Annual Report 2011 - PGS

Notes to the Financial Statements of PGS ASA
NOTES TO THE FINANCIAL STATEMENTS OF PGS ASA
PETROLEUM GEO-SERVICES ASA
(Parent company unconsolidated financial statements)
NOTES TO THE FINANCIAL STATEMENT
Note 1 - Summary of Significant Accounting Policies
Petroleum Geo-Services Group (“the Company”) has prepared its consolidated financial statements in accordance with
International Financial Reporting Standards (“IFRS”) as adopted by the European Union, while the financial statements for
Petroleum Geo-Services ASA (“PGS ASA”) are prepared in accordance with accounting principles generally accepted in
Norway (“N GAAP”).
PGS ASA applies the same accounting policies as described in Note 2 in the notes to the consolidated financial statements
where relevant, except that unrealized foreign exchange gain (loss) on long-term intercompany loans is recognized in the
statement of operations. The financial statements are presented in Norwegian Kroner (“NOK”).
Shares in subsidiaries (see Note 7) are presented at cost less any impairment. When the estimated recoverable amount (based
on estimated future cash flows) is lower than the carrying value of the individual shares and net intercompany receivables in the
subsidiaries, PGS ASA recognizes impairment charges. If and when estimated recoverable amounts increase, impairment
charges are reversed.
Intercompany receivables are impaired when estimated recoverable amount (based on management assessment) is lower than
the carrying value of the net receivable in the individual subsidiary. If and when estimated recoverable amounts increase,
impairment charges are reversed. There is no fixed plan for repayment of long-term intercompany receivables.
See Note 4 to the consolidated financial statement regarding the sale of Onshore. In 2010 PGS ASA converted long term debt
to equity in some of the disposed entities to fulfill the terms of the sales agreement. See Note 7 for further information.
Investment in associated companies is presented at cost less any impairment. When the estimated recoverable amount (based
upon observable market price) is lower than the carrying value of the individual investment, PGS ASA recognizes impairment
charges.
Proposed dividend to shareholders for the year are recognized as debt at yearend, as it is assessed as more likely than not that
the dividend will be approved by the General Assembly the following year.
Note 2 - Intercompany transactions
PGS ASA has significant intercompany transactions with its subsidiaries. Transactions with subsidiaries are mainly related to
business support functions and financing activities. Intercompany transactions in the Statement of Operations consist of:
Years ended December 31,
(In thousands of NOK) 2011 2010 2009
Revenue 116,633 125,401 125,913
Cost of sales 1,953 1,845 2,248
Selling, General and administrative cost 37,534 63,183 41,410
Interest expense (income), net (Note 3) (35,560) (4,693) 33,104
Other financial items, net (Note 4) (1,500,499) (401,103) (1,401,579)
Intercompany transactions, net 1,613,205 466,169 1,450,730
Note 3 - Interest Expense, Net
Interest expense, net, consists of:
Years ended December 31,
(In thousands of NOK) 2011 2010 2009
Interest income, external 19,510 7,340 2,391
Interest income, intercompany 442,504 147,118 342,403
Interest expense, external (287,221) (319,787) (386,692)
Interest expense, intercompany (406,944) (142,424) (375,507)
Total (232,151) (307,753) (417,405)
PGS ANNUAL REPORT 2011 56
124 PGS Annual Report 2011