ANNUAL REPORT 2018 — BOSKALIS ANNUAL REPORT 2018 ANNUAL ANNUAL REPORT 2018 REPORT 2018 KEY FIGURES (in EUR million, unless stated otherwise) 2018 2017 Revenue 2,570 2,343 Order book 4,292 3,495 EBITDA 353.6* 436.6 Net result from joint ventures and associates 28.4* 31.0 Depreciation and amortization 234.6 251.6 Operating result 119.0* 185.0 Extraordinary charges 519.5 0.0 EBIT -400.5 185.0 Net profit adjusted for extraordinary charges after tax 82.8 150.5 Net profit (loss) -435.9 150.5 Net group profit (loss) -433.7 150.4 Cash flow 319.5* 402.0 Shareholders’ equity 2,544 3,023 RATIOS (IN PERCENTAGES) EBIT as % of revenue 4.6* 7.9 Return on capital employed 2.9* 4.8 Return on equity 3.0* 4.9 Solvency 56.1 62.6 S S RE FIGURES PER SHARE (IN EUR) RE U U G Profit 0.63* 1.15 I G I F F Dividend 0.50 1.00 Y Y E E Cash flow 2.41* 3.07 K NON-FINANCIAL INDICATORS Employees including associated companies 11,345 10,732 Employees in Boskalis majority owned entities 5,912 5,772 Ratio women/men within Boskalis’ majority owned entities 12/88 10/90 Number of nationalities within Boskalis’ majority owned entities 68 64 Lost Time Injuries (LTI) 10 9 Lost Time Injury Frequency (LTIF) 0.05 0.06 Total Recordable Injury Rate (TRIR) 0.40 0.55 Strategic suppliers: percentage spend covered by Supplier Code of Conduct 70 81 CO2 emissions scope 1+2 (MT (‘000)) 1,180 1,223 Please refer to the glossary for definitions of the terms used S I * Excluding extraordinary charges L A SK BO – 8 1 0 7 RT 2 O EP LAG 201 R S VER UAL R NN JAA A REVENUE (in EUR million) NET PROFIT (in EUR million) CAPITAL EXPENDITURE (in EUR million) 20 2,570 2,343 150.5 17 335 82.8 178 2017 2018 2017 2018* 2017 2018 Net capital expenditure Disposals REVENUE BY SEGMENT (in EUR million) REVENUE BY GEOGRAPHICAL AREA (in EUR million) 132 215 Dredging & Inland Infra 106 606 The Netherlands Offshore Energy Rest of Europe Towage & Salvage 355 Australia / Asia Eliminations (-32) Middle East 1,041 Africa 1,429 North and South 336 America 952 ORDER BOOK (in EUR million) ACQUIRED ORDERS (in EUR million) FLEET UTILIZATION (in weeks per year) 4,292 3,367 3,495 2,909 37 35 36 36 16 14 2017 2018 2017 2018 2017 2018 Hoppers Cutters HTVs 1 ANNUAL REPORT 2018 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 The Marker Wadden in the Netherlands 3 4 CHAIRMAN’S STATEMENT 6 BOSKALIS AT A GLANCE 20 REPORT OF THE SUPERVISORY BOARD 32 REPORT OF THE BOARD OF MANAGEMENT 69 FINANCIAL STATEMENTS 2 018 144 OTHER INFORMATION 4 CHAIRMAN’S STATEMENT Reflecting on 2018, it was a year with some appealing highlights in a market that continues to be challenging. With our offshore transport activities we set a new record with the transport of the heaviest cargo ever whilst in dredging we concluded a very large dry-excavated harbor basin in Duqm, Oman. In the market environment in which we operate we see cautious signs of recovery in due course, although we are still a long way away from the exuberant market climate of three to five years ago. We closed 2018 with an order book of EUR 4,292 million, almost 23% higher than twelve months earlier. Revenue amounted to EUR 2,570 million and there was a sharp decline in the net profit adjusted for impairments and extraordinary charges to EUR 83 million. The decline in profitability was mainly due to a CHAIRMAN’S STATEMENT steep drop in the result of the Offshore Energy division where the transport activities suffered, in particular at the low end of the market. Following a review of our position, in a market which offers no prospects for improvement, it was decided to fully exit this loss-making segment. Due in part to this decision, as well as impairment charges in the towage division, an extraordinary DREDGING & INLAND INFRA charge of EUR 519 million was recognized, consisting mainly of goodwill impairments and a write-off of vessels. Based on our solid Early 2018 we secured two prestigious projects which are critical balance sheet and the strong cash flow we expect to continue to for the further development of Singapore with a combined value of generate, we have for the purpose of the dividend adjusted the net EUR 700 million. The first project relates to the expansion of Tuas loss for the extraordinary charges. We propose to pay-out 79% of Port. For Finger Pier 3 we will design and construct 387 hectares of the adjusted net profit equivalent to a dividend of EUR 0.50 per land reclamation works bounded by 9.1 kilometers of caisson walls share, which will be paid out in cash. in consortium with Penta Ocean and Hyundai. The second project marks the construction of Singapore’s first polder, Pulau Tekong. During the year further progress was made in the execution of The project comprises dike closures, dike reinforcements, drainage our strategy. In February the 3,000-ton crane vessel Bokalift 1 of the reclamation area and extensive dry earthmoving activities in entered into service. It is a truly unique transport and installation joint venture with Penta Ocean. Early October the green light vessel with its revolving crane and large deck area and it had a was given for the LNG Canada export facility contract in Kitimat. busy first year installing turbine foundations for a sizable wind The dredging scope for Boskalis includes the removal and cleaning farm. Following the strong performance by the mid-2017 of contaminated and non-contaminated soil from the site of the acquired survey activities of Gardline, we further expanded our future facility. position in survey by investing in a new vessel and acquiring a majority stake in the Middle East survey operator Horizon. In 2018 In the Netherlands we acquired the contract for the expansion of we also strengthened our offshore cable installation position the IJburg district of Amsterdam, involving the construction of an through the intended acquisition of the cable-laying assets of artificial island in the IJmeer lake, adjacent to the existing IJburg Bohlen & Doyen in Germany. A welcome addition following a islands. In addition, in the course of the year, we acquired string of large contract wins in this market. And in the closing numerous Inland Infra projects in the Netherlands, including the weeks of the year we signed a multi-year charter for a construction N69 project, involving the construction of the new road connection support vessel, a necessary addition to strengthen our proposition linking the N69 provincial road with the A67 motorway in the ANNUAL REPORT 2018 – BOSKALIS ANNUAL REPORT 2018 in the higher end of the installation market. south of the Netherlands. 5 Along with a raft of smaller contracts the order book at Dredging & resulting in the announcements early 2019 that Boskalis intends to Inland Infra increased in 2018 with a mixture of long-term multi-year sell its stake in Saam Smit Towage and Kotug Smit Towage. projects and near-term work. All in all with the projects in hand, we have good visibility for the fleet for the first half of 2019. Salvage had a busy and good year. Early in 2018 we were awarded the contract for salvaging the ultra-large container ship Maersk Honam. The vessel caught fire in the Arabian Sea and was OFFSHORE ENERGY rescued by the Salvage colleagues along with most of the cargo. Our Offshore Energy division on the one hand continues to be The ship was then towed to Dubai, where the remaining cargo was affected by the lackluster investment climate in Oil & Gas, which in offloaded and fire-damaged waste was discharged and cleaned. particular led to the decision to exit the low-end transport market. In addition to this sizable project we also succeeded in acquiring On the other hand, the early cyclical survey activities and offshore the contracts for salvage in two of the three geographic zones in the wind prospered in 2018. The Ostwind 2 project is an excellent world as defined by the U.S. Navy. The third zone was acquired by example and with a value of EUR 250 million it is also the largest our U.S. partner Donjon, meaning that we are now able to provide cable-laying contract ever acquired by Boskalis. This renewables salvage services to the U.S. Navy around the globe. project will combine multiple in-house disciplines including UXO survey, geotechnical and geophysical surveys, seabed preparation QUALITY MANAGEMENT works, the transport and installation of 270 kilometer export cable and seabed reinstatement. Furthermore, we won the Triton Knoll In the past year we also made great strides in terms of further and Moray East cable installation contracts with a combined value harmonizing our activities. In 2018 we continued with the roll-out of of EUR 200 million.