of temporary differences which will cause taxation in the future;
forecasts of taxable results;
analysis of the past taxable results; and
•
existence of significant and non-recurring income and expenses, included in the past tax results, which should not
repeat in the future.
Deferred income tax liabilities are recognized for all taxable temporary differences, except restrictively enumerated
circumstances, in accordance with the provisions of IAS 12.
Tax assets and liabilities are not discounted.
y) Financial liabilities
Financial liabilities are classified, at initial recognition, as:
•
financial liabilities at fair value through profit or loss (i.e., instruments held for trading including derivatives not
designated as hedging instruments and also instruments designated upon initial recognition as at fair value through
profit or loss),
•
financial debt,
•
trade and other payables, or
• derivatives designated as hedging instruments in an effective hedge.
Financial liabilities are recognized initially at fair value and, in the case of loans and borrowings and payables, net of
directly attributable transaction costs.
Financial liabilities at fair value through profit or loss
Financial liabilities are classified as held for trading if they are incurred for the purpose of repurchasing in the near
term.
Gains or losses on liabilities held for trading are recognized in the statement of profit or loss.
TechnipFMC has not elected to designate any financial liability as at fair value through profit or loss.
Financial debts (current and non-current)
Current and non-current financial debts include bond loans, commercial paper programs and other borrowings. After
initial recognition, debt is measured at amortized cost using the effective interest rate method. Transaction costs,
such as issuance fees and redemption premium are included in the cost of debt on the liability side of the statement
of financial position, as an adjustment to the nominal amount of the debt. The difference between the initial debt and
redemption at maturity is amortized at the effective interest rate.
The convertible bonds with an option for conversion and/or exchangeable for new or existing shares (“OCEANE”) are
recognized in two distinct components:
• a debt component is recognized at amortized cost, which was determined using the market interest rate for a non-
convertible bond with similar features. The carrying amount is recognized net of its proportionate share of the debt
issuance costs; and
• a conversion option component is recognized in equity for an amount equal to the difference between the issuing
price of the OCEANE convertible bond and the value of the debt component. The carrying amount is recognized net
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of its proportionate share of the debt issuance costs and corresponding deferred taxes. This value is not remeasured
but will be adjusted for all conversion of bonds.
Derecognition
A financial liability is derecognized when the obligation under the liability is discharged or cancelled or expires. When
an existing financial liability is replaced by another from the same lender on substantially different terms, or the terms
of an existing liability are substantially modified, such an exchange or modification is treated as the derecognition of
the original liability and the recognition of a new liability. The difference in the respective carrying amounts is
recognized in the statement of income.
z) Non-current assets held for sale or distribution to equity holders
TechnipFMC classifies non-current assets and disposal groups as held for sale/or distribution to equity holders of the
parent if their carrying amounts will be recovered principally through a sale transaction or a distribution rather than
through continuing use. Such non-current assets and disposal groups classified as held for sale/or distribution are
measured at the lower of their carrying amount and fair value less costs to sell or distribute. Costs to sell/or distribute
are the incremental costs directly attributable to the sale or distribution, excluding finance costs and income tax
expense.
The criteria for held for sale/or distribution classification is regarded as met only when the sale/or distribution is highly
probable and the asset or disposal group is available for immediate sale/ or distribution in its present condition. Actions
required to complete the sale/or distribution should indicate that it is unlikely that significant changes to the sale/or
distribution will be made or that the decision to sale/or distribute will be withdrawn. Management must be committed
to the sale/or distribution expected within one year from the date of the classification.
aa) Cash dividend and non-cash distribution to equity holders
TechnipFMC recognizes a liability to make cash or non-cash distributions to its equity holders when the distribution
is approved by its shareholders. A corresponding amount is recognized directly in the statement of equity.
bb) Current/ non-current distinction
The distinction between current assets and liabilities, and non-current assets and liabilities is based on the operating
cycle of contracts. If related to contracts, assets and liabilities are classified as “current”; if not related to contracts,
assets and liabilities are classified as “current” if their maturity is less than 12 months or “non-current” if their maturity
exceeds 12 months.
1.4 Use of critical accounting estimates, judgments and assumptions
The preparation of the consolidated financial statements requires the use of critical accounting estimates, judgments
and assumptions and may affect the assessment and disclosure of assets and liabilities at the date of the financial
statements, as well as the income and the reported expenses regarding this financial year. Estimates may be revised
if the circumstances and the assumptions on which they were based change, if new information becomes available,
or as a result of greater experience. Consequently, the actual result from these operations may differ from these
estimates.
Other disclosures relating to TechnipFMC’s exposure to risks and uncertainties includes:
• Capital management (Note 17)
• Market related exposures (Note 29)
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a) Judgments
Areas of judgment that have the most significant effect on the amounts recognized in the consolidated financial
statements relate to the planned Separation transaction and revenue recognition.
Planned Separation transaction
On August 26, 2019, we announced our intent to separate our Onshore/Offshore segment and loading systems
business into Technip Energies. The related spin-off plan was unanimously approved by our Board of Directors. We
anticipate completing the transaction in the second quarter of 2020, however, completion is subject to financing,
general market conditions, regulatory approvals and final approval from our Board of Directors.
In anticipation of the disposal, a process to separate the Technip Energies business from the other TechnipFMC
operations has commenced. This involved separation activities in relation to operational processes, information
technologies and support functions, such as finance, human resources and the separation of certain legal entities,
which host several business activities. Since the announcement of the planned transaction, management has also
been evaluating the allocation of cash and debt items to develop and achieve the appropriate capital structure and
credit metrics for both Technip Energies and TechnipFMC by the legal separation date. The transaction is anticipated
to close in the second quarter of 2020.
Upon completion of the Separation, the historical results of Technip Energies will be presented as discontinued
operations as the Separation will result in a strategic shift in operations with a major impact to our consolidated
financial statements.
Revenue recognition
The majority of our revenue is derived from long-term contracts that can span several years. TechnipFMC accounts
for revenue in accordance with IFRS 15. The unit of account in IFRS 15 is a performance obligation. A contract’s
transaction price is allocated to each distinct performance obligation and recognized as revenue when, or as, the
performance obligation is satisfied. The performance obligations are satisfied over time as work progresses or at a
point in time.
A significant portion of our total revenue recognized over time relates to our Onshore/Offshore and Subsea segments,
primarily for the entire range of onshore facilities, fixed and floating offshore oil and gas facilities, and subsea
exploration and production equipment projects that involve the design, engineering, manufacturing, construction, and
assembly of complex, customer-specific systems. Because of control transferring over time, revenue is recognized
based on the extent of progress towards completion of the performance obligation. The selection of the method to
measure progress towards completion requires judgment and is based on the nature of the products or services to
be provided. We generally use the cost-to-cost measure of progress for our contracts because it best depicts the
transfer of control to the customer that occurs as we incur costs on our contracts. Under the cost-to-cost measure of
progress, the extent of progress towards completion is measured based on the ratio of costs incurred to date to the
total estimated costs at completion of the performance obligation. Revenues, including estimated fees or profits, are
recorded proportionally as costs are incurred.
Due to the nature of the work required to be performed on many of performance obligations, the estimation of total
revenue and cost at completion is complex, subject to many variables, and requires significant judgment. It is common
for the long-term contracts to contain award fees, incentive fees, or other provisions that can either increase or
decrease the transaction price. We include estimated amounts in the transaction price when we believe we have an
enforceable right to the modification, the amount can be estimated reliably, and its realization is probable. The
estimated amounts are included in the transaction price to the extent it is probable that a significant reversal of
cumulative revenue recognized will not occur when the uncertainty associated with the variable consideration is
resolved.
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TechnipFMC executes contracts with its customers that clearly describe the equipment, systems, and/or services.
After analyzing the drawings and specifications of the contract requirements, the project engineers estimate total
contract costs based on their experience with similar projects and then adjust these estimates for specific risks
associated with each project, such as technical risks associated with a new design. Costs associated with specific
risks are estimated by assessing the probability that conditions arising from these specific risks will affect the total
cost to complete the project. After work on a project begins, assumptions that form the basis for the calculation of
total project cost are examined on a regular basis and the estimates are updated to reflect the most current information
and management’s best judgment.
Adjustments to estimates of contract revenue, total contract cost, or extent of progress toward completion are often
required as work progresses under the contract and as experience is gained, even though the scope of work required
under the contract may not change. The nature of accounting for long-term contracts is such that refinements of the
estimating process for changing conditions and new developments are continuous and characteristic of the process.
Consequently, the amount of revenue recognized over time is sensitive to changes in estimates of total contract costs.
There are many factors, including, but not limited to, the ability to properly execute the engineering and design phases
consistent with customers’ expectations, the availability and costs of labor and material resources, productivity, and
weather, all of which can affect the accuracy of cost estimates, and ultimately, the future profitability.
Our operating loss for the year ended December 31, 2019 was positively impacted by approximately $1,114.3 million,
as a result of changes in contract estimates related to projects that were in progress at December 31, 2018. During
the year ended December 31, 2019, we recognized changes in our estimates that had an impact on our margin in
the amounts of $797.2 million, $324.7 million and $(7.6) million in our Onshore/Offshore, Subsea and Surface
Technologies segments, respectively. The changes in contract estimates are attributed to better than expected
performance throughout our execution of our projects.
Our operating loss for the year ended December 31, 2018 was positively impacted by approximately $553.4 million,
as a result of changes in contract estimates related to projects that were in progress at December 31, 2017. During
the year ended December 31, 2018, we recognized changes in our estimates that had an impact on our margin in
the amounts of $379.2 million, $169.9 million and $4.3 million in our Onshore/Offshore, Subsea and Surface
technologies segments, respectively. The changes in contract estimates are attributed to better than expected
performance throughout our execution of our projects.
See Note 1 for a detailed description of revenue accounting policies thereon.
b) Estimates and assumptions
The key assumptions concerning the future and other key sources of estimation uncertainty at the reporting date, that
have a significant risk of causing a material adjustment to the carrying amount of assets and liabilities within the next
financial year relate to income taxes, pension accounting, determination of fair value in business combinations,
impairment of non-financial assets and estimates related to fair value for purposes of assessing goodwill for
impairment and are described below.
Income taxes
Our income tax expense, deferred tax assets and liabilities, and reserves for uncertain tax positions reflect
management’s best assessment of estimated future taxes to be paid. We are subject to income taxes in the United
Kingdom and numerous foreign jurisdictions. Significant judgments and estimates are required in determining the
consolidated income tax expense.
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In determining the current income tax provision, we assess temporary differences resulting from differing treatments
of items for tax and accounting purposes. These differences result in deferred tax assets and liabilities, which are
recorded in our consolidated balance sheets. When we maintain deferred tax assets, we must assess the likelihood
that these assets will be recovered through adjustments to future taxable income. To the extent we believe recovery
is not probable, no deferred tax asset is recognized. We believe this assessment is a critical accounting estimate
because it is highly susceptible to change from period to period, requires management to make assumptions about
our future income, and can be potentially material to the results of operations.
Forecasting future income requires us to use a significant amount of judgment. In estimating future income, we use
our internal operating budgets and long-range planning projections. We develop our budgets and long-range
projections based on recent results, trends, economic and industry forecasts influencing the segments’ performance,
our backlog, planned timing of new product launches and customer sales commitments. Significant changes in our
judgment related to the expected realizability of a deferred tax asset results in an adjustment to the recorded balance
of that asset.
The calculation of income tax expense involves dealing with uncertainties in the application of complex tax laws and
regulations in numerous jurisdictions in which we operate. We recognize tax benefits related to uncertain tax positions
when, in our judgment, it is more likely than not that such positions will be sustained on examination, including
resolutions of any related appeals or litigation, based on the technical merits. We adjust our liabilities for uncertain
tax positions when our judgment changes as a result of new information previously unavailable. Due to the complexity
of some of these uncertainties, their ultimate resolution may result in payments that are materially different from our
current estimates. Any such differences will be reflected as adjustments to income tax expense in the periods in which
they are determined.
For further information, see Note 7 to the consolidated financial statements.
Accounting for pension and other post-retirement benefit plans
Pension and other post-retirement (health care and life insurance) obligations are described in Note 20 to the
consolidated financial statements.
The determination of the projected benefit obligations of TechnipFMC’s pension and other post-retirement benefit
plans are important to the recorded amounts of such obligations on our consolidated statement of financial position
and to the amount of pension expense in our consolidated statements of income. In order to measure the obligations
and expense associated with our pension benefits, management must make a variety of estimates, including discount
rates used to value certain liabilities, rate of compensation increase, employee turnover rates, retirement rates,
mortality rates and other factors. Management updates these estimates on an annual basis or more frequently upon
the occurrence of significant events. These accounting estimates bear the risk of change due to the uncertainty and
difficulty in estimating these measures. Different estimates used by management could result in recognition of
different amounts of expense over different periods of time.
The discount rate affects the interest cost component of net periodic pension cost and the calculation of the projected
benefit obligation. The discount rate is based on rates at which the pension benefit obligation could be effectively
settled on a present value basis. Discount rates are derived by identifying a theoretical settlement portfolio of long-
term, high quality (“AA” rated) corporate bonds at the determination date that is sufficient to provide for the projected
pension benefit payments. A single discount rate is determined that results in a discounted value of the pension
benefit payments that equate to the market value of the selected bonds. The resulting discount rate is reflective of
both the current interest rate environment and the pension’s distinct liability characteristics. Significant changes in the
discount rate, such as those caused by changes in the yield curve, the mix of bonds available in the market, the
duration of selected bonds and the timing of expected benefit payments, may result in volatility in pension expense
and pension liabilities.
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Due to the specialized and statistical nature of these calculations which attempt to anticipate future events,
management engages third-party specialists to assist management in evaluating the assumptions as well as
appropriately measuring the costs and obligations associated with these pension benefits.
The actuarial assumptions and estimates made by management in determining TechnipFMC’s pension benefit
obligations may materially differ from actual results as a result of changing market and economic conditions and
changes in plan participant assumptions. While management believes the assumptions and estimates used are
appropriate, differences in actual experience or changes in plan participant assumptions may materially affect the
financial position or results of operations.
Impairment of non-financial assets
Property, plant and equipment, including vessels, identifiable intangible assets being amortized and capitalized
software costs are reviewed for impairment whenever events or changes in circumstances indicate the carrying
amount of the non-financial assets may not be recoverable. The carrying amount of a non-financial asset is not
recoverable if it exceeds the recoverable amount determined as the higher of and asset’s fair vale less costs of
disposal and its value in use. If it is determined that an impairment loss has occurred, the loss is measured as the
amount by which the carrying amount of the non-financial asset exceeds its recoverable amount. The determination
of future value in use as well as the estimated fair value of non-financial assets involves significant estimates on the
part of management. Because there usually is a lack of quoted market prices for non-financial asset, fair value of
impaired assets is typically determined based on the present values of expected future cash flows using discount
rates believed to be consistent with those used by principal market participants, or based on a multiple of operating
cash flow validated with historical market transactions of similar assets where possible. The expected future cash
flows used for impairment reviews and related fair value calculations are based on judgmental assessments of future
productivity of the asset, operating costs and capital decisions and all available information at the date of review. If
future market conditions deteriorate beyond the current expectations and assumptions, impairments of non-financial
assets may be identified if management concludes that the carrying amounts are no longer recoverable.
Refer to Note 1 for estimates and accounting policies relevant to property, plant and equipment and intangible assets.
Impairment of goodwill
Goodwill represents the excess of cost over the fair market value of net assets acquired in business combinations.
Goodwill is not subject to amortization but is tested for impairment at the level of Groups of Cash-Generating Units
(“GCGUs”) the goodwill has been allocated to, on an annual basis, or more frequently if impairment indicators arise.
TechnipFMC established October 31 as the date of the annual test for impairment of goodwill. TechnipFMC identifies
a potential impairment by comparing the recoverable amount of the applicable GCGU to its net book value, including
goodwill. If the net book value exceeds the recoverable amount of the GCGU, management measures the impairment
by comparing the carrying value of the GCGU to its recoverable amount. GCGU with goodwill are tested for
impairment using a quantitative impairment test.
When using the quantitative impairment test, determining the fair value of a GCGU is judgmental in nature and
involves the use of significant estimates and assumptions. TechnipFMC estimates the fair value of its GCGUs using
a discounted future cash flow model. The majority of the estimates and assumptions used in a discounted future cash
flow model involve unobservable inputs reflecting management’s own assumptions about the assumptions market
participants would use in estimating the fair value of a business. These estimates and assumptions include revenue
growth rates and operating margins used to calculate projected future cash flows, discount rates and future economic
and market conditions. The estimates are based upon assumptions believed to be reasonable, but which are
inherently uncertain and unpredictable and do not reflect unanticipated events and circumstances that may occur.
A lower recoverable amount estimate in the future for any of GCGUs could result in goodwill impairments. Factors
that could trigger a lower recoverable amount estimate include sustained price declines of the GCGU’s products and
services, cost increases, regulatory or political environment changes, changes in customer demand, and other
changes in market conditions, which may affect certain market participant assumptions used in the discounted future
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cash flow model based on internal forecasts of revenues and expenses over a specified period plus a terminal value
(the income approach). When assessing triggering factors, on a quarterly and also on an annual basis, TechnipFMC
also analyzes the relationship between its market capitalization and its consolidated book value of equity.
The income approach estimates recoverable amount by discounting each GCGU’s estimated future cash flows using
a weighted-average cost of capital that reflects current market conditions and the risk profile of the GCGU. To arrive
at the future cash flows, management uses estimates of economic and market assumptions, including growth rates
in revenues, costs, estimates of future expected changes in operating margins, tax rates and cash expenditures.
Future revenues are also adjusted to match changes in TechnipFMC’s business strategy. Management believes this
approach is an appropriate valuation method. Under the market multiple approach, management determines the
estimated fair value of each of GCGUs by applying transaction multiples to each GCGU’s projected EBITDA and then
averaging that estimate with similar historical calculations using either a one, two or three year average. The GCGU
valuations were determined primarily by utilizing the income approach, with a lesser weighting attributed the market
multiple approach.
In our analysis, we have considered the potential longer term implications of the climate change on our business and
industry, including its impact on the market value of TechnipFMC.
Refer to Note 11 of the consolidated financial statements for additional information related to goodwill impairment
testing during 2019.
1.5 Revision of prior period financial statements
In connection with the adoption of the new lease standard we reviewed our existing lease contracts, and we adjusted
our Consolidated Statements of Financial Position and Consolidated Statements of Changes in Stockholders’ Equity
as of January 1, 2016, 2017, 2018 and 2019 to include an additional $42.0 million of liabilities of which $5.0 million
and $37.0 million was Other Current Liabilities and Other Liabilities, respectively, with a corresponding $42.0 million
decrease in Retained Earnings, Net Income and Other Reserves to reflect additional rent expense which was not
historically recorded prior to fiscal 2016. These historical adjustments are not material to any prior interim or annual
consolidated financial statements. Refer to Note 4 for detailed description.
In connection with the preparation of the Consolidated Statement of Income for the year ended on December 31,
2019, we identified adjustments in our previously issued financial statements related to the classification between
service revenue, product revenue and the related cost of sales. The reclassification adjustments had no effect on the
reported Total Revenues, Consolidated Net Profit or Total Equity for any periods previously presented.
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The effects of reclassification adjustments on Consolidated Statement of Income for the year ended on December 31,
2018 are as follows:
(In millions, except per share data)
Revenue:
Service revenue from customer contracts
Product revenue from customer contracts
Total revenue
Costs and expenses:
Cost of service revenue
Cost of product revenue
Total costs and expenses
Year Ended December 31, 2018
Note
As Previously
Reported
Adjustments As Revised
$
5
5
9,793.5 $
2,576.0
12,599.9
(707.4 ) $
707.4
—
9,086.1
3,283.4
12,599.9
7,910.5
2,239.9
13,341.9
(442.4 )
442.4
—
7,468.1
2,682.3
13,341.9
Net profit (loss) attributable to TechnipFMC plc
$
(1,756.4 ) $
— $
(1,756.4 )
Earnings per share attributable to TechnipFMC plc
Basic
Diluted
Weighted average shares outstanding
Basic
Diluted
NOTE 2. SCOPE OF CONSOLIDATION
2.1 Business combinations
8
8
8
8
$
$
(3.83 ) $
(3.83 ) $
458.0
458.0
— $
— $
—
—
(3.83 )
(3.83 )
458.0
458.0
Year ended December 31, 2019 - Significant business combinations and other changes
On December 30, 2019, we completed the acquisition of the remaining 50% interest in Technip Odebrecht PLSV CV
(“TOP CV”). TOP CV was formed as a joint venture between Technip SA and Ocyan SA to provide pipeline installation
ships to Petroleo Brasileiro SA (“Petrobras”) for their work in oil and gas fields offshore Brazil with results reported in
our Subsea segment using the equity method of accounting. Subsequent to this transaction the investment became
a fully consolidated entity. In connection with the acquisition, we acquired $391.0 million in assets, including two
vessels valued at $335.2 million. In addition, we assumed $239.9 million of liabilities, including a $203.1 million term
loan. The valuation of these assets and liabilities are preliminary and remain ongoing. As a result of the acquisition,
we recorded a gain of $59.5 million, the net results of the impairment charge of $23.8 million included within Income
from Equity Affiliates and a bargain purchase gain of $83.3 million included within Impairment, Restructuring and
Other Expenses.
The impact on consolidated revenues and net profit by the business combination does not differ significantly, had the
acquisition been completed as of January 1, 2019, therefore no pro forma financials are disclosed.
Year ended December 31, 2018 - Significant business combinations and other changes
In February 2018, we signed an agreement with the Island Offshore Group to acquire a 51% stake in Island Offshore’s
wholly-owned subsidiary, Island Offshore Subsea AS. Island Offshore Subsea AS provides RLWI project management
and engineering services for plug and abandonment (“P&A”), riserless coiled tubing, and well completion operations.
In connection with the acquisition of the controlling interest, TechnipFMC and Island Offshore entered into a strategic
cooperation agreement to deliver RLWI services on a worldwide basis, which also include TechnipFMC’s RLWI
capabilities. Island Offshore Subsea AS has been rebranded to TIOS and is now the operating unit for TechnipFMC’s
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RLWI activities worldwide. The acquisition was completed on April 18, 2018 for total cash consideration of $42.4
million. As a result of the acquisition, we recorded redeemable financial liability equal to the fair value of a written put
option. Finally, we preliminarily increased goodwill by $85.0 million.
The impact on consolidated revenues and net profit by the business combination does not differ significantly, had the
acquisition been completed as of January 1, 2018, therefore no pro forma financials are disclosed.
On July 18, 2018, we entered into a share sale and purchase agreement with POC Holding Oy to sell 100% of the
outstanding shares of Technip Offshore Finland Oy. The total gain before tax recognized in the third quarter of 2018
was $27.8 million.
Additional acquisitions, including purchased interests in equity method investments, during the year ended December
31, 2018 totaled $62.5 million in consideration paid.
2.2 Subsidiaries, joint venture undertakings and equity affiliates
TechnipFMC’s subsidiaries, joint venture undertakings and equity affiliates at December 31, 2019 are listed in Note
31. All subsidiaries are fully consolidated in the financial statements. Ownership interests noted in the table reflect
holdings of ordinary shares.
All consolidated companies close their accounts as of December 31st except (i) Technip India which closes their
statutory accounts as of March 31st, (ii) Technipetrol AG which closes their statutory accounts as of November 30th
and (iii) Technip South Africa (Pty.) Ltd which closes their statutory accounts as of June 30th. However, these entities
perform an interim account closing as of December 31 for the purpose of TechnipFMC consolidation.
NOTE 3. SEGMENT INFORMATION
The table below shows information on TechnipFMC’s reportable business and geographical segments:
3.1 Information by business segment
Segment revenue and segment operating profit
(In millions)
Segment revenue
Subsea
Onshore/Offshore
Surface Technologies
Total revenue
Segment operating profit (loss)
Subsea
Onshore/Offshore
Surface Technologies
Total segment operating loss
Corporate items
Corporate expense (1)
Interest income
Interest expense
Total corporate items
Loss before income taxes (2)
Year Ended December 31,
2019
2018
5,523.4 $
6,268.8
1,634.0
13,426.2 $
4,865.6
6,120.7
1,613.6
12,599.9
(1,417.1 ) $
964.4
(654.8 )
(1,107.5 )
(569.8 )
115.8
(614.3 )
(1,068.3 )
(2,175.8 ) $
(1,366.3 )
823.1
172.7
(370.5 )
(581.7 )
121.1
(517.5 )
(978.1 )
(1,348.6 )
$
$
$
$
(1)
benefits, certain foreign exchange gains and losses, merger transaction, integration expenses and Separation expenses.
Corporate expense primarily includes corporate staff expenses, legal reserve, stock-based compensation expenses, other employee
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(2)
Includes amounts attributable to non-controlling interests.
During the years ended December 31, 2019 and 2018, revenue from JSC Yamal LNG exceeded 10% of
TechnipFMC’s consolidated revenue.
Segment assets
(In millions)
Segment assets
Subsea
Onshore/Offshore
Surface Technologies
Total segment assets
Corporate (1)
Total assets
December 31,
2019
December 31,
2018
$
$
10,837.3 $
4,446.7
2,249.8
17,533.8
6,041.4
23,575.2 $
11,322.8
4,356.6
2,900.7
18,580.1
6,593.5
25,173.6
(1) Corporate includes cash, deferred income tax balances, property, plant and equipment not associated with a specific segment, pension assets
and the fair value of derivative financial instruments.
Other business segment information:
Capital Expenditures
Year Ended December 31,
Depreciation and
Amortization
Year Ended December 31,
Research and
Development Expense
Year Ended December 31,
2019
2018
2019
2018
2019
2018
$
$
287.7 $
22.6
96.6
47.5
454.4 $
223.2 $
7.6
111.9
25.4
368.1 $
574.5 $
82.4
145.7
35.9
838.5 $
444.7 $
38.2
66.6
5.2
554.7 $
134.4 $
13.2
15.3
—
162.9 $
145.2
29.7
14.3
—
189.2
(In millions)
Subsea
Onshore/Offshore
Surface Technologies
Corporate
Total
3.2 Information by geography
Geographic segment sales were identified based on the location where TechnipFMC’s products and services were
delivered.
(In millions)
Revenue
Russia
USA
Norway
Brazil
Israel
United Kingdom
India
Angola
Australia
United Arab Emirates
Malaysia
China
Indonesia
All other countries
Total revenue
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195
Year Ended December 31,
2019
2018
2,378.0 $
1,931.2
1,371.1
1,100.1
757.0
540.8
518.0
447.8
372.8
327.2
283.8
272.9
237.6
2,887.9
13,426.2 $
2,773.3
1,275.8
1,202.6
1,504.3
243.8
442.1
214.0
385.7
926.6
460.3
362.3
112.3
130.7
2,566.1
12,599.9
$
$
U.K. Annual Report and IFRS Financial Statements 2019
Location of property, plant and equipment, net by geographic region is the following:
(In millions)
United Kingdom
United States
Netherlands
Brazil
Norway
All other countries
Total property, plant and equipment, net
NOTE 4. LEASES
December 31,
2019
2018
$
$
957.1 $
558.1
474.9
313.2
333.0
519.1
3,155.4 $
925.6
911.2
341.6
325.8
311.4
754.5
3,570.1
In January 2016, the IASB issued IFRS 16 “Leases” (“IFRS 16”). IFRS 16 requires that a lessee recognize a liability
to make lease payments and a right-of-use (“ROU”) asset representing its right to use the underlying asset for the
lease term. IFRS 16 eliminates the current dual accounting model for lessees and introduces a single, on-balance
sheet accounting model, such that a lease classification test is not required. The updated guidance leaves the
accounting for leases by lessors largely unchanged from existing guidance. Early application is permitted. Entities
may choose to apply IFRS 16 using either a full retrospective or a modified retrospective approach during transition.
The standard became effective for us on January 1, 2019.
TechnipFMC adopted IFRS 16 on January 1, 2019, electing the modified retrospective approach and did not restate
comparative amounts for the prior periods presented. For leases previously classified as finance leases the entity
recognized the carrying amount of the lease asset and lease liability immediately before transition as the carrying
amount of the right of use asset and the lease liability at the date of initial application. The measurement principles of
IFRS 16 are only applied after that date. The remeasurements to the lease liabilities were recognized as adjustments
to the related ROU assets immediately after the date of initial application. We elected certain practical expedients
permitted under IFRS 16, including the practical expedient for short-term leases in which a lessee is permitted to
make an accounting policy election not to recognize lease assets and lease liabilities for leases with a term of 12
months or less and do not include an option to purchase the underlying asset, as well as a similar practical expedient
for low-value assets. Lease cost of short-term leases are recognized on a straight-line basis over the lease term and
disclosed within the consolidated financial statements. TechnipFMC believes short-term lease commitments are not
materially different than the short-term lease cost for the period.
In addition, TechnipFMC elected the transition practical expedient available to lessees and lessors for grandfathering
the lease definition previously identified under existing guidance. TechnipFMC also elected the practical expedient of
portfolio approach to make judgments and estimates about discount rate or lease term to leases with similar
characteristics.
IFRS 16 did not have a material effect on TechnipFMC’s consolidated financial statements from a lessor perspective,
and TechnipFMC did not experience a significant change in its lessor leasing activities at adoption.
Adoption of the new lease accounting guidance had a material impact on the consolidated statement of financial
position. On January 1, 2019, TechnipFMC (1) carried forward existing finance lease liability of $337.8 million and
recognized an additional lease liability of approximately $1,146.0 million which represents the present value of the
remaining lease payments, discounted using the Company’s applicable weighted average incremental borrowing
rates, and (2) reclassified $321.3 million of leased assets to ROU asset and recognized an additional ROU asset of
approximately $1,066.8 million. As of January 1, 2019, $1,388.1 million of ROU asset represents the total lease
liability of $1,483.8 million adjusted for accrued and prepaid rent, lease incentives, and other balances. The impact
of adopting the new lease accounting guidance was recorded as an adjustment to increase retained earnings by
approximately $1.8 million.
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Lessee Arrangements
TechnipFMC leases real estate, including land, buildings and warehouses, machinery/equipment, vessels, vehicles,
and various types of manufacturing and data processing equipment, from a lessee perspective. Leases of real estate
generally provide for payment of property taxes, insurance, and repairs by TechnipFMC.
TechnipFMC determines if an arrangement is a lease at inception by assessing whether an identified asset exists and
if we have the right to control the use of the identified asset. Leases are included in right-of-use assets, lease liabilities
(current), and lease liabilities (non-current) on the consolidated statements of financial position. Right-of-use assets
represent the right to use an underlying asset for the lease term and lease liabilities represent TechnipFMC’s
obligation to make lease payments arising from the lease. Right-of-use assets and liabilities are recognized at the
commencement date based on the present value of the remaining lease payments over the lease term. With the
exception of rare cases in which the implicit rate is readily determinable, TechnipFMC uses its incremental borrowing
rate based on the information available at the commencement date in determining the present value of lease
payments. The right-of-use assets also includes any lease prepayments made and excludes lease incentives we
received from the lessor. Lease cost for lease payments is recognized on a front-loaded expense pattern over the
lease term. Several of TechnipFMC’s leases provide for certain guarantees of residual value. TechnipFMC estimates
and includes in the determination of lease payments any amount probable of being owed under these residual value
guarantees. At the date of adoption and December 31, 2019, TechnipFMC determined that there were no residual
value guarantees which were probable of being owed. The leases do not contain any material restrictive covenants.
Lease terms within the lessee arrangements may include options to extend/renew or terminate the lease and/or
purchase the underlying asset when it is reasonably certain that we will exercise that option. TechnipFMC applies a
portfolio approach by asset class to determine lease term renewals. The leases within these portfolios are categorized
by asset class and have initial lease terms that vary depending on the asset class. The renewal terms range from 60
days to 5 years for asset classes such as temporary residential housing, forklifts, vehicles, vessels, office and IT
equipment, and tool rentals, and up to 15 years or more for commercial real estate. Short-term leases with an initial
term of 12 months or less that do not include a purchase option are not recorded on the statement of financial position.
Lease costs for short-term leases are recognized on a straight-line basis over the lease term and amounts related to
short-term leases are disclosed within the consolidated financial statements.
TechnipFMC has variable lease payments, including adjustments to lease payments based on an index or rate (such
as the Consumer Price Index), fair value adjustments to lease payments, and common area maintenance, real estate
taxes, and insurance payments in triple-net real estate leases. Variable lease payments that depend on an index or
a rate (such as the Consumer Price Index or a market interest rate) are included when measuring initial lease liability
of the lease arrangements using the payments’ base rate or index. We remeasure the lease liability when there is a
change in future lease payments resulting from a change in such index or rate. Variable payments that do not depend
on an index or rate are recognized in profit or loss and are disclosed as ‘variable lease cost’ in the period they are
incurred.
TechnipFMC adopted the practical expedient to not separate lease and non-lease components for all asset classes
except for vessels, which have significant non-lease components.
The following table is a summary of amounts recognized in consolidated statement of income as of December 31,
2019:
(In millions)
Depreciation of right-of-use assets
Interest expense on lease liabilities
Short-term lease costs
Sublease income
203 TechnipFMC
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Year Ended
December 31, 2019
329.2
44.4
20.8
8.9
$
$
U.K. Annual Report and IFRS Financial Statements 2019
The table below shows the ending balance and depreciation of right-of-use assets by types of assets:
(In millions)
Real estate
Vessels
Machinery and equipment
IT equipment
Office furniture and equipment
Total
The following table is the lease liability recognized as of December 31, 2019:
(In millions except for discount rate)
Lease liability recognised as of December 31, 2019
Current lease liabilities
Non-current lease liabilities
Weighted average discount rate
As of December 31, 2019
Depreciation
Net Book Value
$
$
189.3 $
129.9
5.6
2.7
1.7
329.2 $
743.5
101.2
13.2
5.5
1.5
864.9
As of December 31,
2019
$
$
956.8
275.1
681.7
4.4 %
Supplemental cash flow information related to leases for the year ended December 31, 2019 is as follows:
(In millions)
Payments for the principal portion of lease liabilities
Cash paid for interest on lease liabilities
Right-of-use assets obtained in exchange for lease obligations
Year Ended
December 31, 2019
335.8
48.9
125.4
$
$
The following table is a summary of the maturity of lease liabilities for leases as of December 31, 2019:
(In millions)
2020
2021
2022
2023
2024
Thereafter
Total lease payments
Less: Imputed interest (1)
Total lease liabilities (2)
Lease liabilities
305.3
184.6
128.0
101.9
89.7
330.4
1,139.9
183.1
956.8
$
$
Note: For leases commencing prior to 2019, minimum lease payments exclude payments to landlords for real estate taxes and common area
maintenance.
(1) Calculated using the interest rate for each lease.
(2) Includes the current portion of $275.1 million for lease liabilities.
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At December 31, 2018, future minimum rental payments under noncancelable operating leases before the adoption
of IFRS 16 were:
(In millions)
2019
2020
2021
2022
2023
Thereafter
Total lease payments
Less: income from sub-leases
Net minimum operating lease payments
Lease liabilities
313.4
269.7
180.1
123.6
102.1
485.6
1,474.5
25.6
1,448.9
$
$
As of December 31, 2019, TechnipFMC has an additional lease, for a new office building in Paris, France, that has
not yet commenced for $236.2 million. This lease will commence in fiscal year 2021 with a lease term of 10 years.
Lessor Arrangements
TechnipFMC leases real estate including land, buildings and warehouses, machinery/equipment, and vessels from a
lessor perspective. TechnipFMC determines if an arrangement is a lease at inception by assessing whether an
identified asset exists and if the customer has the right to control the use of the identified asset. TechnipFMC uses
the implicit rate for its lessor arrangements. TechnipFMC estimates the amount it expects to derive from the
underlying asset following the end of the lease term based on remaining economic life. The lessor arrangements
generally do not include any residual value guarantees. TechnipFMC recognizes lessee payments of lessor costs
such as taxes and insurance on a net basis when the lessee pays those costs directly to a third party or when the
amount paid by the lessee is not readily determinable.
The following table is a summary of the Company’s components of lease revenue for the year ended December 31,
2019:
(In millions)
Operating lease revenue
Year Ended
December 31, 2019
273.9
$
The following table is a summary of the maturity analysis of the undiscounted cash flows to be received on an annual
basis for each of the first five years, and a total of the amounts for the remaining years.
(In millions)
2020
2021
2022
2023
2024
Thereafter
Total undiscounted cash flows
Operating Leases
$
$
29.4
17.5
14.3
1.0
—
—
62.2
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NOTE 5. REVENUE
5.1 Revenue recognition by segment
The majority of our revenue is from long-term contracts associated with designing and manufacturing products and
systems and providing services to customers involved in exploration and production of crude oil and natural gas. The
following is a description of principal activities separated by reportable segments from which TechnipFMC generates
its revenue.
Subsea - Our Subsea segment manufactures and designs products and systems, performs engineering, procurement
and project management and provides services used by oil and gas companies involved in offshore exploration and
production of crude oil and natural gas.
Systems and services may be sold separately or as combined integrated systems and services offered within one
contract. Many of the systems and products TechnipFMC supplies for subsea applications are highly engineered to
meet the unique demands of our customers’ field properties and are typically ordered one to two years prior to
installation. We often receive advance payments and progress billings from our customers in order to fund initial
development and working capital requirements.
Under Subsea engineering, procurement, construction and installation contracts, revenue is principally generated
from long term contracts with customers. We have determined these contracts generally have one performance
obligation as the delivered product is highly customized to customer and field specifications. We generally recognize
revenue over time for such contracts as the customized products do not have an alternative use for TechnipFMC and
we have an enforceable right to payment plus a reasonable profit for performance completed to date.
Our Subsea segment also performs an array of subsea services including (i) installation services, (ii) asset
management services (iii) product optimization, (iv) inspection, maintenance and repair services, and (v) well access
and intervention services, where revenue is generally earned through the execution of either installation-type or
maintenance-type contracts. For either contract-type, management has determined that the performance of the
service generally represents one single performance obligation. We have determined that revenue from these
contracts is recognized over time as the customer simultaneously receives and consumes the benefit of the services.
Onshore/Offshore - Onshore/Offshore Business designs and builds onshore facilities related to the production,
treatment, transformation and transportation of hydrocarbons and renewable feedstock; and designs, manufactures
and installs fixed and floating platforms for the offshore production and processing of oil and gas reserves.
The onshore business combines the design, engineering, procurement, construction and project management of the
entire range of onshore facilities. The onshore activity covers all types of onshore facilities related to the production,
treatment and transportation of oil and gas, as well as transformation with petrochemicals such as ethylene, polymers
and fertilizers. Some of the onshore activities include the development of onshore fields, refining, natural gas
treatment and liquefaction, and design and construction of hydrogen and synthesis gas production units.
Many of these contracts provide a combination of engineering, procurement, construction, project management and
installation services, which may last several years. Management has determined that contracts of this nature have
generally one performance obligation. In these contracts, the final product is highly customized to the specifications
of the field and the customer’s requirements. Therefore, the customer obtains control of the asset over time, and thus
revenue is recognized over time.
The offshore business combines the design, engineering, procurement, construction and project management within
the entire range of fixed and floating offshore oil and gas facilities, many of which were the first of their kind, including
the development of floating liquefied natural gas (“FLNG”) facilities. Similar to onshore contracts, contracts grouped
under this segment provide a combination of services, which may last several years.
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Management has determined that contracts of this nature have one performance obligation. In these contracts, the
final product is highly customized to the specifications of the field and the customer’s requirements. Management has
determined that the customer obtains control of the asset over time, and thus revenue is recognized over time as the
customized products do not have an alternative use for us and we have an enforceable right to payment plus
reasonable profit for performance completed to date.
Surface Technologies - Our Surface Technologies segment designs, manufactures and supplies technologically
advanced wellhead systems and high pressure valves and pumps used in stimulation activities for oilfield service
companies and provides installation, flowback and other services for exploration and production companies.
We provide a full range of drilling, completion and production wellhead systems for both standard and custom-
engineered applications. Under pressure control product contracts, we design and manufacture flowline products,
under the Weco®/Chiksan® trademarks, articulating frac arm manifold trailers, well service pumps, compact valves
and reciprocating pumps used in well completion and stimulation activities by major oilfield service companies.
Performance obligations within these systems are satisfied either through delivery of a standardized product or
equipment or the delivery of a customized product or equipment.
For contracts with a standardized product or equipment performance obligation, management has determined that
because there is limited customization to products sold within such contracts and the asset delivered can be resold
to another customer, revenue should be recognized as of a point in time, upon transfer of control to the customer and
after the customer acceptance provisions have been met.
For contracts with a customized product or equipment performance obligation, the revenue is recognized over time,
as the manufacturing of our product does not create an asset with an alternative use for us.
This segment also designs, manufactures and services measurement products globally. Contract-types include
standard product or equipment and maintenance-type services where we have determined that each contract under
this product line represents one performance obligation.
Revenue from standard measurement equipment contracts is recognized at a point in time, while maintenance-type
contracts are typically priced at a daily or hourly rate. We have determined that revenue for these contracts is
recognized over time because the customer simultaneously receives and consumes the benefit of the services.
5.2 Disaggregation of revenue
TechnipFMC disaggregates revenue by geographic location and contract types. The tables also include a
reconciliation of the disaggregated revenue with the reportable segments for the year ended December 31, 2019 and
2018:
Reportable Segments
Reportable Segments
Year Ended December 31, 2019
Year Ended December 31, 2018
Subsea
Onshore/Off
shore
Surface
Technologies
Subsea
Onshore/Off
shore
(In millions)
Europe, Russia, Central Asia
$
America
Asia Pacific
Africa
Middle East
Total products and services revenue $
1,745.2 $
1,770.4
659.9
824.8
407.1
5,407.4 $
2,813.1 $
766.2
1,152.5
526.0
1,011.0
6,268.8 $
236.7 $
741.4
189.3
61.1
247.6
1,476.1 $
1,528.1 $
1,747.1
532.9
758.1
181.2
4,747.4 $
Surface
Technologies
227.7
879.2
123.2
57.9
213.4
1,501.4
3,506.1 $
365.1
1,236.1
252.7
760.7
6,120.7 $
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The following table represents revenue by contract type for each reportable segment for the year ended December
31, 2019 and 2018:
Year Ended December 31, 2019
Year Ended December 31, 2018
Subsea
Onshore/Off
shore
(In millions)
Services
Products
Total products and services revenue
Lease and other(1)
Total revenue
$
$
3,244.9 $
2,162.5
5,407.4
116.0
5,523.4 $
Surface
Technologies Subsea(2)
279.4 $
1,196.7
1,476.1
157.9
1,634.0 $
2,712.7 $
2,034.7
4,747.4
118.2
4,865.6 $
6,268.8 $
—
6,268.8
—
6,268.8 $
Onshore/Off
shore
Surface
Technologies
252.7
1,248.7
1,501.4
112.2
1,613.6
6,120.7 $
—
6,120.7
—
6,120.7 $
(1)
Represents revenue not subject to IFRS15.
(2)
$707.4 million for the year ended December 31, 2019. See Note 1.
We revised the consolidated statement of income to correct the classification of service revenue and product revenue in the amount of
5.3 Contract balances
The timing of revenue recognition, billings and cash collections results in billed accounts receivable, costs and
estimated earnings in excess of billings on uncompleted contracts (contract assets), and billings in excess of costs
and estimated earnings on uncompleted contracts (contract liabilities) on the consolidated statement of financial
position.
Contract Assets - Include unbilled amounts typically resulting from sales under long-term contracts when revenue is
recognized over time and revenue recognized exceeds the amount billed to the customer, and right to payment is not
just subject to the passage of time. Amounts may not exceed their net realizable value. Costs and estimated earnings
in excess of billings on uncompleted contracts are generally classified as current.
Contract Liabilities - We sometimes receive advances or deposits from our customers, before revenue is recognized,
resulting in contract liabilities.
The following table provides information about net contract assets (liabilities) as of December 31, 2019 and 2018,
respectively:
(In millions)
Contract assets
Contract (liabilities)
Net contract (liabilities)
December 31,
2019
December 31,
2018
$
$
1,519.1 $
(4,571.4 )
(3,052.3 ) $
1,295.0 $
(4,069.0 )
(2,774.0 ) $
$ change
% change
224.1
(502.4 )
(278.3 )
17.3
(12.3 )
(10.0 )
The increase in our contract assets from December 31, 2018 to December 31, 2019 was primarily due to the timing
of milestones. The increase in our contract liabilities was primarily due to additional cash received, excluding amounts
recognized as revenue during the period.
In order to determine revenue recognized in the period from contract liabilities, we first allocate revenue to the
individual contract liability balance outstanding at the beginning of the period until the revenue exceeds that balance.
Revenue recognized for the year ended December 31, 2019 that were included in the contract liabilities balance at
December 31, 2018 was $2,414.0 million. Revenue recognized for the year ended December 31, 2018 that were
included in the contract liabilities balance at December 31, 2017 was $2,814.6 million.
In addition, net revenue recognized for the year ended December 31, 2019 and 2018 from our performance
obligations satisfied in previous periods has favorable impact of $1,176.5 million and $596.9 million, respectively. This
primarily relates to the changes in the estimate of the stage of completion that impacted revenue.
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5.4 Transaction price allocated to the remaining unsatisfied performance obligations
Remaining unsatisfied performance obligations (“RUPO” or “order backlog”) represent the transaction price for
products and services for which we have a material right but work has not been performed. Transaction price of the
order backlog includes the base transaction price, variable consideration and changes in transaction price. The order
backlog table does not include contracts for which we recognize revenue at the amount to which we have the right to
invoice for services performed. The transaction price of order backlog related to unfilled, confirmed customer orders
is estimated at each reporting date. As of December 31, 2019, the aggregate amount of the transaction price allocated
to order backlog was $24,251.1 million. TechnipFMC expects to recognize revenue on approximately 47.4% of the
order backlog through 2020 and 52.6% thereafter.
The following table details the consolidated order backlog for each business segment as of December 31, 2019:
(In millions)
Subsea
Onshore/Offshore
Surface Technologies
Total remaining unsatisfied performance obligations
2020
2021
Thereafter
$
$
4,506.8 $
6,581.3
411.7
11,499.8 $
2,472.4 $
5,127.8
61.5
7,661.7 $
1,500.6
3,589.0
—
5,089.6
The following table details the consolidated order backlog for each business segment as of December 31, 2018:
(In millions)
Subsea
Onshore/Offshore
Surface Technologies
Total remaining unsatisfied performance obligations
2019
2020
Thereafter
$
$
3,379.2 $
5,335.1
469.9
9,184.2 $
1,382.1 $
1,732.9
—
3,115.0 $
1,238.3
1,022.5
—
2,260.8
NOTE 6. OTHER INCOME AND EXPENSE ITEMS, FINANCIAL INCOME AND EXPENSES
6.1 Other income (expense), net
Other income (expense) is as following:
(In millions)
Reinsurance income
Net loss from disposal of intangible assets
Net loss from disposal of property, plant and equipment
Foreign currency translation losses
Legal provision (Note 21)
Other
Total other income (expense), net
2019
2018
$
$
4.8 $
(0.3 )
(25.5 )
(167.3 )
(91.3 )
12.4
(267.2 ) $
11.8
(1.8 )
(20.1 )
(65.6 )
(280.0 )
22.8
(332.9 )
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6.2 Expenses by nature
An analysis of operating expenses by nature is as following:
(In millions)
Wages and salaries
Depreciation and amortization
Social security costs
Operating leases
Right-of-use lease amortization
Impairment (1)
Other pension costs
Separation costs (2)
Merger, transaction and integration costs
Purchases, external charges and other expenses
Total costs and other expenses
2019
2018
$
$
2,552.7 $
509.3
552.1
—
329.2
2,430.0
54.5
72.1 —
31.2
8,317.5
14,848.6 $
2,640.4
554.9
509.2
360.3
—
1,636.1
54.0
—
36.4
7,550.6
13,341.9
(1)
TOP CV. Refer to Note 2 for further details.
In 2019 we have recorded a bargain purchase gain of $83.3 million in connection with the acquisition of the remaining 50% interest in
(2)
operating segment for the year ended December 31, 2019.
We have incurred $72.1 million of Separation costs associated with the planned Separation transaction related to Onshore/Offshore
6.3 Financial income
Financial income consist of the following:
(In millions)
Interest income from treasury management (1)
Dividends from non-consolidated investments
Financial income related to long-term employee benefit plans
Net proceeds from disposal of financial assets
Total financial income
(1)
Mainly results from interest income from short-term security deposits.
6.4 Financial expenses
Financial expenses consist of the following:
(In millions)
Interest expenses on bonds and private placements
Interest expenses on finance lease
Financial expenses related to long-term employee benefit plans
Interest expenses on commercial papers, bank borrowings and overdrafts
Redeemable financial liability fair value remeasurement
Other
Total financial expenses
Net financial income (expenses)
2019
2018
101.4 $
0.3
1.0
13.1
115.8 $
117.0
3.1
1.0
—
121.1
2019
2018
(75.1 ) $
(44.4 )
(4.6 )
(49.9 )
(423.5 )
(16.8 )
(614.3 ) $
(498.5 ) $
(80.7 )
(11.9 )
(4.5 )
(42.5 )
(322.3 )
(55.6 )
(517.5 )
(396.4 )
$
$
$
$
$
Net financial expenses for the year ended December 31, 2019 amounted to a loss of $498.5 million compared to
$396.4 million for the same period in 2018.
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NOTE 7. INCOME TAX
7.1 Income tax expense
The income tax expense recognized in the statements of income is $275.1 million and $397.0 million in 2019 and
2018 respectively, explained as follows:
(In millions)
Current income tax expense
Deferred income tax credit (expense)
Income tax credit (expense) as recognized in the consolidated statements of income
Deferred income tax related to items booked directly to opening equity
Deferred income tax related to items booked to equity during the year
Income tax expense as recognized in the consolidated statements of other comprehensive
income
7.2 Income tax reconciliation
2019
2018
(341.1 ) $
66.0
(275.1 ) $
(358.8 )
(38.2 )
(397.0 )
2019
2018
(12.9 ) $
(1.2 )
(14.1 ) $
(25.4 )
12.5
(12.9 )
$
$
$
$
The reconciliation between the tax calculated using the standard tax rate applicable to TechnipFMC and the amount
of tax effectively recognized in the accounts is detailed as follows:
(In millions)
Net loss
Income tax expense
Loss before income taxes
At TechnipFMC plc statutory income tax rate of 19.0%
Differences between TechnipFMC plc and foreign income tax rates
U.S. Transition tax
Net change in tax contingencies
Deferred tax assets not recognized
Other non-deductible expenses
Adjustments on prior year taxes
Deferred tax relating to changes in tax rates
Impairments
Non-deductible legal provision
Other
Effective income tax expense
Tax rate
2019
2018
$
(2,450.9 )
$
(275.1 )
(2,175.8 )
413.4
(0.8 )
—
28.3
(187.0 )
—
(9.7 )
(12.2 )
(467.3 )
(17.3 )
(22.5 )
(275.1 )
(12.6 )%
(275.1 )
$
(1,745.6 )
(397 )
(1,348.6 )
256.2
(109.7 )
(11.8 )
(10.2 )
(213.8 )
—
(10.6 )
(25.6 )
(228.7 )
(56.0 )
13.2
(397.0 )
(29.4 )%
(397.0 )
Income tax expense as recognized in the consolidated statements of income
$
U.S. Tax Cuts and Jobs Act (“TCJA”) and Other Jurisdictional Tax Reform. Included in the 2018 provision for income
taxes are taxes related to the deemed repatriation to the United States of foreign earnings. The Tax Cuts and Jobs
Act, signed into U.S. law on December 22, 2017, made significant changes to the U.S. federal income taxation of
non-U.S. corporate subsidiaries that are controlled by one or more U.S. shareholders. As part of these changes, the
TCJA required a deemed repatriation of all accumulated non-U.S. earnings.
The TCJA generally requires that, for the last taxable year of a non-U.S. corporation beginning before January 1,
2018, all U.S. shareholders of such a corporation that is at least 10-percent U.S.-owned must include in income their
pro rata share of the corporation’s accumulated post-1986 deferred foreign income that was not previously subject to
U.S. tax. Accordingly, the Company recorded income tax expense of $11.8 million in 2018 associated with the deemed
repatriation of approximately $307 million of non-U.S. earnings that were not previously subject to U.S. tax.
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7.3 Deferred income tax
Significant components of deferred tax assets and liabilities are as follows:
(In millions)
Accrued expenses
Net operating loss carryforwards
Inventories
Non-deductible interest
Other tax credits
Foreign exchange
Provisions for pensions and other long-term employee benefits
Contingencies related to contracts
Other contingencies
Capital loss
Leasing
Other
Total deferred income tax assets
Revenue in excess of billings on contracts accounted for under the
percentage of completion method
U.S. tax on foreign subsidiaries’ undistributed earnings not indefinitely
reinvested
Property, plant and equipment, goodwill and other assets
Margin recognition on construction contracts
Leasing
Total deferred income tax liabilities
Deferred income tax assets (liabilities), net
(In millions)
Accrued expenses
Net operating loss carryforwards
Inventories
Research and development credit
Foreign exchange
Provisions for pensions and other long-term employee benefits
Contingencies related to contracts
Other contingencies
Fair value losses/gains
Capital loss
Other
Total deferred income tax assets
Revenue in excess of billings on contracts accounted for under the
percentage of completion method
U.S. tax on foreign subsidiaries’ undistributed earnings not indefinitely
reinvested
Property, plant and equipment, goodwill and other assets
Margin recognition on construction contracts
Total deferred income tax liabilities
Deferred income tax assets (liabilities), net
$
212 TechnipFMC
206
As of
December 31,
2018
Recognized
in Statement
of Income
Recognized
in Statement
of OCI
As of
December 31,
2019
$
116.2 $
33.6
3.2
—
—
25.7
39.0
71.1
28.7
21.1
—
15.0
353.6
20.8
9.4
350.1
(34.4 )
—
345.9
$
7.7 $
(178.0 ) $
68.0
2.3
22.8
113.2
(21.7 )
(39.4 )
(46.0 )
(26.6 )
(21.1 )
219.8
(19.1 )
74.2
(0.2 )
1.0
(159.7 )
(58.7 )
215.3
(2.3 )
76.5 $
— $
—
—
—
—
(6.6 )
5.4
—
—
—
—
—
(1.2 )
—
—
—
—
—
—
(1.2 ) $
(61.8 )
101.6
5.5
22.8
113.2
(2.6 )
5.0
25.1
2.1
—
219.8
(4.1 )
426.6
20.6
10.4
190.4
(93.1 )
215.3
343.6
83.0
As of
December 31,
2017
Recognized
in Statement
of Income
Recognized
in Statement
of OCI
As of
December 31,
2018
$
146.5 $
90.2
13.4
7.5
(21.5 )
86.4
111.3
33.5
12.4
—
(3.4 )
476.3
41.2
4.9
403.3
6.4
455.8
20.5 $
(30.3 ) $
(56.6 )
(10.2 )
(7.5 )
33.1
(45.8 )
(40.2 )
(4.8 )
(12.4 )
21.1
18.4
(135.2 )
(20.4 )
4.5
(53.2 )
(40.8 )
(109.9 )
(25.3 ) $
— $
—
—
—
14.1
(1.6 )
—
—
—
—
—
12.5
—
—
—
—
—
12.5 $
116.2
33.6
3.2
—
25.7
39.0
71.1
28.7
—
21.1
15.0
353.6
20.8
9.4
350.1
(34.4 )
345.9
7.7
U.K. Annual Report and IFRS Financial Statements 2019
As of December 31, 2019, the net deferred tax asset of $83.0 million is broken down into a deferred tax asset of
$267.0 million and a deferred tax liability of $184.0 million as recorded in the statement of financial position.
7.4 Tax loss carry-forwards and tax credits
At December 31, 2019 and 2018, deferred tax assets included U.S. foreign tax credit carryforwards of $135.3 million
and $105.9 million, which, if not utilized, will begin to expire in 2024. Realization of these deferred tax assets is
dependent on the generation of sufficient U.S. taxable income prior to the above date. Based on long-term forecasts
of operating results, management believes that it is more likely than not that our U.S. earnings over the forecast
period will not result in sufficient U.S. taxable income to fully realize these deferred tax assets; therefore, we have
established a valuation allowance against the related deferred tax assets. In its analysis, management has considered
the effect of deemed dividends and other expected adjustments to U.S. earnings that are required in determining U.S.
taxable income. Non-U.S. earnings subject to U.S. tax, including deemed dividends for U.S. tax purposes, were $3.8
million in 2019 and $307.6 million in 2018, respectively.
As of December 31, 2019 and 2018, deferred tax assets included tax benefits related to net operating loss
carryforwards. If not utilized, these net operating loss carryforwards will begin to expire in 2020. Management believes
it is more likely than not that we will not be able to utilize certain of these operating loss carryforwards before
expiration.
The majority of the net operating loss carryforwards are in Brazil, Canada, Malaysia, Mexico, Netherlands, Norway,
Saudi Arabia, U.K., and United States. Except in Canada, Mexico, and Netherlands, these loss carryforwards extend
indefinitely.
At December 31, 2019, deferred tax assets include tax benefits related to certain intercompany interest costs which
are not currently deductible, but which may be deductible in future periods. If not utilized, certain of these costs will
become permanently non-deductible beginning in 2025. Management believes that it is more likely than not that we
will not be able to deduct these costs before expiration of the carry forward period. See Note 1 for discussion on
estimates and uncertainties. There are no income tax consequences attached to the payment of dividends in either
2019 or 2018 by TechnipFMC to its shareholders.
NOTE 8. EARNINGS PER SHARE
Diluted earnings per share are computed in accordance with Note 1. Reconciliation between earnings per share
before dilution and diluted earnings per share is as follows:
(In millions, except per share data)
Net loss attributable to TechnipFMC plc
Weighted average number of shares outstanding
Dilutive effect of restricted stock units
Dilutive effect of stock options
Dilutive effect of performance shares
Total shares and dilutive securities
(In U.S. dollars)
Basic earnings (loss) per share attributable to TechnipFMC plc
Diluted earnings (loss) per share attributable to TechnipFMC plc
213 TechnipFMC
207
Year Ended December 31,
2019
2018
$
(2,454.0 ) $
(1,756.4 )
448.0
—
—
—
448.0
$
$
(5.48 ) $
(5.48 ) $
458.0
—
—
—
458.0
(3.83 )
(3.83 )
U.K. Annual Report and IFRS Financial Statements 2019
In 2019, the average annual share price amounted to $23.06 and the closing price to $21.32. In 2018, the average
annual share price amounted to $29.69 and the closing price to $20.20.
As TechnipFMC’s net result was a loss as of December 31, 2019 and 2018, share subscriptions options, and
performance shares had an anti-dilutive effect; as a consequence, potential shares linked to those instruments were
not taken into account in the diluted weighted average number of shares or in the calculation of diluted earnings (loss)
per share.
NOTE 9. EQUITY METHOD INVESTMENTS
Our equity investments were as follows as of December 31, 2019 and 2018:
TOP CV
Dofcon Brasil AS
Serimax Holdings SAS
Magma Global Limited
TTSJV W.L.L
Other
Investments in equity affiliates
December 31, 2019
December 31, 2018
Percentage
Owned
Carrying
Value
Percentage
Owned
Carrying
Value
— % $
50 %
20 %
25 %
36 %
—
$
—
167.4
21.5
50.2
—
61.3
300.4
50 % $
50 %
20 %
25 %
36 %
—
$
102.2
126.2
23.2
49.8
0.2
57.5
359.1
For certain construction joint operations, our assets in such operations, including those held jointly, and our liabilities,
including those incurred jointly are recognized in the consolidated financial statements. None of joint operations,
individually or in the aggregate, are significant to our consolidated results for 2019 or 2018.
Our total net profit from equity affiliates included in each of our reporting segments was as follows:
(In millions)
Subsea
Onshore/Offshore
Income from equity affiliates
Our major equity method investments are as follows:
Year Ended December 31,
2019
2018
$
$
9.2 $
3.1
12.3 $
89.3
33.4
122.7
TOP CV - is an affiliated company in the form of a joint venture between Technip SA and Ocyan SA (formerly known
as Odebrecht). TOP CV was formed in 2011 when awarded a contract to provide pipeline installation ships to state-
controlled Petrobras for their work in oil and gas fields offshore Brazil. On December 30, 2019, we completed the
acquisition of the remaining 50% interest in TOP CV. Prior to the acquisition, we accounted for our 50% investment
using the equity method of accounting with results reported in our Subsea segment. Subsequent to this transaction
we recorded the results in our consolidated financial statements. Refer to further description in Note 2.
Dofcon Brasil AS (“Dofcon”) - is an affiliated company in the form of a joint venture between Technip SA and DOF
Subsea and was founded in 2006. Dofcon provides Pipe-Laying Support Vessels (PLSVs) for work in oil and gas
fields offshore Brazil. We have accounted for our 50% investment using the equity method of accounting with results
reported in our Subsea segment.
Serimax Holdings SAS (“Serimax”) - is an affiliated company in the form of a joint venture between Technip SA and
Vallourec SA and was founded in 2016. Serimax is headquartered in Paris, France and provides rigid pipes welding
services for work in oil and gas fields around the world. We have accounted for our 20% investment using the equity
method of accounting with results reported in our Subsea segment.
214 TechnipFMC
208
U.K. Annual Report and IFRS Financial Statements 2019
Magma Global Limited (“Magma Global”) - is an affiliated company in the form of a collaborative agreement signed
in 2018 between Technip-Coflexip UK Holdings Limited and Magma Global to develop hybrid flexible pipe for use in
offshore applications. As part of the collaboration, TechnipFMC holds a minority stake. We have accounted for our
25% investment using the equity method investment of accounting with results reported in our Subsea segment.
TTSJV W.L.L. (“TTSJV W.L.L.”) - is an affiliated company in the form of a joint venture between Technip Italy S.p.A.
Technip USA, Inc., Tecnicas Reunidas Saudia for Services and Contracting Co. Ltd and Samsung Engineering Co.
Ltd was founded in in October 2018 for the BAPCO Modernization Program. We have accounted for our 36%
investment using the equity method of accounting with results reported in our Onshore/Offshore segment.
Reconciliation of carrying amount in TechnipFMC’s equity affiliates is as follows:
(In millions)
Carrying amount of investments as at January 1
Acquisitions / contributions
Divestiture (1)
Share of profit of equity affiliates
Distributed dividends
Other comprehensive income
Other
Carrying amount of investments as at December 31
2019
2018
$
$
359.1 $
0.7
(67.8 )
12.3
(4.1 )
(1.1 )
1.3
300.4 $
181.0
43.6
—
122.7
(3.0 )
5.2
9.6
359.1
(1) On December 30, 2019, we completed the acquisition of the remaining 50% interest in TOP CV.
The tables below provide summarized financial information for TOP CV, Dofcon and TTSJV W.L.L that are material
to TechnipFMC. The information disclosed reflects the amounts presented in the financial statements of TOP CV,
Dofcon and TTSJV W.L.L and not TechnipFMC’s share of those amounts. They have been amended to reflect
adjustments made by TechnipFMC when using the equity method, including fair value adjustments.
(In millions)
Data at 100%
Cash and cash equivalents
Other current assets
Total current assets
Non-current assets
Total assets
Total equity
Financial non-current liabilities (excluding trade
payables)
Total non-current liabilities
Financial current liabilities (excluding trade payables)
Other current liabilities
Total current liabilities
Total equity and liabilities
TTSJV W.L.L
December 31
Dofcon
TOP CV
December 31
December 31,
2019
2018
2019
2018
2019
2018
548.7 $
32.5
581.2
3.5
584.7 $
145.5 $
160.3
305.8
—
305.8 $
86.0 $
101.1
187.1
1,715.9
1,903.0 $
61.8 $
83.4
145.2
1,671.6
1,816.8 $
— $
—
—
—
— $
90.3
19.3
109.6
460.7
570.3
(18.6 ) $
0.6 $
334.8 $
256.2 $
— $
204.4
—
—
—
603.3
603.3
584.7 $
—
—
—
305.2
305.2
305.8 $
671.4
671.4
374.5
522.3
896.8
1,903.0 $
1,034.1
1,034.1
435.2
91.3
526.5
1,816.8 $
—
—
—
—
—
— $
62.6
62.6
284.5
18.8
303.3
570.3
$
$
$
$
215 TechnipFMC
209
U.K. Annual Report and IFRS Financial Statements 2019
(In millions)
Data at 100%
Revenue
Depreciation and amortization
Interest income
Interest expense
Income tax expense (benefit)
Profit (loss) for the period
Other comprehensive income
Total comprehensive income
TTSJV W.L.L
Dofcon
TOP CV
2019
2018
2019
2018
2019
2018
$
$
1,107.3 $
(0.3 )
2.1
—
—
(19.3 )
—
(19.3 ) $
269.2 $
—
1.2
—
—
0.6
—
0.6 $
273.5 $
(85.2 )
10.1
(61.1 )
(4.9 )
81.4
1.0
82.4 $
216.3 $
(61.3 )
8.0
(37.6 )
24.6
95.7
8.5
104.2 $
120.5 $
(190.4 )
2.4
(21.0 )
—
(66.6 )
(2.2 )
(68.8 ) $
136.7
(34.1 )
0.7
(23.2 )
—
86.8
2.3
89.1
(In millions)
Data at 100%
Carrying amount of investment as at January 1
$
Divestiture
Profit (loss) for the period
Other comprehensive income
Distributed dividends
Carrying amount of investment as at December 31 $
TechnipFMC’s share in %
TechnipFMC’s share in investment
Carrying amount
$
$
TTSJV W.L.L
Dofcon
TOP CV
2019
2018
2019
2018
2019
2018
$
0.6
—
(19.3 )
—
—
(18.7 ) $
36.0 %
—
$
—
$
—
—
0.6
—
—
0.6
$
$
252.4
—
81.4
1.0
—
334.8
$
$
148.2
—
95.7
8.5
—
252.4
$
$
$
204.4
(135.6 )
(66.6 )
(2.2 )
—
—
$
119.7
—
86.8
2.3
(4.4 )
204.4
36.0 %
0.2
$
0.2
$
50.0 %
167.4
$
167.4
$
50.0 %
126.2
$
126.2
$
— %
—
$
—
$
50.0 %
102.2
102.2
In addition to the interest in TOP CV, Dofcon and TTSJV W.L.L disclosed above, TechnipFMC also has interests in a
number of individually immaterial associates that are accounted for using the equity method. None of the investments
in joint ventures and associates is individually material, therefore summarized financial information (at 100%) are
presented below:
(In millions)
Data at 100%
Non-current assets
Current assets
Total assets
Total equity
Current liabilities
Total equity and liabilities
December 31,
2019
2018
$
$
$
$
305.5 $
823.4
1,128.9 $
530.7 $
598.2
1,128.9 $
286.5
892.3
1,178.8
470.1
708.7
1,178.8
216 TechnipFMC
210
U.K. Annual Report and IFRS Financial Statements 2019
Summarized statement of total comprehensive income (at 100%) are presented below:
(In millions)
Data at 100%
Revenue
Interest income
Depreciation and amortization
Interest expense
Income tax expense (benefit)
Profit for the period
Other comprehensive income
Total comprehensive income
2019
2018
$
$
$
702.5 $
18.7
(13.7 )
(7.0 )
(1.8 )
18.7 $
2.9
21.6 $
884.1
3.0
(12.0 )
(6.2 )
(3.7 )
68.2
(18.2 )
50.0
NOTE 10. PROPERTY, PLANT AND EQUIPMENT
The following tables include the costs, the accumulated depreciation and impairment losses by type of tangible assets:
(In millions)
Land
Buildings
Vessels
Machinery
and
Equipment
Assets under
Construction
Other
Total
Net book value as of December 31, 2017 $
Costs
Accumulated depreciation
Accumulated impairment
Net book value as of December 31, 2018 $
Costs
Accumulated depreciation
Accumulated impairment
$
Net book value as of December 31, 2019 $
153.6 $
156.8
(4.2 )
(1.5 )
151.1 $
112.9 $
(7.1 )
(3.4 )
102.4 $
2,426.5
(725.3 )
(557.4 )
736.7 $ 1,535.9 $
968.6
(221.9 )
(34.9 )
711.8 $ 1,143.8 $
699.8 $ 2,742.7 $
(225.5 )
(74.5 )
399.8 $ 1,300.3 $
(767.4 )
(675.0 )
1,199.8 $
1,983.7
(729.6 )
(73.0 )
1,181.1 $
2,254.1 $
(892.2 )
(316.7 )
1,045.2 $
136.7 $
179.1
—
—
179.1 $
130.7 $
—
(1.8 )
128.9 $
308.3 $ 4,071.0
6,318.2
603.5
(2,081.3 )
(400.3 )
—
(666.8 )
203.2 $ 3,570.1
569.3 $ 6,509.5
(2,282.0 )
(389.8 )
(0.7 )
(1,072.1 )
178.8 $ 3,155.4
In connection with TechnipFMC annual test for impairment of goodwill as of October 31, 2019, property, plant and
equipment was also tested for impairment at that date. In estimating property, plant and equipment value in use, the
estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current
market assessments of the time value of money and the risks specific to the asset (or cash-generating unit). For an
asset that does not generate cash inflows largely independent of those from other assets, the recoverable amount is
determined for the cash-generating unit to which the asset belongs. If the recoverable amount of an asset (or cash-
generating unit) is estimated to be less than its carrying amount, an impairment loss is recognized. An impairment
loss is recognized as an expense immediately as part of operating profit (loss) in the consolidated statements of
income.
In estimating certain vessels’ recoverable amount TechnipFMC obtained independent valuations. Since vessels were
valued using the discounted cash flows method the valuation is considered to be Level 3 in the fair value hierarchy
in 2019 and 2018.
The prolonged downturn in the energy market and its corresponding impact on our business outlook led us to
conclude the carrying amount of certain of our assets in our Subsea segment exceeded their recoverable amount in
2019 and 2018.
217 TechnipFMC
211
U.K. Annual Report and IFRS Financial Statements 2019
In December 2019, we completed the sale of our G1201 vessel as part of our overall strategy to optimize the profile
and size of our subsea fleet. Due to the intent to sell our G1201 vessel and subsequently signed Memorandum of
Agreement (MOA) with a third party, we reviewed the carrying value of its sister vessel, the G1200, as of September
30, 2019. As a result of this assessment, an impairment charge of $125.1 million was recorded on the two vessels to
bring their carrying value to a combined fair value of $104.0 million as of September 30, 2019. The fair value
measurements of these vessels were based on the transaction price in the MOA, which is a Level 2 observable input
as per the fair value hierarchy. As a result of the sale, a net loss of $7.1 million is included in Other Income (Expense),
net in our consolidated statements of income.
For the remaining long-lived assets which we impaired in 2019, we measured their fair value by estimating the amount
and timing of net future cash flows, which are Level 3 unobservable inputs, and discounting them using a risk-adjusted
rate of interest of 10.8%.
TechnipFMC recorded $125.1 million and $267.8 million impairment loss on vessels in our Subsea segment during
the years ended December 31, 2019 and 2018, respectively. Additionally, in 2019 an impairment charge of $168.9
million related to our flexible pipe and umbilical manufacturing facilities was recorded by our Subsea segment. These
continued conditions in 2019 also led to a goodwill impairment. Refer to Note 11 to these consolidated financial
statements for additional information.
In January 2019, we purchased a deepwater dive support vessel, Deep Discoverer, for $116.8 million. The purchase
of this vessel was funded through debt. Refer to Note 19 to these consolidated financial statements for additional
information.
On December 30, 2019, we completed the acquisition of the remaining 50% interest in TOP CV. In connection with
the acquisition, we assumed assets and liabilities that included two vessels and loan that is fully collateralized against
the two vessels. Refer to Note 2 and Note 19. There were no pledged property, plant and equipment as of December
31, 2018.
A reconciliation of the carrying amount of property, plant and equipment is as following:
(In millions)
Land
Buildings
Vessels
Machinery
and
Equipment
Assets
under
Construction
Net book value as of December 31, 2017 $
Additions
153.6 $
9.4
736.7 $ 1,535.9 $
48.6
35.6
1,199.8 $
203.4
Acquisitions through
business combinations
Disposals
Depreciation expense for the year
Impairment
Net foreign exchange differences
Other
Net book value as of December 31, 2018
Additions
Acquisitions through business combinations
Disposals
Transfer to right-of-use
Depreciation expense for the year
Impairment
Net foreign exchange differences
Other
Net book value as of December 31, 2019 $
—
—
—
11.2
(6.2 )
(2.0 )
(0.4 )
(3.5 )
0.2
151.1
0.6
—
—
(48.4 )
(0.8 )
(1.8 )
(0.4 )
2.1
102.4 $
(26.6 )
(35.4 )
(11.3 )
(19.3 )
19.1
711.8
33.6
—
(2.7 )
(262.8 )
(26.7 )
(39.6 )
(2.5 )
(11.3 )
399.8 $ 1,300.3 $
(9.0 )
(112.8 )
(267.8 )
(51.9 )
13.8
1,143.8
118.4
335.2
(45.8 )
—
(99.5 )
(125.1 )
18.2
(44.9 )
(24.7 )
(171.0 )
(25.6 )
(50.7 )
38.7
1,181.1
224.2
—
(3.1 )
(10.1 )
(216.5 )
(243.7 )
1.8
111.5
1,045.2 $
136.7 $
76.3
(0.5 )
0.2
—
—
(7.7 )
(25.9 )
179.1
25.3
—
0.4
—
—
—
(1.3 )
(74.6 )
128.9 $
Other
Total
308.3 $ 4,071.0
398.1
24.8
1.1
11.8
(71.1 )
(372.3 )
(304.7 )
(161.2 )
(1.5 )
3,570.1
435.5
335.2
(53.7 )
(321.3 )
(383.3 )
(4.8 )
(51.1 )
0.4
(28.1 )
(47.4 )
203.2
33.4
—
(2.5 )
—
(39.8 )
(1.1 )
(4.8 )
(9.6 )
(411.3 )
11.0
(26.8 )
178.8 $ 3,155.4
As of December 31, 2018, the carrying amount of leased assets was $321.3.0 million including $48.4 million related
to land, $262.8 million related to buildings and $10.1 million related to office and equipment.
218 TechnipFMC
212
U.K. Annual Report and IFRS Financial Statements 2019
NOTE 11. GOODWILL AND INTANGIBLE ASSETS, NET
11.1 Intangible assets, net
The components of intangible assets were as follows:
(In millions)
Goodwill
Acquired
Technolog
y
Backlog
Customer
Relationships
Tradename
s
Licenses,
Patents and
Trademarks Software
Other
Total
Net book value as of
December 31, 2017
Costs
$
Accumulated
amortization
Accumulated
impairment
Net book value as of
December 31, 2018
Costs
Accumulated
amortization
Accumulated
impairment
Net book value as of
December 31, 2019
$
8,957.3
9,061.1
$
215.0
240.0
$
57.0
175.0
—
(48.9 )
(175.0 )
$
256.0
285.0
(57.4 )
$
603.0
636.5
(63.9 )
$
48.9
182.8
$
92.4
232.1
61.5
93.9
$ 10,291.1
10,906.4
(131.3 )
(159.1 )
(32.1 )
(667.7 )
(1,367.2 )
$
$
7,693.9
$
9,040.5 $
—
(3,385.9 )
—
—
—
—
—
(0.9 )
—
(1,368.1 )
191.1
$
240.0 $
(73.9 )
—
$
175.0 $
(175.0 )
227.6
$
285.4 $
(85.9 )
572.6
$
636.6 $
(95.8 )
51.5
$
181.2 $
(131.5 )
72.1
$
226.4 $
(150.0 )
61.8
$
8,870.6
105.6 $ 10,890.7
(50.3 )
(762.4 )
—
—
—
—
—
(1.2 )
—
(3,387.1 )
$
5,654.6
$
166.1
$
—
$
199.5
$
540.8
$
49.7
$
75.2
$
55.3
$
6,741.2
A reconciliation of the carrying amount of intangible assets is as following:
(In millions)
Goodwill
Acquired
Technolog
y
Backlog
Customer
Relationships
Tradename
s
Licenses,
Patents and
Trademarks Software Other
Total
Net book value as of
December 31, 2017
Additions
$
Disposals - write-off
Amortization charge
for the year
Impairment
Net foreign exchange
differences (1)
Other
Net book value as of
December 31, 2018
Additions
Disposals - write-off
Amortization charge
for the year
Impairment
Net foreign exchange
differences (1)
Other
Net book value as of
December 31, 2019
$
$
8,957.3
104.7
—
$
215.0
—
—
—
(1,324.2 )
(43.9 )
—
7,693.9
9.9
—
—
(2,018.7 )
(12.8 )
(17.7 )
(23.9 )
—
—
—
191.1
—
—
(25.0 )
—
—
—
$
57.0
—
—
(57.0 )
—
—
—
—
—
—
—
—
—
—
$
256.0
—
—
$
603.0
1.5
—
$
48.9
7.4
—
$
92.4
8.1
(3.0 )
61.5
12.8
—
$ 10,291.1
134.5
(28.4 )
—
—
—
227.6
0.4
—
(28.5 )
—
—
—
(31.9 )
—
—
—
572.6
0.1
—
(31.9 )
—
—
—
(3.8 )
—
(1.0 )
—
51.5
—
—
(1.9 )
—
0.1
—
(24.1 )
(0.8 )
(2.4 )
1.9
72.1
27.3
(0.4 )
(19.8 )
(0.2 )
(0.6 )
(3.2 )
(13.5 )
—
(0.8 )
1.8
61.8
10.0
3.6
(18.9 )
—
0.2
(1.4 )
(3.0 )
(182.6 )
(1,325.0 )
(48.1 )
3.7
8,870.6
47.7
3.2
(126.0 )
(2,018.9 )
(13.1 )
(22.3 )
5,654.6
$
166.1
$
—
$
199.5
$
540.8
$
49.7
$
75.2
$
55.3
$
6,741.2
(1) Goodwill is partially denominated in Euro.
TechnipFMC recognized identifiable intangible assets acquired in business combinations. Refer to Note 2 to these
consolidated financial statements for additional information regarding these acquisitions. All of the acquired
identifiable intangible assets are subject to amortization and, where applicable, foreign currency translation
adjustments. There are no intangible assets with indefinite useful life.
219 TechnipFMC
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U.K. Annual Report and IFRS Financial Statements 2019
11.2 Goodwill
The carrying amount of goodwill by reporting segment was as follows:
December 31, 2017
Additions due to business combinations
Impairment
Translation
December 31, 2018
Additions due to business combinations
Impairment
Other
Translation
December 31, 2019
Subsea
Onshore/Offs
hore
Surface
Technologies
Total
$
$
5,490.1 $
85.0
(1,324.2 )
(30.0 )
4,220.9
—
(1,347.7 )
—
(6.4 )
2,866.8 $
2,461.6 $
—
—
(13.9 )
2,447.7
—
—
(17.7 )
(6.4 )
2,423.6 $
1,005.6 $
19.7
—
—
1,025.3
9.9
(671.0 )
—
—
364.2 $
8,957.3
104.7
(1,324.2 )
(43.9 )
7,693.9
9.9
(2,018.7 )
(17.7 )
(12.8 )
5,654.6
Goodwill was tested for impairment utilizing the methodology in accordance with the accounting policy in Note 1.
The valuation of GCGUs for the purpose of goodwill impairment test was determined primarily by utilizing the income
approach by estimating the value in use with a lesser weighting attributed the market multiple approach. The income
approach estimates the value in use by discounting each GCGU’s estimated future cash flows using a weighted-
average cost of capital that reflects current market conditions and the risk profile of the GCGU. To calculate the future
cash flows, TechnipFMC used estimates of economic and market assumptions, including growth rates in revenues,
costs, estimates of future expected changes in operating margins, tax rates and cash expenditures. The future
revenues are adjusted to match changes in TechnipFMC’s business strategy. Under the market multiple approach,
we determine the estimated fair value of each of our GCGUs by applying transaction multiples to each GCGU’s
projected EBITDA and then averaging that estimate with similar historical calculations using either a one, two or three
year average.
For recently acquired GCGUs, a quantitative impairment test may indicate a fair value that is substantially similar to
the GCGU’s carrying amount. Such similarities in value are generally an indication that management’s estimates of
future cash flows associated with the recently acquired GCGUs remain relatively consistent with the assumptions that
were used to derive its initial fair value.
As part of TechnipFMC's annual goodwill impairment test, the TechnipFMC’s market capitalization was compared to
our estimate of fair value for each operating segment. TechnipFMC’s market capitalization on its testing date had
declined significantly when compared to the prior-year’s assessment, driven in part by greater geopolitical uncertainty
and lower commodity prices. As a result, our estimate of business fair value could not be supported by the market
capitalization on the testing date.
During the year ended December 31, 2019, we recorded $1,347.7 million and $671.0 million of goodwill impairment
charges in our Subsea and Surface Technologies operating segments, respectively. During the year ended December
31, 2018, we recorded $1,324.2 million of goodwill impairment charges in our Subsea operating segment.
The following table presents the significant estimates used by management in determining the fair values of our
operating segments for the years ended December 31, 2019 and 2018:
Year of cash flows before terminal value
Risk-adjusted post-tax discount rate
EBITDA multiples
2019
4
2018
5
12.5% to 15.0%
12% to 13.0%
6.0 - 8.5x
7.0 - 8.5x
220 TechnipFMC
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As discussed above, when evaluating the 2019 quantitative impairment test results, management considered many
factors in determining whether an impairment of goodwill for any operating segments was reasonably likely to occur
in future periods, including future market conditions and the economic environment. Circumstances such as market
declines, unfavorable economic conditions, loss of a major customer or other factors could increase the risk of
impairment of goodwill for these operating segments in future periods.
The sensitivity analysis has been performed for Onshore/Offshore operating segment and has not identified any
potential impairments. The excess of recoverable amount over the carrying amount for Onshore/Offshore operating
segment was approximately 400% of the respective carrying amount. For the Subsea and Surface Technologies
operating segments, any change in the assumptions could result in a material change in the impairment charge.
NOTE 12. OTHER NON-CURRENT ASSETS
Other non-current assets consisted of the following:
(In millions)
Non-current financial assets at amortized cost, gross
Loss allowance
Non-current financial assets at amortized cost, net
Non-quoted equity instruments at Fair Value Through Profit or Loss (“FVTPL”)
Quoted equity instruments at FVTPL
Total non-current assets, net
NOTE 13. CASH AND CASH EQUIVALENTS
Cash and cash equivalents consisted of the following:
(In millions)
Cash at bank and in hand
Cash equivalents
Total cash and cash equivalents
U.S. dollar
Euro
Brazilian real
Pound sterling
Japanese yen
Norwegian krone
Australian dollar
Malaysian ringgit
Other
Total cash and cash equivalents by currency
Fixed term deposits
Other
Total cash equivalents by nature
December 31,
2019
2018
$
$
252.6 $
(11.8 )
240.8
3.6
54.8
299.2 $
296.3
(21.9 )
274.4
21.1
18.1
313.6
December 31,
2019
2018
3,320.6 $
1,869.5
5,190.1 $
2,359.6 $
1,514.5
40.8
136.3
56.1
83.5
44.7
274.5
680.1
5,190.1 $
1,617.3 $
252.2
1,869.5 $
2,435.1
3,107.1
5,542.2
3,526.5
740.8
16.3
112.7
45.0
72.3
88.2
323.3
617.1
5,542.2
2,559.9
547.2
3,107.1
$
$
$
$
$
$
A substantial portion of cash and securities are recorded or invested in either Euro or U.S. dollar which are frequently
used by TechnipFMC within the framework of its commercial relationships. Cash and securities in other currencies
correspond either to deposits retained by subsidiaries located in countries where such currencies are the national
currencies in order to ensure their own liquidity, or to amounts received from customers prior to the payment of
221 TechnipFMC
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expenses in these same currencies or the payment of dividends. Short-term deposits are classified as cash
equivalents along with the other securities.
NOTE 14. TRADE RECEIVABLES, NET AND CONTRACT ASSETS
Trade receivables, net and contract assets include trade accounts receivable from completed contracts, contract
assets and other miscellaneous invoices (e.g. trading, procurement services). TechnipFMC’s trade receivables and
contracts assets mainly constitute a homogeneous portfolio of major oil and gas, petrochemical or oil-related
companies.
TechnipFMC applies the IFRS 9 simplified approach to measuring expected credit losses which uses a lifetime
expected loss allowance for all trade receivables and contract assets. On that basis, the all potential uncollectible
receivables as at December 31, 2019 and December 31, 2018 were determined as follows for both trade receivables
and contract assets:
(In millions)
Gross amount
Opening loss allowance
Increase in loss allowance
Used allowance reversals
Unused allowance reversals
Effects of foreign exchange and other
Closing loss allowance
Total trade receivables, net
December 31, 2019
December 31, 2018
Trade
Receivables
Contract
Assets
Trade
Receivables
Contract
Assets
$
$
$
$
2,382.5 $
(125.2 ) $
(39.5 ) —
3.5
39.8
20.3
(101.1 ) $
2,281.4 $
1,521.6 $
(3.7 ) $
1.2 —
—
—
—
(2.5 ) $
1,519.1 $
2,593.0 $
(121.5 ) $
(36.7 ) —
9.3
14.0
9.7
(125.2 ) $
2,467.8 $
1,298.7
—
(5.0 )
—
—
1.3
(3.7 )
1,295.0
Refer to Note 29 for further information on impairment losses of trade receivables and TechnipFMC’s exposure to
credit risk and foreign currency risk.
NOTE 15. INVENTORIES
Inventories consisted of the following:
(In millions)
Raw materials
Work in process
Finished goods
Inventory
December 31,
2019
2018
$
$
347.5 $
290.2
786.2
1,423.9 $
366.6
146.4
744.0
1,257.0
All amounts in the table above are reported net of obsolescence reserves of $135.7 million and $97.5 million at
December 31, 2019 and 2018, respectively.
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NOTE 16. OTHER CURRENT ASSETS
Other current assets consisted of the following:
(In millions)
Current financial assets at amortized cost
Current financial assets, total
Value added tax receivables
Other tax receivables
Prepaid expenses
Asset held for sale
Other
Other current assets, total
Total other current assets, net
December 31,
2019
2018
$
$
91.7 $
91.7
395.2
100.7
66.8
25.8
182.4
770.9
862.6 $
—
—
305.9
85.1
91.3
9.8
174.3
666.4
666.4
At December 31, 2019, current financial assets at amortized cost include short-term debt notes and loans receivable.
NOTE 17. STOCKHOLDERS’ EQUITY
17.1 Changes in TechnipFMC’s ordinary shares and treasury shares
On November 27, 2019, TechnipFMC redeemed 50,000 redeemable shares of £1 each and cancelled one deferred
ordinary share of £1 in the capital of TechnipFMC. As of December 31, 2019, TechnipFMC’s share capital was
447,064,767 ordinary shares. As of December 31, 2018, TechnipFMC’s share capital was 50,000 non-voting
redeemable shares, one deferred share, and 450,480,680 ordinary shares. The movements in share capital were as
follows:
(In millions of shares)
December 31, 2017
Stock awards
Treasury stock purchases
Treasury stock cancellations
December 31, 2018
Stock awards
Treasury stock purchases
Treasury stock cancellations
Net stock sold from employee benefit trust
December 31, 2019
Ordinary
Shares
Ordinary
Shares held in
Employee
Benefit Trust
Treasury
Shares
465.1
0.2
—
(14.8 )
450.5
0.6
—
(4.0 )
—
447.1
0.1
—
—
—
0.1
—
—
—
(0.1 )
—
—
—
14.8
(14.8 )
—
—
4.0
(4.0 )
—
—
The plan administrator of the Non-Qualified Plan purchases shares of our ordinary shares on the open market. Such
shares are placed in a trust owned by a subsidiary.
17.2 Dividends
As an English public limited company, we are required under U.K. law to have available “distributable reserves” to
conduct share repurchases or pay dividends to shareholders. Distributable reserves are a statutory requirement and
are not linked to a IFRS reported amount (e.g. retained earnings, net income and other reserves). The declaration
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U.K. Annual Report and IFRS Financial Statements 2019
and payment of dividends require the authorization of our Board of Directors, provided that such dividends on issued
share capital may be paid only out of our “distributable reserves” on our statutory balance sheet. Therefore, we are
not permitted to pay dividends out of share capital, which includes share premium
Following the merger, we capitalized our reserves arising out of the merger by the allotment and issuance by
TechnipFMC of a bonus share, which was paid up using such reserves, such that the amount of such reserves so
applied, less the nominal value of the bonus share, applied as share premium and accrued to our share premium
account. We implemented a court-approved reduction of our capital by way of a cancellation of the bonus share and
share premium account, which completed on June 29, 2017, in order to create distributable profits to support the
payment of possible future dividends or future share repurchases. Our articles of association permit us by ordinary
resolution of the shareholders to declare dividends, provided that the directors have made a recommendation as to
its amount. The dividend shall not exceed the amount recommended by the directors. The directors may also decide
to pay interim dividends if it appears to them that the profits available for distribution justify the payment. When
recommending or declaring payment of a dividend, the directors are required under English law to comply with their
duties, including considering our future financial requirements.
Dividends declared and paid during the year ended December 31, 2019 were $232.8 million.
Dividends declared and paid during the year ended December 31, 2018 were $238.1 million.
17.3 Capital management
For the purpose of our equity capital management, equity capital includes issued ordinary shares, share premium
and all other equity reserves attributable to the equity holders of TechnipFMC. The primary objective of our capital
management is to maximize the shareholder value.
We monitor our capital structure and take actions in light of economic conditions and the requirements of our financial
covenants. To manage our capital structure, from time to time we may adjust the return capital to shareholders or
issue new share. We have also met all our financial covenants set forth by our loans and borrowings.
In April 2017, the Board of Directors authorized the repurchase of $500.0 million in ordinary shares under our share
repurchase program. We implemented our share repurchase plan in September 2017. The Board of Directors
authorized an extension of this program, adding $300.0 million in December 2018 for a total of $800.0 million in
ordinary shares. We repurchased 4.0 million of ordinary shares for a total consideration of $92.7 million during the
year ended December 31, 2019, under our authorized share repurchase program. The $500.0 million part of the
program was completed on December 20, 2018. We intend to cancel repurchased shares and not hold them in
treasury. Canceled treasury shares are accounted for using the constructive retirement method.
As of December 31, 2019, our securities authorized for issuance under equity compensation plans were as follows:
Equity compensation plans approved by security holders
Equity compensation plans not approved by security holders
Total
Number of
Securities to be
Issued Upon
Exercise of
Outstanding
Options, Warrants
and Rights
4,842.4 $
—
4,842.4 $
Weighted Average
Exercise Price of
Outstanding
Options, Warrants
and Rights (in $)
Number of Securities
Remaining Available for
Future Issuance under
Equity Compensation
Plans
29.68
—
29.68
21,350.2
—
21,350.2
We had no unregistered sales of equity securities during the years ended December 31, 2019 and 2018.
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17.4 Accumulated other comprehensive income (loss)
Accumulated other comprehensive income (loss) are as follows:
Gains
(Losses) on
Defined
Benefit
Pension
Plans
Cash Flow
Hedges (1)
Foreign
Currency
Translation Other
Accumulated
Other
Comprehensive
Income (Loss) –
TechnipFMC plc
Accumulated
Other
Comprehensive
Income (Loss) –
Non-Controlling
Interests
Total
Accumulated
Other
Comprehensive
Income (Loss)
$
7.1
$
3.3
$
(609.9 ) $ 0.2
$
(599.3 ) $
(0.3 ) $
(599.6 )
(75.2 )
(26.9 )
(173.8 )
—
—
—
(41.1 ) —
(275.9 )
(41.1 )
(68.1 )
(23.6 )
(824.8 )
0.2
(916.3 )
28.2
—
(49.6 )
12.3
—
—
(12.0 ) —
(9.1 )
(12.0 )
(4.6 )
—
(4.9 )
(0.7 )
—
(280.5 )
(41.1 )
(921.2 )
(9.8 )
(12.0 )
$
(39.9 ) $
(73.2 ) $
(824.5 ) $ 0.2
$
(937.4 ) $
(5.6 ) $
(943.0 )
(In millions)
Accumulated other
comprehensive income
(loss) as of
December 31, 2017
Net effect before
reclassification to profit or
loss
Reclassification to profit
or loss
Accumulated other
comprehensive income
(loss) as of
December 31, 2018
Net effect before
reclassification to profit or
loss
Reclassification to profit
or loss
Accumulated other
comprehensive income
(loss) as of
December 31, 2019
(1) Recorded under this heading is the effective portion of the change in fair value of the financial instruments qualified as cash flow hedging, as well
as foreign exchange gains and losses corresponding to the effective portion of non-derivative financial assets or liabilities that are designated as
a hedge of a foreign currency risk.
TechnipFMC has initially applied the hedging requirements of IFRS 9 as amended by IFRS 9 paragraph 7.2.21 on January 1, 2019. TechnipFMC
has not restated the comparative information on hedge accounting, which continues to be reported under IAS 39. There were no differences arising
from the adoption of the hedge accounting requirements of IFRS 9 which would impact Retained Earnings, Net Income and Other Reserves as of
January 1, 2019. (see Note 1).
17.5 Non-controlling interests
Non-controlling interests amounting to $69.9 million and $69.8 million as of December 31, 2019 and 2018,
respectively, did not represent a material component of TechnipFMC’s consolidated financial statements in the
years ended December 31, 2019, and 2018.
NOTE 18. SHARE-BASED COMPENSATION
Incentive compensation and award plan
On January 11, 2017, we adopted TechnipFMC’s Incentive Award Plan (the “Plan”). The Plan provides certain
incentives and awards to officers, employees, non-employee directors and consultants of TechnipFMC and its
subsidiaries. The Plan allows our Board of Directors to make various types of awards to non-employee directors and
the Compensation Committee (the “Committee”) of the Board of Directors to make various types of awards to other
eligible individuals. Awards may include share options, share appreciation rights, performance share units, restricted
share units, restricted shares or other awards authorized under the Plan. All awards are subject to the Plan’s
provisions, including all share-based grants previously issued by FMC Technologies and Technip prior to
consummation of the Merger. Under the Plan, 24.1 million ordinary shares were authorized for awards.
At December 31, 2019, 14.4 million ordinary shares were available for future grant.
225 TechnipFMC
219
U.K. Annual Report and IFRS Financial Statements 2019
The exercise price for options is determined by the Committee but cannot be less than the fair market value of our
ordinary shares at the grant date. Restricted share and performance share unit grants generally vest after three years
of service.
Under the Plan, our Board of Directors has the authority to grant non-employee directors share options, restricted
shares, restricted share units and performance shares. Unless otherwise determined by our Board of Directors,
awards to non-employee directors generally vest one year from the date of grant. Restricted share units are settled
when a director ceases services to the Board of Directors. At December 31, 2019, outstanding awards to active and
retired non-employee directors included 83.4 thousand share units. At December 31, 2018, outstanding awards to
active and retired non-employee directors included 119.4 thousand share units.
We recognize compensation expense and the corresponding tax benefits for awards under the Plan. The
compensation expense under the Plan is as follows:
(In millions)
Share-based compensation expense
Income tax benefits related to share based compensation expense
Year Ended December 31,
2019
2018
$
$
74.5 $
20.1 $
49.1
13.2
Share-based compensation expense is recognized over the lesser of the stated vesting period of three years or the
period until the employee reaches age 62 (the retirement eligible age under the plan).
As of December 31, 2019 and 2018, the portion of share-based compensation expense related to outstanding awards
to be recognized in future periods is as follows:
Share-based compensation expense not yet recognized (In millions)
$
Weighted-average recognition period (in years)
Restricted share units
December 31,
2019
2018
76.9 $
1.7
83.4
1.7
We began issuing restricted share units in 2017. A summary of the non-vested restricted share units activity is as
follows:
(Shares in thousands)
Non-vested at January 1
Granted
Vested
Cancelled/forfeited
Non-vested at December 31
2019
2018
Weighted-
Average
Grant Date
Fair Value
30.10
21.24
29.44
27.79
27.44
Shares
2,977.4 $
1,969.1 $
(347.1 ) $
(73.5 ) $
4,525.9 $
Weighted-
Average
Grant Date
Fair Value
28.53
31.57
28.94
27.85
30.10
Shares
1,722.3 $
1,516.0 $
(165.4 ) $
(95.5 ) $
2,977.4 $
The total grant date fair value of restricted stock units vested during years ended December 31, 2019 and 2018
was $10.2 million and $4.8 million, respectively.
Performance shares
The Board of Directors has granted certain employees, senior executives and Directors or Officers restricted share
units that vest subject to achieving satisfactory performances. For performance share units issued on or after
January 1, 2017, performance is based on results of return on invested capital and total shareholder return (“TSR”).
226 TechnipFMC
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U.K. Annual Report and IFRS Financial Statements 2019
For the performance share units which vest based on TSR, the fair value of performance shares is estimated using
a combination of the closing stock price on the grant date and the Monte Carlo simulation model. The weighted-
average fair value and the assumptions used to measure the fair value of performance share units subject to
performance-adjusted vesting conditions in the Monte Carlo simulation model were as follows:
Weighted-average fair value (1)
Expected volatility (2)
Risk-free interest rate (3)
Expected performance period in years (4)
$
Year Ended December 31,
2019
2018
29.04
$
34.00 %
2.42 %
3.0
41.97
34.00 %
2.37 %
3.0
(1)
The weighted-average fair value was based on performance share units granted during the period.
(2)
term of the option.
Expected volatility is based on normalized historical volatility of our shares over a preceding period commensurate with the expected
(3)
The risk-free rate for the expected term of the option is based on the U.S. Treasury yield curve in effect at the time of grant.
(4)
Merger employee base, the expected term was estimated using a simplified method for all awards granted in 2019 and 2018.
For awards subject to service-based vesting, due to the lack of historical exercise and post-vesting termination patterns of the post-
A summary of the non-vested performance share activity is as follows:
(Shares in thousands)
Non-vested at January 1
Granted
Vested
Cancelled/forfeited
Non-vested at December 31
2019
2018
Weighted-
Average
Grant Date
Fair Value
27.02
24.99
22.30
27.94
28.52
Shares
3,043.8 $
1,514.7 $
(597.6 ) $
(143.2 ) $
3,817.7 $
Weighted-
Average
Grant Date
Fair Value
25.59
36.06
34.55
28.45
27.02
Shares
2,748.8 $
623.0 $
(203.6 ) $
(124.4 ) $
3,043.8 $
The total grant date fair value of performance shares vested during years ended December 31, 2019 and 2018
was $13.3 million and $7.0 million, respectively.
Share option awards
The fair value of each option award is estimated as of the date of grant using the Black-Scholes options pricing model
or the Cox Ross Rubinstein binomial model.
Share options awarded prior to 2017 were granted subject to performance criteria based upon certain targets, such
as total shareholder return, return on capital employed, and operating profit (loss) from recurring activities.
Subsequent share options granted are time based awards vesting over three years.
The weighted-average fair value and the assumptions used to measure fair value are as follows:
Weighted-average fair value (1)
Expected volatility (2)
Risk-free interest rate (3)
Expected dividend yield (4)
Expected term in years (5)
227 TechnipFMC
221
$
Year Ended December 31
2019
2018
5.64
$
32.5 %
2.5 %
2.6 %
6.5
9.07
32.5 %
2.7 %
2.0 %
6.5
U.K. Annual Report and IFRS Financial Statements 2019
(1)
The weighted-average fair value was based on stock options granted during the period.
(2)
term of the option.
Expected volatility is based on normalized historical volatility of our shares over a preceding period commensurate with the expected
(3)
(4)
The risk-free rate for the expected term of the option is based on the U.S. Treasury yield curve in effect at the time of grant.
Share options awarded in 2019 and 2018 were valued using an expected dividend yield of 2.6% and 2.0%, respectively.
(5)
Merger employee base, the expected term was estimated using a simplified method for all awards granted in 2019 and 2018.
For awards subject to service-based vesting, due to the lack of historical exercise and post-vesting termination patterns of the post-
The following is a summary of option transactions during years ended December 31, 2019 and 2018:
Balance as of December 31, 2017
Granted
Exercised
Cancelled
Balance as of December 31, 2018
Granted
Exercised
Cancelled
Balance as of December 31, 2019
Exercisable at December 31, 2019
Number of
Shares
Weighted
average
exercise price
36.35
30.70
—
47.20
33.68
20.98
—
48.65
29.68
35.92
Weighted
average
remaining life
(in years)
4.6
4.8
5.3
3.0
4,883.8 €
602.2 $
— $
(827.6 ) $
4,658.4 $
800.0 $
— $
(616.0 ) $
4,842.4 $
1,617.7 $
The aggregate intrinsic value of stock options outstanding and stock options exercisable as of December 31, 2019
was $0.4 million and nil, respectively.
Cash received from the option exercises was nil and nil during years ended December 31, 2019 and 2018,
respectively. The total intrinsic value of options exercised during the years ended December 31, 2019 and 2018 was
nil and nil, respectively. To exercise share options, an employee may choose (1) to pay, either directly or by way of
the group savings plan, the share option strike price to obtain shares, or (2) to sell the shares immediately after having
exercised the share option (in this case, the employee does not pay the strike price but instead receives the intrinsic
value of the share options in cash).
The following summarizes significant ranges of outstanding and exercisable options at December 31, 2019:
Options Outstanding
Options Exercisable
Weighted
average
exercise price
(in $)
Number of
options
(in thousands)
Weighted
average
exercise price
(in $)
$
$
$
$
26.55
45.49
56.93
29.68
1,105.7 $
33.0 $
479.0 $
1,617.7 $
26.54
45.49
56.93
35.92
Exercise Price Range
$20.00-$33.00
$45.00-$51.00
$55.00-$57.00
Total
Number of
options (in
thousands)
4,330.4
33.0
479.0
4,842.4
Weighted
average
remaining life
(in years)
5.7
2.0
1.4
5.3
228 TechnipFMC
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The following summarizes significant ranges of outstanding and exercisable options at December 31, 2018:
Options Outstanding
Options Exercisable
Exercise Price Range
$24.00-$33.00
$45.00-$51.00
$55.00-$57.00
Total
Number of
options (in
thousands)
3,543.5
570.0
544.9
4,658.4
Weighted
average
remaining life
(in years)
5.9
0.4
2.2
4.8
$
$
$
$
Weighted
average
exercise price
(in $)
Number of
options
(in thousands)
Weighted
average
exercise price
(in $)
27.80
48.12
56.82
33.67
— $
570.0 $
544.9 $
1,114.9 $
—
48.12
56.82
52.37
NOTE 19. DEBT (SHORT-TERM AND LONG-TERM)
19.1 Debt
Short-term debt and current portion of long-term debt consisted of the following:
(In millions)
Commercial papers
Bank borrowings
5.00% Notes due 2020
Other
Total short-term debt and current portion of long-term
December 31, 2019
December 31, 2018
Carrying
Amount
Fair Value
Carrying
Amount
Fair Value
$
$
1,967.0 $
247.8
224.4
23.0
2,462.2 $
1,966.9 $
248.0
230.0
23.0
2,467.9 $
1,916.1 $
44.2
—
23.2
1,983.5 $
1,916.1
44.2
—
23.5
1,983.8
Long-term debt––Long-term debt consisted of the following:
(In millions)
December 31, 2019
December 31, 2018
Synthetic bonds due 2021
3.45% Senior Notes due 2022
5.00% Notes due 2020
3.40% Notes due 2022
3.15% Notes due 2023
3.15% Notes due 2023
4.00% Notes due 2027
4.00% Notes due 2032
3.75% Notes due 2033
Bank borrowings
Finance lease
Total long-term debt
Commercial paper
Bank borrowings
5.00% Notes due 2020
Other
Total short-term debt and current portion of long-term
Total debt
Carrying
Amount
Fair Value
Carrying
Amount
Fair Value
491.7 $
500.0
—
168.4
145.4
140.2
84.2
108.6
109.2
265.5
—
2,013.2
1,967.0
247.8
224.4
23.0
2,462.2
4,475.4 $
513.1 $
499.2
—
180.6
156.8
150.5
96.4
127.8
123.8
265.4
—
2,113.6
1,966.9
248.0
230.0
23.0
2,467.9
4,581.5 $
488.8 $
500.0
228.4
171.6
148.1
142.9
85.8
110.5
111.1
221.0
337.8
2,546.0
1,916.1
44.2
—
23.2
1,983.5
4,529.5 $
532.4
489.7
244.0
186.9
161.3
153.3
95.8
120.2
126.1
220.8
337.8
2,668.3
1,916.1
44.2
—
23.5
1,983.8
4,652.1
$
$
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Revolving credit facility - On January 17, 2017, we acceded to a new $2.5 billion senior unsecured revolving credit
facility agreement (“facility agreement”) between FMC Technologies, Inc., Technip Eurocash SNC (the “Borrowers”),
and TechnipFMC plc (the “Additional Borrower”) with JPMorgan Chase Bank, National Association (“JPMorgan”), as
agent and an arranger, SG Americas Securities LLC as an arranger, and the lenders party thereto.
The facility agreement provides for the establishment of a multicurrency, revolving credit facility, which includes a $1.5
billion letter of credit subfacility. Subject to certain conditions, the Borrowers may request the aggregate commitments
under the facility agreement be increased by an additional $500.0 million. On November 26, 2018, we entered into
an extension which extends the expiration date to January 2023.
Borrowings under the facility agreement bear interest at the following rates, plus an applicable margin, depending on
currency:
• U.S. dollar-denominated loans bear interest, at the Borrowers’ option, at a base rate or an adjusted rate linked to the
London interbank offered rate (“Adjusted LIBOR”);
• sterling-denominated loans bear interest at Adjusted LIBOR; and
• euro-denominated loans bear interest at the Euro interbank offered rate (“EURIBOR”).
Depending on the credit rating of TechnipFMC, the applicable margin for revolving loans varies (i) in the case of
Adjusted LIBOR and EURIBOR loans, from 0.820% to 1.300% and (ii) in the case of base rate loans, from 0.000%
to 0.300%. The “base rate” is the highest of (a) the prime rate announced by JPMorgan, (b) the greater of the Federal
Funds Rate and the Overnight Bank Funding Rate plus 0.5% or (c) one-month Adjusted LIBOR plus 1.0%.
The facility agreement contains usual and customary covenants, representations and warranties and events of default
for credit facilities of this type, including financial covenants requiring that our total capitalization ratio not exceed 60%
at the end of any financial quarter. The facility agreement also contains covenants restricting our ability and our
subsidiaries’ ability to incur additional liens and indebtedness, enter into asset sales or make certain investments.
As of December 31, 2019, we were in compliance with all restrictive covenants under our revolving credit facility.
Bilateral credit facilities - We have access to a €100.0 million bilateral credit facility expiring in May 2021. Two bilateral
credit facilities of €80.0 million each and a bilateral credit facility of €60.0 million expired in May and June 2019,
respectively.
Each bilateral credit facility contains usual and customary covenants, representations and warranties and events of
default for credit facilities of this type.
Commercial paper - Under our commercial paper program, we have the ability to access $1.5 billion and €1.0 billion
of short-term financing through our commercial paper dealers, subject to the limit of unused capacity of our facility
agreement. Commercial paper borrowings are issued at market interest rates. As of December 31, 2019, our
commercial paper borrowings had a weighted average interest rate of 2.23% on the U.S. dollar denominated
borrowings and (0.28)% on the Euro denominated borrowings.
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Synthetic bonds - On January 25, 2016, we issued €375.0 million principal amount of 0.875% convertible bonds with
a maturity date of January 25, 2021 and a redemption at par of the bonds which have not been converted. On March 3,
2016, we issued additional convertible bonds for a principal amount of €75.0 million issued on the same terms, fully
fungible with and assimilated to the bonds issued on January 25, 2016. The issuance of these non-dilutive cash-
settled convertible bonds (“Synthetic Bonds”), which are linked to our ordinary shares were backed simultaneously
by the purchase of cash-settled equity call options in order to hedge our economic exposure to the potential exercise
of the conversion rights embedded in the Synthetic Bonds. As the Synthetic Bonds will only be cash settled, they will
not result in the issuance of new ordinary shares or the delivery of existing ordinary shares upon conversion. Interest
on the Synthetic Bonds is payable semi-annually in arrears on January 25 and July 25 of each year, beginning July 26,
2016. Net proceeds from the Synthetic Bonds were used for general corporate purposes and to finance the purchase
of the call options. The Synthetic Bonds are our unsecured obligations. The Synthetic Bonds will rank equally in right
of payment with all of our existing and future unsubordinated debt.
The Synthetic Bonds issued on January 25, 2016 were issued at par. The Synthetic Bonds issued on March 3, 2016
were issued at a premium of 112.44% resulting from an adjustment over the 3-day trading period following the
issuance resulting in a share reference price of €48.8355.
A 40.0% conversion premium was applied to the share reference price of €40.7940. The share reference price was
computed using the average of the daily volume weighted average price of our ordinary shares on the Euronext Paris
market over the 10 consecutive trading days from January 21 to February 3, 2016. The initial conversion price of the
bonds was then fixed at €57.1116.
The Synthetic Bonds each have a nominal value of €100.0 thousand with a conversion ratio of 3,337.3493 and a
conversion price of €29.9639. Any bondholder may, at its sole option, request the conversion in cash of all or part of
the bonds it owns, beginning November 15, 2020 to the 38th business day before the maturity date.
Senior Notes - On April 3, 2018, we commenced offers to exchange up to $459.8 million in aggregate principal amount
of new 3.45% senior notes due October 1, 2022 (the “Senior Notes”), Series B, which have been registered under
the U.S. Securities Act of 1933, as amended (the “Securities Act”), for any and all of our outstanding restricted 3.45%
Senior Notes due 2022, Series A (the “Outstanding Notes”), which we previously issued in a private transaction that
was not subject to the registration requirements of the Securities Act (the “Initial Offering”). We refer to the Exchange
Notes and the Outstanding Notes collectively as the “Notes”.
The terms of the Senior Notes are governed by the indenture, dated as of March 29, 2017 between TechnipFMC and
U.S. Bank National Association, as trustee (the “Trustee”), as amended and supplemented by the First Supplemental
Indenture between TechnipFMC and the Trustee (the “First Supplemental Indenture”) relating to the issuance of the
2017 Notes and the Second Supplemental Indenture between TechnipFMC and the Trustee (the “Second
Supplemental Indenture”) relating to the issuance of the 2022 Notes.
At any time prior to July 1, 2022, in the case of the 2022 Notes, we may redeem some or all of the Senior Notes at
the redemption prices specified in the First Supplemental Indenture and Second Supplemental Indenture,
respectively. At any time on or after July 1, 2022, we may redeem the 2022 Notes at the redemption price equal to
100% of the principal amount of the 2022 Notes redeemed. The Senior Notes are our senior unsecured obligations.
The Senior Notes will rank equally in right of payment with all of our existing and future unsubordinated debt, and will
rank senior in right of payment to all of our future subordinated debt.
231 TechnipFMC
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Private Placement Notes - On July 27, 2010, we completed the private placement of €200.0 million aggregate principal
amount of 5.0% notes due July 2020 (the “2020 Notes”). Interest on the 2020 Notes is payable annually in arrears on
July 27 of each year, beginning July 27, 2011. Net proceeds of the 2020 Notes were used to partially finance the
2004-2011 bond issue, which was repaid at its maturity date on May 26, 2011. The 2020 Notes contain contains usual
and customary covenants and events of default for notes of this type. In the event of a change of control resulting in
a downgrade in the rating of the notes below BBB-, the 2020 Notes may be redeemed early by any bondholder, at its
sole discretion. The 2020 Notes are our unsecured obligations. The 2020 Notes will rank equally in right of payment
with all of our existing and future unsubordinated debt.
In June 2012, we completed the private placement of €325.0 million aggregate principal amount of notes. The notes
were issued in three tranches with €150.0 million bearing interest at 3.40% and due June 2022 (the “Tranche A 2022
Notes”), €75.0 million bearing interest of 4.0% and due June 2027 (the “Tranche B 2027 Notes”) and €100.0 million
bearing interest of 4.0% and due June 2032 (the “Tranche C 2032 Notes” and, collectively with the “Tranche A 2022
Notes and the “Tranche B 2027 Notes”, the “2012 Private Placement Notes”). Interest on the Tranche A 2022 Notes
and the Tranche C 2032 Notes is payable annually in arrears on June 14 of each year beginning June 14, 2013.
Interest on the Tranche B 2027 Notes is payable annually in arrears on June 15 of each year, beginning June 15,
2013. Net proceeds of the 2012 Private Placement Notes were used for general corporate purposes. The 2012 Private
Placement Notes contain usual and customary covenants and events of default for notes of this type. In the event of
a change of control resulting in a downgrade in the rating of the notes below BBB-, the 2012 Private Placement Notes
may be redeemed early by any bondholder, at its sole discretion. The 2012 Private Placement Notes are our
unsecured obligations. The 2012 Private Placement Notes will rank equally in right of payment with all of our existing
and future unsubordinated debt.
In October 2013, we completed the private placement of €355.0 million aggregate principal amount of senior notes.
The notes were issued in three tranches with €100.0 million bearing interest at 3.75% and due October 2033 (the
“Tranche A 2033 Notes”), €130.0 million bearing interest of 3.15% and due October 2023 (the “Tranche B 2023 Notes)
and €125.0 million bearing interest of 3.15% and due October 2023 (the “Tranche C 2023 Notes” and, collectively
with the “Tranche A 2033 Notes” and the “Tranche B 2023 Notes”, the “2013 Private Placement Notes”). Interest on
the Tranche A 2033 Notes is payable annually in arrears on October 7 each year, beginning October 7, 2014. Interest
on the Tranche B 2023 Notes is payable annually in arrears on October 16 of each year beginning October 16, 2014.
Interest on the Tranche C 2023 Notes is payable annually in arrears on October 18 of each year, beginning October
18, 2014. Net proceeds of the 2013 Private Placement Notes were used for general corporate purposes. The 2013
Private Placement Notes contain contains usual and customary covenants and events of default for notes of this type.
In the event of a change of control resulting in a downgrade in the rating of the notes below BBB-, the 2013 Private
Placement Notes may be redeemed early by any bondholder, at its sole discretion. The 2013 Private Placement
Notes are our unsecured obligations. The 2013 Private Placement Notes will rank equally in right of payment with all
of our existing and future unsubordinated debt.
Term loan - In December 2016, we entered into a £160.0 million term loan agreement to finance the Deep Explorer,
a diving support vessel (“DSV”), maturing December 2028. Under the loan agreement, interest accrues at an annual
rate of 2.813%. This loan agreement contains usual and customary covenants and events of default for loans of this
type.
On December 30, 2019, we completed the acquisition of the remaining 50% interest in TOP CV. In connection with
the acquisition, we assumed liabilities that included a $203.1 million term loan of which $16.0 million is due June 30,
2020 with the remaining balance due September 30, 2020. Immediately following the acquisition, we paid $13.1
million towards the outstanding balance. The debt is fully collateralized against our two vessels, Coral do Atlantico
and Deep Star (previously referred to Estrela do Mar).
Bank borrowings - In January 2019, we executed a sale-leaseback transaction to finance the purchase of a deepwater
dive support vessel, Deep Discoverer (the “Vessel”) for the full transaction price of $116.8 million. The sale-leaseback
agreement (“Charter”) was entered into with a French joint-stock company, owned by Credit Industrial et Commercial
(“CIC”) which was formed for the sole purpose to purchase and act as the lessor of the Vessel. It is a variable interest
232 TechnipFMC
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U.K. Annual Report and IFRS Financial Statements 2019
entity, which is fully consolidated in our condensed consolidated financial statements. The transaction was funded
through debt of $96.2 million which is primarily long-term, expiring on January 8, 2031.
Foreign committed credit - We have committed credit lines at many of our international subsidiaries for immaterial
amounts. We utilize these facilities for asset financing and to provide a more efficient daily source of liquidity. The
effective interest rates depend upon the local national market.
Analysis by type of interest rate after yield management is described in Note 29.
19.2 Secured financial debts excluding finance leases
Secured debts are as follows:
As of December 31, 2019
As of December 31, 2018
(In millions)
Guarantee
Without
Guarantee
Total
Guarantee
Without
Guarantee
Bank overdrafts, current facilities and other
$
Short-term portion of long-term debt
232.1 $
34.4
4.1 $
2,191.6
236.2 $
2,226.0
— $
0.8
3.9 $
1,978.8
Total
3.9
1,979.6
Total short-term debt and current portion of long-
term
Total long-term debt, less current portion and finance
leases
Total debt excluding finance leases
266.5
2,195.7
2,462.2
0.8
1,982.7
1,983.5
190.0
456.5 $
1,823.2
4,018.9 $
2,013.2
4,475.4 $
193.1
193.9 $
2,015.1
3,997.8 $
2,208.2
4,191.7
$
NOTE 20. PENSIONS AND OTHER LONG-TERM EMPLOYEE BENEFIT PLANS
20.1 Description of TechnipFMC’s current benefit plans
We have funded and unfunded defined benefit pension plans which provide defined benefits based on years of service
and final average salary.
We are required to recognize the funded status of defined benefit post-retirement plans as an asset or liability in the
consolidated statement of financial position and recognize changes in that funded status in comprehensive income
in the year in which the changes occur. Further, we are required to measure the plan’s assets and its obligations that
determine its funded status as of the date of the consolidated statement of financial position. We have applied this
guidance to our domestic pension and other post-retirement benefit plans as well as for many of our non-U.S. plans,
including those in the United Kingdom, Germany, France and Canada.
In the case of funded plans, we ensure that the investment positions are managed to achieve long-term investments
that are in line with the obligations under the pension schemes. Our objective is to match assets to the pension
obligations by investing in long-term fixed interest securities with maturities that match the benefit payments as they
fall due and in the appropriate currency.
We actively monitor how the duration and the expected yield of the investments are matching the expected cash
outflows arising from the pension obligations. We have not changed the processes used to manage its risks from
previous periods. Investments are well diversified, such that the failure of any single investment would not have a
material impact on the overall level of assets.
Our pension investment strategy emphasizes maximizing returns consistent with balancing risk. Excluding our
international plans with insurance-based investments, 99% of our total pension plan assets represent the U.S.
qualified plan, the U.K. plan and the Netherlands plan. These plans are primarily invested in equity securities to
maximize the long-term returns of the plans.
233 TechnipFMC
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On December 31, 2017, we amended the U.S. retirement plans (the “Plans”) to freeze benefit accruals for all
participants of the Plans as of December 31, 2017. After that date, participants in the Plans will no longer accrue any
further benefits and participants’ benefits under the Plans will be determined based on credited service and eligible
earnings as of December 31, 2017.
Foreign-based employees are eligible to participate in TechnipFMC-sponsored or government-sponsored benefit
plans to which we contribute. Several of the foreign defined benefit pension plans sponsored by us provide for
employee contributions; the remaining plans are noncontributory. The most significant of these plans are in the
Netherlands, France and the United Kingdom.
We have other post-retirement benefit plans covering substantially all of our U.S. unionized employees. The post-
retirement health care plans are contributory; the post-retirement life insurance plans are noncontributory.
We expect to contribute approximately $6.9 million to our international pension plans, representing primarily the
Netherlands qualified pension plans and U.K. qualified pension plans. We do not expect to make any contributions to
our U.S. Qualified Pension Plan and our U.S. Non-Qualified Defined Benefit Pension Plan in 2020. All of the
contributions are expected to be in the form of cash.
The following table summarizes expected benefit payments from our various pension and post-retirement benefit
plans through 2029. Actual benefit payments may differ from expected benefit payments.
(In millions)
2020
2021
2022
2023
2024
2025-2029
Total
Expected
benefit
payments
74.4
71.5
67.7
66.5
72.6
376.3
729.0
$
$
20.2 Net benefit expense recognized in the statement of income
The net benefit expense recognized in the statement of income is as follows:
(In millions)
Current service cost
Financial cost
Interest income
Net actuarial gain (loss) recognized on long-term benefits
Special events (curtailment/settlement)
Administration costs and taxes
Net benefit expense as recorded in the statement of income
2019
2018
$
$
16.2 $
45.0
(34.6 )
(0.2 )
1.5
3.6
31.5 $
21.1
46.2
(38.1 )
(0.5 )
(0.7 )
7.1
35.1
20.3 Defined benefit asset (liability) recognized in the consolidated statements of financial position
The amounts recognized in the statement of financial position and the movements in the net defined benefit obligation
over the year are as follows:
234 TechnipFMC
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U.K. Annual Report and IFRS Financial Statements 2019
(In millions)
As of January 1, 2018
Acquisitions / disposals
Expense as recorded in the statement of income
Total current service cost
Net financial costs
Actuarial gains of the year
Administrative costs and taxes
Actuarial loss recognized in other comprehensive income
Actuarial loss on defined benefit obligation
- Experience
- Financial assumptions
- Demographic assumptions
Actuarial gain (loss) on plan assets
Change in irrecoverable surplus other than interest
Contributions and benefits paid
Contributions by employer
Contributions by employee
Benefits paid by employer
Benefits paid from plan assets
Exchange difference and other
Settlements
Other
As of December 31, 2018
Acquisitions / disposals
Expense as recorded in the statement of income
Total current service cost
Net financial costs
Actuarial gains of the year
Administrative costs and taxes
Actuarial loss recognized in other comprehensive income
Actuarial loss on defined benefit obligation
- Experience
- Financial assumptions
- Demographic assumptions
Actuarial gain (loss) on plan assets
Change in irrecoverable surplus other than interest
Contributions and benefits paid
Contributions by employer
Contributions by employee
Benefits paid by employer
Benefits paid from plan assets
Exchange difference and other
Settlements
Other
As of December 31, 2019
Defined
Benefit
Obligation
Fair Value of
Plan Assets
Net Defined
Benefit
Obligation
$
$
$
1,600.7 $
—
73.2
20.4
46.2
(0.5 )
7.1
(92.8 )
(92.8 )
7.2
(100.0 )
(3.2 )
—
3.2
(86.9 )
—
1.2
(29.1 )
(59.0 )
(25.9 )
(87.6 )
13.6
1,394.3 $
—
66.1
17.7
45.0
(0.2 )
3.6
185.3
185.3
(2.7 )
204.2
(14.9 )
—
(1.3 )
(69.2 )
—
1.1
(17.0 )
(53.3 )
11.0
—
5.0
1,592.5 $
1,263.1 $
—
38.1
—
38.1
—
—
(118.1 )
(118.1 )
—
—
—
(118.1 )
—
(39.3 )
18.5
1.2
—
(59.0 )
(20.9 )
(87.6 )
0.1
1,035.4 $
—
34.6
—
34.6
—
—
129.5
129.5
—
—
—
129.5
—
(45.3 )
6.9
1.1
—
(53.3 )
13.5
—
0.2
1,167.9 $
337.6
—
35.1
20.4
8.1
(0.5 )
7.1
25.3
25.3
7.2
(100.0 )
(3.2 )
118.1
3.2
(47.6 )
(18.5 )
—
(29.1 )
—
(5.0 )
—
13.5
358.9
—
31.5
17.7
10.4
(0.2 )
3.6
55.8
55.8
(2.7 )
204.2
(14.9 )
(129.5 )
(1.3 )
(23.9 )
(6.9 )
—
(17.0 )
—
(2.5 )
—
4.8
424.6
In 2019 and 2018, the discounted defined benefit obligation included $1,378.2 million and $1,199.5 million for funded
plans and $215.8 million and $196.2 million for unfunded plan assets, respectively.
235 TechnipFMC
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U.K. Annual Report and IFRS Financial Statements 2019
Below are the details of the principal categories of plan assets by country in terms of percentage of their total fair
value:
2019
(In %)
Eurozone
United Kingdom
United States
2018
(In %)
Eurozone
United Kingdom
20.4 Actuarial assumptions
Eurozone
United Kingdom
United States of America
Eurozone
United Kingdom
United States of America
Bonds
Shares
Real Estate
— %
— %
— %
— %
82 %
100 %
Bonds
Shares
Real Estate
— %
— %
— %
81 %
— %
11 %
— %
— %
10 %
Cash
Other
Total
— %
7 %
— %
100 %
— %
— %
100 %
100 %
100 %
Cash
Other
Total
— %
9 %
100 %
— %
100 %
100 %
December 31, 2019
Future Salary
Increase
(above Inflation
Rate)
Healthcare Cost
Increase Rate
Discount Rate
From 0.90% to
1.00%
From 2.30% to
3.60%
2.0 %
3.6 %
3.9 %
4.0 %
NA
NA
NA
Inflation
Rate
From 1.60% to
1.80%
From 2.40% to
3.10%
NA
December 31, 2018
Future Salary
Increase
(above Inflation
Rate)
From 1.57% to
3.70%
4.2 %
NA
Discount Rate
From 1.30% to
1.90%
From 2.60% to
2.70%
3.6 %
Healthcare Cost
Increase Rate
Inflation
Rate
NA
NA
NA
1.73%
2.5 %
NA
Assumptions regarding future mortality are set based on actuarial advice in accordance with published statistics and
experience in each territory. These assumptions translate into an average life expectancy in years for a pensioner
retiring at age 65:
(in years)
Eurozone
United Kingdom
United States of America
236 TechnipFMC
December 31, 2019
Assumed life expectations for a retiree age 65
Retiring at the end of the reporting
period
Retiring 15 years after the end of the
reporting period
Male
Female
Male
Female
27
23
23
28
23
19
31
25
21
23
21
21
230
U.K. Annual Report and IFRS Financial Statements 2019
The sensitivity analysis is based on a change in an assumption while holding all other assumptions constant.
The discount rates as of December 31, 2019 of the Eurozone, United Kingdom and the United States zones are
determined by holding the benefit flows of services expected from the plans and by using a curve of yield built from
a wide basket of bonds of companies of high quality (noted AA). In the countries where the market bonds of companies
of high quality is insufficiently deep, the discount rates are measured in reference to governmental rates.
The references used to determine the discount rates at December 31, 2019 remain unchanged compared to 2018. A
25% decrease in the discount rate would increase the defined benefit obligation by approximately 3.8%. A 25%
increase in the discount rate would decrease the defined benefit obligation by approximately (3.6)%.
20.5 Other plans
Savings plans - The TechnipFMC Retirement Savings Plan (“Qualified Plan”), a qualified salary reduction plan under
Section 401(k) of the Internal Revenue Code, is a defined contribution plan. Additionally, we have a non-qualified
deferred compensation plan, the Non-Qualified Plan, which allows certain highly compensated employees the option
to defer the receipt of a portion of their salary. We match a portion of the participants’ deferrals to both plans. Both
plans relate to FMC Technologies, Inc.
Participants in the Non-Qualified Plan earn a return based on hypothetical investments in the same options as our
401(k) plan, including TechnipFMC plc stock (“FTI Stock Fund”). In March 2019, the FTI Stock Fund was removed
from the Non-Qualified Plan. Changes in the market value of these participant investments are reflected in other
income (expense), net. The deferred compensation obligation is measured based on the actuarial present value of
the benefits owed to the employee. As of December 31, 2019 and 2018, our liability for the Non-Qualified Plan was
$36.6 million and $31.5 million, respectively, and was recorded in other non-current liabilities. We hedge the financial
impact of changes in the participants’ hypothetical investments by purchasing the investments that the participants
have chosen. With the exception of TechnipFMC plc stock, which is maintained at its cost basis, changes in the fair
value of these investments are recognized as an offset to other income (expense), net. As of December 31, 2019 and
2018, we had investments for the Non-Qualified Plan totaling $26.3 million and $21.4 million at fair market value,
respectively. As of December 31, 2019 and 2018, TechnipFMC stock held in trust of nil and $2.4 million at its cost
basis, respectively.
We recognized expense of $34.0 million and $31.8 million for matching contributions to these plans in 2019 and 2018,
respectively. Additionally, we recognized expense of $13.2 million and $14.3 million for non-elective contributions in
2019 and 2018, respectively.
237 TechnipFMC
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NOTE 21. PROVISIONS (CURRENT AND NON-CURRENT)
Movements in each class of provision as at December 31, 2018 are set out below:
(In millions)
As of
December
31, 2017
Increase
Used
Reversals
Unused
Reversals
Foreign
Exchange
Adjustments
Other
As of
December
31, 2018
$
$
Tax
Litigation
Provisions for claims
Total non-current provisions
Other non-current provisions (2)
1.5 $
4.4
9.9
58.5
74.3 $
214.9
15.1
57.9
19.5
404.8
712.2 $
786.5 $
Movements in each class of provision as at December 31, 2019 are set out below:
— $
—
—
(40.1 )
(40.1 ) $
(25.9 )
—
(16.9 )
(3.4 )
(151.3 )
(197.5 ) $
(237.6 ) $
— $
(0.9 )
(3.0 )
(7.4 )
(11.3 ) $
(114.6 )
(2.7 )
(0.4 )
—
(101.6 )
(219.3 ) $
(230.6 ) $
0.6 $
0.2
0.2
20.2
21.2 $
62.7
13.6
292.0
—
194.0
562.3 $
583.5 $
Contingencies related to contracts
Tax
Litigation (1)
Provisions for claims
Other current provisions (2)
Total current provisions
Total provisions
$
$
— $
(0.2 )
(0.7 )
(1.9 )
(2.8 ) $
(4.0 )
(2.1 )
(6.7 )
(0.9 )
(20.6 )
(34.3 ) $
(37.1 ) $
(1.4 ) $
2.3
—
0.5
1.4 $
15.7
6.1
62.3
—
(81.2 )
2.9 $
4.3 $
0.7
5.8
6.4
29.8
42.7
148.8
30.0
388.2
15.2
244.1
826.3
869.0
(In millions)
Tax
Litigation
Restructuring obligations (2)
Provisions for claims
Other non-current provisions
$
Total non-current provisions
$
Contingencies related to contracts
Tax
Litigation (1)
Restructuring obligations (2)
Provisions for claims
Other current provisions
Total current provisions
Total provisions
$
$
As of
December
31, 2018
Increase
Used
Reversals
Unused
Reversals
Foreign
Exchange
Adjustments
Other
As of
December
31, 2019
0.7 $
5.8
10.8
6.4
19.0
42.7 $
148.8
30.0
388.2
28.6
15.2
215.5
826.3 $
869.0 $
— $
5.2
2.2
2.4
1.0
10.8 $
36.5
8.8
84.0
30.3
5.7
124.1
289.4 $
300.2 $
— $
(2.2 )
(0.6 )
—
(13.3 )
(16.1 ) $
(20.7 )
(1.1 )
(293.9 )
(17.3 )
(20.0 )
(115.6 )
(468.6 ) $
(484.7 ) $
— $
—
(2.0 )
—
(0.2 )
(2.2 ) $
(10.4 )
(2.6 )
(27.5 )
(1.3 )
—
(73.2 )
(115.0 ) $
(117.2 ) $
— $
(3.2 )
0.2
(0.1 )
(0.2 )
(3.3 ) $
(0.4 )
0.3
(6.9 )
—
(0.6 )
(2.9 )
(10.5 ) $
(13.8 ) $
— $
2.0
5.0
—
8.8
15.8 $
(37.1 )
(11.6 )
16.2
(7.2 )
—
(5.3 )
(45.0 ) $
(29.2 ) $
0.7
7.6
15.6
8.7
15.1
47.7
116.7
23.8
160.1
33.1
0.3
142.6
476.6
524.3
Litigation - A provision of $91.3 million and $280.0 were recorded in 2019 and 2018, respectively, regarding
(1)
U.S. Department of Justice related to investigation of offshore platform projects awarded between 2003 and 2007,
performed in Brazil by a joint venture company in which Technip S.A. was a minority participant, and also certain
other projects performed by Technip S.A. subsidiaries in Brazil between 2002 and 2013. On June 25, 2019, we
announced a global resolution to pay a total of $301.3 million. As part of this resolution, we entered into a three-year
Deferred Prosecution Agreement. Refer to Note 25 for detailed description. The remaining unpaid balance pursuant
to the the Deferred Prosecution Agreement was reversed from provisions and recorded in other current liabilities and
other non-current liabilities. Refer to Note 22 for details.
238 TechnipFMC
232
U.K. Annual Report and IFRS Financial Statements 2019
(2)
Restructuring obligations - In December 2019, we initiated a company-wide reduction in workforce intended
to reduce costs and better align our workforce with current and anticipated activity levels, which resulted in the
recognition of severance costs relating to termination benefits and other restructuring charges. The initial plan
included a workforce reduction of approximately 1,600 employees. Restructuring charges related to this global
initiative was $32.4 million. During 2018 we initiated cost cutting measures resulting in the recognition of severance
costs related to employee termination benefits, expenses related to the consolidation of our facilities and other non-
recurring charges. Restructuring obligation was part of other current provisions and other non-current provisions as
at December 31, 2018.
The accounting policy principles utilized to evaluate the amounts and types of provisions for liabilities and charges
are described in Note 1.
NOTE 22. OTHER LIABILITIES (CURRENT AND NON-CURRENT)
Other current liabilities consisted of the following:
(In millions)
Redeemable financial liability
Current financial liabilities at FVTPL, total
Other taxes payable
Accruals on completed contracts
Social security liability
Payable on litigation settlement
Other
Other current liabilities, total
Total other current liabilities
Other non-current liabilities consisted of the following:
(In millions)
Redeemable financial liabilities
Non-current financial liabilities
Payable on litigation settlement
Uncertain tax positions
Obligations on non-qualified employee retirement plans
Payable on property, plant and equipment
Subsidies
Other
Other non-current liabilities
Total other non-current liabilities
December 31,
2019
2018
129.0 $
129.0
240.4
193.5
116.5
62.9
275.8
889.1
1,018.1 $
173.0
173.0
215.0
234.4
112.3
—
217.2
778.9
951.9
December 31,
2019
2018
181.0 $
181.0
62.9
60.6
36.6
12.2
4.4
76.2
252.9
433.9 $
276.3
276.3
—
92.5
31.5
23.1
5.4
118.4
270.9
547.2
$
$
$
$
A mandatorily redeemable financial liability was recognized in 2016 to account for the fair value of the non-controlling
interests in the equity of legal onshore/offshore contract entities which own and account for the design, engineering
and construction of the Yamal LNG plant. This financial liability is periodically revaluated to its fair value, in order to
reflect current expectations about the obligation. TechnipFMC recognized a loss of $423.1 million and $322.3 million
in 2019 and 2018, respectively. Pursuant to payments of $562.8 million and $225.8 million during the year in 2019
and 2018, respectively. The carrying amount of Yamal LNG redeemable financial liability as at December 31 was
$268.8 million and $408.5 million in 2019 and 2018, respectively.
In 2018, an additional redeemable financial liability was recognized to account for an acquisition of Island Offshore.
The carrying amount of Island Offshore redeemable financial liability was $41.2 million and $40.8 million as at
December 31, 2019 and 2018, respectively.
239 TechnipFMC
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NOTE 23. ACCOUNTS PAYABLE, TRADE
Trade payables amounted to $2,660.7 million as of December 31, 2019 as compared to $2,610.8 million as of
December 31, 2018. Trade payables maturities are linked to the operating cycle of supply contracts and mature within
12 months.
NOTE 24. WARRANTY OBLIGATIONS
Our warranties are excluded from the estimated total costs in the measurement of progress and accrued when or as
we transfer control of the goods or services to the customer. Refer to Note 5 to these consolidated financial statements
for additional information regarding warranties. Our accrued warranties as of December 31, 2019 were $193.5 million.
During 2019, we had new warranty expenses of $78.8 million, adjustments to existing accruals of $(57.5) million and
claims paid of $62.2 million.
NOTE 25. COMMITMENTS AND CONTINGENT LIABILITIES
Contingent liabilities associated with guarantees - In the ordinary course of business, we enter into standby letters of
credit, performance bonds, surety bonds and other guarantees with financial institutions for the benefit of our
customers, vendors and other parties. The majority of these financial instruments expire within five years.
Management does not expect any of these financial instruments to result in losses that, if incurred, would have a
material adverse effect on our consolidated financial position, results of operations or cash flows.
Guarantees consisted of the following:
(In millions)
Financial guarantees (1)
Performance guarantees (2)
Maximum potential undiscounted payments
December 31,
2019
2018
$
$
945.5 $
4,916.0
5,861.5 $
750.4
4,047.6
4,798.0
(1) Financial guarantees represent contracts that contingently require a guarantor to make payments to a guaranteed party based on changes in an
underlying agreement that is related to an asset, a liability, or an equity security of the guaranteed party. These tend to be drawn down only if there
is a failure to fulfill our financial obligations.
(2) Performance guarantees represent contracts that contingently require a guarantor to make payments to a guaranteed party based on another
entity’s failure to perform under a nonfinancial obligating agreement. Events that trigger payment are performance-related, such as failure to ship
a product or provide a service.
Management believes the ultimate resolution of our known contingencies will not materially affect our consolidated
financial position, results of operations, or cash flows.
Contingent liabilities associated with legal matters - We are involved in various pending or potential legal and tax
actions or disputes in the ordinary course of our business. Management is unable to predict the ultimate outcome of
these actions because of their inherent uncertainty. However, management believes that the most probable, ultimate
resolution of these matters will not have a material adverse effect on our consolidated financial position, results of
operations or cash flows.
On March 28, 2016, FMC Technologies received an inquiry from the U.S. Department of Justice (“DOJ”) related to
the DOJ’s investigation of whether certain services Unaoil S.A.M. provided to its clients, including FMC Technologies,
violated the U.S. Foreign Corrupt Practices Act (“FCPA”). On March 29, 2016, Technip S.A. also received an inquiry
from the DOJ related to Unaoil. We cooperated with the DOJ’s investigations and, with regard to FMC Technologies,
a related investigation by the SEC.
In late 2016, Technip S.A. was contacted by the DOJ regarding its investigation of offshore platform projects awarded
between 2003 and 2007, performed in Brazil by a joint venture company in which Technip S.A. was a minority
participant, and we have also raised with DOJ certain other projects performed by Technip S.A. subsidiaries in Brazil
240 TechnipFMC
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U.K. Annual Report and IFRS Financial Statements 2019
between 2002 and 2013. The DOJ has also inquired about projects in Ghana and Equatorial Guinea that were
awarded to Technip S.A. subsidiaries in 2008 and 2009, respectively. We cooperated with the DOJ in its investigation
into potential violations of the FCPA in connection with these projects. We contacted and cooperated with the Brazilian
authorities (Federal Prosecution Service (“MPF”), the Comptroller General of Brazil (“CGU”) and the Attorney General
of Brazil (“AGU”)) with their investigation concerning the projects in Brazil and have also contacted and are
cooperating with French authorities (the Parquet National Financier (“PNF”)) with their investigation about these
existing matters.
On June 25, 2019, we announced a global resolution to pay a total of $301.3 million to the DOJ, the SEC, the MPF,
and the CGU/AGU to resolve these anti-corruption investigations. We will not be required to have a monitor and will,
instead, provide reports on our anti-corruption program to the Brazilian and U.S. authorities for two and three years,
respectively.
As part of this resolution, we entered into a three-year Deferred Prosecution Agreement (“DPA”) with the DOJ related
to charges of conspiracy to violate the FCPA related to conduct in Brazil and with Unaoil. In addition, Technip USA,
Inc., a U.S. subsidiary, pled guilty to one count of conspiracy to violate the FCPA related to conduct in Brazil. We will
also provide the DOJ reports on our anti-corruption program during the term of the DPA.
In Brazil, our subsidiaries Technip Brasil - Engenharia, Instalações E Apoio Marítimo Ltda. and Flexibrás Tubos
Flexíveis Ltda. entered into leniency agreements with both the MPF and the CGU/AGU. We have committed, as part
of those agreements, to make certain enhancements to their compliance programs in Brazil during a two-year self-
reporting period, which aligns with our commitment to cooperation and transparency with the compliance community
in Brazil and globally.
In September 2019, the SEC approved our previously disclosed agreement in principle with the SEC Staff and issued
an Administrative Order, pursuant to which we paid the SEC $5.1 million, which was included in the global resolution
of $301.3 million.
To date, the investigation by PNF related to historical projects in Equatorial Guinea and Ghana has not reached
resolution. We remain committed to finding a resolution with the PNF and will maintain a $70.0 million provision
related to this investigation. As we continue to progress our discussions with PNF towards resolution, the amount of
a settlement could exceed this provision.
There is no certainty that a settlement with PNF will be reached or that the settlement will not exceed current accruals.
The PNF has a broad range of potential sanctions under anticorruption laws and regulations that it may seek to
impose in appropriate circumstances including, but not limited to, fines, penalties, and modifications to business
practices and compliance programs. Any of these measures, if applicable to us, as well as potential customer reaction
to such measures, could have a material adverse impact on our business, results of operations, and financial
condition. If we cannot reach a resolution with the PNF, we could be subject to criminal proceedings in France, the
outcome of which cannot be predicted.
Contingent liabilities associated with liquidated damages - Some of our contracts contain provisions that require us
to pay liquidated damages if we are responsible for the failure to meet specified contractual milestone dates and the
applicable customer asserts a conforming claim under these provisions. These contracts define the conditions under
which our customers may make claims against us for liquidated damages. Based upon the evaluation of our
performance and other commercial and legal analysis, management believes we have appropriately recognized
probable liquidated damages at December 31, 2019 and 2018, and that the ultimate resolution of such matters will
not materially affect our consolidated financial position, results of operations, or cash flows.
241 TechnipFMC
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NOTE 26. FINANCIAL INSTRUMENTS
26.1 Financial assets and liabilities by category
TechnipFMC holds the following financial assets and liabilities:
(In millions)
Trade receivables, net
Other financial assets
Derivative financial instruments
Cash and cash equivalents
Total financial assets
Long-term debt, less current portion
Non-current lease liabilities
Other non-current financial liabilities
Short-term debt and current portion of long-term debt
Accounts payable, trade
Derivative financial instruments
Current lease liabilities
Other financial liabilities
Total financial liabilities
(In millions)
Trade receivables, net
Other financial assets
Derivative financial instruments
Cash and cash equivalents
Total financial assets
Long-term debt, less current portion
Other non-current financial liabilities
Short-term debt and current portion of long-term debt
Accounts payable, trade
Derivative financial instruments
Other current financial liabilities
Total financial liabilities
December 31, 2019
Analysis by Category of Financial Instruments
Carrying
Amount
At Fair Value
through Profit
or Loss
Assets/Liabiliti
es at
Amortized cost
At Fair Value
through OCI
2,281.4 $
390.9
141.4
5,190.1
8,003.8 $
2,013.2
681.7
181.0
2,462.2
2,660.7
194.0
275.1
129.0
8,596.9 $
— $
58.4
12.3
5,190.1
5,260.8 $
—
—
181.0
—
—
21.0
—
129.0
331.0 $
2,281.4 $
332.5
—
—
2,613.9 $
2,013.2
681.7
—
2,462.2
2,660.7
—
275.1
—
8,092.9 $
December 31, 2018
Analysis by Category of Financial Instruments
—
—
129.1
—
129.1
—
—
—
—
—
173.0
—
—
173.0
Carrying
Amount
At Fair Value
through Profit
or Loss
Assets/Liabiliti
es at
Amortized cost
At Fair Value
through OCI
2,467.8 $
313.6
114.0
5,542.2
8,437.6 $
2,546.0 $
276.3
1,983.5
2,610.8
183.3
173.0
7,772.9 $
— $
39.2
21.2
5,542.2
5,602.6 $
— $
276.3
—
—
20.0
173.0
469.3 $
2,467.8 $
274.4
—
—
2,742.2 $
2,546.0 $
—
1,983.5
2,610.8
—
—
7,140.3 $
—
—
92.8
—
92.8
—
—
—
—
163.3
—
163.3
$
$
$
$
$
$
242 TechnipFMC
236
U.K. Annual Report and IFRS Financial Statements 2019
The following explains the judgments and estimates made in determining the fair values of the financial instruments
that are recognized and measured at fair value in the consolidated financial statements. To provide an indication
about the reliability of the inputs used in determining fair value, TechnipFMC has classified its financial instruments
into the three levels prescribed under the accounting standards. An explanation of each level follows underneath the
table.
(In millions)
Investments:
Nonqualified plan:
Traded securities (1)
Money market fund
Stable value fund
Derivative financial instruments:
Synthetic bonds - call option premium
Foreign exchange contracts
Financial assets
Redeemable financial liability
Derivative financial instruments:
Synthetic bonds - embedded derivatives
Foreign exchange contracts
Financial liabilities
(In millions)
Investments:
Nonqualified plan:
Traded securities (1)
Money market fund
Stable value fund
Derivative financial instruments:
Synthetic bonds - call option premium
Foreign exchange contracts
Financial assets
Redeemable financial liability
Derivative financial instruments:
Synthetic bonds - embedded derivatives
Foreign exchange contracts
Financial liabilities
December 31, 2019
Level 1
Level 2
Level 3
Total
54.8 $
—
—
—
—
54.8 $
—
—
—
— $
— $
1.5
2.1
4.3
137.1
145.0 $
—
4.3
189.7
194.0 $
— $
—
—
—
—
— $
310.0
—
—
310.0 $
54.8
1.5
2.1
—
4.3
137.1
199.8
310.0
4.3
189.7
504.0
December 31, 2018
Level 1
Level 2
Level 3
Total
40.6 $
—
—
—
—
40.6 $
—
—
—
— $
— $
1.6
0.5
9.2
104.8
116.1 $
—
9.2
174.1
183.3 $
— $
—
—
—
—
— $
449.3
—
—
449.3 $
40.6
1.6
0.5
9.2
104.8
156.7
449.3
9.2
174.1
632.6
$
$
$
$
$
$
(1)
Includes equity securities, fixed income and other investments measured at fair value.
During the financial year 2019 and 2018, there were no transfer between Level 1 and Level 2 fair value
measurements, and no transfers into or out of Level 3 fair value measurements.
Non-qualified plan––The fair value measurement of our traded securities is based on quoted prices that we have the
ability to access in public markets. Our stable value fund and money market fund are valued at the net asset value of
the shares held at the end of the quarter, which is based on the fair value of the underlying investments using
information reported by our investment adviser at quarter-end.
Investments at FVTPL ––The fair value measurement of our investments at FVTPL is based on quoted prices that
we have the ability to access in public markets.
243 TechnipFMC
237
U.K. Annual Report and IFRS Financial Statements 2019
Mandatorily redeemable financial liability––We determined the fair value of the mandatorily redeemable financial
liabilities using a discounted cash flow model. Refer to Note 22 for further information related to this liability. The key
assumption used in applying the income approach is the selected discount rates and the expected dividends to be
distributed in the future to the noncontrolling interest holders. Expected dividends to be distributed is based on the
noncontrolling interests’ share of the expected profitability of the underlying contract, the selected discount rate, and
the overall timing of completion of the project. A decrease of one percentage point in the discount rate would have
increased the liability by $3.4 million as of December 31, 2019. The fair value measurement is based upon significant
unobservable inputs not observable in the market and is consequently classified as a Level 3 fair value measurement.
Changes in the fair value of Level 3 mandatorily redeemable financial liabilities is presented below.
(In millions)
Balance at January 1
Expenses recognized in the statements of income
Settlements of mandatorily redeemable financial liability
Acquisitions
Balance at December 31
2019
2018
$
$
449.3 $
(423.5 )
562.8
—
310.0 $
312.0
(322.3 )
225.8
40.8
449.3
Fair value of debt—The fair values (based on Level 2 inputs) of our debt, carried at amortized cost, are presented in
Note 19 Debts.
26.2 Derivative financial instruments
For purposes of mitigating the effect of changes in exchange rates, we hold derivative financial instruments to hedge
the risks of certain identifiable and anticipated transactions and recorded assets and liabilities in our consolidated
statement of financial position. The types of risks hedged are those relating to the variability of future earnings and
cash flows caused by movements in foreign currency exchange rates. Our policy is to hold derivatives only for the
purpose of hedging risks associated with anticipated foreign currency purchases and sales created in the normal
course of business and not for trading purposes where the objective is solely or partially to generate profit.
Generally, we enter into hedging relationships such that changes in the fair values or cash flows of the transactions
being hedged are expected to be offset by corresponding changes in the fair value of the derivatives. For derivative
instruments that qualify as a cash flow hedge, the effective portion of the gain or loss of the derivative, which does
not include the time value component of a forward currency rate, is reported as a component of OCI and reclassified
into earnings in the same period or periods during which the hedged transaction affects earnings. For derivative
instruments not designated as hedging instruments, any change in the fair value of those instruments are reflected
in earnings in the period such change occurs.
For further information on foreign currency risk exposure and management, refer to Note 29.
We hold the following types of derivative instruments:
Foreign exchange rate forward contracts—The purpose of these instruments is to hedge the risk of changes in future
cash flows of highly probable purchase or sale commitments denominated in foreign currencies and recorded assets
and liabilities in our consolidated statement of financial position. As of December 31, 2019 and December 31, 2018,
we held the following material net positions:
(In millions except for rates)
1-12 months
12-24 months
Beyond 24
months
Total
Total
December 31, 2019
Maturity
December 31,
2018
Maturity
Australian dollar
Notional amount (LC)
Average forward rate (LC/USD)
244 TechnipFMC
154.5
1.42
(103.1 )
1.42
—
—
51.4
1.42
183.2
—
238
U.K. Annual Report and IFRS Financial Statements 2019
USD equivalent
Brazilian real
Notional amount (LC)
Average forward rate (LC/USD)
USD equivalent
British pound
Notional amount (LC)
Average forward rate (LC/USD)
USD equivalent
Canadian dollar
Notional amount (LC)
Average forward rate (LC/USD)
USD equivalent
Danish krone
Notional amount (LC)
Average forward rate (LC/USD)
USD equivalent
Euro
Notional amount (LC)
Average forward rate (LC/USD)
USD equivalent
Honk Kong dollar
Notional amount (LC)
Average forward rate (LC/USD)
USD equivalent
Indian rupee
Notional amount (LC)
Average forward rate (LC/USD)
USD equivalent
Indonesian rupiah
Notional amount (LC)
Average forward rate (LC/USD)
USD equivalent
Japanese yen
Notional amount (LC)
Average forward rate (LC/USD)
USD equivalent
Malaysian ringgit
Notional amount (LC)
Average forward rate (LC/USD)
USD equivalent
Mexican peso
Notional amount (LC)
Average forward rate (LC/USD)
USD equivalent
Norwegian krone
Notional amount (LC)
Average forward rate (LC/USD)
USD equivalent
Singapore dollar
Notional amount (LC)
Average forward rate (LC/USD)
USD equivalent
Swedish Krona
108.4
1,089.7
4.03
270.3
233.4
0.76
307.8
(89.6 )
1.30
(68.9 )
—
—
—
908.0
0.89
1,019.8
—
—
—
—
—
—
—
—
—
(50.1 )
108.52
(0.5 )
52.6
4.09
12.9
(300.0 )
18.90
(15.9 )
834.0
8.78
94.9
192.2
1.35
142.9
(72.4 )
(101.1 )
4.03
(25.1 )
116.7
0.76
154.1
(0.3 )
1.30
(0.2 )
—
—
—
99.0
0.89
111.1
(138.0 )
7.79
(17.7 )
74.3
71.34
1.0
240,584.6
13,901.0
17.3
(130.5 )
108.52
(1.2 )
(0.2 )
4.09
—
—
—
—
1,573.9
8.78
179.2
15.1
1.35
11.2
—
(190.0 )
4.03
(47.1 )
(235.3 )
0.76
(310.4 )
—
—
—
(7.0 )
6.65
(1.1 )
102.3
0.89
114.8
—
—
—
302.2
71.34
4.2
—
—
—
4,557.2
108.52
42.0
361.2
4.09
88.3
—
—
—
275.1
8.78
31.3
0.9
1.35
0.6
36.0
798.6
4.03
198.1
114.8
0.76
151.5
(89.9 )
1.30
(69.1 )
(7.0 )
6.65
(1.1 )
1,109.3
0.89
1,245.7
(138.0 )
7.79
(17.7 )
376.5
71.34
5.2
240,584.6
13,901.0
17.3
4,376.6
108.52
40.3
413.6
4.09
101.2
(300.0 )
18.90
(15.9 )
2,683.0
8.78
305.4
208.2
1.35
154.7
129.3
—
752.3
—
194.2
—
52.4
67.0
(247.0 )
(181.0 )
—
—
725.9
831.1
—
—
—
—
—
—
8,118.0
73.9
397.0
96.1
—
—
2,264.7
260.6
108.2
79.4
245 TechnipFMC
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U.K. Annual Report and IFRS Financial Statements 2019
Notional amount (LC)
Average forward rate (LC/USD)
USD equivalent
Kuwaiti dinar
Notional amount (LC)
Average forward rate (LC/USD)
USD equivalent
Yuan Renminbi
Notional amount (LC)
Average forward rate (LC/USD)
USD equivalent
U.S. dollar
90.0
9.30
9.7
(2.0 )
0.30
(6.5 )
—
—
—
(578.7 )
15.7
9.30
1.7
(0.2 )
0.30
(0.6 )
31.6
6.97
4.5
(432.6 )
—
—
—
—
—
—
—
—
—
(67.4 )
105.7
9.30
11.4
(2.2 )
0.30
(7.1 )
31.6
6.97
4.5
(1,078.7 )
—
—
—
—
—
—
(1,051.8 )
Foreign exchange rate instruments embedded in purchase and sale contracts—In general embedded derivative
instrument are separated from the host contract if the economic characteristics and risks of the embedded derivative
instrument are not clearly and closely related to those of the host contract and the host contract is not marked-to-
market at fair value. The purpose of these instruments is to match offsetting currency payments and receipts for
particular projects, or comply with government restrictions on the currency used to purchase goods in certain
countries. As of December 31, 2019 and December 31, 2018, our portfolio of these instruments included the following
material net positions:
(In millions except rates)
Brazilian real
Notional amount (LC)
Average forward rate (LC/USD)
USD equivalent
Euro
Notional amount (LC)
Average forward rate (LC/USD)
USD equivalent
Norwegian krone
Notional amount (LC)
Average forward rate (LC/USD)
USD equivalent
U.S. dollar
December 31, 2019
December 31,
2018
1-12 months
12-24 months
Beyond 24
months
Total
Total
20.4
0.25
5.1
(2.0 )
1.12
(2.2 )
(55.2 )
0.11
(6.3 )
3.1
37.2
0.25
9.2
(4.8 )
1.12
(5.4 )
(69.5 )
0.11
(7.9 )
4.5
—
—
—
—
—
—
—
—
—
—
57.6
0.25
14.3
(6.8 )
1.12
(7.6 )
(124.7 )
0.11
(14.2 )
7.6
—
—
—
—
(104.3 )
(12.0 )
13.1
Fair value amounts for all outstanding derivative instruments have been determined using available market
information and commonly accepted valuation methodologies. Accordingly, the estimates presented may not be
indicative of the amounts that we would realize in a current market exchange and may not be indicative of the gains
or losses we may ultimately incur when these contracts are settled.
The following table presents the location and fair value amounts of derivative instruments reported in the consolidated
statement of financial position:
246 TechnipFMC
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U.K. Annual Report and IFRS Financial Statements 2019
(In millions)
Derivatives designated as hedging instruments
Foreign exchange contracts
Current - Derivative financial instruments
$
Long-term - Derivative financial instruments
Total derivatives designated as hedging instruments
Derivatives not designated as hedging instruments
Foreign exchange contracts
Current - Derivative financial instruments
Long-term - Derivative financial instruments
Total derivatives not designated as hedging instruments
Long-term - Derivative financial instruments - Synthetic Bonds -
Call Option Premium
Long-term - Derivative financial instruments - Synthetic Bonds -
Embedded Derivatives
Total derivatives
December 31, 2019
December 31, 2018
Assets
Liabilities
Assets
Liabilities
94.3 $
34.8
129.1
125.0 $
48.0
173.0
7.6
0.4
8.0
4.3
16.3
0.4
16.7
—
83.8 $
9.0
92.8
11.9
0.1
12.0
9.2
$
—
141.4 $
4.3
194.0 $
—
114.0 $
127.7
35.6
163.3
10.7
0.1
10.8
—
9.2
183.3
Cash flow hedges
Foreign exchange forward contracts listed above are designated as hedging instruments in cash flow hedges of
forecast sales and forecast purchases in different local currencies. These forecast transactions are highly probable.
The foreign exchange forward contract balances vary with the level of expected foreign currency sales and purchases
and changes in foreign exchange forward rates.
There is an economic relationship between the hedged items and the hedging instruments as the terms of the foreign
exchange forward contracts match the terms of the expected highly probable forecast transactions (i.e., notional
amount and expected payment date). We have established a hedge ratio of 1:1 for the hedging relationships as the
underlying risk of the foreign exchange forward contracts are identical to the hedged risk components. To test the
hedge effectiveness, the Group uses the hypothetical derivative method and compares the changes in the fair value
of the hedging instruments against the changes in fair value of the hedged items attributable to the hedged risks.
Hedge ineffectiveness can arise from:
• Differences in the timing of the cash flows of the hedged items and the hedging instruments
• Different indexes (and accordingly different curves) linked to the hedged risk of the hedged items and hedging
instruments
• Changes to the forecasted amount of cash flows of hedged items and hedging instruments
We recognized gain of $3.2 million and loss of $2.5 million for the year ended December 31, 2019 and 2018,
respectively, due to discontinuance of hedge accounting as it was probable that the original forecasted transaction
would not occur. Cash flow hedges of forecasted transactions, net of tax, resulted in net accumulated other
comprehensive loss of $39.9 million and $68.1 million at December 31, 2019 and December 31, 2018, respectively.
We expect to transfer an approximately $3.6 million loss from accumulated OCI to earnings during the next 12 months
when the anticipated transactions actually occur. All anticipated transactions currently being hedged are expected to
occur by the second half of 2023.
The following represents the effect of cash flow hedge accounting on the condensed consolidated statements of
income for the year ended December 31, 2019 and 2018:
247 TechnipFMC
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U.K. Annual Report and IFRS Financial Statements 2019
(In millions)
Year Ended December 31, 2019
Year Ended December 31, 2018
Total amount of income
(expense) presented in the
consolidated statements of
income associated with
hedges and derivatives
Cash Flow hedge gain (loss)
recognized in income
Foreign Exchange Contracts
Amounts reclassified from
accumulated OCI to income
(loss)
Ineffective amounts
Total cash flow hedge gain
(loss) recognized in income
Revenue
Cost of
sales
Selling,
general
and
administrative
expense
Other
income
(expense)
, net
Revenue
Cost of
sales
Selling,
general
and
administrative
expense
Other
income
(expense)
, net
$
(26.6 ) $
—
12.0
—
(26.6 )
12.0
$
—
—
—
(9.1 ) $
3.2
(5.9 )
(2.4 ) $
3.4
$
(2.2 )
(4.6 )
(4.8 )
(1.4 )
(0.1 ) $
—
(0.1 )
1.0
(12.3 )
(11.3 )
Gain (loss) recognized in
income on derivatives not
designated as hedging
instruments
Total
Impact of hedging on equity
$
(1.6 )
(28.2 ) $
0.2
12.2 $
—
— $
(10.2 )
(1.7 )
0.2
(16.1 ) $
(6.3 ) $
(1.2 ) $
—
(0.1 ) $
(11.4 )
(22.7 )
The following is the reconciliation of cash flow hedge reserve in OCI:
(In millions)
Balance at beginning of period
Effective portion of changes in fair value
Amount reclassified to profit or loss
Amount transferred to inventories
Tax effect
Balance at end of period
Cash flow
hedge reserve
Year Ended
December 31,
2019
$
$
(68.1 )
58.6
(23.7 )
—
(6.7 )
(39.9 )
26.3 Offsetting financial assets and financial liabilities
We execute derivative contracts with counterparties that consent to a master netting agreement, which permits net
settlement of the gross derivative assets against gross derivative liabilities. Each instrument is accounted for
individually and assets and liabilities are not offset. As of December 31, 2019 and December 31, 2018, we had no
collateralized derivative contracts.
The following tables present both gross information and net information of recognized derivative instruments:
December 31, 2019
December 31, 2018
Gross
Amount
Recognized
Net Amount
Gross
Amount
Recognized
141.4 $
194.0 $
(112.5 ) $
(112.5 ) $
28.9 $
81.5 $
114.0 $
183.3 $
Net Amount
8.1
77.4
(105.9 ) $
(105.9 ) $
Gross
Amounts Not
Offset
Permitted
Under Master
Netting
Agreements
Gross
Amounts Not
Offset
Permitted
Under Master
Netting
Agreements
(In millions)
Derivative assets
Derivative liabilities
$
$
NOTE 27. PAYROLL STAFF
As of December 31, 2019, TechnipFMC had approximately 37,000 full-time employees.
248 TechnipFMC
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The average monthly number of employees (including executive directors) employed by TechnipFMC during the year
was:
By function:
Production / Services
Selling and distribution
General and administrative
Total
2019
27,512
3,368
7,146
38,026
NOTE 28. RELATED PARTIES DISCLOSURES
28.1 Transactions with related parties and equity affiliates
Receivables, payables, revenues and expenses which are included in our consolidated financial statements for all
transactions with related parties, defined as entities related to our directors and main shareholders as well as the
partners of our consolidated joint ventures, were as follows.
Trade receivables consisted of receivables due from following related parties:
(In millions)
TP JGC Coral France SNC
TTSJV W.L.L
TOP CV
Anadarko Petroleum Company
Others
Total trade receivables
December 31,
2019
2018
40.1 $
22.4
—
—
14.3
76.8 $
31.6
—
10.9
4.9
14.3
61.7
$
$
TP JGC Coral France SNC and TTSJV W.L.L. are equity method affiliates. TOP CV was previously an equity method
affiliate.
A member of our Board of Directors (the “Director”) served on the Board of Directors of Anadarko Petroleum Company
(“Anadarko”) until August 2019. In August 2019, Anadarko was acquired by Occidental Petroleum Corporation
(“Occidental”). As a result, the Director no longer serves as a member of the Board of Directors of Anadarko. The
Director is not an officer or director of Occidental.
Trade payables consisted of payables due to following related parties:
(In millions)
Chiyoda
JGC Corporation
IFP Energies nouvelles
Dofcon Navegacao
Magma Global Limited
Anadarko Petroleum Company
Others
Total trade payables
December 31,
2019
2018
24.8 $
15.1
2.4
2.1
—
—
6.7
51.1 $
70.0
69.5
2.4
2.5
0.6
0.7
2.9
148.6
$
$
Dofcon Navegacao and Magma Global Limited are equity affiliates. JGC Corporation and Chiyoda are joint venture
partners on our Yamal project. A member of our Board of Directors is an executive officer of IFP Energies nouvelles.
249 TechnipFMC
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U.K. Annual Report and IFRS Financial Statements 2019
Additionally, we have note receivable balance of $65.2 million and $130.0 million as of December 31, 2019 and 2018,
respectively. The note receivables balance includes $62.5 million and $119.9 million with Dofcon Brasil AS at
December 31, 2019 and 2018, respectively. Dofcon Brasil AS is an associate and accounted for as an equity method
investment. These are included in other assets on our consolidated statements of financial position.
Revenue consisted of amount from following related parties:
(In millions)
TTSJV W.L.L.
TP JGC Coral France SNC
Anadarko Petroleum Company
TOP CV
Storengy
Dofcon Navegacao
Techdof Brasil AS
JGC Corporation
Others
Total revenue
A member of our Board of Directors serve on the Board of Directors for Storengy.
Expenses consisted of amount to following related parties:
(In millions)
Chiyoda
JGC Corporation
Arkema S.A.
Serimax Holdings SAS
Magma Global Limited
TP JGC Coral France SNC
Jumbo Shipping
IFP Energies nouvelles
Creowave OY
Amaja Oil
Altus Intervention
Competentia
Others
Total expenses
Year Ended December 31,
2019
2018
127.9 $
110.4
67.1
11.9
8.8
8.4
8.3
6.7
30.1
379.6 $
—
118.2
124.8
7.2
—
2.9
7.0
—
33.2
293.3
Year Ended December 31,
2019
2018
25.1 $
20.8
18.9
17.7
7.3
5.0
4.5
3.8
2.6
2.0
1.8
1.6
31.3
142.4 $
53.0
81.2
2.6
0.1
3.0
—
—
4.4
1.9
—
—
—
8.5
154.7
$
$
$
$
Serimax Holdings SAS is an equity affiliate. Amaja Oil is a joint venture partner. We own a minority interest in a
Creowave OY joint venture. Members of our Board of Directors serve on the Board of Directors for Arkema S.A., Altus
Intervention, Jumbo Shipping and Competentia.
250 TechnipFMC
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U.K. Annual Report and IFRS Financial Statements 2019
28.2 Executive compensation
The below table sets forth the single figure of remuneration for the periods ended December 31, 2019 and 2018 for
each of TechnipFMC’s executive directors; the Chief Executive Officer and the Executive Chairman.
(In U.S. dollars)
Salary (1)
Taxable benefits (2)
Annual incentive (3)
Long-term incentive awards (4)
Pension-related benefits
Total remuneration
Chief Executive Officer
Executive Chairman
2019
1,236,000 $
84,989
4,843,364
1,455,003
241,779
7,861,135 $
2018
1,230,000 $
122,231
3,894,477
—
190,796
5,437,504 $
2019
335,391 $
46,193
402,470
901,545
9,665
1,695,264 $
2018
1,061,194
110,492
1,758,397
—
29,983
2,960,066
$
$
Salary provides a fixed level of market competitive compensation to our executive directors that reflects their
(1)
major responsibilities. Base pay is set with reference to market median, based on responsibility, experience,
individual performance, and contributions to the business.
Salary for our Chairman and CEO is unchanged since March 1, 2018.
(2)
The Taxable Benefits for 2019 for the Chairman and CEO includes: (i) personal use of Company automobile
of $4,977; (ii) spouse travel for Company business functions of $42,699; (iii) financial planning and personal tax
assistance of $20,935; and (iv) security services of $16,378.
Taxable Benefits for the Executive Chairman include premiums for (i) medical, life, and disability insurance of
$3,457, (ii) financial planning and personal tax assistance of $25,581, and (iii) spouse travel for Company business
functions of $17,155.
The amount disclosed in the Annual Incentive Awards column for our Chairman and CEO represents the sum
(3)
of annual cash incentive bonus and time-based (non-performance based) RSUs awarded in 2019. In 2019, our
Chairman and CEO’s annual cash incentive was $2,903,364 calculated using a target bonus of 135% of salary, a BPI
rating of 172%, and an API rating of 180%. The time-vested (non-performance based) RSUs awarded in 2019 were
valued at $1,940,000, comprising 20% of the Chairman and CEO's long-term equity incentive target value of
$9,700,000.
Amounts disclosed in the Annual Incentive Awards column for our Chairman and CEO represent the sum of
annual cash incentive bonus and time-based (non-performance based) RSUs awarded in 2018. In 2018, our
Chairman and CEO received a cash bonus of $2,154,499 calculated using a target bonus of 135% of salary, a BPI
rating of 123%, and an API rating of 150%. The time-vested (non-performance) RSUs awarded in 2018 were valued
at $1,739,978, comprising 20% of the Chairman and CEO's long-term equity incentive value of $8,700,000.
The Executive Chairman was not awarded any time-based RSUs in 2019. The amount disclosed in 2019 as
annual incentive awards reflects only the annual cash incentive bonus awarded to Mr. Pilenko, pro-rated January 1
to May 1, 2019.
The Executive Chairman was not awarded any time-based RSUs in 2018. The amount disclosed in 2018 as
annual incentive reflects only the annual cash incentive bonus awarded to Mr. Pilenko.
Mr. Pilenko’s 2019 annual cash incentive bonus was paid at its target value, pro-rated to his time of service
as Executive Chairman, from January 1 to May 1, 2019.
The payments for loss of office received by Mr. Pilenko are detailed in the paragraph entitled “Payments for
Loss of Office”.
251 TechnipFMC
245
U.K. Annual Report and IFRS Financial Statements 2019
For more details on the Company's executive director compensation program, please see the section
“Elements of 2019 Executive Director Compensation”.
(4)
Amounts disclosed in the Long-Term Incentive Awards column for our Chairman and CEO represent the value
of performance-based RSUs subject to performance (ROIC) and market-based (TSR) vesting conditions with a
performance period ending December 31, 2019. It does not include the performance (ROIC) or market-based (TSR)
RSUs or market value of stock options awarded in 2019.
Amounts disclosed in the Long-term Incentive Awards column for our Executive Chairman represent the value of
performance-based RSUs subject to performance (ROIC) and market-based (TSR) vesting conditions with a
performance period ending December 31, 2019.
The long-term incentive awards disclosed in our 2018 U.K. Annual Report were the time-based (non-performance
based) RSUs, performance-based RSUs subject to performance (ROIC) and market-based (TSR) vesting conditions
with a performance period ending December 31, 2020, and grant date value of market value stock options awarded
to our Chairman and CEO in 2018. The value of the time-based (non-performance based) RSUs has been moved to
the Annual Incentive Award column (see footnote 4 above). No long-term incentive value related to performance-
based or market-based RSUs was realized in 2018, therefore this value has been excluded. The value of the market
value stock options has also been excluded since the exercise price of these options is equal to the grant price.
Note: The amounts reported as Salary, Taxable Benefits, Annual Incentive Awards, and Pension-Related Benefits to
our former Executive Chairman were paid in Euros. These amounts were converted to U.S. dollars utilizing an
average of the Euro to U.S. dollar exchange rates on the last day of each month during each reporting year (for 2019:
EUR 1 to USD 1.117971). For 2019, the table includes all compensation paid during the period he served as Executive
Chairman, from January 1 to May 1, 2019.
NOTE 29. MARKET RELATED EXPOSURE
29.1 Liquidity risk
Most of our cash is managed centrally and flowed through centralized bank accounts controlled and maintained by
TechnipFMC domestically and in foreign jurisdictions to best meet the liquidity needs of our global operations.
We expect to meet the continuing funding requirements of our global operations with cash generated by such
operations and our existing revolving credit facility.
Net (debt) cash
Net (debt) cash, is a non-IFRS financial measure reflecting cash and cash equivalents, net of debt. Management
uses this non-IFRS financial measure to evaluate our capital structure and financial leverage. We believe net debt,
or net cash, is a meaningful financial measure that may assist investors in understanding our financial condition and
recognising underlying trends in our capital structure. Net (debt) cash should not be considered an alternative to, or
more meaningful than, cash and cash equivalents as determined in accordance with IFRS or as an indicator of our
operating performance or liquidity.
The following table provides a reconciliation of our cash and cash equivalents to net (debt) cash, utilizing details of
classifications from our consolidated statement of financial position:
(In millions)
Cash and cash equivalents
Less: Short-term debt and current portion of long-term debt
Less: Long-term debt, less current portion
Less: Lease liabilities
Net (debt) cash
252 TechnipFMC
246
December 31,
2019
December 31,
2018
$
$
5,190.1 $
2,462.2
2,013.2
956.8
(242.1 ) $
5,542.2
1,983.5
2,208.2
337.8
1,012.7
U.K. Annual Report and IFRS Financial Statements 2019
Cash flows
Operating cash flows - During 2019, we generated $1,182.1 million in cash flows from operating activities as
compared to $182.3 million used in 2018, resulting in a $1,364.4 million increase compared to 2018. 65.9% of the
annual operating cash flow was generated in the fourth quarter, primarily due to timing differences on project
milestones and vendor payments.
Investing cash flows - Investing activities used $419.8 million and $460.2 million of cash in 2019 and 2018,
respectively. The decrease in cash used by investing activities was primarily due to proceeds from repayment of
advance to joint venture of $62.0 million, decrease in cash used for acquisitions, partially offset by increased capital
expenditures and payment to acquire debt securities in 2019. In 2019, we purchased a deepwater dive support vessel,
Deep Discoverer, that was subsequently funded through a sale-leaseback transaction.
Financing cash flows - Financing activities used $1,120.2 million and $444.8 million in 2019 and 2018, respectively.
The increase of $675.4 million in cash required for financing activities was primarily due to increased settlement of
mandatorily redeemable financial liability, increased payments for the principal portion of lease liabilities and
decreased borrowings of commercial paper, partially offset by decreased purchases of treasury stock in 2019.
Credit facility
The following is a summary of our revolving credit facility at December 31, 2019:
(In millions)
Amount
Debt
Outstanding
Commercial
Paper
Outstanding
Letters of
Credit
Unused
Capacity
Maturity
Five-year revolving credit facility
$
2,500
$
—
$
1,967
$
—
$
533
January 2023
Under our commercial paper program, we have the ability to access up to $1.5 billion and €1.0 billion of financing
through our commercial paper dealers. Our available capacity under our revolving credit facility is reduced by any
outstanding commercial paper. We had $1,967.0 million and $1,916.1 million of commercial paper issued under our
facility at December 31, 2019 and 2018, respectively.
As of December 31, 2019, we were in compliance with all restrictive covenants under our revolving credit facility.
The contractual, undiscounted repayment schedule of financial liabilities is as follows:
(In millions)
Debt
Interest on debt
Accounts payable, trade
Derivative financial instruments
Redeemable financial liability
Finance lease liabilities
$
2020
2,462.2 $
54.9
2,660.7
141.3
138.7
305.3
2021
2022
2023
2024
2025 and
beyond
624.4 $
44.4
—
37.3
119.8
184.6
801.2 $
24.2
—
13.2
65.0
128.0
285.6 $
19.3
—
2.2
40.0
101.9
— $
12.1
—
—
15.0
89.7
302.0 $
77.7
—
—
—
330.4
Total
4,475.4
232.6
2,660.7
194.0
378.5
1,139.9
Total financial liabilities as of December
31, 2019
$
5,763.1
$
1,010.5
$
1,031.6
$
449.0
$
116.8
$
710.1
$
9,081.1
253 TechnipFMC
247
U.K. Annual Report and IFRS Financial Statements 2019
(In millions)
Debt
Interest on debt
Accounts payable, trade
Derivative financial instruments
Redeemable financial liability
Finance lease liabilities
$
2019
1,983.5 $
60.6
2,610.8
138.3
179.2
16.2
2020
2021
2022
2023
2024 and
beyond
229.0 $
60.6
—
28.8
100.0
16.2
700.7 $
60.6
—
13.5
142.3
327.7
671.8 $
46.8
—
1.7
70.0
0.8
292.0 $
46.8
—
0.9
40.0
21.1
326.1 $
119.4
—
—
25.0
—
Total
4,203.1
394.8
2,610.8
183.2
556.5
382.0
Total financial liabilities as of December
31, 2018
$
4,988.6
$
434.6
$
1,244.8
$
791.1
$
400.8
$
470.5
$
8,330.4
29.2 Foreign currency exchange rate risk
We conduct operations around the world in a number of different currencies. Many of our significant foreign
subsidiaries have designated the local currency as their functional currency. Our earnings are therefore subject to
change due to fluctuations in foreign currency exchange rates when the earnings in foreign currencies are translated
into U.S. dollars. We do not hedge this translation impact on earnings. A 10% increase or decrease in the average
exchange rates of all foreign currencies at December 31, 2019, would have changed our revenue and profit (loss)
before income taxes attributable to TechnipFMC by approximately $140.6 million and $5.5 million, respectively. A 10%
increase or decrease in the average exchange rates of all foreign currencies at December 31, 2018, would have
changed our revenue and income before income taxes attributable to TechnipFMC by approximately $134.6 million
and $5.7 million, respectively.
When transactions are denominated in currencies other than our subsidiaries’ respective functional currencies, we
manage these exposures through the use of derivative instruments. We primarily use foreign currency forward
contracts to hedge the foreign currency fluctuation associated with firmly committed and forecasted foreign currency
denominated payments and receipts. The derivative instruments associated with these anticipated transactions are
usually designated and qualify as cash flow hedges, and as such the gains and losses associated with these
instruments are recorded in other comprehensive income until such time that the underlying transactions are
recognized. Unless these cash flow contracts are deemed to be ineffective or are not designated as cash flow hedges
at inception, changes in the derivative fair value will not have an immediate impact on our results of operations since
the gains and losses associated with these instruments are recorded in other comprehensive income. When the
anticipated transactions occur, these changes in value of derivative instrument positions will be offset against changes
in the value of the underlying transaction. When an anticipated transaction in a currency other than the functional
currency of an entity is recognized as an asset or liability on the statement of financial position, we also hedge the
foreign currency fluctuation of these assets and liabilities with derivative instruments after netting our exposures
worldwide. These derivative instruments do not qualify as cash flow hedges.
Occasionally, we enter into contracts or other arrangements containing terms and conditions that qualify as embedded
derivative instruments and are subject to fluctuations in foreign exchange rates. In those situations, we enter into
derivative foreign exchange contracts that hedge the price or cost fluctuations due to movements in the foreign
exchange rates. These derivative instruments are not designated as cash flow hedges.
For our foreign currency forward contracts hedging anticipated transactions that are accounted for as cash flow
hedges, a 10% increase in the value of the U.S. dollar would have resulted in an additional loss of $83.8 million and
$50.7 million in the net fair value of cash flow hedges reflected in our consolidated statement of financial position
at December 31, 2019 and 2018, respectively.
29.3 Interest rate risk
We assess effectiveness of forward foreign currency contracts designated as cash flow hedges based on changes in
fair value attributable to changes in spot rates. We exclude the impact attributable to changes in the difference
between the spot rate and the forward rate for the assessment of hedge effectiveness and recognize the change in
254 TechnipFMC
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U.K. Annual Report and IFRS Financial Statements 2019
fair value of this component immediately in earnings. Considering that the difference between the spot rate and the
forward rate is proportional to the differences in the interest rates of the countries of the currencies being traded, we
have exposure in the unrealized valuation of our forward foreign currency contracts to relative changes in interest
rates between countries in our results of operations. Based on our portfolio as of December 31, 2019, we have
material positions with exposure to interest rates in the United States, Canada, Australia, Brazil, the United Kingdom,
Singapore, the European Community and Norway.
Our interest-bearing loans and borrowings were split between fixed and floating rate as follows:
(In millions)
Fixed Rate
Floating Rate
Total debt
December 31,
2019
December 31,
2018
$
$
4,432.3 $
43.1
4,475.4 $
4,468.6
60.9
4,529.5
Sensitivity analysis as of December 31, 2019
TechnipFMC’s floating rate debt amounted to $43.1 million compared to an aggregate total debt of $4,475.4 million.
To ensure liquidity, cash is invested on a short-term basis. Financial products are subject to fluctuations in currency
interest rates.
As of December 31, 2019, the net short-term cash position of TechnipFMC (cash and cash equivalents, less short-
term financial debts) amounted to $2,452.8 million.
As of December 31, 2019, a 1% (100 basis points) increase in interest rates would lower the fair value of the fixed
rate synthetic bonds, convertible bonds and private placements by $53.7 million before tax. A 1% (100 basis points)
decrease in interest rates would raise the fair value by $56.6 million before tax.
A 1% (100 basis points) increase in interest rates would generate an additional profit of $27.3 million before tax in
the net cash position. A 1% (100 basis points) decrease in interest rates would generate a loss of the same amount.
Sensitivity analysis as of December 31, 2018
TechnipFMC’s floating rate debt amounted to $60.9 million compared to an aggregate total debt of $4,529.5 million.
To ensure liquidity, cash is invested on a short-term basis. Financial products are subject to fluctuations in currency
interest rates.
As of December 31, 2018, the net short-term cash position of TechnipFMC (cash and cash equivalents, less short-
term financial debts) amounted to $3,558.7 million.
As of December 31, 2018, a 1% (100 basis points) increase in interest rates would lower the fair value of the fixed
rate synthetic bonds, convertible bonds and private placements by $66.0 million before tax. A 1% (100 basis points)
decrease in interest rates would raise the fair value by $70.6 million before tax.
A 1% (100 basis points) increase in interest rates would generate an additional profit of $35.6 million before tax in
the net cash position. A 1% (100 basis points) decrease in interest rates would generate a loss of the same amount
29.4 Credit risk
Valuations of derivative assets and liabilities reflect the value of the instruments, including the values associated with
counterparty risk. These values must also take into account our credit standing, thus including in the valuation of the
derivative instrument the value of the net credit differential between the counterparties to the derivative contract. Our
methodology includes the impact of both counterparty and our own credit standing. Adjustments to our derivative
assets and liabilities related to credit risk were not material for any period presented.
255 TechnipFMC
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U.K. Annual Report and IFRS Financial Statements 2019
By their nature, financial instruments involve risk, including credit risk, for non-performance by counterparties.
Financial instruments that potentially subject us to credit risk primarily consist of trade receivables, contract assets,
contractual cash flows from our debt instruments (primarily loans), cash equivalents and deposits with banks, as well
as derivative contracts. We manage the credit risk on financial instruments by transacting only with what
management believes are financially secure counterparties, requiring credit approvals and credit limits, and
monitoring counterparties’ financial condition. Our maximum exposure to credit loss in the event of non-performance
by the counterparty is limited to the amount drawn and outstanding on the financial instrument. We mitigate credit
risk on derivative contracts by executing contracts only with counterparties that consent to a master netting
agreement, which permits the net settlement of gross derivative assets against gross derivative liabilities.
We apply the IFRS 9 simplified approach to measuring expected credit losses which uses a lifetime expected loss
allowance for all trade receivables and contract assets. TechnipFMC’s trade receivables and contracts assets
constitute a homogeneous portfolio. The contract assets relate to unbilled work in progress and have substantially
the same risk characteristics as the trade receivables for the same types of contracts. TechnipFMC has therefore
concluded that the expected loss rates for trade receivables are a reasonable approximation of the loss rates for the
contract assets. To measure the expected credit losses, trade receivables and contract assets have been grouped
based on a selection of TechnipFMC’s subsidiaries that cover a representative part of TechnipFMC’s consolidated
trade receivables and contract assets at each period end.
The expected loss rates are based on the payment profiles of sales over a period of 36 month before December 31,
2018 or January 1, 2018, respectively, and the corresponding historical credit losses experienced within this period.
Credit risk exposure on our trade receivables and contract assets using a provision matrix are set out as follows:
December 31, 2019
Days past due
(In millions)
Carrying amount - Gross
Weighted average expected credit loss rate
(In millions)
Carrying amount - Gross
Weighted average expected credit loss rate
$
$
Current
1,539.5 $
—
Less than 3
months
3 to 12
months Over 1 year
366.1 $
—
232.0 $
—
244.9 $
—
Total Trade
Receivables
2,382.5
Contract
Assets
1,521.6
$
0.16 %
0.16 %
December 31, 2018
Days past due
Current
1,807.9 $
—
Less than 3
months
3 to 12
months
Over 1 year
366.8 $
—
110.3 $
—
308.0 $
—
Total Trade
Receivables
2,593
0.14 %
$
Contract
Assets
1,298.7
0.14 %
NOTE 30. AUDITORS’ REMUNERATION
Fees payable to TechnipFMC’s auditors and its associates are as follows:
(In millions)
2019
2018
Fees payable to TechnipFMC plc’s auditors for the audit of its annual financial statements including 404B
internal control
$
Fees payable to TechnipFMC plc’s auditors and its associates for the audit of its subsidiaries
Audit services
Audit related services
Legal and tax compliance services
Other services
Total fees payable for other services
$
$
$
$
11.2
4.5
15.7 $
8.4 $
0.1
—
8.5 $
11.6
3.9
15.5
0.3
0.5
0.9
1.7
256 TechnipFMC
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U.K. Annual Report and IFRS Financial Statements 2019
NOTE 31. SUBSIDIARIES, JOINT VENTURE UNDERTAKINGS AND EQUITY AFFILIATES
TechnipFMC’s subsidiaries, joint venture undertakings and equity affiliates at December 31, 2019 are listed below:
31.1 Directly owned subsidiaries
Company Name
Address
Share Class Group interest
held in %
AUSTRALIA
Technip Australia Pty
1120 Hay Street, Perth WA 6000
Ordinary shares 100
BRAZIL
Technip Cleplan
Empreendimentos E Projetos
Industriais Ltda.
CHINA
Technip Chemical Engineering
(Tianjin) Co., Ltd.
FRANCE
Compagnie Française De
Réalisations Industrielles, Cofri
SAS
Cybernetix SAS
Rua Dom Marcos Barbosa, nº 2, sala 202 (parte)
20211-178, Cidade Nova, Rio de Janeiro
Equity interest
58.291
521 Jingjin, Road Tianjin
Equity interest
100
6-8 Allée de l'Arche - Faubourg de l'Arche - ZAC Danton
92400 Courbevoie
Ordinary shares 100
Technopôle de Château-Gombert 13382 Marseille Cedex 13
Ordinary shares 100
Genesis Nimes SAS
19, Avenue Feuchères 30000 Nîmes
Technip Corporate Services SAS 6-8 Allée de l'Arche - Faubourg de l'Arche - ZAC Danton
Ordinary shares 100
Ordinary shares 781
92400 Courbevoie
Technip Eurocash SNC
6-8 Allée de l'Arche - Faubourg de l'Arche - ZAC Danton
Equity interest
961
Technip France SAS
92400 Courbevoie
6-8 Allée de l'Arche - Faubourg de l'Arche - ZAC Danton
92400 Courbevoie
Technip Ingenierie Defense SAS 6-8 Allée de l'Arche - Faubourg de l'Arche - ZAC Danton
Ordinary shares 781
Ordinary shares 100
Technip Offshore International
SAS
92400 Courbevoie
6-8 Allée de l'Arche - Faubourg de l'Arche - ZAC Danton
Ordinary shares 100
92400 Courbevoie
Technipnet SAS
6-8 Allée de l'Arche - Faubourg de l'Arche - ZAC Danton
Ordinary shares 100
ITALY
Technip Italy S.P.A.
TPL - Tecnologie Progetti Lavori
S.P.A. In Liquidazione
MALAYSIA
Technip Far East Sdn Bhd
NETHERLANDS
92400 Courbevoie
68, Viale Castello della Magliana
00148 Rome
68, Viale Castello della Magliana
00148 Rome
Suite 13.03, 13th Floor
207 Jalan Tun Razak
Kuala Lumpur
50400
Ordinary shares 100
Ordinary shares 100
Ordinary shares 100
Technip Energies BV
6-8 Allée de l'Arche - Faubourg de l'Arche - ZAC Danton
Ordinary shares 100
Technip Holding Benelux B.V.
92400 Courbevoie
Afrikaweg 30
Zoetermeer 2713 AW
NEW-CALEDONIA - FRENCH OVERSEAS TERRITORY
Technip Nouvelle-Caledonie
27 bis Avenue du Maréchal Foch - Galerie CENTER FOCH - Centre-
Ville
B.P. 4460
98847 NOUMEA
PANAMA
257 TechnipFMC
251
Ordinary shares 100
Ordinary shares 100
U.K. Annual Report and IFRS Financial Statements 2019
Company Name
Address
Technip Overseas S.A.
East 53rd Street
Marbella, Humboldt Tower 2nd Floor
RUSSIAN FEDERATION
Technip Rus LLC
SINGAPORE
266 Litera O, Ligovsky Prospect
196084 St Petersburg
Technip Energies Singapore Pte
Ltd
149 Gul Circle
629605 Singapore
SPAIN
Technip Iberia, S.A.
SWITZERLAND
Engineering Re AG
UNITED KINGDOM
Building n° 8 - Floor 4th Plaça de la Pau s/n
World Trade Center - Almeda Park - Cornellà de Llobregat
08940 Barcelone
Basteiplatz 7
8001 Zurich
TechnipFMC Corporate Holdings
Limited
One St Paul’s Churchyard
London EC4M 8AP
TechnipFMC Holdings Limited
One St Paul’s Churchyard
London EC4M 8AP
VENEZUELA
Inversiones Dinsa, C.A.
Technip Bolivar, C.A. en
liquidation
Avenida Principal de La Urbina, calle 1 con calle 2
Centro Empresarial INECOM, piso 1, oficina 1-1 La Urbina, Minicipio
Sucre
1070 Caracas
523 Zona Industrial Matanzas, Planta De Bauxilum
Puerto Ordaz Ciudad Bolivar
1 Subsidiary fully and indirectly owned by TechnipFMC, plc.
31.2 Indirectly owned subsidiaries
Share Class Group interest
held in %
Ordinary shares 100
Ordinary shares 99.98
Ordinary shares 100
Ordinary shares 99.991
Ordinary shares 100
Ordinary shares 100
88.121
Ordinary shares
A
Ordinary shares
B
Ordinary shares 100
Ordinary shares 99.881
Company Name
Address
Share Class
Group interest
held in %
ALGERIA
FMC Technologies Algeria SARL Rue Shakespeare
Ordinary Shares 100
ANGOLA
BT 08/10 Commune d’El Mouradia
Algiers
Angoflex Industrial Limitada
Rua 1 de Dezembro nº 15, Lobito, Província de Benguela
Ordinary Shares 70
Technip Angola-Engenharia,
Limitada
Rua Rei Katyavala, N.°43-45,
Ordinary Shares 60
Edificio Avenca Plaza, 5°. Andar
5364 Luanda
TechnipFMC Angola, Limitada
Rua Rei Katyavala, n.º 41-43, Edifício Avenca Plaza, 12.º Andar,
Bairro e Distrito Urbano da Ingombota, Luanda, Angola
Ordinary Shares 49
ARGENTINA
FMC Technologies Argentina
S.R.L.
AUSTRALIA
FMC Technologies Australia
Limited
Genesis Oil & Gas Consultants
(Pty) Ltd
c/o Allende & Brea
Maipú 1300, 10th Floor
Buenos Aires C1006ACT
Equity interest
100
66 Sparks Road - Henderson WA 6166
Ordinary shares 100
1120 Hay St, West Perth WA 6005
Ordinary shares 100
258 TechnipFMC
252
U.K. Annual Report and IFRS Financial Statements 2019
Company Name
Address
Technip Oceania Pty Ltd
1120 Hay St, West Perth WA 6005
BAHAMAS
AMC Angola Offshore Ltd
BELARUS
Technip Bel
c/o Trident Corporate Services Limited
Provident House
East Hill Street, Nassau
Pobediteley avenue, 17, room 1009
220004 Minsk
BRAZIL
Cybernétix Produtos E Serviços
Do Brasil Ltda.
Rua Dom Marcos Barbosa, nº 2, sala 402
20211-178, Cidade Nova, Rio de Janeiro
Share Class
Group interest
held in %
Ordinary shares 100
Ordinary shares 100
Ordinary shares 100
Equity interest
100
FMC Technologies do Brasil Ltda Rodovia Presidente Dutra 2660
Equity interest
100
Forsys Subsea Engenharia e
Serviços Offshore Ltda.
Genesis Oil & Gás Brasil
Engenharia Ltda.
GLBL Brasil Oleodutos E
Serviços Ltda.
Technip Brasil - Engenharia,
Instalações e Apoio Marítimo
Ltda.
Technip Serviços Offshore,
Engenharia e Navegação Ltda.
BRUNEI DARUSSALAM
Technip Engineering (B)
Sendirian Berhad
CAMEROON
FMC Technologies Cameroon
SARL
CANADA
TechnipFMC Canada Limited
CHILE
Pavuna - RJ - Brazil
CEP 21535-900
Rua Dom Marcos Barbosa, nº 2, salas 403 e 404
20211-178 Cidade Nova, Rio de Janeiro
Rua Paulo Emídio Barbosa, 485, quadra 4 (parte), Cidade
Universitária cidade e estado do Rio de Janeiro, CEP: 21941-615
Rua Dom Marcos Barbosa, nº 2, sala 602 (parte)
20211-178, Cidade Nova, Rio de Janeiro
Rua Dom Marcos Barbosa, nº 2, salas 202 (parte), 203, 302, 303, 304,
503 e 603
20211-178, Cidade Nova, Rio de Janeiro
Rua Dom Marcos Barbosa, nº 2, salas 204, 403, 404, 504 e 604
(parte)
20211-178, Cidade Nova, Rio de Janeiro
B6, Second Floor, Block B
Shakirin Complex, Kampong Kiulap
BE1518 Bandar Seri Begawan
Equity interest
100
Equity interest
100
Equity interest
100
Equity interest
100
Equity interest
100
Ordinary shares 93.10
Zone Portuaire/Place de l’Udeac,
Equity interest
100
P.B. 12804, Bonanjo, Douala
c/o McInnes Cooper
5th Floor, 10 Fort William Place
P.O. Box 5939, St John's, NL A1C 5X4
Newfoundland and Labrador
Ordinary shares 100
FMC Technologies Chile Limitada Callao 2910, Office 704
Equity interest
100
CHINA
FMC Technologies Energy (Hong
Kong) Limited
FMC Technologies Energy
Holdings (Shanghai) Ltd.
FMC Technologies (Shanghai)
Co., Ltd
FMC Technologies (Shenzhen)
Co., Ltd.
Shanghai Technip Trading
Company
Las Condes, Santiago
Suite 1106-8, 11/F.,
Tai Yau Building, No. 181 Johnston Road,
Wanchai
Hong Kong
Suite 1106-8, 11/F.,
Tai Yau Building, No. 181 Johnston Road,
Wanchai
Hong Kong
Suite 1106-8, 11/F.,
Tai Yau Building, No. 181 Johnston Road,
Wanchai
Hong Kong
Room H, 12/F, Times Plaza, 1 Taizi Road,
Shekou, Nanshan District
518607 Shenzhen
Room 1903, 55 Ding’An Road, Shanghai
259 TechnipFMC
253
Ordinary shares 100
Ordinary shares 100
Equity interest
100
Equity interest
100
Equity interest
100
U.K. Annual Report and IFRS Financial Statements 2019
Company Name
Address
Share Class
Group interest
held in %
Technip Engineering Consultant
(Shanghai) Co., Ltd
CYPRUS
Subtec Marine Services Limited
EGYPT
Room 1902, 55 Ding’An Road, Shanghai
Equity interest
100
3 Chrysanthou Mylona,
P.C.3030 Limassol
Ordinary shares 100
FMC Technologies Egypt LLC
1 Street 293 New Maadi Cairo
Ordinary shares 100
Carretera de Aeropuerto, KM 5, APDO 925, Malabo. EG
Ordinary shares 65
EQUATORIAL GUINEA
Technipfmc Equatorial Guinea
SARL
FRANCE
Angoflex SAS
Clecel SAS
Consorcio Intep SNC
Cyxplus SAS
Flexi France SAS
FMC Loading Systems SAS
FMC Technologies Overseas,
SAS
FMC Technologies SAS
ZAC Danton
92400 Courbevoie
6-8 Allée de l'Arche - Faubourg de l'Arche - ZAC Danton
92400 Courbevoie
6-8 Allée de l'Arche - Faubourg de l'Arche - ZAC Danton
92400 Courbevoie
Technopôle de Château-Gombert
13382 Marseille Cedex 13
Rue Jean Huré
76580 Le Trait
Route des Clérimois
89100 Sens
Route des Clérimois
89100 Sens
Route des Clérimois
89100 Sens
Gydan LNG SNC
Gygaz SNC
Middle East Projects International
(Technip Mepi)
Safrel SAS
SCI les Bessons
Technip Normandie SAS
Technip N-Power SAS
6-8 Allée de l'Arche - Faubourg de l'Arche - ZAC Danton
92400 Courbevoie
6-8 Allée de l'Arche - Faubourg de l'Arche - ZAC Danton
92400 Courbevoie
6-8 Allée de l'Arche - Faubourg de l'Arche - ZAC Danton
92400 Courbevoie
6-8 Allée de l'Arche - Faubourg de l'Arche - ZAC Danton
92400 Courbevoie
Technopôle de Château-Gombert
13382 Marseille Cedex 13
14 rue Linus Carl Pauling
PAT La Vatine
76130 Mont-Saint-Aignan
6-8 Allée de l'Arche - Faubourg de l'Arche - ZAC Danton
92400 Courbevoie
TechnipFMC Corporate Services
SAS
6-8 Allée de l'Arche - Faubourg de l'Arche - ZAC Danton
92400 Courbevoie
Ordinary shares 100
Ordinary shares 100
Equity interest
90
Ordinary shares 100
Ordinary shares 100
Ordinary shares 100
Ordinary shares 100
Ordinary shares 100
Ordinary shares 84
Ordinary shares 84.85
Ordinary shares 100
Ordinary shares 100
Equity interest
100
Ordinary shares 100
Ordinary shares 100
Ordinary shares 100
GABON
FMC Technologies Gabon
S.A.R.L.
Boite Postale (B.P) 277
Port Gentil
Equity interest
90
GERMANY
F.A. Sening GmbH
Smith Meter GmbH
Technip Offshore Wind Germany
- GmbH
Technip Zimmer GmbH
Regentstraße 1
25474 Ellerbek
Regentstraße 1
25474 Ellerbek
Friesstrasse 20
60388 Frankfurt am Main
Friesstrasse 20
60388 Frankfurt am Main
GHANA
260 TechnipFMC
254
Ordinary shares 100
Ordinary shares 100
Ordinary shares 100
Ordinary shares 100
U.K. Annual Report and IFRS Financial Statements 2019
Company Name
Address
FMC Technologies (Ghana)
Limited
Commercial Port Gate 2 Takoradi
P.O. Box CT 42, Cantonments, Accra
Share Class
Group interest
held in %
Ordinary shares 100
GNPC-TechnipFMC Engineering
Services Limited
6th Floor, One Airport Square, Airport City, Accra
PMB CT 305 Cantonments, Accra
Ordinary shares 70
GUYANA
TechnipFMC Guyana INC.
INDIA
FMC Technologies India Private
Limited
Technip Global Business
Services Private Limited
Technip India Limited
INDONESIA
PT FMC Santana Petroleum
Equipment Indonesia
PT FMC Technologies Subsea
Indonesia
IRAQ
c/o Cameron & Shepherd
2 Avenue of the Republic,
Georgetown
Plot No.27(Part) Survey No. 124, Road No 12, Commerzone,
Raheja IT Park, Opp. Institute of Preventive Medicine,
Industrial Park, IDA Nacharam, Hyderabad, Telangana 500 076
9th Floor, World Trade Tower (WTT)
Tower-B
C-1, Sector 16, Noida - 201301, U.P
201301 Noida
B-22, Okhla Phase, 1 Industrial Area
110020 New Delhi
Ordinary shares 100
Ordinary shares 100
Ordinary shares 100
Ordinary shares 100
Jalan Cakung Cilincing Raya KM 2.5
Semper, Jakarta 14130
Metropolitan Tower Lantai 15 Unit B, JL RA Kartini
TB Simatupang Kav 14 RT/RW 010/04, Cilandak Barat, Cilandak,
Jakarta Selatan 12430
Ordinary shares 60
Ordinary shares 95
F.M.C Petroleum Services Ltd.
Erbil - English Village - N°161
Ordinary shares 100
Advanced Oil Services LLC
Al Mansour - District 609 - Alley 23, Building 70 - Office 15, Baghdad
Equity interest
100
ISLE OF MAN
Subtec Asia Ltd
ITALY
Burleigh Manor, Peel Road
Douglas IM1 5EP
Consorzio Technip Italy
Procurement Services - TIPS
FMC Technologies S.r.l. a socio
unico
Technip Italy Direzione Lavori
S.P.A.
68, Viale Castello della Magliana
00148 Rome
6, Via Giardinetto
43044 Collechio Parma
68, Viale Castello della Magliana
00148 Rome
Ordinary shares 100
Equity interest
100
Equity interest
100
Ordinary shares 100
26 New Street, St. Helier, Jersey, JE2 3RA
Ordinary shares 100
JERSEY
CSO Oil & Gas Technology (West
Africa) Ltd
KAZAKHSTAN
FMC Technologies Kazakhstan
LLP
TKJV LLP
LUXEMBOURG
43/5 building, industrial zone 3
Birlik residential area, 130006
Kyzyltobe village, Munaily district
Mangistau Region
Karagandy district, Karaganda city, Kazybek bi district, av.Abdirova,
bld. 3, postal index 100009
Equity interest
100
Participatory
Interest
49.5
Ordinary shares 100
Ordinary shares 100
Ordinary shares 65.75
FMC Technologies Global Rental
Tools S.a r.l
FMC Technologies Tool Holdings
S.ar.l
8-10 avenue de la Gare
1610 Luxembourg
8-10 avenue de la Gare
1610 Luxembourg
MALAYSIA
Asiaflex Products Sdn. Bhd.
Suite 13.03, 13th Floor
207 Jalan Tun Razak
50400 Kuala Lumpur
261 TechnipFMC
255
U.K. Annual Report and IFRS Financial Statements 2019
Company Name
Address
Flexiasia Sdn Bhd
Suite 13.03, 13th Floor
207 Jalan Tun Razak
50400 Kuala Lumpur
FMC Petroleum Equipment
(Malaysia) Sdn. Bhd.
FMC Technologies Global Supply
Sdn. Bhd.
Genesis Oil & Gas Consultants
Malaysia Sdn. Bhd.
Suite 9D, Level 9, Menara Ansar, 65 Jalan Trus
Johor Bahru
80000 Johor
Suite 9D, Level 9, Menara Ansar, 65 Jalan Trus
Johor Bahru
80000 Johor
Suite 13.03, 13th Floor
207 Jalan Tun Razak
50400 Kuala Lumpur
MAURITIUS
Coflexip Stena Offshore
(Mauritius) Ltd.
GIL Mauritius Holdings Ltd
Global Construction Mauritius
Services Ltd
Global Vessels Mauritius, Ltd.
MEXICO
FMC Technologies de México
S.A. de R.L de C.V.
FMC Technologies Servicios
Corporativos, S. de R.L de C.V.
Global Industries Mexico
Holdings S. de R.L. de C.V.
Global Industries Offshore
Services, S. de R.L. de C.V.
Global Industries Services, S. de
R.L. de C.V.
Global Offshore Mexico, S. de
R.L. de C.V.
Global Vessels Mexico, S. de
R.L. de C.V.
Technip De Mexico S. de R.L. de
C.V.
MOZAMBIQUE
Technip Mozambique Lda
33, Edith Cavell Street
11324 Port Louis
33, Edith Cavell Street
11324 Port Louis
33, Edith Cavell Street
11324 Port Louis
33, Edith Cavell Street
11324 Port Louis
FMC Technologies de Mexico, S.A. de C.V.
Laurel Lote 41, Manzana 19, Col. Bruno Pagliai
Veracruz, Veracruz
C.P. 91697
FMC Technologies de Mexico, S.A. de C.V.
Laurel Lote 41, Manzana 19, Col. Bruno Pagliai
Veracruz, Veracruz
C.P. 91697
Vasco de Quiroga 3000
Edificio Calakmul piso 6
Colonia Santa Fe CP 01210
México, D.F. México
Vasco de Quiroga 3000
Edificio Calakmul piso 6
Colonia Santa Fe CP 01210
México, D.F. México
Vasco de Quiroga 3000
Edificio Calakmul piso 6
Colonia Santa Fe CP 01210
México, D.F. México
Vasco de Quiroga 3000
Edificio Calakmul piso 6
Colonia Santa Fe CP 01210
México, D.F. México
Vasco de Quiroga 3000
Edificio Calakmul piso 6
Colonia Santa Fe CP 01210
México, D.F. México
Vasco de Quiroga 3000
Edificio Calakmul piso 6
Colonia Santa Fe CP 01210
México, D.F. México
Distrito Urbano 1, Bairro Central
Avenida da Vladmir Lénine
n.˚1123 Ed. Topázio 7˚ andar
Maputo
262 TechnipFMC
256
Share Class
Group interest
held in %
Ordinary shares 48.89
Ordinary shares 100
Ordinary shares 100
Ordinary shares 100
Ordinary shares 100
Ordinary shares 100
Ordinary shares 100
Ordinary shares 100
Ordinary shares 100
Ordinary shares 100
Ordinary shares 100
Ordinary shares 100
Ordinary shares 100
Ordinary shares 100
Ordinary shares 99
Ordinary shares 100
Ordinary Shares 100
U.K. Annual Report and IFRS Financial Statements 2019
Company Name
Address
FMC Technologies Mozambique
Lda
Distrito Urbano 1,
Av. Zedequias Manganhela no 257,
5 Andar (5th floor),
Maputo Cidade
MYANMAR
Technip Myanmar Co. Ltd
No. 18 G/F, Ground Floor
Tha Pyay Nyo Street ,Shin Saw Pu Quarter
Sanchaung Township
11201
NETHERLANDS
FMC Separation Systems B.V.
FMC Technologies B.V.
FMC Technologies Brazil Finance
B.V.
FMC Technologies Global B.V.
Delta 101
Amsterdam 6825 MN Arnhem
Zuidplein 126, WTC, Tower H, 15é
Amsterdam 1077XV
Zuidplein 126, Tower H, 15th Fl.
1077 XV Amsterdam
Zuidplein 126, Tower H, 15th Fl.
1077 XV Amsterdam
FMC Technologies International
Services B.V.
Zuidplein 126, Tower H, 15th Fl.
1077 XV Amsterdam
FMC Technologies Surface
Wellhead B.V.
TSLP B.V.
Technip Benelux B.V.
Technip EPG B.V.
TechnipFMC PLSV BV
TechnipFMC PLSV CV
Industrieweg 31
7761 PV Schoonebeek
Afrikaweg 30
Zoetermeer 2713 AW
Afrikaweg 30
Zoetermeer 2713 AW
Barbizonlaan 50
Capelle aan den Ijssel
2908 ME
Afrikaweg 30
Zoetermeer 2713 AW
Afrikaweg 30
Zoetermeer 2713 AW
Technip Offshore Contracting
B.V.
Technip Offshore N.V.
Technip Oil & Gas B.V.
Luna ArenA, Herikerbergweg 238
P.O. Box 23393 - 1100 DW Amsterdam
Zuidoost 1101 CM
Luna ArenA, Herikerbergweg 238
P.O. Box 23393 - 1100 DW Amsterdam
Zuidoost 1101 CM
Afrikaweg 30
Zoetermeer 2713 AW
Technip Ships (Netherlands) B.V. Afrikaweg 30
Zoetermeer 2713 AW
TechnipFMC Cash B.V.
Zuidplein 126, 1077XV Amsterdam
TechnipFMC International
Holdings B.V.
Zuidplein 126, WTC, Tower H, 15th FI.
Amsterdam 1077XV
Share Class
Group interest
held in %
Ordinary Shares 100
Ordinary shares 100
Ordinary shares 100
Ordinary shares 100
Ordinary shares 100
Ordinary shares 100
Ordinary shares 100
Ordinary shares 100
Ordinary shares 100
Ordinary shares 100
Ordinary shares 100
Ordinary shares 100
Ordinary shares 100
Ordinary shares 100
Ordinary shares 100
Ordinary shares 100
Ordinary shares 100
Ordinary shares 100
Ordinary shares
Preferred shares
100
100
TechnipFMC Pipelaying BV
Kingsfordweg 151, 1043GR Amsterdam
Ordinary shares 100
NIGERIA
Global Pipelines Plus Nigeria Ltd. 7 Town Planning way, Ilupeju, Lagos
Neptune Maritime Nigeria Ltd.
Neptune Base, Rumuolumeni
PMB 017 (Trans Amadi)
Port Harcourt
TechnipFMC Nigeria Limited
22A Gerrard Road
Ikoyi Lagos
263 TechnipFMC
257
Ordinary shares 99.99
Ordinary shares 66.91
Ordinary shares 100
U.K. Annual Report and IFRS Financial Statements 2019
Share Class
Group interest
held in %
Ordinary shares 100
Ordinary shares 26.52
Ordinary shares 51
Ordinary shares 100
Ordinary shares 100
Ordinary shares 51
Ordinary shares 51
Ordinary shares 100
Equity interest
100
Ordinary shares 100
Ordinary shares 100
Ordinary shares 100
Ordinary shares 100
Ordinary shares 51
Ordinary shares 51
Ordinary shares 30.6
Ordinary shares 100
Ordinary shares 100
Ordinary shares 100
Ordinary shares 100
Company Name
Address
Technip Offshore (Nigeria) Ltd
NORWAY
Agat Technology AS
Anchor Contracting AS
FMC Kongsberg Subsea AS
FMC Technologies Norway AS
Inocean AS
Inocean Engineering AS
Kanfa AS
Technip - FMC IEPCI DA
Genesis Oil & Gas Consultants
Norway AS
Technip Chartering Norge AS
Technip Norge AS
22A, Gerrard Road,
Ikoyi, Lagos.
Lagerveien 23
4033, Stavanger
Bryggegata 9
0250 Oslo
Kirkegårdsveien 45
3616 Kongsberg
Kirkegårdsveien 45
3616 Kongsberg
Bryggegata 3
0250 Oslo
Bryggegata 9
0250 Oslo
Philip Pedersens vei 7
1366 Lysaker
Philip Pedersens vei 7
1366 Lysaker
Moseidsletta 122
4033 Stavanger
Philip Pedersens vei 7
1366 Lysaker
Philip Pedersens vei 7
1366 Lysaker
Technip-Coflexip Norge AS
Philip Pedersens vei 7
1366 Lysaker
TIOS AS
TIOS Crewing AS
POLAND
Inocean Poland Sp Z.o.o
FMC Technologies Sp.z.o.o.
Technip Polska Sp. Z o.o.
PORTUGAL
Angoltech, SGPS, LDA.
Lusotechnip Engenharia,
Sociedade Unipessoal Lda.
RUSSIAN FEDERATION
FMC Eurasia LLC
Rus Technip LLC
JSC FMC Overseas
SAUDI ARABIA
FMC Technologies Saudi Arabia
Limited
Technip Saudi Arabia Limited
Lagerveien 23
4033 Stavanger
Lagerveien 23
4033 Stavanger
ul. Dubois 20
71-610 Szczecin
al. Gen. Tadeusza Bora-Komorowskiego 25b
Buma Quattro Complex Buidling B
31476 Krakow
ul. Promyka No.13, suíte 4,
01-604 Warsaw
Rua Castilho, 39-15°, São Mamede
1250-068 Lisboa
Centro Empresarial Torres de Lisboa, Rua Tomás da Fonseca, Torre
E, Piso 9
1600-209 Lisboa
st. B. Yakimanka, 31, office 401, 119180 Moscow
Prechistenka, str. 40/2, building 1, office XXVII, 4th floor, 119034
Moscow
h.11, 3rd Samotechniy pereylok, 127473 Moscow
Ordinary shares 100
Ordinary shares 51
Ordinary shares 100
PO Box 3076
2nd Industrial City
Dammam 34326, Eastern Province
Dhahran Center Building - 5th Floor, Suite #501
Dharan Street, P.O. Box 30893
31952 Al-Khobar
Ordinary shares 100
Ordinary shares 76
264 TechnipFMC
258
U.K. Annual Report and IFRS Financial Statements 2019
Company Name
Address
TPL Arabia
Dhahran Center Building - 5th Floor, Suite #501
Dharan Street, P.O. Box 30893
31952 Al-Khobar
Share Class
Group interest
held in %
Ordinary shares 90
SINGAPORE
Coflexip Singapore Pte Ltd
FMC Technologies Global
Services Pte. Ltd.
FMC Technologies Singapore
Pte. Ltd.
Technip Singapore Pte. Ltd.
TP-NPV Singapore Pte Ltd
SOUTH AFRICA
149 Gul Circle
629605 Singapore
149 Gul Circle
629605 Singapore
149 Gul Circle
629605 Singapore
149 Gul Circle
629605 Singapore
149 Gul Circle
629605 Singapore
FMC Technologies (Pty.) Ltd.
Koper Street Brackenfell 7560
Technip South Africa (Pty.) Ltd
34 Monkor Road - Randpark Ridge
Randburg
2194
SPAIN
Global Industries Offshore Spain,
S.L.
Arturo Soria 263B
28003 Madrid
SWEDEN
Inocean AB
SWITZERLAND
FMC Kongsberg International
GmbH
FMC Technologies GmbH
Technipetrol AG
THAILAND
Global Industries Offshore
(Thailand), Ltd.
Gårdatorget 1
SE-412 50 Gothenburg
Bahnofstrasse 10
6300 Zurich
Bahnofstrasse 10
6300 Zug
Industriestrasse 13c
CH-6304 Zug
18th Floor, Sathorn Thani Building 2, No. 92/52,
North Sathorn Road, Kwaeng Silom, Khet Bangrak,
Bangkok 10500
Technip Engineering (Thailand)
Co. Ltd
20th Floor - Suntowers Building A
123 Vibhavadee - Rangsit Road
Chatuchak, Bangkok 10900
Ordinary shares 100
Ordinary shares 100
Ordinary shares 100
Ordinary shares 100
Ordinary shares 100
Ordinary shares 100
Ordinary shares 100
Ordinary shares 100
Ordinary shares 51
Ordinary shares 100
Ordinary shares 100
Ordinary shares 100
Ordinary shares 100
Ordinary shares 74
TUNISIA
FMC Technologies Service SARL Rue Lac Tanganyika, Immeuble Junior, Bureaux 2-3, Les Berges du
Ordinary shares 100
Lac, 1053, La Marsa,Tunis
UNITED ARAB EMIRATES
Multi Phase Meters FZE
Technip Middle East FZCO
TechnipFMC Gulf FZCO
UNITED KINGDOM
AABB Limited
Office LB14414, Jebel Ali Free Zone
P.O. Box 262274, Dubai
Office LB 15310, Jebel Ali Free Zone
P.O. Box 17864
Dubai
Office LB 173331, Jebel Ali Free Zone
Dubaï
One St Paul's Churchyard
London EC4M 8AP
265 TechnipFMC
259
Ordinary shares 100
Ordinary shares 100
Ordinary shares 100
100
100
48,880 Ordinary
(equity) of 1p
each
4,937,630
Ordinary
deferred of 10p
each
U.K. Annual Report and IFRS Financial Statements 2019
Company Name
Address
Coflexip (UK) Ltd
One St Paul's Churchyard
London EC4M 8AP
Share Class
Group interest
held in %
Ordinary shares 100
One St. Paul’s Churchyard, London, EC4M 8AP
Ordinary shares 100
Enterprise Drive, Westhill, Aberdeenshire, AB32 6TQ
Ordinary shares 100
One St Paul's Churchyard
London EC4M 8AP
One St Paul's Churchyard
London EC4M 8AP
One St Paul's Churchyard
London EC4M 8AP
One St Paul's Churchyard
London EC4M 8AP
Ordinary shares 100
Share A
Share B
Share A
Share B
100
100
Ordinary shares 100
One St Paul's Churchyard London
EC4M 8AP
Ordinary shares 100
One St Paul's Churchyard
London EC4M 8AP
3-5 Melville Street
Edinburgh EH3 7PE
One St Paul's Churchyard
London EC4M 8AP
Ordinary shares 100
Ordinary shares 100
Ordinary shares 100
One St. Paul’s Churchyard, London, EC4M 8AP
Ordinary shares 100
Control Systems International
(UK) Limited
Crosby Services International
Ltd.
Cybernetix S.R.I.S. Limited
Forsys Subsea Limited
Genesis Oil & Gas Consultants
Ltd
Genesis Oil & Gas Ltd
FMC Kongsberg Services Limited
FMC KOS West Africa Limited
FMC Technologies Global
Business Services Ltd.
FMC Technologies Limited
FMC Technologies Pension Plan
Ltd
Spoolbase UK Limited
Subsea I & C Services Limited
Subsea Maritime Services
Limited
Subsea Offshore Services
Limited
Schilling Robotics Limited
Technip E&C Limited
Technip Maritime UK Limited
Technip Offshore Holdings
Limited
Technip Offshore Manning
Services Ltd
Technip PMC Services Limited
Technip Services Limited
Technip Ships One Ltd
Technip UK Limited
One St Paul’s Churchyard
London EC4M 8AP
One St Paul’s Churchyard
London EC4M 8AP
One St Paul’s Churchyard
London EC4M 8AP
One St Paul’s Churchyard
London EC4M 8AP
One St Paul’s Churchyard
London EC4M 8AP
One St Paul’s Churchyard
London EC4M 8AP
One St Paul’s Churchyard
London EC4M 8AP
One St Paul’s Churchyard
London EC4M 8AP
One St Paul’s Churchyard
London EC4M 8AP
One St Paul’s Churchyard
London EC4M 8AP
One St Paul’s Churchyard
London EC4M 8AP
One St Paul’s Churchyard
London EC4M 8AP
One St Paul’s Churchyard
London EC4M 8AP
Ordinary shares 100
Ordinary shares 100
Ordinary shares 100
Ordinary shares 100
Ordinary shares 100
Ordinary shares 100
100
Redeemable
ordinary shares
Ordinary shares
100
Ordinary shares 100
Ordinary shares 100
Ordinary shares 100
Ordinary shares 100
Ordinary shares 100
Ordinary shares 100
Ordinary shares 100
Ordinary shares 100
Ordinary shares 100
Ordinary shares 100
Technip-Coflexip UK Holdings Ltd One St Paul’s Churchyard
TechnipFMC DSV3 Limited
TechnipFMC (Europe) Limited
TechnipFMC Finance ULC
London EC4M 8AP
One St Paul’s Churchyard
London EC4M 8AP
One St Paul’s Churchyard
London EC4M 8AP
One St Paul’s Churchyard
London EC4M 8AP
266 TechnipFMC
260
U.K. Annual Report and IFRS Financial Statements 2019
Company Name
Address
TechnipFMC International
Finance Limited
TechnipFMC International UK
Limited
TechnipFMC Island Offshore
Subsea UK Ltd
TechnipFMC Umbilicals Ltd
West Africa Subsea Services
Limited
UNITED STATES
Badger Licensing LLC
Badger Technologies, LLC
Badger Technology Holdings,
LLC
Control Systems International,
Inc.
Deepwater Technologies Inc
Direct Drive Systems, Inc
FMC Subsea Service, Inc.
FMC Technologies Energy LLC
FMC Technologies, Inc.
FMC Technologies Measurement
Solutions, Inc.
One St Paul’s Churchyard
London EC4M 8AP
One St Paul’s Churchyard
London EC4M 8AP
Pavilion 2, Aspect 32 Prospect Road,
Arnhall Business Park, Westhill
AB32 6FE Aberdeenshire
One St Paul’s Churchyard
London EC4M 8AP
One St Paul’s Churchyard
London EC4M 8AP
Corporation Service Company
251 Little Falls Drive
Wilmington, DE 19808
c/o CT Corporation System
3867 Plaza Tower
Baton Rouge, Louisiana, 70816
c/o CT Corporation System
3867 Plaza Tower
Baton Rouge, Louisiana, 70816
c/o CT Corporation Company, Inc.
3800 North Central Avenue, Suite 460
Topeka, Kansas 66603
c/o The Corporation Trust Company
1209 Orange Street
Wilmington, Delaware 19801
c/o The Corporation Trust Company
1209 Orange Street
Wilmington, Delaware 19801
c/o The Corporation Trust Company
1209 Orange Street
Wilmington, Delaware 19801
c/o The Corporation Trust Company
1209 Orange Street
Wilmington, Delaware 19801
c/o The Corporation Trust Company
1209 Orange Street
Wilmington, Delaware 19801
c/o The Corporation Trust Company
1209 Orange Street
Wilmington, Delaware 19801
Share Class
Group interest
held in %
Ordinary shares 100
Ordinary shares 100
Ordinary shares 51
Ordinary shares 100
Ordinary shares 100
Membership
interest
Membership
interest
100
100
Membership
interest
100
Ordinary shares 100
Ordinary shares 75
Ordinary shares 100
Ordinary shares 100
Membership
interest
100
Ordinary shares 100
Ordinary shares 100
FMC Technologies Overseas Ltd. c/o The Corporation Trust Company
Ordinary shares 100
1209 Orange Street
Wilmington, Delaware 19801
FMC Technologies Separation
Systems, Inc.
c/o CT Corporation System 1999 Bryan Street, Suite 900
Dallas, Texas 75201
FMC Technologies Surface
Integrated Services, Inc.
FMX, LLC
Schilling Robotics, LLC
c/o The Corporation Company
7700 E Arapahoe Road, Suite 220
Centennial, Colorado 80112-1268
c/o CT Corporation System
1999 Bryan Street, Suite 900
Dallas, Texas 75201
c/o The Corporation Trust Company
1209 Orange Street
Wilmington, Delaware 19801
Ordinary shares 100
Ordinary shares 100
Membership
interest
100
Membership
interest
100
267 TechnipFMC
261
U.K. Annual Report and IFRS Financial Statements 2019
Company Name
Address
Subtec Middle East Ltd
Technip E&C, Inc.
Technip Energy & Chemicals
International, Inc.
c/o The Corporation Trust Company
1209 Orange Street
Wilmington, Delaware 19801
c/o CT Corporation System
1999 Bryan Street, Suite 900
Dallas, Texas 75201
c/o CT Corporation System
3867 Plaza Tower
Baton Rouge, Louisiana, 70816
Share Class
Group interest
held in %
Ordinary shares 100
Ordinary shares 100
Ordinary shares 100
Technip Process Technology, Inc. c/o CT Corporation System
Ordinary shares 100
Technip S&W Abu Dhabi, Inc.
Technip S&W International, Inc.
Technip Stone & Webster
Process Technology, Inc
Technip USA, Inc.
TechnipFMC Umbilicals, Inc.
TechnipFMC USA, Inc
TechnipFMC US Holdings Inc.
TechnipFMC US LLC 1
TechnipFMC US LLC 2
The Red Adair Company, L.L.C.
3867 Plaza Tower
Baton Rouge, Louisiana, 70816
c/o CT Corporation System
3867 Plaza Tower
Baton Rouge, Louisiana, 70816
c/o CT Corporation System
3867 Plaza Tower
Baton Rouge, Louisiana, 70816
c/o The Corporation Trust Company
1209 Orange Street
Wilmington, Delaware 19801
c/o The Corporation Trust Company
1209 Orange Street
Wilmington, Delaware 19801
c/o The Corporation Trust Company
1209 Orange Street
Wilmington, Delaware 19801
c/o The Corporation Trust Company
1209 Orange Street
Wilmington, Delaware 19801
c/o The Corporation Trust Company
1209 Orange Street
Wilmington, Delaware 19801
c/o The Corporation Trust Company
1209 Orange Street
Wilmington, Delaware 19801
c/o The Corporation Trust Company
1209 Orange Street
Wilmington, Delaware 19801
c/o CT Corporation System
3867 Plaza Tower
Baton Rouge, Louisiana, 70816
VENEZUELA
FMC Wellhead de Venezuela,
S.A.
Av. 62 # 147-35, Zona Industrial,
Maracaibo, Zulia State, 4001
Technip Velam, S.A
VIETNAM
Av. Principal con Calle 1 y Calle 2
Centro Empresarial Inecom
Piso 1 - La Urbina
1060 Caracas
268 TechnipFMC
262
Ordinary shares 100
Ordinary shares 100
Ordinary shares 100
Ordinary shares 100
Ordinary shares 100
Ordinary shares 100
Ordinary shares 100
Membership
Interest
100
Membership
Interest
100
Membership
interest
100
Ordinary shares 100
Ordinary shares 100
U.K. Annual Report and IFRS Financial Statements 2019
Company Name
Address
FMC Technologies (Vietnam) Co.,
Ltd.
No. 29, Le Duan Street
Ben Nghe Ward, Distric 1
Ho Chi Minh City
Share Class
Group interest
held in %
Equity interest
100
Technip Vietnam Co., Ltd.
7F, Centec Tower Building
72-74 Nguyen Thi Minh Khai Street and 143-145B Hai Ba Trung
Street,
Ward 6, District 3, Ho Chi Minh City
Equity interest
100
31.3 Joint ventures
Company Name
Address
Share Class
Group interest
held in %
BAHRAIN
TTSJV W.L.L.
ESTONIA
Ingenium Baltic OU
FRANCE
South Tambey LNG
TP JGC Coral France SNC
Yamal Services SAS
Yamgaz SNC
ITALY
Consorzio Technip Italy Worley
Parsons
TP - HQC S.R.L.
MOZAMBIQUE
ENHL- TechnipFMC
Mozambique, LDA
JGC Fluor TechnipFMC
Moçambique, LDA
Flat 33, Building Number 98, Road Number 3901, Block 939, Riffa
Alhajiyat,
Ordinary shares 36
Teaduspargi 8,
12618 Tallinn
5 place de la Pyramide
92088 La Défense Cedex
6-8 Allée de l'Arche - Faubourg de l'Arche - ZAC Danton
92400 Courbevoie
6-8 Allée de l'Arche - Faubourg de l'Arche - ZAC Danton
92400 Courbevoie
6-8 Allée de l’Arche - Faubourg de l’Arche - ZAC Danton
92400 Courbevoie
Ordinary shares 70
Equity interest
50
Equity interest
50
Ordinary shares 50
Equity interest
50
Viale Castello della Magliana, 68 00148 Roma
Equity interest
90
68, Viale Castello della Magliana
00148 Rome
Equity interest
51
Av. Vladmir Lenine, 1123, 7° Andar | Edifício Topázio | Maputo |
Mozambique
Ordinary shares 51
Av. Vladmir Lenine, 1123, 7° Andar | Edifício Topázio | Maputo |
Mozambique
Ordinary shares 33.33
TP JGC Coral Mozambique
Av. Vladmir Lenine, 1123, 7° Andar | Edifício Topázio | Maputo |
Mozambique
Ordinary shares 50
NETHERLANDS
Etileno XXI Holding B.V.
NIGERIA
B7JV(Nigeria) Limited
NORWAY
Dofcon Brasil AS
Marine Offshore AS
Kleine Houtweg 33
Haarlem
2012 CB
3rd Floor, WAEC Office Complex, 10,
Zambezi Crescent, Maitama, Abuja, PCT
Maitama
PCP
Thormohlens Gate 53 C
5006 Bergen
Vollsveien 17A
1327 Lysaker
Technip-DeepOcean PRS JV DA Killingøy
5515 Haugesund
PORTUGAL
TSKJ - Serviços De Engenharia,
Lda.
Avenida Arriaga, n.º 30, 1.º andar - H
Funchal (Sé) 9000 064, Ilha da Madeira, Portugal
269 TechnipFMC
263
Ordinary shares 50
Ordinary shares 33.33
Ordinary shares 50
Ordinary shares 51
No capital
50
Ordinary shares 25
U.K. Annual Report and IFRS Financial Statements 2019
SAUDI ARABIA
Global Al Rushaid Offshore Ltd
Technip Italy S.p.A. & Dar Al
Riyadh for Engineering
Consulting
THAILAND
Technip (Thailand) Ltd
UNITED ARAB EMIRATES
Yemgas FZCO
UNITED KINGDOM
B7JV(UK) Limited
UNITED STATES
P O Box No 31685
31952 Al Khobar
Khobar Business Gate, Tower B, 7th Floor, King Faisal Bin Abdul-Aziz
Road
34423 Al-Khobar
Ordinary shares 50
Ordinary shares 60
20th Floor - Suntowers Building A
123 Vibhavadee - Rangsit Road
Chatuchak, Bangkok 10900
Ordinary shares 49
Office LB 15312
P.O. Box No.17891
Jebel Ali Free Zone - Dubai
Ordinary shares 33.33
Hill Park Court Springfield Drive, Leatherhead, Surrey, KT22 7NL
Ordinary shares 33.33
FMC Technologies Offshore, LLC c/o The Corporation Trust Center
Spars International Inc.
1209 Orange Street
Wilmington, Delaware 19801 USA
c/o CT Corporation System
1999 Bryan Street, Suite 900
Dallas, Texas 75201 USA
31.4 Associated undertakings
Ownership
based on
Contributions
Class A
Common Stock
50
50
Company Name
Address
Share Class Group interest
held in %
BOSNIA AND HERZEGOVINA
Petrolinvest, D.D. Sarajevo
Tvornicka 3
71000 Sarajevo
BRAZIL
FSTP Brasil Ltda.
CHINA
HQC - TP Co. Ltd
COLOMBIA
Tipiel, S.A.
FINLAND
Creowave Oy
FRANCE
Novarctic SNC
Oceanide
Serimax Holdings SAS
GHANA
TechnipFMC Ghana Limited
INDONESIA
PT Technip Indonesia
MALAYSIA
270 TechnipFMC
Rua da Candelária, 65, sala 1615
20091-906 Rio de Janeiro
n° 7 Yinghuayuan Dongjie, Chaoyang District
Pechino
Calle 38 # 8-62 Piso 3
Santafe De Bogota D.C.
Yrttipellontie 10 H
90230 Oulu
6-8 Allée de l'Arche - Faubourg de l'Arche - ZAC Danton
92400 Courbevoie
Port de Brégaillon
83502 La Seyne sur Mer
346 rue de la Belle Etoile
95700 Roissy en France
6th Floor, One Airport Square
00233 Accra
Metropolitan Tower, 15th Florr, JL. R. A.
Kartini Kav.
14 (T.B Simatupang), Cilandak
Jakarta Selatan 12430
264
Ordinary shares 33
Ordinary shares 25
Equity interest
49
Ordinary shares 45.10
Ordinary shares 24.9
Ordinary shares 33.33
Ordinary shares 23.10
Ordinary shares 20
Ordinary shares 49
Ordinary shares 42.1
U.K. Annual Report and IFRS Financial Statements 2019
FMC Wellhead Equipment Sdn.
Bhd.
Suite 9D, Level 9, Menara Ansar, 65 Jalan Trus
Johor Bahru
80000 Johor
Ordinary shares 49
Technip Consultant (M) Sdn. Bhd Suite 13.03, 13th Floor
Ordinary shares 25
Technip Geoproduction (M) Sdn.
Bhd.
NETHERLANDS
Etileno XXI Services B.V.
NORWAY
Inocean Marotec AS
Kongsberg Technology Training
Centre AS
RUSSIA
LNG Nova Engineering LLC
SINGAPORE
FSTP Pte Ltd
UNITED ARAB EMIRATES
CTEP Free Zone Company
UNITED KINGDOM
Magma Global Limited
207 Jalan Tun Razak
50400 Kuala Lumpur
Suite 13.03, 13th Floor
207 Jalan Tun Razak
50400 Kuala Lumpur
Prins Bernhardplein 200
Amsterdam 1097 JB
Bryggegata 9
0250 Oslo
Kirkegårdsveien 45
3616 KONGSBERG
Room 1,2
Premises XXXV, ul. Akademika Pilyugina 22
Moscow 117393
50 Gul road
629351 Singapore
Jebel Ali Free Zone - Office 10007
P.O. Box 261645
Dubaï
Ordinary shares 31
Ordinary shares 40
Ordinary shares 46
Ordinary shares 33.33
Ordinary shares 34.90
Ordinary shares 25
Ordinary shares 40
Magma House, Trafalgar Wharf, Hamilton Road, Portsmouth, PO6
4PX
Ordinary shares 25
NOTE 32. SUBSEQUENT EVENTS
None.
NOTE 33. RECONCILIATION OF US GAAP TO IFRS AND NON-GAAP MEASURES
33.1 Reconciliation of US GAAP to IFRS
In accordance with the Securities and Exchange Commission (“SEC”), TechnipFMC is required to prepare its Annual
Report on Form 10-K for the three years ended December 31, 2019 in accordance with accounting principles
generally accepted in the United States of America (“US GAAP”) and SEC rules and regulations pertaining to annual
financial information.
To assist TechnipFMC’s shareholders in understanding the differences in the basis of preparation of the TechnipFMC’s
consolidated financial statements, the tables below set out reconciliations from US GAAP to IFRS for Net Loss
attributable to TechnipFMC plc for the years ended December 31, 2019 and 2018, respectively, together with a
reconciliation of Total Equity from US GAAP to IFRS as at December 31, 2019 and December 31, 2018. These
reconciliations set out all significant differences which are expected to result from the conversion from US GAAP to
IFRS.
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In the consolidated financial statements as of December 31, 2019 and for the two years then ended, the main
differences between US GAAP and IFRS for TechnipFMC relate to the following:
(In millions)
Total TechnipFMC plc stockholders’ equity in accordance with US GAAP
$
Leases
Goodwill
Impairment of property, plant and equipment
Defined benefit plans
Hedge accounting
LIFO adjustments
Expected credit losses
Equity method investments
Other
Total equity in accordance with IFRS
(In millions)
Net loss attributable to TechnipFMC plc in accordance with US GAAP
Leases
Goodwill
Impairment of property, plant and equipment
Defined benefit plans
Hedge accounting
LIFO adjustments
Expected credit losses
Equity method investments
Other
$
$
Net loss attributable to TechnipFMC plc in accordance with IFRS
$
Leases
December 31,
2019
2018
7,688.1 $
(25.0 )
56.2
(18.1 )
(32.6 )
8.5
10.9
(9.6 )
—
6.1
7,684.5 $
10,388.9
(16.5 )
86.3
(9.7 )
(36.7 )
11.0
7.9
(6.4 )
(33.9 )
(1.3 )
10,389.6
Year Ended
2019
2018
(2,415.2 ) $
(8.6 )
(30.0 )
(8.5 )
(25.5 )
(3.6 )
3.0
(2.6 )
33.7
3.3
(2,454.0 ) $
(1,921.6 )
(8.3 )
58.8
118.5
(48.4 )
30.3
7.3
(1.7 )
17.2
(8.5 )
(1,756.4 )
Under the new US GAAP leasing accounting guidance, that is effective from January 1, 2019, at lease
commencement, a lessee classifies a lease as a finance lease or an operating lease. Under the new IFRS accounting
guidance, lessees do not classify leases and all leases are treated under a single model that is similar to a finance
lease model under US GAAP. TechnipFMC classified all of its leases as operating lease under US GAAP that resulted
in significant accounting differences between the two standards.
In 2018, prior to adoption of the new leasing standard on January 1, 2019, certain TechnipFMC’s lease agreements
met a finance lease classification under IFRS. The previous US GAAP accounting guidance on leases contained
specific quantitative thresholds (“bright-line tests”) that must be evaluated in determining whether a lease is capital
or operating. A review of the overall substance of TechnipFMC’s lease arrangements indicated that certain leases
classified as operating leases in accordance with US GAAP should be classified as finance leases under IFRS.
Goodwill
Both US GAAP and IFRS require initial measurement of assets acquired, liabilities assumed and noncontrolling
interests in a business combination, subject to certain exceptions, at fair value. There are certain differences between
fair value measurements under US GAAP and related measurement concepts in IFRS. On the merger date on
January 16, 2017 the recognized goodwill under IFRS was higher when compared to the value of goodwill under US
GAAP as of January 16, 2017.
In addition, in a valuation of TechnipFMC’s GCGUs for the purpose of goodwill impairment test an overall net impact
of GAAP differences resulted in lower carrying values of Subsea and Surface Technologies operating segments and
272 TechnipFMC
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in a higher carrying value of Subsea operating segment under IFRS when compared to carrying values of these
operating segments under US GAAP in 2019 and 2018, respectively. Under IFRS the differences in carrying values
of our operating segments resulted in an additional goodwill impairment charge in 2019 and in a reduction of goodwill
impairment charge in 2018.
Impairment of property, plant and equipment
US GAAP has a higher hurdle for impairment of long-lived assets (property, plant and equipment) than IFRS, meaning
it is less likely for impairment charges to be recognized. Therefore, the US GAAP impairment test had yielded different
results in 2017 that subsequently resulted in a positive impact to IFRS earnings in 2018.
Defined benefit plans
There are differences between the methodologies for defined benefits under IFRS compared to US GAAP. The most
notable differences relate to accounting for actuarial gains and losses, recognition of prior service costs, special event
accounting and calculation of the expected return on plan assets.
Under US GAAP all actuarial gains and losses are deferred in OCI and subsequently amortized to net income through
a corridor approach as elected by TechnipFMC. Under IFRS actuarial gains and losses are recognized immediately
in OCI for long-term benefit plans. Gains and losses are not subsequently recognized in net income in subsequent
periods for these plans. Several small short-term plans (such as jubilee plans) do expense gains and losses directly
in net income in the year incurred.
Under US GAAP prior service costs or credits from plan amendments are initially deferred in OCI and subsequently
recognized in net income over the average remaining service period of active employees affected by the plan
amendment. Under IFRS all past service costs and credits are immediately recognized in profit or loss at the earlier
of when the amendment occurs or when the related restructuring or termination costs are recognized.
Under US GAAP special events such as settlements and curtailments are recognized differently from IFRS. Under
US GAAP settlements are triggered through lump sums exceeding a specified threshold in a given year, resulting in
accelerated recognition of actuarial gains and losses. Under IFRS, settlements are triggered based on non-routine
lump sum payments, with the settlement impact calculated as the difference between the cash payout and the present
value of the benefit held on the balance sheet. Curtailments have different definitions of when to recognize, with US
GAAP triggering a curtailment when an event causes a significant decrease in the plan’s future service and IFRS
triggering a curtailment based on a significant reduction in employee headcount based on a specific event. The net
income impact under IFRS is calculated as the change in present value due to the curtailment, and US GAAP using
a more complicated formula depending on whether the curtailment is a gain or loss, and whether any outstanding
prior service cost exists.
The US GAAP expected return on plan assets is calculated using the expected long-term rate of return on invested
assets in the underlying portfolio. Under IFRS, a “net interest” expense (income) on the net defined benefit liability
(asset) is recognized as a component of defined benefit cost, based on the discount rate used to determine the
obligation.
Hedge accounting
Using cash as natural hedge instrument is not allowed under US GAAP. An adjustment to reclassify natural hedging
results from income statement to OCI is recorded under IFRS.
LIFO adjustments
TechnipFMC has several subsidiaries that utilize LIFO cost accounting method under US GAAP. While LIFO is an
allowable method under US GAAP, it is prohibited under IFRS. TechnipFMC records an adjustment to reverse the
impact from LIFO costing method under IFRS in its consolidated financial statements.
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Expected credit losses
IFRS requires to use a new forward-looking “expected loss” model to estimate the allowance for trade and other
receivables, debt securities held to maturity, loans receivable and other financial assets. The new guidance resulted
in the earlier recognition of loss allowance under IFRS.
Equity method investments
US GAAP and IFRS have different methodologies in assessment of impairment on equity method investments.
Other
TechnipFMC recorded other various insignificant differences including differences from deferred taxes.
33.2 Non-GAAP measures
In addition to financial results determined in accordance with US GAAP, we provide non-GAAP financial measures
(as defined in Item 10 of Regulation S-K of the Securities Exchange Act of 1934, as amended) below.
Net income, excluding charges and credits, as well as measures derived from it (including diluted earnings (loss) per
share, excluding charges and credits; Income before net interest expense and taxes, excluding charges and credits
("Adjusted Operating profit"); Depreciation and amortization, excluding charges and credits; Earnings before net
interest expense, income taxes, depreciation and amortization, excluding charges and credits ("Adjusted EBITDA");
and net cash) are non-GAAP financial measures.
Management believes that the exclusion of charges and credits from these financial measures enables investors and
management to more effectively evaluate TechnipFMC's operations and consolidated results of operations period-
over-period, and to identify operating trends that could otherwise be masked or misleading to both investors and
management by the excluded items. These measures are also used by management as performance measures in
determining certain incentive compensation. The foregoing non-GAAP financial measures should be considered in
addition to, not as a substitute for or superior to, other measures of financial performance prepared in accordance
with GAAP.
The following is a reconciliation of the most comparable financial measures under US GAAP to the non-GAAP
financial measures.
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Year Ended
December 31, 2019
Net income
(loss)
attributable
to
TechnipFMC
plc
Net income
(loss)
attributable to
noncontrolling
interests
Provision
for income
taxes
Net interest
expense
Income
(loss) before
net interest
expense and
income
taxes
(Operating
profit)
Depreciation
and
amortization
Earnings
before net
interest
expense,
income
taxes,
depreciation
and
amortization
(EBITDA)
(1,174.9 )
TechnipFMC plc, as reported
$
(2,415.2 ) $
3.1 $
276.3 $
451.3 $
(1,684.5 ) $
509.6 $
Charges and (credits):
Impairment and other charges
Restructuring and other charges
Business combination transaction
and integration costs
Separation costs
Reorganization
Legal provision, net
Purchase price accounting
adjustment
Valuation allowance
Net foreign exchanges
Other
Adjusted financial measures
$
2,364.2
27.7
23.1
54.2
17.2
46.3
26.0
187.0
146.9
(9.2 )
468.2 $
—
—
—
—
—
—
—
—
—
—
3.1 $
119.9
9.3
8.1
17.9
8.1
8.3
8.0
(187.0 )
—
—
268.9 $
—
—
—
—
—
—
—
—
—
—
451.3 $
2,484.1
37.0
—
—
2,484.1
37.0
31.2
72.1
25.3
54.6
34.0
—
146.9
(9.2 )
1,191.5 $
—
—
—
—
(34.0 )
—
—
—
475.6 $
31.2
72.1
25.3
54.6
—
—
146.9
(9.2 )
1,667.1
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COMPANY FINANCIAL STATEMENTS
TECHNIPFMC PLC
AS OF DECEMBER 31, 2019
Company No. 09909709
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U.K. Annual Report and IFRS Financial Statements 2019
1. COMPANY STATEMENT OF FINANCIAL POSITION
(In millions)
Assets
Investments in subsidiaries
Property, plant and equipment, net
Right-of-use assets
Intangible assets, net
Loan receivables – related parties
Other non-current financial assets
Deferred income taxes
Total non-current assets
Cash and cash equivalents
Trade and other receivables, net
Derivative financial instruments
Income taxes receivable
Other current assets
Total current assets
Total assets
Equity and Liabilities
Ordinary shares
Retained earnings, net income and other reserves
Total shareholders’ equity
Long-term debt
Loan payables – related parties
Deferred income taxes
Lease liabilities
Derivative financial instruments
Other non-current liabilities
Total non-current liabilities
Short term debt
Trade and other payables
Lease liabilities
Income taxes payable
Total current liabilities
Total liabilities
Total equity and liabilities
At January 1
Loss for the year
Other changes in retained earnings
Retained earnings
Note
December 31,
2019
December 31,
2018
$
3
4
5
6
7
8
$
9
$
10
11
6
4
10
12
4
8
$
$
$
14,475.5 $
0.3
42.6
1.3
1,551.9
28.9
0.6
16,101.1
5.5
195.0
4.3
180.6
23.5
408.9
16,510.0 $
447.1 $
5,935.7
6,382.8
1,707.5
5,599.5
—
9.9
4.3
113.9
7,435.1
244.6
2,327.2
35.5
84.8
2,692.1
10,127.2
16,510.0 $
8,317.7 $
(2,068.0 )
(314.0 )
5,935.7 $
16,584.8
0.3
—
1.4
1,585.9
18.1
22.8
18,213.3
3.5
171.9
9.2
123.6
22.7
330.9
18,544.2
450.5
8,317.7
8,768.2
1,968.5
5,417.3
0.6
—
9.2
82.9
7,478.5
—
2,220.6
—
76.9
2,297.5
9,776.0
18,544.2
10,774.5
(1,678.9 )
(777.9 )
8,317.7
The accompanying notes are an integral part of the consolidated financial statements.
The Company has applied IFRS 16 for the first time from January 1, 2019. Under the transition methods chosen,
comparative information is not restated. See Note 4.
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U.K. Annual Report and IFRS Financial Statements 2019
The financial statements were approved by the Board of Directors and signed on its behalf by
Douglas J. Pferdehirt
Director and Chief Executive Officer
March 13, 2020
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2. COMPANY STATEMENT OF CHANGES IN STOCKHOLDERS’ EQUITY
Ordinary
Shares
Share
Premium
Merger
Reserve
(In millions)
Balance as of December 31, 2017
Cumulative effect of initial application of IFRS 9
Net loss
Other comprehensive income/(loss)
Dividends (Note 9)
Issuance of ordinary shares (Note 9)
Cancellation of treasury shares (Note 9)
Share-based compensation (Note 9)
Balance as of December 31, 2018
Cumulative effect of initial application of IFRS 16 (Note 4)
Net loss
Other comprehensive income/(loss)
Dividends (Note 9)
Issuance of ordinary shares (Note 9)
Cancellation of treasury shares (Note 9)
Share-based compensation (Note 9)
Balance as of December 31, 2019
$
$
$
465.1 $
—
—
—
—
0.2
(14.8 )
—
450.5 $
—
—
—
—
0.6
(4.0 )
—
447.1 $
— $
—
—
—
—
—
—
—
— $
—
—
—
—
—
—
—
— $
Retained
Earnings,
Net Income
and Other
reserves
Total
Shareholders’
Equity
— $
—
—
—
—
—
—
—
— $
—
—
—
—
—
—
—
— $
10,774.5 $
(9.1 )
(1,678.9 )
(151.8 )
(238.1 )
—
(428.0 )
49.1
8,317.7 $
(1.2 )
(2,068.0 )
(65.8 )
(232.8 )
—
(88.7 )
74.5
5,935.7 $
11,239.6
(9.1 )
(1,678.9 )
(151.8 )
(238.1 )
0.2
(442.8 )
49.1
8,768.2
(1.2 )
(2,068.0 )
(65.8 )
(232.8 )
0.6
(92.7 )
74.5
6,382.8
The accompanying notes are an integral part of the consolidated financial statements.
The Company has applied IFRS 16 for the first time from January 1, 2019. Under the transition methods chosen,
comparative information is not restated. See Note 4.
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3. NOTES TO THE COMPANY FINANCIAL STATEMENTS
NOTE 1 - GENERAL CORPORATE INFORMATION
TechnipFMC plc (the “Company” or “TechnipFMC”) is a global leader in subsea, onshore/offshore, and surface
projects. TechnipFMC is a public limited company limited by shares. The company is incorporated under the laws of
England and Wales. The Company’s registered address is One St. Paul’s Churchyard, London, EC4M 8AP.
On June 14, 2016, FMC Technologies, Inc. (“FMC Technologies”) and Technip S.A. (“Technip”) entered into a
definitive merger agreement (the “Merger”) providing for the merger among FMC Technologies, FMC Technologies
SIS Limited, a private limited company, and a wholly-owned subsidiary of FMC Technologies and Technip. FMC
Technologies SIS Limited was formed and incorporated under the Act and under the laws of England and Wales on
December 9, 2015, and for the purposes of participating in the all-share merger.
On August 4, 2016, the legal name of FMC Technologies SIS Limited was changed to TechnipFMC Limited, and on
January 11, 2017, was subsequently re-registered as TechnipFMC.
On January 16, 2017, the cross-border Merger was completed. Pursuant to the terms of the Merger, Technip merged
with and into TechnipFMC, with TechnipFMC continuing as the surviving company (the “Technip Merger”), and each
ordinary share of Technip (the “Technip Shares”), other than Technip Shares owned by Technip or its wholly-owned
subsidiaries, were exchanged for 2.0 ordinary shares of TechnipFMC, subject to the terms of the Merger. Immediately
following the Technip Merger, a wholly-owned indirect subsidiary of TechnipFMC (“Merger Sub”) merged with and into
FMC Technologies, with FMC Technologies continuing as the surviving company and as a wholly-owned indirect
subsidiary of TechnipFMC, and each share of ordinary share of FMC Technologies (the “FMCTI Shares”), other than
FMCTI Shares owned by FMC Technologies, TechnipFMC, Merger Sub or their wholly-owned subsidiaries, were
exchanged for 1.0 ordinary share of TechnipFMC, subject to the terms of the Merger.
As noted above, the Company obtained control of the entire share capital of Technip via a share for share
exchange. There were no changes in rights or proportion of control exercised as a result of this transaction. Although
the share for share exchange resulted in a change of legal ownership, in substance these financial statements reflect
the continuation of Technip (now as a branch), headed by TechnipFMC. The December 31, 2016 equity position
reflects the share capital structure of Technip. The statement of changes in equity presents the legal change in
ownership of the Company, including the share capital of TechnipFMC and the merger reserve arising as a result of
the share for share exchange transaction in 2017.
NOTE 2 - ACCOUNTING PRINCIPLES
2.1 Basis of preparation
The financial statements for the year ended December 31, 2019 have been prepared in accordance with United
Kingdom Accounting Standards – in particular Financial Reporting Standard 101 “Reduced Disclosure Framework”
(“FRS 101”) – and with the Act. FRS 101 sets out a reduced disclosure framework for a qualifying entity as defined
in the Standards which addresses the financial reporting requirements and disclosure exemptions in the individual
financial statements of qualifying entities that otherwise apply the recognition, measurement and disclosure
requirements of EU-adopted International Financial Reporting Standards (“IFRS”).
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The Company is a qualifying entity for the purposes of FRS 101. The application of FRS 101 has enabled the
Company to take advantage of certain disclosure exemptions that would have been required had the Company
adopted IFRS in full. The only such exemptions that the directors considered to be significant are:
•
•
•
•
•
•
•
No detailed disclosures in relation to financial instruments;
No cash flow statement;
No disclosure of related party transactions with subsidiaries;
No statement regarding the potential impact of forthcoming changes in financial reporting standards;
No disclosure of “key management compensation” for key management other than the Directors;
No disclosures relating to the Company’s policy on capital management, and
No disclosure of requirements of paragraph 45b and 46-52 of IFRS 2 Share based charges.
The assets and liabilities of Technip have been recognized at their respective historic carrying values in the accounts
of Technip, rather than uplifted to fair value, on the basis that, in substance, the Merger represents a capital
reorganization of Technip and TechnipFMC and therefore represents a continuation of Technip. Accordingly, the
comparative information presented in the Company Statement of Financial Position and the Company Statement of
Changes in Stockholders’ Equity is that of Technip. Prior to the Merger, Technip had a Euro functional currency. The
comparative information for the year ended December 31, 2016, and information up to the date of the Merger, has
been retranslated into the U.S. Dollar presentational currency in accordance with IAS 21, “The Effects of Changes in
Foreign Exchange Rates”. From the date of the Merger, TechnipFMC’s functional currency was determined to be U.S.
Dollars as this is the primary economic environment in which the post-merger entity operates.
The financial statements have been prepared under the historical cost convention, except for certain financial assets
and liabilities, which are measured at fair value. Accounting policies have been consistently applied throughout the
reporting period. The financial statements of the Company for the year ended December 31, 2019 are presented in
U.S. dollars, the presentation and functional currency of the Company, and all values are rounded to the nearest
million included to one decimal place.
The directors have a reasonable expectation that the Company has adequate resources to continue in existence for
the foreseeable future. Therefore, the financial statements have been prepared on a going concern basis.
The directors have taken advantage of the exemption available under Section 408 of the Act and have not presented
a profit and loss account for the Company.
Planned Separation transaction
On August 26, 2019, TechnipFMC announced that its Board of Directors had unanimously approved a plan to separate
our Onshore/Offshore segment, Loading Systems and Process Automation businesses (the "Separation") into an
independent, publicly traded company (“Technip Energies”). If it goes ahead the transaction is expected to be tax free
to certain shareholders where permissible, including the U.S. It is expected that the transaction will be completed in
the first half of 2020, subject to general market conditions, regulatory approvals, consultation of employee
representatives, where applicable, and final approval from TechnipFMC’s Board of Directors. Refer to Note 1 of
TechnipFMC consolidated financial statements for management’s judgment on accounting for the planned Separation
transaction.
2.2 Changes in accounting policies and disclosures
a)
Standards, amendments and interpretations effective in 2019
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IFRS 16 “Leases”
IFRS 16 supersedes IAS 17 “Leases” (“IAS 17”), IFRIC 4 “Determining whether an Arrangement contains a Lease”,
SIC-15 “Operating Leases-Incentives” and SIC-27 “Evaluating the Substance of Transactions Involving the Legal
Form of a Lease”. The standard sets out the principles for the recognition, measurement, presentation and disclosure
of leases and requires lessees to account for most leases under a single on-balance sheet model. Refer to Note 4
for disclosures on the adoption impact and changes in the Company’s financial statements.
IFRS 9 “Financial instruments” (“IFRS 9”)
The Company has initially applied IFRS 9 on January 1, 2018 with exception to the hedging requirements of IFRS 9
as amended by IFRS 9.7.2.21. The hedge accounting is adopted with the date of initial application as of January 1,
2019. There is no impact on the Company’s financial statements from adoption of hedging requirements of IFRS 9.
Standards, amendments and interpretations to existing standards that are issued, not yet effective
b)
and have not been early adopted as of December 31, 2019
Certain new accounting standards and interpretations have been published that are not mandatory for December 31,
2019 reporting periods and have not been early adopted by the Company. The Company’s assessment of the impact
of these new standards and interpretations is discussed in Note 1 of TechnipFMC consolidated financial statements.
2.3 Summary of significant accounting policies
The significant accounting policies, which have been used in the preparation of the Company financial statements,
are set out below. These policies have been consistently applied to all years presented.
a)
Investments
Investments are measured initially at cost, including transaction costs, less any provision for impairment.
At each balance sheet date, the Company reviews the carrying amounts of its investments to assess whether there
is an indication that those assets may be impaired. If any such indication exists, the Company makes an estimate of
the asset’s recoverable amount. An asset’s recoverable amount is the higher of an asset’s fair value less costs to sell
and its value in use.
If the recoverable amount of an asset is estimated to be less than its carrying amount, the carrying amount of the
asset is reduced to its recoverable amount. An impairment loss is recognized immediately in the income statement.
Where an impairment loss subsequently reverses, the carrying amount of the asset is increased to the revised
estimate of its recoverable amount, to the extent that the increased carrying amount does not exceed the carrying
amount that would have been determined had no impairment loss been recognized for the asset in prior periods. A
reversal of an impairment loss is recognized immediately in the income statement.
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b)
Trade receivable and loans issued to related parties
Recognition and measurement
The classification of financial assets at initial recognition depends on the financial asset’s contractual cash flow
characteristics and the Company’s business model for managing them. Financial assets at amortized cost is the most
relevant category to the Company. The Company measures trade receivable and loans issued to related parties at
amortized cost when both of the following conditions are met:
The financial asset is held within a business model with the objective to hold financial assets in order to collect
•
contractual cash flows, and
The contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments
•
of principal and interest on the principal amount outstanding.
Loans receivable (debt instruments) are initially measured at their fair values plus transaction costs.
Trade receivables are amounts due from customers for goods sold or services performed in the ordinary course of
business. Trade receivables are recognized initially at the amount of consideration that is unconditional unless they
contain significant financing components, when they are recognized at fair value. The Company holds the trade
receivables with the objective to collect the contractual cash flows and therefore measures them subsequently at
amortized cost using the effective interest method.
Impairment
An allowance for expected credit losses (“ECL”) is recognized for all financial assets not held at fair value through
profit or loss. As opposed to the incurred loss approach, ECL is based on the difference between the carrying amount
(as per the contractual cash flows of the instruments) and all the cash flows that the Company expects to receive,
discounted at the original effective interest rate. The expected cash flows will include consideration of collaterals or
other credit enhancements that are integral to the contractual terms.
In case of instruments for which there has not been a significant increase in credit risk since initial recognition, ECL
is applied for default events that are possible within the next 12-months (a 12-month ECL). In case there has been a
significant increase in credit risk since initial recognition, a ECL is applied over the remaining life of the exposure
(“lifetime ECL”).
For trade receivables and loans, the Company has elected to apply a simplified approach and calculates an ECL
based on loss rates from historical data. Under the simplified approach the Company develops loss-rate statistics on
the basis of the amount written off over the life of the financial assets and adjusts these historical credit loss trends
for forward-looking factors specific to the debtors and the economic environment to determine lifetime expected
losses.
c)
Share-based employee compensation
The measurement of share-based compensation expense on restricted share awards is based on the market price
at the grant date and the number of shares awarded. The Company used the Black-Scholes options pricing model to
measure the fair value of share options granted on or after January 1, 2017, excluding from such valuation the service
and non-market performance conditions (which are considered in the expected number of awards that will ultimately
vest) but including market conditions. The share-based compensation expense for each award is recognized during
the vesting period (i.e., the period in which the service and, where applicable, the performance conditions are fulfilled).
The cumulative expense recognized for share-based employee compensation at each reporting date reflects the
already expired portion of the vesting period and the Company’s best estimate of the number of awards that will
ultimately vest. The expense or credit in the statement of profit or loss for a period represents the movement in
cumulative expense recognized as at the beginning and end of that period.
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d)
Long term debt
Non-current financial debt includes bond loans and other borrowings. After initial recognition, loans and borrowings
are measured at amortized cost using the effective interest rate method. Transaction costs, such as issuance fees
and redemption premium on convertible bonds are included in the cost of debt on the liability side of the statement of
financial position, as an adjustment to the nominal amount of the debt. The difference between the initial debt and
redemption at maturity is amortized at the effective interest rate.
e)
Foreign currency transactions
Foreign currency transactions are translated into the functional currency at the exchange rate applicable on the
transaction date.
At the closing balance sheet date, monetary assets and liabilities stated in foreign currencies are translated into the
functional currency at the exchange rate prevailing on that date. Resulting exchange gains or losses are directly
recorded in the income statement, except exchange gains or losses on cash accounts eligible for future cash flow
hedging and for hedging on net foreign currency investments.
Translation of financial statements of the Company’s branch in foreign currency
The income statements of the Company’s branch are translated into USD at the average exchange rate prevailing
during the year. Statements of financial position are translated at the exchange rate at the closing date. Differences
arising in the translation of financial statements of the branch are recorded in other comprehensive income as foreign
currency translation reserve. The functional currency of the branch is the local currency (euro).
f)
Derivative financial instruments and hedging
The Company uses derivative financial instruments, such as forward contracts, swaps and options to hedge its risks,
in particular foreign exchange risks. Currently, every derivative financial instrument held by the Company is aimed at
hedging future inflows or outflows against exchange rate fluctuations during the period of contract performance.
Derivative instruments and in particular forward exchange transactions are aimed at hedging future cash inflows or
outflows against exchange rate fluctuations in relation with awarded commercial contracts.
Refer to Note 26 of TechnipFMC consolidated financial statements for further details.
g)
Cash and cash equivalents
Cash and cash equivalents consist of cash in bank and in hand, as well as securities fulfilling the following criteria:
an original maturity of usually less than three months, highly liquid, a fixed exchange value and an insignificant risk
of loss of value. Securities are measured at their market value at year-end. Any change in fair value is recorded in
the income statement.
h)
Share capital and dividend distribution
Ordinary shares and redeemable shares are classified as equity. The redeemable shares may be redeemed by the
Company for nil consideration at any time and are therefore recognized within equity.
Dividend distribution to the Company’s shareholders is recognized as a liability in the Company’s financial statements
in the period in which the dividends are approved by the Company’s shareholders. Interim dividends are recognized
when paid.
i)
Taxation
Corporate tax is payable on taxable profits at amounts expected to be paid, or recovered, under the tax rates and
laws that have been enacted or substantively enacted at the balance sheet date.
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Deferred tax is recognized to take account of timing differences between the treatment of transactions for financial
reporting purposes and their treatment for tax purposes. A deferred tax asset is only recognized when it is regarded
as more likely than not there will be a suitable taxable profit from which the future reversal of the underlying timing
differences can be deducted.
Deferred tax is measured at the average tax rates that are expected to apply in the periods in which the timing
differences are expected to reverse based on the tax rates and laws that have been enacted or substantively enacted
at the balance sheet date.
j)
Non-current assets held for sale or distribution to equity holders
TechnipFMC classifies non-current assets as held for sale/or distribution to equity holders of the parent if their carrying
amounts will be recovered principally through a sale transaction or a distribution rather than through continuing use.
Such non-current assets classified as held for sale/or distribution are measured at the lower of their carrying amount
and fair value less costs to sell or distribute. Costs to sell/or distribute are the incremental costs directly attributable
to the sale or distribution, excluding finance costs and income tax expense.
The criteria for held for sale/or distribution classification is regarded as met only when the sale/or distribution is highly
probable and the asset is available for immediate sale/ or distribution in its present condition. Actions required to
complete the sale/or distribution should indicate that it is unlikely that significant changes to the sale/or distribution
will be made or that the decision to sale/or distribute will be withdrawn. Management must be committed to the sale/or
distribution expected within one year from the date of the classification.
k)
Cash dividend and non-cash distribution to equity holders
The Company recognizes a liability to make cash or non-cash distributions to its equity holders when the distribution
is approved by its shareholders. A corresponding amount is recognized directly in the statement of equity.
2.4 Use of critical accounting estimates, judgments and assumptions
The preparation of the financial statements requires the use of critical accounting estimates, judgments and
assumptions that may affect the assessment and disclosure of assets and liabilities at the date of the financial
statements, as well as the income and the reported expenses regarding this financial year. Estimates may be revised
if the circumstances and the assumptions on which they were based change, if new information becomes available,
or as a result of greater experience. Consequently, the actual result from these operations may differ from these
estimates.
a)
Judgments
Areas of judgment that have the most significant effect on the amounts recognized in the Company’s financial
statements relate to the planned Separation transaction and to determining whether the Company’s investments are
impaired.
Refer to Note 1 of TechnipFMC consolidated financial statements for management’s judgment on accounting for the
planned Separation transaction.
b)
Estimates and assumptions
The key assumptions concerning the future and other key sources of estimation uncertainty at the reporting date, that
have a significant risk of causing a material adjustment to the carrying amount of assets and liabilities within the next
financial year relate to estimates on provision for expected credit losses on trade receivable and loans issued to
related parties and are described below.
The assessment of the correlation between the historical observed loss rate statistic, forecast economic conditions
and ECLs is a significant estimate. The amount of ECLs is sensitive to changes in circumstances and of forecast
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economic conditions. The Company’s historical credit loss experience and forecast of economic conditions may also
not be representative of customer’s actual default in the future.
The Company assesses whether there are any indicators of impairment of investments at each reporting date.
Investments are tested for impairment when there are indicators that the carrying amount may not be recoverable.
Details of impairment recorded during the year and the carrying value of investments are contained in Note 3.
NOTE 3 - INVESTMENTS IN SUBSIDIARIES
The movement in investments account balances are described below:
(In millions)
Cost at January 1
Additions (1)
Net foreign exchange difference
Total Cost at December 31,
Impairment at January 1
Impairments (2)
Net foreign exchange difference
Total impairment at December 31,
Net book value at December 31,
2019
2018
18,581.6 $
—
(83.9 )
18,497.7 $
1,996.9 $
2,035.8
(10.5 )
4,022.2 $
15,526.0
3,263.1
(207.5 )
18,581.6
217.1
1,789.8
(10.0 )
1,996.9
14,475.5 $
16,584.8
$
$
$
$
$
(1) Additions in 2018 mainly comprise TechnipFMC International Holdings BV for $2,255.1 million and FMC Technologies Global BV for $1,008.1
million.
(2)
Impairments relate to the carrying value of intermediate holding company investments. The methodology and assumptions used in reviewing the
investments for impairment were the same as those used in the Goodwill review. See Note 11 of TechnipFMC consolidated financial statements
for further details.
The Company’s direct subsidiaries as at December 31, 2019 are listed below. Ownership interests reflect holdings of
ordinary shares. Details of other related undertakings are provided in Note 31 of TechnipFMC consolidated financial
statements.
Company Name
Address
Share Class
The
Company
interest held
in %
AUSTRALIA
Technip Australia Pty
1120 Hay Street, Perth WA 6000
Ordinary shares
100
BRAZIL
Technip Cleplan Empreendimentos E
Projetos Industriais Ltda.
Rua Dom Marcos Barbosa, nº 2, sala 202 (parte)
Equity interest
58.29
20211-178 Rio de Janeiro
TSKJ Servicos De Engenharia, Lda.
Avenida Arriaga, numero trinta
Equity interest
25
Terceiro andar - H
Freguesia da Sé, Concelho do Funchal
9000-064 Funchal
CHINA
Technip Chemical Engineering (Tianjin)
Co., Ltd.
10th Floor - Yunhai Mansion
200031 Shanghai
COLUMBIA
Tipiel, S.A.
286 TechnipFMC
Calle 38 # 8-62 Piso 3
Santafe de Bogota D.C.
280
Equity interest
100
Equity interest
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U.K. Annual Report and IFRS Financial Statements 2019
Company Name
Address
Share Class
The
Company
interest held
in %
FRANCE
Technip Corporate Services SAS
89, avenue de la Grande Armée
Ordinary shares
78
75116 Paris
Technip Eurocash SNC
89, avenue de la Grande Armée
Equity interest
96
75116 Paris
Technip France SA
6-8 Allée de l’Arche - Faubourg de l’Arche - ZAC Danton
Ordinary shares
78
Compagnie Française De Réalisations
Industrielles, Cofri SAS
Cybernetix SAS
92400 Courbevoie
6-8 Allée de l’Arche - Faubourg de l’Arche - ZAC Danton
Ordinary shares
100
92400 Courbevoie
Technopôle de Château-Gombert
13382 Marseille Cedex 13
Ordinary shares
100
Genesis Nimes SAS
19, Avenue Feuchères
Ordinary shares
100
30000 Nîmes
Serimax Holdings SAS
95700 Roissy en France
Ordinary shares
Technip Ingenierie Defense SAS
6-8 Allée de l’Arche - Faubourg de l’Arche - ZAC Danton
Ordinary shares
20
100
92400 Courbevoie
Technip Offshore International SAS
89, avenue de la Grande Armée
Ordinary shares
100
75116 Paris
Technipnet SAS
6-8 Allée de l’Arche - Faubourg de l’Arche - ZAC Danton
Ordinary shares
100
INDONESIA
PT Technip Indonesia
ITALY
92400 Courbevoie
Metropolitan Tower, 15th Florr, JL. R. A.
Kartini Kav.
14 (T.B Simatupang), Cilandak
Jakarta Selatan 12430
Equity interest
9
Technip Italy S.P.A.
68, Viale Castello della Magliana
Ordinary shares
100
TPL - Tecnologie Progetti Lavori S.P.A.
In Liquidazione
MALAYSIA
Technip Far East Sdn Bhd
00148 Rome
68, Viale Castello della Magliana
Ordinary shares
100
00148 Rome
Suite 13.03, 13th Floor
207 Jalan Tun Razak
Kuala Lumpur
50400
Ordinary shares
100
NETHERLANDS
FMC Technologies Global B.V.
Zuidplein 126, Tower H, 15th Fl.
Ordinary shares
68.6
1077 XV Amsterdam
Technip Holding Benelux B.V.
Afrikaweg 30
Ordinary shares
100
Zoetermeer 2713 AW
TechnipFMC International Holdings B.V. Zuidplein 126, WTC, Tower H, 15é
Amsterdam 1077XV
NEW-CALEDONIA - FRENCH OVERSEAS TERRITORY
Technip Nouvelle-Caledonie
PANAMA
27 bis Avenue du Maréchal Foch - Galerie CENTER FOCH -
Centre-Ville
B.P. 4460
98847 NOUMEA
Preferred shares
and Ordinary
shares
38.93
Ordinary shares
100
Technip Overseas S.A.
East 53rd Street
Ordinary shares
100
RUSSIAN FEDERATION
287 TechnipFMC
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U.K. Annual Report and IFRS Financial Statements 2019
Company Name
Address
Share Class
Technip Rus LLC
266 Litera O, Ligovsky Prospect
Ordinary shares
SAUDI ARABIA
196084 St Petersburg
The
Company
interest held
in %
99.98
Technip Saudi Arabia Limited
Dhahran Center Building - 5th Floor, Suite $501
Ordinary shares
40
SERBIA
Petrolinvest, dd Sarajevo
SPAIN
31952 Al-Khobar
Tvornicka 3
71000 Sarajevo
Equity interest
33.01
Technip Iberia, S.A.
Building n° 8 - Floor 4th Plaça de la Pau s/n
Ordinary shares
99.99
World Trade Center - Almeda Park - Cornellà de Llobregat
SWITZERLAND
Engineering Re AG
UNITED KINGDOM
08940 Barcelone
Basteiplatz 7
8001 Zurich
Ordinary shares
100
TechnipFMC Holdings Limited
One St Paul’s Churchyard
Ordinary shares A 88.12
London EC4M 8AP
Ordinary shares B
VENEZUELA
Inversiones Dinsa, C.A.
Avenida Principal de La Urbina, calle 1 con calle 2
Ordinary shares
100
Centro Empresarial INECOM, piso 1, oficina 1-1 La Urbina,
Minicipio Sucre
1070 Caracas
Technip Bolivar, C.A. en liquidation
523 Zona Industrial Matanzas, Planta De Bauxilum
Ordinary shares
99.94
NOTE 4 – LEASES
Puerto Ordaz Ciudad Bolivar
Refer to Note 4 of TechnipFMC consolidated financial statements for details regarding elections and exemptions
applied as a result of adopting IFRS 16 on January 1, 2019.
Adoption of the new lease accounting guidance had a material impact on the Company’s statement of financial
position. On January 1, 2019, the Company (1) recognized a lease liability of approximately $79.4 million which
represents the present value of the remaining lease payments, discounted using the Company’s applicable weighted
average incremental borrowing rates, and (2) recognized a right-of-use (“ROU”) asset of approximately $78.2 million
adjusted for accrued rent of $1.2 million. The impact of adopting the new lease accounting guidance was recorded
as an adjustment to increase retained earnings by approximately $1.2 million.
The Company has one real estate lease as a lessee with the following balances:
(In millions except for discount rate)
Right-of-use asset
Lease liability
Current lease liabilities
Non-current lease liabilities
Weighted average discount rate
As of December 31,
2019
$
42.6
45.4
35.5
9.9
3.9 %
The following summarizes various amounts recognized by the Company as of and for the year ended December 31,
2019:
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•
•
Depreciation of ROU asset in consolidated statement of income of $35.6 million
Interest expense on lease liability of $2.0 million
Payments for the principal portion of lease liability of $34.2 million and interest portion of $1.8 million for total
•
payments of $36.0 million
The following table is a summary of the maturity of lease liabilities for the Company as of December 31, 2019:
In millions
2020
2021
Total lease payments
Less: imputed interest (1)
Total lease liabilities (2)
(1) Calculated using the interest rate for each lease.
(2) Includes the current portion of $$35.5 million for lease liabilities.
NOTE 5 - LOAN RECEIVABLES - RELATED PARTIES
(In millions)
Loan receivables - related parties
Lease liabilities
35.5
10.3
45.8
0.4
45.4
$
$
December 31,
2019
2018
$
1,551.9 $
1,585.9
In 2019, Technip Umbilicals and Asiaflex Products SDN BHD (“Asiaflex”) repaid part of their intercompany loans for
$9.8 million and $4.5 million, respectively.
The Company’s loan receivables from related parties are unsecured and are stated net of impairment allowance of
$4.7 million at December 31, 2019.
Loan receivables from related parties primarily consist of loans to Technip Offshore International SAS (“TOI”), Technip
UK Ltd (“Technip UK”) and Asiaflex. The terms and interest rates for significant loans are detailed below.
Loans to TOI consist of two loans in the amount of $1,103.5 million and $114.0 million respectively with 5
(i)
year terms and interest rates of 4.16% and 2.10% respectively.
Loan to Technip UK is in the amount of $147.8 million with a 5 year term and interest rate of LIBOR GBP 6
(ii)
months +0.5 basis point.
(iii)
Loan to Asiaflex is in the amount of $70.0 million with a 10 year term and interest rate of LIBOR 3M +1.1%.
NOTE 6 - DEFERRED INCOME TAX
The tax rate utilized to compute deferred taxes depends on the location of the underlying transaction. The transactions
carried out by the U.K. head office are tax effected using the U.K. tax rate. The transactions carried out by the French
permanent establishment are tax effected using the French tax rate.
The earnings of the U.K. head office are subject to the U.K. statutory rate of 19.0%. The profits or losses of the French
permanent establishment are not taxable in the U.K. as the election under section 18A CTA 2009 has been validly
made.
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The net deferred tax assets and liabilities amounts to $0.6 million and $22.2 million as of December 31, 2019 and
2018, respectively. The deferred tax balance comprises:
(In millions)
Deferred tax relating to pensions
Deferred tax relating to financial instruments
Short term timing differences
Tax loss carry forward
Total
The movement in the deferred tax asset is shown below:
(In millions)
At January 1
Movement relating to pensions
Credit to income statement
At December 31
NOTE 7 - TRADE AND OTHER RECEIVABLES
(In millions)
Trade receivables - related parties
Prepaid expenses
Advances paid to suppliers
Trade and other receivables
December 31,
2019
2018
0.4 $
(1.9 )
0.9
1.2
0.6 $
December 31,
2019
2018
22.2 $
0.4
(22.0 )
0.6 $
0.3
(2.8 )
0.9
23.8
22.2
14.8
0.3
7.1
22.2
December 31,
2019
2018
182.7 $
11.9
0.4
195.0 $
157.8
14.0
0.1
171.9
$
$
$
$
$
$
The Company’s trade receivables from related parties are stated net of loss allowance of $6.3 million at December
31, 2019.
NOTE 8 - INCOME TAX RECEIVABLE / INCOME TAX PAYABLE
The Company is a tax resident of both the United Kingdom (the “U.K.”) and France.
The Company maintains a permanent establishment in France which carries out the activities that were previously
carried out by Technip. For tax purposes, this permanent establishment is the head of the French tax consolidated
group. As such, the Company’s French branch is liable for tax at the French statutory rate of 34.3% on French
consolidated income.
In turn, the Company’s French branch receives from the French affiliates members of the French tax consolidated
group the income tax that these affiliates would have paid on a standalone basis if they had not been a member of
the French tax consolidated group.
The current income tax credit booked by the Company’s French branch is the difference between the income tax due
on the consolidated income to the French tax authorities and the income tax received from the affiliates members of
the French tax consolidated group.
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NOTE 9 - STOCKHOLDERS’ EQUITY
9.1 Changes in the Company’s ordinary shares
On November 27, 2019, TechnipFMC redeemed 50,000 redeemable shares of £1 each and cancelled one deferred
ordinary share of £1 in the capital of TechnipFMC. As of December 31, 2019, the Company’s share capital was
447,064,767. As of December 31, 2018, TechnipFMC’s share capital was 50,000 non-voting redeemable shares and
450,480,680 ordinary shares. The movements in share capital were as follows:
(In millions of shares)
December 31, 2017
Stock awards
Treasury stock cancellations
December 31, 2018
Stock awards
Treasury stock cancellations
December 31, 2019
Ordinary Shares
465.1
0.2
(14.8 )
450.5
0.6
(4.0 )
447.1
As an English public limited company, we are required under U.K. law to have available “distributable reserves” to
conduct share repurchases or pay dividends to shareholders. Distributable reserves are a statutory requirement and
are not linked to a IFRS reported amount (e.g. retained earnings, net income ans other reserves). The declaration
and payment of dividends require the authorization of our Board of Directors, provided that such dividends on issued
share capital may be paid only out of our “distributable reserves” on our statutory balance sheet. Therefore, we are
not permitted to pay dividends out of share capital, which includes share premium
Following the merger, the Company capitalized its reserves arising out of the merger by the allotment and issuance
by the Company of a bonus share, which was paid up using such reserves, such that the amount of such reserves
so applied, less the nominal value of the bonus share, applied as share premium and accrued to its share premium
account. The Company implemented a court-approved reduction of its capital by way of a cancellation of the bonus
share and share premium account which completed on June 29, 2017, in order to create distributable profits to support
the payment of possible future dividends or future share repurchases. Its articles of association permit by ordinary
resolution of the shareholders to declare dividends, provided that the directors have made a recommendation as to
its amount. The dividend shall not exceed the amount recommended by the directors. The directors may also decide
to pay interim dividends if it appears to them that the profits available for distribution justify the payment. When
recommending or declaring payment of a dividend, the directors are required under English law to comply with their
duties, including considering its future financial requirements.
The additional information required in relation to shareholder’s equity is given in Note 17 to TechnipFMC consolidated
financial statements.
9.2 Dividends
Dividends declared and paid during the year ended December 31, 2019 and 2018 were $232.8 million and $238.1
million, respectively.
The additional information required in relation to dividends is given in Note 17 to TechnipFMC consolidated financial
statements.
9.3 Share-based compensation
Refer to Note 18 of TechnipFMC consolidated financial statements for details of share-based payment schemes.
Details of the directors’ remuneration is provided in the Directors’ Remuneration Report in the Company’s Annual
Report.
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NOTE 10 - DEBT (SHORT-TERM AND LONG-TERM)
Debt consisted of the following:
(In millions)
Synthetic bonds due 2021
3.45% Senior Notes due 2022
5.00% Notes due 2020
3.40% Notes due 2022
3.15% Notes due 2023
3.15% Notes due 2023
4.00% Notes due 2027
4.00% Notes due 2032
3.75% Notes due 2033
Other
Total Long-term debt
5.00% Notes due 2020
Other
Total short-term debt and current portion of long-term debt
Total debt
December 31, 2019
December 31, 2018
Carrying
Amount
Fair Value
Carrying
Amount
Fair Value
$
$
491.6 $
459.9
—
168.4
145.4
140.2
84.2
108.6
109.2
—
1,707.5
224.4
20.2
244.6
1,952.1 $
513.1 $
459.2
—
180.6
156.8
150.5
96.4
127.8
123.8
—
1,808.2
230.0
20.2
250.2
2,058.4 $
488.8 $
459.9
228.4
171.6
148.1
142.9
85.8
110.5
111.1
21.4
1,968.5
—
—
—
1,968.5 $
532.4
450.4
244.0
186.9
161.3
153.3
95.8
120.2
126.1
21.4
2,091.8
—
—
—
2,091.8
For details of long and short term debt included in the table above, refer to Note 19 of TechnipFMC consolidated
financial statements.
NOTE 11 - LOAN PAYABLES - RELATED PARTIES
Loan payables - related parties consists of the following:
(In millions)
Borrowings from TechnipFMC Holdings ltd (UK)
Borrowings from TechnipFMC International (UK) ltd
Borrowings from TechnipFMC Finance ULC
Borrowing from TechnipFMC (Europe) Ltd
Loan payables - related parties
December 31,
2019
2018
$
$
2,657.7 $
2,131.0
446.7
364.2
5,599.6 $
2,551.4
2,076.0
435.1
354.8
5,417.3
Loan payables to related parties are unsecured and consist of borrowings from TechnipFMC Holdings Ltd (UK)
(“Holdings Ltd”), TechnipFMC International (UK) Ltd (“International Ltd”), TechnipFMC Finance ULC (“Finance ULC”),
and TechnipFMC (Europe) Ltd (“Europe Ltd”). The terms and interest rates for significant loans are detailed below.
Loans from Holdings Ltd primarily consist of three loans in the amount of $1,008.1 million, $838.5 million and
(i)
$545.8 million respectively with 5 year terms and interest rates of 4.83%, 4.68% and 2.69% respectively.
Loan from International Ltd is in the amount of $2,048.2 million with a 5 year term and interest rate of
(ii)
2.69%.
Loans from Finance ULC primarily consist of a loan in the amount of $389.4 million with a 5 year term and
(iii)
interest rate of 2.69%.
(iv)
Loan from Europe Ltd is in the amount of $350.0 million with a 5 year term and interest rate of 2.69%.
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NOTE 12 - TRADE AND OTHER PAYABLES
Trade and other payables consists of the following:
(In millions)
Overdraft with Technip Eurocash (Related party Cash Pooling)
Trade payables - related parties
Other current liabilities
Trade and other payables
December 31,
2019
2018
$
$
2,176.6 $
131.5
19.1
2,327.2 $
2,014.4
192.0
14.2
2,220.6
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TechnipFMC plc is registered in England and Wales
Company No. 09909709
One St. Paul’s Churchyard
London, EC4M 8AP, United Kingdom
Telephone number: +44 203-429-3950
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