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2 Message from the Chairman and the CEO 10 2018 highlights 14 Board of Directors 16 Operational chart 18 Report on non-financial indicators of the CFE Group SUMMARY OF THE 138TH CORPORATE FINANCIAL YEAR 38 DREDGING, ENVIRONMENTAL & MARINE ENGINEERING 50 CONTRACTING 52 Construction 60 Multitechnics 62 Rail & Utilies 66 REAL ESTATE DEVELOPMENT 75 FINANCIAL REPORT ANNUAL REPORT 2018 1 2018 DELIVERS GOOD PERFORMANCES IN THE THREE DIVISIONS 2018 was a good year for the CFE the vessels of GeoSea and Tideway. MESSAGE FROM group, and was characterized by a Revenue from traditional dredging also THE CHAIRMAN high level of activity. This is evidenced grew with the continuation of work AND by the consolidated revenue, which in Singapore, the start of deepening THE CEO increased by 18.7% to € 3,641 million, work in the port of Szczecin (Poland), and by the well-filled order book and maintenance dredging in Belgium, which at year-end amply topped Germany, Africa and India. Dimco € 5.3 billion. This high volume of also reported a substantial growth of business was also reflected in a very business with three major projects satisfactory profitability. The net profit in the Netherlands (the Rijnlandroute of € 171.5 million is barely 5% lower link, the Terneuzen lock, and the than the previous year, when windfall Blankenburg connection), illustrating profits were reported in the Real Estate the dynamic of the civil engineering Development division. branch that was transferred by CFE at the end of 2015. These strong consolidated results are the outcome of the excellent DEME recorded a slight increase in its performance of our three divisions. EBITDA to € 458.9 million (or 17.3% of revenue), while the net profit remained At DEME, revenue increased by 12.3% stable at € 155.6 million. to a record level of € 2,646 million, 46% of which was generated by renewable Many new contracts were won. Besides energy projects. Construction work on deepening the fairway to Szczecin, large offshore wind farms in Denmark, DEME will deepen and maintain Germany and the United Kingdom the Canal Martin Garcia between ensured a virtually full utilization of Argentina and Uruguay. In offshore 2 ANNUAL REPORT 2018 LUC BERTRAND PIET DEJONGHE CHAIRMAN OF THE BOARD OF DIRECTORS MANAGING DIRECTOR wind, there are substantial new orders DEME expects to realize revenue in than 7% to € 1,320 million. This does for the offshore wind farms Borssele 2019 comparable to that of the past not yet include two major contracts (NL), Moray East (UK) and SeaMade year, and an EBITDA margin within the that were awarded to CFE in 2018, but (B). Dimco, for its part, landed the historical range. of which the start was still subject to contract for the construction and certain conditions precedent, namely CFE Contracting reported a 30% 20-year maintenance of the Blanken- the Public-Private Partnership contract revenue growth to € 935 million. If we burgverbinding (NL). These and other for the modernization and 20-year discount the activities of Coghe and contracts boosted DEME’s order book maintenance of the public lighting Van Laere, which were only acquired by 13.9% to € 4,010 million at year-end along the motorways in Wallonia at year-end 2017, that growth is still 2018. (Mobix), and the NEO 2 project for the 10%. Growth was driven by the three construction of a congress centre and To execute this order book, DEME segments. On a like-for-like basis, hotel on the Heysel plateau in Brussels reinforced its fleet further in 2018. construction activity increased by 11% (BPC). The multi-purpose cable-laying vessel in Belgium, Luxembourg and Poland. ‘Living Stone’ and the jack-up vessel The integration of Van Laere is running Although the net profit of CFE ‘Apollo’ were brought into service, while smoothly. In Multitechnics, where the Contracting remained virtually stable construction work continued on the integration of the electrical and HVAC at € 15.2 million, the EBIT fell slightly ground-breaking cutter suction dredger installations within VMA is paying off, to € 22.7 million (2.4% of revenue). ‘Spartacus’ and the offshore installation business increased by 10%. Rail & The activities in Tunisia, which are vessel ‘Orion’, which will be delivered Utilities, which now operate under the being wound down, made a negative this year. Finally, two modern trailing name ‘Mobix’, reported 14% growth. contribution. Additionally, there is still suction hopper dredgers and two self- potential for improvement at Van Laere, The solid commercial positioning of our propelled barges were commissioned which is already breaking even after construction and installation companies for delivery in 2020. earlier losses prior to the acquisition by is also reflected in the order book, CFE Contracting. In light of the above, which increased year-on-year by more ANNUAL REPORT 2018 3 +18.7% Order book Revenue 5,386 3,641 million € million € CFE Contracting should be able to BPI recorded a net profit of € 9.3 million and the remediation of contaminated improve its operating income in 2019. compared with € 22.3 million in 2017, soils are part of DEME’s core business, when an extraordinary capital gain attention is also consistently paid to BPI Real Estate, too, reported buoyant of € 18.4 million was recognized. limiting the environmental impact of activity in its three geographical The operating result amounted to its projects and vessels. Within CFE markets. In Belgium, 259 apartments € 13.2 million (9.5% return on capital Contracting, too, we want to coordinate were sold in seven projects that employed). and step up our efforts to promote the are under construction. Planning 17 Sustainable Development Goals applications have been filed for new The companies of the group have defined by the United Nations. To this projects in Brussels, Ottignies and once again reported a solid growth end, the new position of Sustainability Liège, and two new building plots during the past year. For us, however, Officer was created. were acquired in Auderghem. In revenue and growth are not an end Luxembourg, the ‘Domaine de l’Europe’ in itself. For several years now we We want to thank all staff members project - which is fully sold - is nearly have shown in all divisions of the of the group for the dedication and completed, and work has begun on group that the revenue growth is also enthusiasm with which they bring in the ‘Livingstone’ project, where the profitable. To be really sustainable, and carry out the many projects on apartments of the first two phases are our activities not only need to make a daily basis, often in challenging already sold. In Poland, two residential economic sense; we also have to pay conditions. This year, we also want to projects with a total floor area of more heed to the social and ecological turn the spotlight on two colleagues. 40,000 m² were delivered, and four aspects. For many years now, the Renaud Bentégeat has retired after projects are under construction and on health and safety of our employees having led CFE as CEO for 15 years. sale in Warsaw, Wroclaw and Poznan. has been paramount throughout the During that time, he has helped to group. Although renewable energy shape the group as we know it today. 4 ANNUAL REPORT 2018 Through the acquisition of Bâtiments & LUC BERTRAND Ponts, he reinforced the construction CHAIRMAN OF THE BOARD and development activities, and OF DIRECTORS he also initiated the diversification into installation techniques and rail PIET DEJONGHE infrastructure. MANAGING DIRECTOR At DEME, Alain Bernard handed over the reins to Luc Vandenbulcke on 1 January 2019. Alain joined the company in 1980 and has made his mark as CEO on DEME’s amazing development over the past 12 years. With his entrepreneurship and sense of innovation, he has expanded DEME from a pure dredging firm to a highly international and diversified marine engineering group. We wish to thank Renaud and Alain for all they have achieved and are pleased that we can continue to call upon their experience and enthusiasm. ANNUAL REPORT 2018 5 CFE IS A DIVERSIFIED INDUSTRIAL GROUP, LISTED ON EURONEXT BRUSSELS AND ACTIVE IN THREE MAJOR DIVISIONS: DREDGING AND MARINE ENGINEERING, CONSTRUCTION AND TECHNICAL INSTALLATIONS, AND REAL ESTATE DEVELOPMENT. CFE SA CARRIES OUT ITS DEME (Dredging, Environmental and ACTIVITIES THROUGH THREE Marine Engineering) is one of the biggest marine engineering companies in the WHOLLY-OWNED SUBSIDIARIES world. Besides the traditional dredging THAT ARE THE LEAD activity, there has been an organic diversification into civil engineering, COMPANIES OF THE THREE development and construction of offshore wind projects, offshore works for the oil OPERATIONAL DIVISIONS OF and gas industry, decontamination of polluted soils and sludge, and harvesting THE GROUP: of marine resources. DEME has a workforce of more than 5,000 people and operates a modern and versatile fleet of more than 100 vessels that are deployed on every ocean and every continent. 6 ANNUAL REPORT 2018 BPI Real Estate develops real estate CFE Contracting is active in projects in Belgium, Luxembourg construction, technical installations and Poland. Focus is on large- (electricity and HVAC) and rail scale and innovative inner-city infrastructure (tracks, catenaries and redevelopments mainly in regions signalling). The CFE Contracting entities or cities with population growth, employ more than 3,500 people, economic development and in which primarily in Belgium, Luxembourg and infrastructure works are planned, thus Poland. offering an alternative in terms of mobility. ANNUAL REPORT 2018 7 COMPANY PROFILE Each of those entities is led by its own CFE IS PROUD OF ITS management team with operational and financial responsibility for profit and ROOTS THAT GIVE IT SOLID loss and balance sheet.