The Netherlands: Record Revenue and Profit for Boskalis

 

2010 was a special and memorable year for Boskalis in many ways. Not just because it was the year in which we celebrated our centenary, but definitely also because it was a year in which we continued to develop the foundations for the future of our company.

Record revenue and profit

Above all, 2010 was a special year because of the record level of revenue and net profit we achieved. Revenue rose by 23% to € 2.7 billion and net profit was up 36% at 311 million, whilst the order book remained at a respectable level of € 3.2 billion. Operating results of truly historic proportions.

The merger with Smit Internationale N.V., which we completed with effect from 27 March 2010, made a major contribution to the growth figures we achieved in 2010.

The combination of Boskalis and SMIT has created a world-class maritime player:

– 14,000 employees;

– 1,100 vessels;

– active in 65 countries.

As soon as the offer had succeeded we got down to work together on exploring the potential synergies – in terms of costs but in particular in the market. And the opportunities are plentiful. For example, we are working together increasingly closely to cut procurement costs, leverage each other’s knowledge and people, and more importantly: to piggy back on each other in the market.

Over € 10 million in actual cost and other synergies have been identified in 2010 and will be realized over the next two years.

However, last year we also achieved great success in our core activity of Dredging & Earthmoving, once again reaping the benefits of our contracting policy of recent years which enabled us to start 2010 with a well-filled order book.

And so we made an excellent start with the integration process, with business continuing very much as usual.

The organization had to pull out all the stops – on the projects, on the vessels, at the wharves and in the offices. Everybody worked hard – both on the integration and on our normal business.

In the Oil & Gas segment we worked on the Nord Stream pipeline linking Russia and northern Germany. We also made a start on the sizable Gorgon LNG project in Australia – a big challenge for the organization due to both its nature and in particular the unique environment. In addition we started work on the second phase of the LNG port at Cuyutlán in Mexico as well as the expansion of the Soyo LNG port in Angola.

In our Ports segment construction work on the Maasvlakte 2 in Rotterdam – a project which will continue through to mid-2012 – kept us very busy in the Netherlands in 2010. Most of the volume of sand that needs to be delivered from the sea has been deposited and we are now hard at work on the sea wall in particular.

In addition we, together with Archirodon, successfully completed the construction of the new Khalifa Port in Abu Dhabi. And in the Caribbean we worked on deepening and expanding cruise ship terminals, in the Bahamas and in Jamaica.

In the Land Reclamation & Coastal Protection segment work in the Netherlands was once again concentrated on tackling the sections of coastline known as the ‘Zwakke Schakels’ (Weak Links). Just before the end of the year we won the contract to create a ‘sand motor’ off the coast of the province of Zuid-Holland.

In the Maldives the reconstruction of another four islands was completed in order to protect the local population from rising sea levels.

In Louisiana in the United States our American trailing suction hopper dredger Stuyvesant successfully helped to build sand berms to protect the ecosystem against the oil spill resulting from the disaster with the Deepwater Horizon rig.

Safety

Despite the high level of operational activity and the additional workload from the merger we once again managed to further improve safety on our vessels and projects, as evidenced by the fact that we managed to again reduce the Lost Time Injury Frequency rate, our leading safety indicator, from 0.74 to 0.67. In our Corporate Social Responsibility Report we account for our economic, social and environmental performance and in which, amongst others, Safety is a prominent aspect.

A major initiative in the area of safety in 2010 was the introduction of our new safety program, NINA (No Injuries No Accidents). Focused on the necessary culture changes, the entire safety program was developed in-house and its roll-out across the Boskalis organization has been ongoing since the summer of 2010. The aim is for NINA to become part and parcel of our everyday business. The core of NINA consists of five safety values, which mainly relate to awareness, responsibility and open communication about safety.

The NINA program enjoys the proactive support of our senior management and will make a major contribution to the further improvement of safety within our company.

Financing

In order to finance the acquisition of SMIT, Boskalis already successfully completed a

€ 230 million equity offering of over nine million new shares in 2009. In addition, a

€ 650 million credit facility was taken out, as well as a € 400 million bridge loan.

In 2010 we completed the overall financing with a € 354 million private placement loan in the United States and the United Kingdom. The interest was so intense that demand was three times greater than our required financing level.

Even after the acquisition of SMIT our balance sheet remains solid, with a solvency level of 37.1%. At end-2010 net debt totalled € 450 million. The net debt/EBITDA ratio is around 0.9, well below the ceiling of 3.0 which applies under the financing agreements.

Our strong balance sheet combined with the cash flows that we will generate over the next few years will enable us to pursue further targeted growth of our business through investments and acquisitions.

 

Corporate Business Plan 2011-2013

A new Corporate Business Plan has been compiled in order to bring focus to the new group in terms of its composition and cohesion, and to prioritize the various investment opportunities.

To this end we took measures including a global market survey of the relevant trends and developments in our markets. We also visited dozens of our clients and end-users of our services around the world in order to question them about their views on the market and their specific product requirements.

The study showed that the long-term drivers for our industry, and in particular the growth in energy consumption and global trade, remain positive.

The main market segments that we will continue to concentrate on are:

– Oil & Gas;

– Ports;

– Land Reclamation & Coastal Protection.

We have refined our geographical focus. We have identified six regions in the world where there is expected to be a high level of activity for our business in the coming years and on which we will concentrate our focus. These ‘focal regions’ are:

– Northwest Europe;

– South and West Africa;

– Brazil;

– Middle East;

– Southeast Asia;

– Australia.

Although the long-term drivers are positive, we expect volumes and prices to be under pressure in the near term, particularly at the lower end of the market. We shall therefore intensify our focus on cost leadership.

Conversely, at the top end of the market we are seeing opportunities for combined services with considerable added value. This applies in particular to the combination of SMIT and Boskalis services. In order to maximize our ability to leverage these opportunities we will continue to further integrate the organizations.

In the coming years we will use our strategic framework to further put our house in order, on the one hand by fine-tuning both our portfolio of activities and our organization.

On the other, we will take targeted action to further strengthen ourselves – within the organization, with our fleet, and, where possible, through acquisitions.

And so it is with a sense of great expectation and confidence that we cross the threshold into the next century of our history.

Shortly after the date of this report the sad news reached us of the sudden passing away of our esteemed chairman of the Supervisory Board, Mr. H. Heemskerk.

After his appointment to the Supervisory Board in 2006 Mr. Heemskerk made a major contribution to the development of our company through his broad managerial experience, great interest and enthusiastic involvement. As chairman of the Supervisory Board Mr. Heemskerk played an important, binding role in renewing, reinforcing and leading the Supervisory Board. We will remember him as a committed, inspiring and passionate person.

[mappress]

Source: boskalis, April 5, 2011;

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