ANNUAL REPORT 2019 — BOSKALIS ANNUAL REPORT 2019 ANNUAL ANNUAL REPORT 2019 REPORT 2019 KEY FIGURES (in EUR million, unless stated otherwise) 2019 2018 Revenue 2,645 2,570 Order book 4,722 4,292 EBITDA 375.8 353.6* Net result from joint ventures and associates 25.6 28.4* Depreciation and amortization 265.1 234.6 Operating result 28.5 119.0 Extraordinary items 82.3 -519.5 EBIT 110.7 -400.5 Net profit adjusted for extraordinary charges after tax 74.9 82.8 Net profit (loss) 74.9 -435.9 Net group profit (loss) 74.9 -433.7 Cash flow 340.0 319.5* Shareholders’ equity 2,491 2,544 RATIOS (IN PERCENTAGES) EBIT as % of revenue 4.2 4.6* Return on capital employed 2.9 2.9* Return on equity 3.0 3.0* Solvency 54.3 56.1 FIGURES PER SHARE (IN EUR) Profit 0.56 0.63* Dividend 0.50 0.50 Cash flow 2.55 2.41* KEY FIGURES NON-FINANCIAL INDICATORS Employees including associated companies 9,604 11,345 Employees in Boskalis majority owned entities 5,812 5,912 Ratio women/men within Boskalis’ majority owned entities 14/86 12/88 Number of nationalities within Boskalis’ majority owned entities 79 68 Lost Time Injuries (LTI) 6 10 Lost Time Injury Frequency (LTIF) 0.03 0.05 Total Recordable Injury Rate (TRIR) 0.37 0.40 Strategic suppliers: percentage spend covered by Supplier Code of Conduct 81 70 CO2 emissions scope 1+2 (MT (‘000)) 1,110 1,180 Please refer to the glossary for definitions of the terms used * Excluding extraordinary charges ANNUAL REPORT 2019 – BOSKALIS ANNUAL REPORT 2019 REVENUE (in EUR million) NET PROFIT (in EUR million) CAPITAL EXPENDITURE (in EUR million) 2,570 2,645 20 17 82.8 74.9 178 228 2018 2019 2018* 2019 2018 2019 Net capital expenditure Disposals REVENUE BY SEGMENT (in EUR million) REVENUE BY GEOGRAPHICAL AREA (in EUR million) 132 227 Dredging & Inland Infra 88 619 The Netherlands Offshore Energy Rest of Europe 358 Towage & Salvage Australia / Asia Eliminations (-25) Middle East 1,020 Africa 1,518 North and South 434 America 919 ORDER BOOK (in EUR million) ACQUIRED ORDERS (in EUR million) FLEET UTILIZATION (in weeks per year) 4,722 4,292 3,367 3,041 36 37 34 32 26 16 2018 2019 2018 2019 2018 2019 Hoppers Cutters HTVs 1 ANNUAL REPORT 2019 This annual report contains forward-looking statements. These statements are based on current expectations, estimates and projections of Boskalis’ management and information currently available to the company. These forecasts are not certain and contain elements of risk that are difficult to predict and therefore Boskalis does not guarantee that its expectations will be realized. Boskalis is under no obligation to update the statements contained in this annual report. Some of the projects referred to in this report were carried out in cooperation with other companies. 2 TABLE OF CONTENTS Dredging and land reclamation activities for the Duqm Liquid Berths Project in Oman 3 4 CHAIRMAN’S STATEMENT 6 BOSKALIS AT A GLANCE 24 REPORT OF THE SUPERVISORY BOARD 36 REPORT OF THE BOARD OF MANAGEMENT 73 FINANCIAL STATEMENTS 2 019 144 OTHER INFORMATION 4 CHAIRMAN’S STATEMENT 2019 was again a challenging year for Boskalis, with a first half of the year that was negatively impacted by the earnings of the Offshore Energy division. However, the second half showed a sharp improvement of our profitability and increasingly more signs of recovery in several of our markets. In 2019, our revenue increased to more than EUR 2.6 billion, the utilization of our vessels was healthy and the order book grew to a record amount of EUR 4.7 billion. Due to the sharp improvement in the second half we realized a net profit of EUR 75 million for the year. We propose a cash dividend of EUR 0.50 per share. We took major strides in the expansion and optimization of the company during 2019. On the one hand we parted ways with the Saam Smit and Kotug Smit towage joint ventures, allowing us to CHAIRMAN’S STATEMENT strengthen our balance sheet by over EUR 260 million. On the other hand, we acquired Horizon Geoscience in the Middle East strengthening our position in the offshore survey market, thus providing us with a huge opportunity to play a leading role in this market together with Gardline. we were also awarded a provisional letter of acceptance for Pasay, DREDGING & INLAND INFRA a sizable land reclamation project in Manila Bay in the Philippines. In the Dredging & Inland Infra division a lot of work was The climate change resilient islands will accommodate real estate undertaken in Duqm, Oman, as this massive project is nearing needed in light of the strong population growth in this region. completion. In early 2019 the new port area was submerged using siphons and the impressive kilometer-long quay wall and two OFFSHORE ENERGY 400-meter-long jetties largely disappeared under water. In Singapore we booked significant progress on the two impressive Many projects were also undertaken within Offshore Energy. Within projects we are involved in: Finger Pier 3 and Pulau Tekong, the the area of renewables, the Borssele Alpha export cable installation first polder to be created in Southeast Asia. There are strong signs project was a compelling example of our unique combination of that Singapore intends to use polders to protect more of its activities ranging from dredging work to soil compaction and coastline from the consequences of climate change in the coming cable-laying, to rock installation for which we deployed a broad years. This is a great example of the important role we play in range of our specialized vessels and equipment. The crane vessel providing the necessary climate-adaptive solutions. In addition, we Bokalift 1 was once again well-utilized in its second year of were active on many projects around the world including Australia, operation: until August at the East Anglia wind farm and Indonesia, Canada, Kenya and the Netherlands. subsequently for the removal of platforms in the Vulcan Viking field. The most spectacular Offshore Energy project was the dry-docking We were also successful in acquiring new contracts in Australia of the 325-meter-long Carnival Vista cruise ship on board the (Port Adelaide), Bahrain (Manama land reclamation), Romania BOKA Vanguard in the Bahamas. This unique operation caught the (Mamaia beach replenishment), United Kingdom (Southsea coastal attention of many media outlets and millions of people around the defense), the Netherlands (RijnlandRoute) and Maldives world last year. This was followed by the record-breaking transport (Gulhifalhu). The latter relates to a land reclamation and coastal of the FPSO P70 from China to Brazil. With a weight of 91,000 tons defense project for one of the islands in the Maldives to protect this is the heaviest load ever transported by a semi-submersible ANNUAL REPORT 2019 – BOSKALIS ANNUAL REPORT 2019 against the consequences of climate change. At the end of the year heavy transport vessel. 5 A number of interesting new projects were also acquired. The continue to increase. Energy that will not only be found on land, but recovery of the offshore oil and gas market is slowly becoming also offshore. Looking at this demand, we expect that fossil fuels will apparent at Heavy Marine Transport demonstrated by the many continue to be important for quite some time. The importance of contracts that were signed in the last quarter of 2019. These renewable energy will furthermore increase as part of the energy contracts included the transportation of LNG modules, two FPSOs transition. and two floating production systems signaling that after a period of low capex levels, activity levels are picking up. Furthermore, we The rate at which this transition looks to take place will however acquired sizable seabed intervention contracts across the globe not avert further global warming. Climate change will become ever including the Scarborough contract in Australia, Yunlin in Taiwan more apparent, gradually through rising sea levels and already (scour protection around wind turbine foundations), El Salvador apparent through more intense and frequent forms of extreme (connecting an FSRU) and the Lillebaelt Baltic Pipeline project. weather. That will have various profound effects, one being that Within the area of renewables, a sizable contract was awarded for many of these coastal areas with growing populations and the installation of three export cables for the Hornsea 2 offshore prosperity will be under threat. We can play an important role by wind farm. The operation will involve the use of a new offering an array of protective measures ranging from beach multifunctional plough that will be pulled by the CSV Boka Falcon replenishment to polders, and from dikes to mangroves – many that was chartered in 2019. The game-changing renewables creative ways to protect coastlines and introduce adaptive measures contract award for the Offshore Energy division was Changfang aimed at combatting the effects of climate change. Xidao. It is a game changer because it concerns our first foundation work for wind turbines outside Europe. And more particularly Boskalis is exceptionally positioned to play a significant role as because the contract has resulted in the decision to invest in a we create and protect welfare and advance the energy transition. second crane vessel: the Bokalift 2. This is yet another We offer a unique combination of people, vessels and capabilities groundbreaking concept. It combines a crane with a lifting through which we provide innovative solutions. capacity of 4,000 tons, capable of hoisting structures more than 100 meters tall and has a free deck space of 7,500 m².